Marketing Performance of Small and Medium Enterprises

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The emergence of internet started as a project of the US Department of Defense almost 25 years ago. Today, internet has become part of so many people's lives and business [1].

During the last ten years, the internet witnessed a huge growth in the world. According to the Internet World Stats (2007), by March 2008, the internet user population reached 1.40 billion worldwide, which is an increase of 290% from 2000 to 2008 [2]. (see table below)

Kula and Tatoglu [3] sate in their research that the internet has been used widely throughout the world as a mainstream communication tool in various organizations. The use of internet has presented all businesses with an opportunity to improve performance and enhance revenue generation by the adaptation of e-commerce and e-businesses [4]. Generally, there are two main factors for the high approval and usage of internet in business organizations. First of all internet is compatible with every network and individual information system which minimizes the operational and switching costs. Secondly, the interactive and communicative capabilities of the internet allow it to be used not just as a communication tool but also as a marketing channel [3].

While Hughes [5] sees that implementing internet in all organizations is must to remain competitive, internet hasn't been widely implemented in Small and Medium Enterprises (SMEs) [3]. According to El-Gohary [6], SMEs play a great role in the world's economy, and their contribution to the economic and employment growth is recognized widely. And therefore, it is important that SMEs start to implement e-marketing at a wider pace and take more advantage from it in order to strengthen its competitive advantage.

In this article, I will discuss the use of internet in SMEs and how it has resulted in the adoption of e-marketing. Moreover, the article will elaborate and investigate the effects of e-marketing on the marketing performance of SMEs.


While the internet is widespread in all organizations around the world, that is not the case in small and medium enterprises (SMEs). The extent of internet usage among different SMEs varies [3].

Before going further, it's necessary to identify the meaning of small and medium enterprises. Although there is no clearly stated and accepted definition of SMEs, for this paper I've taken Gilmore, Gallagher, and Henry's definition of SMEs [7] which states that an SME is an enterprise that employs less than 250 persons, has an annual turnover not exceeding EUR 50 million ($74 million), and/or an annual balance sheet total not exceeding EUR 43 million ($63 million).

Going back to the topic above, the extent of internet usage among SMEs varies greatly. And while some SMEs use internet and benefit from its advantages, other SMEs are not even interested in internet and do not give it a thought [3]. That is a real problem because in this era, internet is very essential in all enterprises. According to Mansor and Abidin [8], in order to survive in today's challenging environment, it is vital that SMEs be competitive and strong. Towards achieving that, SMEs need to continuously strengthen their capacity and capability to produce high quality products and services at competitive prices. This can be done through e-commerce which will strengthen their product, promotion, and distribution innovation.

Mohamad and Ismail [9] state that the adoption of internet in SMEs is mostly limited to e-mail as a way of communication and only few SMEs actually used internet as a marketing tool. The reason that internet is not widely spread in SMEs might be due to the lack of knowledge of correctly implementing it, and also the lack of awareness about its capabilities. In their research, Jones, Hecker and Holland [10] say that, although the advantages of e-commerce are well documented, there is a lack of research dealing with the issue of how to effectively implement e-commerce into a small firm's operations. And so, SMEs might just need more research of how to effectively implement e-commerce in order for them to implement it without hesitation and without any risks or loss.

And so, SMEs must know the power of e-commerce, e-marketing, and other forms of e-business in order to survive and gain competitive advantage. That's because using internet in business has proven to be very beneficial. According to Archer and Yuan [11], e-commerce technologies provide effective and efficient ways in which customers can gather information quickly about available products and services, evaluate and negotiate with suppliers, implement order fulfillment over communications links, and access post-sales services. On the other hand, through e-commerce, suppliers can gather marketing, sales, and service information from customers.


According to Gilmore, Gallagher and Henry [7], one of the issues regarding the internet adoption in organizations is that the term e-business is often used synonymously with e-commerce and e-marketing when in fact e-commerce and e-marketing are actually parts of e-business activities. E-business refers to the use of digital interactive technologies and information technology in order to conduct a firm's business. E-marketing also uses these digital interactive technologies in order fulfill traditional marketing practices and it is defined as: "using the internet and its related technologies and features such as the world wide web, web presences, e-mails, real-time communication, and delayed and mixed time communication to help achieve marketing objectives in conjunction with other marketing communication tools". Closely associated with e-marketing, e-commerce refers specifically to the facilitation of the transactions created by the businesses marketing activities.

Now that we know the difference between the three terms, it will be easier to go on in details about e-marketing in SMEs.


As an exchange process, marketing can be traced back to the times when our ancestors began to produce crops or goods surplus to their own requirements and used them to barter for other things [12]. Today, marketing has a deeper meaning that what our ancestors began to do long time ago.

The term marketing etymologically is an English word that means buying and selling. The American Marketing Association defines marketing as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large". When a business is originated, the starting point is the market. Marketing helps the company know its market, and market knowledge is vital for the permanent adaptation of the product/service or business to the market changes [13].

What the internet was introduced, it affected many aspects of human life and also in corporations and businesses. The internet, web and related information technologies have proven to be transformational. Although these transformational technologies have effects all parts of the corporation, it is the marketing function that has been most affected [14]. And therefore, the emergence of the internet caused a development of a new type of marketing, e-marketing. [13]. The definition of e-marketing can vary from one author to the other; according to El-Gohary [15], Smith and Chaffey define it as "Achieving marketing objectives through applying digital technologies", while Strauss and Frost 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 goals".


In today's world, internet is proving to be an outstanding marketing tool in the advertising field and has been called the most effective promotional tool of the century [16]. That is why e-marketing has started being used in many companies for many years.

Although the use of the internet by SMEs has generally continued since 2000, it appears that its overall effect is still low because internet implementation in SMEs is still at its infancy stage. SMEs do not use e-marketing to its full scope and potential, especially in relation to developing corporate image or competitive advantage. However, the use of internet may still offer benefits to SMEs in the form of improved promotions and communications with customers [7].

In addition, e-marketing has also had a few effects on the marketing performance of SMEs even though it wasn't used to its full potential. E-marketing has the many features and characteristics that have affected SMEs marketing performance. It attracts more clients toward the product/service, facilitates a permanent exchange of detailed specific information, and offers other information and opportunities. In addition, in e-marketing there is no difficulty in terms of the size, scope and level of transactions via the internet due to marketing research. E-marketing is relational, interactive, dialogue oriented and open, direct, global (but focuses on individual clients), fast, it has low transactional and communication costs, and it operates in a world without distances and does not have a closing time [13].

Furthermore, e-marketing led to major changes in companies that implemented it (including SMEs), as well as a series of major advantages. Ion C, Ion B, and Sorin P [13] identify these advantages as follows: allows companies to increase and intensify their presence on the market, offers possibilities for market development and increasing sales, contributes to improving services for clients, allows companies to change a potential client into an active one, facilitates information transfer and their rapid update, significant economy, increased safety, equal opportunities, information flow control.

From the SMEs side of view, a survey was done by Lagrosen [17] to ask of what is the greatest benefit that e-marketing has provided them with. Most companies agreed that the greatest benefit of e-marketing is that it provides a two-way communication (interactive communication). In this way, the communication can become more engaging for customers and better suited to the individual customers' needs and wants.

While e-marketing has great and revolutionary potential and benefits to companies, it has had only quite a number of effects on SMEs because it is not being used fully in these enterprises. The reason for that is how challenging implementing e-marketing has proven to be. The development strategies of e-marketing in SMEs are reported to be challenging because transformation requires an understanding of the rationale for e-marketing adoption. In a survey done by Chong et al [2] in 2009, a number of SMEs were asked about the reason they adopted e-marketing. The results were that the SMEs answered as follows: for competition in the marketplace (29.9%), e-marketing is part of the marketing strategy (20.7%), globalization (19.5%), to follow the industry trends (9.2%), it was demanded by senior management (8%), customer satisfaction (9.2%), and others (3.4%). So from the results of this survey it can be seen that most of the surveyed SMEs (29.9%) implemented e-marketing for competitive advantage.


SMEs dominate international industries in volume; however, it is their size that provides them with competitive advantage. With that being said, the limited resources of SMEs keeps their marketing activity restricted. And therefore, SMEs have to implement new and innovative ways for their marketing [18]. E-marketing could be the answer to open and increase SMEs marketing activities.

Moreover, SMEs today face an increasingly unstable marketplace widespread with change. Dominating the changes are technological advances affecting telecommunications and information processing. One aspect of these changes that has clearly reverberated is the growth of the Internet [19]. And in order to balance with the changing environment of today's world, SMEs must take advantage of the growth of internet in order to survive.

SMEs will be made aware of a vast array of supply opportunities through the Internet. The traditional methods of making a market aware of the firm's products and capabilities can require major resource commitments making the portion of the global market that a small firm can hope to cover limited. And so, internet will make marketing much more successful especially in reach an international market [20].

And so, in order for SMEs to compete effectively in today's rough environment, they need to develop skills and strategies that will help them in gaining competitive advantage over giant enterprises. Developing marketing, and e-marketing capabilities and adopting an e-marketing strategy would be the way to improve their business performance and survive [21].


The literature review in this article shows that the use of internet in SMEs is relatively slow. This is due to many reasons such as lack of knowledge of how to effectively implement it, lack of awareness of internet capabilities, and also challenges of internet adoption.

Internet has provided companies with the new and innovative marketing which is e-marketing. While e-marketing have many advantages, SMEs failed to use it to its full potential and thus failed to benefit from all the advantages. However, for those SMEs that have implemented e-marketing, e-marketing has affected their marketing performance in many ways such as:

- Improved communication with customers

- Widened marketing activities

- Coping up with the unstable changing environment and marketplace

- More successful marketing in reaching to international markets and making them aware of the product/service

- Competitive advantage over giant enterprises

If more SMEs start to use e-marketing; and to its full scope, their marketing performance will be stronger and more successful. Since SMEs are a huge part of the economy's growth, they need to remain competitive to survive in the industry. That's why more researches should be done to raise awareness of the importance of e-marketing, how to effectively implement it, and how to face the challenges of implementing it.

To sum up, the literature review in this article examined the benefits and potential of e-marketing in SMEs and their marketing performance. It was discovered that the use of e-marketing is not wide and that it needs more time for it to spread and be used fully.


To conclude, this article has pointed out the effects of e-marketing on the marketing performance of SMEs. SMEs could truly benefit from e-marketing if they use it to its full potential. Not only that, all areas of e-business can be very beneficial to SMEs but the problem is the low rate of internet adoption in SMEs.

This article also explains the reason for low internet adoption in SMEs whether its e-business in general or more specifically e-marketing. Due to the usual confusion between e-business, e-marketing, and e-commerce, the paper has highlighted the difference between the three in order to be able to fully understand what e-marketing is and how it can benefit companies.

Finally, the article elaborates and explains the reasons that all SMEs should be implementing e-marketing today before tomorrow and that e-marketing can have great potential on the success and survival of a company.


This article is based only on literature review from other researches. And so, its findings are not new or innovative. Therefore future researches should be done by surveying a few SMEs and interviewing employees and employers to get a better insight of why exactly they are not using e-marketing to its full potential and why they are going very slowly in adopting internet in their enterprises. Moreover, future researches should cover how to effectively implement e-marketing in SMEs as well as how to overcome the challenges that come with it. This will help SMEs start implementing e-marketing without any problems or challenges. And this way SMEs can enhance their marketing performance even more and remain competitive against large enterprises.