THE INFLUENCE OF ONLINE MARKETING ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISE

1.1 Introduction

Online marketing is the application of the internet and related digital technologies to achieve marketing objectives. This definition is a simple definition which, unlike the following ones, does not touch the important aspect of customer relationship. Online marketing consists of measures and activities to promote products and services and build relationships with customers over the Internet (Kotler & Armstrong, 2012; Kotler et al., 2010). Online marketing carefully target users and get them to interact with you while they‘re engaged with the most personal, intimate medium ever invented. However, given that the marketing discipline is undergoing a transformation in some part of African countries with new paradigms emerging as relationship marketing, it is now appropriate to assess small firm practices in a broader and more contemporary perspective (Burrett, 2008).

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.

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1.2 Background of Study

Businesses are looking to new technologies to meet their unique business requirements and position themselves to take advantage of global changes in business activities. Businesses both large and small need information to succeed in today's rapid changing environment, they need to be able to process data and use information effectively when conducting their day-to-day operations. The growth of the Internet has opened up a vast arena, providing more opportunities for businesses, particularly small to medium-sized enterprises (SMEs) to sell their products and services to a global audience than they would have been able to afford to reach using the traditional methods.

Barnes et al., (2008) asserted that SMEs make significant contribution to most economies of the World, they are socially and economically important, since they represent 99 % of all enterprises in the EU and provide around 65 million jobs and contribute to entrepreneurship and innovation. SMEs have been shown to contribute significantly to country and regional economic growth, increased employment levels and locally relevant product and service. SMEs are very important to the UK economy; they accounted for 99% of all enterprises and provide over 59% of private sector employment (BERR, 2008). They are also the source of future growth and innovation.

Barnes et al., (2008) argue that the advent of the digital economy has made the adoption and use of Internet a significant issue for most SMEs. Yet, many SMEs find themselves in a difficult situation. They may be too small to be able to employ a dedicated IT expert and lack the resources to buy consultancy advice. They often have limited experience in selecting, implementing and evaluating suggested IT solutions (Barnes et al., 2008). Barnes et al., (2008) noted that SMEs find themselves caught in a trap, lack of resources means that while there may be an aggregate demand for IT service and advice, individually, the varying nature of that demand makes it uneconomical for other firms to provide a service meeting that demand.

According to Bili and Raymond (2003), Small and Medium Business Enterprises (SMEs) are considered to represent the driving forces of sustainable local economic development throughout the world. They form the base of economies, stimulate private property and entrepreneurial capabilities which, due to their flexibility, can quickly adjust to market changes, generate employment, create diversified economic activity, and contribute to exports and trade.

In Nigeria, Third National Development Plan defined a small-scale business as a manufacturing establishment employing less than ten people or whose investment in machinery and equipment does not exceed six hundred thousand naira. Small-scale business, small-scale industries and small-scale entrepreneurship are used interchangeably to mean a small industry firm and will be used as such in this paper. Its deliberation was to refer to the operational definition.

Coviello et al (2002) have noted, this may be because such criticisms are based on the practices of larger firms. Furthermore, there may be an issue about the imposition of academic norms of marketing which ignore many of specific elements of the contents of small firms marketing, small firms may not practices marketing but many, nonetheless survive and grow. In any case, study agrees that most small firms seemed to use a relationship approach to marketing.

Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Influence of Online Marketing on the Performance of Small and Medium Scale Enterprise (SMEs) in Nigeria.

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1.3 Statement of Problems

Investigation revealed that online marketing has changed and is still changing the way business is conducted around the world. The commercialization of the Internet has driven online marketing to become one of the most promising channels for inter-organizational business processes. Online marketing evolved in various means of relationship within the business processes.

In Nigeria, many small and medium enterprises are investing more and more in the Internet/online marketing business. In order to survive in today’s challenging environment, it is imperative that SMEs be competitive and resilient. So, the main problem of this study is to determine the effect of online marketing applications on the business success in the small and medium enterprises.

Suffice to say that online advertising or marketing in the major sites in Nigeria occupy prominent position, the effectiveness of online advertising comes from whether consumers are willing to click and watch, but the reality is that most net consumers ignore online advertising. How to attract the attention of consumers has become a very important issue. In practice, different forms of advertising can be designed to attract consumers, such as pop-up ads, button ads, advertising couplet, floating ads, full-page advertising, and so on. Especially for SMEs, due to restrictions on marketing resources, news, advertising, large-scale promotional activities, they have less chance of publicity, so website promotion via the Internet means is much more important for them than big ones. Thus, this study investigates relationship between online marketing and small and medium sized businesses performance in Nigeria.

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1.4 Aim and Objectives of Study

The aim of the study is to investigate the Influence of Online Marketing on the Performance of Small and Medium Scale Enterprise (SMEs) in Nigeria. In achieving this aim, the following specific objectives were laid out as follows:

1. To determine if an online marketing application has a significant and positive impact on business performance in small and medium enterprises;
2. To investigate the nature of the relationship between online marketing and small and medium sized businesses’ productivity;
3. To examine if online marketing order and delivery has a significant and positive impact on business performance in small and medium enterprises;
4. To determine whether online marketing customer support service has a significant and positive impact on business performance in small and medium enterprises;
5. To investigate if online advertising has a significant and positive impact on business performance in small and medium enterprises; and
6. To find out whether online payment system has a significant and positive impact on business performance in small and medium enterprises.

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1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• Will online marketing applications have a significant and positive impact on business performance in small and medium enterprises?
• Is online marketing customer support service has a significant and positive impact on business performance in small and medium enterprises?
• Will online advertising has a significant and positive impact on business performance in small and medium enterprises?
• Is online payment system has a significant and positive impact on business performance in small and medium enterprises?
• Does online marketing order and delivery has a significant and positive impact on business performance in small and medium enterprises?
• What is the nature of the relationship between online marketing and small and medium-sized businesses’ productivity?

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1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: Online marketing applications have no significant and positive impact on business performance in small and medium enterprises.
• H1: Online marketing applications have significant and positive impact on business performance in small and medium enterprises.

Hypothesis Two

• H0: There is no significant relationship between online marketing and small and medium-sized businesses productivity.
• H1: There is significant relationship between online marketing and small and medium-sized businesses productivity.

Hypothesis Three

• H0: Online marketing order and delivery has no significant and positive impact on business performance in small and medium enterprises.
• H1: Online marketing order and delivery has significant and positive impact on business performance in small and medium enterprises.

Hypothesis Four

• H0: Online marketing customer support service has no significant and positive impact on business performance in small and medium enterprises.
• H1: Online marketing customer support service has significant and positive impact on business performance in small and medium enterprises.

Hypothesis Five

• H0: Online advertising has no significant and positive impact on business performance in small and medium enterprises.
• H1: Online advertising has significant and positive impact on business performance in small and medium enterprises.

Hypothesis Six

• H0: Online payment system has no significant and positive impact on business performance in small and medium enterprises.
• H1: Online payment system has significant and positive impact on business performance in small and medium enterprises.

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1.7 Significance of Study

The findings of this study will be beneficial to organizations as well as firms especially on the need to focus generally on online/internet 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 essence, 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.

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1.8 Scope of Study

The scope of the research is focused on the Influence of Online Marketing on the Performance of Small and Medium Scale Enterprise (SMEs) in Nigeria using Jumia Nigeria Online Marketing Application as a case study.

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1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
3. Research material: availability of research material is a major setback to the scope of the study.
4. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
5. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

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1.10 Definition of Terms

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

Digital Marketing: Digital marketing is the component of marketing that utilizes internet and online based digital technologies such as desktop computers, mobile phones and other digital media and platforms to promote products and services.