COLLEGE OF BUSINESS & ECONOMICS

SCHOOL OF COMMERCE

The Effect of Marketing Strategy on Business

Performance: A Study on Selected Small and
Medium Enterprises (SMEs) In Addis Ababa

By
Wubneh Wolde-Cherkos
Dr. Andinet Worku

June, 2021
Addis Ababa, Ethiopia

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 ADDIS ABABA UNIVERSITY SCHOOL OF COMMERCE
DEPARTMENT OF MARKETING MANAGEMENT GRADUATE
PROGRAM UNIT

The Effect of Marketing Strategy on Business Performance: A

Study on Selected Small and Medium Enterprises (SMEs) In Addis
Ababa
BY: Wubneh W/Cherkos

APPROVAL BOARD COMMITTEE

Research Advisor Signature

_________________________ _________________________

External Examiner Signature

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Internal Examiner Signature

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 Statement of Certification

This is to certify that Wubneh W/cherkos has carried out his research work on the topic entitled
“The Effect of Marketing Strategy on Business Performance: A Study on Selected Small and
Medium Enterprises (SMEs) In Addis Ababa” is his original work and is suitable for submission
for the award of Masters Degree in Marketing Management.

Advisor

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 Declaration

I, Wubneh W/Cherkos, hereby declare that the thesis work entitled “The Effect of Marketing
Strategy on Business Performance: A Study on Selected Small and Medium Enterprises (SMEs)
In Addis Ababa.” submitted in partial fulfilment of the requirements for Master of Arts in
Marketing Management to Addis Ababa University, School of Commerce, is the outcome of my
own effort and that all sources of materials used for the study have been duly acknowledged.
This study has not been submitted for any degree in this University or any other University.

Name: Wubneh W/Cherkos

Signature: ____________________

Date: ________________________

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Acknowledgments

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 Table of Contents
Statement of Certification ....................................................................................................................... 3
Declaration.............................................................................................................................................. 4
Acknowledgments ................................................................................................................................... 5
Abstract .................................................................................................................................................. 9
Chapter One .......................................................................................................................................... 10
Introduction .......................................................................................................................................... 10
1.1 Background of the Study ........................................................................................................ 10
1.2 Statement of the Problem ...................................................................................................... 13
1.3 Research Question ................................................................................................................. 16
1.4 Research Objectives ............................................................................................................... 16
1.5 Research Hypothesis .............................................................................................................. 16
1.6 Significance of the Study ........................................................................................................ 17
1.7 Scope of the Study ................................................................................................................. 17
1.8 Limitation of the Study ........................................................................................................... 18
1.9 Organization of the thesis ...................................................................................................... 18
Chapter Two .......................................................................................................................................... 19
Literature Review .................................................................................................................................. 19
1.10 2.1 Introduction ..................................................................................................................... 19
1.11 2.2Theoretical Review ............................................................................................................ 19
2.2.1 Competitive Advantage ......................................................................................................... 19
2.2.2 Ansoff’s matrix ...................................................................................................................... 21
2.2.3 Marketing mixes as a basis of formulating a strategy ............................................................. 21
2.2.4 Business Performance ........................................................................................................... 24
2.2.5 Entrepreneurial marketing ..................................................................................................... 25
2.2.6 Small and Medium Business Enterprises ............................................................................... 27
1.12 2.3 Empirical Review .............................................................................................................. 28
2.3.1Conceptual Framework .......................................................................................................... 29
Chapter Three ....................................................................................................................................... 31
Research Methodology .......................................................................................................................... 31
1.13 ................................................................................................................................................... 31

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 1.14 3.1 Design of the Study .......................................................................................................... 31
3.2 Sources of Data ............................................................................................................................ 31
3.3 Data Collection methods .............................................................................................................. 31
1.15 3.4 Sampling Design ............................................................................................................... 32
3.4.1 Description of the Study Area & Population of the Study ...................................................... 32
3.4.2 Sampling Frame .................................................................................................................... 33
3.4.3 Sampling Techniques ............................................................................................................ 33
3.4.4 Sample size ........................................................................................................................... 34
1.16 3.5 Data Analysis .................................................................................................................... 35
1.17 3.6 Reliability and Validity ...................................................................................................... 35
1.18 3.7 Ethical Consideration ........................................................................................................ 35
3.7.1 COVID-19 Risk Management ............................................................................................... 35
CHAPTER FOUR ..................................................................................................................................... 37
DATA PRESENTATION, ANALYSIS, AND INTERPRETATION ....................................................................... 37
1.19 4.1 Quantitative Data Analysis................................................................................................ 37
4.1.1 The Questionnaire Response Rate ......................................................................................... 37
4.1.2 Testing of the Research Instruments ..................................................................................... 37
4.1.2.1 Validity Test ....................................................................................................................... 37
4.1.2.2 Reliability Test .................................................................................................................... 38
4.1.3 Descriptive Analysis............................................................................................................... 39
4.1.4 Correlation Analysis .............................................................................................................. 42
4.1.5 Regression ............................................................................................................................ 44
4.2 Qualitative Data Analysis ............................................................................................................. 52
4.2.1 Emerging Themes from Participants’ Response ..................................................................... 52
1.20 4.3 Discussion of the Results .................................................................................................. 54
CHAPTER FIVE........................................................................................................................................ 57
SUMMARY OF MAJOR FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS ........................................ 57
5.1 Summary of Major Findings ......................................................................................................... 57
5.2 conclusions .................................................................................................................................. 58
5.3 Recommendations ....................................................................................................................... 60
5.4 Limitations and Suggestions for Future Research ......................................................................... 61
REFERENCES .......................................................................................................................................... 63
Annex 1: Survey Tool ............................................................................................................................ 69

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Annex2: Semi-Structured Interview Guide ............................................................................................ 73

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 Abstract
The main objective of this research work was to examine the effect of marketing strategies on
business performance in the context of small and medium enterprises (SMEs) in Addis Ababa. In
order to meet this objective the study employed a mixed method where data was collected using
both qualitative and quantitative approaches such as survey and in-depth interviews. The
samples were drawn from owners/managersof SMEs located in south west of Addis Ababa,
Nifasilklaftosubcityworead 02, specifically from such areas asKore, Lebu, German Adebabay,
Jemo condominium, Jemo Michael and Koshe areas. A total of 332 respondents were
approached for the survey and 8 SME owners were approached for an in-depth interview. The
quantitative data were analyzed by using descriptive and inferential analysis. Thematic analysis
was utilized for the qualitative data. The findings of the research has shown that the independent
variables (i.e., product, price, promotion, place and after sale service have asignificant effect on
the dependent variable performance. However, the regression analysis has shown that
packaging has a non-significant effect on performance. Price had a higher effect on performance
compared to the other independent variables (B = . p = ). . The qualitative data results also
supported the quantitative findings and showed that marketing strategies had valuable effect on
the performance of SMEs.

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 Chapter One

Introduction
1.1 Background of the Study

Marketing is generally considered as the process by which companies create value for the
customers and build strong customer relationship in order to capture value from customers in
return (Cavusgil,S.T,&Zou,S 2014). Marketing also described by the American Marketing
Association (2008) as the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society
at large. According to Kotler (2000), Marketers use numerous tools to elicit the desired responses
from their target markets. These tools constitute a marketing mix. Marketing mix is the set of
marketing tools that the firm uses to pursue its marketing objectives in the target market.
McCarthy (1999), classified these tools into four broad groups that he called the four Ps of
marketing: product, price, place, and promotion. Marketing-mix decisions must be made to
influence the trade channels as well as the final consumers. Typically, the firm can change its
price, sales-force size, and advertising expenditures in the short run. However, it can only
develop new products and modify its distribution channels in the long run. Thus, the firm
typically makes fewer period-to-period marketing-mix changes in the short run than the number
of marketing-mix decision variables might suggest. Robert Lauterborn (1990), suggested that the
sellers’ four Ps correspond to the customers’ four Cs (i.e., Product Customer solution, Price
Customer cost, Place Convenience and Promotion Communication). Captivating business firms
are those that satisfy customer needs efficiently and suitably and with effective communication.

Now a day, in contemporary business world, marketing becomes a vital and comprehensive tool
to plan, produce, price, promote, distribute goods, service, and ideas for the satisfaction of
relevant customers and clients. (Smile Dzisi& Daniel Ofosu 2014)

One definition of marketing strategy is that it is an indication of how the marketing mix elements
would be used to achieve the marketing objectives (Foxall, 1981). A marketing strategy is a
method of focusing an organization's energies and resources on a course of action, which can

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lead to increased sales and dominance in a targeted market. It is most effective when it is an
integral component of overall firm strategy, defining how the organization will successfully
engage customers, prospects, and competitors in the market arena. According to Aaker (2008),
marketing strategy is a process that can allow an organization to concentrate its resources on the
optimal opportunities with the goals of increasing sales and achieving a sustainable competitive
advantage. Marketing strategies are fundamental in setting out basic and long-term activities in
the marketing field. The formulation, evaluation and selection of market-oriented strategies
consequently contribute to the goals of the company and its marketing objectives. Marketing
strategies constitute one of the key functional strategies that Small and Medium Enterprises
(SMEs) adopt to enhance performance. Organizations including Small and Medium Enterprises
have realized the need to institute strategies that will help them gain an in depth understanding of
the market, particularly with regards to their competitors and customers.

Small and medium enterprises (SMEs) are the engine of economy growth and development
globally. By their very nature, SMEs constitute the most viable and veritable vehicle for self-
sustaining industrial development (Oyebamiji, kareem and Ayeni. 2013).It is also noted by
Tambunan (2008) that Small and Medium Enterprises (SMEs) play a vital role in economic
development, as they have been the main source of employment generation and output growth,
both in developing as well as in developed countries. In developing countries, the roles of SMEs
become more crucial as they have potential to improvement of income distribution, employment
creation, poverty reduction and export growth. It also leads to the development of
entrepreneurship, industry and the rural economy. The term “SME” encompasses a broad
spectrum of definitions. The definition varies from country to country. Generally, these
guidelines are based upon either headcount or sales or assets. For example, as per the report of
Dalberg (2011), Egypt defines SMEs as having more than 5 and fewer than 50 employees
whereas Vietnam considers SMEs to have between 10 and 300 employees. However, the Inter-
American Development Bank defines SMEs as having a maximum of 100 employees and less
than $3 million in revenue. In Europe, they are defined as having manpower fewer than 250
employees and United States define them with employees less than 500 (Natarajan & Wyrick,
2011). As general guidelines, the World Bank defines SMEs as those enterprises with a
maximum of 300 employees, $15 million in annual revenue, and $15 million in assets .

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The definitions in Ethiopia also vary from institution to institution. According to the Federal
Micro and Small Enterprises Development Agency(FeMSMEs) (2011) definition, Micro, Small
and Medium Enterprises MSMEs are categorized in terms of number of employees, total asset
and annual turnover. Accordingly, SMEs are businesses who recruit employees between 6 and
300 and their total asset between Br. 100,000 to Br. 1,500,000. According to central statistics
agency definition, SMEs are business, which has employees between 10and 300 and their total
asset between Br. 11,000 to 1,650,000. The ministry of trade also gives varying definition to
segment SMEs. Since the definitions are varying across different institutions, for this specific
study, the researcher uses ‘total asset’ as the classification of SMEs for ease of availability of
data.

In Ethiopia, next to the agriculture sector, the SME is the second largest employment-generating
sector (Fiona Meehan, 2004, P. 2). Thus, the government of Ethiopia gave due attention to the
growth of SMEs, as a means to reduce poverty and unemployability (Rahel&Issac, 2010). In
some developing countries, which have great economic achievement, SMEs by virtue of their
size, location, capital investment and their capacity to generate greater employment, have
demonstrated their powerful propellant effect for rapid economic growth (ILO, 2003). But Small
and Medium Enterprises (SMEs) in Ethiopia have not performed creditably well and hence have
not played the expected vital and vibrant role in the economic growth and development of the
country. The challenges could be as a result of perceived ineffective marketing strategy which is
having negative effect on the organization’s performance, product quality, customer satisfaction
and profitability (Gerbrehiwot& Wolday,2006).

The purpose of this study was therefore to examine and give recommendations of the effect of
marketing strategies on the business performance of SMEs owners/managers who work in Addis
Ababa.

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1.2 Statement of the Problem

All organizations attempt to survive and achieve superior business performance in their
competing markets. The success of organizations may be attained through different ways. Some
organizations think of their internal capabilities while others account on their external position.
Third group of organizations think of both their internal capabilities and external position.
However, an organization can achieve superior business performance only if it can provide
products that customers will pay more for than it costs the firm to provide to them. It means that
the organization must be able to create value for its customers. Value creation seems to be at the
heart of any successful strategy (especially, marketing strategy).

The notion of marketing strategy has become an important concept and has been used by
business institutes and enterprises worldwide. The concept of strategy is ancient and it comes
from Greek word strategies, which means art of Army General. Effective Army Generals are
needed to win battles and protect territories. Strategic Marketing is defined by Achumba (2000),
as a chosen line of action selected by an organization for pursuing a marketing objective.
Accordingly, marketing strategy can be defined as a pathway in which enterprises or other
business firms follow to achieve their business goals. Marketing strategy is a comprehensive
methodwhich unfolds a series of actions such as market research, developing vision about the
market(s), selecting market targets strategies, design positioning strategies, setting objectives and
implementing the marketing programmes to meet the value requirements of the target markets
(Mustapha 2013). to be deliberated by a firm or an enterprise It is a logic Marketing strategy has
a combination of activities that have logical relationships. The activities are used in order to
assess customer needs, attitudes and also to examine competitors' products The major focus of
marketing strategy is valuing customers and making sure the firm runs at a lower cost as it keeps
its costomers’ choice and needs (Chiliya, Herbst and Roberts- Combard 2009). Owomoyela,
Oyeniyi and Ola (2013), also see marketing strategy as way of providing aneminence product
that satisfies client needs, offering reasonable price and engaging in wider distribution and back
it up with effective promotion strategy. Marketing strategy is a vital precondition of industry's
ability to fortify its market share and play down the impact of the competition.

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In Ethiopia, during post Derg period, the country envisaged a strategic plan that transform the
economy from agricultural sector to industrialization, the first ADLI (agricultural development
led industrialization) was failed due to the incapability of the middle class or SMEs to play its
role according to government report, and again the government come up with new GTPs for the
transformation but not yet produced the targeted transformation of the country, the government
condemned the middle class mostly for SMEs didn’t perform as expected. Statistics indicate that
the unsuccessful performance of SMEs besides the external problem (i.e., infrastructural,
finance...) are mainlyascribed to flaws in financial management and marketing. The meagre
performance of SMEs is the foremostapprehension. Hence, that needs to investigate their
marketing strategies and determine if that has effect on the business performance.

Studies has been conducted that showed the relationship of marketing strategies to performance.
For example, Moula C. (2017), conducted a study on the effect of marketing strategies on sales
performance of SMEs in Kenya and positive relationship between all the marketing mix
elements and sales performance was indicated. While, Alita et al.;(2012) examined the influence
of promotional strategies on banks performance. The authors found that there is a positive
relationship between promotional strategies and bank performance. Furthermore, Ayedunet al.,
(2014) examined the effect of marketing strategies on corporate performance of estate surveying
and valuation firms in Kaduna metropolis of Nigeria. The study revealed that marketing
strategies adopted and corporate performance of the firms were positively correlated. Mustapha
(2017), investigated effects of marketing mix strategy on performance of small-scale businesses
in Nigeria and the study found that that the effects of business performance and product offered
to the market, price, promotion, place strategies of the product were positive and significant.
Furthermore, marketing strategy (promotion,product, price, and place) were considerably
independent which can stand by their own and dual predictors of business performance. Each
one has its distinctiverole and effectto the performance of the small businesses. This also shows
the importance of the marketing strategy no matter how small the Business may be,its
performance is proportionately depending and goes with the marketing strategy applied.

In the context of Ethiopia there are studies which examined the effect of marketing strategies on
businessperformance. For example, Abebe (2018) examined the effect of marketing mix strategy

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on performance of SMEs in southern region of Ethiopia. His study revealed that the relationship
between marketing strategies; product, price and promotion and performance of small and
medium manufacturing enterprises is positive and significant. In addition, BezawitH. et al.,
(2020) conducted a research on the effect of marketing strategies on the performance of private
insurance companies in Ethiopia. The result had showed that there is a positive relationship
between marketing strategies and performance of insurance companies in Ethiopia. Though
Abebe has examined the effect of marketing strategies on business performance of SMEs,his
study has focused on only the 4Ps and non-financial measures of performance. Therefore, this
study aims to add to the literature on the effect of marketing strategies on business performance
by including other marketing strategy elements such as packaging of products and establishment
of long-term relationship with customers. In addition, the study also aimed to add to this strand
of the literature by taking into account short-term measures of business performance (i.e.,
financial measures). The researcher believed that the existing empirical data is not adequate
enough to show effects of marketing strategies on business performance as most of the studies
were conducted on other business sectors other than SME. On the other hand, the studies that had
been conducted in Ethiopia on SME were very few in number and out of the geographical area
that this research had covered. Additionally, the researcher had also noticed that most of the
studies conducted were methodologically designed using a quantitative approach in which they
collect and analyse data through a means of survey. This in return, limited the findings of the
studies as most of them had no chance to triangulate the quantitative data through the use of
qualitative data.

These all, therefore, creates a proper avenue to fill the gap that other researchers had left, fill the
methodological gaps of the researches that had been conducted so far on the effects of marketing
strategies on business performance of small and medium enterprises by employing a mixed
method study which combines both quantitative and qualitative approaches, and to examine the
business performance by incorporating other marketing strategy elements which were not
considered and examined by other researchers such as packaging of products and establishment
of long term relationship with customers. The study tried to focus on effects of marketing
strategies on business performance in Addis Ababa, which then led to the question; what are the
effects of marketing strategies on business performance of small and medium enterprises?

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1.3 Research Question
This study was guided by the following general research question.
 Is there significant effect of marketing strategies on business performance?
Additionally, the study tried to examine the following specific research questions in a systematic
and empirical manner.
1. Does product positively affect business performance?
2. Does promotion positively affect business performance?
3. Does place positively affects business performance?
4. Does price positively affect business performance?
5. Does packaging positively affect business performance?
6. Does after sales service affect business performance?

1.4 Research Objectives

The main objective of this research work was to examine the effect of marketing strategies on
business performance with special reference to the selected small and medium enterprises
(SMEs) in Addis Ababa. Other specific objectives of the study are:
i. To examine the degree at which product,price, place, promotion, packaging and after
sales service strategy improves the level of business performance of SMEs in Addis
Ababa.
ii. To determine the extent at which product, price, place, promotion, packaging and
after sales service strategy influences the business performanceof SMEs in Addis
Ababa.

1.5 Research Hypothesis

The following hypotheses were formulated and tested to answers to the research questions
mentioned above.
H1: Product strategy has positive significant effect on the performance of SMEs;

H2: Price strategy has positive significant effect on the performance of SMEs;

H3: Promotion strategy has positive significant effect on the performance of SMEs;

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H4: Place strategy has positive significant effect on the performance of SMEs;

H5: Packaging strategy has positive significant effect on the performance of SMEs;

H6: After-sales service strategy has positive significant effect on the performance of SMEs;

1.6 Significance of the Study

Since Ethiopia is a developing nation with a high rate of unemployment, the job creation and the
generation of seed capital of this SMEs for the transformation to large scale industry will be
significant once they employed strategic marketing system in their operation. This study will
help to find out the effect of marketing strategies on the performance of SMEs which will be
significant as:
 It will help the SME owners/managers to focus on marketing strategies to boost their
performance.
 It will help the concerned government body, Federal Micro and small Enterprise
Development Agency FMSEDA, to plan for capacity building projects and develop
training material for SMEs.

1.7 Scope of the Study

This study tried to examine the effect of marketing strategies on the performance of selected
small and medium enterprises in Addis Ababa. The aspect looked into the SMEs strategies of
product, price, promotion, place, packaging and after sales service on the performance of small
and medium enterprises. The study was focused on registered small and medium enterprises that
were engaged in the manufacturing, import, export, domestic trade and service, building and
construction and transport sectors. The study will employ Explanatory Mixed-Method design and
try to collect both qualitative and quantitative data in a concurrent manner. By taking the
research design in to consideration, the study will sample respondents and participants using
probability and non-probability sampling techniques. Both survey questionnaire and semi-
structured interview guides will be used to collect quantitative and qualitative data and
descriptive and inferential statistics for the quantitative wing as well as content and thematic
analysis for the qualitative wing of the study will be used to analyze the data.

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1.8 Limitation of the Study
Due to large geographic area coverage of the city, this study will be confined only in Nifas Silk
Lafto sub-city out of the ten sub-cities and the study result may not generalize the effect of
marketing strategy on performance.

1.9 Organization of the thesis

Chapter one of this proposal provides a reflection of the problem statement and identifies how
the study will be accomplished. Chapter two elucidates previously published studies that support
the research question. Chapter three discusses about what type of methods the researcher will
employ to conduct the research. Chapter four focus on the presentation, analysis and
interpretation of data and chapter five presents finding of the research and give conclusion and
recommendation for stakeholders.

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 Chapter Two

Literature Review
2.1 Introduction
This chapter presents a review of related literature on the effect of marketing strategies on the
performance of business, as presented by various researchers, scholars, analysts and authors. The
chapter also provides the theories underpinning the study.

2.2Theoretical Review
This section examines the various theories that are related to marketing strategy. The section
starts by discussing about Porter’s three generic strategies, Ansoff’s product/market matrix and
the marketing mix strategies.

2.2.1 Competitive Advantage

Competitive advantage is a factor or combination of factors that make an organization more
successful than other organizations in a competitive environment and cannot be easily emulated
by its competitors. Strategy (specially marketing strategy) is related to competitive advantage
mutually. On one hand competitive advantage is a base or an essence for formulating strategy,
onthe other hand, formulating strategy is to create and sustain competitive advantage in the line
of organizational objectives.

Porter (1980), identified three generic strategies as fundamental sources of competitive

advantage. These are: cost leadership, differentiation and focus. Arguably, these provide a basis
for all strategic activity and underpin the large number of marketing strategies available to the
organization. Additionally, management needs to define the competitive scope of the business-
targeting a broad or narrow range of industries/customers, essentially either operating industry-
wide or targeting specific market segments. Each generic strategy is examined in turn.

Cost Leadership
One potential source of competitive advantage is to seek an overall cost leadership position
within an industry, or industry sector. Here, the focus of strategic activity is to maintain a low-
cost structure. The desired structure is achievable via the aggressive pursuit of policies such as

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controlling overhead cost, economies of scale, cost minimization in areas such as marketing and
R&D. global sourcing of materials and experience effects. Additionally, the application of new
technology to traditional activities offers significant opportunity for cost reduction.

Differentiation
The product offered is distinct and differentiated from the competition. The sources of
differentiation must be on a basis of value to the customer. The product offering should be
perceived as unique and ideally offer the opportunity to command a price premium. The skill
base for a differentiation strategy is somewhat different from a cost leadership strategy and will
focus on creating reasons for purchase, innovation and flexibility.

Common sources of differentiation include:

a. Product performance- factors such as quality, durability and capability all offer potential
points of differentiation. Performance is evaluated relative to competitors’ products and
gives customers a reason to prefer one product over another.
b. Product perception- often the perception of a product is more important that actual
performance. The product has an enduring emotional appeal generating brand loyalty,
this commonly achieved via marketing communications (advertising, branding,
endorsement, etc.) and direct experience of customer groups.
c. Product augmentation- we can differentiate by augmenting the products in a way that
adds value. For example, high levels of service, after-sales support, affordable finance
and competitive pricing, all serve to enhance the basic product offering.

Focus
The organization concentrates on a narrower range of business activities. The aim is to specialize
in a specific market segment and derive detailed customer knowledge. This focus, or niche,
strategy can also generate the benefit of cost leadership of differentiation within a defined market
segment. A focus strategy is based on geographic segmentation, end-user focus and single
product type focus.

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2.2.2 Ansoff’s matrix
Ansoff (1975), developed a product/market matrix (or ‘Ansoff matrix) which provides a useful
linkage between products and markets. The organization’s potential is determined by the
combination of current and new products within current and new markets.

Figure 1: Ansoff product/market matrix

a. Market penetration- the aim is to increase sales of existing products in current markets.
b. Market development- aims at finding new markets for existing products. This could
involve new geographic markets, adding distribution channels or finding new market
segments.
c. Product development- organizations must update their product portfolio to remain
competitive.
d. Diversification- this involves moving beyond existing areas of operation and actively
seeking involvement in unfamiliar activities.

2.2.3Marketing mixes as a basis of formulating a strategy

In the literature it is common to link the marketing mix elements to marketing strategy. A
marketing strategy is defined as in a given market area, the proper allocation of resources to
support enterprises to win competitive advantage(Greenley,1984).Goi (2005), define marketing
strategy as the set of the marketing tools that firms use to pursue their marketing objectives in the
target market. Therefore, the function of marketing strategy is to determine the nature, strength,
direction, and interaction between the marketing mix- elements and the organizational marketing
strategy development to establish, build, defend and maintain its competitive advantage.

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Managerial judgment is important in coping with environmental ambiguity and uncertainty in
strategic marketing.

2.2.3.1 Product Strategy

Kotler and Armstrong (2006) define a product as anything that can be offered to a market for
attention, acquisition, use, or consumption that might satisfy a want or need. They further define
a consumer product as the product bought by the final consumer for personal consumption.
Consumers buy products frequently, with careful planning, and by comparing brands based on
price, quality, design, features, brand name and sizes. Mohammad et al, (2012) also say that
product is the physical appearance of the product, packaging, and labelling information, which
can also influence whether consumers notice a product in-store, examine it, and purchase it. Past
researchers have clearly suggested that product influences have a significant impact on business
performance (KazemandHeijden, 2006; Kemppainen, Vepsäläinen, and Tinnilä, 2008;
Ogunmokun and Esther, 2004; Owomoyelaet al, 2013),Product/market strategies address the
specific market effect of a product or product line.

2.2.3.2 Pricing Strategy

kotler (2007) defines price as a cost of producing, delivering and promoting the product charged
by the organization. Zeithaml (1988) is of the view that monetary cost is one of the factors that
influence consumers perception of a products value. Price can be stated as the actual or rated
value of a valuable product which is up for exchange; some define it as amount of money paid
for product (Kotleret al, 2005). In the studies of Colpan,( 2006); Dooleet al., (2006) and
Owomoyelaet al, (2013) they establish significant relationship between price and business
performance. The price you set for your product or service plays a large role in its marketability.
Pricing for products or services that are more commonly available in the market is more elastic,
meaning that unit sales will go up or down more responsively in response to price changes
(Jones, 2007).

2.2.3.3 Promotion Strategy

Zeithamlet al. (1995), describe promotion as part of specific effort to encourage customers to tell
others about their services. According to Duncan (2005), promotion is the key to the market

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exchange process that communicates with present and potential stakeholders, and the general
public. Every firm or store must cast itself into the role of communicator and promoter.
Hakansson (2005) also reports that promotion appears as an issue of how to create an optimal
mix of marketing communication tools in order to get a product's message and brand from the
producer to the consumer. Borden, (1984) defines promotion as sales promotion, advertising,
personal selling, public relations and direct marketing. Kotler, (2007) discovers that Promotions
have become a critical factor in the product marketing mix which consists of the specific blend
of advertising, personal selling, sales promotion, public relations and direct marketing tools that
the company uses to pursue its advertising and marketing objective.

2.2.3.4 Place Strategy

Jones, (2007) defines place as any way that the customer can obtain a product or receive a
service. Bowersox and Closs (1996) give distribution as another name for place. According to
them, it is the third element of the marketing mix, and it encompasses all decisions and tools
which relate to making products and services available to customers. Kotler and Armstrong
(2006), also define place or distribution as a set of interdependent organizations involved in the
process of making a product available for use or consumption by consumers. Place strategy calls
for effective distribution of products among the marketing channels such as the wholesalers or
retailers (Berman, 1996). Owomoyela et al, (2013)

2.2.3.5 Packaging Strategy

Packaging is a crucial component of the "marketing mix" for a product. It is the "least expensive
form of advertising" and is of particular importance at the point of sale, as the package is the
manufacturer's last chance to convince the customer to purchase the product (Sajuyigbeet al,
2013). Packaging is a very important marketing strategy to glamorize product in order to attract
the consumers’ attention. Sometimes packaging is so important that it cost more than the product
itself in order to lure the consumers to buy it (Sajuyigbeet al,2013). Olayinka and Aminu (2006)
see packaging as all activities of designing and producing the container or wrapper for a product.
Kottler (2007) defines packaging as all materials products used for the containment, protection,
hard delivery and presentation of goods. Packaging is the protecting products for distribution,
storage, sale and use, packaging also refers to the process of design evaluation and production of
packages. Packaging can be described as a coordinated system of preparing goods for transport,

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warehousing information and sell. It is fully integrated into government business, institutional,
industry, and personal use (Diana, 2005). Sajuyigbeet (2013), point out that packaging is one of
the inevitable communication tools that influence buying behaviour and enhance business
performance.

2.2.3.6 after Sales Service Strategy

‘After sales service’ involves a continuous interaction between the service provider and the
customer throughout the post-purchase product life cycle. At the time the product is sold to the
customer, this interaction is formalized by a mutually agreed warranty or service contract.
Urbaniak (2001), defines after sales service as those activities that enhance or facilitate the role
and use of the product. Asugman (1997), also define after sales service as those activities in
which a firm engages after purchase of its product that minimize potential problems related to
product use, and maximize the value of the consumption experience. Past researchers (Ruben,
2012; Saccani, et al., 2007; Raddats, 2011; Goffin and New, 2001) agree that after sales service
is a marketing strategy that enhance and establish strong and long relationship with customers,
which in long run lead to customer satisfaction, retention and profitability.

2.2.4 Business Performance

Spillan and Parnell (2006), acknowledged that the links between strategy and performance have
been substantiated at firm and functional levels, although there is often overlap between the two.
At the business level, strategy typologies - also referred to as gestalts, frameworks, and
archetypes - identified several generic strategic approaches and were developed and utilized as a
theoretical basis for identifying strategic groups in industries. Porter’s (1985), generic strategy
typology also infers competitive and marketing dimensions and has been widely tested.
According to Porter, a business can maximize performance either by striving to be the low cost
producer in an industry or by differentiating its line of products or services from those of other
businesses; either of these two approaches can be accompanied by a focus of organizational
efforts on a given segment of the market (Haghighinasab, Sattari, Ebrahimi and Roghanian,
2013). Presumably, differentiated businesses should emphasize marketing as a means of
distinguishing their products and services from those of their rivals. Likewise, Porter’s focus
orientation is consistent with the marketing themes of product positioning and target marketing.
According to Haghighinasab et al., (2013), performance can be measured based on growth,

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market share and profitability. The higher the indices, the greater the performance of the business
and vice versa. Ardjouman and Asma (2015), further defined performance in terms of output
such as profitability or quantified objectives. This means that performance of SMEs has to do
with both behaviour and results. This explanation covers achievements of anticipated levels as
well as objective review and setting. When the behaviour of management is right, then the
anticipated levels of output would be achieved and vice versa for failure. When behaviours of
management towards marketing strategies are geared on a right direction, then this positively
affect the performance of SMEs. Some strategies which could affect performance of businesses
are the product quality, marketing communication and relationship marketing.

Business performance consists of two main components: customer performance (satisfied and
loyal customer), market performance (i.e. sales volume and market share) (Hooley et al. 2003).
a. Financial Performance – innovation capabilities result in the development and
marketing of new or existing products that might be expected to result in increased
profitability, increase sales volume and market share.
b. Non-financial performance-it has been recognized that loyal customers are more
valuable than occasional ones. Many marketing activities therefore are directed at
creating value for the customers and maintaining satisfied and loyal customers.

2.2.5 Entrepreneurial marketing

Entrepreneurial marketing (EM) as a concept was introduced in 1982 as a new paradigm that
integrates both entrepreneurship and marketing. The term EM does not have a universally
acceptable definition but can be described as the process that firms undertake when using
marketing to act entrepreneurially. EM is generally associated with the creative marketing
activities of small firms with limited resources. Hills et al.(2010: p 6) define EM as “a process of
pursuing opportunities and launching and growing ventures that create perceived customer value
through relationships by employing innovativeness, creativity, selling, market immersion,
networking and flexibility”.
Bjerke and Hultman (2002) express the concept of entrepreneurial marketing with the help of a
“conceptual framework for entrepreneurial marketing” as presented on figure one. This

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framework shows the relationship between the four pillars of the subject. Entrepreneurship
explains the why and how processes of opportunity recognition. This is further implemented
together with either transactional and/or relationship marketing in order to increase customer
value. Resources, which is the next pillar, concerns the fact that there is a need in the offering to
generate value to the customer. Resources can be acquired by cooperating with partners or they
can just simply be owned by the company. In growing entrepreneurial firms, customer value is
usually not created on an individual level. Rather, it is created by the cooperation between
several different actors. Growing firms rely on contributing partners in the process of increasing
customer value. There are several reasons why a growing firm chooses to rely on partners in
order to increase customer value; economies of scale and niche specialists are two reasons why a
newly started venture might turn to partners in order for them to optimize the use of resources.
There might also not be any available competence for inhouse production, which also requires
time allocation; and using partners can also increase the flexibility when it comes to changing
aspects of customer demands. The bottom line might lie in the fact that the newly started venture
is lacking overall resources to take care of all aspects of production and therefore needs to rely
on other firms to handle parts of the production. The third part of the framework is processes. It
is here where the value creation takes place; co created by all the different processes that take
place in the value assemblage. Any firm is permeated by processes at all levels of the
organization. Maintaining customer relationships, distribution channels, production planning and
development of products are just a few processes that take place in any organization. The core of
these processes lies in the ambition to create customer value and increase this value to overcome
competitor’s customer value. The last and final pillar is the actors. The actors are individuals or
organizations that run the processes and co create customer value.

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Figure 1: Four Pillars of the Entrepreneurial Marketing framework (Bjerke &Hultman, 2002)

2.2.6 Small and Medium Business Enterprises

Oyebamiji, Kareem and Ayeni (2013), characterized SMEs as follows: 1) The same manager or
proprietor finds it difficult to raise short- or long-term capital from the organized capital market,
instead relies on personal savings or loans from friends, relatives or money lenders. 2) The same
manager/proprietor handles/supervises the production, financing, marketing and personnel
functions of the enterprise. 3) The manager/proprietor’s vision is confined to the local
community in which he carries on his line of business. There is little or no knowledge of the
wider or distant markets. 4) The rate of business mortality is high probably because of strong
mutual distrust and dominance of the sole proprietor which militates against the formation of
partnerships or limited liability companies. 5) The enterprise is generally poorly equipped as the
small-scale industrialist feels reluctant to accept outside help owing to prejudice or fear that
information about the enterprise might reach the tax authorities or a nearby competitor. 6) Little
or no account of business costs or revenue is kept and the banking system is hardly utilized. The
result is that banking facilities for business financing and expansion are extended to only very
few of the industrialists. 7) The level of education of the proprietor is usually very low with a
consequent low level of business management technique, skill or market information.

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2.3 Empirical Review
Abebe (2018), conducted a study on the effect of marketing mix strategy on performance of
SMEs evidenced from selected manufacturing enterprises in southern region of Ethiopia. The
researcher adopted a causal research design conducted on 250 owners/managers of SMEs and the
study result showed thatprice, promotion, product and performance of small and medium
manufacturing enterprises are significantly related,but the relationship between place and SMEs
performance was found significantly negative. Bintu (2017) did a study on the effects of
marketing mix strategy on performance of small-scale business in Maiduguri metropolitan,
Borno state of Nigeria. The study aim was to explore how marketing mix elements are managed
and they impacted on the performance of small-scale enterprises in Maiduguri. The study
adopted exploratory and descriptive survey research method. The study result revealed that there
is a positive and significant relationship between product, price, promotion and performance of
small and medium manufacturing enterprises. Using SMEs in Nigeria, Bintu (2017) did a study
on the effects of marketing mix strategy on performance. The study’s aim was to explore the
management of marketing mix elements and their relationshipwith business performance. The
study adopted exploratory and descriptive survey research method and the result shows that there
is significant relationship between marketing strategy elements and business performance.
Furthermore, using SMEs in Kenya, Njoroge(2015) studied the relationship between marketing
strategies and the performance of enterprises in Matuu town, Machakos country, Kenya. To
achieve the study objective, the study used descriptive research design and the population of
interest comprised all the SMEs in Matuu town, Machakos country. A sample of 86 SMEs was
selected by using simple random and stratified sampling methods. The study established that
customers’ relationship marketing strategies and the technology-based marketing strategies have
a positive insignificant influence on the performance of SMEs in the target area of the study,
MAtuu.Apparently, innovative marketing strategies have a significant negative relationship with
the performance of SMEs in Matuu town.

Another empirical review will be on entrepreneurial marketing (EM) that has been theoretically
reviewed in the previous section. Even though, the researcher encountered scarcity of empirical
data on EM in the case of Ethiopian small and medium enterprises, different studies conducted in
different parts of the world showed that the combination of EM as both market-oriented and

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entrepreneurialoriented activities allows firms to survive both static and volatile market
environments. EM may lead to sustainable growth for firms operating in challenging markets
(Miles and Darroach, 2006; Morrish, 2011; Jones et al., 2013). Hacioglu et al. (2012) investigate
the relationship between the seven dimensions of EM and firm innovative performance in a
sample of Turkish SMEs. The study found that four dimensions of the EM namely pro-
activeness, innovativeness, customer intensity and resource leveraging have significant
relationships with firm innovative performance. The effects of the three other dimensions are not
significant. Hamali (2015) finds that pro-activeness, resources leveraging, value creation and
customer intensity dimensions of EM have significant positive relationships with business
performance. Olannye and Edward (2016) examine the effect of EM on the performance of fast
food restaurants in Nigeria. The findings of the study show that pro-activeness, innovation and
opportunity recognition dimensions of EM exhibit significant positive effects on firm
competitive advantage. Sadiku-Dushi et al. (2019) explore the relationship between the seven
dimensions of EM and overall firm performance as measured by efficiency, profit, owner’s
personal goal and firm and owner’s reputation. The results indicate that pro-activeness and
calculated risk-taking have negative relationships with overall SME Performance.

2.3.1Conceptual Framework

The conceptual framework is a diagrammatical presentation of variables in the study. As the

study aims at examining the effect of marketing strategies on business performance with special
reference to the selected small and medium enterprises (SMEs), the research framework
designed in the way that represents two interrelated parts, which are marketing strategy and
SMEs business performance by classifying these two as dependent and independent variables.
The independent variables include: product development marketing strategy, pricing marketing
strategy, place marketing strategy, promotion marketing strategy, packaging marketing strategy
and after sales service marketing strategy while the dependent variable is the business
performance of small and medium enterprises in Addis Ababa. The below conceptual framework
is a basic structure that consists of certain abstract blocks which represent the observational, the
experimental and the analytical aspects of a process or system being conceived. The framework

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is adopted from a published study1 that examines how marketing strategies influence firm
performance. The interconnection of these blocks completes the framework for certain expected
outcomes.

Independent Variables Dependent Variables

Product H1

Price H2

Promotion Business
H3 Performance

Place H4

Packagin H5g

After-
salesservice
H6

1
Adopted from Saif, N.M.A. (2018)

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 Chapter Three

Research Methodology

3.1 Design of the Study

This study employed Explanatory Mixed-Method design in order to achieve the objective which
is to examine the effect of marketing strategies on business performance with special reference to
the selected small and medium enterprises (SMEs) in Addis Ababa. This design is a two-phase
mixed methods design with the overall purpose that qualitative data helps explain or build upon
quantitative results (Creswell, Plano Clark, et al.,2003).

The researcher used this design in a concurrent manner in which both qualitative and quantitative
data were gathered at the same time. The qualitative data of the study was designed so that it
could draw significant information from selected small and medium enterprise owners/managers
and other key informants that would be missed during the quantitative data collection phase.

3.2 Sources of Data

3.2.1 Primary Data
Primary data was sourced out from sampled small and medium enterprises managers/owners,
key informants from Addis Ababa city administration SME and Sub-city SME experts.

3.2.2 Secondary Data

The researcher used secondary data sources from related literatures, studies, policies and other
relevant documents from the different institutions which works on small and medium enterprises.

3.3 Data Collection methods

As the study employedExplanatory Mixed-Method design, the researcher will use the following
data collection methods to draw both qualitative and quantitative data.

3.3.1 In-depth Interview

According to Creswell (2003), in-depth interviews are qualitative interviews with people who
know what is going on in the community. The purpose of key informant interviews is to collect
information from a wide range of people—including community leaders, professionals, or

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residents—who have first-hand knowledge about the community. For this specific study, Key
Informant Interviews were conducted using well-designed semi-structured interview (SSI)
instrument/guides that allow the researchers to dig out information, probe and capture the desired
data on effect of marketing strategies on business performance with special reference to the
selected small and medium enterprises (SMEs)

3.3.2 Survey
The study employed survey in order to collect valuable data from sample respondents. According to
Creswell (2003), Survey is defined as the act of examining a process or questioning a selected
sample of individuals to obtain data about a service, product, or process. Data collection surveys
collect information from a targeted group of people about their opinions, behaviour, or
knowledge. For this specific study, the researcher conducted a survey to draw valuable data from
SME owners/managers through the means of well-structured questionnaire adopted from prior
published studies. The questionnaires comprise of both open and close ended questions in line
with the objective of the study. A five-point Likert scale will be used for closed ended questions.
The questionnaire contains two sections each. The first section was to establish the respondent’s
demographic data while the second section was be to establish the respondents’ opinion on the
effect of marketing strategies on the performance of SMEs.

3.4 Sampling Design

This section elucidates the overall sampling design that was employed to select respondents and
participants for both qualitative and quantitative wings of the study

3.4.1 Description of the Study Area & Population of the Study

The study area located in south west of Addis Ababa, Nifasilklaftosubcityworead 02,
compromises areas like Kore, Lebu, German Adebabay, Jemo condominium, Jemo Michael and
Koshe areas. In this study, the target population were small and medium enterprise managers
operating in Addis Ababa, Nefas silk lafto sub city, Woreda 02. The main reason for the
selection of Nefas Silk laftosubcitywored 02 is convenience of the locality to conduct the
research and the notion that the SMEs in the city of Addis Ababa resembles each other in terms
of their size, scope of operation, assets, breadth of the product range, and so forth.

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3.4.2 Sampling Frame
In order to deliberate the sampling frame for the study, the researcher obtained the number of
small and medium enterprises and other additional information from the Federal Micro and
Small& Medium enterprise development agency (FMSMEA) data base as FMSMEA is the best
source of this information as it is the official regulator of SMEs in Ethiopia.

3.4.3 Sampling Techniques

As it is mentioned in the previous section, the study is planned to draw both qualitative and
quantitative data. Thus, considering the research design, the researcher will employ the following
separate sampling techniques to administer both KIIs and survey questionnaire.

3.4.3.1 Selection of Participants for Key Informant Interviews

Participants of the study will be selected using purposive and/or judgmental sampling based on

the opinion of an expert. Judgmental sampling, also called purposive sampling or authoritative

sampling, is a non-probability sampling technique in which the sample members are chosen only

on the basis of the researcher’s knowledge and judgment (Creswell, 2003). Hence, the researcher

will use judgemental sampling to determine who should be approached for the Key Informant

Interview. At the proposal stage, the researcher proposed to approach the following target

participants for the Key Informant Interview.

i. Micro and Small enterprise managers/owners from different sectors who are not part of

the survey.

ii. Federal Micro, Small& Medium enterprise development agency (FMSMEA) experts at

the federal level and sub-city level.

However, due to time constraint the researcher couldn’t collect data from Federal Micro and

Small enterprise development agency and Sub-city Micro and Small enterprise development

agency.

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3.4.3.2 Sampling technique for Survey Respondents

To come up with a representative and appropriate study sample, this study employed stratified
sampling technique. According to Creswell (2003), Stratification is the process of dividing
members of the population into homogeneous subgroups before sampling. The strata should
be mutually exclusive: every element in the population must be assigned to only one stratum.
The strata should also be collectively exhaustive: no population element can be excluded. Thus,
small and medium enterprise managers will be classified into different business sectors (strata),
according to the nature of the business they conducted, like manufacturing, import, export,
domestic trade and service, building and construction and transport sectors. The stratification is
done, simple random sampling is applied within each stratum. The objective is to improve the
precision of the sample by reducing sampling error. The rationale behind the selection of the
stratified sampling is the businesses were evenly distributed across the entire sub- city but they
do have different sectors to be stratified and from the same sector the research will use a random
sampling to draw a representative of the population.

3.4.4 Sample size

For the qualitative wing of the study, the researcher conducted8 key informant interviews from
the aforementioned target participants. The number of the key informant interviews was decided
by the researcher up on the data saturation. On the other hand, the researcher used the data
extracted from FSMEA. According to the data extracted from FSMEA the total number SMEs in
the selected region is 1943. Since the number of SMEs in the population is precisely known, the
researcher used the Yamane Taro (1967) sample size determination formula as follows;
Sample size (n)= N/[1+N(e)2]
n=332
Where: N= total population
e= level of precision(e=.05)

The researcher used proportional allocation which uses a sampling fraction in each of the strata
(different business sectors i.e., manufacturing, import, export, domestic trade and service,
building and construction and transport sectors) that is proportional to that of the total population
(SME).

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3.5 Data Analysis
Before processing the responses, data preparation had been done on the completed
questionnaires by coding, entering and cleaning the data. The collected data will be going to be
analysed using descriptive statistics. The descriptive statistical tools will help in describing the
information and determining the respondents’ degree of agreement with the varied statements
under each factor. Data analysis will be done using statistical package for social science (SPSS
version 20) and Microsoft excel to generate quantitative reports which will be presented in the
form of tabulations, percentages, mean and standard deviation.

3.6 Reliability and Validity

Reliability can be defined asthe degree of consistency and accuracy in which the measuring of
the toolsdemonstrates under same situation, same studyparticipantsusing the same instrument
and should produce the same results under one and the same conditions (Amin, 2005). In
determining reliability of the instrument, the researcher carried out a pilot study around Lebu
area. This helped in fine-tuning the research instrument and improving its utility in collecting
data for the actual study.
Validity is an indication of how sound the research will be. The validity of the instrument was
measured using the content validity, which refers to the ability of the instrument to cover all
possible aspects of the research topic. To ensure content validity, the researcher incorporated the
opinion of research experts and advisor’s opinion in designing the questionnaire.

3.7 Ethical Consideration

The researcher tried to make sure that the participants were protected from known or foreseeable
harms that could result from their participation in research. The researcher sought consents that
provide the prospective participants sufficient opportunity to consider whether or not to
participate and to minimize the possibility of coercion or undue influence. The researcher will
inform prospective participants whether their records would be kept confidential and explain the
level of confidentiality.

3.7.1 COVID-19 Risk Management

The researcher tried to take all the measures of prevention advised by the WHO and
precautionary measures suggested on the Ethiopian State of Emergency guideline to protect the
study participant and the researcher from the current pandemic, COVID -19. Particularly, in

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thedata collection process, Wearing Masks, using sanitizers and 2-meter physical distancing in
any one on one or group gatherings will be maintained.

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 CHAPTER FOUR

DATA PRESENTATION, ANALYSIS, AND INTERPRETATION

The main objective of the study has been to examine the Effect of Marketing Strategy on Small
and Medium Enterprise Performance and in this regard the study has drawn qualitative and
quantitative data which was collected in a concurrent manner. This section elucidates the data
analysis and major findings the study in two phases. The first phase presents the quantitative data
analysis and the second phase presents the qualitative data analysis. The section also provides a
discussion of the findings from both qualitative and quantitative data analysis.

4.1 Quantitative Data Analysis

4.1.1 The Questionnaire Response Rate
Once after the data collection was completed, it was tried to sortout and removed data that is
incorrect and incomplete questionnaires from the quantitative data collection. This was to make
the data ready for the analysis phase.

The data collection survey was administered to the SMEs owners located in south west of Addis
Ababa, Nifasilklaftosubcityworead 02, compromises areas like Kore, Lebu, German Adebabay,
Jemo condominium, Jemo Michael and Koshe areas. A total of 332 questionnaires were
distributed, and of these, 289 were collected back fully filled and completed. Among the total
sample, 43(13%) were not responded. This yielded 87% usable questionnaire that could be used
for further analysis. According to Creswell (2003), a response rate of 70% is “very good” for
further assessment. Therefore, in this case, the response rate of 87% is significant.

4.1.2 Testing of the Research Instruments

The researcher had undertaken validity and reliability test to guarantee the study instruments
were valid as well as reliable. The following sections discuss both validity and reliability tests
undertaken.

4.1.2.1 Validity Test

Validity is the amount, to which data exactly reflects what they are meant to reflect, i.e., the
instrument measures what is supposed to measure (Creswell,2003). In other words, the right
questions being asked should help to obtain meaningful and usable responses on concepts under

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the study. Thus, the purpose of checking validity in the study has been to seek relevant evidence
that confirms the answers found with the measurement device which is the nature of the problem.

Accordingly, the questionnaire was developed on the basis of previous study (Njoroge,2015) and
review of related literatures and standard questions in order to increase its validity. Besides, the
researcher discussed with the advisor about the questionnaires before it is distributed in order to
assure the validity of the study. Finally, pilot test was conducted before all the questionnaires are
distributed, in order to check whether the respondents understand the questions and respond
applicably. This test was also helped the researcher to get valuable comments to modify some
questions.

4.1.2.2 Reliability Test

According to Khotari(2004), reliability refers to consistency, where internal consistency involves
correlating the responses to each question in the questionnaire with those other questions in the
questionnaire. The researcher conducted a pilot survey to 12 SMEs owners in order to ensure the
reliability of the instrument.

The reliability of the questionnaire scales of the pilot study was checked using Cronbach’s alpha.
Cronbach's alpha is measured on a scale of 0 to 1, with 1 indicating perfect consistency. It is
unlikely to find perfection, but there should be an acceptable level (Mayers, 2013). According to
Creswell (2003), the general rule of thumb is that a Cronbach's alpha of 0.70 and above is good,
0.80 and above is better, and 0.90 and above is best.

Therefore, the overall Cronbach’s alpha result of the scales within the 6 items (i.e.Product,
Development Strategies, Pricing strategies, Promotion strategies, Place Strategies, Packaging
Strategies, After Sales Service Strategies and Performance) of the survey instruments was found
to be at the acceptable level which is showed in the following section.

Table 1: Cronbach’s alpha result

Reliability Statistics
Cronbach's Alpha N of Items
Product Development .708 4
Pricing strategies .726 4
Promotion strategies .725 4
Place Strategies .739 5

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Packaging Strategies .774 5
After Sales Service Strategies .742 5
Performance .820 4
Overall reliability .892 31

Survey result, 2021

4.1.3 Descriptive Analysis

4.1.3.1 Demographic Characteristics of the Respondents

The first part of questionnaire consists of the demographic information of the respondents. This
part of the questionnaire requested a limited amount of information related to personal and
professional demographic characteristics of respondents. Accordingly, the following variables
about the respondents were summarized and described in Table 2.

Table 2: Demographic Information

Demographic and General Information Related

Variables Categories Outcomes
Frequency Percentage
Male 212 73%
Gender of the Respondents Female 77 27%
Total 289
< 20 years
21-30 45 16%
Age of the Respondents
31-40 177 61%
41-50 38 13%
Over 50 29 10%
Total 289
Less than secondary school 123 43%
Certificate Diploma 101 35%
Educational Status
First Degree 56 19%
Second Degree and Above 9 3%
Total 289
< 5 years 95 33%
6-10 years 135 47%
Experience in the Enterprise
11-15 years 45 15%
Over 15 years 14 5%
Total 289
Small 156 54%
Medium 133 46%
Size of Enterprise
Other
Total 289

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 Manufacturing 67 23%
Trade 75 26%
Sub-sector
Service 114 39%
Construction 33 12%
Total 289
< 50 215 74%
51-100 56 19%
Number of Employees
101-150 13 5%
151-200 5 2%
>201
Total 289

According to the above table, the distribution of sex of the respondents shows that 73% of them
were male and the remaining 27% were female. Apparently, the majority of the respondents were
male and it can be generalize that males owned and/or managed the majority of SMEs.

When it comes to the age of the respondents, the result shows that there wasn’t any respondent
below the age 20. The majority of the respondents fall within 31-40 which is 61%, followed by
the age group of 21-30 which is 16% of the total respondents. The rest 13%, and 10%, found
between the age bracket of 41-50 years, >50 years. This shows that the majority of SMEs were
owned and/or run by young people.

The educational status distribution of the respondents shows that, 43% of them were less than
secondary school, 35% were certificate Diploma holders, 19% of them were First Degree
holders, and 3% of them possessed second/Masters Degree and above. Therefore, this result
implies that the majority of the respondents had level of education that ranks Certificate-Second
degree and above.

Regarding their experience in their expertise, 33% of the respondents had experience below five
years. The majority of the respondents (47%) of the respondents indicated that they had a
working experience of 6-10 years in the enterprise. While, 15% of them had experience that
ranges between 11-15 and 5% of the respondents had over 15% years of experience, 9.3% and
4.9% of them had 15 years of experience. Therefore, this result indicated that most of the
respondents had a knowledge basis of customer interaction.

With regard to the size and sub-sectors of the enterprise, the majority of the respondents were
from small enterprises which accounted for 54% which followed by the medium enterprise

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which accounted for 46%. When it comes to the sub-sectors, the majority of the enterprises were
engaged in service sub-sector which accounted for 39%. While, the remaining 26%, 23% and
12%, of them were engaged in trade, construction and construction sub-sectors.

Additionally, regarding the number of employees, most of them have < 50 employees which
accounted for 74% and followed by the enterprise having 50-100 employees which is accounted
for 19%, while the remaining 5% represents enterprises with 101-150 employees and 2% of
sample SMEs have 151-200 employees respectively.

4.1.3.2 Descriptive Analysis of the variables

As it was mentioned in the methodology section the survey instrument constitutes questions that
were designed to measure the respondents’ opinion towards the marketing strategies on a five-
point Likert scaleranges from 1 being ‘Strongly Disagree’ to 5 ‘Strongly Agree’ for marketing
strategy and performance dimensions. In order to show the average responses of respondents for
each question that was included under each item the mean score was calculated for each
construct. The following table summarizes result of descriptive statistics (mean and standard
deviation) of each variable

Table 3: Mean score and Standard Deviation

N Minimum Maximum Mean SD

Product Development strategies 289 1.5 5.00 3.8215 .68410
Pricing strategies 289 1.8 5.00 3.8445 .70012
Promotion strategies 289 1.8 5.00 3.8575 .65750
Place Strategies 289 1.8 5.00 3.9329 .68928
Packaging Strategies 289 1.3 5.00 3.9440 .66839
After Sales Service Strategies 289 1.3 5.00 3.9440 .73314
Performance 289 1.5 5.00 3.9842 .69092

Source: Survey result, 2021

The researcher adopted measurement scale intervals from published research works. According
to the measurement scales, mean scores 4.51-5.00 are excellent or very good, 3.51-4.50 good,
2.51-3.50 average or moderate, 1.51-2.50 fair and 1.00-1.50 is poor (PoonlarBtawee, 1987)as
cited by Hailu Demissie (2013). Accordingly, as it is stated on the above table 3, fall in the
category of the range between 3.82 and 3.98. This implies that the respondents have a very good
opinion on the aforementioned variables (i.e., marketing strategies) would have an effect on the

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performance of small and medium enterprises. Additionally, all the variables have scored low
standard deviation that implies that the data are clustered closely around the mean. This means
that the participants of the survey had very close outlook on every single variable surveyed.

4.1.4 Correlation Analysis

In this study correlation analysis was employed to examine the relationship between marketing
strategies and business performance of the SMEs. According to Creswell (2003), analysis of
correlation measures the strength of association between two variables and the direction of the
relationship. In terms of the strength of relationship, the value of the correlation coefficient
varies between +1 and -1. A value of ± 1 indicates a perfect degree of association between the
two variables. As the correlation coefficient value goes towards 0, the relationship between the
two variables will be weaker. The direction of the relationship is indicated by the sign of the
coefficient; a + sign indicates a positive relationship and a – sign indicates a negative
relationship. Accordingly, the relationship of the variables is presented in following table.

Table 4: correlation matrix

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 Correlations
Product Price Promotion Place Packaging After-sales Performance
service
Pearson 1
Correlati
Product on
development
strategies Sig. (2-
tailed)
289
N
Pearson .788** 1
Correlati
Price strategies on
Sig. (2- .000
tailed)
289
N 289
**
Pearson .612 .696** 1
Correlati
Promotion on
strategies
Sig. (2- .000 .000
tailed)
289 289 289
N
Pearson .721** .738** .781** 1
Correlati
Place on
strategies
Sig. (2- .000 .000 .000
tailed)
289 289 289 289
N
Pearson .574** .672** .575** .593** 1
Packaging Correlati
strategies on
Sig. (2- .000 .000 .000 .000
tailed)
289 289 289 289 289
N
Pearson .617** .674** .622** .562** .700** 1
After-sales Correlati
service on
Sig. (2- .000 .000 .000 .000 .000
tailed)
289 289 289 289 289 289
N
Pearson .612** .781** .651** .741** .596** .697** 1
SMEs Correlati
Performance on
Sig. (2- .000 .000 .000 .000 .000 .000
tailed)
289 289 289 289 289 289 289
N
**. Correlation is significant at the 0.01 level
(2-tailed).
Source: survey, 2021

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As it is indicated in the above table, the first highest strong correlationcoefficientsorted out in
this study was between pricing variable and performance (r=0.781, p ≤ 0.01) which indicates
there is a strong, positive, and significant relationship between pricing and the performance of
SMEs. The second highest strong positive and significant coefficient of correlation lies between
place and performance (r=0.742, p ≤ 0.01).

After-sales services, Promotion, Product development, packaging variables have also strong,
positive, and significance relationships with the performance or SMEs (dependent variable) with
(r= .697; r=.651; r=.612 and r=.596, p ≤ 0.01, respectively). On the whole, the correlation
matrix presented in table 4, indicates that all the independent variables were positively and
strongly correlated with the dependent variable. As it is also indicated on the above table, the
numbers next to Sig. (2-tailed) were all 0.000. According to Creswell (2003),if the Sig (2-Tailed)
value is greater than 0.05, it can be concluded that there is no statistically significant correlation
between two variables. That means, increases or decreases in one variable do not significantly
relate to increases or decreases in the second variable.Also, If the Sig (2-Tailed) value is less
than or equal to 0.05, the researcher can conclude that the two variables are significantly
correlated in the way that increases or decreases in one variable do significantly relate to
increases or decreases in the second variable. Therefore, the researcher can indicate that there is
a significant correlation between the independent variables and dependent variable.

4.1.5 Regression
Regression analysis is a statistical tool used to model the relationship between a dependent
variable and one or more independent variables. Specifically, regression analysis describes how
the typical value of the dependent variable changes when any one of the independent variables
increases or decreases, while holding the other independent variables constant. In this study, the
assumptions were tested before conducting the regression analysis.

4.1.5.1 The Assumptions for Testing Regression Analysis

 Normality
Normalitytest provides indication about insights gap in the data and outliers. Data that can be
represented by this type of ideal, bell-shaped curve as shown in the graph below, which is said to

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have a normal distribution or to be normally distributed (George and Mallery, 2010). Accordingly,
in the following probability plot indicates that the requirement is satisfied and there is no as such
major deviation from normality.

Figure 3: Histogram

Source: survey result, 2021

 Linearity Test
Multiple linear regression model assumptions assume there is a linear relationship between the
independent variables and the dependent variables. Hence, in the case of this study it is assumed
that performance of SMEs is linearly related with marketing strategy variables; meaning that the
dependent variable performance of SMEs is assumed to be impacted with changes in marketing
strategies (the independent variables). This can also be observed in a scatter plot in which scores
form a straight line (roughly), not a curve (Pallant, 2005). Linear relationship between the
dependent and independent variables is shown on the scatter plot of this study and p-plot
diagram presented below shows that the assumption of linearity is satisfied.

Figure 3: Normal P-P Plot

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Source: Survey 2021

 Homoscedasticity of the Error Terms

Homoscedasticity is the variability in scores for variables of independent should be similar at all
values of variable dependent. Thus, for a basic analysis, it is important to plot Y-axis against X-
axis, because the plot is useful to determine whether the assumptions of random errors and
homoscedasticity have been met. If there were certain variant, such as organize shaping dot
(waves, fuse and narrow), it can be connoted that no homoscedasticity happened. If there were
not certain variant, and dots spreads above and below 0 numbers in axis Y, then it can be said
that homoscedasticity did happened (Pallant, 2005). The scatter plots showed that there is
homoscedasticity. Thus, the assumption is reasonably supported in this study.

Figure 2: Scatter plot

 Multi-collinearity
Multicollinearity is a problem that occurs with regression analysis when there is a high
correlation of at least one independent variable with a combination of other independent
variables. Sometimes, it will be difficult to identify the unique contribution of each variable in

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predicting the dependent variable, when variables are highly correlated. Collinearity diagnostics’
is part of the multiple regression procedure that can help the researcher to pick up on problems
with multi-collinearity that may not be evident in the correlation matrix.

Under collinearity diagnostics, two values are given: Tolerance and VIF. According to Pallant
(2005), Tolerance is an indicator of how much of the variability of the specified independent is
not explained by the other independent variables in the model. If this value is very small (less
than 0.10), it indicates that the multiple correlation with other variables is high, which suggests
the likelihood of multi-collinearity. The other value given is the VIF (Variance Inflation Factor),
and VIF values above 10 indicate the presence of multicollinearity.

Table 5: multicollinearity test

Coefficientsa
Model Collinearity Statistics
Tolerance VIF
1 Product .261 2.581
Price .467 2.733
Promotion .340 2.845
Place .499 2.026
Packaging .342 2.240
After-sales value .273 4.366

a. Dependent Variable: SMEs Performance

Source survey: 2021

As stated in Table 5, the collinearity statistics tolerance value ranges from 0.261 to 0.499, and
the analysis of variance inflation factors (VIF) value ranges from 2.026 to 4.366. Thus, this
shows that there is no multi-collinearity among independent variables. Because, tolerance
amount for all variables is greater than 0.10 and VIF are also less than 10.

 Independent errors
For any two observations, the residual terms should be uncorrelated (or independent). This also can be
described as an autocorrelation which is tested using Durbin–Watson test, a test for serial correlations
between errors (Field, 2005). A value greater than 2 indicates a negative correlation between adjacent
residuals, whereas a value below 2 indicates a positive correlation. As a general rule, the residuals are

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independent (not correlated) if the Durbin-Watson statistic is approximately 2, and an acceptable range is
1.50 - 2.50 (Muluadam, 2015). In this study, the Durbin-Watson test result as it is shown in table 6 is
1.897 which is closer to the acceptable standard of 2.0 shows that there is no autocorrelation problem in
the model.

4.1.5.2 Multiple Linear Regression Analysis

In this section the researcher used linear regressions to obtain the r coefficient and r-square that
determined the relationship and their effect between the dependent and independent variables.
Further, regression analysis helps the researcher to understand how the dependent variable
changes when any one of the independent variables is varied, while the other independent
variables are held fixed. In this regard, multiple linear regressionswere conducted with the
objectives of understanding and predicting the effect of the independent variables on the
dependent variable. The regression analysis result is presented in the following table.

Table 6: Model Summary for SME Performance

Model Summaryb
Model R R Adjusted Std. Error Change Statistics Dur
Square R Square of the bin-
R F df df2 Sig. F
Estimate Wat
Chan 1 Change
Square son
ge
Change
.000
1 .784a .615 .691 .45019 .615 76.744 6 321 1.897

a. Predictors: (Constant), product, Place, price, after-sales value, Promotion, packaging

b. Dependent Variable: SME Performance

Source: survey 2021

In the multiple regression Table 6, the value of R square showed that how much of the variance
in the performance of SMEs is explained by the model (Pallant, 2001). R (0.784) is the
correlation of the independent variables with the dependent variable after all the inter
correlations are taken into account. The summary in the table explained, the adjusted R square is
.691 or 69.1% of the variance in the dependent variables i.e.,Performance of SMEs was
explained by independent variables i.e., the six variables and the other 30.9% is due to other
independent variables not included in the model and the random error.

Table 7: ANOVA Result

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 ANOVAa
Model Sum of Squares Df Mean Square F Sig.

108.877 6 15.554 76.744

Regression .000b
1
68.097 321 .203
Residual
176.974 315
Total
a. Dependent Variable: SME Performance

b. Predictors: (Constant), product, Place, price, after-sales value, Promotion, packaging

The ANOVA tells us whether the model, overall, results in a significantly good degree of
prediction of the outcome variable (Field, 2005). Since the significance result on the ANOVA in
Table 7 is 0.000 which is p< 0.05, R, R2, and Adjusted R2 conducted for the regression
analysisproved the presence of a good degree of prediction. The above table that presents the
ANOVA indicates the acceptability of the model.

4.1.5.3 The Regression Coefficient Analysis

The following section presents standardize beta coefficient, which tell us the unique contribution
of each factor to the model. A high beta value and a small p value (<.005) indicate the predictor
variable has made a significant statistical contribution to the model. On the other hand, a small
beta value and a high p value (p >.005) indicate the predictor variable has little or no significant
contribution to the model. (Ggorgeet al., (2003).

Table 8: Regression coefficient

Coefficients’
Unstandardized Standardized t Sig.
Model Coefficients Coefficients

B Std. Error Beta

1 (Constant) .363 .179 2.030 .043

Product .106 .052 .102 2.039 .042

Price .201 .053 .237 3.771 .000
Promotion .165 .061 .159 2.734 .007
Place .122 .052 .192 2.337 .020

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 Packaging .025 .078 .023 0.323 .747
After-sales service .232 .080 .113 2.916 .004

a. Dependent Variable: SMEs Performance

Source: survey, 2021

In order to compare the relative strength of each independent variable's effect on the dependent
variable, the standardized regression coefficient Beta (β) can be used (Pedhazur, 1982). The
significance level of each variable (P-value) is: .042, 0.000, .007, 0.020, .747, .004 and their
standardized coefficients of the independent variables (product, price promotion, place,
packaging and after-sales service) are .102, 0.237, 0.159, 0.192,0.023, 0.113, respectively. The
p-value of all the independent variables except for packaging is below 0.05. This implies that the
independent variables have a significant relationship with the dependent variable (SMEs
Performance), but, the packaging hasn’t. Therefore, the regression equation based on the
variables can be stated as follows.

Y= β0+ β1X1+ β2X2+ β3X3+ β4X4+ β5X5+ β6X6+e

Y= .363+ 0.102X1+ 0.237X2+ 0.159X3+ 0.192X4+ 0.023X5+ 0.113X6+e

Where: Y= SMEs Performance (Dependent Variable)

β0 = Intercept β1, β2, β3, β4, β5, β6, = Coefficients of the line
X1= Product
X2= price
X3= Promotion
X4= place
X5=packaging
X6= After-sales value
e= Sampling error

This result indicates, first, the intercept is .363 when all independent variables have a value of
zero. Then, moving through the equation, holding price, promotion, place, packaging, After-
sales service constant, the Product increases the Performance of SMEs by 0.102 for each
additional Product level increment. The p-value for this coefficient is statistically significant
(p<.05), meaning that Product is a significant predictor of SMEs performance. Accordingly, the

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finding revealed that the first hypothesis which states “Product strategy has the positive
significant effect on the performance of SMEs” is supported as (p-value < 0.05; β=0.102) hence,
the alternative hypothesis is confirmed.

When it comes to the second hypothesis which states that the price strategy has positive
significant effect on the performance of SMEs is also supported because the P-value of Price
strategy is below 0.05 which is (P<0.05; β=0.237) hence the price strategy has the significant
positive effect on the performance of SMEs; thus the alternative hypothesis is confirmed.

The third hypothesis which states Promotion strategy has positive significant effect on the
performance of SMEs is also supported because the P-value is 0.007 which is less than 0.05;
hence, promotion strategy has the significant relationship with SME performance. Besides, the
regression analysis shows that, the promotion strategy has positive as well as the significant
positive effect on the performance of SMEs (β =0.159; P<0.05).

The fourth hypothesis which states, the place strategy has the positive significant effect on the
performance of SMEs‟ is also supported because the P-value is 0.020 which is less than 0.05;
hence, place strategy has the significant relationship with SME performance. Besides, the
regression analysis shows that, the place strategy has positive as well as the significant positive
effect on the performance of SMEs (β =0.192; P<0.05).

The fifth hypothesis which states, the Packaging strategy has the positive significant effect on the
performance of SMEs‟ is not supported; because the P-value is 0.747 which is greater than 0.05,
hence packaging strategy has the insignificant relationship with the performance of SMEs.
Besides, the regression analysis shows that the packagingstrategy has weak and insignificant
positive effect on the performance of SMEs (β =0.023; P>0.05); hence, the alternative hypothesis
is rejected.

The sixth hypothesis which states After-sales service strategy has positive significant effect on
the performance of SMEs is also supported because the P-value is 0.004 which is less than 0.05;
hence, After-sales service strategy has the significant relationship with SME performance.
Besides, the regression analysis shows that, the promotion strategy has positive as well as the
significant positive effect on the performance of SMEs (β =0.113; P<0.05).This simply means

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customers are motivated to buy product that has guaranty contract, installation and effective
delivery.

4.2 Qualitative Data Analysis

4.2.1 Emerging Themes from Participants’ Response
As it was discussed on the methodology section, the study also has a qualitative partin which the
researcher tried to collect a qualitative data from purposively selected SMEs owners and SME
office expert through the means of in-depth interviews. The researcher approached SMEs owners
which were not part of the quantitative survey from each sector (i.e., manufacturing, trade,
service and construction sectors) and conducted interviews. The interview tool was a semi
structured interview guide which strives to understand the effects of the marketing strategies on
the business performance of SMEs by posing set of questions that ask the participants if
marketing strategies (product, price, place, promotion, packaging, and after-sales servive) have
effect on their business performance. The following section presents emerging themes from the
participants’ response.

The effect of Product on SMEs Business Performance

When asked about the effect of Product strategy on SMEs business performance, most of the
participants stated that it was one of the many factors that contribute to the growth of their
business. The respondents mentioned that the better they got focused on the products they
provide to the consumer, the more they became prominent choice of their customers. One
respondent quoted “ I do believe that it is the quality of the service we give that keeps us
standstill in the business arena! (Respondent 1)”

The effect of Price strategy on SMEs Business Performance

The respondents were also asked to describe the effect of price on SMEs Business Performance.
All the respondents stated that most of their customers buying decision were influenced by the
price of the goods and services they provide. They mentioned that they needed to revise their
pricing strategy recurrently by considering the overall market atmosphere in order to keep their
customers. They agreed on the point that the price strategy had an effect on their business
performance.

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 The effect of Place strategy on SMEs Business Performance
All the respondents emphasized that place strategy was one of the dominant factors on their
business performance. They described that most of the time; the place that they chose to operate
had significant effect on the business performance. One of the respondents emphasized “In our
enterprise, we think that it is our operating location that keeps affecting our business.
Coustomers always tend to choose others enterprises only by their proximity as ours is relatively
located at the peripheryof the district (Respondent 3)”. In relation with place, location and
proximity were also the themes that were mentioned by the respondents as a factor that
influences their business performance.

The effect of Promotion strategy on SMEs Business Performance

According to the interviewees, promotion is the back bone of the business performance. The
respondents mentioned that most important purpose that a promotion serves was that it sets a
business apart from its competitors. One of the respondents said “No business will ever need to
run any promotions if there wasn't any competition. You have to stay ahead of your competitors
in order for customers to keep doing business with you(Respondent 7).”

The effect of Packaging strategy on SMEs Business Performance

The interviewees mentioned that packaging also had an impact on the business performance
since it could help new customers get familiar with the brand produced. They also mentioned
that Package should be made in a way that the product could be conveniently taken from one
place to another and can be handled easily by middlemen or consumers in order to increase sales.
One of the respondents said “packaging shows the quality and increase the customers interest to
buy products (respondent 2)”.However, the respondents mentioned that packaging strategy was
the most neglected one among others since it was perceived as an additional cost for the
enterprises.

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 The effect of After-sales strategy on SMEs Business Performance

The participants also stated that after-sales service plays an important role in customer
satisfaction and customer retention. According to their thought, after-sales value generates loyal
customers and increases a brand value. However, they mentioned that they seldom used the
after-sales strategy due to lack of internal consistency within their business firms.

Generally, the qualitative data shows that the marketing strategies have an outstanding effect on
the business performance of the SMEs when applied in a carefully designed and consistent
manner.

4.3 Discussion of the Results

The overall objectives of the study were to examine the effect of marketing strategies on
business performance with special reference to the selected small and medium enterprises
(SMEs) in Addis Ababa. The regression coefficients (Beta Coefficients) between the marketing
strategy and performance have positive values. Hence, there were no inverse relationships
between the marketing strategy variables and performance.

Specifically, Price is the strongest predictor of the Small and Medium Enterprise performance
because it has the highest Beta coefficient result (β = 0.237; p<.05). The Beta Coefficient result
of 0.237 signifies that for a 1-unit change in the independent variable (price), the dependent
variable (Performance) will change by 0.237 units. The qualitative data finding also tells that
price is one of the most important factors that directly affect the performance. Apparently, the
study conducted by Ebitu (2015), was also consistent with this study finding in the way that it
found Price has the significant positive effect the performance of SMEs.

Place is the second predictor of Small and Medium Enterprise performance at (β=0.192; P<.05).
The Beta Coefficient result of 0.192 signifies that for a 1-unit change in the independent variable
(price), the dependent variable (Performance) will change by 0.192 units. In other studies, such
as Ambler (2000) also found that distribution channel relationship has a positive effect on market
share and performance. The qualitative data finding of this study also shows that place creates
convenience for customers and achieves basic, yet significant, benefits such as time, place, form
and delivery benefits for service organizations customers. Therefore, the result of this study
implies that place has the significant positive effect on the performance SMEs.

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Following to Place, Promotion at (β=0.159; P<.05) is the next predictor of performance of the
SMEs. In relation with this result, the qualitative data shows that that promotion strategy is
beneficial for their business. In their study, Adewale et al. (2013) also emphasised that
promotion has a positive and significant relationship with business performance. These all
implicate that effective promotion of SMEs products/services can improve the organizations
performance.

The next predictor is After-Sales service at (β=0.113; P<.05). The result of the study indicated
that the Beta Coefficient result of 0.113 signifies that for a 1-unit change in place strategy
variable, the dependent variable (Performance) will change by 0.113 units. The qualitative data
finding shows that respondents asserted that after-sales service is one of the most important
marketing strategies that affects their business performance as it typically leads to higher
customer satisfaction, brand loyalty, and even word-of-mouth-marketing. Additionally, other
researchers (e.g., Ruben, 2012; Saccani, et al., 2007; Raddats, 2011; Goffin and New, 2001)
found out that after sales service is a marketing strategy that enhance and establish strong and
long relationship with customers, which in long run led to customer satisfaction, retention and
profitability.

Product is the other performance predictor of the SMEs at (β=0.102; P<.05) The Beta Coefficient
result of 0.102 signifies that for a 1-unit change in product strategy variable, the dependent
variable (Performance) will change by 0.102 units. The qualitative finding also showed that
product is also an important marketing strategy to increase performance as it focuses and
considers on new audiences and communities with different packaging and pricing. Apparently,
Cavusgil and Zou (1994) also found that better firm performance can be obtained via adapting
the product to meet requirements of export customers.

The last predictor is Packaging which has positive effect on the performance of SMEs at
(β=0.023; P>.05) but, not significant. In relation to this study, another research conducted by
Sajuyigbeet (2013), point out that packaging is one of the inevitable communication tools that
influence buying behaviour and enhance business performance. However, the P-value of
Packaging strategy in this study was 0.747 which is greater than 0.05, hence packaging strategy
has the insignificant relationship with the performance of SMEs.This result was also triangulated

55 | P a g e
with the qualitative finding and it is implicated that the SMEs considered packaging as an extra
costeven though it has an effect on their business performance.

Table 9: Summary of Hypothesis Testing

Hypothesis Analysis Used Findins Result

H1 Multiple Regression β = 0. 102; p<.05 Positive Significant Supported

H2 Multiple Regression β = 0. 237; p<.05 Positive Significant Supported

H3 Multiple Regression β = 0. 159; p<.05 Positive significant Supported

H4 Multiple Regression β = 0. 192; p<.05 Positive Significant Supported

H5 Multiple Regression β = 0. 023; p>.05 Positive Significant Not Supported

H6 Multiple Regression β = 0. 113; P<.05 Positive Significant Supported

Source: survey result, 2021

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 CHAPTER FIVE

SUMMARY OF MAJOR FINDINGS, CONCLUSIONS, AND

RECOMMENDATIONS

The purpose of this chapter is to verify if the research questions were answeredand the objective
met. Thus, the chapter begins with summary of major findings, conclusions, and
recommendations.

5.1 Summary of Major Findings

Related literatures were reviewed, regarding the methodology, mixed method explanatory
research design was employed. Moreover, 289 five-point Likert scale questionnaires were
distributed to SMEs owners and managers. Additionally, 8 in-depth interviews were conducted
with SME owners who were not part of the quantitative survey, The quantitative data was
analysed using SPSS and it is checked for reliability using Cronbachalfa, descriptive, correlation,
and regression analysis were used to explore the relationship among variables and thematic
analysis was used to analyse the qualitative data. The data analysis found out the following key
findings.

In this study, the mean scores range between 3.51 and 4.50. This implies that the
respondents have a good opinion on the aforementioned variables (i.e., marketing
strategies) draw an effect on the performance of small and medium enterprises.
Additionally, all the variables have scored low standard deviation that implies that the
data are clustered closely around the mean.
The correlation result indicates that all the independent variables were positively and
strongly correlated with the dependent variable
The regression analysis result revealed that the first hypothesis which states “Product
strategy has the positive significant effect on the performance of SMEs.” is supported as
the p-value (0.042) is less than 0.05.

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 The second hypothesis that states that price strategy has positive significant effect on the
performance of SMEs is also supported because the P-value of Price strategy is below
0.05 which is (P<0.05; β=0.237)
The third hypothesis stating Promotion strategy has positive significant effect on the
performance of SMEs is also supported because the P-value is 0.007 which is less than
0.05
The fourth hypothesis was also supported as the place strategy has positive as well as the
significant positive effect on the performance of SMEs (β =0.192; P<0.05).
The fifth hypothesis which states the Packaging strategy has the positive significant effect
on the performance of SMEs is not supported as the P-value is 0.747 which is greater
than 0.05.
The sixth hypothesis which states After-sales service strategy has positive significant
effect on the performance of SMEs is also supported because the P-value is 0.004 which
is less than 0.05.
The p-value of all the independent variables except for packaging is below 0.05. This
implies that the independent variables have a significant relationship with the dependent
variable (SMEs Performance), but, the packaging hasn’t.
Finally, the regression model drawn was Y= .363+ 0.102X1+ 0.237X2+ 0.159X3+
0.1192X4+ 0.023X5+ 0.113X6+e
Apparently, the qualitative data used to triangulate the findings from the quantitative data
indicated that the marketing strategies have outstanding effect on the business
performance of the SMEs. The findings showed that these marketing strategies have a
positive outcome on business performance if the business firms design them and use
them consistently.

5.2 conclusions

Small and medium enterprises (SMEs) are the backbones for economic growth and development
worldwide. By their very nature, SMEs constitute the most feasible and authentic vehicle for
self-financing industrial development (Oyebamiji, Kareem & Ayeni, 2013). Marketing
strategycan be understood as vital tool for any flourishing business, irrespective of its size,
sector, the nature of its work and its objectives (Akroush, 2003). Marketing strategies comprise

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one of the key functional strategies that Small and Medium Enterprises (SMEs) take up to
enhance performance.

Marketing strategy (product, price, promotion and place,) were significantly independent and
joint predictors of business performance and each one has its unique contribution and impact to
the performance of the small Businesses (Ebitu, 2017). This also shows the importance of the
marketing strategy no matter how small the Business may be.

In line with this the researcher conducted scientific study with the objective to examine the effect
of marketing strategy (product, price, promotion, place, packaging and after-sales service) on
small and medium enterprise performance and the following conclusions are drawn out of the
research findings:

The research yielded that the independent variables (i.e., Product, Price, place, promotion, and
after-sales service) except packaging strategies have the significant effect on the small and
medium enterprise’s performance. Each one has its unique contribution and effect to the
performance of the small and medium enterprises businesses. The study conforms to the
positions of Ebitu, (2017); Sajuyigbe et al (2013); Chiliya, et al, (2009) and Owomoyela et al,
(2013) except the result of packaging which has contrary opinion to the previous
researches.Therefore, on the basis of this result, it can be concluded that providing a quality
product, offering affordable price with effective promotion strategy and unique mechanisms to
provide after-sales service which keeps their customer relationship assures higher business
performance of SMEs.

The relationship between dependent and independent variables was analyzed using Correlation
analysis and the result showed that all coefficient of correlation of independent variables were
positively and strongly correlated with the dependent variable. Further multiple regression
analysis was also conducted to verify if the independent variables have the effect on
performance. The result revealed that the significance level of each variable i.e., Product, Price,
promotion, place, packaging and after-sales value (P-value) is: .042, 0.000, .007, 0.020, .747,
.004 and their standardized coefficients are 0.102, 0.237, 0.159, 0.192, 0.23 & 0.113
respectively. The p-value of all the independent variables except for packaging is below 0.05.
This implies that except packaging,all the independent variables have a significant relationship
with the dependent variable (SMEs Performance).

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 5.3 Recommendations
Based on the finding of the study, the researcher provided valuable recommendations as follows.

SMEs need deliberate a tailor-made marketing strategy that will help them define clear, realistic
and measurable marketing objectives for their business. Accordingly, they should consider the
following marketing strategies that will highly contribute to their business performance.

 SMEs should develop a product development strategy that provides a framework for
creating new products or improving the performance, cost and quality of
existing products. The strategy will help them achieve their business goals, such as
entering new markets, selling more to existing customers and winning business from
competitors.

 As Price is one of the most important ways in which customers choose between different
products and services, SMEs should consider competition in their target market place and
customers’ reactions to possible product prices when setting a price for the product they
produce.

 Placeis also another important strategy that involves all the decisions in getting the right
product to the target market’s environment. Therefore, Placement decisions of SMEs,
such as accessing the right distribution channels, should take into consideration where
customers would expect to find a product or services at their convenience.

 SMEs should design an outstanding tailor-made promotion strategy that considers

Advertising, Direct marketing that aims at directly connecting with carefully targeted
individuals to cultivate lasting relationships, Personal selling Personal presentation using
sales force and Sales promotion that applies short-term incentives to encourage a
purchase
 The SMEs should also develop after-sales service such as extended warranty, upgrade in
the product, training, discounts, gifts, etc… in order to maintain relationship with the
existing customers and attract new ones.

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 5.4 Limitations and Suggestions for Future Research
The result of this research work will make available a platform for several future study effort. In
this study, only small and medium enterprises were taken into consideration. So, it is
recommended to conduct similar study and examine the effect of marketing strategy on business
performance using large enterprises of the same sector.

Furthermore, it is recommended to examine the factors affecting the relationship between

marketing strategies and performance which was not included in this study. According to
Ambler, et al (2004), company marketing resources and capabilities and company marketing
practice are found to have the mainlydominant effect and are the master moderators on the
relationships between the marketing strategy components and the company’s performance. Thus,
this would be an opportunity for other investigators to examine the factors in future research
works.

Additionally, for a better and accurate generalization, it is also recommendable to examine the
research model of this study in other sectors with special concern on the context of Ethiopia.

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 Annex 1: Survey Tool
Questionnaire

Greetings!
My Name is Wubneh W/Cherkos. I am a student at Addis Ababa University, school of
commerce carrying out a research on the effect of marketing strategies on business performance
of small and medium enterprises (SMEs) in Addis Ababa. This research is academic in nature
and will be used for academic purpose only. The questionnaire takes a maximum of 25 minutes
and any information provided will be treated with utmost confidentiality.

Please tick and fill where appropriate

Section A: Background information

1. Gender:Male Female
2. Age:<20years 21-30years 31-40years 41-50 years Over
50years
3. Educationalstatus:Lessthansecondaryschool CertificateDiploma 1st
Degree
2nd Degree andabove Ifothers,pleasespecify
4. Your Experience in the Enterprise: < 5 years 6-10 years 11-15 years over 15
5. What is size of your Enterprise:Small Medium Ifothers,pleasespecify
6. What type/sub-sector is your business/enterprise engagedin?
Manufacturing Trade Service Construction
7. How many employees your enterprisehas?
<50 51-100 101-150 151-200 >201

Section B: Product Development Strategies

8. This section aims at establishing the product development strategies adopted by the small;
and medium enterprises. Use the following scale as appropriate
1-Strongly disagree 2-Disagree 3-Neutral 4- Agree 5-Strongly agree
Statements 1 2 3 4 5
SMEs do not offer a broad product line
SMEs have products with broad market appeal
SMEs are not efficient in meeting customer wants

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SMEs develop and test their products to conform their
adaptability and suitability to the target customers

Section C: Pricing strategies

9. Evaluate the following statements on pricing strategies. Use the following scale as
appropriate.
1-Strongly disagree 2-Disagree 3-Neutral 4-Agree 5-Strongly agree
Statements 1 2 3 4 5
Pricing is not a basis for competition among small and medium
enterprise
SMEs have quality transportation to deliver their products to the
markets.
SMEs price are higher as compared to standard quality
Market orientation of a product is not important for a product
pricing

Section D: Promotion strategies

10. Evaluate the following statements on promotion strategies. Use the following scale as
appropriate
1-Strongly disagree 2-Disagree 3-Nutral 4-Agree 5-Strongly agree
Statements 1 2 3 4 5
Existence of promotion
SMEs do not advertise their products through various media
SMEs focus on customers’ needs and integrating all activities of
the organization to satisfy those needs
SMEs promotional strategy elicit attention, interest, desire and
action
SMEs introduce new products in design and style

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Section E: Place Strategies
11. Evaluate the following statements on place strategies. Use the following scale as appropriate
1-Strogly disagree 2-Disagree 3-Neutral 4-Agree 5-Strongly agree
Statements 1 2 3 4 5
SMEs aren’t accessible to customers
SMEs have a reliable channel of distribution for their products
Location of small and medium enterprise affects performance and
distribution of the products.
Place strategy outline how and where the SMEs will place their
products or services to gain market share.

Section F: Packaging Strategies

12. Evaluate the following statements on place strategies. Use the following scale as appropriate
1-Strogly disagree 2-Disagree 3-Neutral 4-Agree 5-Strongly agree
Statements 1 2 3 4 5
SMEs product packaging are not attractive to customers
SMEs packaging are more convincing to buy the product
SMEs packaging have good containers to transport the product
SMEs packaging are not good for storage the product

Section G: After Sales Service Strategies

13. Evaluate the following statements on place strategies. Use the following scale as appropriate
1-Strogly disagree 2-Disagree 3-Neutral 4-Agree 5-Strongly agree
Statements 1 2 3 4 5
SMEs continuously contact their customers after sales concluded.
SMEs do not provide warranty for their goods sold to the
customers.
SMEs accessible to provide support to customers on the how to
use the product after sales.

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Section H: Performance
14. To what extent do marketing strategies adopted by enterprises influence performance of
SMEs
Not at all ()
Minimal extent ( )
Moderate extent ( )
Large extent ()
15. Please indicate the extent at which your business performance has grown in the following
areas due to marketing.
Use the following scale as appropriate
1-Not at all 2-Minimal extent 3-Moderate extent 4-Large extent 5-Very large extent
Performance 1 2 3 4 5
Our customers are satisfied
Our customers receive value
My company has the ability to absorb new customers
High market share compared to our competitor
Increasing profit

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 Annex2: Semi-Structured Interview Guide

1. Do you think your product positively affect the business performance that you are

running currently? How? Please explain?

2. What is the effect of promotion on your business performance? Could you support your

answer with evidence/ tangible company experience?

3. What is the value of place on your business performance? How well it benefits your

company?

4. Have you ever experienced the positive effect of price on your business performance?

Please explain?

5. What is the effect of packaging on business performance? What kinds of packaging do

you use to optimise your business performance?

6. Does your company use after sales service? If yes, how well it optimises your business

performance?

7. Of all the aforementioned ones, which marketing strategy supported you to optimise your

business performance? Please support your answer by stating your reasons.

Thank you!

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