CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The problem of locating information on the World Wide Web (www) was addressed with the introduction of search engines (Dreilinger and Howe, 1997). Search engines utilize automated programs known as spiders to scan the web, gather website information, store it in databases, and retrieve it when requested by users. Typically, search engines display ten results per page, such as Google's top ten results on the first page, followed by the next ten on the second page. The ranking of websites is determined naturally through the algorithms employed by search engines.
Website owners engage in SEO campaigns (Aul, 2011) to organically improve their website's visibility and achieve higher rankings on search engine results pages. SEO involves various ranking algorithms and plays a crucial role in attracting new customers (Tomasi and Li, 2015). According to Hansell (2007), search engines drive a significant number of visitors to a company's website, particularly new customers seeking information about products and services.
In recent years, there has been a significant increase in research focused on Small and Medium Enterprises (SMEs) and entrepreneurship, leading to a greater understanding of their role in various economies worldwide. The rise of digital platforms has provided SMEs with excellent opportunities to enhance their brand presence and expand their businesses (Arobo, 2022).
The concept of SMEs emerged in the development landscape in the late 1940s, primarily aiming to promote trade and industrialization in developed nations (Organization for Economic Cooperation and Development, 2004). The specific definitions of SMEs vary from country to country, taking into account their role in the economy and the policies and programs established by relevant agencies or institutions responsible for SME development.
For example, a small business in highly developed countries like Japan, Germany, and the United States of America (USA) could be classified as a medium or large-scale business in a developing economy like Nigeria (Etuk et al., 2014). Furthermore, the definition of SMEs also evolves over time, influenced by the policy focus of different agencies or developmental institutions.
Despite the aforementioned variations, SMEs can be defined based on several criteria, including turnover, number of employees, profit, capital employed, available finance, market share, and relative size within the industry (Etuk et al., 2014). According to the Companies and Allied Matters Act (CAMA, 2020), in order for a company to be classified as a small company within a given year, it must meet the following conditions: it must be a private company, its turnover should not exceed 120 million naira (or any other amount determined by the Commission), its net assets value must not exceed N60 million (or any other amount determined by the Commission), none of its members can be a foreigner, a government entity, or a nominee of a government or government corporation/agency, and its directors must hold at least 51 percent of its equity share capital. These criteria encompass a vast majority of Nigerian businesses, including SMEs.
Furthermore, as stated by the Corporate Affairs Commission (CAC), the regulatory agency responsible for business registration and oversight in Nigeria, a small company is defined as one that has only one director. This implies that a small company does not require a board of directors to oversee its operations. Additionally, a small company is exempt from the requirement of appointing a company secretary (Corporate Affairs Commission, 2022). Therefore, it is not mandatory for a small company to designate a company secretary to handle administrative and legal matters.
Ekpo et al. (2017) highlight the distinctive characteristics of SMEs, including their small-scale operations, easy entry into economic activities, and reliance on local resources. On the other hand, the quantitative definition emphasizes specific quantitative attributes such as the number of employees, sales value, and/or asset value. Like any other business enterprise, SMEs aspire to increase sales in order to expand their assets and market size. Due to escalating market competition, various strategies are devised to attract and retain customers, with the ultimate goal of boosting sales and maintaining profitability (Jobber and Ellis-Chadwick, 2013). The success of a business organization heavily relies on its marketing skills, and one of the primary objectives of marketing is to enhance sales.
Furthermore, marketing is considered a crucial test for businesses to evaluate the impact it has on vital business indicators such as market share and sales growth. Therefore, it is imperative for small and medium-scale businesses to improve their marketing efforts to ensure survival in the market and remain relevant in the face of competition (Is-haq, 2019). Globally, SMEs have been found to contribute to no less than 60% of employment in the business sector. Small and medium enterprises are widely regarded as the driving force behind economic growth in all countries (Rajesh et al., 2008). In Nigeria, they are estimated to account for approximately 40% of the GDP and 70% of industrial employment (Eniola, 2014). According to Inah (2021), Nigeria's Minister of State for Industry, Trade, and Investment, Amb. Mariam Katagum, stated that the latest SMEDAN/NBS MSME Survey indicates that Nigeria's SMEs contribute nearly 50% of the country's GDP and account for over 80% of employment in the country.
Undoubtedly, the SME sector plays a crucial role in Nigeria's growth, including the reduction of poverty and unemployment levels, and accounts for 97.2% of companies in the country. Moreover, SMEs contribute to national development by positively influencing income distribution in both functional and nominal terms (Uzor, 2004).
Therefore, it is essential to create a supportive environment that encourages the advancement of SMEs. One of the key factors in promoting small businesses is sales, which serves as the primary source of revenue generation. Enhancing sales can be achieved through effective marketing of SMEs' products and services. Such marketing efforts generate awareness and increase preferences for the advertised products compared to competing alternatives (Is-haq, 2019).
With the evolving landscape of Internet technologies, SMEs are investing in these technologies and leveraging e-commerce to access global markets and compete with larger companies in their respective industries. The growth of e-commerce sales has been significant, rising from 72 billion US dollars in 2002 to 228 billion US dollars in 2010 (Aul, 2011). While creating a website that enables online transactions is a relatively straightforward task for SMEs, the real challenge lies in making the website visible to potential customers when they search for product information.
Search engines have become a vital channel for SMEs to expand their global reach and compete with larger companies. They have a considerable impact on business performance, serving as convenient information tools and powerful agents of transformation that enhance transparency and competitiveness in the business environment (Rangaswamy et al., 2009). The display and organization of search results into meaningful groups and sequences are important factors that influence how information is perceived by users (Kleinmuntz and Schkade, 1993).
Moreover, the order of search results has a significant impact on how users process information on a web page. Internet users expect the most relevant results to appear at the top of a Search Engine Results Page (SERP) and assume that the ranking of search results is relevant to their search terms. Studies indicate that websites ranking higher on a SERP have a greater likelihood of being visited by users (Enge et al., 2012). Users also tend to believe that companies whose websites appear at the top of SERPs are the leading companies in their respective fields. A study conducted by Enquiro (2007) examined car buyers' perception of the best fuel-efficient car based on a search engine results page (SERP) ranking schema.
For instance, when the brand name car, Honda, was positioned in the first position on the SERP, users perceived it to be more fuel-efficient. However, if Honda did not appear on the first page, users did not perceive it as significant. Research has also shown that users typically do not go beyond the first two or three pages of search results (Roussinov and Chen, 2001). Therefore, the need to improve the ranking of a website, which can be achieved through search engine optimization (SEO), has become increasingly important for many organizations, particularly for SMEs. Engaging in SEO is crucial for SMEs to remain competitive in the global marketplace and avoid falling behind in this essential marketing channel.
Due to a lack of knowledge about the benefits of SEO and limited internal resources to carry out SEO activities, many SMEs opt to allocate funds to outsource their SEO efforts to specialized companies. As mentioned previously, it is essential to study and assess the performance of SMEs, given their significant contributions to local economies. Thus this study assesses the impact of seo on sales performance of small and medium enterprises in Ogbomosho North Local Government of Oyo State.
1.2 Statement of the Problem
SEO can indeed help level the playing field for SMEs, as the top positions on SERPs are not exclusively reserved for well-known companies (Fusco, 2006). Through effective search engine optimization techniques, relatively unknown small companies can surpass larger and more renowned competitors in search rankings. However, there is limited research available that specifically examines the impact of SEO on sales performance for SMEs, particularly for small and medium enterprises in Ogbomosho North Local Government of Oyo State.
1.3 Aim of the Study
The aim of this study is to examine the impact of search engine optimization (SEO) on the sales performance of small and medium enterprises (SMEs) in Ogbomosho North Local Government of Oyo State.
1.4 Objectives of the Study
The study will focus on the following objectives:
- To assess the level of SEO implementation among SMEs in Ogbomosho North Local Government of Oyo State.
- To analyze the sales performance of SMEs in Ogbomosho North Local Government of Oyo State.
- To examine the relationship between SEO and sales performance of SMEs in Ogbomosho North Local Government of Oyo State.
1.5 Research Questions
The study will address the following research questions:
- What is the level of SEO implementation among SMEs in Ogbomosho North Local Government of Oyo State?
- What is the sales performance of SMEs in Ogbomosho North Local Government of Oyo State?
- Is there a significant relationship between SEO and sales performance of SMEs in Ogbomosho North Local Government of Oyo State?
1.6 Research Hypothesis
The study may formulate the following research hypothesis:
H0: There is no significant relationship between SEO and sales performance of SMEs in Ogbomosho North Local Government of Oyo State.
H1: There is a significant relationship between SEO and sales performance of SMEs in Ogbomosho North Local Government of Oyo State.
1.7 Justification of the Study
This study is justified by the need to understand the impact of SEO on the sales performance of SMEs in a specific region, Ogbomosho North Local Government of Oyo State. It aims to contribute to the existing body of knowledge on the subject and provide valuable insights for SMEs in enhancing their online visibility and sales performance.
1.8 Scope of the Study
The scope of this study is limited to SMEs operating in Ogbomosho North Local Government of Oyo State. The study will focus on the impact of SEO on the sales performance of these SMEs and factors influencing the successful implementation of SEO strategies. The study will not extend its investigation beyond the specified geographical area and will not cover other aspects of digital marketing or business performance evaluation.
