The Internet As A Marketing Tool Among Kenyan

Published Date: 02 Nov 2017

ARCC African Regional Centre for Computing

CCK Communications Commission of Kenya

ISP Internet Service Providers

SPSS Statistical Package for Social Scientists

TABLE OF CONTENT

CHAPTER ONE

INTRODUCTION

Background of the problem

The rise of the internet and the World Wide Web globally has led to major shifts and transformations in the business world. Internet usage has grown exponentially from 0.4 % of the world’s population in 1995 to 32.7% in 2012. Driven by social media and mobile systems, this growth is expected to continue, providing a platform for many different services. The growth of the internet is expected to continue and reach 45% of the world’s projected population by 2016 (CISCO, 2016). Locally, internet penetration has been growing rapidly. Currently 11.8 Million Kenyans use the internet (CCK, 2012). The number of internet users is increasing and the way we work, play and do business has changed. Many companies allow their employees to work from home, internet users can play games online with friends they have never met face to face and business deals can be concluded on the web without the need to ever meet. One industry that is feeling this impact is marketing and specifically advertising.

Internet as a marketing tool provides significant opportunities for companies to seek and adopt innovative practices in order to address the increasing demands of consumers (Sharma & Aragón-Correa, 2005). In this context, business operations must be developed at two levels: the physical and virtual level. The Internet presents itself as a means of comprehensive two-way communication allowing users to access and interact with information from a wide variety of sources (government agencies, businesses, universities and individuals) as well as communicate through multiple ways. Companies could use the Internet to do business and even distribute some types of products (Vieites, 2002). Doing that companies can benefit from easier access to information, reduced cost of economic interactions and improved communication with customers (Smith et al., 2004).

For a long time, print has been the key medium for advertising, commanding huge revenue allocations from clients. A major portion of this allocation has traditionally been consumed by the newspaper industry. Globally, this industry is facing a sustained onslaught from online platforms including websites, blogs, lists and social media sites like Facebook, Twitter, LinkedIn and YouTube. Users of these online platforms spend a lot of time online. In his book the vanishing newspaper, Philip Meyer predicts that the last American newspaper will be published in the year 2040 (Meyer, 2006). This decline corresponds to an increase in online activity. Studies have estimated that internet users spend sixteen hours per month online. In view of dwindling newspaper circulation, advertisers are reducing how much they spend on print media and diversifying into new online channels. According to Tsang and Tse (2005) online advertising is effective if it is able to generate an immediate response from consumers.

Online advertising has given rise to a whole new industry dominated by companies such as Google, Facebook and Twitter that have figured out how to attract billions of users and how to monetize this huge subscriber base. In the United States alone, internet advertising revenues totaled 31.7 billion in the year 2011, a 22% increase from 2010 (IAB,2011). From 2002 to 2011, internet advertising revenue in the U.S.A has been growing at a CAGR of 20.3% and is expected to keep growing. Google and other online platforms including Facebook, Twitter and LinkedIn have been the main beneficiaries of this shift in advertising spend. It is important to understand this shift and the challenges and opportunities presented therein for the local market.

Kotler and Armstrong (2010) define advertising as any paid form of non-personal communication of ideas and information about products in the media with the objective of creating brand image. Kaye and Medoff (2001) confirm online advertising is widely used by companies and advertisers to promote their products and services. It is crucial that online advertising be effective in order to generate favorable responses from consumers. The internet is identified as a global interconnection of computer networks that offers companies inexpensive and convenient tools for advertising and communicating with their customers. This is known as online advertising (Kaye & Medoff, 2001).

Kenya’s advertising revenue grew exponentially over the past decade from 3.2 billion shillings in 1999 to 49.2 billion in 2009, fuelled by a fragmented audience in the country created particularly by vernacular radio station, a study by research firm Ipsos Synovate indicates.  Radio and television shared the revenues equally unlike a few years ago when radio played second fiddle to television. Ipsos said in 2011, beverage companies spent Kshs. 65 billion, an average of 5.4 billion shillings weekly. Online advertising is a segment that has been missing all along from the studies that continues to be carried out (Mbote, 2012).

Statement of the problem

Chaffey (2007) believe that Internet Marketing brings high profitability to the firms at low cost where as some researchers (Gatticker et al, 2000) argue that internet is just an effective and modern tool for marketing and the success of marketing depends more on strategies and right decisions rather than the technologies like internet and email. Considerable portion of literature has emphasized on studying the impact of Internet Marketing on business organizations of different countries (McCole & Ramsey, 2004; Chaston & Mangles, 2003) however there are few researches focused mainly on the effectiveness of Internet Marketing in Kenya and East Africa at large. The ability to quantify its impact and effectiveness in the region is hampered by a lack of insight that would be provided by scholars researching the topic. The desired effect of online advertising is generating favorable consumer response. It is therefore important to examine how effective online advertising is among consumers in Kenya thereby prompting this study.

1.3 Purpose of the study

The purpose of the study is to investigate the effectiveness of the internet as a marketing tool among online costumers and users. The study will however be guided by the following specific objectives.

Specific Objectives

The study will seek to answer the following research questions:

What factors influence the effectiveness of the internet as a markeitng tool among Kenyan consumers?

What are the perceived effects of the different forms of internet marketing tools used Kenyan consumers?

What is the market for online advertising among Kenyan consumers?

1.5 Rationale of the study

The study will present importance to several stakeholders in the marketing sector first. The study seeks to inform investment into the field as it aims to measure the size of the opportunity presented in monetary terms as well as possible returns on investment. The study will also be important to incumbent advertisers on the risk posed by the new media and examine the trends in the region. The study is also interested in understanding the user’s point of view, what makes online advertising useful for a user and what makes it a nuisance. It seeks to gain insights from the end user on how online advertising can be improved. The study findings will contribute to the knowledge base on how best to utilize online advertising and stimulate further research.

1.6 Scope of the study

The study will explore online marketing with a bias for online advertising. Online advertising has a global reach and therefore this study shall limit itself to Kenya as a country and may broaden to include East Africa as the region shares many attributes. The study will seek to investigate website marketing, social media marketing, viral video, email marketing, display advertising and search engine marketing and optimization. Different age groups behave differently online. The study will not limit itself to a particular age group but will seek to establish the behavioral patterns associated with the different age groups and how to best serve advertisements to each age group. The study will also seek to investigate how financial muscle affects internet access and interaction with online advertising. The study will seek to establish social links associated with the effectiveness of advertisements especially as pertains to social media marketing. The study will also limit itself to the business – to – consumer marketing area rather than focus on the business – to – business area.

1.7 Definition of terms

Advertising – A structured and composed non – personal communication of information usually paid for and usually persuasive in nature, about products (goods, services, and ideas) by identified sponsors through various media.

Internet – An interconnected system of networks that connects computers around the world via the TCP/IP protocol.

World Wide Web – A system of Internet servers that support specially formatted documents. The documents are formatted in a markup language called HTML (Hypertext Markup Language) that supports links to other documents, as well as graphics, audio, and video files.

Online – This refers to a connection to a computer or computer network between two or more users

Website –

1.8 Chapter summary

This chapter introduces the background of the study. It looks at local and global trends of internet use as well as online advertising trends. It has explored the drivers for adoption of this medium and the challenges facing the medium in the region. The chapter also focuses on the objectives, scope and importance of the study. Chapter two will review existing literature on the topic and chapter three will look at the research design and methodology.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This section of the study will review available literature on the phenomenon of the use of internet marketing and its effectiveness among its consumers and users. The study is presented in different titles which are internet and marketing from a global perspective, internet use trends, forms of internet advertising and factors affecting the effectiveness of internet advertising

2.2 Internet and Marketing from a Global Perspective

Internet that is considered as an efficient medium to access, organize, communicate and share communication (Levy, 1996) is drawing unpredictable impacts on the business activities. The marketing strategies of the firms are also much inspired and affected with the emergence of this advance technology and many of the researchers (Peterson et al, 1997; Ashworth et al. 2006; Hamill, 1997) believe that the growth and spread of internet with an extraordinary pace over the last few decades has resulted in its increased use for marketing purpose but at the same time that it is not an easy job to measure the impact of internet on the marketing activities and their outcomes because changes occur in the modern business world so fast that considering the speed with which developments and changes take place on the Internet it is almost impossible to predict the impact of Internet Marketing.

According to the traditional concept, the strategies of marketing must follow some predefined steps as Darby et al (2003) explained that the Marketing strategy must possess eight steps including "market research to understand customer's perceptions and wants; product development along the lines of perceived customer wants; product delivery and customer feedback and market testing. However in the modern era of Internet Marketing there are some major changes occurred in the concept of marketing and Internet seem to be challenging some of the most basic ideas of marketing, while some of these changes hold positive implications for marketing anywhere in the world, the effects of others are not so clear. In particular, Internet Marketing has challenged product development and the concept of marketing itself. In traditional marketing, information was often gathered from customers in order to develop products that customers’ satisfaction, however, the greater information richness that the Internet provides for both business and customers means that business managers must tap into this technology to satisfy the ever increasing consumer demands, and also to compete favorably in the increasingly competitive business front (Komenar, 1997).

Wanyama (2011) observes traditional media has become congested and thus more expensive. Companies are now looking for a cheaper, more effective option of reaching out to a highly segmented audience. The low entry barriers for marketing online coupled with intensive tracking and analytic tools have proved to be most resourceful for selling brands online. This is especially true for SMEs and start-ups that have to muscle their way to the top using the most cost-effective means. The audience has also become more segmented through specific platforms and communities based on age, geographic location and interests. Thersthol and Lövgren (2007) view online marketing as a process for reaching out to as many existing and potential customers as possible. In order to do so, Jobber (2004) states that it is of uttermost importance to have knowledge of the existing-and potential customers, as it in the end can affect the company in its long-term success.

2.3 Internet Usage Trends

According to a survey by internetworldstats.com internet usage across Africa has grown by about 1,400 percent between 2000 and 2009. In Kenya, it has more than doubled in the last two years making it the fastest growing media, now with more than 3.5 million monthly users.  In 2009, 45 percent of internet users in Kenya access it via mobile phone, compared to 13 percent in 2007 as indicated in a study by local research firm Synovate. 

The Internet first became available in Kenya during 1993. Full Internet access was established in 1995. The African Regional Centre for Computing (ARCC), an NGO based in Nairobi, Kenya, became the first provider of web-based Internet service. The first commercial ISP, Formnet began operating in 1995. Soon competition increased with the entry of three other ISPs. All the ISPs would lease analogue or digital data lines from Kenya to the United States to access the internet backbone. In 2000, there were about 200,000 Internet users in Kenya, with an estimated monthly growth of 300 new subscribers each month. The main users of the Internet in Kenya are Multinational corporations, international organizations and NGOs. All the government’s ministries are now accessible via the internet. The latest estimate of Internet users for Kenya from the ITU is 3,995,500 people, corresponding to a penetration rate of 9.7%. At present there are 72 licensed ISPs of which about half are operational. Currently the Communications Commission of Kenya (CCK) is considering conducting a comprehensive Internet Usage Study to confirm the real number of users in Kenya.

2.3 Internet Advertising in Kenya

Many marketing managers are yet to see how to convert the millions of internet users into brand loyalists; however internet advertising has for a long time been looked at only in terms of placing a dormant banner on a website. However, brand and marketing managers are now seeing the benefits of online advertising. On internet, you capture the full attention of your audience, and the most important bit about it is that the audience communicates back with you – they click, respond to queries, make purchases, giving you instant feedback. Latiff (2009) noted Kenya’s advertising landscape is about to change for good. Traditional media – Radio, TV and print – now have a more formidable competitor for a share of the advertising cake. Online marketing’s interactive features make it more attractive for brand managers who want to see results and track minute-by-minute effectiveness of their campaigns.

Kariuki (2012) observes that there are numerous forms of internet marketing used in the world; however, very few are being used in Kenya. Being a developing country, the mostly used form of internet marketing in Kenya is individual websites. But as most companies and businesses have realized, this is not enough to market products and services on the internet. Consequently, online marketing experts are needed to coordinate strategic internet marketing practices that will bring business to any online business. Internet marketing in Kenya is rising in demand as marketing managers become acquainted with its potential. In elaborating how the website marketing through the internet Wamaitha (2008) explains that when an individual or organisations starts a website and put information on it about the business or passion. Increase the content on your site. Google and other search engines recognize your site as an authority in your area so they index you. That means that whenever you write your content is ranked immediately or it takes a few days or shorter than if there was a lot of content on Kenya on the internet. As you increase your content, Google starts ranking your site too. It starts from N/A to 10. N/A means that they do not even recognize your site exists and cannot send their spiders to your site. But with time they start recognizing you and your site starts being ranked.

Muchuku (2011) identifies another common form of online marketing mostly used in Kenya is the use of social media. Globally, social media revenue hit 10.3 billion in 2011, a growth of 41.4 percent from the previous period, according to data from IT research specialists Gatner, with projections that it could hit $29 billion in 2012 and $40 billion by 2015. Although the data is not available in Kenya, a number of companies can be said to have established themselves on social media mainly telecommunication companies. Politicians also seem to value the Internet with all aspiring presidential candidates in the country having launched web portals and their adverts all over the social media, as HumanIPO recently reported (Mbote, 2012).

Internet Marketing in Kenya via social media has been very effective especially in the fashion industry. Many organizations have opened social pages like face book and twitter where they interact with their clients and respond to their views. Some of them design specific products for their customers and hence social media has become an effective tool of marketing. By far, facebook.com is the most use in social media marketing in Kenya. This form of social media has been very effective and efficient in fashion industry. Twitter is the other social media platform used by companies to communicate and advertise products. In this form, companies are opening social media pages where they solicit for fans (Kariuki, 2012). Although the data is not available in Kenya, a number of companies can be said to have established themselves on social media mainly telecommunication companies. Politicians also seem to value the Internet with all aspiring presidential candidates in the country having launched web portals and their adverts all over the social media, as HumanIPO recently reported. For instance Tusker Lager spent Kshs. 479 million, Pilsner Lager Kshs 159 million, Tusker Malt Kshs 41 million and Summit Lager Kshs. 39.8 million.

Muchuku (2011) further observes the use of E - mail marketing as common in Kenya. Internet Marketing in Kenya is sometimes done by business people sending messages to the target population randomly to their phone numbers or e mail addresses. The challenge is that this method has been used by many fraud stars to steal from the general public. There are many other forms of Internet Marketing in Kenya, but these are the most common ones. Rodgers and Thorson (2000) explain online advertisements can be in the form of banner advertisements, pop-advertising, sponsorship, hyperlinks, and websites.

2.4 Factors Affecting Effectiveness of Internet Marketing

Smith (2005) revealed that the internet is rapidly growing and spreading as a compelling tool of marketing as the market places have turned in to a technology centric business world. In order to survive in this technology centric business world it is very crucial for the companies that they understand the importance and role of Internet Marketing and adopt and utilize it properly to take full advantages of this modern tool.

Kokkinaki and Ambler (1999) revealed that different marketing activities and strategies are taking effects of Internet marketing for example the pricing policy. Pricing is an important component of the marketing mix and for any organization the pricing policy possesses great importance because it determines that what would be the final amount of money that they will charge from the customers in return of the product or service they offer. The customer response towards the product is also affected by the price of the product or service hence it is very crucial that the businesses must formulate their pricing policies in a manner that can satisfy their customers as well as provide benefit to the organization as well. In this regard the company has to take care of many important matters and among them the consumer behavior is an important one that can be effectively measures and monitored through Internet Marketing.

In this way internet provide an opportunity to the businesses to get immediate and impulsive responses of the consumers thorough the marketing surveys and polls conducted online or via email. According to the Internet World Statistics website A major factor that may have influenced the use of ICT positively in Kenya is the use of the English language. English is the official language in Kenya, and Information Technology (IT) services are largely based in English, so this has been an advantage.

As a developing country, Kenyan infrastructure is not well developed. Internet connection heavily relies on internet connection and power supply. Research shows that a very small population of Kenyans has a 24 hour access to the internet. This means that very few people can be reached on Internet Marketing in Kenya. A very big population in Kenyans also leaves in the rural areas where there is limited or no power supply. This renders the population that can get access to computer use to be very few. The challenge of infrastructure in Kenya makes online marketing to mainly reach the people in towns and a few people in the villages. Given that a big population of Kenyans lives in rural areas that have not been connected with the fibre optic cable and lack power connection, poor infrastructure is a major drawback to Internet Marketing in Kenya. The other challenge is that many Kenyans live below the poverty line, thus fighting for basic needs cannot allow them visit the internet. Information posted online ends up reaching only part of the target market (Muchuku, 2011).

Web usability means that any visitor who visits a business website is able to do the desired actions. These actions would include ordering services, purchasing products, casting vote, retrieving information, downloading files, or completing a registration form. Some sites are also designed to ensure contribution of information by online visitors who have used products or are participating in a certain forum. Therefore the most important fact about website usability is that it can be measured by the ease of completing the required action. This then becomes one major factor to consider when doing internet marketing in Kenya and around the world – designing a website to effectively appeal to visitors (Kariuki, 2012). Research has found that more than 40 percent of online purchase trials fail on the first attempt. Further, over 50 percent of visitors fail to navigate through a website due to difficulties in navigation; and to make the situation worse, it has been found that less than ten percent of website visitors will come back to such a site. With these damning figures, it is evident that website usability is at the heart of e-business success hence the need to take time when designing the site.

According to Constantinides (2002) other factors shaping the online behaviour of users are the 4 P’s of marketing; Product, Price, Place and Promotion (In this case, the product is the online advertisement with the objective of developing an interest for the company while persuading the user of looking into the offering more closely. The price is considered by the user as a cost element towards time, connectivity and opportunity. If there are substitutes, the chances are high that the consumer will compare the offerings. The website where the product is available is also the promotional medium, and the most important

Demographic factors have also been observed to have an impact on the effectiveness of online advertising. Since the Internet is more mainstream than ever before, it is interesting to investigate and study previous research regarding the demographic differences between internet users (Korgaonkar & Wolin, 2002). Variables such as education, age and gender are shown to have an effect on the attitude towards web sites and advertising (Wang et al, 2002). Knowledge of these variables offers the marketers the possibility of spending marketing money in targeted, gender-specific advertisements (Wolin & Korgaonkar, 2003). Hanson (2000) claims that the majority of Internet users are perceived as quite young, while middle-aged persons and seniors are minorities among the people spending time online. This difference reflects itself in e.g. work and education. While most companies and in the modern times provide computers and the possibility of using the Internet at work, this generation of our population are the ones most likely to have been exposed to the internet medium. The same goes for all educational institutions.

On the contrary Mbote (2012) observes that there is indeed a place for online advertising in Kenya, "this neglect on a segment that has a potential to overtake traditional media with its effectiveness highly rated given its ability to segment age groups and geographical barriers. One of the few statistics on the Kenya online market indicate Kenya delivered approximately 35 million mobile Web ad impressions for around 50 mobile websites, according to Inmobi’s 2009 data. Another global mobile ad network BuzzCity study in 2010 shows Kenya was position six globally, with a 243 percent growth in mobile advertising ahead of countries like Canada, and the U.K."

2.5 Chapter Summary

This section of the study reviewed related material on internet marketing from published material, journals, and blogs and also from internet sources. The study found a plethora of studies which have been conducted in developed countries with less evidence of internet marketing studies in developing countries of which Kenya is among. There were several factors identified that influence the effect of the internet as a marketing tool among consumers which included the demographic characteristics of users, access to technological tools which can access the internet and also internet connectivity among the Kenyan population as compared to urban and rural areas.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This section of the study comprises of the research methods the study seeks to adopt in order to collect and synthesize appropriate data to achieve the study objectives. The section is in different titles which include the research design, population and sampling design, data collection methods, research procedures and the data analysis methods.

3.2 Research Design

The study seeks to adopt the descriptive survey research design. Descriptive research was the appropriate design for the study as it allows the researcher to use both primary and secondary sources of data using qualitative and quantitative approaches. The descriptive research design is typically concerned with determining the frequency with which an event occurs or the relationship between two variables (Shukla, 2008). Ghauri, Grønhaug and Kritianslund (2005) conclude that descriptive research is characterized by the fact that the problem is clear and well structured.

3.3 Population and Sampling Design

The population of the study targets would be users of modern technological gadgets which dominate the global and Kenyan market today. These include smart phones, I Pads, computers and other communication gadgets that can access the internet. The populations of the study are post graduate students in the United States International University (USIU). The study will adopt a non – probability sampling technique which is more appropriate when the researcher wants to sample particular population which is deemed fit for the study. The researcher will thus use the snowball sampling technique which is based on informal networks inorder to reach the target population of the study.

The study will seek to use both the convenience and snowball sampling techniques. Cochran (1963) defines snowball sampling as a process which begins by identifying someone who meets the criteria for inclusion in your study. The participants will be identified through the convenience sampling technique where the researcher uses his or her own judgment to determine who would be appropriate for the study. Adopting the snowball sampling technique the researcher then asks them to recommend others who they may know who also meet the criteria. The researcher will randomly select 30 members of the Degree of Global Executive Masters of Business Administration who will then recommend another individual who would provide information to address the study objectives. The researcher will seek to have every member of the identified 30 refer at least 4 other respondents which will lead to a sample size of 120.

3.4 Data Collections Methods

The study will adopt both primary and secondary sources of data. Primary sources of data include the information that the researcher exclusively collects from the study participants and for the sole purpose of the study. Inorder to collect primary data the researcher will seek to use the questionnaire which will be administered to the study participants. This thesis aims at finding out people’s attitudes and intentions, and Ghauri et al (2005) write that only primary data can provide answers to such questions. The preference for a questionnaire for students is based on the fact that students are able to complete it without help, anonymously, and it is cheaper and quicker than other methods while reaching out to larger sample (Bryman, 2008; Cohen et al., 2007). Secondary sources on the other hand comprise of material that has already been published or is available in the public domain and can be used to inform the study being undertaken. Some examples of secondary sources are editorial and review articles, media, and other reports that review events, experiments, and creative works.

3.5 Research Procedures

The researcher will self – administer the questionnaires to the study participants. The benefit of self - administration according to Greener (2008) motivates and encourages the respondents to participate in the study. Further the procedure will enable the researcher to explain or elaborate on the key term and concepts used in the instrument. The researcher will indulge the respondents by informing the on the purpose of the study and also assure the confidentiality of the information they provide.

3.6 Data Analysis Methods

The researcher will seek to edit the raw data collected through the questionnaire with an effort to detect errors and omissions such that the minimum data quality standards have been achieved. Coding involves numbers so as to be able to group responses into a limited number of classes or categories (Shukla, 2008). The coding process will be done after all the data has been collected inorder to identify the different clusters of responses that are generated from the raw data. This will then be entered into the Microsoft Excel spreadsheet which will then be copied to the statistical package for social sciences (SPSS) for further analysis. Descriptive analysis will be performed which will assist in summarizing data and identifying data trends which will allow the researcher to undertake further statistical analysis to establish relationships between the dependent and independent variables of the study.

3.7 Chapter Summary

This chapter comprised of the various research methods that the study will adopt inorder to accomplish the study objectives. The study identified the descriptive survey research design and the snowball sampling technique to identify the study participants. The researcher also identified the questionnaire as the primary method of data collection and also described the data analysis methods to be adopted by the study.