E-Marketing for SMEs: Untapped Opportunity

Small and Medium Sized Enterprises are facing increasing challenges and aggressive competition larger corporations, which enjoys higher resources, advanced know-how and scale economies. A recent report by the Department for Business Innovation and Skills illustrates this frightening reality; while SMEs accounted for 99.9% of the total enterprises in the UK, they were only responsible 50.1% of the private sector turnover, meaning that the remaining 0.1% which are large enterprises are controlling a massive 49.9% of the sector’s turnover.

The chart below highlights one of the main advantages for large enterprises compared to small and medium ones: efficiency. With only 41% of the private sector’s employment, large enterprises managed to generate around 50% of the sector’s turnover, compared to 37% of the turnover generated by 48% of the employment at small enterprises.

Adoption of E-marketing techniques can benefit SMEs in various aspects, mainly:

Cost Efficiency: Despite the difficulty of quantifying the impact of advertising on share of mind and sales, it is expected that online advertising is 50% more efficient in generating sales than offline advertising and 34% more efficient in acquiring share of mind (Evans 2008 and Hollis 2005), in addition, online advertising employs sophisticated techniques such as pay per click and pay per action. However, cost efficiency advantage of online marketing is not limited to advertising, cost efficiency is one of the main drivers for e-commerce; through establishing virtual sales channels, SMEs can dramatically reduce the overhead costs of rents, wages and so forth.

Targeted Reach: One of the unique characteristics of e-marketing is the high level of targeting it facilitates. SMEs can now optimize their budgets towards very specific targets, for example SMEs can now target specific geographic locations, or defined interest groups, even more, SMEs can utilize behavioural targeting to approach consumer targets based on their internet surfing habits or interests (Poole 2009). Instead of mass targeting, e-marketing enable SMEs to target only those who are more likely to become consumers or who have the intention of utilizing a specific product or service. In addition, the fact that internet has no geographic location allows SMEs to develop new markets

Market Development: E-marketing platforms offer Small and Medium Enterprises the advantage of global reach. It simply means that with a tool like the website, an SME can reach anyone in the world who has internet access, 24-hours of the day. This enables the organisation to find new markets and compete worldwide with limited investment, and enables customers find out about your products even if physical accessibility to the store or the office is not possible.

Economies of Scale: Economies of scale is one of the main advantages large enterprises have over smaller ones, however, many platforms on the internet enables SME to become an affective part of a larger virtual market place or distribution channel. Similar to the physical markets, the modern internet space is d ominated by several companies such as Google, Amazon and Ebay (see video below for more details), such platforms enable SME to capitalize on the scale of these companies through – for example – selling its products on Amazon or link its website with Google.

Interactivity: Although traditional marketing is mainly focused on communicating brand value to customers, E-marketing initiates conversations between companies and its audience. With a two-way communication channel, companies can respond speedily to the needs of consumers, and constantly adapt to their changing expectations. By closing the gap between making information available and eliciting a reaction from consumers, consumer purchase turn-around-time is speeded up and promotion spend can go much further in creating instant leads.

Measurability: Online marketing can provide a substantial knowledge to SMEs on the impact of its e-marketing activities; through using advanced web analytics software, SMEs can understand the impact of each activity on share of voice, interest and information gathering and – most importantly – purchase (Learmonth and Klaassen 2009). Such knowledge enables SMEs to optimize their marketing expenditures and generate higher responses.

References:

Poon, S. and Huang, X. (2004) ‘E-Commerce and SMEs: A Reflection and the Way Ahead. In Electronic commerce in small to medium-sized enterprises. Ed by Qirimi, N. New York: Idea Publishing, 17-28

Gilmore, A., Gallagher, D. and Henry, S. (2008) E-marketing and SMEs: operational lessons for the future. London: Emerald Publishing

Evans, D. (2008) The Economics of Online Advertising, Review of Network Economics 7(3)

Hollis, N. (2005) Ten Years of Learning: How Online Advertising Builds Brands, Journal of Advertising Research 45(2)

Poole, K. (2009) Online Behavioural Targeting, EContent 32(7)

Learmonth, M. and Klaassen, A. (2009) Taking online-ad measurement beyond the click, Advertising Age 80(18)

Chaffey et'al (2003) Internet Marketing: Strategy, Implementation & Practice. London: Prentice Hall

Mobile vs Mobile

The Laptop – being the mobile PC solution, and the Smartphone, both portable devices are indispensable tools of general business productivity. According to a recent consumer survey, 81% of executives globally, rely on these tools (Friedman and Hoffman 2008). However, a research on the rate of usability by country shows that preference for PCs as a means of surfing the internet in developed markets like the U.S. and Canada, is growing stronger compared to the cell phones (Ipsos 2006). Although, the research did raise the possibility of the cell phone overtaking the PC market in the future, the

technological gap between these two devices implies the contrary. Proponents of the cell phone’s potential to succeed the laptop, argue in favour of its offering of the basic functionalities sought by consumers such as internet browsing, watching videos and basic connectivity tools like e-mail or chat. In addition, they criticize Laptops as being deficient in meeting consumers’ expectations of mobility, mainly due to its size and short battery life while praising smartphones on the other hand, for addressing these needs.

It is true that smartphones capabilities have been rapidly developed, making some of the smartphones in the market a power match for some laptops in terms of processing and internet capabilities. However, the processing ability and storage capacity of cell phones makes it an inadequate replacement to the Laptop. The TC HD2 is the phone with the fastest processor with 1GHZ speed and 448MB RAM (www.phonegg.com). Therefore, smartphones can be impractical in handling large files and advanced applications, as these processes require large memory space, which the PCs possess. Another limitation for using smartphones as a replacement for PC lies in the connectivity of these devices, as full scale GPRS, WAP and 3G connections requires substantial investments in networking and security infrastructures.

The pace of innovations in mobile technologies carries a promising future for the smartphones, however, laptops are also undergoing substantial innovations that software developers utilize in driving higher market demand for latest technologies. This is clearly highlighted by the development of external storage from floppy disks to CD ROM, DVD and BLURAY and the major software upgrades accompanying such storage mediums.

More innovations are taking place. Although, it is a fact that companies like Google, Dell and Apple are making extensive foray into the smartphone market; Google with its Android platform, Dell with the Mini 3, and Apple investing continuously in augmenting its iPhone. However, this is not enough to conclude that the days of Laptops are soon to be over.

For instance, Apple’s latest revelation, the iPad, a small powerful handheld computer that offers the benefit of flexibility and portability among other things, is a reflection of the company’s belief in the longevity of the Laptop market, a notion that sees Buyya et’al (2008) ranking computing as the 5^th utility after such essentials as gas, water, electricity, and telephony. The demand for PCs in developing markets such as India rose by 5.2 per cent in the third quarter of 2009 (Business Standard Feb 17, 2010). In Brazil, the market is anticipated to grow by 12% over the 2009-2013 periods.

Another threat to smartphones would be user privacy; the reliance on wireless netwroks makes smartphones more vulnerable to connection interceptions, unlike the more reliable cable connections used by most business and household users. In addition, global positioning service that allows usage even in the remotest parts of the earth, which is one of the main advantages for smartphones, can be easily abused by individuals and organizations to track users. In fact, a move has already been initiated by the US government to this end, claiming that such records would be utilized in fighting terrorism (Pearson & Milford 2010).

The vision of the Smartphone replacing the PC might only be possible through the merging of the technological advancement and user practicality of PCs with the mobility of smartphones, resulting in a hybrid device similar to Apple’s iPad.

It is difficult to separate between the laptop and the smartphone; after all, the smartphone is one variety of PC, just like desktop and laptop, yet with GSM capabilities a feature which many laptops nowadays have.

Useful Links

http://www.business-standard.com/india/news/indian-pc-market-grows-52-in-q2/71920/on

http://www.ipsosna.com/news-polls/pressrelease.aspx?&id=3049

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