E u r o p e a n I n t e g r a t i o n S t u d i e s 2 0 1 6 / 1 0 44 Role of Internet Marketing for Exporting and Not Exporting Companies (Results of Recent Company Survey in Latvia) http://dx.doi.org/10.5755/j01.eis.0.10.16282 Biruta Sloka, Ināra Kantāne, Renāte Vidruska University of Latvia, Riga, Aspazijas bulv. 5, LV 1050, Latvia Submitted 03/2016 Accepted for publication 09/2016 Role of Internet Marketing for Exporting and Not Exporting Companies (Results of Recent Company Survey in Latvia) EIS 10/2016 European Integration Studies No. 10 / 2016 pp. 44–51 DOI 10.5755/j01.eis.0.10.16282 © Kaunas University of Technology Abstract Introduction The aim of current paper is to analyse the role of internet marketing for exporting and non–exporting companies. Methods used in research: scientific publications studies, survey of companies in Latvia. The survey was conducted from November 2014 to March 2015. The company register data base LURSOFT is used for survey sample creation. A systematic sampling was applied in the survey to guarantee a ran­ dom selection of units included in the sample. For the analysis of the survey data – descriptive statistical analysis, cross tabulations, Mann–Whitney U test are applied. The companies’ survey results show that exporting companies and non–exporting companies do not use internet marketing properly, the half of companies home page use only as a business card. About 32% of exporting companies and about 19% of non–exporting companies does not sell the products/services on the internet, but customers can order the product in home page. Products/services sell both on the Internet and at points of sale about 25% of exporting companies and about 26% of non–exporting companies. Theoretical findings and empirical research results indicates that internet marketing could be used more efficient in companies to promote and develop expert. KEYWORDS: exporting companies, internet marketing; non–exporting companies, company survey, market promotions. Internet marketing has bigger and bigger role as the information technologies development pushes to open new challenges and new options for mere efficient marketing applications, in­ cluding development of internet marketing. There are numerous researches done worldwide to evaluate efficiency of internet marketing in different fields and branches of business. According comparative statistical data Latvia is not applying internet as efficient as other countries and this has motivated to make deeper research on aspects of internet marketing for exporting and non–exporting companies. The aim of the current research is to analyse the role of internet marketing for exporting and non–exporting companies. Tasks for the research: analyses theo­ retical findings of the role of internet marketing and examine different views of the companies on internet marketing and make comparisons of the indicators for exporting and non–exporting 45 E u r o p e a n I n t e g r a t i o n S t u d i e s 2 0 1 6 / 1 0 companies. Research methods applied: scientific publications studies, survey of companies in Latvia and comparing results of the survey for the exporting and non–exporting companies. For data processing of survey results there are used descriptive statistics: indicators of central tendency and location (arithmetic mean, mode, median) and indicators of variability – range, standard deviation and standard error of mean, cross tabulations and Mann–Whitey U test. Main findings are that companies could use internet marketing more efficient. Internet marketing aspects are on researcher’s agenda in many countries as internet takes more and more significant place in everyday life around the globe. More and more activities are per­ formed via internet and internet marketing has significant role in attraction of consumers, export promotion and realization of goods and services. Aspects of applications of information techology in developing business models of export are analysed from several aspects (Fazlollahtabar, 2012) where the proposed system is composed of marketing, business models and web optimisation. Antendents and effect of Internet implementation for trade shows are important research topic as trade shows are noticed as one of the most effecient trade promoters (Ling–yee, 2010) where Ling–yee also have examined the influence of the usage of the internet for trade show marketing on performance of trade shows. Ling–yee has indicated that the key lesson for exhibitors is to adopt the right approach to internet marketing – using the internet primarily for “informational and com­ municational purpose” in pre–show promotion, and for “customer service and support purpose” in post–show follow–up. Online activities and export performance for the smaller firm has a specific capability perspective – analysed and defined as the extent to which an export firm’s objectives are achieved via online activities (Morgan–Thomas, 2009). Rapid internationalisation enabled by the Internet and a knowledge intensive company has better chances for export development (Arenius, Sasi, Gabrielsson, 2005). The nature of trade relations between different countries, like Lithuania and Russia depends also from political decisions – like trade barriers. Investigation on trade barri­ ers is an important issue as often economic aspects are not stressed when explaining political de­ cisions on introduction of trade barriers (Daugeliene, 2014). Internet marketing and export growth has been analysed in many countries and by many authors, like in Chile (Bianchi, Mathews, 2016) where it was examined whether the Internet has an impact on the export performance of firms from emerging markets. Bianchi and Mathews study has tested a conceptual model that includes the effect of Internet marketing capabilities on export market growth in an emerging market on a cross–national sample of export firms from Chile – the current findings of authors have indicated that Internet marketing capabilities positively influence the availability of export information, which in turn impacts the development of business network relationships and export market growth. Efficiency and exports in country prospective is analysed on different aspects including website information and export performance (Moral–Pajares, et al, 2015). Building and leveraging informa­ tion in dynamic environments and the role of information technologies infrastructure flexibility as enabler of organisational responsiveness and competitive advantage of efficient internet marketing applications (Bhatt, et al, 2010).. The envolvent of criteria for assessment of innovation expression for state level in Lithuania (Daugeliene, Juocepyte, 2012). Specifics of cross–border trade are on importance where researchers also have made their investigations (Gomez–Herrera, et al, 2014). The influence of internet–marketing on marketing competencies and export performance are eval­ uated and examined (Prassad, et al, 2001). Different approaches could be used in different indus­ tries for distribution channels like as sophisticated computer– and internet–mediated marketing practices as the larger proportion of entrepreneurs in developing economies still deploy largely informal marketing practices and several countries have adopted the marketing revolution to vary­ ing degrees, consistent with prevailing level of development (Ogunrin, Inegbenebor, 2015). Studying Theoretical findings E u r o p e a n I n t e g r a t i o n S t u d i e s 2 0 1 6 / 1 0 46 and prioritising the effective elements of Internet advertising on e–marketing has its specifics and research findings like as external perspective on using internet and new technologies for electronic communication together with traditional media for receiving and delivering services to customers as e–marketing is considered as the pulse of strong exports in modern global markets and underlying employment, production and improvement as well as foreign exchange incomes and economic development – one of the bases for e–marketing provided by internet is internet ad­ vertisement: Internet ads include notice messages to internet users by websites, e–mail, support ads software, text messaging and mobiles with internet connection feature (Doostar, Mohamma­ di, 2014). The internet as an alternative path to internationalization – examinations of the drivers and performance outcomes of two patterns of internet use supporting export marketing: the in­ ternet as an alternative to a physical presence and the internet as a sales channel are questions investigated by researchers and stating that traditional exporters are likely to use the internet as a complement to, and thus to support, existing physical operations with foundp practical implica­ tions that managers should focus on relationship building and on–site learning, instead of putting too much emphasis on the internet as a substitute for a physical market presence and authors develop a framework and explore previously untested relationships that suggest the internet may play a complementary role in firm internationalization. (Sinkovics, et al, 2013). The Digital Scoreboard is published by European Commission and shows progress of European countries digital economies. For this purpose European Commission uses multiple indicators that are secondary statistical data gathered from several sources. Data are openly available for down­ load online (European Commission, 2016a,b) and also contains some indicators related to internet marketing (social media and web site usage, advertising in internet). In general Latvia shows quite low overall performance (see Table 1). Small and medium enterprises (SMEs) represent the larg­ Table 1 Latvia internet marketing data compared with EU28 average, % of enterprises, 2015 Indicator (indicator code) Latvia (rank) Latvia (value, %) Average EU28 value, % SMEs Large SMEs Large SMEs Large Enterprises using social media (e_sm_any ) 25 14 27.01 64.90 38.36 62.82 Enterprises having a web site or homepage (e_web) 25 17 58.16 94.56 74.75 94.05 Use two or more social media (e_sm_ge2) 24 14 9.55 42.42 17.01 43.50 Enterprises exploiting the “Business to Consumers” opportunities of web sales (e_aws_gt1_b2c_gt10ws) 23 6 4.22 13.75 6.39 8.11 Enterprises selling cross–border to other EU countries (e_aeseu) 23 18 3.92 17.71 7.52 23.19 Enterprises using any computer network for sales (e_esell) 22 23 8.30 21.52 16.15 37.98 Enterprises paying to advertise on the internet (e_ads ) 18 (out of 23) 6 (out of 23) 27.57 50.31 30.28 42.21 Enterprises having a website with some sofisticated functionalities (e_webf2) 15 5 56.17 87.40 55.04 99.93 Source: European Commission secondary data (European Commission, 2016 a, b) 47 E u r o p e a n I n t e g r a t i o n S t u d i e s 2 0 1 6 / 1 0 est part of all enterprises, employ an increasing number of persons and form about 25% of GDP in Latvia. Statistical data related to internet marketing first suggests that results of large companies are much higher compared with SMEs (statistically significant difference). Second, difference be­ tween performance of SMEs in Latvia and performance of SMEs in EU28 on average is also very high. Thus Latvian SMEs are performing worse than large companies. Moreover, two other Baltic States have higher values – Lithuania slightly outperforms Latvia, while Estonia is very close to the leaders. Thus the research of different internet marketing usage among Latvian companies in different aspects is very important. The empirical research showed that about 45% of exporting companies and about 52% of non–ex­ porting companies in Latvia considered that the role of internet marketing was significant, aver­ age evaluations (arithmetic mean, mode and median) were around 8 points (in evaluation scale 1 – 10). The non–exporting companies evaluated significance of internet marketing slightly higher than exporting companies (indicated by arithmetic mean, mode and median). The evaluations on internet marketing significance were quite different (indicated by indicators of variability – range, standard deviation, standard error of mean). However, the evaluations of exporting and non–exporting companies’ on internet marketing significance did not differ statistically significant as proved by the results of the Mann–Whitney test (p=0.427). The main statistical indicators of manager’s evaluations on internet marketing significance of exporting companies and non– exporting companies’ are reflected in Table 2. About 46% of exporting companies and non–exporting companies considered that internet mar­ keting impact on marketing and sales objectives was significant, average evaluations (arithmetic mean, mode and median) were around 8 points. The exporting companies and non–exporting companies’ evaluations on internet marketing impact on marketing and sales objectives were similar (arithmetic mean 6.8 and 6.7, mode 8, median 7). The evaluations of exporting companies and also non–exporting companies were quite different (indicators of variability). The main sta­ tistical indicators of exporting companies and non– exporting companies’ evaluations on internet marketing impact on marketing and sales objective are reflected in Table 3. The evaluations of exporting and non–exporting companies’ on internet marketing impact on marketing and sales objectives did not differ statistically significant as proved by the results of the Mann–Whitney test (p=0.427). Empirical research results and discussion Table 2 Statistical indicators of managers evaluations on internet marketing significance Statistical indicators Exporting companies Non–exporting companies Arithmetic mean 6.9 7.0 Standard error of mean 0.176 0.180 Median 7 8 Mode 7 8 Standard deviation 2.304 2.444 Range 9 9 Minimum 1 1 Maximum 10 10 Source: Authors’ calculations based on manager’s survey conducted in 2015 (n=406), evaluation scale 1 – 10, where 1 – not significant; 10 – very significant. E u r o p e a n I n t e g r a t i o n S t u d i e s 2 0 1 6 / 1 0 48 Table 3 Statistical indicators of managers evaluations on internet marketing impact on marketing and sales objectives Statistical indicators Exporting companies Non–exporting companies Arithmetic mean 6.8 6.7 Standard error of mean 0.165 0.164 Median 7 7 Mode 8 8 Standard deviation 2.159 2.2 Range 9 9 Minimum 1 1 Maximum 10 10 Source: Authors’ calculations based on manager’s survey conducted in 2015 (n=406), evaluation scale 1 – 10, where 1 – not significant; 10 – very significant. The exporting companies and non–exporting companies’ significance of internet marketing role for gaining feedback, for analysis of digital communication channel efficiency, for market­ ing expenses reduction, for increase sales quantities and for brand/product/company popu­ larisation have evaluated similarly. The highest evaluations on internet marketing role respon­ dents of both companies groups (exporting companies and non–exporting companies) gave for brand/product/company popularisation, slightly higher evaluations gave non–exporting companies (arithmetic mean respectively 7.7 and 7.6, mode 10, median 8), the respondents evaluations were quite different (indicators of variability). The exporting companies and non–exporting companies high evaluated also internet mar­ keting role for increase sales quantities, the evaluations were quite different. The exporting companies slightly higher than non–exporting companies evaluated internet marketing role for marketing expenses reduction and analysis of digital communication channel efficiency. However the differences in the evaluations of exporting companies and non–exporting com­ panies on internet marketing role for gaining feedback, for analysis of digital communica­ tion channel efficiency, for marketing expenses reduction, for increase sales quantities and for brand/product/company popularisation were not statistically significant (results of Mann–Whit­ ney test, p>0.291). The main statistical indicators of exporting companies and non–exporting companies’ evaluations on role of internet marketing are reflected in Table 4. The use of internet marketing possibilities exporting companies and non–exporting compa­ nies evaluated similarly – as middling, the evaluations were quite different. The main statis­ tical indicators of exporting companies and non–exporting companies’ evaluations on use of internet marketing possibilities are reflected in Table 5. The company home page used only as a business card a nearly half of companies (about 45% of exporting companies and about 52% of non–exporting companies). About 32% of exporting companies and about 19% of non–exporting companies do not sell the products/services on the internet, but customers could order the product in their web page. Companies sell products/services both on the Internet and at points of sale – about 25% of ex­ porting companies and about 26% of non–exporting companies but on the Internet sold about 3% of non– exporting companies and no one of exporting companies. 49 E u r o p e a n I n t e g r a t i o n S t u d i e s 2 0 1 6 / 1 0 Table 4 Statistical indicators of managers evaluations on internet marketing role in their companies Internet marketing role Exporting companies Non–exporting companies Mean Median Mode Standard Deviation Mean Median Mode Standard Deviation For gaining feedback 6.2 7 8 2.65 6.5 7 8 2.49 For analysis of digital communication channel efficiency 5.4 6 8 2.82 5.2 5 1 2.79 For marketing expenses reduction 6.3 7 7 2.51 6.1 6 5 2.68 To increase sales quantities 7.2 8 9 2.56 7.0 8 10 2.65 For brand/ product/company popularisation 7.6 8 10 2.35 7.7 8 10 2.50 Source: Authors’ calculations based on manager’s survey conducted in 2015 (n=406), evaluation scale 1 – 10, where 1 – not significant; 10 – very significant. Companies with web pages and those who are exporting their goods/services, more often use Facebook (60.7%), have blog (15.4%), use Google adverts (46.3%), e–mail marketing (45.9%) and use SEO optimisation (34.1%) compared with companies that are not exporting (use Face­ book – 59.9%, have blog – 55.6%, use Google adverts – 39.6%, use e–mail marketing (54.6%) and use SEO – only 34.1%). Results suggest that exporting companies more often use social media and such tools as SEO optimisation, while non–exporting companies more often use banner advertising that is usually more expansive and does not provide feedback from customer as well as direct communications with customer. It is recommended to all companies to follow the latest possibilities and develop­ ments of internet marketing to apply modern and effective tools for internet marketing. Table 5 Statistical indicators of managers evaluations on internet marketing impact on marketing and sales objectives Statistical indicators Exporting companies Non–exporting companies Arithmetic mean 5.4 5.1 Standard error of mean 0.186 0.175 Median 5 5 Mode 3 4 Standard deviation 2.333 2.292 Range 9 9 Minimum 1 1 Maximum 10 10 Source: Authors’ calculations based on manager’s survey conducted in 2015 (n=406), evaluation scale 1 – 10, where 1 – incomplete; 10 – very well. E u r o p e a n I n t e g r a t i o n S t u d i e s 2 0 1 6 / 1 0 50 _ Usage of internet marketing can significantly affect companies’ performance. _ Latvia lacks behind other European Union countries in terms of internet marketing usage. Moreover, performance of small and medium enterprises in Latvia is highly low. _ The companies’ survey results show that exporting companies and non–exporting companies do not use internet marketing properly. Companies’ evaluations for the significance of internet marketing and the impact of internet marketing on the marketing and sales are rather high, but the variability of evaluations are high. _ Evaluations of exporting companies and non–exporting companies for the usage of internet marketing possibilities are on average level. _ The half of companies do not use sophisticated web page, but uses it only as a business card. _ The exporting companies and non–exporting companies’ significance of internet marketing role for gaining feedback, for analysis of digital communication channel efficiency, for market­ ing expenses reduction, for increase sales quantities and for brand/product/company popu­ larisation evaluated similarly. The exporting companies and non–exporting companies eval­ uate internet marketing role for brand/product/company popularisation, for increase sales quantities. The exporting companies slightly higher than non–exporting companies evaluated internet marketing role for marketing expenses reduction and analysis of digital communica­ tion channel efficiency. _ The variability of exporting companies and non–exporting companies’ evaluations on internet marketing significance role is high. _ In general results suggest that companies (both – exporting and not–exporting) understand the importance of internet marketing for business, however, they do not use fully internet marketing potential for some reason. Non–exporting companies more often are using banner advertising while exporting companies tend to use social media (Facebook, blogs), as well as SEO and Google adverts more often. Conclusions References Arenius, P., Sasi, Gabrielsson, M. (2005). 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Journal of Research in Marketing and Entrepreneurship, 17(2), 130–148. http://dx.doi.org/10.1108/JRME–03–2014–0006 Prassad, V.K., Ramamurthy, K., Naidu, G.M. (2001). The Influence of Internet–Marketing on Marketing Competencies and Export Performance. Journal of International Marketing, 9(4), 82–110. http://dx.doi. org/10.1509/jimk.9.4.82.19944 The paper was supported by the National Research Program 5.2. EKOSOC–LV About the authors BIRUTA SLOKA Dr. oec., Professor University of Latvia Fields of research interests Internet marketing, application of statistical methods for data analysis, small and medium business, factors influencing business development, internet marketing; was researcher in ESF, ERAF projects and in the projects of University of Latvia. She has headed the Euro Faculty Riga Centre. She is member of Advisory Board of EUROSTAT. She is a Member of Latvian Association of Econometrists, Member of Association of Professors of Higher Education of Latvia and the President of Latvian Association of Statisticians Address Aspazijas bulv. 5, LV – 1050, Riga, Latvia Tel. +371 29244966 Email: Biruta.Sloka@lu.lv INARA KANTANE Dr. admin., Associate Professor with the University of Economics and Culture, researcher at the University of Latvia University College of Economics and Culture Fields of research interests Small and medium business, factors influencing business development, employment and it impact on fertility and migration; had been researcher in ESF, ERAF projects and in the projects of University of Latvia; member of Latvian Association of Statisticians Address Lomonosova st.1 c.5, LV – 1019, Riga, Latvia Tel. +371 29491763 Email: Inara.Kantane@lu.lv RENĀTE VIDRUSKA Mg. comp, Researcher University of Latvia Fields of research interests Internet marketing, marketing research, e–commerce aspects, and information and communication technologies usage in business, customer behavior, applied statistics Address Aspazijas bulv. 5, LV – 1050, Riga, Latvia Tel. +371 29195175 Email: renate.vidruska@ gmail.com