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Research Article | Volume 3 Issue 2 (July-Dec, 2022) | Pages 1 - 5
Adoption and Use of Digital Marketing Channels on the Performance of Small and Medium-sized Enterprises in Delta State
 ,
1
Associate Professor of Business Administration, Delta State University, Abraka-Nigeria
2
Msc Student in Department of Business Administration, Delta State University, Abraka-Nigeria
Under a Creative Commons license
Open Access
Received
Jan. 3, 2022
Revised
Jan. 9, 2022
Accepted
Jan. 19, 2022
Published
Jan. 27, 2022
Abstract

The adoption and use of digital marketing channels (DMC), as well as their impact on the performance of small and medium-sized businesses in Delta State, were investigated in this study. The study uses the correlational and descriptive survey research design to achieve unbiased results. Data used for the analysis were extracted from 180 respondents consisting of small and medium-sized enterprise (SMEs) managers from Marketing departments, Operations departments, and Finance departments in Warri and Ughelli Environs filling out a self-structured questionnaire. Simple percentage, frequency count and mean statistics were used to examine the data collected from respondents on the research questions, while the Pearson Product Moment Correlation Coefficient was used to test the study's hypotheses. The study's findings revealed that SMEs use a variety of DMC for their marketing operations, which have a profound positive impact on SMEs' performance. However, the study established that the adoption of DMC by SMEs does not correlate with their performance. The study recommends that SMEDAN and other associated organizations should strengthen awareness programs on the adoption of digital marketing channels in order to educate SMEs owners and staff about these tools, particularly those that are still underutilized.

Keywords
INTRODUCTION

The internet, together with its countless tools, ignited positive vibrations in the business processes of businesses worldwide, regardless of size. Digital marketing devices, such as mobile digital applications and marketing platforms, are examples of these tools, which have created the immense potential for businesses to promote and progress their business operations. This noticeable influence can be seen both locally and internationally among SMEs. Digital marketing is a new way of thinking about marketing, not just traditional marketing with a digital twist [1,2].

 

Digital marketing, as described by Kotler and Armstrong [3], is a type of direct marketing that uses interactive technology such as emails, websites, online forums and newsgroups, interactive television, mobile communications, and so on to connect consumers with sellers electronically. Using phones and other gadgets promotes many-to-many conversations and modifies prospective and actual customers' communication [4,5]. These gadgets aid businesses, large and small, to advertise their products on the internet and contact potential clients at any time and from any location [6,7].

 

Multiple digital marketing channels help to facilitate digital marketing. These channels are Internet-based systems for creating, accelerating, and transmitting product value from a producer to a consumer terminal via digital networks [8,9]. E-mail marketing, pay-per-click advertising (PPC), display advertising, search engine optimization (SEO), social media marketing, in-game advertising, online public relations, and sponsored content are all examples of digital marketing channels. Most businesses have learned that digital marketing and its channels enable quick, far-reaching, and cost-effective processes and procedures. However, a number of data imply that a company's size may impact digital channel applicability, with SMEs being at the bottom of the adoption cycle [10]. Large businesses, on the other hand, are more likely to have the resources and capacity to successfully leverage existing digital channels and resources [11].

 

The importance of SMEs in developed and developing economies worldwide cannot be overstated. SMEs, as indicated by the Energy Sector Management Assistance Program (ESMAP2014), are the driving force behind long-term economic growth, job creation, and GDP gains. In terms of employment, income, innovation, and the development of local markets and supply chains play a critical role in any economy. According to Forkuoh and Li [12], SMEs generate local products and services for local needs using local resources through a combination of invention and improvisation. Because of their local activity radius, their impact on the impoverished in the community is larger through employment, procurement, and sales [13,14]. Small enterprises frequently succeed in transitioning informal activities into formal ones, so directly contributing to the market's economic health. Kwabla [15] reiterated that SMEs play a critical role in the economic development of many developing nations due to this understanding.

 

Despite that the large and big firms are gaining significant benefits from the adoption and use of DMC to reach out to a larger market and raise awareness of their products and services, only a few local SMEs are aware of these available channels [16,17]. This study, therefore, focuses on the adoption and use of DMC and its impacts on the performance of SMEs to reach out to a larger market and raise awareness of their products and services in Delta State were investigated in this study.

 

From the above empirical review, the study is hypothesized as follows:

 

  • There is no significant positive relationship between the adoption of DMC and SMEs performance.

  • There is no significant positive relationship between the extent of usage of DMC by SMEs and their performance.

LITERATURE REVIEW

Conceptual Framework

Digital Marketing and Its Channels: Various authors have used the terms 'digital marketing,' 'internet marketing,' 'electronic marketing,' 'online marketing,' and 'web marketing' interchangeably. Yasmin et al. [18] provide a compelling description of digital marketing: "Digital marketing is a sort of marketing that is commonly utilized for advertising products and or services and to reach consumers through digital channels" [18]. They noted that digital marketing extends beyond internet marketing to encompass outlets that do not require internet usage, such as mobile phones (both SMS and MMS).

 

Digital marketing, is the process of achieving marketing objectives through the use of digital technology and media [19]. According to Chaffey, digital marketing efforts include company websites, social media company pages, and online communication methods and platforms. E-mail marketing, pay-per-click advertising (PPC), display advertising, search engine optimization (SEO), social media marketing, in-game advertising, online public relations, and sponsored content are all examples of DMC. Wireless text messaging, mobile apps, podcasts, electronic billboards, digital television and radio channels, and so on are all examples of DMC [20]. Digital marketing has its traits and dynamics, according to Taiminen and Karjaluoto [21], which must be understood in order to select efficient marketing approaches and strategies. They said that digital marketing channels can be defined in various ways. One approach is to portray them from the perspective of who controls the communications (the firm or the target audience) and whether the communications are one-way or two-way.

 

SMEs Performance Indicators

As Cicea et al. [22] point out, evaluating the success of small and medium-sized firms in an economy comes from various vital perspectives. First, SMEs have a significant impact on an economy's gross domestic product and unemployment rate [23,24]; second, SMEs have the ability to adapt to the challenges of a rapidly changing environment (The Economist Intelligence Unit); and third, SMEs represent the framework of free entrepreneurial initiative and entrepreneurship, which are critical elements in defining a competitive economy (The Economist Intelligence Unit) [25].

 

The performance of SMEs can be measured using quantitative and qualitative approaches [22] and a balanced scorecard (BSC) [13,26-28]. Efficiency, financial results, the volume of production, number of clients [13,29] market share, profitability, productivity, revenue dynamics, costs and liquidity [30,31] and so on are all quantitative components of SMEs' performance. Goals achievement, leadership style, employee behavior [29], customer happiness [32], product and process innovation, organizational and marketing innovation [33], and so on are examples of qualitative perspectives. As a result, this research will focus on the qualitative components of SME success.

 

BSC, as a measurement performance tool, translates the company's goals or visions of SMEs to financial reward using an appropriate strategy. Thus, the BSC uses any or combination of financial, internal business processes, customers, and learning & growth to achieve SMEs performance.

 

Empirical Review 

Several studies have been conducted worldwide to determine the link between digital marketing tools (DMT) and the success of micro, small, and medium-sized firms. For example, Lee et al. [34] investigated the effects of information technology (IT) adoption on business processes and customer performance in 689 South Korean small businesses. Individual IT, including traditional and electronic communication techniques, considerably improved the internal process performance of small businesses, according to the findings. Later, in a poll, Erdogmus and Cicek [35] looked at brand loyalty among businesses in relation to the use of DMT. Their results revealed that digital marketing positively impacted customer loyalty to a brand.

 

Furthermore, according to Jagongo and Kinyua [36], the path to increased revenue was discovered through improved communications provided by the use of digital marketing platforms. In a different survey, Kithinji [37] looked into the impact of internet marketing on the performance of SMEs, and discovered that many small businesses are concerned about losing existing customers if social media marketing is used. Nonetheless, the SMEs recorded improved market share, expansion, and profitability following the use of social media strategies. On the contrary, Taiminen and Karjaluoto [21] found a negative effect of digital marketing on business returns.

 

Deraz [38] used small and medium-sized retailing and manufacturing enterprises in Sweden to investigate the impact of digital marketing (digitalization) on SMEs' performance. The study used a mixed methods technique, including qualitative case studies and a survey method. Ten accessible Swedish SMEs – merchants and manufacturers – were chosen as responses. Questionnaires were utilized to collect primary data, while documentary footage was used to obtain secondary data (minutes, annual reports etc.). SPSS was used to examine the data collected. T-test, regression analysis, and ANOVA test. The results of the study showed that the adoption of DMT and techniques positively impacts both the quantitative and qualitative performances of small businesses in Sweden. 

 

Is-haq [39] investigated the impact of DMA on the sales of small and medium-sized businesses, in the selected SMEs sector, in Nigeria. The data were analyzed using descriptive and inferential statistics. The study's findings reveal that using digital marketing methods like e-mails, search engine optimization, pay per click, and online advertising to increase SMEs' sales would be very beneficial. However, the findings suggest that in order for SMEs to maintain increased sales in the sector, they must use more than one digital tool as part of their marketing strategies. 

 

Nuseir and Aljumah [40] evaluated the impact of digital marketing on business performance in the United Arab Emirates small and medium firm sector (UAE). Marketing and IT managers from SMEs were interviewed for the study. The data was analyzed using SMART-PLS using measurement and structural equation modeling, and it was based on the findings of a study on how digital marketing affects business performance. The study discovered that digital marketing efforts performed by apps have a beneficial impact on the performance of UAE SMEs, and that using cutting-edge technology allows businesses to reach out to clients remotely. 

 

Theoretical Framework

Several ideas are associated with the study of digital marketing for business improvement on a theoretical level. The theory of social networks, the theory of technology adoption, the theory of reasoned action, and the diffusion of innovations theory are all significant theories in this study (DOI). Firms and businesses often base their adoption of new technologies (including digital marketing) on Rogers' theoretical basis [41]. The Technology Acceptance Model (TAM) is frequently used to assess technology uptake in various businesses. 

 

Nevertheless, the Diffusion of Innovations Theory (DOI) is used as the theoretical foundation for this research. This theory investigates a wide range of innovations by introducing four aspects (time, communication channels, invention, and social system) that influence the dissemination of new ideas. DOI has been utilized at both the organizational and individual levels and provides a theoretical framework for discussing adoption at both the global and local levels. The DOI model combines three essential elements: adopter characteristics, innovation characteristics, and the innovation-decision process. Five steps in the innovation-decision step, including confirmation, knowledge, implementation, decision, and persuasion, took place over time through a succession of communication channels among members of a comparable social system.

 

Five primary constructions have been identified as effective elements of any innovation acceptance in terms of qualities of an innovation step: relative advantage, compatibility, complexity, trialability, and observability. Five groups of early adopters, innovators, laggards, late majority, and the early majority were identified in the adopter characteristics stage [42]. In conclusion, this study adopts DOI, since it focuses more on system characteristics, organizational traits, and environmental factors than other adoption models.

MATERIALS AND METHODS

The researchers use the Correlational and descriptive survey research design in this study to explain the link between the independent variables and the dependent variable highlighted in the investigation [43-46]. The population of this study includes all SMEs in the Warri and Ughelli environs. A population frame of 200 SMEs in this region was used to create the target population. The study's unit of observation is the SMEs managers, who focus on the adoption and use of digital marketing firms and their impact on SMEs' performance. The researchers selected each manager from the marketing departments, operations departments, and finance departments of the selected SMEs, resulting to a total of 600.

 

A sample size of 30% was obtained from the target population of 600, resulting in a respondent base of 180 managers from the selected SMEs' marketing, operations, and finance departments. This decision is supported by Mugenda and Mugenda [47], who states that for small populations, a representative sample of at least 30 respondents is required, but for larger populations, a representative sample depends on the mode of selection, with Gay et al. [48] stating that a sample of 10 to 30% is considered representative.

RESULTS AND DISCUSSION

The Pearson Product Moment Correlation Coefficient, r (PPMCC), on the other hand, was used to assess the study's hypotheses since it can help determine the extent to which one independent variable is associated with a dependent one [13,49]. For evaluating the hypotheses, the alpha threshold of significance was fixed at 0.05.

 

Table 1 reveals the correlation between the adoption of digital marketing channels and the performance of SMEs in Delta State. The result shows that the correlation coefficient (r), 0.12, at a significant level (α) of 0.882, greater than the threshold of alpha level at 0.05. Therefore, the null hypothesis that there is no significant positive relationship between the adoption of digital marketing channels and SMEs performance are accepted. It implies that an increase or decrease in the adoption of digital marketing channels by SMEs may not lead to a corresponding increase in their performance.

 

Table 1: Relationship between Adoption of Digital Marketing Channels and SMEs Performance 

ParametersAdoption of Digital Marketing ChannelsSMEs Performance
Adoption of Digital Marketing Channels Pearson Correlation10.012
Sig. (2-tailed)-0.882
N146146
SMEs PerformancePearson Correlation0.0121
Sig. (2-tailed)0.882-
N146146
*. Correlation is significant at the 0.05 level (2-tailed).

 

Table 2: Relationship between Usage of Digital Marketing Channels and SMEs Performance 

ParametersUsage of Digital Marketing ChannelsSMEs Performance
Usage of Digital Marketing Channels Pearson Correlation10.963**
Sig. (2-tailed)-0.000
N146146
SMEs PerformancePearson Correlation0.963**1
Sig. (2-tailed)0.000-
N146146
*. Correlation is significant at the 0.05 level (2-tailed).

 

The findings of this study revealed that there is no substantial beneficial association between SMEs' performance and their use of digital marketing platforms. This study contrasts with Is-haq [39], who discovered that SMEs' adoption of digital marketing tools would greatly increase their performance, particularly in sales. However, Is-haq's findings suggested that for SMEs to maintain increased sales, they must use more than one digital marketing tool as part of their marketing strategies [39].

 

Table 2 reveals the correlation between the usage of digital marketing channels and SMEs performance in Delta State. The result shows that the correlation coefficient (r) is 0.963 at a significant level (α) of 0.000. Therefore, the null hypothesis stating that there is no significant positive relationship between the extent of usage of digital marketing channels by SMEs and their performance is rejected. This implies that an increase or decrease in the usage of digital marketing channels by SMEs may lead to a corresponding increase in their performance.

 

According to the findings of this study, there is a significant positive association between the extent to which SMEs use digital marketing channels and their performance. This finding is consistent with that of Jagongo and Kinyua [36], who observed that improved communications enabled by using digital marketing platforms were the gateway to increased income among small company firms.

CONCLUSION

From this study's findings, SMEs use various digital marketing platforms for their marketing activities, the most popular of which is social media marketing. It is also stated that SMEs use these channels for marketing purposes, with social media platforms being used far greater than the others, and that digital marketing channels significantly impact SMEs' performance. Despite this, SMEs' adoption of digital marketing channels does not correlate with their performance, even though an increase or reduction in their use of these marketing channels may lead to a proportional rise or drop in their performance.

 

Recommendations

In light of the study's findings, the researcher suggests the following:

 

  • SMEDAN and other associated organizations should strengthen awareness programs on digital marketing channel adoption to educate SMEs owners and staff about these tools, particularly those still underutilized.

  •  SMEs' management should pay attention to their staff's problems when using digital marketing channels for business operations and propose solutions to decrease or eliminate them.
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