In this age of technology, internet marketing is vital since the majority of customers use the internet regularly which creates an opportunity for firms to reach them. Companies thus need strategies which will enable them to reach these customers and effectively advertise their goods and services to them. This study analyzes secondary data to determine the impact of internet marketing on small firms and how firms can optimize on the use of internet marketing. Additionally, it looks at the legal challenges that firms have faced for mishandling customer data obtained during online marketing. The results show that firms should combine both online and offline marketing tactics which are based on the 4P’s which are product, place, promotion, and people. It further indicates that firms should strive to build relationships with their customers to create loyalty and thus increase their productivity levels. There is a myriad of benefits identified as being brought about by internet marketing. These include; reduced marketing costs, increased brand visibility, easy performance analysis, and a local and international reach. Finally, the study shows that website marketing is critical to business operations and it also highlights the significance of tracking the impacts of various online marketing strategies.
Keywords:
internet marketing, small firms, online marketing, business operations, marketing strategies.
How Small Businesses Can Optimize Internet Marketing
Background
Traditional forms of marketing are widely used by businesses. To create a competitive advantage, companies have had to use new methods of marketing such as internet marketing. According to Schwarzl and Grabowska (2015), internet marketing entails the use of internet tools to reach target customers. In particular, the focus of this marketing strategy is the internet page.
Additionally, internet marketing differs from online marketing. Online marketing entails all the techniques used in advertising to lead users to certain web pages (Schwarzl and Grabowska, 2015). Contrary, Jones et al. (2011) argue that online marketing and internet marketing are the same. Corley et al. (2013) add that internet marketing entails using the internet as a platform to buy products. Therefore, internet marketing uses internet tools to direct users to business web pages and reach new customers hence create a virtual environment where consumers can buy goods.
Internet marketing had developed gradually over the years. According to Jones et al. (2011), it began in the 1990s with the creation of web pages that describe products for the consumers. By 1996, online advertising was worth $301 million which became $1 billion in 1997 (Jones et al., 2011). The growth was profound because online advertising had not begun in 1994 (Jones et al., 2011). Corley et al. (2013) add that internet marketing gained popularity because it was a method that could increase sales.
Additionally, the use of social media in internet marketing began in 2009 (Nosrati et al., 2013). Based on this growth, privacy became a concern. Nosrati et al. (2013) state that online advertising companies, such as Google, had unrestricted access to personal customer data. It can be argued that the internet began as a way for businesses to reach new consumers and is continually evolving.
Internet marketing has been adopted by businesses to influence productivity. According to Mokhtar (2015), there has been significant growth in internet usage in developed and developing countries which has increased internet marketing. For instance, in 2012, approximately 40 percent of the small to medium business enterprises (SMEs) in India used internet advertising methods and about 55 percent used their website for business leads generation (Pradhan et al., 2018). In developing countries, businesses use the internet differently depending on the type of sector and the size of the company (Mokhtar, 2015). Globally, internet marketing has been used as a tool to improve the productivity of businesses.
Research Objectives
The objectives of this study are;
1. To analyze different laws on the protection of online marketing target customers.
2. To determine the different types of online marketing strategies that firms should use to increase marketing effectiveness.
3. To determine how social media marketing affects the operations of small businesses.
4. To analyze how one can optimize website marketing and generate high benefits from its use.
Research Questions
The research questions that this study targets to answer include;
1. How has social media marketing impacted the operations of small companies?
2. Are large firms better at internet marketing than small companies? If so, why?
3. Which challenges do small businesses face which make them fail at internet marketing?
4. Are there any companies which have faced legal issues due to the use of social media marketing?
5. Which online marketing strategies should companies use to reach a broad target market and increase marketing effectiveness?
6. Which technological advancements aid in the determination of the effectiveness levels of various online marketing strategies?
Research Aims
The research aims to determine how internet marketing has affected small businesses and find out why many small companies are unable to use social media marketing effectively when compared to larger companies. Additionally, it aims to determine the different legal issues that various firms have faced due to poor use of social media, and even determine the best strategies that firms can apply to optimize the use of websites in marketing. The results of the study will have applications both practically and theoretically. Practically, the results will enable small business owners to identify the reasons why their marketing techniques fail and thus help them determine strategies that they can apply to enhance their online marketing operations. Theoretically, they will aid in the advancement of theories such as the resource-based model and the Theory of Planned Behavior.
Methodology
The study employed a descriptive survey research design. According to Chille (2018), a descriptive survey enables one to acquire information by collecting data and analyzing the findings. The study made use secondary data by reviewing information from the various firms to find out how internet marketing has affected their operations.
Secondary data was collected for various companies that use internet marketing. Different statistical methods such as graphs and tables were used in the analysis to determine the relationship between the dependent and independent variables. The secondary data was collected from various databases namely; Webster, Wiley Online, and J-STOR libraries.
The analysis of the different peer-reviewed articles revealed that a gap exists in the research on the impact of internet marketing primarily on small firms. The choice of the secondary sources used an inclusion criterion which consisted of fifteen peer-reviewed journals articles and works from different researchers on the subject as well as topics that contained internet marketing for either small or large businesses. The exclusion criteria used was for articles that were not visible in the top twenty search results.
To further determine the works to use in the study, the articles chosen had first to have titles that were in line with the impact of internet marketing on businesses, the abstracts of the articles were studied, and finally, the chosen articles were read in full to ensure that they were relevant to the study. The studies used in this case involved at least five participants each to ensure that the findings were rich and thus represented the entire population. Various case studies were analyzed since they aided in the in-depth exploration of the companies’ activities and processes and to determine their internet marketing activities and also come up with the impacts of those activities on the various businesses. The secondary data hence came from archival evidence, documents, and observations from case studies. Finally, the analysis of the evidence from the case studies involved the use of both qualitative and quantitative data. The data which was required to satisfy the various objective was collected in varying ways as depicted below.
Objective 1; To determine how companies have been adversely affected by the wrong use of social media marketing.
The study looked at one major firm, Facebook, that has faced legal issues due to its use of internet marketing and looked at other studies that provide insights on how such problems can be avoided.
Objective 2; To determine the different types of online marketing strategies that firms should use to increase marketing effectiveness.
Different articles were analyzed to determine how firms can improve productivity by using various online marketing strategies such as social media, e-mail marketing, among others together.
Objective 3; To determine how social media marketing affects the operations of small businesses.
To satisfy this objective, the study involved the analysis of different case studies of both small companies to see how social media marketing has influenced their performance and how the firms have benefited from using online marketing strategies.
Objective 4; To analyze different laws on the protection of online marketing target customers.
The objective was satisfied by looking at the results of the use of websites by different companies to determine how they have impacted business performance. The study considered how the sites affected the various firms, both large and small.
Literature Review
Many small companies in many countries across the globe do not last long, and this may be attributed to various factors including their marketing activities. Demishkevich (2015) states that only fifty percent of small companies in the United States manage to operate for more than five years. One factor that has been attributed to these statistics by different researchers is lack of proper marketing activities. Similarly, according to a study conducted by Zickuhr and Smith (2012), ninety-two percent of consumers look for the goods and services they need online. Their research further shows that ninety-one percent of customers use e-mail, seventy-one percent use the internet to purchase products and services, and sixty-four percent of people use different social networking sites. Therefore, business owners have to use the internet in their marketing activities and use it effectively for them to have the desired impact.
The review of the different peer-reviewed journal’s literature by Walsh and Lipinski (2009); (Moran and Gossieaux, 2010) and (Micu et al., 2017) showed that the marketing activities carried out by small businesses have a minor impact when compared to those of the large firms mainly because of the constraints that they face. According to Walsh and Lipinski (2009) and Micu et al. (2017), the level of marketing maturity in small and medium enterprises is not as high as that of large firms. Moran and Gossieaux (2010) add that the knowledge that the small business owners have affects their marketing strategies and they also adopt the marketing strategies that meet the needs of their businesses. Demishkevich (2015) adds that their marketing activities are also reactive because of the dynamic business environment. Therefore, the successful implementation of internet marketing strategies requires the application of specialized knowledge by small businesses.
According to Jarvinen et al. (2012), online strategies are becoming fragmented, and they are also continually evolving. Some businesses, especially SMEs are thus not able to keep up with technologies which are changing very fast and may, therefore, require help in the management of their online marketing activities. Consequently, since many small business owners cannot afford to hire in-house specialists, they choose to outsource their online marketing activities to web agencies. Similarly, Biswas (2016) adds that the lack of user capability skills is one of the factors that have made it hard for small companies to adopt internet marketing. Additionally, Gossieaux (2010) states that their lack of knowledge causes small business owners to fail to implement various online marketing strategies and thus not follow any set procedures when marketing online which leads to failure.
According to Choudhury (2014), small businesses are also unable to take advantage of internet marketing due to the financial constraints that they face. They are thus not able to adequately adapt to new technologies which are changing quickly as mentioned earlier. Similarly, another study conducted by Kessler, Allocca and Rahman (2007) states that financial policies usually favor large companies more than small companies due to the high transaction costs and collateral that is needed. These costs include the costs of creating websites or advertising costs on platforms such as Facebook. Another study conducted by Popli and Rizvi (2015) shows that small companies have a poor infrastructure which inhibits their online marketing strategies.
According to O’Donnell (2014); Swapana and Padmavathy (2017), even though the core dimension of the different social media networks is communication, not all the existing platforms are suitable in equal measure for the organizations’ marketing objectives since they are not all well suited for the cultivation of relationships, collaboration, or even passing information. This hence means that certain online marketing platforms will yield better results than others and these are the platforms that can create the optimal marketing mix. Jarvinen et al. (2012) however state that frequent communication which is initiated by the marketer on the various interactive networks is vital since it aids in the development of long-term friendships. The entity that provides information creates its communities with its social network constructs and should, therefore, communicate frequently to bring about the flow of information. Figure 1 below depicts the type of information that takes place in a social sphere.
Figure 1. Type of information that takes place in a social sphere.
Source: Jarvinen et al. (2012)
DespiteSari (2017) found that many small companies normally focus on customer engagement through various online channels. Similarly, Scheers (2014) found that the owners of small businesses usually use online marketing platforms to carry out various communication activities aimed at brand development such as e-mailing and personal selling. Relationship marketing is another strategy that many small companies use to reach their customers and retain them. According to Van Scheers and Mashego (2017), small enterprises practice relationship marketing, and they even have a system that they use to communicate with their customers and manage their customers’ data.
Another study conducted by Van Scheers and Botha (2015) however states that many small business owners are not even aware of the term relationship marketing and thus do not employ strategies aimed at building the relationships that they have with their customers. Moreover, a study carried out by Choudhury (2014) stated that many small companies normally employ online marketing strategies that are aimed at the short-term fulfillment of objectives while many large companies use online marketing strategies that will generate value over the long-term.
Choudhury (2014) adds that firms that use online marketing effectively improve their relations with their customers and also make the communication process effective and efficient. Some small companies use communication technologies which are interactive to automate the process of communicating with their customers. According to Biswas (2016), small companies are also able to collect data about the interests of their target market where they learn about the different people’s characteristics and interests. The access that firms have to this personal data allows them to deliver effective and targeted advertising. The integration of the firms’ online marketing tools and their customers’ data is crucial since it enables the firms to improve the relationships that they have with their prospective and existing customers.
According to Kessler, Allocca, and Rahman (2007), measurement of the impact of the different marketing strategies that companies employ is vital and aids in improving the companies’ performance. Similarly, Sari (2017) found that there is a positive relationship between the performance of the marketing mix that a company uses and the use of metrics. Scheers (2014) states that the collection and definition of metrics aimed at demonstrating the contribution of different marketing strategies and tactics is a process that can prove to be complicated and thus needs various metrics to be integrated.
However, a study conducted by Van Scheers and Mashego (2017) determined that the majority of small firms do not carry out the analysis of their different marketing activities and instead the management relied on its intuition. The lack of expertise when carrying out online marketing activities, as well as the failure to measure how the marketing strategies employed, are performing have caused small companies not to reap the benefits of online marketing. Consequently, a study conducted by Scheers (2014) states that many small entrepreneurs are hostile to online marketing due to the bad experiences that they have had.
Therefore, despite its many advantages, online marketing has been seen to bring various challenges to the businesses that use it. According to Sood (2018) and (Sztojanov, 2015), it is a double-edged sword which can build brand reputation and also destroy it. Incidentally, Netflix Inc. announced on July 2011 that they would increase the cost of subscription by about sixty percent (Sood, 2018). Consequently, the customers complained greatly about this which led to the drop in their stock prices significantly and the company’s reputation was substantially damaged. Firms may also be negatively affected in cases where they have low information content, structure, and poor performance.
Discussion and Analysis
The discussion and analysis section has been organized based on the objectives.
1. Laws on the protection of online marketing target customers.
Internet marketing has enabled various firms to gain even confidential data about their customers. However, firms such as Facebook and Equifax have incurred huge losses in fines for misappropriating their customers’ data as depicted in table 1 (Sec.gov, 2018). Various countries across the globe have put laws in place aimed at protecting their citizens’ data. However, some countries such as the UK, have laws which are more permissive when it comes to using customers’ data (Demishkevich, 2015).
In California, USA, there is a privacy protection act which requires firms to disclose the data they may use, the types of information they gather using online marketing tactics and the process in which customers can review and change information (Jarvinen et al., 2012). Firms also need to assure their customers that they will protect their data since data breaches have been rampant in recent years as depicted in figure 2 and 3. Another critical factor that firms should consider when dealing with their customers’ data is determining whether they are underage or not because many countries have stringent laws which are aimed at protecting minors (Calvert, 2018). Therefore, understanding of national laws in regards to online marketing is a crucial element that companies need to consider. Additionally, companies need to ensure that their data and that of their customers is well protected to prevent incidences of hacking. Finally, they need to be aware of the ages of the customers who they are advertising their products to in a bid to ensure that they are not underage.
Figure 2. Data breaches statistics
Source: Calvert, 2018
Company
Amount of fine
Date of fine
1. Facebook
£500,000
2018
2. Carphone warehouse
£350,000
2018
3. Your money rights
£350,000
2017
4. Keurboom Communications
£400,000
2017
5. TalkTalk
£400,000
2016
6. Equifax
£500,000
2018
Table 1. Losses in fines.
Source: SEC.gov, 2018
Figure 3 Fined companies
Source: Odhiambo (2012).
2. Online marketing strategies that firms should use.
The online marketing strategy that a firm should use must be based on the 4Ps model which is depicted in figure 4 below.
Figure 4. Successful SMMEs.
Source: Odhiambo, 2012
The online marketing strategy to be used by firms is hence dependent on the products and the prices charged. Firms thus need to use social media platforms such as Facebook, Instagram, and Twitter and connect with their customers. The different companies need to use different platforms effectively in a bid to increase their visibility and customer awareness.
According to Faisal (2016), the internet usage rate has grown as depicted in figure 4 below. Therefore, optimizing on its usage is crucial. The researchers conducted a survey that showed that blogs influence purchasing decisions at a rate of 63% higher than magazines and personalized marketing strategies using online platforms enhanced the rates of clicks by 14% (Faisal, 2016). Another study conducted by Schwarzl and Grabowska (2015) showed that it is vital for companies to be aware of their customers’ decision-making process which is depicted in figure 5 below. By comprehending this process, they will be able to personalize their marketing process and connect with their customers which will increase their loyalty.
Figure 5. Internet Usage Rate.
Source: Schwarzl and Grabowska (2015)
Finally, Gul and Boz (2012) add that online marketing strategies are not the only ones that should be employed to create an optimal marketing mix. Instead, firms need to integrate online marketing with traditional marketing strategies into their business models and value propositions. Firms also need to track and interpret their internet marketing performance data and use it to generate insights on how to optimize their marketing activities. Therefore, companies need to mix both online and offline marketing strategies to increase the effectiveness of their marketing activities. companies should also capitalize on the marketing strategy that favor its products and the prices charged. Finally, connecting with their customers is a crucial marketing strategy that small companies need to adopt to create customer loyalty.
3. How social media marketing affects the operations of small businesses.
Lagrosen conducted a study in 2015 which involved the analysis of various Swedish companies shown in figure 6 below. The study showed that most of the large companies use mass transactions communications strategies while others use relationship marketing. The majority of successful small companies use personalized relationship communication strategy. This strategy has been said to be the most effective strategy for small firms since they need to focus on building relationships with their customers.
Figure 6. Analysis of Swedish Companies.
Source: Lagrosen (2015)
According to Woźniakowski (2016), online marketing has various benefits on small firms. It enables them to have an equal opportunity when advertising regardless of their size. Additionally, it saves on costs and allows the marketers to determine the amount and type of traffic visiting their sites and thus optimize on their marketing strategies. It also allows the firms to reach many customers both locally and internationally. Therefore, when companies use online marketing continually and adequately connect with their customers, they are likely to improve business productivity and increase their market share and consequently raise their profit levels.
A study conducted by Musso (2017) showed that 85% of women and 15% of men use online marketing as depicted in figure 7. Additionally, the highest age bracket of people who use the internet are people aged 25-34 years. Therefore, by concentrating their marketing efforts on these market segments, firms have been able to increase their conversion rates.
Figure 7. Online marketing usage.
Source: Musso (2017)
The study further showed that there are particular times that the majority of people use different online platforms and in varying proportions based on their locations as depicted in figure eight and nine below. Therefore, many small firms try to optimize on such factors to increase their online marketing effectiveness.
Figure 8. Top Instagram followers in different areas in the US
Source: Musso (2017)
Figure 9. Times when people are most active on Instagram.
Source: Musso (2017)
It is therefore crucial for small companies to carry out data analysis to determine the online marketing platforms that their target customers use at different times. Additionally, they need to use a personalized marketing strategy when dealing with their target customers.
4. How one can optimize website marketing and generate high benefits from its use.
According to Yannopoulos (2011), firms build websites that focus on ensuring that customers are well informed and provide different ways in which customers can communicate their thoughts and opinions and question the management on various issues. A study conducted by Musso (2017) showed that increased web traffic is one of the major objectives of digital marketing at 14% as depicted in figure 10 below. Firms hence need to optimize their websites by using search engine optimization and google analytics to track their conversion rates and enhance them.
Figure 10 Objectives for a digital marketing. Source: (Musso, 2017)
A study conducted by Musso (2017) showed that CEOs are looking to enhance their SEO as depicted in figure 11 below. SEO optimization is crucial since the majority of people use search engines to search for various products and services that they need as depicted in figure 12. Google analytics on the other hand aids in the measurement of a firm’s return on investment and enables the management to track how their websites and other internet marketing platforms are performing (Musso, 2017). Consequently, firms can determine the areas which deliver the highest value and maximize productivity in those sectors.
Figure 11. Companies’ Top SEO Priorities: 2018. Source: (Musso, 2017)
Figure 12
Once companies increase traffic, they should engage with them and then carry out actions which will improve their conversion rates as depicted in figure 13. Yannopoulos (2011) states that firms need to create a personalized relationship with the target customers who visit their websites to convert them into customers.
Figure 13
Therefore, companies need to optimize the results of their websites by using both search engine optimization and google analytics. These two tools will enable the firms to track their traffic and increase their conversion rates. Once they increase their traffic, the companies need to create a personalized relationship with their customers.
Conclusion
In conclusion, the study identified a gap in the effects of internet marketing on small firms. It made use of secondary data derived from companies, case studies, and previously completed research studies. The analysis of secondary data showed that many small companies do not apply online marketing effectively in their daily operations. The different constraints that small companies face include the lack of sufficient funding, lack of expertise, and an inability to keep up with the constantly changing technologies. The study has also shown that many firms have faced legal challenges for misappropriating customer data, and it has also shown the significance of analyzing which marketing strategies are effective.
Recommendations
Based on the results of this study, there are various recommendations that firms need to consider. First, firms should follow the policies of the nations where they operate. Additionally, they need to be aware of the ages of the people who they market their products to in a bid to ensure that their marketing operations and the manner in which they use the data obtained are within the law. Second, firms need to protect their customers from data breaches by hackers which have been prevalent over the recent past by putting up measures that ensure data protection.
Third, the study showed that marketing should involve the integration of both online and offline marketing strategies. Companies also need to analyze their target customers to determine the best marketing strategies that should be applied in a bid to yield the most optimal results. The study further revealed that small firms need to plan strategically on how best to carry out internet marketing or use the help of other professionals in the field to optimize their marketing results. Finally, firms should continually track the performance of their online marketing strategies using tools such as search engine optimization and google analytics to determine how best to improve their marketing activities.
Limitations and Suggestions for Further Research
The main limitation of the research was the use of secondary data which could be inaccurate or wrongly represent the entire population. To get more conclusive results, more companies and case studies should be studied to ensure that the data is a representation of the whole population. Other limitations included the lack of particular sets of data and credentials needed to access specific databases crucial to the research.
Further research can be conducted on the comparison of using either relational marketing or value-based marketing. The study showed that most of the large companies use value-based marketing which is focused to the masses while the majority of successful firms use relational marketing. Therefore, it is vital to research further on this area, to determine which strategy has the highest impact on business productivity. Determining the best type of marketing that firms need to adopt will help companies to optimize their marketing operations and increase their effectiveness and efficiency.
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