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.
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
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14 comments:
A very well written piece. Well done.
However, do you think all small and medium enterprises can easily apply these models into their businesses?
In Chinese idiom 癞虾蟆想吃天鹅肉 (The toad on the ground wanting to eat the goose in the sky) - This idiom is used derisively on people who desire something which are beyond their ability in terms of wealth.
Link it back to SMEs which have many limitations, we would like to add some practical insights especially for small enterprises that do not have enough human and financial resources to do market research and all the e-marketing ideas you mentioned in your article. For example, SMEs can utilize existing e-marketing tools such as social networks to create free market research to better understand the customers, their attitudes, opinions and/or intentions (Casteleyn 2009). SMEs like Approved Foods Ltd utilized Facebook and Twitter to study customers' demand, reviews and feedbacks, then use it to improve on their services (Cluderay 2010)
In that sense, our role as marketers can justify the strategic/logic recommendations for SMEs to be more practical and workable.
References:
Casteleyn, J., Mottart, A. and Rutten, K. (2009) ‘How to use Facebook in your Market Research’. International Journal of Market Research 51(4), 439-447
Cluderay, D. (2010) 'Approved Food and Drink: About Us' [online] available from http://www.approvedfood.co.uk/static/About_Us [23 February 2010]
I have a question about the measurability of "purchase". You say that purchase is the most important. It may be really important, but I think it's important to know that not every SME sells online. Don't you think that next to online research, offline research is also needed? Because in the beginning of an online marketingadventure, brand awareness and information are maybe more important than just selling your goods.
I actually disagree with Emarketforensics on the limitations for SMEs to adopt E-marketing, as a practice. It is extremely important to note that the article does not address E-marketing techniques but rather tackles the benefits E-marketing may bring for small and medium enterprises. I believe that one of the charming characteristics of E-marketing is the scalability; meaning that the process can be freely scaled up or down based on the enterprise's financial and operational capabilities. For instance, a smaller enterprise can set up a website for free through services like (Webs.com), can drive traffic through PPC advertising and specifying the maximum budget they're willing to pay, can use free services to track their website's traffic and user behavior and can utilize social networking to understand customers' trends and reactions, the following link http://www.podtech.net/scobleshow/technology/1447/the-killer-business-paper-models showcase an interview with the owner of a one-man business that successfully utilized E-marketing to find new markets and establish distribution channels.
The main limitation for the adoption - as Poon and Huang 2004 - identified is not realizing the potential of these technologies by businesses, especially smaller ones, and that's the purpose of this article; to illustrate the potentials of E-marketing for SMEs, rather than listing the tools and techniques that can be used.
Floris, we understand that not all companies can sell products online and of course measuring the impact on purchase may not be applicable for these. We can't even claim that web analytics can serve as a replacement for offline research or even that E-marketing can replace conventional marketing - not in the near future at least. However, I do believe that the most important knowledge generated by web analytics is the purchase drivers. We should distinguish between online measurement - through web analytics - and online research, which are very different research and tracking tools. In fact, web analytics is a tiny part of online research that has various limitations, one of which is the fact that web analytics is not appropriate for non customers or non visitors.
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
I agree with both of you guys. Going online is a project and it's not done in one day. A company normally knows which his target audience is and which the objectives are.
Of course there's a difference between (e-)marketing in and big and (e-)marketing in a small company. Certainly in the beginning, the marketing strategy in an SME is more intuitive and they have to take care more about human resource/time constraints. But it helps SME to think more "out of the box". And just one good idea can become a real success story.
Gilmore, A., Gallagher, D., & Scott, H. (2007). E-marketing and SME's: operational lessons for the future. European Business Review , 234-247.
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You have misunderstood our arguments, we did not say that limitations among SMEs will make them fail to adopt E-marketing. We simple believe your recommendations (or benefits as you have put it) has to be more practical rather than theoretical. As a marketer, we must recommend strong, straight-forward and practical steps for organizations to kick-start or help their businesses immediately.
I like to point out that the ideas of E-Marketing for SME`s is fantastic and the practicability does not have to do with cost anymore as this can be achieved on a relatively free web platform this days.
However the 'target market' of businesses should define the model of E-Commerce model that should be applied.
In sum this work is useful to the extent that it can create an awareness to SME`s that it has the advantage of the Internet in promoting itself at almost no cost
It's absolutely right that we - as marketers - should recommend a strong and straight forward practical steps, not immediately though. I believe that our main challenge with SMEs - and even large corporates in some cases - is not to tell clients HOW to implement E-marketing but rather WHY would they consider E-marketing at the first place, and that was the main purpose of our article.
In my opinion, although SMEs has to consider their current situations such as financial ability to design marketing plan,I believe that every SME want to develop to a large company in the future.There are also a chinese idiom: It is not a good soldier if he/she doesn't want to be a general.Therefore I think emarketing is an effective and low-cost method for SMES to win.
I think it all depends on the location and the resources available for the SMEs to operate with. Take for instance in Nigeria where there is large gap between the Urban areas and the rural settlements, the rural dwellers hardly access internet or other infotech channels hereby limitin the use of E-marketing or other electronic tools. Most SMEs in this area thrives more around the rural areas to avoid downpricing of thier products by the larger manufacturers.
The idea needs to be sold to SME`s groups and individuals consistently! E-marketing is relatively new and has high advert and awareness potentials for medium scale businesses at little or no cost
E-marketing in contemporary time is done on social networks like Face book, Yahoo etc. But we see medium scale businesses not fully harnessing the advantages the internet offer due to inadequate conciousness
Good Work Here
In this days internet marketing is very popular because people no need to spend lots of money for internet marketing and can get best results by internet marketing.
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