The effect of E-marketing on the marketing performance of

Small Business Enterprise:

A comparative study between Egypt and the UK.

HATEM EL-GOHARY
Bradford University School of Management

School address : EMM Lane, Bradford, West Yorkshire BD9 4JL, UK.
Mailing address : 24 Laisteridge Lane, Bradford, BD7 1QT, West Yorkshire, UK.
Telephone : +44 (0)7878470306
Fax : +44 (0)1274 546866
Email : h.o.a.elgohary@bradford.ac.uk
elgohary70@yahoo.com
Supervisor name : Dr. Myfanwy Trueman
Supervisor e-mail : M.Trueman@Bradford.ac.uk

16th EDAMBA Summer Academy

Soreze, France

July 2007
Hatem El-Gohary 16th EDAMBA Summer Academy 2007

Abstract:-

Small Business Enterprises (SBE's) play a major role in the world economy, and
their contribution to economic and employment growth is widely recognized. Based on
the SBE role as an economic engine to drive global development, this research seeks to
understand the practices and activities of these enterprises in terms of electronic
marketing (Achieving marketing objectives and functions through the use of electronic
communication technology), marketing performance and the effectiveness of industrial
and trade SBE’s. In order to do this a comparative study is made between SBE’s in Egypt
(developing) and the UK (developed).
The main aim of this work is to identify links between the conceptual framework
and empirical analysis in this field because they appear to be highly integrated, and if
reviewed separately may present distorted results.
A triangulation approach will be used in which quantitative and qualitative data
will be collected through structured mailed questionnaires and semi-structured
interviews to address different levels of investigation, test the hypotheses and address the
central research questions.

Key words: E-Marketing, Small Business Enterprises, Marketing performance,

Egypt, UK.

1. Introduction:-

Small Business Enterprises (SBE's) do play a major role in the world economy,
and they are recognized as one of the main contributors to economic, development and
employment growth. According to Mulhern (1995) 99% of all European companies are
small and medium sized (SME) and from 1985-1995 it provided 66% of the employment
in Europe. That is also true in Less Developing Countries (LDC’s) since small businesses
do represent a high percentage of the total number of enterprises.
On the other hand, the revolution in information technology (IT) and
communications changed the way people conduct business today. In recent years,
increasing numbers of businesses have been using the Internet and other electronic media
in their marketing efforts, giving the chance for Electronic marketing (as a new marketing
phenomenon and philosophy) to grow in a very dramatic and dynamic way.
From the researcher point of view, implementing E-marketing by small business
enterprise can change the shape and nature of SBE’s business all over the world. Because
the rapid proliferation of the Internet, the World Wide Web (WWW) and electronic
communication has created a fast growing new electronic channels for marketing. For
that, the internet and other electronic media are playing now a very important role in
conducting marketing activities due to its unique characteristics as a market and as a
medium.
Depending on that the researcher is seeking to add to the body of knowledge by
investigating and understanding the practices and activities of small business enterprises

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Hatem El-Gohary 16th EDAMBA Summer Academy 2007

through conducting a research about the effect of implementing E-marketing on

marketing performance of industrial and trade SBE's, it is a comparative study between
the Egyptian and British SBE’s to gain a better understanding of the SBE’s role in
developing countries since they are less well represented in the literature.
1.1 Background:-

1.1.1 Small Business Enterprises:-

Despite of the powerful position held by small businesses, defining it has always
been difficult and there is a little agreement on what defines a small business because the
term covers a variety of firms. As a result small businesses have been defined in a
perplexing number of different ways in different parts of the world according to national
and local needs (Theng and Boon 1996; Watson and Everrett 1996). Table 1 summarizes
the official or most common definitions of SBE's used in some countries around the
world.
Table 1: Criteria of defining SBE’s adapted by some countries
Country No. of employees Other criteria
USA Under 100 Less than $ 5 million annual sales
European Under 50 Annual turnover or global balance less than 10 million
Union euros
+
Independence
Australia Under 20 None
Canada Under 500 in mfg Less than $ 5 million annual sales
and 50 in services
India None Total investment(not exceeding 10 million Indian
Rupees in industrial enterprises and 1 million in
service enterprises)
Mexico Under 50 None
Thailand Under 200 in None
labour intensive
Turkey 10 to 49 None
Source: El-Gohary (2006)
From table 1 it is noticed that the number of employees is the most often used
element in determining the category of SBE's in most countries. Furthermore,. It also
noticed that there is a lack of agreement on what defines a small business, for that a
standard definition for Small Business Enterprises is needed. Accordingly and due to the
absence of an Egyptian official definition for SBE’s, the researcher will depend on the
following definition for SBE’s for the purpose of conducting the research study: “a small
business enterprise is that enterprise that employs from ten to forty-nine employees”.

1.1.2 E-Marketing:-

Electronic marketing (E-marketing) can be viewed as a new modern business

practice associated with buying and selling goods, services, information and ideas via the

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Hatem El-Gohary 16th EDAMBA Summer Academy 2007

Internet and other electronic means. A review of relevant literature revealed that
definitions of electronic marketing vary according to each author's point of view,
background and specialization. While Smith and Chaffey (2005) defines it as: “Achieving
marketing objectives through applying digital technologies”, Strauss and Frost (2001)
define it as: “The use of electronic data and applications for planning and executing the
conception, distribution and pricing of ideas, goods and services to create exchanges that
satisfy individual and organizational objectives”.
The researcher will depend on Strauss and Frost definition in conducting the
current research because: it takes into consideration all the element of E-marketing, all
types of products, it illustrate the main objective of E-marking which is creating the
exchanges that satisfy individual and organizational needs. Moreover it is the official
definition for E-marketing adopted by the E-Marketing Association.

1.1.3 Marketing performance:-

Given the fact that a firm survival depends on its capacity to create value, and
value is defined by customers (Day, 1990), marketing makes a fundamental contribution
to long-term business success. But despite of the importance of measuring business
performance there is a little research on the measures used to evaluate marketing
performance and effectiveness. On the other hand, when looking to the marketing
performance and success measures it is noticed that there are many measures. Recently,
in an attempt to organize performance measures Kokkinaki and Ambler (1999) have
summarized it and established six categories for marketing performance and success
measures which are: Financial measures / Competitive market measures / Consumer
behaviour measures / Consumer intermediate measures / Direct costumer measures /
Innovativeness measures.

1.1.3.1 E-Marketing Performance Measures:-

Standardised measures for E-marketing performance are both needed and

necessary. The discussion of most of the researchers has centred on the following
measures (beside the traditional marketing performance measures): Traffic/ Visit duration
/ Conversion rate (visit to purchase) / Catalogue size / Sales value / Number of
transactions / Number of users (as measured by the number of registered user accounts).
In conducting the proposed research the researcher will depend on both traditional
marketing and E-marketing performance measures. Namely: Financial measures /
Competitive market measures / Consumer behaviour measures /E-marketing measures
(such as: Conversion rate / Traffic / Visit duration / Number of transactions / Number of
users).

2. The Literature Review:-

The researcher had identified a wide range of the literature review (in its wider
broad sense which include: Journals, Academic Books, theses and dissertations, short
articles, E-databases, conference papers,…). The literature time period starts from 1990
to presence. The research studies investigated and covered a wide rang of E-marketing
areas, such as: Internet-marketing / E-mail marketing / Intranet marketing / SMS

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Hatem El-Gohary 16th EDAMBA Summer Academy 2007

marketing / Extranet marketing. On the other hand, it is noticed that the literature in
Internet-marketing (IM) covers five main areas which are: Internet marketing (IM)
environment, IM functions, IM applications and IM research. Regarding the literature of
E-marketing in SBE’s, it was found that it covers the following areas illustrated in figure
1.

The concept of The use of

E-Bay and E-Marketing in internet by SBE’s
SBE’s SBE’s SBE’s Competencies

E-Business
adoption by The literature of e- Virtual
SBE’s marketing in SBE’s Market

The internet as a distribution Export

B2B in SBE’s
channel for SBE’s performance

Figure 1: The literature of e-marketing in SBE’s

Source: El-Gohary (2006).

2.1 The research Gap:-

By reviewing this literature it’s noticed that:-

- Almost all of the researches on E-marketing in SBE’s had been conducted in
Europe (UK, Northern Ireland, the Republic of Ireland, Austria and Switzerland),
Australia and New Zealand. Only 2 studies were conducted in developing
countries.
- The literature was concentrated on some research areas, and (up to the knowledge
of the researcher) there is no single research on the SBE’s E- Marketing
Performance or in SBE’s marketing in Egypt.

Obviously this is a major gap in the contemporary research on SBE’s E-Marketing

Therefore a contribution to the literature is needed.

3. Research Problem:-

As a conclusion of the literature survey, the fundamental problem motivating this

research study is the urgent need to understand the relationship between using E-
marketing by the Egyptian and British small business enterprises and the marketing
performance of these enterprises. As well as the effect that E-marketing has on marketing
activities for small business enterprises. The study attempts to have full-scale research
that is statistically significant that could answer the following main question: what are the
relationship between using E-marketing and the marketing performance of the Egyptian
and British small business enterprises.

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Hatem El-Gohary 16th EDAMBA Summer Academy 2007

4. Research Objectives:-
The main objectives of this research is to: develop a theoretical model to
understand and interpret the use of the E-marketing by small business enterprises in the
UK and Egypt, explore and analyze the level and form of e-marketing used by the
Egyptian and British SBE’s and its contribution to marketing performance as measured
by financial and operational performance measures.
To achieve these objectives a series of hypotheses have been constructed to be
tested during the research process.

5. Research Hypotheses:
Topic Selection
Process and the literature review, the following
In the light of the previous discussion
hypotheses have been constructed. Both the conceptual framework and empirical study
Electronic
are linked to test these hypotheses:-
Marketing Identification of the:-
Hypothesis (1): The level of e-marketing used by SBE’s is significantly related to the
- Research Problem
firm’s marketing performance.
- Research objectives
Hypothesis (2): The form of e-marketing used by SBE’s is not significantly related to the
Small Business -Research Importance
Enterprisesfirm’s marketing performance.
Hypotheses (3): Implementing E-marketing by the SBE’s is dependent on the SBE
internal related factors.
The Research
6. Contribution To The Current Knowledge:-
Questions, Model and
Hypotheses
“We make a living by what we get, but we make a life by what we give”
Research Strategy Sir Winston Churchill
The primary benefit of this study is as a contribution to knowledge in the areas of
small business
Research enterprises and E-marketing.
Methods Research
The research will contributesData,
to theMethod
limitedand
number of empirical researches on marketing goods, services, ideas and information
Methodology Methodological
Researchon
depending Design
the Internet and other electronic marketing means. Moreover,triangulation
it contributes
to the limited number of empirical evidences to explore the effect of E-marketing on the
marketing performance of small business enterprises. Many researchers (Sheth, J. N.,
Measures
Sharma, A., 2005; Sandeep K., Singh, N., 2005; Adam, S., et al., 2002; Teo, T., Tan, J.
S.,Sampling
2002; Darby, R., Jones, J., Al Madani, G., 2003 and Goldsmith, R., Lafferty, B.,
Process
2002) had suggested the need for such kind of research. Those authors agree that a
serious marketing practitioners and academic researchers are now aware that more survey
Questionnaire Design Data Collection
systematic research is required to reveal the true nature of E-marketing.
and Administration
case study
7. Researchpilot
Reliability/ Process:-
study
Descriptive Statistics,
Correlation, Chi
Entering
The Data toprocess
research SPSS will be conducted through five basic stages (as illustrated in
Figure2) these stages are:
Data Analysis Square, Independent
Identification of the research problem and objectives, The
samples t-test
Purification Process
development of the research framework, Research methodology, Quantitative and
qualitative data analysis, and Discussion and conclusion. Content Analysis

Interpretations and Discussion

of Key Findings

6
Conclusion and
Recommendations
Hatem El-Gohary 16th EDAMBA Summer Academy 2007

Figure 2: The research process

Source: El-Gohary (2006).
The researcher had done his best to arrange the organisation of the study in such
a way that it allows the readers to follow the process easily and smoothly.

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Hatem El-Gohary 16th EDAMBA Summer Academy 2007

7.1 Research Methodology:-

From the researcher point of view, generally there is no optimal research
methodology or method. Because each methodology or method have some drawbacks or
limitations, but a researcher must employ the most appropriate research methodology and
methods to his research in the light of his research questions, aims and by taking into
consideration the methodologies and methods employed in other studies in the field.
Based on that, when determining the most suitable methodology for the research
the researcher take into consideration the research questions and aims as well as the
methodologies used in the contemporary E-marketing research.
To investigate the methodologies and methods used in contemporary E-marketing
research, the researcher constructed a representative un-probability sample from the
literature. From this sample it was found that the majority of researchers in the literature
depended on Quantitative methodology with a percentage of 33.3% of the sample size
and as illustrated in figure 3: 27.6% of the researchers applied Qualitative methodology,
8.6% applied Triangulation methodology, 29% conducted Conceptual and theoretical
studies and 1.5% (One researcher) conducted Literature Review. (Table 2 illustrate a
classification for this literature according to the methodology employed).
Regarding the research strategies adopted by the researchers it was found that the
majority of researchers depended on Survey strategy with a percentage of 41.7 % and as
illustrated in figure 4: 18.8 % of the researchers applied Case Study strategy, 6 % applied
Exploratory strategy and 3 % applied Experiment strategy.
On the other hand, regarding the research methods it was found that the majority
of researchers depended on Questionnaires with a percentage of 60.4 % and as illustrated
in figure 5: 29.6 % applied Interviews, 6 % applied observation and 4 % applied Focus
Groups.

Quantitative
Quantitative
8.6% 1.5%
33.3% Theoretical
Conceptual
Qualitative
Qualitative
Triangulation
Triangulation

Literature review
Literature review

27.6%
29% Table 2
Classification for some of the literature according to the methodology employed
MethodologyLiteratureQuantitativeFlavián
Figure 3: Research Methodologies used in andE-marketing
Guinalíu (2006), Lin et. al. (2006), Kuhlmeier and
Knight (2005), Wong (2005),
Source: El-Gohary (2006). Flavián et al.(2005), Lymperopoulos and Chaniotakis (2005), McCole
and Ramsey (2004),Kim and Kim (2004), Lee-Kelley et al.(2004), Merisavo and Raulas
(2004).QualitativeTaylor and England (2006), Hackney et al. (2006), Park (2005), Lagrosen (2005),
Ryan and Valverde (2005), Warnaby and Yip (2005), Rowley (2004 a), Smith, C. (2004), Darby et
al. (2003), Martin and Matlay (2003), Siddiqui et. al. (2003).TriangulationWeischedel et al (2005),
Christodoulides and Chernatony (2004), Fillis et al (2004), Yang et al. (2003), Chaston and
Mangles (2003), Adam et al (2002), Kapoulas (2002).Conceptual and theoretical studiesDe
Kervenoael et al (2006), Sheth and Sharma (2005), Sandeep and Singh (2005), McCole (2004),
Smith and Manna (2004), Smith, A (2004 a, b ), Kulviwat, et al (2004),Rowley (2004 b), Lindgreen
et al (2004).Source: El-Gohary (2006).
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 Hatem El-Gohary 16th EDAMBA Summer Academy 2007

1.5% 41.7% Survey

29%
Case study
Exploratory

Experiment

Conceptual
3% Literature
6%
18.8% review
Figure 4: Research strategies used in E-Marketing
Source: El-Gohary (2006).

4%
6%
Questionnaire
Interviews
Observation
Focus groups
29.6% 60.4%

Figure 5: Research Methods used in E-marketing

Source:
ByEl-Gohary (2006).
reviewing the methodologies in the literature it was found that most of the
studies conducted have some critique points regarding the methodologies and methods
used in it, for example:-
* Among the things that can be taken against Collins, et al (2003):-

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Hatem El-Gohary 16th EDAMBA Summer Academy 2007

- The research was conducted in 4 European countries, 2 of these countries do not

speak English and have a different culture which might affect the reliability of the study.
Especially that many of the questions were designed for academics rather to small hotels.
- Depending on the telephone in data collection have some drawbacks, one of it is
the danger that respondents might answer the question in the way that they believe the
researchers would like to hear (socially desirable answer).
- They didn’t provide any valid arguments for choosing the 4 countries
investigated, especially that there are other famous tourism European countries like:
Greece, Italy and France. Not only the comparability of those countries is questionable,
but also applicability of the findings to other countries can’t be guaranteed.
The same point of critique is valid on the methodology applied by McCole and
Ramsey (2004); they didn’t provide any valid arguments for choosing the 3 countries
investigated in their study.
* The main point of critique on the methodology applied by: Ramsey and McCole
(2005); Hinson and Sorensen (2006); Chaston and Mangles (2003); Ng (2005) is the
Lack of applicability and generalisation of the findings to the population at large.
* For Poon and Swatman (1997) the major points of critique is that they depend
on a multiple-case design, Although these designs are desirable when the intent of the
research is description, theory building, or theory testing and it allows a cross-case
analysis and the extension of theory (Benbasat et al., 1987, p. 373), BUT (from the
researcher point of view) it have the following drawbacks: lack of quantitative evidence
provided (such as the additional revenue generated by using the Internet) / there is no
guaranty that the interviewees were honest in their responses /…)
* Most of the Qualitative researches in the literature depend solely on Case
studies and that could make it have some problems such as: the accusation of limited
generalisability; the question of external validity and Lack of rigour (where biased views
of the researcher have been allowed to influence the findings) (Yin, 1994). Also it is
noticed that most of the Quantitative researches depend solely on survey strategy and it
also have some serious criticisms (Inherently positivistic, Incapable of getting at the
meaningful aspect of social behaviour, inherently atomistic …).

* Regarding conceptual studies, although it adds a lot to the field of E-marketing,

but all of it has a main point of critique which is: it lacks quantitative evidences to
support its findings.
Based on the previous discussion, a triangulation approach will be used in the
research, the researcher will make a: data, method and methodological triangulation, in
which quantitative and qualitative data will be collected depending on a combined
research strategy based on survey and case study strategies through questionnaires and
interviews to address different levels of the study.
The survey strategy will allow the answer of the 'WHAT' question of the research,
such as: what is the relationship between using E-marketing by the SBE’s and its
marketing performance. On the other hand, the case study strategy will give in-depth

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Hatem El-Gohary 16th EDAMBA Summer Academy 2007

information and answer the 'HOW' and ‘WHY’ questions (for example: why the
relationship is taking one direction instead of anther direction).

Why triangulation?
The logic of triangulation is based on the premise that: “no single method ever
adequately solves the problem” (Denzin, 1978: 28) and using only one method is more
vulnerable to error linked to that particular method (Patton, 1990: 188); for that the use of
different methods in studying the same phenomenon should lead to a greater validity and
reliability than a single methodological approach, because any bias inherent in a
particular method would be neutralised when in conjunction with other methods. Beside
that, each technique has its advantages and disadvantages, strengthens and weaknesses,
for that combining the methods will be helpful and useful to benefit from the advantages
and strengthens and avoid the disadvantages and weaknesses.

So, although triangulation entails a commitment to greater amounts of effort, time

and money, it has the advantage of removing the bias that is often associated with the use
of a single technique. For that the researcher will use triangulation to increase the validity
and credibility of the research conclusion, to be more confident about the findings, to
increase the ability of generalization, to answer the research questions and to meet the
research objectives effectively and professionally. Especially that according to the
knowledge of the researcher there is no previous studies were conducted in the field of E-
marketing practices in SBE’s in Egypt, also there is lack in scientific studies in this filed
in general. For that the researcher: believes that combining of methods in this research is
indispensable, and will depend on a combined research approach based on survey and
case study analysis.

7.2 Data Collection and Analysis:-

The backbone of this research is to establish and sustain a clear link between
conceptual framework and empirical analysis. The main importance of this consideration
comes from the belief that unless the conceptual framework and empirical study are
highly integrated, each one of them individually would present a partitioned and distorted
image of the research points. For that this study will depend on:
Conceptual framework: depending mostly on the secondary data.
Empirical study : depending mostly on the primary data.

A combined research strategy based on survey and case study strategies will be
carried out in the research by using structured mailed questionnaires and interviews as a
primary data collection methods.Then, many statistical analysis techniques will be used
to analyse the data and test the research hypotheses.
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Hatem El-Gohary 16th EDAMBA Summer Academy 2007

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