Applied Consultancy ProjectLiterature Review

Fatimah Anas 2014 (N0600331)

Name: Fatimah Zahriyya AnasI.D: N0600331Topic: Can Nigerian SME’s Use Social Media To Enhance Their Maketing Strategies?Supervisor: Steve CaronWord Count: 2921

Table of Contents

Introduction.......................................................................................................................... 3

The Importance of Social Media...................................................................................... 4

The Importance of Small & Medium Enterprises........................................................5

Social Media Marketing..................................................................................................... 5The Linkage Between Social Media and Marketing Theory ........................................8

References......................................................................................................................... 10

2

Introduction

The paper will seek to review why small and medium sized enterprises (SME’s) in Nigeria

should adopt the use of social media to enhance their marketing and promotion strategies. The

paper will first review what SME’s and social media are along with the role SME’s play in

the economy and the importance social media today in context of business promotion. This

paper aims to highlight why it is necessary for Nigerian SME’s to adopt social media

marketing along with other traditional marketing/promotion strategies. To further conclude

will review the linkage between social media and marketing theory. The paper focuses on the

four major social networks: Facebook, Twitter, LinkedIn and YouTube.

Social media, which is still a developing phenomenon, is defined by Kietzmann et al (2011)

as an arena through which groups and individuals form, review, and modify user-generated

content. Comparably, Kaplan and Haenlein (2010) assert that social media is a platform that

facilitates formation and swap of “User Generated Matter”. Blackshaw and Nazzaro (2004),

define social media as customer generated media that contains new informants of online

information that is formed, initiated, spread and used by people who inform each other about

a wide range of materials. A general consensus of all definitions is that social media possess a

general vital component, which is the formation and exchange of info by users. Furthermore,

the Office of Communications (OFCOM) Research Document (2008) described social media

sites as sites that permit users to create online profile or own web pages and establish an

online social media presence. This definition of social media indicates that it is not merely a

medium for establishing social interactions but also business connection amongst businesses

that have online established presence.

The characterization of SME is typically procured from in each country based on the function

of SME in the economy, policies and programs intended by particular organizations

commissioned to develop SME. Ayaggari et al (2007) note that the definition of SME’s

differs from one country to another and also within a country, it can differ from one industry

to another contingent on the base which the meaning is sort. Nonetheless, there are certain

general mutual indicators of the classification, which include number of employees, worth of

assets and turnover. However, with the establishment of The National Policy on SME’s, it

tackled the problem of clarity as to what represents small and medium enterprises. It defines

small enterprise as ‘a business with overall assets (eliminating land and building) of less than

Five million naira with a staff not surpassing ten employees’ while medium enterprise as ‘a

business with overall assets (eliminating land and building) of above Fifty million naira but

3

not surpassing Five hundred million naira with a overall staff of between 50-199 workers

(Pradhan and Munda, 2010). The Small and Medium Sized Development Agency of Nigeria

(SMEDAN) defines SMEs as a small enterprise as a business with 10-49 people with an

annual turnover of five to 49 million Naira while a medium enterprise as a business with 50-

199 people with an annual turnover of 50-499 million Naira (SMEDAN, 2005). Etuk, Etuk

and Michael, (2014) furthermore observe that the SME sector in Nigeria are broadly

categorized into two broad groups; growth oriented business and those that function mainly as

a source of income for owners and or employees. With the latter being the most in the nation.

The Importance of Social Media

Social media has gone beyond just being a place for people to interact but also place

businesses seeking to communicate with clients on online platforms. Social media has

become such a significant element for many businesses in their every day business life

providing marketing opportunities. For example, Global Fortune 500 firms increasingly use

social media tools in their marketing promotions. Burston-Marsteller Research (2011), found

that 25% of the businesses use Facebook, Twitter, LinkedIn and YouTube while 84% make

us of at least one of them indicating a 6% increase in a year. Chung and Austria (2010), note

social media that was in past seen, as just a trend is now a reality for marketers.

Social media has become a leading tool used to influenced consumers in making decisions

about what to purchase, where from and what’s currently trending. People are relying more

and more on social media in decision-making. Because of this shift, it is important for SME’s

to capitalize on this and use social media. Social media has consistently been identified as an

influential tool for SME owners as it helps in forming customer relationships as well as

generating a buzz for businesses. Social media is powerful tool accessed globally by millions

of users.

Social media has a growing influence in many perspectives: on one angle, it can been able to

revutionalize the way users communicate with each other and looking from different angle, it

has led to the supplementation of marketing communication prospects in a business-to-

business and a business-to-consumer facet. Social media has facilitated in making businesses

to reconsider the conventional unilateral communication flow of their marketing messages

(Markos-Kujbus et al, 2014).

4

The Importance of Small & Medium Enterprises

SME’s play an important role in development and growth of economies so much so that they

are implied to as “the engine of growth” and “catalyst for socio-economic change of nations”.

Various studies have identified SME’s as driving forces in economic development. SME’s

play a significant role in the growth and development of economies and act as a catalyst for

socio-economic growth of countries.

SME’s play heavily in the role of job creation, aiding economic revival and national

advancement. Data from the Federal office of statistics in Nigeria shows that about 70% of

businesses in Nigeria are SME’s and employ about 50% of the working force. Studies have

shown that SME’s are not only at the bane of economic growth and development but are

considered to be the anchor of the country (Ariyo, 1999). Likewise, Aina (2007), attests that

the advantages of SME’s to economies are apparent, as they are identified as major

contributors to the growth of numerous economies in regards to production of commodities

and services, job opportunities at relatively little investment cost, particularly in fast

developing service area and they offer a channel for the lessening of income gaps

consequently increasing the pool of trained or fairly skilled workers as a foundation for

potential industrial development. However, Ihua (2009) notes that Nigerian SME’s currently

perform at appalling level when compared to other nations although most of the problems

with SME’s can be associated with economic variables along with the interaction of internal

characteristics. While past governments in Nigeria have done little to improve the SME’s,

Omotola (2008) notes that the shift to a democratic government has better improved the effort

of government towards aiding SME’s. In 2005, the Small and Medium Enterprises

Development Agency of Nigeria (SMEDAN) was established to help attain the objectives of

SME industry in the country.

Social Media Marketing

A large number of social media exist. However, the most identified social media platforms

are LinkedIn, Twitter, YouTube, and Facebook (Nielsen,2012). Traditional marketing

strategies like advertising, word of mouth, and public relations are still extremely essential,

but social media marketing has now become a part of everyday marketing’s fabric and need to

be considered at the strategic level of marketing decision-making process.

A strong marketing strategy is vital to the survival and progression of SMEs. Gimore, Carson,

5

and Grant (2001) note that SME’s marketing strategies are faced with several restrictions. The

most common being the high cost of advertising, availability of limited resources in regards to

funding and marketing understanding. Okoya (2013), further note that another marketing

difficulty experienced by SME’s is the lack knowledge and use of marketing theory. With

expenses being the major constraint, SME owners are not keen on engaging professional

marketing agencies to promote their business or maintain the cost of promotional adverts on

traditional media (Television, radio and newspapers). The social media marketing can be used

mostly for free and extremely easily in comparison with other promotional tools (Levinson

and Gibson 2010). A study conducted by Kirtis and Karahan (2011) showed that using social

media as a marketing tool could lead to businesses saving cost and reaching millions of users

in a short period of time. Furthermore, there is the lack of awareness on the various tools

accessible for marketing and expertise to promote SME’s to a wider audience at little costs .

As a result of these constraints, marketing for Nigerian SME’s have traditionally been

through word of mouth promotion or government funded or subsidized platforms such as

exhibitions to advertise their business.

Studies have shown that thriving SME’s are the bedrock of economic growth. SMEs in

Nigeria are not performing well and therefore have not had much impact on the foreseen vital

and effervescent role in the economic growth and development of Nigeria (Onugu, 2005). In

order for SME’s to contribute to growth of the economy, they have to also grow as a business

and generate revenue. Promotional activities are effective in encouraging customer

engagement leading to revenue lift and long term value creation from the development of

relationships (Angel & Sexsmith 2011). Therefore, in order for Nigerian SME’s to grow, they

have to increase their market share and awareness. Hence, it is imperative to come up with

marketing strategies that will attract prospective customers and draw patronage.

Uko & Ayatse (2014), propose that progressive growth and development of Nigerian SME’s

lie in owners willingness to adopt and embrace progressive marketing strategies. SMEs in

Nigeria need to adopt new methods in promoting sustainable business growth. Social media

continues to grow in popularity with small businesses to the point where it’s no longer a

matter of “if” you should be utilizing the platforms but “how.”

Rashid Husain and Aminu Adamu (2014), note that the number of Nigerians on social media

is ever increasing and studies have shown that it influences buying decisions. They

furthermore note that social media especially Facebook and Twitter play a significant role in

customer buying in Nigeria. Social media promotion has grown to be an influential tool for

business marketing. SME’s around the world are recognizing the potential of social media as

6

a highly cost effective opportunity to create awareness among potential customer base

(Mutula & Van Brakel 2007). However, in Nigeria social network marketing is still yet to be

fully adopted into the marketing networks of most businesses. Harindranath et al (2008) note

that SME’s in the past frequently had difficulty in embracing technological applications as a

result of their shortage of skills, resources and technical knowledge. Rising awareness for a

product or business and engaging customers requires significant investment (Mason & Spring

2011). Derham et al (2011) propose that social media marketing is especially fit for SME’s

because of the minimal cost, low barriers and low knowledge of IT proficiencies required to

use it.

The World Fact Book (2015), estimates the Nigerian population to be at about 181, 562,052

(July 2015 estimate) with about 70.3 million Internet users. Nigeria currently has the highest

Internet population in Africa and is the 9th in the world (Internet World Stats, 2015).

According to recent studies, Facebook is currently the most visited social website with over

10million users in Nigeria followed by Twitter and Youtube (Seal-World Technologies,

2014). Percentage of the population using the Internet stood at 41.0% in 2014, up from

20.0% in 2009 (Euromonitor, 2014). The number is expected to continue to rise as new fibre

optic cables are becoming more available and will increase the swiftness and affordability of

broadband. According to research carried out by Terragon Insights (2013), 72% of Nigerians

visit social networking sites. In December 2014, a survey conducted on adult in the major

cities of Nigeria showed that showed that; 67% used Facebook; 50% used Twitter; and 20%

used LinkedIn. Furthermore, 40% of mobile phone owners use their phones to visit social

networking sites and 28% do so on a typical day (Euromonitor, 2015). According to Solis

(2009) social media has redefined how people discover and share information. It is becoming

progressively significant in buyers purchasing decisions since it amplifies word of mouth. A

recent Vanguard articles further emphasize this view, stating that is predictable that the

number of people who look to the Internet before making purchasing decisions is expected to

continue increasing.

Beyond reaching a larger customer base, Ogechukwu et al (2013) note that one other major

gains of social media marketing is that, when properly used, products can be enhanced.

According to Gillin (2009) traditional one way marketing strategies to potential customers is

no longer sufficient and should be accompanied by two-way communication channels to

achieve maximum results. Social media networks are exceptionally useful in gathering

information and views from consumers because of the two-way conversation it allows

(Kaplan and Haelein, 2010). For example, Facebook allows conversations to go beyond a

secluded one-to-one dialog and become a conversation with many people (Hawn, 2009). It

7

allows business to engage with customer base, while growing it through recommendations

and endorsements. Facebook allows businesses to create business pages, which can be used to

announce updates and it appears on walls of users subscribed to the page. Twitter is another

highly patronized social media site by Nigerians. Twitter is a mixture of micro blogging and

social network (Evans and Felt, 2008). Twitter provides users the opportunity to share real

time content.

The Linkage Between Social Media and Marketing Theory

A study conducted by The SMB Group found that one in five small businesses have no social

media strategy. Without a strategy, SME’s cannot access if they are making gains or losing.

Furthermore, the study found that businesses deprived of a strategy stated that they were less

satisfied with social media’s capability to create new leads (SMB Group, 2012). According to

Barker et al. (2012) like with any other form of marketing, in order for businesses to gain

form the benefits of using social media they have to think of a clear marketing plan.

Contemporary advertising theory can be explained using the AIDA model. The AIDA model

was initially coined by E.St. Elmo Lewis in 1898. A, I, D, A represents Attention

(awareness), Interest, Desire and Action respectively. The AIDA model is adapted in

marketing or promotion to explain how consumers engage with marketing promotions. At the

awareness stage, the attention of the consumer is drawn to the brand or product. A study

conducted by Hubspot (2012) found that almost two out of every three conversations online

refers to a brand, product or service. Sawhney and Zabin’s (2002) further build on that by

proposing that brand awareness leads to interest and then to desire and finally a purchase. By

utilizing the advantage of brand awareness the business can capitalize on that as key a key

driver of growth and profitability. Gro ̈nroos (1999) notes that views of marketing and

promotion have experienced a paradigmatic shift. The nature of consumer and business owner

interactions has transformed from oppositional to relationship building (Kalafatis, 2000).

Businesses now need to adopt a pull strategy by interacting with consumers through their

advertising and promotion to build up a consumer demand. Donaldson and O'Toole (2007)

note that social media as oppose to traditional marketing strategies provides channels for

developing relationship with consumers. McKenna (1991) offers a useful outline, he stresses

putting the importance of putting the consumer first and changing the position of marketing

from persuading the consumer, to genuine consumer participation. Cardwell (1994) further

claims that a business's very survival will be contingent on their shifting closer to the

consumer by building relationships to enable them comprehend consumer requirements and

8

desires.

Conclusion

There are many benefits SMEs can get from adopting social media marketing strategy. Social

media marketing provides a channel of feedback that may enable a business to further

improve their brand and most importantly it allows for effective marketing at relatively low

cost. Hajli,(2014) further note that SME’s benefit from social media marketing in two key

areas; cost effective interaction with consumers and capitalization of discussions between

consumers. However, there are also disadvantages associated with social media marketing.

Tolsdorf (1976) notes that the absence of feedback restriction is arguable the main

disadvantage of social media marketing. The absence of feedback control makes it impossible

for SME’s to prevent negative post and responses. Although companies cannot directly

control what consumers are saying, they do have the ability to influence the conversations

consumers are having (Mangold & Faulds, 2009). Baird and Parasnis (2011) note that while

the threat of negative publicity is high exists; the possible benefits are far greater. Likewise,

Libai et al, (2010) emphasize that a good brand image can be seen and maintained if the

business performs well and meets consumer expectations.

In conclusion, having considered the having considered the relevant literature, it could be

suggested that small and medium sized enterprises cannot afford to not engage with social

media in today’s business environment. Failure to adopt social media marketing strategies

could possibly losing out on a large consumer base. However, SME’s do not necessarily have

to partake on every social media platform, but rather recognize the platform that best targets

their audience and match their business style. As with many new technologies, identifying

business value can be problematic and Blanchard (2011) addresses the key issue that may be

overlooked in the hype surrounding the use of social media. He emphasizes that value can

only be generated by recognizing that social media is a tool that must be incorporated into

existing strategies and used to support existing business objectives.

9

References

1. Ariyo D 1999. Small firms are the backbone of the Nigeria economy, Africa Economic

Analysis, Africa Business Information Services, Bridgnorth United Kingdom

2. Ayyagari, M., Beck, T., & Demirguc-Kunt, A. (2007). Small and medium enterprises

across the globe. Small Business Economics, 29(4), 415-434.

3.Aina, O. C. (2007). The role of SMEs in poverty alleviation in Nigeria. [Online] Available:

http://www.journalanduse.org/Assets/Vol3%20Papers/JOURNAL%2010.pdf (17th August,

2015).

4. Blackshaw, P., & Nazzaro, M. (2004). Consumer-Generated Media (CGM) 101: Word-of-

mouth in the age of the Web-fortified consumer. Retrieved July 25, 2008

5. Chung, C., & Austria, K. (2010). Social Media Gratification and Attitude toward Social

Media Marketing Messages: A Study of the Effect of Social Media Marketing Messages on

Online Shopping Value. Proceedings of the Northeast Business & Economics Association.

6. Csordás, T., Markos-Kujbus, É., & Gáti, M. (2014). The Attributes of Social Media as a

Strategic Marketing Communication Tool. Journalism and Mass Communication, 4(1), 48-

71.

7. Cardwell, M. (1994), Customer Care Strategy for the '90s, Thornes, Cheltenham.

8. Donaldson, B., & O'Toole, T. (2007). Strategic market relationships: from strategy to

implementation. John Wiley & Sons.

9. Derham, R., Cragg, P., & Morrish, S. (2011). Creating Value: An SME And Social Media.

In PACIS (p. 53).

10. Euromonitor, (2015). Nigeria: Country Profile. Retrieved August 15 2015, from

Euromonitor Passport Database.

11. Euromonitor, (2015). Technology, Communications and Media: Nigeria. Retrieved August

15 2015, from Euromonitor Passport Database.

10

12. Etuk, R. U., Etuk, G. R., & Michael, B. (2014). Small and medium scale enterprises

(SMEs) and Nigeria’s economic development. Mediterranean Journal of Social Sciences,

5(7), 656.

13. Felt, A., & Evans, D. (2008). Privacy protection for social networking apis. 2008 Web 2.0

Security and Privacy (W2SP’08).

14. Gilmore, A., Carson, D., & Grant, K. (2001). SME marketing in practice. Marketing

intelligence & planning, 19(1), 6-11.

15. Gillin, P., & Moore, G. A. (2009). The new influencers: A marketer's guide to the new

social media. Linden Publishing.

16. Gro ̈ nroos, C. (1999), “‘Relationship marketing: a change in paradigm and a focus on

determinants of success”, Journal of Business Research, Vol. 46 No. 3, pp. 327-35.

17. Husain, R., & Adamu, A. The impact of social media on virtual marketing in Nigeria.

18. Harindranath, G., Dyerson, R., & Barnes, D. (2008). ICT adoption and use in UK SMEs:

a failure of initiatives. The Electronic Journal of Information Systems Evaluation, 11(2), 91-

96.

19. Hajli, M. (2014). A study of the impact of social media on consumers. International

Journal of Market Research, 56(3), 387-404.

20. Heller Baird, C., & Parasnis, G. (2011). From social media to social customer relationship

management. Strategy & Leadership, 39(5), 30-37.

21. Ihua, U. B. (2009). SMEs key failure-factors: a comparison between the United Kingdom

and Nigeria. Journal of Social Sciences, 18(3), 199-207.

22. Internetworldstats.com, (2015). Africa Internet Stats Users Telecoms and Population

Statistics. [online] Available at: http://www.internetworldstats.com/africa.htm#ng [Accessed

31 Aug. 2015].

23. Kalafatis, S.P. (2000), “Buyer-seller relationships along channels of distribution”,

Industrial Marketing Management, Vol. 31, pp. 215-28.

11

24. Kietzmann, J. H., Hermkens, K., McCarthy, I. P., & Silvestre, B. S. (2011). Social media?

Get serious! Understanding the functional building blocks of social media. Business horizons,

54(3), 241-251.

25. Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and

opportunities of Social Media. Business horizons, 53(1), 59-68.

26. Kirtiş, A. K., & Karahan, F. (2011). To be or not to be in social media arena as the most

cost-efficient marketing strategy after the global recession. Procedia-Social and Behavioral

Sciences, 24, 260-268.

27. Levinson, J.C. & Gibson, S. 2010, “Guerrilla Social Media Marketing: 100+ Weapons to

Grow your Online Influence, Attract Customers and Drive Profits”, Entrepreneur Media Inc.,

Canada.

28. Libai, B., Bolton, R., Bügel, M. S., De Ruyter, K., Götz, O., Risselada, H., & Stephen, A.

T. (2010). Customer-to-customer interactions: broadening the scope of word of mouth

research. Journal of Service Research, 13(3), 267-282.

29. Mason, K., & Spring, M. (2011). The sites and practices of business models. Industrial

Marketing Management, 40(6), 1032-1041.

30. Mutula, S. M., & Van Brakel, P. (2007). ICT skills readiness for the emerging global

digital economy among small businesses in developing countries: Case study of Botswana.

Library Hi Tech, 25(2), 231-245.

31. Mangold, W. G., & Faulds, D. J. (2009). Social media: The new hybrid element of the

promotion mix. Business horizons, 52(4), 357-365.

32. Nielsen (2012) State Of The Media: The Social Media Report 2012

http://www.nielsen.com/us/en/newswire/2012/social-media-report-2012-social-media-comes-

of-age.html (Accessed August 2015)

33. Office of Communications (OFCOM) Research Document. (2008). Social Networking: A

quantitative research report in to attitudes; behaviours and use.

34. Omotola, J. S. (2008). Combating poverty for sustainable human development in Nigeria:

The continuing struggle. Journal of poverty, 12(4), 496-517.

12

35. Okoya, O. (2013). Organisational Climate and Performance: A Case Study of Nigerian

High Growth SMEs (Doctoral dissertation, University of East London).

36. Onugu, B. A. N. (2005). Small and medium enterprises (SMEs) in Nigeria: Problems and

prospects. St. Clements University, Nigeria (Unpublished Dissertation for a Doctor of

Philosophy in Management Award).

37. Pradhan, K., & Munda, S. K. (2010). Micro Small and Medium Enterprises (MSME) and

Economic Development of Odisha.

38. Small and Medium Enterprises Agency of Nigeria (SMEDAN). (2005). SME Success

Digest. Volume 3(1), January-June, 2005.

39. Solis, B., & Breakenridge, D. K. (2009). Putting the public back in public relations: How

social media is reinventing the aging business of PR. FT Press.

40. SMB Group. (2012). “2012 Impact of Social Business in Small and Medium Business

Study”. Retrieved from http://www.smb-gr.com/wpcontent/

uploads/2012/pdfs/2012_Impact_of_Social_Business_Study_Marketing_Overview.pdf

41. Sawhney, M., & Zabin, J. (2002). Managing and measuring relational equity in the

network economy. Journal of the Academy of Marketing Science, 30(4), 313-332.

42. Uko, J. P., & Ayatse, F. A. (2014). Market Penetration as a Growth Strategy for Small and

Medium-Sized Enterprises in Nigeria. Management and Administrative Sciences Review,

3(1), 8-23.

43. Tolsdorf, C. C. (1976). Social networks, support, and coping: An exploratory study.

Family process, 15(4), 407-417.

13