EFFECT OF DIGITAL MARKETING ON GROWTH OF SMALL SCALE ENTERPRISES IN LAGOS, NIGERIA
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EFFECT OF DIGITAL MARKETING ON GROWTH OF SMALL SCALE ENTERPRISES IN LAGOS, NIGERIA
ABSTRACT
The study investigated the effect of digital marketing on the growth of small and medium-sized businesses in Lagos state. The study succinctly investigated the impact of digital marketing on sales growth. 150 small and medium-sized firms (SMEs) were purposefully chosen in the Lagos Metropolitan Area.
The study used primary data by administering a questionnaire to respondents. The data were examined using descriptive statistical analysis and Pearson correlation analysis.
The study found a substantial positive correlation (r=0.772; p<0.05) between internet advertising and increased sales. Additionally, there is a substantial positive correlation (r=.896; p<0.05) between email marketing and increased sales.
There is a favourable and substantial association between Blog Marketing and Sales Improvement (r=0.772; p<0.05). Finally, there is a positive and significant correlation between Search Engine Marketing and sales improvement (r=.896; p<0.05).
The survey advises that every SME should use digital marketing to assure sales growth. This will help to keep costs to a low while also assuring the ongoing effectiveness of the business.
Chapter one
INTRODUCTION
1.1 Background of the Study
A firm, whether little or large, simple or complex, private or public, is established to offer competitive prices. Businesses in Nigeria are classified as small, medium, or large. A small-scale industry can be explained by project costs, capital, personnel count, sales volume, annual business turnover, and financial strength.
To define a small-scale industry, the federal and state ministries of Industry and Commerce use the value of installed fixed capital criterion. Fixed capital ranged from N60,000 in 1972 to N5,000,000 in 2003.
As a result, the small-scale industry may need to be classified into micro and super-micro businesses in order to provide enough incentives and protection for the former.
Meanwhile, any business or enterprise that has an annual revenue greater than that of a cottage industry, which is currently set at N5,000 per year, is classified as a small scale industry. The National Directorate of Employment (NDE) defines a small-scale industry as earning no more than N35,000.
Small and medium-sized companies (SMEs) are non-subsidiary, autonomous businesses that have fewer than a certain number of employees. This number varies per country. The most common maximum limit for classifying a SME is 250 employees, like in the European Union.
However, other countries set the maximum at 200 employees, but the United States defines SMEs as enterprises with fewer than 500 employees. Small businesses often have fewer than 50 employees,
whereas micro-enterprises have no more than 10, and in some circumstances as little as 5. Financial assets are sometimes used to characterise small and medium-sized enterprises.
In the European Union, a new definition went into effect on January 1, 2007, and it applies to all Community acts and financial programmes, as well as state aid, where SMEs might receive more national and regional aid than large firms.
The new definition increases the financial ceilings: the turnover of medium-sized enterprises (50-249 employees) should not exceed EUR 50 million; that of small enterprises (10-49 employees) should not exceed EUR 10 million; and that of micro firms (less than 10 employees) should not exceed EUR 2 million.
Alternatively, the financial sheets of medium, small, and micro firms should not exceed EUR 43 million, EUR 10 million, and EUR 2 million, respectively (OECD, 2007).
Modern Information and Communication Technology (ICT) has had a significant impact on marketing and other professions in recent years. Modern ICT has prompted a paradigm change from analogue or rudimentary modes of transaction to a system in which almost all marketing activities are carried out online.
Although digital marketing is frequently misinterpreted as E-commerce and E-business. Digital marketing entails getting closer to customers and better understanding them, adding value to products, expanding distribution channels, and increasing sales using digital media platforms, whereas e-commerce focuses on selling online or the capacity to transact online.
However, E-business refers to the process of using digital technology to enable organisations to know what their customers want and produce only those products, eliminating guesswork and avoiding waste of unsold stock, resulting in increased productivity, profit, and growth (Slywotzky & Morrison, 2008). It is also known as digital business.
According to Cunningham (2010), e-business through digital marketing serves as the glue that keeps employees, customers, and partners in touch and informed. It entails the use of self-service applications to provide relevant information to individuals who require it, resulting in great value in commercial transactions.
The internet’s development of transaction tools, which influenced a greater number of stages than traditional transaction systems, had a significant impact on the procurement and selling life cycles (Cunningham, 2010).
This demonstrates that both digital marketing and E-commerce are subgroups of E-business, implying that E-business is the canopy under which the duo hides.
Email marketing is one of the simplest, most efficient, and cost-effective strategies to expand any organisation. This is because it keeps customers and prospects coming back, resulting in increased product demand and feedback on previously purchased products.
As a result, the business owner or entrepreneur can make changes as they become necessary and better please their clients. You can develop solid relationships with clients
and prospects by sending them attractive, professional-looking emails on a frequent basis. Email is the most personal advertising medium of all digital marketing tools in history (Babalola & Babalola, 2013).
1.2 Statement of Problem
Small and Medium Enterprises (SMEs) in Nigeria have not performed admirably, and so have not played the crucial and lively role in Nigeria’s economic growth and development that was anticipated of them.
This situation has caused tremendous worry among the government, citizens, operators, practitioners, and organised private sector groups. Year after year, governments at the federal, state,
and even municipal levels have demonstrated interest and recognition of the critical significance of the SME sub-sector of the economy through budgetary allocations, policies, and pronouncements, and have thus implemented strategies to energise it.
Just as it has been of great concern to everyone to promote the welfare of SMEs, it has also been of great concern to everyone that the critical sub-sector has fallen short of expectations. The situation is more troubling and concerning when compared to what other emerging and industrialised countries have accomplished with their SMEs (Basil, 2011).
However, given the aforementioned issues plaguing Nigeria’s SME sub-sector, solid marketing skills are required. This is because the globe has become a global village. The rise of the Internet, particularly Web 2.0, and social networks is challenging the levels of power and influence held by brand image agents.
With the incredible power of message dissemination on the Web, customer opinions, recommendations, and complaints are becoming increasingly important in shaping company image.
As a result, brands are obviously bidirectional. Decisions are made based on more than just messages delivered by businesses to their customers, as technology makes it easier for individuals to communicate.
As a result, a transfer of power occurs between firms and their customers. Consumers rely heavily on recommendations from those who have used the product or service and shared their experiences on the internet when making purchasing decisions.
This phenomenon is gaining traction at an incredible rate, and for many buyers, sites like Tripadvisor and Ciao have already become vital pre-purchase resources. In this type of setting, effective management of the brand experience appears to be one of the most important criteria for brand success.
Only satisfied customers will provide us with positive recommendations in these virtual settings, which will favourably affect our consumers’ purchasing decisions when they consult these platforms.
Developing effective techniques for influence and communication on Web 2.0 and social networks is also a critical success factor in this competitive market. Unfortunately, many firms are still in denial and are failing to implement proactive Internet presence strategies.
Some allocate a portion of their communications budget to the Internet, but have no overall understanding of what the medium can give them or how an online presence must be linked with other brand messages. Too many businesses are still attempting to dominate public network debates about their brands, and too few are committing.
1.3 GOALS OF THE STUDY
The study’s major goal is to investigate digital marketing and growth in small and medium-sized businesses (SMEs) in the Lagos metropolitan area.
The study’s sub-objectives are:
Investigate the association between several types of digital marketing (email, search engine, online advertising, and blogs) and sales growth in SMEs in Lagos.
Investigate the impact of digital marketing deployment on the performance of small and medium-sized enterprises in Lagos.
RESEARCH QUESTIONS:
How does digital marketing affect the sales growth of SMEs in Nigeria?
What are the obstacles of digital marketing faced by SMEs in Lagos?
Research Hypothesis H1: There is no association between digital marketing and revenue growth.
1.6 Justification for the Study.
Small and medium-sized businesses play an important role in the Lagos State economy, as well as the Nigerian economy as a whole. SMEs add to the state’s GDP and act as a foundation for reducing unemployment rates by allowing individuals to be job owners and creators.
Several research undertaken in Nigeria and the Diaspora have examined the factors that influence sales progress in terms of performance. Rondon (2007) and Bitton (2011) found that the main variables studied were environmental factors, company size, pricing policy, competition, firm’s marketing strategy, field salesperson characteristics,
territory/location, and customer size. Furthermore, research conducted by Babalola and Babalola (2013), Njau and Karugu (2014), and Agwu and Murray (2014) investigated the impact of digital or electronic marketing adoption on SMEs’ overall performance.
In light of this, the study was prompted by a lack of empirical studies on the impact of digital marketing on sales growth in SMEs, particularly in the Lagos metropolis.
This study’s findings and policy recommendations are expected to benefit micro, small, and medium-sized enterprises, investors, business analysts, financial institutions, non-financial institutions, corporate stakeholders,
and government agencies such as the Ministry of Trade, Industry, Investment, and Commerce. It will also benefit future researchers who wish to conduct studies in this area.
1.7 Scope and Limitations of the Study
The study looked at digital marketing and SMEs’ growth, with a focus on the Lagos metropolitan. Control, time, and money constraints were all encountered while carrying out the investigation.
Control Limitation- The researcher was only able to conduct the study in the Lagos metropolis due to the project supervisor’s orders.
Time Limitation- Given other academic responsibilities, the researcher had only a limited amount of time to conduct this study.
Financial Limitation- Due to a lack of funds, the researcher was unable to sample SMEs across the metropolis.
Despite these indicated restrictions, a thorough, high-quality, fact-finding research was conducted.
1.8 Key Definition of Terms
Marketing is the communication between a person (salesperson) and his real or prospective consumers with the goal of selling a product or service to them.
Digital marketing is the use of electronic devices and tools to communicate with existing or prospective clients of a company in order to sell them a product or service.
Sales are the exchange of a commodity or money for the price of goods and services.
Sales Improvement: This refers to a considerable improvement in the company’s sales.
Small and Medium Scale Enterprise: An enterprise with fewer than 100 employees and an annual turnover of less than N1 million.
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