Marketing of SMEs in the Digital Era

This blog post discusses marketing of SMEs in the digital era and its challenges, by using AliExpress as the object of analysis. Eventually, this blog post recommends SMEs to participate in online market platforms and to improve knowledge and skills in digital marketing.

 

 

Marketing of SMEs in the Digital Era

 

Many studies show that companies’ marketing capabilities (including creativity, innovativeness, customer connection, etc.) have the positive relationship with their performance outcomes (Morgan, Vorhies and Mason, 2009; Cacciolatti and Lee, 2016). The same relationship is also experienced by SMEs (Merrilees, Rundle-Thiele and Lye, 2011), although the degree of influence is not as strong as it is in large companies (Walsh and Lipinski, 2009). The digital era has also significantly affected SMEs marketing capabilities as well as impacted their businesses.

The employment of digital medias provides SMEs with low cost of communication and transaction with customers as well as gain and share information globally (Lawrence, 2009). SMEs’ can utilise them to advertise and market their products effectively and efficiently. Among the positive outcomes of SMEs’ digital media usage in marketing are increased profits, market share, brand equity, productivity, etc (Eid and El-Gohary, 2013).

 

Barriers and Challenges of Digital Marketing for SMEs

 

Despite the many benefits of digital marketing that SMEs can achieve, its usage is not leveraged (Alam, 2015; Taiminen and Karjaluoto, 2015). This is most probably because of the barriers they have in applying new technologies which include knowledge, human resources, and finance (Wymer and Regan, 2005). Participating in an online marketplace platform (Oxera, 2015) like AliExpress can be one of the solutions. It accommodates small Chinese businesses for selling their products to international buyers (individuals and businesses). To join in AliExpress, SMEs need to pay $,1500 per store plus cost per action (CPA) 5% of transaction value.

Meanwhile, AliExpress generates income from third-party marketing affiliate program services, in addition to revenues from SMEs above. The program allows intermediary e-tailers to develop sites for AliExpress marketers by using AliPlugin software, another revenue for the company. Affiliates will receive income from the multiplication of visitors (through the click of language options), click-through rate (CTR), conversion rate, and commissions (AliExpress, 2017). Furthermore, affiliate will receive the fee based on pay per sale (PPS) which is more complex than cost per click (CPC) or cost per thousand impressions (CPM). In PPS system, AliExpress affiliates should ensure a customer buy a product, not only visit and click the website advertisement. Thus, attractive design and content of the websites are critical for getting customers’ eyeballs and maintaining their stickiness.

Yet, SMEs who are participating in AliExpress may experience potential challenges including obtaining customers’ insight, maintaining brand and reputation as the consequence of rating and feedbacks given by customers, and evaluating the effectiveness of digital marketing (Leeflang et al., 2014).

 
Conclusion and Recommendation

 

The utilisation of digital medias for advertising and marketing has shown improving SMEs performance. SMEs can manage the resource barriers of their leverage by participating in online marketplace platforms. Meanwhile, to resolve the challenges in the digital marketing application, it is recommended that SMEs actively improve their knowledge and skills. SMEs can gain these for free from many sources including from the platforms where they are participating in. AliExpress for example, it provides abundant tips for SMEs to increase online businesses income.

 

References:

 

Alam, S.S. (2015) Adoption of internet in Malaysian SMEs. Journal of Small Business and Enterprise Development. 16  (2), pp. 240–255. doi:10.1108/IJBM-07-2013-0069.

 

AliExpress (2017) AliExpress affiliate revenue model – 4 tricks you didn’t know about. Available from: https://alipartnership.com/news/aliexpress-affiliate-revenue-model/ [Accessed 12 June 2017].

 

Cacciolatti, L. and Lee, S.H. (2016) Revisiting the relationship between marketing capabilities and firm performance: The moderating role of market orientation, marketing strategy and organisational power. Journal of Business Research [online]. 69  (12), pp. 5597–5610. Available from: http://dx.doi.org/10.1016/j.jbusres.2016.03.067doi:10.1016/j.jbusres.2016.03.067.

 

Eid, R. and El-Gohary, H. (2013) The impact of E-marketing use on small business enterprises’ marketing success. The Service Industries Journal [online]. 33  (1), pp. 31–50. Available from: http://www.tandfonline.com/doi/abs/10.1080/02642069.2011.594878doi:10.1080/02642069.2011.594878.

 

Lawrence, J.E. (2009) The Internet and Small to Medium-sized Enterprises: Research Notes. Information, Society and Justice. 2  (2), pp. 221–235.

 

Leeflang, P.S.H., Verhoef, P.C., Dahlstrom, P. and Freundt, T.. (2014) Challenges and solutions for marketing in a digital era. European Management Journal [online]. 32  (1), pp. 1–12. Available from: http://dx.doi.org/10.1016/j.emj.2013.12.001doi:10.1016/j.emj.2013.12.001.
 

Merrilees, B., Rundle-Thiele, S. and Lye, A. (2011) Marketing capabilities: Antecedents and implications for B2B SME performance. Industrial Marketing Management [online]. 40  (3), pp. 368–375. Available from: http://dx.doi.org/10.1016/j.indmarman.2010.08.005doi:10.1016/j.indmarman.2010.08.005.
 

Morgan, N.A., Vorhies, D.W. and Mason, C.H. (2009) Market Orientation, Marketing Capabilities and Firm Performance. Strategic Management Journal. 30  (1), pp. 909–920. doi:10.1002/smj.

Oxera (2015) Benefits of online platforms [online] (October). Available from: http://www.oxera.com/getmedia/84df70f3-8fe0-4ad1-b4ba-d235ee50cb30/The-benefits-of-online-platforms-main-findings-(October-2015).pdf.aspx?ext=.pdf%7CD404A21C5BB053405B1A640AFFD44AE3.

 

Taiminen, H.M. and Karjaluoto, H. (2015) The usage of digital marketing channels in SMEs. Journal of Small Business and Enterprise Development. 22  (4), pp. 633–651. doi:10.1108/IJEBR-02-2016-0064.

 

Walsh, M.F. and Lipinski, J. (2009) The role of the marketing function in small and medium sized enterprises. Journal of Small Business and Enterprise Development [online]. 16  (4), pp. 569–585. Available from: http://www.emeraldinsight.com/doi/10.1108/14626000911000929doi:10.1108/14626000911000929.

 

Wymer, S. and Regan, E. (2005) Factors Influencing e-commerce Adoption and Use by Small and Medium Businesses. Electronic Markets [online]. 15  (4), pp. 438–453. Available from: http://www.informaworld.com/openurl?genre=article&doi=10.1080/10196780500303151&magic=crossref%7C%7CD404A21C5BB053405B1A640AFFD44AE3doi:10.1080/10196780500303151.