Digital Marketing and Its Impact on Small Businesses

Executive Summary

Small businesses major challenge is marketing due to the high costs involved in the process. The traditional forms of communication, such as radio and television, have a higher cost that small businesses cannot afford to reach their customers. The objective of this study is to evaluate the impact of digital marketing on small businesses in Kuwait. To achieve this, different digital marketing channels such as social media, online advertisement, and email marketing were evaluated in terms of sales for small businesses. The study uses theoretical data and previous research to investigate how social media has impacted businesses. The general findings of the study found that digital marketing channels significantly contribute to the growth of small businesses in Kuwait. The study suggests that policies such as making the economy more digital will heavily contribute to the economy and boost the growth of SMEs.

The keywords are small businesses, social media, growth, and digital marketing.

Introduction

The present report investigates the impact of online marketing on small businesses. The main aim of the report is to show that small businesses can use different methods of digital advertising, like social media, email marketing, and online advertising, to boost their businesses for higher sales. Another goal is to show how digital marketing improves customer relations for SMEs. In particular, the following report will answer the following questions:

1. What is digital marketing?
2. What forms of digital marketing are effective for SMEs
3. What is the impact of digital marketing on SMEs

The report will be organized as follows: first is the background, which will discuss previous studies that have been done on how digital marketing affects businesses. The following section is an analysis, presenting data from different sources on SMEs and digital marketing. The report ends with a conclusion and makes a recommendation for small businesses on the importance of digital marketing.

Background

Digital marketing is described as any marketing that relies on electronic devices to convey promotional messages. In this type of marketing, campaigns often appear on computers, tablets, phones, and other digital devices. Online advertising takes different forms, such as videos, display ads, search engine marketing, and paid social ads. Through the data available on the Internet, a customer’s choice to buy and the knowledge they have about products is available through data analysis from technology companies. Through digital marketing, businesses are able to evaluate the actions of customers, which is an effective way of expanding business. Gilmore (2011) says that digital marketing can get a customer’s emotional commitment, attention, knowledge, and understanding of a product, which is a good way of sales persuasion.

Advancements in technology have significantly impacted different aspects of conducting business, especially marketing. Due to this, there has been outstanding progress in business tools and marketing techniques that have influenced business communication positively. Digital media and technology have made it possible to link businesses and customers. In the last decade, internet use has expanded significantly, and currently, there are approximately 2.5 billion internet users worldwide. Li et al. (2017) argue that companies pay more than $60 billion to technology companies yearly. The figures prove that the Internet is changing how businesses are operated, which has also influenced many companies to apply digital marketing in their operations. Also, technology companies provide business owners with specific data and help them advertise to their niche customers, which boosts sales.

Digital marketing is one of the most used campaign techniques by companies across every business. Small businesses have also taken advantage of digital marketing to align with their target audience. According to Schivinski & Dabrowski (2016), SMEs operate in complex and unpredictable environments, where some are in competition with big brands. Due to this, they have to compete for value for customers’ hence unfair competition. Due to this, SMEs have to take advantage of digital marketing strategies to build their brands so that they can build their customer base. Sedera et al. (2016) say that SMEs need to apply social networks, online advertising campaigns, and different virtual approaches for transformational growth.

According to Yasmin, Tasneem & Fatema (2015), it is important for small businesses to position their brands in a way that allows them to have continued growth and maintain a competitive advantage in the market. If SMEs effectively use digital marketing, they are able to increase their sales and maintain a healthy profit level to survive in the market. SMEs should utilize all digital tools that offer marketing to create a wide pool of potential customers. By doing this, they are able to learn effective tools for their businesses. In Kuwait, there are a lot of digital marketing companies; however, they could be more effective for SMEs due to high rates. Therefore, when pushed to use digital marketing tools, SMEs should learn techniques that are used in digital marketing.

Analysis

What is digital marketing for small businesses?

Digital marketing entails different types of marketing techniques and technologies to reach online consumers. Because it is a form of online marketing, it allows firms to establish their brand identity and increase revenue. Unlike big established firms, small businesses use digital marketing differently, creating a bigger challenge for them. Kim & Kang (2014) argues that big corporation are more likely to succeed in digital marketing due to resources and more knowledge of their customers. One of the most used digital platforms in Kuwait is Facebook, and this is why a lot of small businesses advertise on the platform.

Figure 1: web traffic referrals from social media

Figure 1 illustrates the most used platform in Kuwait, depending on market share. The figure demonstrates that Facebook has the biggest share of online users, and this is evident because many small traders in Kuwait advertise their products through Facebook.

What forms of digital marketing are effective for SMEs

Small businesses in Kuwait have limited funds, and therefore, they can only rely on specific digital tools. Some of the most effective tools include social media marketing, content marketing, and email marketing. Small businesses can utilize digital marketing through content marketing, which is a fast and efficient way for companies. Content marketing entails creating a business profile and telling potential customers about a business’s products and services. It is one of the most important marketing essentials for SMEs because all other digital marketing strategies revolve around it. Through content, small businesses can use it as ads by publishing it in different social apps or other networks.

Figure 2 illustrates the leading digital marketing platforms that are used by small businesses.

Source: https://www.eminentseo.com/our-clients/small-businesses/

The figure illustrates that social media and websites are among the most popular digital media for marketing by small businesses. Additionally, email marketing is also very popular, followed by SEO and mobile apps. The figure also shows that content marketing is a very effective tool for SMEs in Kuwait.

What is the impact of digital marketing on SMEs

Digital marketing has significantly increased the success of SMEs in Kuwait. A lot of SMEs that have shown significant growth have succeeded by advertising online and building a reputable brand. Therefore, small businesses are able to build success by advertising to reach potential audiences. Many online shoppers in Kuwait get their products and services from small online businesses compared to big firms that sell similar products. Another impact of SMEs is the potential of creating competitiveness, and this drives them to better performance.

Another impact of digital marketing on small businesses is that it creates more brand awareness. Brands reflect consumer expectations; therefore, using digital marketing, small businesses are validated by their customers through customer reviews, enhancing trust for new upcoming brands. Also, digital marketing has facilitated customer engagement, which helps optimize customer satisfaction.

Figure 3: Kuwait: e-commerce market size 2018-2024

Figure 3 shows that e-commerce is significantly increasing, and the same trend is expected to continue. The data shows that small businesses are positively impacted by digital marketing.

Conclusion and Recommendation

The following research concludes that digital marketing is one of the most important tools for small businesses, facilitating growth, trustworthiness, and brand awareness. Many businesses in Kuwait rely on digital marketing, and the tool that is significantly used is social media through apps like Facebook and Instagram. Also, the study finds that Content marketing is one of the most used forms of digital marketing because it allows businesses to use content as advertisement in different media. The credibility of digital marketing cannot be questioned because it has positively impacted small businesses in Kuwait.

The study recommends that small businesses learn more about other types of digital tools that can increase sales. Also, a business should not rely on a single digital marketing tool as mixing up tools helps reach different audience types, increasing revenue. Also, with effective use of digital marketing, it is easy to create a trustworthy brand. If more businesses continue to utilize digital marketing tools, Kuwait’s economy will perform even better.

References

Gilmore, A. (2011). Entrepreneurial and SME marketing. Journal of research in marketing and entrepreneurship, 13(2), 137-145.

Schivinski, B., & Dabrowski, D. (2016). The effect of social media communication on consumer perceptions of brands. Journal of Marketing Communications, 22(2), 189-214.

Sedera, D., Lokuge, S., Grover, V., Sarker, S., & Sarker, S. (2016). Innovating with enterprise systems and digital platforms: A contingent resource-based theory view. Information & Management, 53(3), 366-379.

Yasmin, A., Tasneem, S., & Fatema, K. (2015). Effectiveness of digital marketing in the challenging age: An empirical study. International journal of management science and business administration, 1(5), 69-80.

Li, L., Su, F., Zhang, W., & Mao, J. (2017). Digital transformation by SME entrepreneurs: A capability perspective. Information Systems Journal, 28(6), 1129–1157. https://doi.org/10.1111/isj.12153

Kim, E., Sung, Y., & Kang, H. (2014). Brand followers’ retweeting behavior on Twitter: How brand relationships influence brand electronic word-of-mouth. Computers in Human Behavior, 37, 18-25.