Effects of E-marketing on Small and Medium Enterprises (SMEs) a case study of Femtech IT and Dool-X Centre in Kwara State

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ABSTRACT

CHAPTER ONE

INTRODUCTION

  1. Background to the Study

With the advent of technology the internet has come a long way within a very short time as a mainstream business tool that has transformed business activities (Rashid & Al-Qirim, 2001). The metaphor of “a tidal wave that washes over all industries and drowns all those who don’t learn to swim in it” has been used repeatedly by marketing practitioners to describe usage of the internet as a marketing channel; giving the more reason for Small and Medium Enterprises (SMEs) to adopt its usage as a marketing avenue (Gay, Charlesworth & Esen, 2007). According to Vuuren and Groenewald (2007) the creation of the SME sector plays an important role towards contributing to the economic growth of an economy and averting the low gross national product, high unemployment and levels of poverty in countries. Khan and Mahapatra (2009) remarked that technology plays a vital role in improving the quality of services provided by the business units. One of the technologies which really brought information revolution in the society is internet technology and is rightly regarded as the third wave of revolution after agricultural and industrial revolution. The cutting edge for business today is e-commerce. The effects of e-commerce are already appearing in all areas of business, from customer service to new product design. It facilitates new types of information based business processes for reaching and interacting with customers like online advertising and marketing, online order taking and online customer service etc. It can also reduce cost in managing orders and interacting with a wide range of suppliers and trading partners, areas that typically add significant overheads to the cost of products and services. Businesses are increasingly using the Internet for commercial activities. The ubiquitous nature of the internet and its wide global access has made it an extremely effective mode of communication between businesses and customers (Rowley, 2001). Thompson (2005) introduced that the growth of internet technology has enormous potential as it reduces the costs of product and service delivery and extends geographical boundaries in bringing buyers and sellers together.

As we move into the twenty-first century, the way that firms and companies do business has changed, furthermore, it is readily apparent that such changes are attributable to the advent of the internet (Ainin, Noor & Ismawati, 2003). The economy of the world nowadays is transitioning from an economy that is just related to products or services to an economy in which value creation, employment and economic wealth is very important. An overview of the internet shows that this phenomenon is not only networking media but also a place consumer conducts their transactions on the global market. The speed of innovation increases day-by-day, and this era has the highest rate in the speed of enhancement of technology in comparison with any previous era. Undoubtedly, usage of internet and computer has an important influence on the issue. Nowadays, we can easily see that many people use the internets computer devices, smart phones as well as emails and even logging on to social media sites like Facebook, LinkedIn or Twitter has become an essential daily need (Raad & Yeassen, 2010).

With the outburst of internet growth, internet marketing has become increasingly popular. It is said that internet marketing first began in the earlier years of 1990 with just text-based websites which offered product information (Herbig & Hale, 1997). Customer relationships can be re-engineered via the Internet, resulting in more cost efficient one to- one relationship (Cronin, 1995). However, recent research has shown that, despite technology facilitating improved business practice (Levy & Powell, 2012), a number of Small and Medium Enterprises (SMEs) have not capitalized on this new mode of carrying out business. Embracing technology can result in competitive advantage in the marketplace (Heinen, 1996, Soliman & Janz, 2004). Technology now offers opportunities for instant international market access, as well as improved domestic market performance for SMEs (Levy & Powell, 2012). In light of these advances, technology has allowed organizations to provide customers with an array of products, services and delivery channels. An example of this channel is the small scale enterprises which are increasingly depending on the internet in rendering services to their customers. Organizations are now developing different means of marketing their products and services through the use of the internet. Schibrowsky and Peltier (2007) recommended that, in order to be successful, the smaller firms that practice e-marketing must be prepared to strike a balance between developing new opportunities and facilitating improvements to existing offerings. As well as using the internet to reach out to new customers, it can also be used to improve relationships with existing customers too. There are newer marketing techniques being invented all the time. Businesses are inventing new techniques to find better ways to make revenue and establish their brand on the internet.

There are has been several misconceptions about this subject from the researcher and authors about E-marketing, E-commerce, E-business, and internet marketing as equal meaning with different wording which is not correct. E-marketing has broader scope while internet marketing just refer to internet thing like world wide web(www) and electronic mail, while E-marketing include all above plus tools like mobile phones, intranet and extranet. On the other hand E-business and E-commerce have even broader scope in compare of E-marketing.

Some authors (Mutula and Van-Brakel, 2006; Chaston, 2000) postulate that internet marketing adoption varies widely among SMEs as the technologies facilitate the enhancement of competitive advantages. In addition, similar opportunities for enterprises to develop their systems are offered through internet marketing. This study reviews the relevant literature relating to the effects of e-marketing on the small and medium enterprise sector, and the opportunities to small and medium enterprise that have not started practicing e-marketing and how those firms that have been using it can improve on their business activities. 

1.2 Statement of Research Problem

The internet is the fastest growing technology in the world, taking approximately seven years to reach a 25% market share from its conception, as opposed to the telephone that took 35 years, and the television which took 26 years (Singh, 2002). Despite the growing consciousness and enthusiasm for electronic marketing, only a few SMEs are exploiting its substantial benefits (Awa, Nwibere, & Inyang, 2010). The advent of internet marketing offers SMEs a new frontier of opportunities and challenges. Among the challenges faced by SMEs in using E-marketing are; dependability on technology, security, privacy issues, maintenance costs due to constantly evolving environment, higher transparency of pricing and increased price competition, worldwide competition through globalization, low connection speed, intangibility, limited face to face contact, inability of customers to feel the product before making purchase, working under different international legal and policies issues which are in most cases not harmonized, etc.

However with all the problems above which plaque the SME sub-sector in Nigeria, there is need for a good marketing skill. This is due to the fact that the world has become a global village. The appearance on the scene of the internet, especially Web 2.0, and the social networks is challenging the levels of power and influence of the agents who build brand image.

Unfortunately, many companies are clearly still in denial and failing to adopt pro-active strategies for an internet presence. Some earmark a percentage of their communications investment for the internet, but with no overall idea of what the medium can offer them, or of how a web presence must be integrated with other brand communications. Too many companies are still trying to control public network conversations on their brands, and too few are dedicating .The study is designed to examine the effects of e-marketing on small and medium enterprises a case study of Femtech IT and Dool-X Centre in Kwara state.

1.3 Research Questions

The following questions were formulated for the study.

  1. How does E-marketing adoption improve the sales of SMEs?
  2. What are the effects of E-marketing on the profits of SMEs?
  3. How does affiliate marketing contribute more to the sales of SMEs than social media marketing?
  4. How does affiliate marketing contribute more to the sales of SMEs than social media marketing?

1.4 Objectives of the Study

The main objective of this study is to examine the effects of E-marketing on Small and Medium enterprises (SMEs), while Specific objectives are, to:

  1. determine if the sales of SMEs can be improved through E-marketing;
  2. examine the effect of E-marketing on SMEs profit;
  3. compare the contributions of affiliate marketing and social media marketing on the firm’s sales; and
  4. compare the contributions of affiliate marketing and social media marketing on the firm’s sales

1.5 Research Hypotheses

The following hypotheses were formulated in the null form.

Ho1:     E-marketing does not have significant influence on the sales of SMEs.

HO2:     E-marketing does not have significant influence on the profit of SMEs

HO3:       Affiliate marketing does not have significant influence on SMEs sales than Social media marketing

Ho4:    Affiliate marketing does not have significant influences on SMEs sales than social media marketing.

1.6 Significance of the Study

The increasing presence of the internet in daily lives has resulted in the internet an essential media in marketing communication. To gain competitive advantage in the demanding market, it is important nowadays for company especially small and medium enterprises to have its own website, promote its products through social networks and mobile applications, use e-mail as a channel of communication with its business partners and customers, and apply all available information communication technology (ICT). It needs to provide all information for potential clients in one place at any time of the day, from anywhere in the world. This can be possible by using innovative ways of communication and by adapting business operations to demanding requirements of the modern market. This imposes the innovation of practices and the implementation of new technologies in business processes. Therefore, there is need for awareness about the necessity of applying ICT in the business.

Nowadays, the importance of SMEs has been recognized worldwide and their immense involvement to economic growth, community organization, employment, catalysts of growth, innovation and skills and development. SMEs account for over 95% of enterprise and 60%-70% of employment, and generate a large share of new jobs in Organization for Economic Co-operation and Development (OECD) countries in Africa. Since the dawn of industrial changes and globalization, the importance and contribution of small firms is enhanced as the economies of scale reduces. This study will provide information to business operators and owners especially the SMEs on the effects of E-marketing on their operations and opportunities it brings. The contributions of this study would be of interest to managers of SMEs using e-marketing and those that are not using e-marketing, scholars, and professionals in the field. This research work will also add to the existing research works that have been carried out in the past and also serve as a guide to the prospective researchers that might also be interested in carrying out further research on this topic.

1.7 Scope of the Study

As previously mentioned, the research simply focuses on the effect of e-marketing on small and medium enterprises. In order to maintain the focus of this research work, the scope is strictly limited to the small and medium enterprises (SMEs). By doing this, activities and operations of some selected firms in Kwara state are examined. For the sake of this research the following firms will be visited to administer questionnaires so as to ensure the objectives of the research are met, Femtech IT and Dool-X centre. These firms were chosen as a result of their ability to carryout their business activities making use of e-marketing and they have been performing excellently in their chosen areas. In order to achieve some of the objectives, secondary data will be obtained from the companies and it will cover between 2010 to2016. The main reason for collecting the secondary data of these firms for these periods is to ensure data collected is not over five years and also to make the bases for the findings not stale or outdated.

1.8 Definition of Operational terms

Marketing: is the process of planning, executing the conception, price, promotion and distribution of ideas, goods and services to create exchange that satisfy the customers and company’s objectives (AMA).

E-marketing: Stan (2003) defines e-marketing as electronic application of traditional marketing mix elements (product, price, promotion and place).

E-commerce: is the process of integrating  all company’s processes, activities and services toward buying and selling of product and exchange of information and funds with the company’s partners via computer networks and electronic technologies, Chong (2008).

Small and Medium Enterprises (SMEs): the Central Bank of Nigeria (2010) defines small and medium enterprise (SMEs) as business with asset base of between five and five-hundred million naira, and staff strength of between 11-300 people.

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