Webology (ISSN: 1735-188X)
Volume 19, Number 3, 2022
2315 http://www.webology.org
Why New Businesses Fail Due To Ineffective Services In
Marketing Strategy
Salman Ahmed Khan
a
, Sayma Zia
a
, Ayla Wajahat
a
, Maryam Khokhar
a
* , Arsalan
Ahmed Siddiqui
a
, Sehrish Qasim Ali
a
a, Department of Business Studies, Bahria Business School, Bahria University Karachi
Campus, Karachi, Pakistan.
ABSTRACT
Entrepreneurship has seen one of the major growths in Pakistan, in fact, just last year, the country
ranked as 4
th
in the World for the highest ratio of startups and small businesses. With many new
campaigns and programs in support for new and thriving business ideas for youth by the
government and tax wagers, the market has seen a significant growth in the last few years however
the sustainability and effectiveness hasn’t grown alongside. One of the major reasons is the
ineffective marketing strategies that small businesses implement due to their lack of exposure to
understanding the industry. Another hypothesis that can be reached is the effect of Covid in the
recent months especially since last year that has brought a huge downturn in the industry and has
significantly damaged the state of existing as well as new SMEs in its duration. Our study adopted
a simple questionnaire through which we tested and found out the insight and learned how
ineffective marketing has affected businesses everywhere resulting in business failures and
bankruptcy, along with the current Covid situation that has driven many SMEs to forced closure.
Through this study, many rising businesses in their initiation phase will learn the keys to rescuing
a failing business specially through recognizing the importance of marketing and its latest trends.
KEYWORDS: business, ineffective marketing, failure, entrepreneur, organization.
1. INTRODUCTION
There are a lot of common reasons to fail in business some common are they don’t have effective
marketing strategy the lack of effectiveness in business. In the changing scene with rivalry, there
is need to receive arrangement and system that business with profanely and adequately in all
business cycle (Du and Kim 2021). Achievement and disappointment and frequently seen as
different sides of the coins so that by staying away from the last mentioned the previous turn out
to be more achievable. Difficulties could be because of seen insufficient promoting system which
is having adverse consequences on the business’s execution item quality productivity
(Longenecker, Simonetti, and Sharkey 1999). Entrepreneurs will actually want to deal with
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intricacies of new small business promoting maintainability and adding to the flourishing of their
representative. Specialist at the SBA characterized a small business as a firm with under 500
employees (Haji Nor Amin et al. 2019). Small commercial
enterprise administration research, only half of recent agencies survive for the first 5 years
and only one-0.33 of latest organizations are capable of live on for 10 years. The inverse is
compelling as we are able to finish that if simplest 50% of recent organizations continue to
exist for the primary 5 years, then the alternative 50% fail within the first five years. We also
can finish that approximately 65% of latest organizations don’t make it to the ten-12 months mark
(Abebe and Gebremariam 2021). Strategy implementation is additional vital for the organization
than the strategy formulation, as a result of if the strategic plan isn't with success enforced by
the employees and management, its price and damages grow quite the failure of strategy
formulation (Williamson 2000). It’s necessary for the management and employees to use the
suitable and authentic models and framework for the implementation of the strategic set up in a
corporation. The most reason of failure of the strategic plan implementation is lack
of acceptable models and frameworks to guide the management and employees that square
measure involved in implementation of the strategic set up in well-known organization
(McPherson 1996). Leadership role is important in formulation and strategic plan implementation
and if the strategic leader isn't involved in strategy implementation, leadership isn't able to create
a vivid vision for any strategic program. Implementation of the strategic plan is more important
than formulation; otherwise it's nothing except well documented pieces of paper in a company
(Lebrasseur, Zanibbi, and Zinger 2003). The organizational longevity or viability of business
enterprises has been the topic of numerous empirical studies that have focused on causal factors,
like organizational resources, that are relevant to the present phenomenon.
Scholarly literature tends to agree that multiple characteristics exists that make sure the
longevity of organizations which they are available from both the external environment and
internal organizational systems position is that, because of the constant change in external
environmental factors in reference to marketing and global competency, organizations must adapt
internally to the strain of their environment (Henrekson and Stenkula 2010). By changing internal
factors like strategies, designs and plans, companies can adapt to the wants of the business world.
Embracing better business practices allows organizations to embrace new ideas, suggestions and
a good range of business opportunities (McAdam, Reid, and Shevlin 2014).
2. LITERATURE REVIEW
Today, remaining identical public notice of sale and selling technique bear doubt less thanks to
mathematical shopping. In addition, it exist thus powerful that it can facilitate bring back to life
the frugalness and might develop in mind or physically tremendous lucky probability for
governments to operate modern an adept form (Watkins 1983). Because the Internet is changing
the brand, price, distribution, and promotion strategy, marketing managers who fail to recognize
the role of the Internet in their corporate marketing plan will be at a disadvantage. With 20 million
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people having access to the Internet, Pakistan has experienced significant development in media,
yet marketers continue to do things the old way (P. Jennings and Beaver 2016)
The execution requirements are very stringent. Big ideas sometimes demand large sums of
money and well-organized groups. Successful entrepreneurs need an evangelical ability to recruit,
maintain, and balance the interests of investors, customers, workers, and suppliers for a seemingly
impossible idea, as well as organizational and leadership abilities to swiftly grow a huge,
complicated firm (Khokhar, Iqbal, et al. 2020). Furthermore, the entrepreneur may demand a high
level of technical expertise in deal making, strategy planning, overhead management, and other
commercial abilities. To put it another way, the revolutionary entrepreneur appears to require
nearly supernatural talents that regular mortals do not possess (Alayón, Säfsten, and Johansson
2022)
Relationship marketing is an old concept with a new focus that is currently at the forefront of
both practice and academic study in services marketing. The maturation of services marketing with
an emphasis on quality, more realization of potential advantages for the company and the
consumer, and technical advancements have all fueled its growth (HOU et al. 2021)
Marketing and entrepreneurship have long been viewed as two of the firm's most important
duties. Despite their close relationship in practice, marketing and entrepreneurship have mostly
grown inside their own discipline bounds, with little cross-disciplinary fertilization (Khokhar
2019). It might be a new year, but the ongoing Covid-19 pandemic means that there are further
challenges for the retail industry to come in 2021 (Irshad et al. 2019). Lockdowns fueled
considerable ecommerce purchases in the fourth quarter of 2020. November and December
witnessed a 39 percent and 37 percent increase in online sales, respectively. Overall, according to
new statistics from IMRG, internet sales increased by 36% in 2020, the largest increase in 13 years.
This contrasts with overall retail sales, which decreased by 2%., the yearly growth rate fell to 0.13
percent, the lowest in 25 years (Khokhar, Hou, et al. 2020)
Businesses will have to adapt their strategic plans due to the changing nature of information
and the technology that impact it. As smaller rivals learn to use information in ways that offer them
a competitive edge, all sectors will alter. Relationships between firms and their suppliers, for
example, will shift. Banking and other financial services industries are examples. The existing
business model of newspaper publication will be severely threatened. In the future, branding will
be a valuable asset. Business model innovation is critical to the long-term viability of open
innovation (Yumei Hou 2020).
3. METHODLOGY
3.1 PROCEDURE
Business growth and expansion necessitate the same level of careful and strategic planning as day-
to-day operations. Before opening a new location, even well-established and successful
commercial franchises such as fast-food restaurants and convenience stores conduct extensive
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research and planning. Before proceeding, they assess local and regional demographics and
spending trends, future development plans for the area, and other pertinent issues. To avoid failure,
you must do the same for your business. Conduct extensive research to ensure that the time is right
and that the funds are available for expansion. Before expanding to another location, ensure that
the initial business is stable. The methodology details the research methods used and explained in
the study. The approach used in this activity report is deductive in nature. The sample size was
202. Data were collected using one set of questionnaires, as it was a practically feasible way to
gather information for the study from a number of participants over a short period of time (Khokhar
et al. n.d.).
3.2 SCALE AND MEASUREMENT
Four constructs used in the study were replaced by a five-point Likert scale. Usually, respondents
still feel comfortable completing the type of questionnaire that includes a Likert scale. The
statistical package for the social sciences (SPSS) was used for the statistical analysis. Four
constructs are used as independent variables and as dependent variables. A variable “Business
failure” is used as moderating variable which has a linked between the ineffective marketing
strategy and consumer awareness intentions.
4. CONCEPT FRAMEWORK
The conceptual framework is shown in the following figure 1. After that, a description that
supports the relational derivative of the independent variable and the dependent variable comes
out.
Figure 1: Conceptual Framework of Business Failure
4.1 INEFFECTIVE MARKETING AND BUSINESS FAILURE
The conclusion is that there is a positive correlation between lack of marketing skills and business
failure (P. L. Jennings and Beaver 1995).
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H1: ineffective marketing directly effect on business failure.
4.2 COVID-19 AND BUSINESS FAILURE
The COVID-19 pandemic is considered a black swan event that has affected all aspects of human
life. Despite the short duration of the pandemic – only four and a half months so far – a sizable
body of research on COVID-19 has been published (Beaver 2003).
H2: COVID-19 directly effect on business failure.
4.3 CONSUMER AWARENESS AND BUSINESS FAILURE
The first inter-organizational perspective looked at the key factors that contributed to the success
or failure of a partnership in to better understand the effects on consumer perception (LANE and
SCHARY 1991).
H3: consumer awareness directly effect on business failure.
5. DESCRIPTIVE STATISTICS
Descriptive Statistics Skewness and Kurtosis analyses are used for evaluating the uni-variate
normality of the adopted constructs. The results are summarized in below Table 1:
Table 1: Descriptive Statistics
Descriptive Statistics
N
Mini
mu
m
Maxi
mum
Mean
Skewness
St
ati
sti
c
Sta
tisti
c
Stati
stic
Stati
stic
Stati
stic
Std.
Error
Sta
tisti
c
Std.
Err
or
For a start-up or
any business in its
early stage, brand
awareness is more
important than
anything else.
19
6
1.0
5.0
4.15
3
-
1.30
4
.174
2.0
03
.34
6
Failure to
understand a
customer's or
consumer's
behavior is the
major reason of
collapse for
businesses today.
19
6
1.0
5.0
4.30
1
-
1.64
9
.174
3.6
64
.34
6
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80% Businesses
fail mainly due to
ineffective
marketing.
19
6
1.0
5.0
3.51
5
-
.349
.174
-
.56
7
.34
6
Marketing is the
most important
process in an
overall business
19
6
1.0
5.0
3.77
6
-
.434
.174
-
.64
2
.34
6
Marketing is the
most important
process for a
business to make
profit.
19
5
1.0
5.0
3.70
8
-
.392
.174
-
.20
7
.34
6
A business should
invest a good sum
of its budget on
effective
Marketing.
19
6
1.0
5.0
4.38
8
-
1.42
5
.174
1.8
00
.34
6
During Corona
virus, many retail
businesses closed
down. it might be
because of how
some businesses
failed to adapt to
the new
Ecommerce market
19
6
1.0
5.0
4.11
7
-
1.20
6
.174
1.9
42
.34
6
The present
pandemic corona
virus -19 has led to
business failure
because not to
maintain the
demand and supply
of market.
19
6
1.0
5.0
4.08
7
-
1.02
3
.174
.97
1
.34
6
New business fail
in the beginning
because they try to
do it all strategies
19
6
1.0
5.0
3.50
5
-
.517
.174
-
.37
1
.34
6
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New start up
done€™t have
proper information
that how to
maintain their
business
19
5
1.0
5.0
3.45
6
-
.554
.174
-
.17
7
.34
6
New start up fail
because they don't
have proper
direction
19
4
1.0
5.0
3.88
1
-
.926
.175
.24
4
.34
7
Valid N (list wise)
19
3
The above table shows that the highest Skewness level (SK=-1.64)
5.1 RELIABILITY STATISTICS
The two most important factors of precision are Reliability and Validity. Reliability is measured
by taking and analyzing several measurements on the same objects. Internal consistency of the
adopted constructs has been measured through the Cronbach’s Alpha. Summarized results are
depicted in the Table 2 below.
Table 2: Reliability Statistics
Cronbach's Alpha
Cronbach's Alpha Based on
Standardized Items
Number of Items
0.771
0.776
11
The above table shows that the highest reliability is 0.771
5.2 EXPLORATORY FACTOR ANALYSIS:
Here we will find the principal analysis which is a type of exploratory factor analysis. EFA being
explorative in nature was used for understanding relationships between the constructs and indicator
variables. Below lays the table 3 which shows results.
Table 3: KMO and Bartlett's Test.
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
.742
Bartlett's Test of Sphericity
Approx. Chi-Square
526.191
df
55
Sig.
.000
6. DISCUSSION / RESULTS
The main objective of conducting this study was to understand why businesses fail and in the
recent conditions, what are the major factors affecting the growth or downfall of businesses.
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Our major goal was to analyze how much of that failure is due to the ineffective marketing of such
businesses and their failure to identify and adapt to the recent marketing trends. The result we
reached based on different means of research conducted were the following:
The hypothesis that business fail due to ineffective marketing strategy proved to have a positive
relation as many businesses in the recent years, especially due to the growing digitalization, have
failed to succeed in the market due to not identifying the trend therefore the conclusion based on
the hypothesis has been failed to reject. The hypothesis that Covid 19 played a role in business
failure lead to the learning that over the period of time in Covid and the sudden distraught it brought
has affected the economy and the major economic powers of the world, significantly due to which,
many businesses have also suffered and therefore it has contributed as one of the major factors in
business failures in the past months resulting in our second hypothesis to be failed to reject based
on the present research and responses.
The hypothesis that businesses fail due to not recognizing and properly evaluating their
consumers demands and therefore planning their marketing and product development accordingly
has been failed to accept as the study led to the recognition that each product has its audience due
to which the product has been designed and therefore the major reason of a business’ failure isn’t
it. All the findings in the research are in accordance with the earlier studies.
7. CONCLUSION
A successful business is not something that can be left to chance or luck. From the start to the end
of your company's life cycle, you'll need a well-defined business plan, strategic operations, and
strong financial management. To promote their products, reach their target audience, and attract
new customers, every business needs a successful marketing strategy. Unfortunately, many of the
executives who set out to develop these plans fall short of their objectives. Given all of the factors
that go into any marketing team's planning and execution process, it should come as no surprise
that marketing plans fail for a variety of reasons. They aren't having to, however.
To conclude this research, we have highlighted a major concern over the latest business trends
and studies in our business sector and why our economic growth is suffering in the view of the
recent events. Major one that can be considered an environmental factor is Covid that we’re all
familiar with and which has caused major changes in the business practices of all industries in the
world. The marketing trends and practices have greatly been affected and reformed in the light of
it as the forecast seems to claim it to be a long-term condition with many side effects and long-
lasting effects on the world even after it. Another major hypothesis we successfully studied was
also a fairly recent one yet something that has grown largely due to the Covid factor and the recent
growing digitization of the world into global connectivity which is the new market trends and
failure to identify and adapt to them leading to many business failures and losses. Our third
hypothesis has been failed to accept although we believe it requires a more in-depth research in
later time to reach a more conclusive result over it to identify what percentage of role it plays in
business failures and potential success. We believe this study will serve as a great learning to
readers who wish to study the market and business trends of the recent years and help forecast the
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changing states and growing needs of the industry in order to better develop themselves and their
businesses for it.
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