ASSESSING THE LEVERAGE EFFECT OF E-MARKETING ON PERFORMANCE OF SMEs

Abstract

This study examines the leverage effect of  E-marketing on performance of small and medium scale businesses (SMEs) in Nigeria. The main objective is to investigate how the adoption of internet marketing enhances SMEs in Nigeria. The study is a survey approach with sample of 180 respondents (employees & customers) drawn from four generation banks in the country, representing 65 percent of the total population (280). The data was analyzed using Descriptive Statistics and Chi-square to test the formulated hypotheses which revealed that the adoption of internet marketing has significantly enhanced customers’ banking services in Nigeria, particularly in the areas of improved patronage, on-time (effective) service delivery and reduced marketing costs. The study also found that internet marketing has created exciting new and cheaper ways to learn about and track customers, create products and services tailored to meet customer needs, distribute products more efficiently and communicate with potential customers effectively. Some recommendations were made; among the major recommendations is the need for all the barriers to effective internet marketing adoption such as poor connectivity, inadequate computers and ICT infrastructure, as well as cyber-crimes which constituted serious bottleneck to the overall success of banking operations in Nigeria should be addressed by managers and all stakeholders in the business sector.

CHAPTER ONE

INTRODUCTION

• Background To The Study

The rapid changes in the cyber world, information resources available through computer networks and the internet, is causing changes in traditional marketing and among consumers (Schware, 2005). Given advancing technology, shifts in consumer consumption patterns and lifestyle, the platforms for communications are apparently becoming more complex. Hence, today’s markets illustrate advertising to be radically different from that of past years, where new means and ways coupled with innovative ideas have not only transformed traditional media advertising, but have also transcended to the new media, to gain better reach of the audience. Today, the global advertising foray is evolving from the traditional communications of advertisements to digitally led content advertisements. The industry is seeing new growth that extends beyond traditional revenue streams. This is in regards to the inclusion of the online medium of the Internet or new media, which is taking content to mass audiences using digital media communications channels and devices (Sekaran and Bougie, 2010).

With the recent emergence of Nigeria as the largest economy in Africa, the need for customer convenient marketing and service delivery in the banking sector has become more imperative. Studies have shown that Nigeria has the second largest financial services sector in Sub-Saharan Africa, after South Africa and it is fast growing and expanding internationally (Becker et al., 2008). Electronic transactions (e-transactions has changed the face of business in recent times by bridging geographical, industrial and regulatory gaps as well as creating innovative products and services and more market opportunities for both banks and customers (Liao and Cheung, 2002; Khan and Karim, 2010). Therefore, banks have employed internet marketing to exploit such opportunities and provide services to their customers at their finger tips

The rapid technological diffusion makes the internet the best way to provide customers with banking services regardless of the limits of time and geography. And that's what makes banks consider the internet as an important part of their strategic plans. Internet technology has changed the design and the way of delivering the financial services and as a result the banking industry has made continuous innovations – especially in the field of communications and information technology – that ultimately led to the emergence of the idea of what is known as the “online market”. SMEs services through the internet is a way to keep the existing customers and attract others to the business (Pikkarainen et al., 2004).

As a result of its perceived benefits, internet marketing or electronic transactions has attracted a lot of scholarly attention. Hitherto, studies have focused on e-transaction- Benefits and Challenges in an Emerging Economy (Jayshree Chavan, 2013); E-Marketing – A literature Review from a Small Businesses perspective (Hatem El-Gohary, 2010); e-transaction And SMEs Performance In Nigeria (Abaenewe, et al 2013); E-transaction in Developing Economy: Empirical Evidence from Nigeria (Elisha Menson, 2010);

1.2   Statement Of Problem

Marketing is about identifying and meeting human needs profitably (Kotler and Keller, 2004). Making the right decision about change is not always easy, good marketing is no accident, but a result of careful planning and execution (Kotter and Keller, 2004). The influx of new SMEs in the later eighties and nineties, commonly referred to as the new generation business, tilted the business of marketing to focus more on customer expansion. To effectively achieve this, most of these new generational SMEs created opportunities more for the female marketer as the core customer ratio was male dominated (Olabayo, 2007).

The marketing department was officially carved out in the late nineties as against the old system that dwelt on paper documentation and manual recording. The days when customer’s transactions were manually manipulated to reflect deposits and withdrawals, and balances, all, stored in a file attached to the name and address of the customer (Obut, 2001). Compared to the early years where willing customers walk into business premises to transact their business, marketers and marketing were designed to seek out the customers. This change in pattern soon differentiated business into old and new generation, where the new generation were carefully involved in identifying and meeting prospective customers need (Okeke, 2006). The profit margin in these new generation SMEs led to the opening of more business outlet and branches, creating healthy competition that revolutionized the industry in the nineties (Amodu, 2003). Can this revolution and spread in SMEs activities be responsible, for the later need of electronic means of executing transactions’? At what stage was it applied to marketing and what was the leveraging effect on the performance of SMEs then? How did the old generation firms respond?

Electronic marketing involves using information and communications technology to reach diverse customers, even in their comfort and distant zones (Echejile, 2008). Experiences from developed countries have shown greater customer care and comfort and confidence in the use of information and communication technology in SMEs’ operations. With more efficient technology, marketers have simply grown their lists of satisfied customers at limited costs, since it easily affords them the opportunity to reach global customers.

Marketing prospective customers made easier through the application of information and communication technology means reaching far and distant customers in no time, opening of business relationships without requiring physical presence and making services available to customers via the internet Nduka, 2006). Banks in developed countries have broken territorial barriers reaching and harnessing business opportunities in third and developing countries, at the expense of the local banks operating in those economies. The question is, have the Nigerian old and new generation firms taken full advantage of these begging opportunities and projected to the rest of the World? What are those factors militating against local Nigerian SMEs and depriving them from taking absolute advantage of e-marketing? What inherent opportunities are hiding behind these challenges and how can they be unwrapped to the benefit of the Nigerian society? Can we assess the performance of old and new generation banks on the basis of the Leveraging effects of electronic marketing in the South Eastern Nigeria?

1.3   OBJECTIVES OF THE STUDY

The main objective of this study is to assess the leveraging effect of electronic marketing on the performance of SMEs in South East Nigeria. The specific objectives are to:

1. Determine the extent to which old and new generation firms leverage an electronic marketing in their various business operations.
2. Compare the influence of electronic marketing between the old generation and new generation firms in Nigeria, using the South East region as a reference point.
3. Identify the challenges which both new generation and the old generation firms face with cognizance to the use of electronic means in banks’ marketing designs.
4. Decipher how a SMEs in a competitive business environment applies electronic marketing tools and strategies in the performance of their selling duties.
5. Make adequate suggestions cum recommendations towards the improvement of information and communication technology usage both in the old and new generation firms’ marketing activities.

1.4   RESEARCH QUESTIONS

The beauty of electronic marketing in a welt developed business sector is limitless, especially the flexibility which it permits in sub-sectors like the banking system (Uzoechi, 2006). The full utilization of the internet for advertisement and the hosting of websites, where every information concerning the SMEs can be surfed with contact telephone numbers and business addresses, is made possible.

Electronic software for capturing customers’ data means that business people on the go can access SMEs services irrespective of the place, time or (imitations. Mobile transfer of money, deposits and withdrawals alerts on mobile handsets, faxing of account opening documents without location challenges, automatic teller machines and cards, point of sale services, and many other daily developments, have made electronic infusion into marketing a wonder to behold (Osiagwu, 201 1). The interest of this researcher however, is to assess how effectively and efficiently the old and new generation banks in Nigeria have fared with respect to leveraging on electronic means of marketing. It has therefore become pertinent to x-ray the following research questions:

1. To what extent has information and communication technology contributed to the development of SMEs marketing in Nigeria?
2. How well have the Nigerian SMEs marketer tapped into the opportunities that electronic marketing provides and what is the impact on the banking public?
3. What are the impediments encountered in attempting to market electronically In South-East Nigeria?
4. Are there inherent benefits in electronic marketing that has not been fully harnessed in the Nigerian SMEs sub-sector?
5. What possible steps should be taken in other to improve electronic marketing in SMEs?
6. Who should do what to ensure uninterrupted provision of SMEs services to the common Nigerian businessman in the South-East?

1.5   RESEARCH HYPOTHESIS

For the purpose of this study, the for (lowing hypotheses have been put forward and wilt be tested in line with the relationship between the old generation and new generation leveraging effects of electronic marketing usage.

1. Ho: The benefits of e-marketing have been fully tapped in the Nigerian business environment.

Hi:    The benefits of e-marketing have not been fully tapped in the Nigerian  business environment.

2. Ho: Electronic marketing is better implemented in new generation firms than the old generation firms in Nigeria

Hi: Electronic marketing is not better implemented in new generation firms than the old generation firms in Nigeria

3. Ho: The application of electronic marketing method in SMEs is highly affected by the attitude and training of ‘firms marketing officers

Hi:   The application of electronic marketing method in SMEs is not highly affected by the attitude and training of firms’ marketing officers

1.6   SIGNIFICANCE OF STUDY

The level of graduate unemployment in the Nigerian economy has continued on the rise and all efforts to mitigate it and its harsh effect on the citizenry has resisted possible near solutions. Prior to the coming of Professor Chukwuma Soludo to Central Bank of Nigeria (CBN) the over eighty banks that were in existence then virtually had very insignificant impact in the day to day life of the ordinary Nigerian. the consolidation of the banks into twenty-five banking groups opened the economy to lots of graduate employment opportunities creation, stability in the banking operations and the opening of branches closer to business concerns.

E-marketing could hold the key behind the door of many more employment opportunities in Nigeria and Africa at large. The technological revolution that is currently sweeping across China, and the beehive of activities being witnessed in the Arab Emirates are all attributed to information and communication technologies properly grafted in the financial sectors. The ingenuity of the Nigerian youth which were expressed negatively can be harnessed into profitable e-businesses. The banking sub-sector is so vital to the development of every economy and all efforts geared towards its stability and development will be reverberated into the overall well being of the Nigeria citizenry.

Furthermore, the globalization that turned the entire world into a single reachable market has got its basis in electronic banking, e-commerce, e-petroleum, e-gold, e-business, e-library, e-communication, and e-marketing are all indication of the e-human. Every effort directed towards empowering Nigerian  incognizance to re-positioning effectively to harness the opportunities which the e-industry provides must be adequately received. The power of e-marketing is that it gives the marketer greater advantage within shortest possible costs to increase and manage more customers in the network. Put succinctly, the e-marketer has more opportunities to reach more customers without spending corresponding amount of resources. Empowering more Nigerians financially could be very vital towards reducing unemployment, poverty, hunger, strife robbery, kidnapping and even terrorism. More financially empowered Nigerians can truncate and reverse the constant primary exports in favour of secondary goods and service exports. This alone would impact highly on the economic life of the ordinary Nigerian man or woman, improving the welfare level in the country Gross Domestic Product (GDP) and the perception of Nigerians by the rest comity of nations.

It is the belief of the researcher that the findings of this work to a large extent will, be useful to stakeholders in marketing in Nigeria and other players within the Nigerian economy both in policy construction and strategy implementation sections. It is also the researcher’s utmost belief that this work will be an eye-opener to business enterprises that are yet to embrace and reap from the opportunities which e-marketing provides. It is hoped also that the work will provide enough insight to counter some of the misconception connected to the subject matter, and so provide a leeway for professionals to embrace.

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