EFFECTS OF ADVERTISING ON THE SMALL AND MEDIUM ENTERPRISES
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EFFECTS OF ADVERTISING ON THE SMALL AND MEDIUM ENTERPRISES
1Introduction
This chapter will provide a brief overview of the full study. It will outline the research’s background and objectives.
1.1 Background Information.
Small and medium-sized firms (SMEs) are widely regarded as important drivers of economic growth in both developing and developed countries (Beck, Kunt, & Ross, 2003).
As a result, understanding the many types of contributions made by small firms at the local level, as well as their impact on overall economic growth, remains critical.
Kenya, a developing country, for example, still has a low statistical base of small firms, although there is some uncertainty over their proportional importance to the country’s economy.
SMEs in Kenya have been described as efficient and prolific job producers, as well as the seeds of large firms; their growth accelerates the fulfilment of broader economic and socioeconomic goals such as poverty eradication.
Despite the awareness of the potential roles that SMEs can play, there are a number of bottlenecks that limit their capacity to realise full potential. According to observations, there is a high turnover of firms in Kenya
with 60 out of every 100 new enterprises starting in a year closing within a year, and those that survive (40%) being more than two years old and 66% being less than six years old (Kenya 1998, 1999).
Lack of managerial skills, equipment and technology, regulatory concerns, access to international markets, unfair competition, and other factors all impede their development, but financial constraints are the most significant (Anheier and Seibel, 1987). The role of finance has been seen as important to the development of SMEs.
This issue originates from the initial funding, which is most likely generated from unreliable informal savings and loan groups, as well as larger financial barriers to efficient and effective marketing.
As this study will show, SMEs require marketing strategies to remain viable and develop in an ever-changing and competitive business climate. The question and relevance of advertising, as a form of promotion, will be examined further.
1.2 Statement Of the Problem
Advertising, as research shows, is an expensive endeavour for any SMEs. Whether it is internal or through external freelancing contracting agencies. Any SME’s advertising spend might be as low as 2% of its quarterly turnover (Steve McKee, 2010: Bloomberg Business Week).
The question that requires a solution is, how can these firms, particularly East African Packaging Industries (EAPI), overcome financial restraints and progress towards development?
This study aims to define and answer similar issues, as well as determine how much advertising, or lack thereof, affects the performance and survival of SMEs.
1.3 Research Questions.
I. How does advertising influence the growth and development of SMEs in Kenya?
II. Does advertising impact the growth of SMEs, including sales volume and market expansion?
III. What advertising strategy has EAPI implemented to promote its products, and how effective has it been?
1.4 Objectives Of The Study
The primary goal of this research is to investigate the impact of advertising on the growth and development of small and medium-sized businesses. The study will also look into the nature of advertising and the presumption that advertising and sales volume lead to enterprise growth, as well as the influence that advertising has on new SMEs entrants.
1.5 Limitations and scope of study
As the study demonstrates, determining the cause and effect of advertising on the development and expansion of an organisation is extremely challenging because it is not always possible to regulate the different aspects that are considered ‘contributors’ in an advertising environment.
In other words, an enterprise’s increased sales cannot be traced simply to a specific advertising campaign because other unrecognisable elements such as increasing income for the enterprise’s target customers and enhanced customer relations all have a contributing effect.
As a result, the study concentrated solely on the recognisable difficulties that were linked to advertising and had a demonstrable impact on the development or hindrance of SMEs’ development and growth. In retrospect, these were: budgetary limits and competition.
2East African Packaging Industries: A Brief Overview
East African Packaging Industries (EAPI) is a successful medium firm in Kenya, with an annual revenue of $28.1 million. It has and continues to be a market leader in the provision of innovative, high-quality packaging solutions, primarily for the tea, horticulture, and tobacco industries.
EAPI has made complete client satisfaction a core part of its corporate culture, which has led to the company becoming one of the largest corrugating industries in East Africa.
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