Posted: June 22nd, 2015

The Challenges that Face SMEs in the Adoption E-marketing in King Saudi Arabia

Table of Contents

The Challenges that Face SMEs in the Adoption E-marketing in Saudi Arabia. 3

  1. Introduction. 3

Research Questions. 4

Research Objectives. 4

  1. Literature Review.. 4

Introduction. 4

Role of SMEs in Saudi Arabia. 4

E-marketing Barriers for SMEs in Saudi Arabia. 5

Impact of E-marketing on SMEs. 5

  1. Methodology. 6

Introduction. 6

Research Design. 7

Target Population. 7

Methods of Data Collection. 7

Sampling Design. 7

Theoretical Framework. 7

Data Analysis. 8

  1. Resources for the study. 9
  2. Project Schedule. 10
  3.    References. 11
  4. Appendix. 14

 

 

 

 

 

1.      Introduction

E-marketing is a modern term, commonly known as electronic commerce, and it involves the process of transacting businesses using the internet. These services include electronic cash transfer, online marketing, mobile commerce, electronic data interchange, and inventory management systems. E-marketing has been proven to increase customer satisfaction and boost sales. It has come as a useful tool for data storage. Different institutions have embraced e-marketing, such as private entities, as well as governments worldwide to offer efficient and swift services to consumers. The main setback in the adoption of electronic marketing is the fact that it is still considered an innovation in developing countries (Kerros & Orloff, 2012). It is despite the fact that it has become a norm in the retail channel in the global business environment and specifically in the developed countries.

E-marketing has grown to determine how business is conducted globally in the recent past. The adoption of e-marketing has enhanced effectiveness in business, such as the distribution of goods, rendering of services, effective marketing and efficiency of payment services (Al-Somali, et al., 2011). For this reason, e-marketing has become a vital aspect of any business, and its adoption is encouraged across all sectors of the economy globally. Saudi Arabia in this perspective is still in its inception stage of E-marketing despite its world ranking of being the second largest in internet usage in the Middle East. The country has seen a tremendous growth and advancement in the ICT market and yet it has not fully embraced E-marketing in its SME sector, in particular (Al-Salamin & Al- Hammad, 2015).

The primary objective is to identify the factors that have hindered the adoption of E- marketing in Saudi Arabia and make recommendations on what can enhance the adoption of E- marketing (AlGhamdi & Drew, 2011). The focus will be on the Small and Micro Enterprises (SMEs) in the Saudi Arabia, Kingdom with a broad look on those SMEs that have been in existence for over three years.

Research Questions

The research in this section will seek to answer the questions below:

  • Does the level of SMEs income affect their adoption of e-marketing in the Saudi Arabia economy?
  • Do the SME sector lack telecommunications infrastructure required for the adoption of e-marketing in Saudi Arabia?
  • Is the shortage of qualifiedsupportstaff that can developandsupportthe e-marketing sites affecting the adoption of e-marketing by SMEs?
  • Do the consumer and entrepreneurs’ lacktheskillsrequiredfortheuse of the internet among otherfactors?

Research Objectives

The objectives of this study will expound on:

  • Determine whether the level of SMEs income affect the adoption of e-marketing in Saudi Arabia.
  • Establish whether the SMEs lack telecommunication infrastructure required for the adoption of e–marketing in Saudi Arabia.
  • Establish whether there exists sufficient support staff that can develop and support e-marketing sites for the SMEs in the Saudi Arabia.
  • Establish whether the entrepreneurs and customer have the requisite knowledge to use the internet adequately.
  1. Literature Review

Introduction

E-marketing in recent years has been embraced, and it plays a central role in the retail channel for businesses globally. The adoption has been phenomenal globally, where organizations, SMEs, and governments have adopted it in their operations. It is inevitable that the diffusion of E-marketing in developing countries is an important indicator of spanning economic growth (Almoawi & Mahmood, 2012). The adoption of E-marketing creates numerous benefits to the entrepreneurs and customers as well, such as the ability to cut costs drastically.

Role of SMEs in Saudi Arabia

The SMEs sector plays a significant role in enhancing the economic development of economies around the world. They are known to be the driving force of any economy, as they emerge and span growth in a short period. Saudi Arabia, in particular, being the largest economy in the Middle East boasts of 90 percent of all businesses being SMEs. They provide employment to at least 25 percent of Saudi Arabia’s total population and contribute at least 33% of the nation’s total GDP. The Small and Micro- Enterprise is the fourth largest sector in the Saudi Arabia economy after the oil, telecommunications, and financial sector. The sector in 2010 had total sales of approximately $ 77 billion. Given that the country’s GDP stands at around $ 170 billion, it is a reflection of the sector’s great significance to the nation’s economy (Al-Salamin & Al- Hammad, 2015).

E-marketing Barriers for SMEs in Saudi Arabia

Saudi Arabia’s SMEs grows at a very slow pace because they do not expand significantly like in the developed economies. It leaves the SMEs with inadequate capital to invest in the necessary infrastructure developments for E-marketing installation (AlGhamdi, et al., 2012). Insufficient funds can be blamed on the government being reluctant to invest in the sector. The SMEs sector in Saudi Arabia has been reluctant in adopting online shopping as one of the basics of E-marketing. Only a few online stores have launched in the past few years. An example being (Souq.com, email.com.sa) and (www.macys.com), most of them being international stores (Almousa, 2013).

Studies were conducted to determine the most tangible barriers that inhibit SMEs from E-marketing adoption. The most significant factors were found to include; lack of proper regulation to protect both the SMEs and the consumers and poor ICT infrastructure development. In addition, the SMEs have a low income and some cannot afford the installation and maintenance of e-marketing sites. There has been over- reliance on the mailing system by the citizens and SMEs. It is due to the lack of proper education on how to use E-marketing services and the internet, in general (Al-Hudhaif & Alkubeyyer, 2011).

E-marketing adoption in Saudi Arabia has not been given the required attention by the government. The government has a poorly managed internet infrastructure, and also lacks a legal and reliable framework that can span growth in the ICT sector. Culture and attitude of the citizens have also played a major impact in the adoption of Emarketing and E-commerce. This is so because, even if SMEs invest in the infrastructure development of E-marketing, consumers will not embrace it well (ALMowalad & Putit, 2011). This is due to their over- reliance on the traditional way of doing business in the analogue way. It has also been accelerated by the fact that the highest percentage of citizens is not conversant with the English language. It was reported that the website language provided a huge barrier in the development of E-marketing, as the nation is well known to be Arabic speakers, and most services on the internet are in English (Almousa, 2013).

Impact of E-marketing on SMEs

ALMowalad & Putit, (2011) expressed that businesses that have adopted the E-marketing gain significant growth and expansion, as it has been proven to increase productivity, increase sales and span tremendous increase in revenue. The main factors that drive the adoption of E-marketing include marketing, the development of strong relationships between business partners, the ability to reach more customers and cost reductions (Al-Salamin & Al- Hammad, 2015). The SMEs can reap big from the adoption of E-marketing and particularly in Saudi Arabia. SMEs sector has experienced major setbacks, which include logistical and geographical challenges because the majority are unable to access markets. By using E-marketing, SMEs can realize a reduction in business costs that range from transactional costs to costs of communication. E-marketing also gives SMEs the ability to reach their customers directly, and this eliminates middlemen who increase the cost of transactions. The adoption of E-marketing will enable SMEs to experience rationalization in their businesses that will accelerate business growth (Barba-Sanchez, et al., 2007).

According to Almousa, (2013) the SMEs sector can benefit significantly from the adoption of E-marketing in the long- run. Some of these benefits are; increased national and global presence, improved competitiveness, increased customer base, and shortening of the supply chains (Kerros & Orloff, 2012). The government of Saudi Arabia should invest heavily in the ICT sector and more so, in the E-marketing platform because it has been proven to accelerate growth. The focus should be emphasized on SMEs in Saudi Arabia, as they have been seen to have a great influence on the nation’s economy.

SMEs should be adequately prepared for the adoption of e-marketing in terms of placing the necessary expertise in their workforce. The government should educate the SMEs and citizens to ensure an efficient transformation on E-marketing in the nation’s fourth largest sector (AlGhamdi & Drew, 2011). The biggest barrier to SMEs adoption in the Saudi Arabia has been found to be the language barrier. The government should ensure that the internet has translations for Arabic languages and in this effect. For this reason, the adoption process will be smooth and effective. A necessary framework should also be developed to ensure that SMEs have access to loans and financial grants. These resources should be provided by both the government and the financial institutions to assist them in accessing the capital for installing the E-marketing infrastructure (Al-Hudhaif & Alkubeyyer, 2011). The review has analyzed all impact of E-marketing and its adoption by SMEs in Saudi Arabia.

3. Methodology

Introduction

In this chapter, we shall analyze all the methods that will be used to enhance the achievement of the research objectives. The methods include research design, target population, methods of data collection, sampling design, Research instruments, Theoretical framework, Empirical framework, and Data analysis. These methods of carrying out our study will be analyzed in depth.

Research Design

A research design is meant to expound on the research project, by providing a direction for the study process. Research design is sub- divided into three major types that are Descriptive research, exploratory research, and casual research. Descriptive research mainly sheds a light on an already existing study where the pertinent issues have been addressed and analyzed for reliable referencing. Casual research provides a link between the dependent and independent variables based on the topic of study. Exploratory research on the other hand, focuses mainly on emergent issues that researchers have not given close attention. It means that there are no prior studies done on it, hence constructing a literature review of this type of research becomes hectic. In our study, the main focus has been placed on casual and exploratory research (Creswell, 2003).

Target Population

In this study, our target population will be the entrepreneurs of small and micro-enterprises in Saudi Arabia. The main focus will be on the entrepreneurs who have been in the industry for a long period, preferably a period of not less than three years.

Methods of Data Collection

In general, there are two types of data, and they include primary and secondary data. Primary data refer to the original data that has not been used or published prior to this study. In this research, primary data will be used in the form of questionnaires. Secondary data refer to the study that has been carried out in reference to a research source that already exists (Martin, et al., 2012). In this study, we will use secondary data to attain effectiveness in our results. The secondary data used will be in the form of peer- reviewed journals and statistics from the government of Saudi Arabia will be used.

Sampling Design

Sampling design is the process of carefully selecting a number of research elements to be used in carrying out the research. In this study, we will target specific SMEs that have been in existence for the past three years. The study here will aim at collecting sufficient data from the SMEs that have gained enough exposure in the small and micro- enterprise sector in the Saudi Arabia economy.

Theoretical Framework

The theoretical framework mainly describes the correlation between the dependent and the independent variable. In this study, the dependent variable will be E-marketing in the SME sector and its adoption is dependent on various factors. These factors include infrastructure development by the government, education on E-marketing usage, increased awareness, skilled workforce in the SME sector, and level of income and funding. These factors have been found to influence the adoption of e-marketing significantly as shown in the next diagram:

 

 

 

 

 

 

 

 

 

 

 

 

The table illustrates how E-marketing is dependent on the various factors described for its efficient commencement and adoption by the SMEs in Saudi Arabia.

Empirical Framework

An empirical framework analyzes the relationship between the dependent and the independent variable by providing a methodology that critically analyzes the relationship as described below. The model of the study is as below:

 

Y= β0 + β1 GID + β2E + β3SW + β4LF + β5IA

 

Where the initials are as follows:

GID – Government Infrastructural Development

E – Education on the usage of E-commerce

SW – Skilled Workforce in the SME sector

LF – the Level of Funding by the Government

IA – the Increased Awareness of both the citizens and the SME sector players

Data Analysis

In data analysis, the data formulated in the study will be presented in the form of tables, pie charts, and graphs. The data collected from the research will also be analyzed and formulated in the form of a regression model as presented above in the empirical formula. The variables, both dependent and independent will be fully explained for thorough understanding and presentation of efficient results.

4. Resources for the study

Primary and secondary sources will be used for the study. In conducting the study, the secondary data refers to mostly peered reviewed sources. The method was chosen because it is simple to discover information relevant to the study. To enhance the secondary data, articles, numerous publications and books will be used for the study. However, some of the research journals may require payment to get access to the database so the researcher will use research materials from Google scholar and the Google search engine. To ensure that the sources are reliable for the research, the study recognizes two types of sources; credible and non- credible sources. Credible sources will refer to peered reviewed sources, and in rare occasions, unpublished university dissertations. Websites that have the term “.org” and “.gov” will also be used for the research. The non- credible sources, on the other hand, will be websites such as blogs and uploaded assignments by other students. Non credible sources will not be used for the research.

In terms of primary data, the study has not yet identified the specific organizations that will be considered in the collection of data. However, a cross-sectional approach will be adopted entrepreneurs from different sectors will be included. Primary data will be collected through the use of questionnaires. These questionnaires will be distributed face to face or by email. A letter from the university will be requested to ensure that most, if not all the organizations give access to the research. The study will involve research into SME’s that have adopted the E-marketing in their operational systems as well as those that have not. To this end, the organizations that have met the appropriate qualifications will be chosen for the collection of the primary data. The questionnaire will be structured (Creswell, 2013). The structured questionnaires will prevent the participants from giving biased and irrelevant information toward the study. It will also enable the research to be convenient and cost effective.

 

 

 

 

 

 

 

 

 

 

 

 

  1. Project Schedule
Steps Description Due date
1 Preparation Stage  
  Week -1-2: Area of interest identified 01/09/15
  Weeks 3-4: Topic selected/form submitted 01/19/15
  Weeks 4-5: Topic refined to develop dissertation proposal 01/31/15
  Weeks 5-8: Proposal written and submitted 02/21/15
2 Chapters 1-3 completed  
  Chapter 1 Draft Introduction completed 02/28/15
  Chapter 2 Draft Literature Review completed 03/14/15
  Chapter 3 Draft Research Methodology completed 03/26/15
3 Collection of data and information  
  Data analysis and Interpretation of data 04/07/15
  Chap 4 Draft Results, Analysis and Discussion completed 04/16/15
  Chapter 5 Draft Conclusions, Implications & recommendations 05/10/15
4 Final Writing up  
  Structure, presentation and proof reading 05/22/15
5 Final Stage  
  Final proof reading, printing and binding 05/26/15
     
6 Submission of Project (WOLF and hard copy submission) 05/29/15

 

 

 

 

 

 

 

6.       References

AlGhamdi, R. & Drew, S., 2011. Seven Key Drivers Of Online Retailing Growth IN KSA. Brisbane, School of Information and Communication Technology, Griffith University, Australia.

AlGhamdi, R., Nguyen, A. & Jones, V., 2013. A Study of Influential Factors in the Adoption and diffusion of B-2-C E-commerce. International Journal of Advanced Computer Science and Applications, 4 (1), pp. 89-94.

AlGhamdi, R., Nguyen, A., Nguyen, J. & Drew, S., 2012. Factors Influencing E-Commerce Adoption by Retailers in Saudi Arabia a Quantitative Analysis, Kuala Lumpur: International Conference of Internet Studies.

Al-Hudhaif, S. & Alkubeyyer, A., 2011. E-Commerce Adoption Factors in Saudi Arabia. International Journal of Business and Management, 6 (9), pp. 122- 133.

Almoawi, A. R. N. A. & Mahmood, R., 2012. Applying the Ote Model In Determining the E-Commerce Adoption on Smes in Saudi Arabia. Asian Journal of Business and Management Sciences, 1 (7), pp. 12-24.

Almousa, M., 2013. Barriers to E-Commerce Adoption: Consumers’ Perspectives from a Developing Country. Scientific Research Publishing, pp. 65-71.

ALMowalad, A. & Putit, L., 201. Factors Influencing Saudi Arabian Women’s Shopping Behavior in Online Purchase Activities. Journal of Emerging Economies and Islamic Research, 1(2), pp. 1- 13.

Al-Salamin, H. A. & Al- Hammad, A. A., 2015. Attitude of Saudi Consumers Towards Online Shopping with Special Reference to Al. Barcelona, King Fiasal.

Al-Somali, S. A., Gholami, R. & Clegg, B., 2011. Determinants of B2B e-commerce adoption in Saudi Arabian firms. International Journal of Digital Society, 2 (2), pp. 406 – 415.

Barba-Sanchez, V., Martinez-Ruiz, M. d. P. & Jimenez-Zarco, A. I., 2007. Problems and Perspectives in Management, 5(1), pp. 103 – 114.

Creswell, J. W., 2013. Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. London: SAGE Publications.

Ghamdi, A., Abdullah, R., Steve, D. & Alfarraj, O. A. M., 2011. Issues Influencing Saudi Customers’ Decisions to Purchase from Online Retailers in the KSA : A Qualitative Analysis. European Journal of Scientific Research, 55(4), pp. 580-593.

Kerros, A. d. & Orloff, B., 2012. E- Commerce in Saudi Arabia: Driving the evolution, adaption and growth of e-commerce in the retail industry, London: Sacha Orloff Consulting Group.

Martin, B., Hanington, B. & Hanington, B. M., 2012. Universal Methods of Design: 100 Ways to Research Complex Problems, Develop Innovative Ideas, and Design Effective Solutions. New York: Rockport Publishers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix

 

Questionnaire

Please tick where appropriate

Part A

Gender:

[ ] Male                               [ ] Female

Age:

[ ] Under 20                 [ ] 21-30               [ ] 31-40         [ ] 41-50             [ ] Over 51

Marital status:

[ ] Unmarried           [ ] Married               [ ] Divorced         [ ] separated

 

Educational achievement

[ ] Primary school                 [ ] some secondary school       [ ]

completed secondary [ ] some additional training       [ ] completed university

Part B

Please tick or cross inside the bracket on whether you agree or disagree with the following questions.

  1. Does the level of SMEs income affect their adoption of e-marketing in the Saudi Arabia economy?

Yes [ ]                        No [ ]

  1. Do the SME sector lack telecommunications infrastructure required for the adoption of e-marketing in Saudi Arabia?

Yes [ ]                         No [ ]

  1. Is the shortage of qualified support staff that can develop and support the e-marketing sites affecting the adoption of e-marketing by SMEs?

Yes [ ]                         No [ ]

  1. Do the consumer and entrepreneurs’ lack the skills required for the use of the internet among other factors?

Yes [ ]                         No []

  1. Should the government of Saudi Arabia establish necessary measures for SMEs to adopt e- marketing?

Yes [ ]                         No [ ]

  1. Can e- marketing be used to meet customer expectations and improve their experience?

Yes [ ]   No [ ]

  1. Is e-marketing an essential factor in reducing the cost of doing business and enhancing business for SMEs in Saudi Arabia?

Yes [ ]                         No [ ]

  1. Is security, privacy and confidentiality a major factor hindering SME’s from adopting E-marketing?

Yes [ ]                         No [ ]

  1. Should the government formulate a platform of legal regulations to facilitate the SMEs to adopt to E- marketing?

Yes [ ]                        No [ ]

  1. Are SMEs empowered to put in place necessary infrastructure for E- marketing adoption?

Yes [ ]                        No [ ]

 

 

RESEARCH PROJECT PROPOSAL

EVALUATION GRID/FEEDBACK SHEET

Student to fill in personal details below and having read the ethical guidelines, confirm project is category A (below) and upload along with the proposal form.

 

Student last name:

Student first name(s):
Student no:                
Supervisor:                

 

       First submission

         Resubmission

 

 

Evaluation

(As per ticked Box)

 

 

Summary Feedback

(Check overleaf for possible further comment)

 

Excellent:

Approved to proceed

 

Compelling proposal, persuasively outlining a well thought through, feasible and relevant research study.

 

Very Good:

Approved to proceed

 

 

Clear and specific about research question, project design and research methods. These three elements are shown to be well co-ordinated.

 

Good:

Approved to proceed

 

 

Well-defined research question. Sensible project design and clear plans for conducting the research.

 

Competent:

Approved to proceed

 

 

Clear research question. Explicit ideas on design and methods, but there are some issues about the fit between question, design and methods.

 

   

Identifies an interesting topic, but the research question is very broad and the details of the project are hazy.

 

 

 

   

The focus, purpose and method of the project are not made clear to the reader.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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