The Effect of Social Media Marketing on Small Business Performance

Abstract:

The research aims to assess the impact of social media on small businesses, identify the social media
strategies used by these businesses, explore how social media is applied, and define how it can be
effectively utilized by small businesses. Studying the impact of social media activities on the
performance of small businesses is crucial, particularly in the context of social media platforms like
Facebook and Twitter, where understanding their strategic use is essential for small companies. The
research employed a descriptive analytical method, linking variables theoretically and through
questionnaires to derive useful conclusions and recommendations for scientific research and small
business activities.

Introduction

Social media platforms enable businesses to interact directly with consumers quickly and

affordably, achieving higher efficiency compared to traditional communication methods (Fridolf

& Arnautovic, 2013). Social media marketing represents the contemporary electronic tools for

marketing, offering a wide-reaching, cost-effective, swift, and highly efficient channel for

consumers to access information and features of enticing products. This channel also facilitates

the purchasing and selling process without requiring buyers to physically visit stores or

locations(Sonali Gaur & Manisha, 2020). Marketing plays a vital role in promoting and

impacting the sale of products or services, with social media platforms like Facebook that is now

playing a critical role in this process(Saliin, 2023). According to Dwivedi et al., (2015) stated

Marketing is essential for promoting and influencing the sales of products or services, and the

significance of social media platforms like Facebook in this regard cannot be overstated. Sabri et

al., (2021) is also stated that Social media marketing enables individuals to utilize online social

networks to promote their websites, products, or services, connecting with a significantly broader

audience than conventional advertising channels would allow.

Social media plays a vital role in marketing and creating relationships with customers. With limited
barrier to entry, small businesses are beginning to use social media as a means of marketing.
Unfortunately, many small businesses struggle to use social media and have no strategy going into it. As
a result, without a basic understanding of the advantages of social media and how to use it to engage
customers, countless opportunities are missed. The research aims to acquire an initial understanding of
how a small business recognized for using social media to grow the business, uses social media to
engage customers (Cox, 2012).

this project is to identify the strategies that aid an SME’s use of social media to interact with consumers.
The project deals with two specific topics that are rarely discussed together: SME’s marketing strategy
and social media. The majority of academic literature discussing social media strategy in organizations
only researches strategy in large organizations. The weakness of such literature, however, is that those
same strategies do not necessarily work for small businesses. The study examines a small business
recognized for its success of using social media. The research provides a set of techniques that the small
business uses for their social media strategy, an analysis of these techniques, and lessons from the
techniques that may benefit others (Cox, 2012).

Literature

5.1 Social Media Marketing:

Social media is engaging with consumers online. According to Wikipedia, social media is internet-based
tools for sharing and discussing information among human beings. Social media is all about networking
and networking in a way that espouses trust among parties and communities involved. Any website
which allows user to share their content, opinions, views and encourages interaction and community
building can be classified as a social media. Some popular social media sites are: Facebook, YouTube,
Twitter, Dig, and my space, stumble Upon, Delicious, Scribe, Flickr etc. (Neti, 2011). Social media has
caused a significant change in the strategies and tools companies use for communicating with
customers. Social media marketing enables companies to achieve a better understanding of customer
needs in order to build effective relationships (Cox, 2012). Social media marketing is marketing using
online communities, social networks, blog marketing and more. It's the latest "buzz" in marketing.
Global companies have recognized Social Media Marketing as a potential marketing platform, utilized
them with innovations to power their advertising campaign with social media marketing (Neti, 2011) A
unique role of social media is that enabling customers to talk to one another is, in a sense, an extension
of traditional word of mouth communication (Mangold & Faulds, 2009). Managers are faced with the
question of how this power can be harnessed to benefit the organization. Although companies cannot
directly control what consumers are saying, they do have the ability to influence the conversations
consumers are having (Mangold & Faulds, 2009). Social media marketing (SMM) takes advantage of
social networking to help a company increase brand exposure and broaden customer reach. The goal is
usually to create content compelling enough that those users will share it with their social networks
(Cox, 2012).

5.1.2 Strategy:

A study conducted by The SMB (Small and medium sized business) Group found that one in five small
businesses have no social media strategy. Without strategy or goals, a business is unable to determine
whether or not they are gaining anything through their efforts, or simply wasting time. Those businesses
without a strategy also reported being less satisfied with social media’s ability to generate new leads
(SMB Group, 2012). Small businesses need to have a plan when using social media. Because social media
is applied to marketing in various methods, no one strategy fits all (Cox, 2012). The tools and strategies
for communicating with consumers have changed. Social media tools help companies communicate with
individual consumers, which can in turn help establish long-term relationships. Social media tools such
as forums, blogs, or chat rooms create an interactive dialogue for companies to engage consumers.
However, consumers are able to produce information about a company and educate other consumers
about products, brands, services, and more (Cox, 2012).

One may question the advantages of having a presence on social networking sites such as Facebook or
Twitter when the business already has a website. The answer is reach. A business wants their message
to reach as many people as possible (Cox, 2012). Social networks such as Facebook have a relatively
short half-life of information and are deep. This social media can be used to influence and track beliefs
and attitudes of consumers (Weinberg & Pehlivan, 2011).

5.2 Defining Small Businesses:

Generally, there is no universally agreed-on definition of small business or SME (Small and Medium
Enterprise). Many efforts have tried to define the term small business, using criteria such as number of
employees, sales volume, and value of assets. Much academic literature adopts the European
Commission definition of SME (Cox, 2012). Small businesses are the backbone of the U.S. economy.
They create employment opportunities and it is important for them to survive to sustain or increase
their contributions to the economy (Cox, 2012). Marketing from a SME’s point of view is a way to inform
the customer about the firm, its products, and services; and to create and maintain customer
relationships (Reijonen, 2010). With the amount of resources available today, small businesses have
numerous marketing opportunities available to them (Cox, 2012).

5.2.1 Marketing Opportunities of Small Businesses:

Numerous marketing opportunities exist for small businesses, namely networking and word of mouth
marketing. Not only do owner-managers of small businesses rely on their personal contact network, but
they rely on the networks of their customers as well. Small businesses often rely on word of mouth
recommendations for new customers (Cox, 2012). Word of mouth marketing provides small businesses
with an opportunity to give customers a reason to talk about products, making it easier for word of
mouth to take place (Cox, 2012). Networking is a widely cited marketing activity for SME’s and is
important during their establishment, development, and growth (Walsh & Lipinski, 2009). as cited by
Walsh & Lipinski, 2009 that in marketing their firms, SME’s rely heavily on their personal contact
network. The Word of Mouth Marketing Association (2011) recognizes all word of mouth marketing
techniques as being based on the concepts of customer satisfaction, two-way conversation, and
transparency. The association describes the basic elements of word of mouth marketing as: “Educating
people about your products and services; Identifying people most likely to share their opinions;
Providing tools that make it easier to share information; Studying how, where, and when opinions are
being shared; and Listening and responding to supporters, detractors, and neutrals”. Small firms are
generally at an advantage because their small size makes it easier to get close to customers and obtain
valuable feedback (Gilmore et al, 1999). Such an advantage enables small businesses to take advantages
of the marketing opportunities networking and word of mouth marketing provide. But small business
owners face many challenges when it comes to marketing as well (Cox, 2012).

5.2.2 Marketing Challenges of Small Businesses:

Researchers widely agree that marketing practiced in small firms is different from that of large
organizations. According to Stokes (2000), in small firms,

marketing is used for immediate needs and little attention is paid to plans and strategies. SME’s direct
their attention to sales in order to survive (Stokes, 2000). For all issues outside of advertising, such as
customer satisfaction measurement and improvement and design of customer service and support, the
sales function has a slightly greater influence (Walsh & Lipinski, 2009). One of the most prevalent areas
in which a small business has problems is marketing (Huang & Brown, 1999). This is due to the inability
to employ a marketer to carry out marketing activities for the business (Berthon, et al., 2008). Reijonen
(2010) recognizes “marketing as tactics/methods focuses on the use of marketing mix (4 p’s: product,
place, price, promotion); in other words, on the implementation of marketing strategy”. Because
definitions of marketing generally interpret the marketing carried out by large businesses, there is no
clear definition of marketing in SME’s (Reijonen, 2010). One solution to the marketing challenges faced
by small businesses is Social media. Social media enables small businesses to overcome the Challenges
of limited budget, lack of expertise, and positioning against larger competitors. Small businesses are not
the same as big businesses and therefore cannot be expected to have the same marketing resources.
Several models of marketing exist that provide guidelines for businesses to survive and grow (Reijonen,
2010). However, marketing theory that a large organization uses cannot be generalized to a small
business which has different characteristics and requirements. As a consequence, small firms are moving
from conventional marketing practices towards more affordable, interactive, and integrated marketing
(Reijonen, 2010).

Based on the literature review and the information in the deductive method of data analysis, the
following hypotheses were raised and tested using specific statistical tests. The hypotheses are
described below.
H1: There is a positive significant statistical relationship between social media applied & small business.

H2: There is a positive significant statistical relationship between strategy of social media & small
business.

H3: There is a positive significant statistical relationship between impact of social media & small
business

6. METHODOLOGY

6.3 Sample and data collection:

Purposive and convenient sampling methods were conducted in this study, The Khartoum study was
conducted by Varisa Private Limited, Alsaqifa Travel and Tourism, Uttachue Travel and Tourism and
Loomi Limited Co. the companies were selected purposively as a form of non-probability sampling in
order to obtain a gross estimate of the results without wasting time, effort, and expense. A total sample
of the companies’ employees were selected conveniently to cover the full research of 60 employees
matching selection criteria. 60 sets of questionnaires were distributed to the sample selected out of
companies’ employees using the convenience method. The questionnaire consist of 3 sections, part one
is about demographic information, part two is about social media (independent variables) and part
three is about small business (dependent variable). However, only 45 (75%) sets of questionnaires were
successfully collected and completely answered. Data Analysis: The data was collected manually and
then analyzed using a computer-aided program (SPSS version 21.2); multiple regression analysis was
used to find the relationship between variables

7. RESULTS AND IMPLICATIONS

7.1 Result of Regression Model Analysis Between Dependent And Independent Variables:

Table (1) shows the result of multiple regression analysis between Strategy, Impact, Applied Business
and Small Business. The adjusted squared multiple correlation coefficient (adjusted R2) clearly explains
03.7% of the variance associated with the small business. The F statistic is also significant (F = 7.504). We
also observed that the most important variable was strategy, which had the highest Beta value (.525)
and highest t-value (4.022) this result shows a positive relationship between strategy and small business.
The second most important variable associated with the small business was impact, the Beta value of
this variable was (.176) with t-value (.826). The result also shows a positive relationship between impact
and small business

Table (1) Multiple Regression Analysis

 Model T Sig.

B Std Error Beta

Constant 2.064 2.391 .863 .393

Applied .122 .178 0.99 .687 .496

Bus.

Strategy .543 .135 .525 4.022 .000

Impact .176 .213 .155 .826 .413

Table (2) summarize the results of the four hypotheses of this research. The acceptance rule of factors
(p-value < .05), the significant value (p < .05), further confirms that the variable is suitable and significant
in relation to the dependent variable

Table (2) Overall Hypotheses

N0 Hypothesis T- P-Value Result

Value

H1 There is positive significant statistical relationship 0.687 0.496 Not

between Applied business and Small business Supported

H2 There is positive significant statistical relationship 4.022 0 Supported

between Strategy and Small business

H3 There is positive significant statistical relationship o.826 0.413 Not

between Impact and Small business Supported

CONCLUSIONS

This study began with the fundamental question of how a small business uses social media to engage
consumers. Data from the study was presented. The study demonstrates that from the beginning, the
participant recognized social media’s importance and utilized it to the best of her ability. Although the
participant had taken a marketing class that covered social media marketing strategies, the participant
still had to learn how to use social media and struggled in the beginning. The study illustrates the
choices a business has in deciding how to engage consumers and makes an argument for why each
strategy should be used. The literature suggested that often small businesses do not have a strategy
when they begin using social media. This can potentially end in wasted time and effort. It is important
for businesses to recognize what they want to achieve by using social media. No longer is it enough to
create a Facebook or Twitter account and post to or check it once a week. Businesses must be active
participants on these channels and to do so they should have some knowledge on how to use them,
including strategies for engaging the audience

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