Research Article: 2022 Vol: 25 Issue: 6S
Surathan Parapornpisut, King Mongkut's University of Technology North Bangkok
Jusana Techakana, King Mongkut's University of Technology North Bangkok
Sunee Wantanakomol, King Mongkut's University of Technology North Bangkok
Citation Information: Parapornpisut, S., Techakana, J., & Wantanakomol, S. (2022). Strategies for marketing management of small and micro community enterprises to achieve sustainability. Journal of Management Information and Decision Sciences, 25(S6), 1-13.
Structural Equation Modeling, Marketing Management Strategy, Small and Micro Community Enterprises (SMCE’s)
Small and micro community enterprises (SMCE’s) are regarded as the grassroots economy of Thailand. At present, 70.01 percent of SMCE’s face a main problem of marketing strategy management because globalization has caused dynamic consumer changes (SMCE Promotion Division, 2021). The objective of this research was to study strategies for marketing management of SMCE’s to achieve sustainability. The study was a mixed research, using qualitative and quantitative methods. The quantitative research was a survey with a sample of 500 SMCE entrepreneurs.
The results showed that Strategies for Marketing Management of SMCE’s to Achieve Sustainability encompassed five factors consisting of: 1) “Community Centric”: the most important sub-item was “organizing contest activities for members in the community to participate in creating and developing new products or services”. These activities became the genesis of creative developments, 2) “Marketing Insights”: the most important sub-item was “tracking information on changes in social and cultural trends as a basis for marketing decisions”, 3) “Making Products”: the most important sub-item was “displaying important information clearly regarding directions to use and expiration dates on packages”, 4) “Selling Products”: the most important sub- item was “having specialists to be consultants for SMCE entrepreneurs on selling activities”, and 5) “Promoting Products”: the most important sub-item was “including participating in trade shows to introduce products or services to consumers”. The hypothesis testing revealed that difference in type of business between “the tangible product community enterprise” and “the intangible service community enterprise” is insignificant. The statistical non- significance of this study was set at 0.05.
The analysis of the structural equation model showed that the results passed the assessment criteria with the empirical data. The Chi-square Probability Level (CMIN- ρ) was 0.072, The Relative Chi-square (CMIN/DF) was 1.095. The Goodness of Fit Index (GFI) was 0.940. The Root Mean Square Error of Approximation (RMSEA) was 0.014.
In globalization, if there is a change at any point in the world, it may expand to other points of in a very short time. In terms of economy, politics, and society, it affects the entire world economy. As Thailand faces an economic crisis, especially the agricultural sector, of which incomes are uncertain, farmers inevitably suffer. The government therefore recognizes the importance of the country's grassroots business. An overview of the whole economy was considered and to maintain a quality economic growth, along with creating a balance among businesses. It is mandatory that the economy of Thailand be connected to the global economy to develop SMCE’s and alleviate poverty in communities. It has to develop both economic and social strengths to ultimately promote self-reliance principles in all communities (Sakolnakorn, 2013).
Community Enterprise (SMCE) Promotion Act of 2005 states that community enterprise (SMCE) refers to an enterprise related to the production of goods, services or other activities performed by a group of people who have a common way of life and come together to carry out such activities (juristic person or non-juristic person) to generate income and for self-reliance of families, communities and between communities (Ministry of Agriculture and Cooperatives, 2019).
The size of a community enterprise business refers to Small and Micro Community Enterprises (SMCE’s) for creative self-management of “capital” (Phongphit, 2005) as cited in Sakolnakorn (2013). A group is to be formed for community capital management with an aim of creating a solid foundation with good welfare for SMCE members (Kee-ariyo et al., 2016).
The SMCE Promotion Act is an important strategy to drive the economy of Thailand. This Act focuses on encouraging the community to apply local resources and wisdom for maximum benefits, as well as promoting and developing SMCE’s with a push for cooperation between the government and private sectors. At present, the government has adopted the 12th National Economic and Social Development Plan 2017-2021 (2017) with a focus on SMCE’s in correspondence with the 20-year national strategy of Thailand. Its main objective is to build stability, prosperity, and sustainability in stated in the context of Thailand 4.0. Nowadays, there is an integrated collaboration between 5 ministries to promote SMCE’s. The Ministry of Agriculture and Cooperatives manages the promotion of raw material production for SMCE’s. The Ministry of Industry promotes the raw material processes to increase values of products before they go to markets. The Ministry of Commerce promotes products of SMCE’s. The Ministry of Interior has assigned the Department of Community Development to oversee the growth of SMCE’s. The Ministry of Social Development and Human Security is responsible for the quality of life of community members. These ministries must promote the potential development of SMCE’s for expanding the national economic development base to create economic opportunities for various groups in the society along with social development and promotion.
According to the data from the SMCE Promotion Division in 2016-2020, the number of SMCE’s tends to increase as shown in Figure 1.
Figure 1: The Number of Smce’s from 2016-2020
Source: SMCE Promotion Division, Department of Agricultural Extension, 2021
The potential of SMCE’s must be assessed by the committee of the Department of Agricultural Extension. Currently, the SMCE Potential Assessment System (2012) is used. The assessment criteria are divided into three levels: good, moderate, and need to be improved. The results of the 2016-2020 SMCE Potential Assessment are detailed as shown in Table 1.
Table 1 The Results of the Smce Potential Assessment Shows A Comparison of the Number of Smce’s At Good, Moderate and Need to be Improved Levels from 2016-2020 |
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Year | Number of SMCE assessed for potential | Good level | Moderate and Need to Be Improved level | ||
Number | Percent | Number | Percent | ||
2016 | 2,189 | 637 | 29.10 | 1,552 | 70.90 |
2017 | 3,034 | 872 | 28.74 | 2,162 | 71.26 |
2018 | 2,980 | 945 | 31.71 | 2,035 | 68.29 |
2019 | 6,962 | 2,195 | 31.53 | 4,767 | 68.47 |
2020 | 22,399 | 6,468 | 28.88 | 15,931 | 71.12 |
Mean | 29.99 percent | 70.01 percent |
Table 1 provides an overview of SMCE assessments reflecting a mean over a 5-year period (2016-2020). The percentage of SMCE’s at a good level was only 29.99%, but the percentage of SMCE’s at moderate and need to be improved levels was 70.01%. From the perspective of the assessment of potential improvements from 2016-2020, it was found that marketing management was the worst problem that needed to be improved, and the average was 19.01% in a period of five years.
The problems of SMCE’s could be summarized as follows: the number of SMCE entrepreneurs tends to increase (2016-2020). However, according to the results of comparing the potential of SMCE entrepreneurs, it was found that the average over the past five years (2016-2020), only 29.99% of SMCE’s were at a good level, but there were 70.01% of SMCE’s were at the moderate and need to be improved level. When considering different aspects, it was found that the main problem of SMCE’s was marketing management. Therefore, the researcher studied strategies for marketing management of SMCE’s in order to achieve sustainability, and to build a competitive strategy of SMCE’s to promote community economy.
1. To study marketing management strategies for SMCE’s classified by type of business; namely manufacturing businesses focusing on producing tangible products and the other being intangible service businesses.
2. To develop a structural equation model of strategies for marketing management of SMCE’s to achieve sustainability.
Based on past concepts and theories, the researcher could summarize 5 factors of strategy for marketing management of SMCE’s to achieve sustainability as follows: Community-Centric, Marketing Insights, Making Products, Selling Products, and Promoting Products.
Figure 2: Sources of Research Elements on Strategies for Marketing Management of Small and Micro Community Enterprises (Smce’s) to Achieve Sustainability
This research was to create a new body of knowledge by using mixed research. It was divided into 3 parts: a qualitative research using in-depth interview techniques, a quantitative research using exploratory data collection, and a qualitative research using focus group method to verify the validity of the research model. The methods of conducting the research were detailed as follows:
1. The population used in qualitative research consisted of 9 experts through a purposive sampling method. The experts were categorized in 3 groups: 3 entrepreneurs or executives in business organizations, 3 officers in government agencies and related agencies and 3 academicians.
2. The quantitative research was a survey among SMCE entrepreneurs who were assessed as good in 2019 in terms of manufacturing tangible product enterprises and service enterprises. The sample size determination was carried out by using research criteria in the type of factor analysis or structural equation modeling. The size of the sample was 500 entrepreneurs, which is at a very good level (Comrey & Lee, 1992) as cited in Silpcharu (2020). The study was conducted using the Multi- stage Sampling method (Babbie, 2010) as cited in Silpcharu (2020). The cluster sampling procedure could be classified into two types of SMCE’s: SMCE’s in the manufacturing tangible goods and SMCE’s in service businesses. It was carried out by using the probability sampling method. The data were collected by distributing a questionnaire among the sample subjects.
3. The research tool was a questionnaire with check list questions and rating scale items. Weighing criteria were set with five levels based on the Likert scale. The index of item objective congruence study found that the 100 observed variables had IOC values between 0.60-1.00. Check-list questions were determined by using standard deviation analysis with values between 0.51-1.93, and rating scale items were analyzed by using Corrected Item-Total Correlation values between 0.31- 0.77. The reliability of the questionnaire was analyzed by using Cronbach's alpha coefficient of 0.97. To collect the data, a multi-stage randomized interview was used.
4. Data analysis was performed by using descriptive statistics, reference statistics, and multiple statistics for the development of a Structure Equation Model (SEM) by using SPSS and AMOS software packages. The criteria for Evaluating the Data- model Fit were defined in four values: 1) The Chi-square Probability Level (CMIN-ρ) was greater than 0.05. 2) The Relative Chi-square (CMIN/DF) was less than 2.03) The Goodness of Fit Index (GFI) was greater than 0.90. 4) The Root Mean Square Error of Approximation (RMSEA) was less than 0.08. The conceptual framework was shown in Figure 3.
5. Another qualitative research was conducted using a focus group. The key informants in this study consisted of 11 experts selected with the purposive sampling method.
Figure 3: Research Frameworks on Strategies for Marketing Management of Small and Micro Community Enterprises (Smce’s) to Achieve Sustainability
The researcher presented an overview of Strategies for Marketing Management of Small and Micro Community Enterprises (SCME’s) to Achieve Sustainability and conclusions as follows:
1. The results of the analysis of Strategies for Marketing Management of SCME’s to Achieve Sustainability revealed 5 interrelated factors: Community-Centric, Marketing Insights, Making Products, Selling Products, and Promoting Products.
2. The level of importance in the Strategies for Marketing Management of SCME’s to Achieve Sustainability was found that overall was at a very high level with a mean score of 4.63, Marketing Insights Factor was at a very high level with a mean score of 4.70, Promoting Products Factor was at a very high level with a mean score of 4.63, Selling Products Factor was at a very high level with a mean score of 4.63, Making Products Factor was at a very high level with a mean score of 4.61, and Community-Centric Factor was at a very high level with a mean score of 4.57. If classified by the top 3 sub-items according to the level of importance, the findings were as follows:
2.1 As for the Community-Centric factor, the most important sub-item was “Organizing the contest activity among community members to create new products or services, and to expand the creativity of the community”, the mean score was 4.71 (S.D. =0.50). The second was “Promoting SMCE’s as the learning center for community members”, the mean score was 4.71 (S.D. =0.53). The third sub-item was “Selecting high experienced community members as consultants for the SMCE’s”; the mean score was 4.68.
2.2 As for the Marketing Insights factor, the most important sub-item was “Tracking information on changes in social and cultural trends as a source of information for marketing decisions”; the mean score was 4.78. The second was “Studying of marketing and distribution channels, including new transaction models”; the mean score was 4.77 (S.D. =0.446). The third sub-item was “Paying attention to issues that affected pricing such as market demands, competitors, laws and regulations, and costs before setting prices”; the mean score was 4.77 (S.D. =0.452).
2.3 As for the Making Products factor, the most important sub- item was “To specify directions of product use and expiration date on packages”; the mean score was 4.72. The second was “Designing products or services as a reflection of community identities to differentiate them from competitors’ offerings”; the mean score was 4.69. The third was “To use only practical packaging or service instruments to create customer convenience in businesses”; the mean score was 4.68.
2.4 As for the Selling Products factor, the most important sub-item was “Leveraging marketing experts to give advices on sales”; the mean score was 4.68. The second was “To use digital applications for pre-booking products or services”; the mean was 4.67 (S.D. =0.54). The third was “Recruiting sales representatives with qualifications such as good personality, good interpersonal skills, and service-minded spirit”; the mean score was 4.67 (S.D. =0.57).
2.5 As for the Promoting Products factor, the most important sub-item was “To participate in trade shows to create products or services awareness”; the mean score was 4.71. The second one was “Co-promoting with credit cards or branded products such as hotels, shops, and tourist attractions”; the mean score was 4.70. The third was “Setting up a customer relations unit or call center for listening to information or giving advices to customers”; the mean was 4.69.
3. In conclusion, an analysis of Strategies for Marketing Management of SMCE’s to Achieve Sustainability sorted by importance could be summarized as follows; when considering by type of business, it was found that manufacturing businesses producing tangible goods focused on “Marketing Insights” with the mean score being 4.71, “Promoting Product” with the mean score being 4.66, and “Selling Products” with the mean score being 4.65. Service businesses focused on “Marketing Insights” with the mean score being 4.70, “Selling Products” with the mean score being 4.60, and “Promoting Products” with the mean score being 4.59.
4. The comparison of perceived importance of Strategies for Marketing Management of SMCE’s to Achieve Sustainability between manufacturing businesses producing tangible products and service businesses showed no statistically significant differences when using t-test to compare two independent groups at the 0.05 level.
Table 2 Comparison Of The Perceived Importance Of Strategies For Marketing Management Of Smce's To Achieve Sustainability Between Manufacturing Businesses Producing Tangible Products And Service Businesses |
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Strategies for Marketing Management of Small and Micro Community Enterprises (SCME’s) to Achieve Sustainability |
Manufacturing businesses producing tangible products | Service businesses | t-value | p-value | ||
¯X | S.D. | ¯X | S.D. | |||
Overall | 4.65 | 0.35 | 4.60 | 0.37 | 1.66 | 0.10 |
1. Community Centric | 4.61 | 0.39 | 4.53 | 0.48 | 1.87 | 0.06 |
2. Marketing Insights | 4.71 | 0.32 | 4.70 | 0.32 | 0.59 | 0.55 |
3. Making Products | 4.65 | 0.40 | 4.58 | 0.41 | 1.80 | 0.07 |
4. Selling Products | 4.65 | 0.39 | 4.60 | 0.41 | 1.17 | 0.24 |
5. Promoting Products | 4.66 | 0.35 | 4.59 | 0.38 | 2.16 | 0.03* |
5. Structural equation model of Strategies for Marketing Management of SMCE’s to Achieve Sustainability, based on Arbuckle's recommendation, the researcher analyzed and adjusted the model by considering modification indices. The methodology began with the theoretical consideration of outcomes to exclude the observable variables one by one; the model was then reprocessed, and this was done until the model with all four statistical values met all four criteria and was completely consistent with the empirical data (Silpcharu, 2020) as shown in Table 3, the structural equation model in Figure 4, and the meaning of variables in Table 4.
Table 3 Statistics Obtained From The Congruence Assessment Of The Structural Equation Model Before And After The Improvement |
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Index | Accepted Value | Before improvement | After improvement |
CMIN- ? (Chi-square Probability Level) | ? > 0.05 | 0.000 | 0.072 |
CMIN/df
(Relative Chi-square) |
< 2.00 | 1.823 | 1.095 |
3. GFI (Goodness of Fit Index) |
> 0.90 | 0.716 | 0.940 |
4. RMSEA (Root Mean Square Error of Approximation) |
< 0.08 | 0.041 | 0.014 |
Figure 4: Structural Equation Model Of Strategies For Marketing Management Of Smce’s To Achieve Sustainability In Standardized Estimates Mode After Model Improvement
Table 4 Meaning of abbreviations used in strategies for marketing management of smce’s to achieve sustainability |
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Abbreviation | Meaning |
CC1 | Set marketing policies to enhance community members’ quality of life |
CC3 | Let community members participate in the selection of community identities to integrate with products and services |
CC4 | Share benefits among community members in monetary and welfare forms |
CC7 | Select principal materials in communities to support the economy of respective communities |
CC11 | Run the community enterprise in accordance with the regulations required by laws to avoid potential conflicts or disputes with people in the community |
CC13 | Use environmentally friendly materials, equipment, and technologies in communities |
MI2 | Keep up with information on social and cultural changes to use as bases for marketing decisions |
MI4 | Study the marketing channels and distribution practices as well as new processes of transaction |
MI6 | Study community capital such as resources, wisdoms, culture and traditions to create business and product stories |
MI8 | Analyze and assess strengths, weaknesses, opportunities and threats to have information for marketing planning |
MI10 | Gather information from new suppliers to generate business options |
MI15 | Explore tools and equipment used in business operation to assess competitive potential |
MI16 | Assess production competencies and service processes to use the data to analyze competitiveness in the market |
MP1 | Set goals, plans, and teams to develop new products or services of the organization |
MP2 | Design products or services incorporation with community identities for differentiation |
MP7 | Set quality standards for the production of goods and services with definitely explicit KPI |
MP10 | Test qualities of new products or services before launching |
MP11 | Establish quality and validation processes at every stage of production and service |
MP19 | Develop packaging and service equipment to create value added for products and services |
SP1 | Use modern technologies, such as e-Payment system and QR Code to facilitate transactions |
SP7 | Create new online and offline sales channels with efficiency and reliability |
SP8 | Choose retail and wholesale channels to distribute products and services in correspondence with target markets’ behaviors |
SP16 | Use applications for customers to reserve products and services in advance |
SP17 | Added channels to deliver products by using delivery services, such as Grab, FedEx, DHL, Kerry, and Thailand Post |
SP19 | Build a sales network by joining Alibaba, Shopee, Agoda, and Lazada |
PP2 | Participate in trade shows to build awareness of products and services among consumers |
PP3 | Leverage co-promotion strategies with credit cards and other categories of business, such as hotels, shops and tourism attractions |
PP8 | Look for business partners, such as retail businesses and tourism attractions to use as places for product or service displays |
PP11 | Consult with experts on how to promote products and how to build relationship with suppliers and customers |
PP13 | Build relationship with mass media personnel to disseminate good images for organizations and products |
PP15 | Set up social media pages as channels for publicize news to customers |
PP16 | Build brands by telling stories of behind the scene of product or service development, awards received, and quality certification to create value added for to products and services |
PP18 | Create symbols and logos to make it easier for consumers to recognize products or services |
6. The hypothesis testing results from the analysis of the causal influence between the latent variables in Strategies for Marketing Management of SMCE’s to Achieve Sustainability Model for all 7 hypotheses were found that 1) The “Marketing Insights” factor had a statistically significant direct influence on the “Community Centric” factor at the 0.001 level; and Standardized Regression Weights were 0.87. 2) The “Marketing Insights” factor had a statistically significant direct influence on the “Making Products” factor at the 0.001 level; and Standardized Regression Weights were 0.30. 3) The “Marketing Insights” factor had a statistically significant direct influence on the “Promoting Products” factor at the 0.001 level; and Standardized Regression Weights were 0.35. 4) The “Marketing Insights” factor had a statistically significant direct influence on the “Selling Products” factor at the 0.001 level; and Standardized Regression Weights were 0.40. 5) The “Community Centric” factor had a statistically significant direct influence on the “Making Products” factor at the 0.001 level; and Standardized Regression Weights were 0.67. 6) The “Making Products” factor had a statistically significant direct influence on the “Selling Products” factor at the 0.001 level; and Standardized Regression Weights were 0.52. 7) The “Making Products” factor had a statistically significant direct influence on the “Promoting Products” factor at the 0.001 level; and Standardized Regression Weights were 0.61.
The researcher proposes a discussion on the research findings in 4 issues as detailed below.
1. The overall results showed that the comparison of perceived importance of Strategies for Marketing Management of SMCE’s to Achieve Sustainability were not significantly different at the 0.05 level, which is correspondent with Wongmonta (2020), stating that the marketing is an integral and pivotal element of business, no matter what business is involved. Entrepreneurs need marketing insights to formulate strategies for high achievement.
2. The Marketing Insights factor had the highest direct influence on the Community Centric factor, which is correspondent with a research by Poltanee, Sonthanong & Techakana (2021), stating that when an entrepreneur knows marketing insights, it should be realized that particular resources of community are tools to create uniqueness of community enterprises. Thus, marketing insights will lead to community-centric marketing practices.
3. The results of the research revealed that the most important factor of Strategies for Marketing Management of SCME’s to Achieve Sustainability was the Marketing Insights, which is correspondent with a research by Silpcharu & Wantanakomol (2017), stating that the bodies of knowledge and marketing insights are important factors for a sustainable success. It is not a choice, but a mandate.
4. The most important sub-item of Strategies for Marketing Management of SMCE’s to Achieve Sustainability was “Tracking information on changes in social and cultural trends as a resource for marketing decisions”, which is correspondent with a research by Techakana (2019), stating that the sustainability is an aim of Thailand 4.0, people involved must deeply understand marketing environment, including competition, politics, economy, sociology–culture, technology, and nature. All of these are parts of marketing insights that entrepreneurs should know to achieve a sustainable business and preserve environment quality and natural resources.
The researcher proposes 10 recommendations based on the findings of this research as follows.
1. The government should support the soft loan policy and establish conditions for applying for low interest loans that are conducive to SMCE’s, including assigning relevant agencies to provide advices on financial management for SMCE’s. Thailand's retail system should stipulate a credit term, which means that the amount of time the seller allows the buyer to pay at a later date should be at least 30-120 days as agreed. This issue greatly affects the SMCE’s. It also directly affects the whole system of SMCE because if the credit term is short, SMCE entrepreneurs will not have sufficient working capital to operate their business and they have to wait for the buyer's payment for an agreed period of time. Therefore, the policy of low interest loan is an essential measure to drive SMCE businesses.
2. The government should support the policy of enhancing competitiveness of SMCE’s by teaching digital media technologies for marketing to expand communication channels, distribution channels, transaction channels, advertising, and application creation for SMCE’s to facilitate and expedite consumer accesses.
3. The government sector should encourage large private sectors to take part in the operation, especially those in retail businesses to provide distribution channels for SMCE products.
4. The government should support education policies by integrating knowledge of basic business and marketing practices for SMCE entrepreneurs.
5. The government should support researches to look for innovation that will benefit SMCE’s, such as researches related to product development and improvement of production processes or services. In addition, a business training center for SMCE’s should be established as a mentor and a consultant unit on business operations. And there should be guidelines on how to operate SMCE’s with a futuristic mindset.
6. SMCE’s should assess community-based capital such as people, materials, wisdom, and culture, and gather information for good planning of product development. The design must reflect community identities in order to differentiate SMCE products. If the product is not differentiated by means of reflecting community identities, they will not be unique and there will not be competitive advantages. The selection of community-based capital in the implementation of SMCE’s contributes to the distribution of income to the community members and enhances community economy.
7. SMCE’s should encourage community members to participate in contest activities to attract people in the community to create new products or services and leverage their creative potential. Participation makes community members feel proud that their ideas are the driving force behind the operation of SMCE’s. Creativity must be combined with innovation and identity to create added values for community products.
8. SMCE’s must pay attention to packaging and consider packaging as part of the product. Therefore, product development must be carried out in parallel with the development of packaging.
9. In addition to consumer incentives, SMCE’s should also take advantage of digital technology as a sales and transaction channel that transcends space and time constraints in terms of far-reaching sales capabilities and 24/7 sales and transaction capabilities. SMCE’s must leverage digital technologies to their fullest potential as it can help promote marketing strategies for sustainable growth.
10. SMCE’s should learn content strategies to create psychological differentiation as well as brand differentiation in order to achieve sustainable market competitive advantages.
The study of marketing management strategies of community enterprises should be in depth according to types of business. Manufacturing businesses can be classified as crops, livestock, processing and food products, input factors, woven fabrics or clothing, fishery, basketry, beverages, herbal products, woodwork or furniture, souvenirs or gifts, artificial flowers, pottery, jewelry or gems, metal artifacts, leather goods, machinery, and others. Service businesses include community savings, community shops, tourism, health, mechanical repairs, and other services (SMCE Promotion Division, Department of Agricultural Extension, 2021). In addition, other strategies of community enterprises should be studied to develop the potential of SMCE’s to achieve sustainability, such as manufacturing, service, financial management, supply chain management and logistics.
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Received: 02-May-2022, Manuscript No. jmids-22-11931; Editor assigned: 04-May-2022, PreQC No. jmids-22-11931 (PQ); Reviewed: 15-May-2022, QC No. jmids-22-11931; Revised: 21-May-2022, Manuscript No. jmids-22-11931 (R); Published: 27-May-2022