EFFECT OF PROMOTIONAL STRATEGIES EMPLOYED BY SMALL AND MEDIUM
SIZED ENTERPRISS IN ENHANCING PERFORMANCE: A SURVEY STUDY OF
ELDORET TOWN
BY
CHAPTER ONE
INTRODUCTION
1.0 Introduction
This chapter contains the background to the study, statement of the problem, objectives of the
study, research questions, and significance of the study, limitations of the study, assumptions of
the study, conceptual framework and theoretical framework.
1.1 Background of the study
The performance of enterprises comprises the actual output or results of an organization as
measured against its intended outcomes. The performance of organizations and enterprises
encompasses three specific areas which are the financial performance, product market
performance and shareholders returns. In recent years many organizations and enterprises have
attempted to manage enterprise performance using the balanced score card methodology where
performance is tracked and measured in multiple dimensions. Existing literature has however
indicated the need for managers to pay more attention to the promotional strategies of enterprises
that are already in operation in an effort to enhance their operation (Obuna, 2008).
Promotional strategies have been adopted by organizations and industry operators to enhance
business operations. These are practices that perform the market development and growth
function. There is broad agreement that proper promotional strategies could improve enterprise
performance by providing real time market information that marketing mangers can use to
administer strategies effectively, formulate budgets, and manage resources. Sound promotional
strategies not only help organizations gain effective control over their current market, but also
enhance the outreach to new potential markets thus enhancing enterprise performance (Sigre,
2010).
Over the past decade developed countries have increasingly embarked on efforts to computerize
their Promotional strategies. Most common among these have been efforts to introduce
Integrated Marketing Systems (IMS) that computerize and automate key aspects of enterprise
marketing. IMS can enable prompt and efficient access to reliable data and help strengthen
enterprise controls, improving the provision of services which in turn lead to growth of customer
base and subsequently, improved enterprise performance. (Randall, 2010). In the developed
nations the process of promotional strategies is a fabric that is woven in the day to day operations
of the various enterprises. This can be attributed to the fact that the developed nations have
strong human capital, have support from the various bureaucracies involved and have strong
means by which they use to control their promotional strategies and hence lead to successful
promotional strategies.
In the developing nations on the other hand the concept of promotional strategies and its impacts
on enterprise performance is yet to be realized. This can be attributed to the lack of clear
information by the enterprises on the possible effects of the promotional strategies process on
their performance.
In Kenya some of the enterprises have adopted the promotional strategies process while some
have not. For example most of the service industries have not adopted step by step or phased
approaches of ensuring that Promotional strategies practices are fully embedded in the enterprise
operation to enhance their performance. These enterprises have as a result failed to realize their
full performance potential. It is against this background that the study aims to investigate the
effects of promotional strategies on the performance of the small and medium size enterprises
with focus on Eldoret municipality.
1.2 Problem statement
The importance of small and medium sized enterprises on the economic growth of a nation and
especially the developing nations can not be understated. Small and medium sized enterprises are
currently facing multiple difficulties simultaneously which include market over-saturation, increasing
competition and disgruntled franchise owners. This brings concerns about the industry on what they are
doing to cater for the above issues owing to the fact that there is few if any promotional strategies are
being incorporated. There is an observation that sales have drastically gone down while running costs
are high. This places a financial burden on the entrepreneurs. Altogether, these small and medium sized
enterprises require effective use of promotional strategies. This is because even if small and medium
sized enterprises products and services are properly produced, priced and distributed, still they need to
be promoted. This is to make customers aware of the product and services, to remind customers that the
products and services exist, about the quality and the advantages they offers over competing products.
The promotional methods used in Eldoret town are not effective in retaining and increasing the
customers to the enterprises. Effective promotional strategies will increase demand for the product and
services and improve enterprise performance. Successful promotion of small and medium sized
enterprises outlets requires in-depth market research. The research therefore seeks to investigate the
effect of promotional strategies on small and medium sized enterprises performance in Eldoret town.
1.3 Research objectives
i) To establish the various promotional strategies that can be used to improve small and
medium sized enterprises performance in Eldoret municipality.
ii) To find out the promotional methods used by the small and medium sized enterprises in
Eldoret municipality.
iii) To find out the effectiveness of the various promotional strategies in improving the
enterprises performance.
iv) To establish the challenges encountered in the promotion of the small and medium sized
enterprises in Eldoret municipality and their possible challenges.
1.4 Research questions
i) What are the various promotional strategies that can be used to improve small and
medium sized enterprises performance in Eldoret municipality?
ii) What are the promotional strategies used by the small and medium sized enterprises in
Eldoret municipality?
iii) How effective are the various promotional strategies in improving performance of the
small and medium sized enterprises in Eldoret municipality?
iv) What are the challenges encountered in the promotion of the small and medium sized
enterprises and their possible solutions in Eldoret municipality?
1.5 Research Hypothesis
The research will adopt a null hypothesis:
Ho – Promotional strategies employed by small and medium sized enterprises have no effects on
small and medium sized enterprises performance in Eldoret municipality.
H1 – Promotional strategies employed by small and medium sized enterprises have an effects on
small and medium sized enterprises performance in Eldoret municipality.
1.6 Justification of the study
The research is important because it will help the various stakeholders involved in the small and
medium sized enterprises outlets to improve their businesses. The research would help the
interested parties in the formulation of promotional strategies that will assist in effective
marketing of products and thus improving their performance. It would shed more light and
provide sufficient data on the relationship between promotion and small and medium sized
enterprises outlets sales in Eldoret town. It would assist the government in terms of policy
formulation in the area of promotion and marketing. In the theoretical regard, the study will
contribute towards the production of knowledge in the field of entrepreneurship. It will also help
other scholars to advance the scope of study and research since what has been researched on will
not be handled by other researchers but will concentrate on researching other fields that need to
be explored.
1.7 Scope and Limitations of the study
1.7.1 Scope of the study
The study will be limited in scope to small and medium sized enterprises within Eldoret town,
the town was chosen due to high development rate of the town, small and medium sized
enterprises outlets are on the rise and increased competition among existing enterprises makes
the town suitable for the study.
1.7.2 Limitations of the study
There are various limitations the researcher anticipates during the study and they include:
Uncooperative Respondents, whereby the respondents will not be willing to give information and
some will even be hostile .The researcher will overcome this by assuring the respondents that
their information was confidential so as to avoid the hostility from the respondents. The
researcher will also confirm to them that the information is mainly for research purposes and the
information gathered will be useful to them. In regard to this no respondent will be asked to
disclose their identity to the researcher.
The researcher will also be limited in terms of finance and resources. This are the resources
needed to carry out the research. The money required might be inadequate due to limited
sources. The researcher however intents to solve this limitation by preparing a work plan budget
prior to the study with limitation to his financial capability and sticking to it.
1.8 Conceptual Framework
The conceptual framework of the study identifies the promotional strategies as the independent
variable where the enterprise performance is the dependent variable.
(Source: Researcher, 2012)
Promotion strategies
Advertising
PersonalSelling
Salespromotion
Publicrelations
ElectronicMedia
Effects of promotion
Customers’perceivedvalue
Brandtrust
Repeatpurchasebehaviour
Customers’commitment
Challenges
Lawsuitthreats
Increasedcompetition
Promotioncost.
Enterprise Performance
Numberofreturncustomers
Increaseinnumberofnewcustomers
Rateofcustomerturnover
Increasedrevenue
