The effect of E-marketing on the marketing performance of

Small Business Enterprise:

Abstract:-

Small Business Enterprises (SBE's) play a major role in the world economy, and

their contribution to economic and employment growth is widely recognized. Based on

the SBE role as an economic engine to drive global development, this research seeks to

understand the practices and activities of these enterprises in terms of electronic

marketing (Achieving marketing objectives and functions through the use of electronic

communication technology), marketing performance and the effectiveness of industrial

and trade SBE’s. In order to do this a comparative study is made between SBE’s in Egypt

(developing) and the UK (developed).

The main aim of this work is to identify links between the conceptual framework

and empirical analysis in this field because they appear to be highly integrated, and if

reviewed separately may present distorted results.

A triangulation approach will be used in which quantitative and qualitative data

will be collected through structured mailed questionnaires and semi-structured

interviews to address different levels of investigation, test the hypotheses and address the

central research questions.

Key words: E-Marketing, Small Business Enterprises, Marketing performance,

Egypt, UK.

1. Introduction:-

Small Business Enterprises (SBE's) do play a major role in the world economy,

and they are recognized as one of the main contributors to economic, development and

employment growth. According to Mulhern (1995) 99% of all European companies are

small and medium sized (SME) and from 1985-1995 it provided 66% of the employment

in Europe. That is also true in Less Developing Countries (LDC‟s) since small businesses

do represent a high percentage of the total number of enterprises.

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 On the other hand, the revolution in information technology (IT) and

communications changed the way people conduct business today. In recent years,

increasing numbers of businesses have been using the Internet and other electronic media

in their marketing efforts, giving the chance for Electronic marketing (as a new marketing

phenomenon and philosophy) to grow in a very dramatic and dynamic way.

From the researcher point of view, implementing E-marketing by small business

enterprise can change the shape and nature of SBE‟s business all over the world. Because

the rapid proliferation of the Internet, the World Wide Web (WWW) and electronic

communication has created a fast growing new electronic channels for marketing. For

that, the internet and other electronic media are playing now a very important role in

conducting marketing activities due to its unique characteristics as a market and as a

medium.

Depending on that the researcher is seeking to add to the body of knowledge by

investigating and understanding the practices and activities of small business enterprises

through conducting a research about the effect of implementing E-marketing on

marketing performance of industrial and trade SBE's, it is a comparative study between

the Egyptian and British SBE‟s to gain a better understanding of the SBE‟s role in

developing countries since they are less well represented in the literature.

1.1 Background:-

1.1.1 Small Business Enterprises:-

Despite of the powerful position held by small businesses, defining it has always

been difficult and there is a little agreement on what defines a small business because the

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term covers a variety of firms. As a result small businesses have been defined in a

perplexing number of different ways in different parts of the world according to national

and local needs (Theng and Boon 1996; Watson and Everrett 1996). Table 1 summarizes

the official or most common definitions of SBE's used in some countries around the

world.

Table 1: Criteria of defining SBE‟s adapted by some countries

Country No. of employees Other criteria

USA Under 100 Less than $ 5 million annual sales

European Under 50 Annual turnover or global balance less than 10 million

Union euros

Independence

Australia Under 20 None

Canada Under 500 in mfg Less than $ 5 million annual sales

and 50 in services

India None Total investment(not exceeding 10 million Indian

Rupees in industrial enterprises and 1 million in

service enterprises)

Mexico Under 50 None

Thailand Under 200 in None

labour intensive

Turkey 10 to 49 None

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Source: El-Gohary (2006)

From table 1 it is noticed that the number of employees is the most often used

element in determining the category of SBE's in most countries. Furthermore,. It also

noticed that there is a lack of agreement on what defines a small business, for that a

standard definition for Small Business Enterprises is needed. Accordingly and due to the

absence of an Egyptian official definition for SBE‟s, the researcher will depend on the

following definition for SBE‟s for the purpose of conducting the research study: “a small

business enterprise is that enterprise that employs from ten to forty-nine employees”.

1.1.2 E-Marketing:-

Electronic marketing (E-marketing) can be viewed as a new modern business

practice associated with buying and selling goods, services, information and ideas via the

Internet and other electronic means. A review of relevant literature revealed that

definitions of electronic marketing vary according to each author's point of view,

background and specialization. While Smith and Chaffey (2005) defines it as: “Achieving

marketing objectives through applying digital technologies”, Strauss and Frost (2001)

define it as: “The use of electronic data and applications for planning and executing the

conception, distribution and pricing of ideas, goods and services to create exchanges that

satisfy individual and organizational objectives”.

The researcher will depend on Strauss and Frost definition in conducting the

current research because: it takes into consideration all the element of E-marketing, all

types of products, it illustrate the main objective of E-marking which is creating the

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exchanges that satisfy individual and organizational needs. Moreover it is the official

definition for E-marketing adopted by the E-Marketing Association.

1.1.3 Marketing performance:-

Given the fact that a firm survival depends on its capacity to create value, and

value is defined by customers (Day, 1990), marketing makes a fundamental contribution

to long-term business success. But despite of the importance of measuring business

performance there is a little research on the measures used to evaluate marketing

performance and effectiveness. On the other hand, when looking to the marketing

performance and success measures it is noticed that there are many measures. Recently,

in an attempt to organize performance measures Kokkinaki and Ambler (1999) have

summarized it and established six categories for marketing performance and success

measures which are: Financial measures / Competitive market measures / Consumer

behaviour measures / Consumer intermediate measures / Direct costumer measures /

Innovativeness measures.

1.1.3.1 E-Marketing Performance Measures:-

Standardised measures for E-marketing performance are both needed and

necessary. The discussion of most of the researchers has centred on the following

measures (beside the traditional marketing performance measures): Traffic/ Visit duration

/ Conversion rate (visit to purchase) / Catalogue size / Sales value / Number of

transactions / Number of users (as measured by the number of registered user accounts).

In conducting the proposed research the researcher will depend on both traditional

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marketing and E-marketing performance measures. Namely: Financial measures /

Competitive market measures / Consumer behaviour measures /E-marketing measures

(such as: Conversion rate / Traffic / Visit duration / Number of transactions / Number of

users).

2. The Literature Review:-

The researcher had identified a wide range of the literature review (in its wider

broad sense which include: Journals, Academic Books, theses and dissertations, short

articles, E-databases, conference papers,…). The literature time period starts from 1990

to presence. The research studies investigated and covered a wide rang of E-marketing

areas, such as: Internet-marketing / E-mail marketing / Intranet marketing / SMS

marketing / Extranet marketing. On the other hand, it is noticed that the literature in

Internet-marketing (IM) covers five main areas which are: Internet marketing (IM)

environment, IM functions, IM applications and IM research. Regarding the literature of

E-marketing in SBE‟s, it was found that it covers the following areas illustrated in figure

1.

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 The concept of The use of
SBE’s
E-Bay and E-Marketing in internet by
Competencies
SBE’s SBE’s SBE’s

E-Business
adoption by The literature of e- Virtual
SBE’s marketing in SBE’s Market

The internet as a distribution B2B in Export

channel for SBE’s SBE’s performance

Figure 1: The literature of e-marketing in SBE‟s

Source: El-Gohary (2006).

2.1 The research Gap:-

By reviewing this literature it‟s noticed that:-

- Almost all of the researches on E-marketing in SBE‟s had been conducted in

Europe (UK, Northern Ireland, the Republic of Ireland, Austria and Switzerland),

Australia and New Zealand. Only 2 studies were conducted in developing

countries.

- The literature was concentrated on some research areas, and (up to the knowledge

of the researcher) there is no single research on the SBE‟s E- Marketing

Performance or in SBE‟s marketing in Egypt.

Obviously this is a major gap in the contemporary research on SBE‟s E-Marketing

Therefore a contribution to the literature is needed.

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3. Research Problem:-

As a conclusion of the literature survey, the fundamental problem motivating this

research study is the urgent need to understand the relationship between using E-

marketing by the Egyptian and British small business enterprises and the marketing

performance of these enterprises. As well as the effect that E-marketing has on marketing

activities for small business enterprises. The study attempts to have full-scale research

that is statistically significant that could answer the following main question: what are the

relationship between using E-marketing and the marketing performance of the Egyptian

and British small business enterprises.

4. Research Objectives:-

The main objectives of this research is to: develop a theoretical model to

understand and interpret the use of the E-marketing by small business enterprises in the

UK and Egypt, explore and analyze the level and form of e-marketing used by the

Egyptian and British SBE‟s and its contribution to marketing performance as measured

by financial and operational performance measures.

To achieve these objectives a series of hypotheses have been constructed to be

tested during the research process.

5. Research Hypotheses:

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 In the light of the previous discussion and the literature review, the following

hypotheses have been constructed. Both the conceptual framework and empirical study

are linked to test these hypotheses:-

Hypothesis (1): The level of e-marketing used by SBE’s is significantly related to the

firm’s marketing performance.

Hypothesis (2): The form of e-marketing used by SBE’s is not significantly related to the

firm’s marketing performance.

Hypotheses (3): Implementing E-marketing by the SBE’s is dependent on the SBE

internal related factors.

6. Contribution To The Current Knowledge:-

“We make a living by what we get, but we make a life by what we give”

Sir Winston Churchill

The primary benefit of this study is as a contribution to knowledge in the areas of

small business enterprises and E-marketing. The research will contributes to the limited

number of empirical researches on marketing goods, services, ideas and information

depending on the Internet and other electronic marketing means. Moreover, it contributes

to the limited number of empirical evidences to explore the effect of E-marketing on the

marketing performance of small business enterprises. Many researchers (Sheth, J. N.,

Sharma, A., 2005; Sandeep K., Singh, N., 2005; Adam, S., et al., 2002; Teo, T., Tan, J.

S., 2002; Darby, R., Jones, J., Al Madani, G., 2003 and Goldsmith, R., Lafferty, B., 2002)

had suggested the need for such kind of research. Those authors agree that a serious

10
marketing practitioners and academic researchers are now aware that more systematic

research is required to reveal the true nature of E-marketing.

7. Research Process:-

The research process will be conducted through five basic stages (as illustrated in

Figure2) these stages are: Identification of the research problem and objectives, The

development of the research framework, Research methodology, Quantitative and

qualitative data analysis, and Discussion and conclusion.

Topic Selection Process

Electronic
Marketing
Identification of the:-
- Research Problem
Small Business - Research objectives
Enterprises -Research Importance

The Research
Questions, Model and
Hypotheses
Research Strategy
Data, Method and
Research Methods Research Methodological
Methodology triangulation
Research Design
Measures

Sampling Process
survey
Questionnaire Design Data Collection
and Administration case study
11
Reliability/ pilot study
Descriptive Statistics,
Figure 2: The research process

Source: El-Gohary (2006).

The researcher had done his best to arrange the organisation of the study in such

a way that it allows the readers to follow the process easily and smoothly.

7.1 Research Methodology:-

From the researcher point of view, generally there is no optimal research

methodology or method. Because each methodology or method have some drawbacks or

12
limitations, but a researcher must employ the most appropriate research methodology and

methods to his research in the light of his research questions, aims and by taking into

consideration the methodologies and methods employed in other studies in the field.

Based on that, when determining the most suitable methodology for the research

the researcher take into consideration the research questions and aims as well as the

methodologies used in the contemporary E-marketing research.

To investigate the methodologies and methods used in contemporary E-marketing

research, the researcher constructed a representative un-probability sample from the

literature. From this sample it was found that the majority of researchers in the literature

depended on Quantitative methodology with a percentage of 33.3% of the sample size

and as illustrated in figure 3: 27.6% of the researchers applied Qualitative methodology,

8.6% applied Triangulation methodology, 29% conducted Conceptual and theoretical

studies and 1.5% (One researcher) conducted Literature Review. (Table 2 illustrate a

classification for this literature according to the methodology employed).

Regarding the research strategies adopted by the researchers it was found that the

majority of researchers depended on Survey strategy with a percentage of 41.7 % and as

illustrated in figure 4: 18.8 % of the researchers applied Case Study strategy, 6 % applied

Exploratory strategy and 3 % applied Experiment strategy.

On the other hand, regarding the research methods it was found that the majority

of researchers depended on Questionnaires with a percentage of 60.4 % and as illustrated

in figure 5: 29.6 % applied Interviews, 6 % applied observation and 4 % applied Focus

Groups.

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 Quantitative
Quantitative
8.6% 1.5% Theoretical
Conceptual
33.3%
Qualitative
Qualitative
Triangulation
Triangulation
Literature review
Literature review

27.6%
29%

Figure 3: Research Methodologies used in E-marketing

Source: El-Gohary (2006).

Table 2
Classification for some of the literature according to the methodology employed
Methodology Literature
Quantitative Flavián and Guinalíu (2006), Lin et. al. (2006), Kuhlmeier and Knight
(2005), Wong (2005), Flavián et al.(2005), Lymperopoulos and
Chaniotakis (2005), McCole and Ramsey (2004),Kim and Kim (2004),
Lee-Kelley et al.(2004), Merisavo and Raulas (2004).
Qualitative Taylor and England (2006), Hackney et al. (2006), Park (2005), Lagrosen
(2005), Ryan and Valverde (2005), Warnaby and Yip (2005), Rowley
(2004 a), Smith, C. (2004), Darby et al. (2003), Martin and Matlay (2003),
Siddiqui et. al. (2003).
Triangulation Weischedel et al (2005), Christodoulides and Chernatony (2004), Fillis et
al (2004), Yang et al. (2003), Chaston and Mangles (2003), Adam et al
(2002), Kapoulas (2002).
Conceptual and De Kervenoael et al (2006), Sheth and Sharma (2005), Sandeep and Singh
theoretical studies (2005), McCole (2004), Smith and Manna (2004), Smith, A (2004 a, b ),
Kulviwat, et al (2004),Rowley (2004 b), Lindgreen et al (2004).
Source: El-Gohary (2006).

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 1.5% 41.7%
29% Survey
Case study
Exploratory
Experiment
Conceptual
3% Literature
6%
18.8% review

Figure 4: Research strategies used in E-Marketing

Source: El-Gohary (2006).

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 4%
6%

Questionnaire
Interviews
Observation
Focus groups
29.6%
60.4%

Figure 5: Research Methods used in E-marketing

Source: El-Gohary (2006).
By reviewing the methodologies in the literature it was found that most of the

studies conducted have some critique points regarding the methodologies and methods

used in it, for example:-

* Among the things that can be taken against Collins, et al (2003):-

- The research was conducted in 4 European countries, 2 of these countries do not

speak English and have a different culture which might affect the reliability of the study.

Especially that many of the questions were designed for academics rather to small hotels.

- Depending on the telephone in data collection have some drawbacks, one of it is

the danger that respondents might answer the question in the way that they believe the

researchers would like to hear (socially desirable answer).

- They didn‟t provide any valid arguments for choosing the 4 countries

investigated, especially that there are other famous tourism European countries like:

Greece, Italy and France. Not only the comparability of those countries is questionable,

but also applicability of the findings to other countries can‟t be guaranteed.

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 The same point of critique is valid on the methodology applied by McCole and

Ramsey (2004); they didn‟t provide any valid arguments for choosing the 3 countries

investigated in their study.

* The main point of critique on the methodology applied by: Ramsey and McCole

(2005); Hinson and Sorensen (2006); Chaston and Mangles (2003); Ng (2005) is the

Lack of applicability and generalisation of the findings to the population at large.

* For Poon and Swatman (1997) the major points of critique is that they depend

on a multiple-case design, Although these designs are desirable when the intent of the

research is description, theory building, or theory testing and it allows a cross-case

analysis and the extension of theory (Benbasat et al., 1987, p. 373), BUT (from the

researcher point of view) it have the following drawbacks: lack of quantitative evidence

provided (such as the additional revenue generated by using the Internet) / there is no

guaranty that the interviewees were honest in their responses /…)

* Most of the Qualitative researches in the literature depend solely on Case

studies and that could make it have some problems such as: the accusation of limited

generalisability; the question of external validity and Lack of rigour (where biased views

of the researcher have been allowed to influence the findings) (Yin, 1994). Also it is

noticed that most of the Quantitative researches depend solely on survey strategy and it

also have some serious criticisms (Inherently positivistic, Incapable of getting at the

meaningful aspect of social behaviour, inherently atomistic …).

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 * Regarding conceptual studies, although it adds a lot to the field of E-marketing,

but all of it has a main point of critique which is: it lacks quantitative evidences to

support its findings.

Based on the previous discussion, a triangulation approach will be used in the

research, the researcher will make a: data, method and methodological triangulation, in

which quantitative and qualitative data will be collected depending on a combined

research strategy based on survey and case study strategies through questionnaires and

interviews to address different levels of the study.

The survey strategy will allow the answer of the 'WHAT' question of the research,

such as: what is the relationship between using E-marketing by the SBE‟s and its

marketing performance. On the other hand, the case study strategy will give in-depth

information and answer the 'HOW' and „WHY‟ questions (for example: why the

relationship is taking one direction instead of anther direction).

Why triangulation?

The logic of triangulation is based on the premise that: “no single method ever

adequately solves the problem” (Denzin, 1978: 28) and using only one method is more

vulnerable to error linked to that particular method (Patton, 1990: 188); for that the use of

different methods in studying the same phenomenon should lead to a greater validity and

reliability than a single methodological approach, because any bias inherent in a

particular method would be neutralised when in conjunction with other methods. Beside

that, each technique has its advantages and disadvantages, strengthens and weaknesses,

18
for that combining the methods will be helpful and useful to benefit from the advantages

and strengthens and avoid the disadvantages and weaknesses.

So, although triangulation entails a commitment to greater amounts of effort, time

and money, it has the advantage of removing the bias that is often associated with the use

of a single technique. For that the researcher will use triangulation to increase the validity

and credibility of the research conclusion, to be more confident about the findings, to

increase the ability of generalization, to answer the research questions and to meet the

research objectives effectively and professionally. Especially that according to the

knowledge of the researcher there is no previous studies were conducted in the field of E-

marketing practices in SBE‟s in Egypt, also there is lack in scientific studies in this filed

in general. For that the researcher: believes that combining of methods in this research is

indispensable, and will depend on a combined research approach based on survey and

case study analysis.

7.2 Data Collection and Analysis:-

The backbone of this research is to establish and sustain a clear link between

conceptual framework and empirical analysis. The main importance of this consideration

comes from the belief that unless the conceptual framework and empirical study are

highly integrated, each one of them individually would present a partitioned and distorted

image of the research points. For that this study will depend on:

Conceptual framework: depending mostly on the secondary data.

Empirical study : depending mostly on the primary data.

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 A combined research strategy based on survey and case study strategies will be

carried out in the research by using structured mailed questionnaires and interviews as a

primary data collection methods.Then, many statistical analysis techniques will be used

to analyse the data and test the research hypotheses.

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