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The impact of ICT on marketing firms (SMEs) in Lagos State

Information Technology Management Projects

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The increasing need to validate the marketing efforts across brands and also, identifying the most effective way to drive engagement and attribution among products shareholders in Lagos, and Nigeria at large has been on the rise recently (Solomon, 2003). The study further explains that firms generally are moving to the fast paced digital channels to market their products as opposed to the traditional means that used to play a major role in advertising and marketing. While tracking of cost per acquisition or attribution in the old traditional means of marketing such as billboards, television and radio is quite difficult, the recent developments in the Information and Communications Technology (ICT) sector where digital channels have proven to be more effective and attributable has brought the need to measure this impact and assess the possible effects of this impact on marketing efforts today.
 
This study will investigate how ICT is being used by firms, and the various channels such as the Internet, Short Message System (SMS), EMAILS and other means through which users generally interact with using their mobile phones, laptops and other gadgets. According to a study by Philip (2001), the aim of marketing is to know and understand the customer which makes the process of selling products and services seamless.  He went further to explain that the aim of business is to create a customer and to be in that business, there must be marketing and innovation. Other activities are basically costs and the best way to predict the future is to create it. The approach that should be used in marketing in this digital age should be adapted to the cultural changes of this generation.
 
Furthermore, as noted by Vilaseca-Requena(2007), intensive ICT use in marketing makes most firms more innovative, as it is perceived that its usage breaks down barriers to innovation and speeds up processes that in turn become more efficient. Also, the rapid growth of ICT has encouraged firms to integrate and collaborate with robust ad-networks firms to help develop their innovation processes. The internet specifically has been a massive marketplace where a lot of activities take place. It combines creativity and technicality which goes into design, development and advertising. The misconceptions around internet marketing being a process of using websites or displaying banner ads on web pages are still rampant. Effective marketing on the internet requires a strategic process that aligns a firm’s objectives to available channels and the most effective one at that (Ray and Kelly, 2016). In this case, the reach (or target audience) is narrowed down and various channels or platforms are identified to serve this ads to the right audience, at the right place and the right time.
 
However, ICT has had several effects on marketing, with some seen as  positives and others negatives. The advent of mobile phones has been a huge boost to the development of the ICT sector in Nigeria (Twinpine, 2017). This has led to a positive impact on users because information is more easily accessible. Advertisements can easily be done instantaneously as opposed to waiting for a radio jingle or television allocated slots for your adverts. In addition, geographic boundaries that once defined audiences no longer apply. One can conveniently reach people in all geo-political zones without having to bother with the complications that come  with boundaries and environments. On the contrary, many people who are not technically inclined especially in rural areas are not easily reached when using the internet as a way of advertising. According to National Bureau of Statistics in Nigeria (2018), Nigeria has a population of about 200 million people and only about 60 million people are on the internet which constitutes 30% of the entire population (Twinepine, 2017). This leaves room for 70% of the people not captured and unreached because they are either feature phone users or they are not technologically inclined.
 
The Nigerian ecosystem has a variety of marketing firms working with several industries like the telecommunications industry, the manufacturing industry and the financial services industry. Animashaun(2013), identified several marketing activities and its impact on the telecommunications sector using MTN Nigeria as a case study. Users were incentified with sales promotion by giving free airtime and data bundles, sponsorships and exhibitions. Direct marketing was also done when users go to their offices or call centres to make enquiries. He explained how innovation in products and idea gives MTN an advantage over other competitors. In addition, the use of mobile surveys to get feedback from its users while coming up with mobile airtime and data strategies has helped them.
 
The financial service industry offer a wide range of financial services to personal and business customers. Some of these services are bank accounts, advisory, guarantorship, credit/debit card transactions, and money transfers (Lawal, 2014). He went further to show the relationship between marketing strategies and the banks performance has a huge impact on the revenue made at the end of the fiscal year. Banks typically want users to open accounts, fund existing accounts  more often, utility bills and other bills paid through them. In order to achieve this, marketing strategies such as a platform for incentives, profit on savings  and long term investment plans are  at the core of their marketing campaigns.  Recent activities such as Unstructured Supplementary Service Data (USSD) for making mobile payments, airtime recharge and money transfer  has proven efficient and effective using short code marketing done by banks (Flaming and Bull, 2013). An example is 737 shortcode used by GTB.
 
Marketing activities impacts virtually every product or service sold in Nigeria. These activities collectively form the marketing mix that describes how a company produces, prices and promotes a product or service within a market (Greene, 2018). The variation in marketing activities are a lot and encompass almost every kind of media or campaign(Lovering, 2019). Some examples of marketing activities that have proven effective in engaging customers are as follows;

  • Sending SMS blast messages to the users
  • Placing a phone call to the users informing them of new deals, products, discounts e.t.c
  • Sending occasional newsletters
  • Using search engine marketing
  • Meeting customers at trade shows and exhibitions
  • Product placement on TV commercials

 
1.2 STATEMENT OF RESEARCH PROBLEM
According to Thelma (2015), companies still fall short of their target despite the advancement in ICT marketing. Information and Communications Technology channels such as the internet, SMS and mobile applications are considered important for creating a competitive advantage. Despite the rapid deployment of ICT by small and medium enterprises in Nigeria, there is still a huge gap regarding how they are able to sell their products and services (Ebitu and Ufot, 2015).
 
Besides, major SMEs in the Southern part of Nigeria, currently do not have the required managerial expertise to make good marketing decisions when it comes to selling their products and services (Ebitu and Ufot, 2015). The findings highlighted in this study is that there is a significant relationship between the marketing problems experienced by the SMEs and the increase in their profit margin and sales volume. Some of the major challenges the SMEs face were also discussed in the study.  These challenges are that the manager/business owner may not be able to raise short term capital needs of his business from banks or other financial organizations and may rely heavily on personal savings or loans from family and friends, the level of understanding of marketing, its activities and channels for managers and other decision makers is usually low, capital requirements for small scale enterprises are small, which means they have small marketing budget as well, most SMEs are generally poorly equipped as they feel reluctant to accept help from external persons owing to the fear that they would not have full ownership and low demand for their products and services.
The popular radio and television jingles are gradually been phased out and replaced with digital means (Olajide, 2011). The study explains that huge budgets are allocated for these commercials and the effects are always minimal. On the other hand, the use of internet, mobile applications have helped solve this problem. Budget spent has a direct relationship with the outcomes that are desirable. Small and medium enterprises are able to plan and strategize their marketing campaigns. SMS marketing has gained significant ground because of its penetration and reach since the advent of mobile devices in Nigeria (Bomiegba and Ezema, 2017). The study explains that customers are generally not receptive to unsolicited messages especially when these messages do not apply to them. While this is the case, firms find it easier to market through this channel because of its reach (both smartphone and feature phone users)  to the target audience.
In an attempt to fill this research void, the proposed study would examine how the implementation of ICT tools and activities assists SMEs with their marketing efforts. By testing a number of hypotheses from the data that would be collected, this study would discover possible impact that the use ICT channels and activities has on marketing firms in Lagos State.
 
1.3 RESEARCH QUESTIONS

  1. what are the various types of ICT activities that are available to marketing firms in Lagos?
  2. what is the degree of adoption of the ICT channels by marketing firms in Lagos?
  • what impact does ICT activities have on the performance of marketing firms in Lagos?

 
1.4 OBJECTIVES OF THE STUDY
The specific objectives of this study are to:

  1. identify the various types of ICT activities available to marketing firms in Lagos
  2. examine the degree of adoption of ICT channels by marketing firms in Lagos
  • access the impact of ICT activities on the performance of the marketing firms in Nigeria

 
1.5 SIGNIFICANCE OF THE STUDY
This study will be of great importance to the improvement of products sales for small and medium enterprises with their marketing efforts. It would highlight and explain the impact of ICT on marketing and in turn, inform firms on how to integrate advertising strategies with information technology and contribute towards realization of high sales turnover.  Furthermore, this study will provide small scale business stakeholders the need to propagate their businesses practices to meet global needs. This study will also include inclining individuals, agencies and government on the need to create an enabling environment where businesses can thrive and as well, emphasize on the value created when proper ICT practises for marketing are adopted by firms.
 
1.6 SCOPE OF STUDY
The study is based on the impact that ICT activities has on marketing firms with the core focus on small and medium sized enterprises in Nigeria. However, the concentration of study is Lagos State, Nigeria where most of these firms are highly concentrated (Adeoti and Ogundele, 2012). The study will assess the effect in which various ICT activities has had on these marketing firms with specific reference to their performances. For this study, the focus will be on SMEs (small and medium enterprises) where over 90% of Nigerian businesses fall under. In addition, over 50% of employment and industrial outputs are from these SMEs (Oyelaran-Oyeyinka, 2018).
 
The channels adopted for marketing in this study are limited to the use of mobile phones (SMS), the internet (WEB) and mobile applications due to high rate of mobile phone and internet penetration in Nigeria. According to a report by Twinpine (2017), over 70% of the populace use feature phones and 30% use smartphones. The implication of this is that most ICT channels are designed for smartphones (i.e the web) and that leaves 70% of the potential market share untapped. Due to this, there has been several attempts to devise a working solution to potentially bring the larger chunk of the people (the 70%) to the web or alternatively, bring the adverts to them. The safer option is to bring the adverts to them and recent improvements with the use of SMS to deliver campaigns for marketing have helped in this regard. Developments such as SMS to URL, USSD, Video in SMS, flash messages, end of call notification (EOCN) with ads appended and so on have helped improve marketing efforts (Ayo and Ukpere, 2011).
 
1.7 EXPECTED CONTRIBUTION TO KNOWLEDGE
This study will reveal the various ICT activities in which marketing firms in Nigeria are disposed to. Also, the study will reveal the extent of adoption of ICT channels by marketing firms in Lagos State. In addition, the impact of ICT activities on the performance of marketing firms in Lagos State will be known through this study.
 
 
 
 
1.8 DEFINITION OF TERMS
ICT: information and communication technology
ADVERTISING: the activity or profession of producing advertisements for commercial products or services to drive sales
SMS: Short Message Service, is a text messaging service component of most telephone, internet and mobile device systems
URL: Uniform Resource Locator, is a reference to a web resource that specifies its location on a computer network and mechanism for retrieving it
USSD: Unstructured Supplementary Service Data, sometimes referred to as quick codes or feature code is a communications protocol used by GSM cellular telephones to communicate with mobile networks
EOCN: End of Call Notification, is the message you get on completion of a call telling you your account balance
TV: Television
SMEs: Small and Medium Sized Enterprises. Typically, we would be considering about 100 – 250 firms in this report with a reasonable capital base of at least N100, 000.
ICT Activities: these are activities carried out to promote a brands products and services
Marketing Firms: These are firms that helps other businesses to grow by managing  their  product and service development.
ICT Channels: These are the various ways in which ICT enables marketing activities. The use of mobile phones through SMS and the internet are the channels through which these activities happen.

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