IMPACT OF SOCIAL MEDIA ADVERTISING ON THE PROFITABILITY OF SMEs IN GHANA’S RETAIL INDUSTRY

0
1038

ABSTRACT

The advent of social media platforms has been considered as one of the breakthroughs in e-business. Firms around the globe have capitalized on social media to market their products. This study sought to examine how social media usage has influenced the profitability of SMEs in Ghana, using SMEs in Accra as a case study. In attempt to address the study objectives, a mix- methodology research was adopted. Thus, the study collected both quantitative and qualitative data to explore the e-marketing utilizations by SMEs and its impact on profitability. The study found that a plethora of social media platforms are utilized including corporate websites, Facebook and google. This study again found that clients are likely to make decisions based on their encounter with SMEs electronic marketing activities. All platforms available on the internet have offered a two-way communication flow, which is highlighted theoretically and practically.

Consequently, this principle feature of social media has created a new landscape in supporting the socialization of information, and has forced marketers to give up the old mindset in dealing with mass media marketing. Lastly, it can be observed that respondents are convinced that consumers are actively utilising social media platforms as a tool in validating of the purchase decisions; however, consumers are deemed to be inactive in sharing their word of mouth to others with the available social media platforms

CHAPTER ONE

INTRODUCTION

            Background of the Study

In Ghana, just like in the rest of the developing countries, SMEs play very pivotal roles in the economic development of the country. Studies have found that small and medium scale enterprises have become the backbone of the private sector in Ghana. According to Hinson and Sorensen (2006), figures from the Ministry of Trade and Industry and Presidential Special Initiative showed that about 90% of the corporate sector was classified as SMEs. Abor and Quartey (2010) established that SMEs dominate the business environment in Ghana. Their activities span from serving as key provider of goods and supplier of services to individuals and large corporations thereby serving as a source of employment for almost 85% of manufacturing employment. Other studies by Ahiawodzi and Adade (2012) observed that SMEs account for 92% of the businesses operating in Ghana and contribute to 70% of Ghana’s annual GDP. A more recent report by the Ghana Statistical Service (GLSS 6) (2014) showed that about 92% of companies registered in Ghana were SMEs and of this group 75% percent contribute to annual GDP. This clearly shows that the role of SMEs in the economic development of Ghana and Africa at large is quite significant.

Despite the significant role SMEs play in the Ghanaian economy, they are considered as weak contributors to the economy (Abor, 2004) due to financial and managerial challenges. These constraints limit the expansion efforts, sustainability and profitability of SMEs especially in developing countries like Ghana. With the advent of social media however, there appears to be an

opportunity for SMEs to compete both locally and globally. A recent study by CliqAfrica and Avance Media (2017) shows that there are over 3,424,971,237 internet users globally, with an internet penetration of about 46% of global population, a growth difference of 3% from 2015. Facebook, the largest social media network according to its September 2016 data, reports a monthly active user base of 1.79 billion with 1.09 users active on mobile. The trend shows that 1- 2 out of 3 persons found online uses Facebook and probably uses mobile to access it. When all the numerous social media channels are considered, a total social media usage reaches about of 2.31 billion (Wearesocial, 2017).

Available statistics also show that currently there is a strong social media penetration in Ghana and that the trend is no different in Ghana. Statistics show a total of 7,958,675 of the population can be found online (28.4% penetration) ranking the country the 47th highest internet user base closely following that of the United Arab Emirates in the global internet user base rankings (CliqAfrica & Avance Media, 2017). Social media usage in Ghana is also continuously growing and estimated at 40% social media penetration (2.9 million social media users as at January 2016) with almost every online mobile user having a social media account or on a social messaging channel such as WhatsApp (Wearsocial, 2017). These statistics give evidence to the strong penetration of social media in Ghana.