Research Proposal

Impact of Digital Marketing on Sales Improvement of Small and Medium Scale

Enterprises in Hambantota District

Department of Economics
Faculty of Social Sciences and Humanities
Rajarata University of Sri Lanka
2021
Table of Content
1. Introduction
2. Background of the Research
3. Research Problem
4. Literature review
4.1 Introduction
4.2 Theoretical studies
4.2.1 Theories

4.3 Empirical Studies

4.3.1 Interest rate regulation

5 Research Questions

6 Objectives of the study

7Significance of the study

8 Research methodology

8.1 Research sample and data collection

8.2Data analytical techniques

9Organization of the Thesis

10Timeframe

REFERENCES
01. Introduction
Digitization has become part of our daily routines. It is shaping the traditional ways in
which consumers and businesses interact with each other. Digitization, and especially
social media, have been claimed to transform consumer behavior [ CITATION AMK10 \l
1033 ], with important consequences for firms, products and brands (Muntinga et al.,
2011). Consumers are increasingly spending their time online and using social media
(Forrester Research, 2008; Nielsen, 2012). They use online services for browsing, storing
and playing music, to email, toaccess Facebook, Twitter, and apps with various connected
devices such as smart phones,tablets and laptops and that is transforming the way the
internet is being used (EricssonConsumer Lab, 2012)

Digital marketing can be defined as the promotion of goods and services “using digital
technologies, mainly on the Internet, but also including mobile phones, display advertising,
andany other digital medium.The use of digitalchannels has transformed the way marketers
communicate with today’s consumers. A considerable portion of the world’s consumers
own and use computers and/or mobile devices, which contributes to the tremendous growth
of digital ad spending. Marketers quickly recognized the benefits of social networks such
as Facebook, YouTube, Twitter, Instagram, Snapchat, Pinterest and LinkedIn for
communications.
02. Background of the Research
Digital marketing is a new approach to marketing, not just traditional marketing boosted by
digital elements (Järvinen et al., 2012; Liu, Karahanna and Watson, 2011; Rowley, 2008).
It has its own characteristics and dynamics, which should be understood in order to be able
toselect effective marketing tactics and strategies. Digital marketing is widely used to
promote products or services and reach consumers through digital channels. It extends
beyond Internet marketing, including channels that do not require the use of the Internet.
These include mobile applications browsing, social media marketing, display advertising,
search engine marketing, and many other forms of digital media (Export.gov, 2018)

Day by day the internet is becoming more and more intertwined with people’s lives
(Raveendran& Arjun, 2015). This can be attributed to the improvement in internet facilities
and the increase in the use of smartphones. In Sri Lanka, the internet is increasingly used
for Information, entertainment, and communication. The demand for Internet services and
smartphones is also increasing day by day and it is expected that internet usage will
increase further in the future. Therefore, moving to digital marketing using the internet
would be a very timely and effective endeavor. Even small and medium scale businesses
can easily apply this digital marketing method as it is less costly than traditional marketing
methods like Television, radio, newspapers, etc.

Digital marketing is quick and easy, and it introduces SMEs products and services to a
large number of people by engaging in marketing methods themselves. It is reported by
both World Bank and OECD that small businesses play a critical role in achieving
Sustainable Development Goals. The 2030 Agenda is as crucial to not leaving no one
behind principle, and thus to the Sustainable Development Goals. SMEs have played an
important role in developed countries and they help alleviate poverty in third world
countries.

SME can help create employment for women and youth, and contribute to the resilience of
the economy during economic crises. This belief is often ignored by policymakers and
political leaders. SMEs in South Asia account for around 80% of the workforce. SMEs are
important in inclusive growth and environmental sustainability in South Asia They are
involved in transforming commodity value chains, linking primary producers with value-
added markets.

As a developing country, many enterprises are small and medium scales in Sri Lanka.
SMEs have been identified as an important strategic sector for promoting the growth and
economic development of Sri Lanka. Over the years SMEs have gained wide recognition as
a major source for employment, income generation, poverty alleviation, and regional
development [CITATION Min17 \t \l 1033 ]

The SMEs cover broad areas of economic activities such as agriculture, manufacturing,
mining, construction, and service sector industries. (Vijayakumar et al., 2012) Therefore,
developing small and medium enterprises in Sri Lanka can bring huge benefits to the
country and accelerate the economic growth of the country. To do so, they need to increase
their sales by promoting those businesses. Different methods can be used to increase sales,
but with the use of the most popular digital marketing methods available today, marketing
can be done more easily with less cost. The costs of ICT products are declining day by day
enabling smaller firms even to reap the benefits of the new technology and to move on to
improved internet platforms [ CITATION Fer07 \l 1033 ]

This study aimed to investigate the impact of digital marketing on improving sales insmall
and medium-scale enterprises. It also aimed to identify barriers in SMEs inaccessing the
level of digital marketing and provide some policy guidelines forenhancing digital
marketing among potential SMEs.
03. Research Problem
The relevance of SMEs to development in various economies of the World cannot be
overstated. In terms of job creation, revenue generation to economies and their wider effect
on social and economic stability of nations. However, to sustain SMEs, increasingor at
least stable level of profit is required, and this can only be achieved throughimprovement in
sales of goods or products from the enterprise. Since, salesimprovement could only be
made possible through customer patronage, makingconsumers aware of existing and
potential products and available services are crucial. Acritical path to such consumer
awareness is through effective marketing.[CITATION HAS20 \l 1033 ]

But, in the current times, the traditional methods of marketing seem to have gonebeyond
the SMEs. Therefore, a trending alternative which is digital marketing haslargely been
suggested as viable options for several SMEs. This will enable them toreach out to wider
market environment for broad awareness of their goods and services.However, it is
important for small businesses to know whether digital marketing willcontribute to
improvement of sales of their products in the competitive environment. It is important for
them to know whether digital marketing can impact their business throughpromotion of
goods and improvement of sales.[ CITATION HAS20 \l 1033 ]

[ CITATION Pre19 \l 1033 ] Has been carried out a research study to identify social media
adaptation by small and medium enterprises. [ CITATION Gun18 \l 1033 ]has paid attention to
E-commerce in SME-based characteristics and the adoption of E-commerce. [ CITATION
Pra14 \l 1033 ] Investigated the factors that affect for Creating a Conducive Environment for
SMEs in Sri Lanka

Although these studies have focused on various aspects of digital marketing related to
small and medium enterprises in Sri Lanka. As a whole, these studies can be identified as
areas of focused impact of internet use on the performance of SME, impact of social media
on business performance, social media adoption by SME, relationship between firm based
characteristics and the adoption e- commerce and investigated the factors affect for the
Creating a Conducive Environment for SMEs in Sri Lanka. But there was huge knowledge
gap. Because past studies have not studied impact of digital marketing on sales
improvement of small and medium businesses in Sri Lanka. Accordingly this study is
expected to fill the existing knowledge gap in some extent by exploring the impact of
digital marketing on improving sales in small and medium enterprises in Sri Lanka.

04. Literature Review

4.1 Introduction
Small and medium enterprises are a major contributor to the Sri Lankan economy.SMEs
makes up a large part of Sri Lanka's economy, accounting for 80 per cent of all businesses
(Secretariat 2012). By developing Small and medium enterprises, Sri Lanka will be able to
achieve rapid economic growth. SME is said to be the backbone of all developed and
developing nations. So, the development of this sector is important for any country
irrespective of their level of development (Gamage, 2003). In order to develop Small and
medium businesses, those businesses need to be promoted among the people. Today’s most
popular digital marketing methods can be used in thepromotion strategies. Whatever the
marketing method is used, the ultimate goal is to increase sales of businesses. Number of
research studies have been done in other countries as well as in Sri Lanka on how digital
marketing can be applied to Small and medium enterprises (Omondi, 2017), (Ishaq, 2019),
(Eida and Gohary, 2011), (Suriyapperuma et al., 2015), (Samarasinghe et al., 2016),
(Pemarathna, 2019)

4.2 Theoretical Studies

(103254)By definition, digital marketing could be viewed as a process that involve
usageof digital technological know-how to attract consumers and promote business
brands inaddition to building customers’ preferences which are expected to result in
increasinggrowth in business revenue (Kannan & Li, 2017). Furthermore, it enables a
businessenterprise to entice potential consumers or retain the existing ones through
provision of “digitally generated content” to clients that could attract consumers to the
business ideas (Chaffey & Smith, 2013). Though, the aim of digital marketing, in recent
 times, hasshifted to driving growth in income generation, the current trends in digital
marketinghas also been used to create good relations and interactions with the
consumers andbusinesses (Sharma, 2012)

Digital Marketing Strategy

Digital marketing strategy is the process of marketing products and services through the
use of content of social media technology. It concerns internal conditions, external
uncertainties, complexities, and interactions of a number of dissimilar factors and variables
[38]. Another concern is on unique and strong characteristics through interactive media
with consumers. Individuals can interactively make two-way communication through
digital channels [39]. Digital marketing strategy can yield productivity in an economic
scale and make costs efficient [40]. This strategy comprises scopes, scales, and speed of
digital business strategy, as well as business resources of value creation and achievement of
digital business strategy [41].

4.2.1. Theories
Social Network Theory considers the relationships between all people, animals and things.
Social network is used for research on patterns manifesting in the network and theireffects
or attitude. Digital marketing tools are necessary because they allow companies to listen
and makeuse of what is said by their customers. Users on social networks are among the
most influential influencers. Social network theorists view social relations as lumps and
patterns. They act as players within the context of the network, which makes them
somehow connected to the other players. Various kinds of stalemates are presented for
analyzing. A social network can be utilized by businesses to calculate the owners' equity.
These ideas have been tested in social network analyses. This theory can be useful to us in
studying networked SMEs.(MPRA)

4.2Empirical Studies
(IJIRES) A number of studies have found positive effect of digital marketing adoption on
improvement of business sales (Srinivasan, Bajaj and Bhanot, 2016; Yasmin, Tasneem and
Fatema, 2015; Njau and Karugu, 2014). On the contrary, Taiminen and Heikki (2015)
found negative effect of digital marketing on business returns. However, Wanjuki (2014)
found mixed result of effect of digital marketing on businesses. The finding of Jagongo and
Kinyua (2013) showed that the pathway to increase in revenue was identified through
improved communications enabled by social media usage. Other studies on digital
marketing including Erdogmus and Cicek (2012) focused on brand loyalty of business
firms. Results of the study suggest positive effect of social media marketing on loyalty of
customers to brand.

(lipiainen)According to a recent study on 462 SMEs in the USA, many SMEs struggle with
the added
workload of social media (Moyle, 2012). The study also indicates that SMEs are spending
up to six hours each week on social media. Of the tools available, Facebook (90% use) and
Twitter (70% use) are the most popular, whereas the adoption of blogging and use of
LinkedIn (used by around half of the surveyed SMEs), Google+, and Pinterest remain slow.
According to the study, one-third of the surveyed SMEs would like to spend less time on
Social media.

Different studies have evaluated the importance of digital marketing for small and medium
size enterprise (SME) growth. Researchers have done studies on the ways in which digital
marketing plays a role in the success of flower exporting firms in Kenya.(MPRA) Ishaq,
(2019) has examined the effect of digital marketing adoption on sales improvement of
small and medium enterprises in Nigeria. Primary data were collected through structured
questionnaire. A total of 387 respondents were randomly sampled from registered small
and medium business in Lagos State, Nigeria. The data were analyzed using percentages,
frequency counts and regression analysis. The findings of the study showed that digital
marketing has positive impact on sales improvement of SMEs in Nigeria. And also
concluded as the impact of digital marketing options on Sales improvement is more
positive through e-mails, search engine optimization, and Pay per click(Ishaq, O. (2019).
Digital marketing and sales improvement in SME in Nigeria. International journal of
innovation and research in educational science.) Srinivasan et.al.,(2016) study to
understand social media marketing concept Stroll in the micro small and medium
enterprises sector the study used exploratory research to identify the social media
marketing techniques used to acquire the retain customer. Judgmental sampling was used to
collect data from 50 micro small and medium enterprises. The study results indicated that
participation in social media creates a strong impact on brand awareness and brand trust,
which results in a strong influence on customer acquisition and retention. This study also
indicated a positive relationship between the time spent on social media and amount of
sales made. It is concluded by start in that social media marketing strategies have a positive
impact on customer acquisition and retention which research to market share increase.

Research Questions

 What is the effect of digital marketing on the sales improvement of small and
medium enterprises in Sri Lanka?
 What are the most popular and most effective digital marketing method among Sri
Lanka SME?
 What are the challenges in adoption for digital marketing?
 What kind of policy strategies would be benefited by the emerging SMEs?

Objectives of the Study

 To investigate the impact of digital marketing on the sales improvement of small

and medium enterprises in Sri Lanka.
 To identify the most popular and most effective digital marketing method among
Sri Lanka SME
 To identify the challenges in adoption for the digital marketing
 To provide some policy guidelines for enhancing digital marketing among potential
SMEs

Significance of the Study

 It is timely to examine whether the promotion of digital marketing methods among

small and medium enterprises can have a positive impact on their sales.
  This study is important for identifying challenges for small and medium scale
entrepreneurs to focus on digital marketing methods and formulating policies to
overcome them.
 The SME managers and owners are able to know which digital marketing method to
use and how potential customers can be reached and be able to maximize their
digital marketing
 The study is important to policy makers in government and other institutions who
would want to know how to improve business opportunities for the SME

Research Methodology

In here it explains the tools that used in the study to success this research. This section
denotes the steps that are used to develop the research design. About the sources of data
used in the study, the chosen sample, data collection methods, data analysis are included in
this section.

Research Sample and Data Collection

This study consists of quantitative and qualitative analysis methods. Data were collected by
presenting a questionnaire to selected entrepreneurs in the samplefromsmall and medium
scale enterprises in the Hambantota district. The questionnaire system made it possible to
obtain more information at a lower cost and in less time. Furthermore, the questionnaire
was able to provide information without identifying the personal things of the respondents.
So that the respondents could provide information without hesitation.

Data Analytical Techniques

The statistical methods that utilized in this study are described in this section. Data entry,
analysis and presentation were carried out using Statistical Package for Social Sciences
software(SPSS) and Eviewsin order to address the formulated research problem. Both
descriptive and statistical data analysis tools are used to conduct the data analysis.

To analyze the main objective as the Impact of digital marketing on sales improvement of
small and medium scale enterprises in Hambantota District used multiple regression and
correlation in Eviews.Multiple regression analysis is a way of predicting depending
variables from multiple independent variables. This use to evaluate the effects of
independent variables on dependent variable. The estimated multiple regression model can
be presented as follows.

Y = β0 + β1X1 + β2X2 + Ɛi

Y = Dependent variable.

β0 = Autonomous coefficient value,

β1 = Coefficient of first independent variable (X1),

β2 = Coefficient of second independent variable

Ɛi = Difference between the predicted and the observed value of Y for the it participant.

The significance values of coefficients of variables should be significant under the

significant level of 5 %. Significant at p > 0.05. If the result is less than 5 % chance it
concluded that regression model overall predicts significantly well, and also this value use
to measure goodness of fit.

R square and adjusted R square value of the model, R square value indicates the variation
amount of the independent variable is accounted for, by model. And also, this is an overall
measure of the strength of association and does not reflect the extent to which any
particular independent variable is associated with the independent variable.

To achieve the main objectives of the study, it builds 4 developed multiple regression
models in order to check the impact on banking performance using saving deposit rate and
fixed deposit rate consider as independent variables for all 4 regression models and for the
dependent variables for the all models its using interest income, interest expenses, net
interest income and profit of the bank.

To analyze the general objectives such as to find out the relationship between interest rates
and factors in banking performance used Pearson correlation method. Pearson correlation is
used to measure the relationships between independent and dependent variables of
secondary data. Thecovariance value has to lie between -1 and +1. A coefficient of +1
represent that the variables are perfectly positively correlated. Conversely, a coefficient of
-1 indicates a perfect negative correlation between variables. A coefficient of 0 shows no
linear relationship among variables.

To determine the relationship between considered factors and customer satisfaction used
Chi-square test method in SPSS. To evaluate the relationship between categorical variables,
Chi square test is commonly used which is measuring hypothesis testing. To prove the
existing relationship between two variables, 0.05 significant value is used and if the value
is less than 0.05 H1 gets accepted and H0 gets rejected explaining that there is a
relationship between variables. If the significant value is greater than 0.05 H1 will be
rejected and H0 will be accepted concluding that there is a no relationship between
variables.

As seen, descriptive statistics, multiple regression analysis, correlation and Chi-square

testing are used to achieve the objectives of the study.

Organization of the Thesis

In theses paragraphs the researcher explains the way of which chapters of the way of which
chapters is organizing. Following paragraphs explain chapters in detail.

Chapter 1: Introduction
In this chapter, firstly gave the introduction about the first chapter. After, practical
background of the study and theoretical background of the study will be discussed. After
that, explain the research problem and research questions. In that case, problem or the
current condition of the research and the current situation of the interest rate volatility will
be discussed. Then the objectives of the study will be discussed. Objectives explain the
purpose of this research and Reasons for what to conduct this research.
And then in this chapter will be explain about the impact of digital marketing on sales
improvement of small and medium scale enterprises in Hambantota District
Further it will be explained specific objectives of the research. Significance of the study
will be discussed as next step of this chapter. It will be included significance of academic
and practical level in the research. Finally, chapter organization will be explained in
chapter 1.

Chapter 2: Literature Review

In this chapter, at the beginning it will explain about the Impact of digital marketing.
After that, researcher expected to study theoretical literature related to the digital
marketing. Next, this chapter will be given interest rate theories and empirical studies
using past literature. It will be included consequences of interest rate and interest rate
risk management.

Chapter 3: Methodology
In the third chapter will give brief introduction about the methodology that the researcher
hopes to use. As the same the research design will be explained in this chapter. After that,
sampling and measurements will be included to this. Finally, this chapter will discuss about
the data collection procedure and about the operationalization of this research.

Chapter 4: Data analysis and presentation

In this chapter the researcher will describe the analysis of the data, which the researcher
derived from the sample. Analysis chapter decides the final outcome of the research and
discussion of the research.

Chapter 5: Conclusion and Recommendations

This chapter explains the conclusion and recommendations of the research. Conclusion
explains the final result of the research. Recommendations express that what actions should
be taken to further development and reduce the week points of the research.
Time Frame
REFERENCES