EFFECT OF DIGITAL MARKETING ON PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES

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 these SMEs.

TABLE OF CONTENTS

 CHAPTER ONE: INTRODUCTION

1.1 Introduction

1.1.1 Internet Marketing

1.1.2 Small and Medium Enterprises

1.1.3 Small and Medium Enterprises in Lagos metropoli

1.2 Statement of the problem

1.3 Research Objectives

1.4 Value of the Study

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

2.2 Internet Marketing

2.3 Forms of Internet Marketing

2.3.1 Online Blogs and Articles

2.3.2 Online Markets

2.4 Challenges of Internet Marketing Application

2.5 Performance of Small and Medium Enterprises

2.6 Internet Marketing and Performance

2.7 Theoretical Review

2.7.1 Technology Acceptance Model

2.7.2 Diffusion of Innovation Theory

2.7.3 Resource-Based Theory

2.7.4 Social Penetration Theory

Summary

2.8 Conceptual Framework

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Introduction

3.2 Research Design

3.3 Population

3.4 Sampling Design

3.5 Data Collection

3.6 Data Analysis

CHAPTER FOUR: DATA ANALYSIS RESULTS AND DISCUSSION

4.1. Introduction 32

4.2. Demographic Factors of the Respondent

4.3. Demographic Factors of the Firm

4.4. Forms of Internet Marketing

4.5. Applications of Internet Marketing

4.6. Challenges in Internet Marketing Application

4.6.1 Correlation Analysis

4.6.2 Model Summary

4.7.5 Regression Coefficients

4.8 Summary and Interpretation of the Findings

CHAPTER FIVE: SUMMARY CONCLUSION AND RECOMMENDATION

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

REFERENCES

APPENDICES

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.

1. There is a significant impact between online marketing application and business process in small and medium enterprises
   1. 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.