THE IMPACT OF ONLINE MARKETING ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN NIGERIA (A CASE STUDY OF JUMIA NIGERIA)

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE 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.

A search of literature reveals that many changes in organization today have been technology driven Clarke (2001) notes that information technology (IT) is really changing the whole nature of business transaction between consumers and suppliers of goods and services. Pigneur (1996) points out that companies especially SMEs are confronted with a number of changes that require innovative answers. These challenges include the emergence of a competitive global economy; the trend towards an information based economy, and the shift from mass production to a customer-driven economy. He adds that to compete in today’s global information-based and customer-driven economy, SMEs must be efficient, innovative and competitive: able to respond just in time, focus on quality, and implement mass-customization. He suggests that in order to do this today, they must also be able to leverage the new information and communication= technologies (ICTs) to fit better in their environment, establish more co-operative inter-organizational relationships and compete on the international markets (Pigneur, 2006).

There have been many studies and reports published in UK and overseas in the last few years on the Internet usage in business in general. This study is not another examination of the general usage of Internet in business, rather it builds and summarizes the extensive and valuable research already completed in these areas and extracts the essential themes and messages being expressed by most SMEs. The study aims to examine the perceived opportunities and benefits that Internet usage can offer to SMEs.

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.

Consequent upon this background, this research aims at examining the impact of online marketing on the performance of SMEs in Nigeria with particular reference to Jumia Nigeria.

1.2       STATEMENT OF THE PROBLEM

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.

1.3   OBJECTIVES OF THE STUDY

The objectives of this study are:

  1. To determine if online marketing applications 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.
  6. To find out whether online payment system has a significant and positive impact on business performance in small and medium enterprises.

1.4 RESEARCH QUESTIONS

The following research questions will guide the study.

  1. Will online marketing applications have a significant and positive impact on business performance in small and medium enterprises?
  2. What is the nature of the relationship between online marketing and small and medium- sized businesses’ productivity?
  3. Examine if online marketing order and delivery has a significant and positive impact on business performance in small and medium enterprises?
  4. Is online marketing customer support service has a significant and positive impact on business performance in small and medium enterprises?
  5. Will online advertising has a significant and positive impact on business performance in small and medium enterprises?
  6. Is online payment system has a significant and positive impact on business performance in small and medium enterprises?

1.5 RESEARCH HYPOTHESES  

The following research hypotheses will guide the study.

  1. Online marketing applications have no significant and positive impact on business performance in small and medium enterprises.
  2. There is no significant relationship between online marketing and small and medium- sized businesses productivity.
  3. Online marketing order and delivery has no significant and positive impact on business performance in small and medium enterprises.
  4. Online marketing customer support service has no significant and positive impact on business performance in small and medium enterprises.
  5. Online advertising has no significant and positive impact on business performance in small and medium enterprises.
  6. Online payment system has no significant and positive impact on business performance in 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 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 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 Nigeria which are using online marketing applications and own internet websites particularly Jumia Nigeria.

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.

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

REFERENCES

Barnes, D., Dyerson, R,. Harindranath, G., (2008), If it isn’t broken, don’t fix it, http://www.rhul.ac.uk/Management/Research/PRISM/index.html

Blili, S., and Raymond, L., (2003). Information technology: threats and opportunities for small and medium enterprises. International journal of information management, 13, 439-448

Clarke, R., (2006), Issues in Technology-Based Consumer Transactions, http://www.anu.edu.au//Roger.Clarke/SOS/SCOCAP96.html

Pigneur (1996). Internet Commerce for Small Business, Industrial Management & Data Systems, 98, 311-321.