Effect Of Digital Marketing On Performance Of Small And Medium Scale Enterprises

Project and Seminar Material for Business Administration and Management BAM

Effect Of Digital Marketing On Performance Of Small And Medium Scale Enterprises


Abstract


The growth and spread of internet with an extraordinary pace over the last few decades has resulted in its increased use for marketing purpose; this is internet marketing. Internet as a marketing tool provides significant opportunities for companies to seek and adopt innovative practices in order to address the increasing demands of consumers. This study focused on internet marketing and performance of small and medium enterprises in Lagos metropoli. The study objectives were to establish the extent of internet marketing application by SMEs in Lagos metropoli, to determine the challenges faced in implementation of internet marketing by SMEs in Lagos metropoli and to determine the impact of internet marketing use on the performance of SMEs in Lagos metropoli. The research was a descriptive survey and used a sample size of 90 SMEs. Primary data was collected using questionnaires from the top management of the SMEs. The collected data was analyzed using frequencies, percentages, means and standard deviation as well as factor and regression analysis. The study established that internet marketing was used at a moderate extent, and that certain challenges affected the SMEs ability to apply internet marketing. Most SMEs agreed that the greatest challenge in application of internet marketing was the fear of losing their current customers who were not able to access internet. The lack of finances to invest in internet marketing integration as well as lack of skilled IT personnel topped the challenges highlighted in the study. Internet marketing had a positive impact on the performance of SMEs. Social Media and websites were the most applied forms of internet marketing. There was increase in profitability, increased market share and an ability to expand their market growth. The firm’s image was enhanced, an increased competitive advantage as well as more loyalty and access to new markets as impacts of using internet marketing by theseSMEs.


Chapter One


Introduction

1.1 Background to the Study

The emergence of globalisation has brought about a development in Information Communication and Technology which brought about the use of the internet which has consequently led to the emergence of social media. The use of social media by business owners has become an important platform for marketing their products and services to consumers in recent times (Paquette, 2013). The media have become part of the marketing strategy now used by some organisations to connect with their potential customers and this trend has continued to bring dramatic changes to how business is done now compared to what obtained about three to four decades ago. It must be stated that though social media are primarily created as an avenue to socialise, some marketers have realised the business opportunities that they offer and have decided to utilise them to grow their businesses. According to (Neti, 2011), social media represent a marketing opportunity that transcends the traditional middleman; it connects companies directly to consumers. The social media have, therefore, changed how consumers and marketers communicate and engage in business transactions (Balasubramanian, 1997).

In Nigeria the assumption is that government has the responsibility to provide employment for the people, create an enabling economic environment for business to thrive as well as to drive economic growth. But the economic reality as shown that government alone cannot generate full employment for the entire population of those who are willing to work. However, government has the economic machinery to stern the rate of unemployment by formulating policies which stimulate individuals to embark on small scale business. Nigerian government’s response to stemming unemployment has therefore being the promotion of entrepreneurial activities and support for the establishment and promotion of small and medium scale enterprises. Nevertheless, it is necessary for the entrepreneur to have a passionate marketing view of the entire entrepreneurial functions. He needs to look at marketing not as a business function but as a comprehensive view of the entire business process. Entrepreneurs should be more marketing- oriented, more concerned with the booming and buzzing conditions of the external world, to which the enterprise ultimately addresses itself. This is because marketing is on the firing line where the impact of change is greatest for the organisation.

The Internet has also enabled customers to survey, select, and purchase products and services from businesses around the world. Peer communication through social media has become a new form of consumer socialisation which is having a profound influence on consumer decision making and, thus, marketing strategies. The consumer socialisation theory predicts that communication among consumers affects their cognitive, affective, and behavioural attitudes (Al Kailani and Kumar, 2011; Ward, 1974). The internet, therefore, might be considered as an important agent of consumer socialisation. In Ghana, both large and small business owners have also joined millions of internet users, to reach out to customers and new shoppers by promoting and offering their products and services to them. This study attempts to examine what motivate these business owners to shift from the traditional marketing to online shopping.


1.2 Statement of the Problem

The wide acceptance and popular usage of Digital Media has made it possible for anyone who is interested in to set up business of different types at anytime. However, different forms and big corporate are reaping benefits of so many diverse types while the SMEs are still lagging far behind in adaptation of this innovative technology of the present century. It is an alarming issue that SMEs are held below the bottom in the competing world regarding earning of profits compared with multinational companies mainly because of not employing modern techniques like Digital Marketing in the business activities, marketing and the advertising campaigns. Consequently, it is important that a study be undertaken to identify and highlight the probable benefits, attached deficiencies and managing options for the potential disadvantages of Digital Marketing so that SMEs could join the economic and business competition with the rapidly growing companies. This study will take a look at the effect of digital marketing on performance of small and medium scale enterprises in Lagos.


1.3 Research Objectives

The general objective or main objective of this study is to investigate the effect of digital marketing on performance of small and medium scale enterprises in Lagos.

The specific objectives are:

  1. To identify the impact that online marketing application has on on business process in small and medium enterprises
  2. To establish the nature of the relationship between digital marketing and small and medium- sized businesses’ productivity
  3. To determine the effect digital marketing has on business process in small and medium enterprises
  4. To find out the marketing strategies used by SMEs in Lagos to make their products and services appeal to customers

1.4 Research Questions

The following research questions will guide the study:

  1. Does online marketing application have a significant and positive impact on business process in small and medium enterprises?
  2. What is the nature of the relationship between digital marketing and small and medium- sized businesses’ productivity?
  3. Does digital marketing have a significant and positive impact on business process in small and medium enterprises?
  4. What are the marketing strategies used by SMEs in Lagos to make their products and services appeal to customers?

1.5 Research Hypotheses

The following research hypotheses will guide the study.

There is a significant impact between online marketing application and business process in small and medium enterprises

There is significant influence of digital marketing on business process on small and medium enterprises


1.6 Significance of the Study

The findings of this study will be beneficial to organizations as well as firms especially on the need to focus generally on digital marketing, individual, group/team and organizational creativity. Also, the findings of this study will serve as a medium of awareness and enlightenment on the many environmental trends affecting organizations in recent years and proffer possible panacea to such problems as they rear heads. Not only this, but also, its findings will serve as platform mostly for professional manager, chief executives and all personnel involved in the staff training, administration and management on how to drive their staff for maximum human creativity and innovation. By so doing, several organizations would be better equipped to develop a repertoire of techniques (management control systems) to improving performances of average employees and at the same time improving the efficiency in management by enforcing cooperation of workers and standardization of work methods especially in creative organizations. In conclusion, the outcome of this study will provide a contribution to the management of national culture as regards cultural individualism, collectivism, uncertainty avoidance, multiple cultural dimensions as may affect an individual employee’s preferences for, and reaction to management control systems in interactive ways; and it will be a systematic knowledge base for researchers.


1.7 Scope of the Study

The scope of this study will be all the Small and Medium Enterprises in Lagos metropolis which are using online marketing applications and own internet websites.


1.8 Definition of Terms

Medium-sized Enterprises:

These are defined as enterprises which employ fewer than 250 persons, and whose annual turnover does not exceed N50 million or whose annual balance-sheet total does not exceed N43 million.

Small Enterprises:

These are defined as enterprises which employ fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed N10 million.

Micro Enterprises:

These are defined as enterprises which employ fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed N2 million.

Digital Marketing:

This refers to all forms of internet advertising, internet payment system, internet marketing, internet customer support service and internet order and delivery.


Chapter Five


Summary Conclusion And Recommendation

5.1 Introduction

The main objective of the study is to investigate the impact of internet marketing on the performance of SMEs. This chapter presents the summary of findings, conclusion, recommendations, and suggestions for further research.


5.2 Summary

The study’s main objective was to determine the impact of internet marketing on performance of SMEs in Lagos metropoli. The study tested the impact internet marketing has on several performance indicators. On the firm’s Profitability it was found that internet marketing impacted to a great extent with 60% of the respondents agreeing to this. Other variables included the firm’s ability to increase its market share with 40% of the respondents indicating that its impact was moderate and 42.5% agreed that internet marketing increased their market growth rate at a moderate extent. The research also tested its impact on improving customer loyalty and 51.3% of the respondents agreed that it impacted to a great extent. 45% agreed that internet marketing played an impact on their firm’s image enhancement to a great extent while 50% on their increase in competitive advantage on its industry. Internet marketing allowed firms access to new market niches with 65% of the respondents agreeing to this at a very great extent. The research indicated that internet marketing had a moderate impact on the SMEs’ overall performance.

The study tested the different forms of internet marketing used by these SMEs and social Media was the most applied form of internet marketing with 76.3%. 50% of the respondents had a website and 42.5% used online markets. 32.5% applied email advertisements and only 17.5% used mobile phone advertisements, 21.3% applied online popups.

Most firms with a mean of 4.36 agreed that their greatest challenge was the fear of losing their current customers who have in access by current customers, Inadequate Finances had a mean of 4.13, while access to internet and fear of change each had a mean of 4.04.The respondents ability to grow an online audience faced a challenge with a mean of 3.72 The lack of Skilled ICT Personnel gained a mean of 3.61, Integration with operations 3.37 while building a quality Website 3.35. Another challenge was the limited technological infrastructure with a mean of 3.31 and the limited access to electricity 2.89 with the Security and Privacy of firm at a mean of 1.96

The study identified that 75% of the respondents used internet marketing to communicate their products or services. Most respondents agreed that internet marketing was applicable in improving their firm’s visibility, it allowed them focus on specific needs of their target customers, helped them gain more customer loyalty and enabled them improve their products or services from the feedback. The use of internet marketing moderately impacted on their ability to monitor and measure results, there was better communication to other stakeholders and the turnaround time of operations was reduced. Internet marketing had a great impact on the firm’s ability to advertise their products and services and allowed them to expand to new market niches as well as their ability to track down of sales.


5.3 Conclusion

The study found that the use of internet marketing allowed firms communication their products which had a positive impact on their performance. Firms were able to improve on their customer relations through the use of internet marketing as well as advertise their products and track down their sales with better ease. The firm’s visibility increased, they were able to focus on client needs as well as improve the products and services from the feedback given. Internet marketing allowed firms better communication to their stakeholders as well as ability to easily monitor and measure their results. There was a reduced turnaround time in their operations and it allowed them expand to new markets.

The study found that Internet Marketing had a positive impact on the performance of SMEs in Lagos metropoli. The study therefore concludes that the adaptation of internet marketing leads to improved performance of SMEs.


5.4 Recommendation

The study identified benefits derived from SMEs and therefore recommends policies that favor the growth of SMEs as they impact positively on the economy. Creation of awareness is recommended to SMEs and large enterprises on the use and impact of internet marketing. The researcher recommends that support on internet marketing initiatives be given by the state government for them to reap the benefits and enhance the economy. Actions need to be done to curb the challenges in internet marketing application so as to enable as many SMEs opportunities to implement it in their operations. The study recommends that SMEs integrate internet marketing in their operations for its positive impact on their performance.


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Frequently Asked Questions


How does digital marketing enhance the business performance of entrepreneurs?

Indirectly, the digital marketing can enhance the business performance of entrepreneurs if they are inverted with digital knowledge and skills from the outset. In fact, Small and Medium Enterprises (SMEs) is one of the main catalysts for Malaysia’s economic growth (Normah, 2007).

How does online marketing affect small and medium-sized businesses productivity?

There is no significant relationship between online marketing and small and medium- sized businesses productivity. Online marketing order and delivery has no significant and positive impact on business performance in small and medium enterprises.

Does online marketing customer support service improve business performance?

Online marketing customer support service has no significant and positive impact on business performance in small and medium enterprises. Online advertising has no significant and positive impact on business performance in small and medium enterprises.

What is digital marketing and digital advertising?

Digital marketing is basically promoting the brand of business products using all forms of digital advertising mediums as a more interactive and informative alternative. This is in line with the availability of internet technology and enabling various marketing methods to be done digitally.

What are the benefits of digital marketing for small businesses?

A satisfied client will market your products or services on your behalf, and with time, your brand will go viral, opening an opportunity for business growth, and you can reach out to other markets. Digital marketing will improve your branding, and you will get more revenue.

What does a digital marketer actually do?

As a digital marketer, he is an expert at connecting brands to their target audience. Gone are the days when marketing decisions were guided by intuition and experience. Important marketing decisions are now determined by big data.

Does digital marketing increase revenue growth expectancy?

According to Google, companies that have incorporated digital marketing plans, have 2.8 times higher revenue growth expectancy. Companies using digital marketing, have 3.3 times the probability of increasing their workforce and business.

What happens if you don’t engage in digital marketing?

Without incorporating this style of advertising into a broader messaging campaign, a brand severely limits their ability to be successful. A business that doesn’t embrace digital marketing strategies also limits the growth opportunities for their business.

What is the impact of online marketing on small businesses productivity?

Online marketing applications have a significant positive impact on business process in small and medium enterprises. There is a significant relationship between online marketing and small and medium- sized businesses productivity.

Do online marketing applications affect business processes in small and medium sized enterprises?

A well-structured Likert-scale instrument was used to assess the impact of online marketing applications (internet marketing, advertising, order and delivery, costumer support service and payment system) on business processes in the small and medium sized enterprises.

Does online marketing customer support service improve business performance?

Online marketing customer support service has no significant and positive impact on business performance in small and medium enterprises. Online advertising has no significant and positive impact on business performance in small and medium enterprises.

What is the impact of online advertising and payment system on business?

Online advertising has a significant positive impact on business process in small and medium enterprises. Online payment system has a significant positive impact on business process in small and medium enterprises.

What are the advantages of online customer support?

One of the advantages of online customer support is that a customer can expect faster, in-the-moment assistance. For example, if a customer has a quick question about sizing, they can ping you via chat to confirm before they submit their order. But this only works if a customer service representative is poised and equipped to help.

How can I improve my online customer service?

Here are our seven best tips for improving your online customer service. 1. Ask yourself: What are my customers’ support needs? One of the most important things to consider when it comes to online customer service is finding what your customers typically need from your support team.

How can social media marketing improve customer service?

Monitor your social channels and make sure that social media marketing responds to inquiries and problems with customer service in mind. Both customer service departments and marketing need to work together in tandem. Customers reviewing your company because of good customer service help marketing to do their job.

How do marketing and customer support work together?

Customer service teams need to communicate back to the marketing team with information regarding which customer segments to target through future initiatives. Tumblr’s Elizabeth Tobey illustrates how marketing and customer support overlap with other teams. Providing a streamlined, enjoyable experience to your customers is essential. 

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