CABUG-OS, Adrhyeni Kyle G. MGT 199.

1 (E2)
201809540

Review of Related Literature

COVID-19 was declared a pandemic by the World Health Organization on March 11,

2020. The COVID-19 pandemic posed a threat to poor nations, particularly the Philippines. The

Philippines was striking headlines in global news. In East Asia and the Pacific, the country is the

lowest performer in terms of COVID prevention and economic recovery. GDP fell by -0.7

percent in the first quarter of 2020. During the first quarter, the Philippines may even have

additional worries, such as the eruption of the Taal Volcano, which has impacted the livelihood

of the neighboring communities. The eruption, on the other hand, was dealt with in less than a

month. This does not escape the fact that the economy was already taking a hit since the first

virus transmission in the month of March. Medical supplies were in high demand as a result of

the sanitation and social distancing practices.The prohibition of sea, land, and air traffic follows.

As a result, the government encouraged people to work from home. The Philippines' key

industries were severely impacted by the continuous health-advised laws and government

policies.

In the aim of minimizing COVID-19 cases across the country, Enhanced Community

Quarantines (ECQs) and lockdowns were widely adopted. These sequences of lockdowns were

the main factors of the economy’s decline. The National Capital Region (NCR) had the majority

of cases at the onset of the pandemic. NCR is the country's political and economic center.

Despite occupying only 0.2 percent of the country's total land area, it contributes 37% of the

country's USD 390 billion national gross domestic product, according to the Philippines
Statistics Authority (GDP). As stated in the NEDA annual report of the year 2020, in most

regions of the nation, tight community quarantines were implemented, restricting movement and

resulting in a PHP 809 billion loss in family expenditure, or roughly PHP2.2 billion per day. This

amounts to a total income loss for the country of PHP1.04 trillion in 2020, or roughly PHP23

thousand per worker. According to the Department of Trade and Industry (DTI) Secretary

Ramon Lopez, 25.9% of firms surveyed, from June 4 to 17, said they had temporarily shut their

doors.

The most noticeable change in the economy is the internet revolution that has influenced

the whole corporate world. Consumers have turned to online shopping as a result of the

lockdowns. According to a recent Visa research, Filipino consumers find value in online buying,

with nine out of ten customers purchasing online at least once a month. Convenience at 58%,

price at 47%, and discounts at 46 % are identified as the main reasons for purchasing online.

Purchases were done with a touch on their phone for groceries, daily necessities, snacks, and

other items. The Philippines reacted to the market's digitalalization.

One of the affected services in the industry is the food industry. As preventive measures

to the COVID-19 virus, food services opted to resort to food delivery services. Customers relied

heavily on online food delivery and it has kept food services in operation preventing closures. By

2020, the revenue generated by online services has tripled. The fitness centers also struggled to

respond to the decline of gym-goers due to restrictions. To avoid shutting the centers down,

fitness centers advertise and run their programs online. Courier services have been one of the

busiest industries during the pandemic. Food, groceries, paperwork, electronics, clothing, and

other essential products are delivered by courier services in response to demand.

 Social media has become a critical communication tool for disseminating critical

information to the public. In January 2021, the Philippines had 89.00 million social media users.

Social media users in the Philippines accounted for 80.7 percent of the overall population

(Dataportal, 2021). In an article, brands can garner benefits on reaching their audience through

the use of social networking sites such as Facebook (Lipsman, 2012). The Facebook platform

may be used to advertise products, shop for commodities, and conduct transactions all inside the

Facebook platform. The power dynamics in the marketplace have shifted as a result of social

media. The main benefits of Social Media Marketing were identified in a report by Stelzner

(2009): 81 percent of businesses surveyed in this study indicated that their Social Media

activities generated more market exposure, 61 percent of them observed growing consumer

traffic, 56 percent of them noticed new partnerships, and 45 percent of the firms reported reduced

marketing costs. Social media may play a critical and decisive role here; they can be utilized as a

replacement for traditional marketing tools, allowing marketers to carry out a variety of

marketing activities more successfully and cost-effectively, frequently with the active

participation of customers (Constantinides, 2014).

Effective marketing methods are one of the most pressing concerns businesses face today,

especially since practically everyone is moving online. SMEs, on the other hand, have been

unable to leverage such advantages (Yoshino & Taghizadeh-Hesary, 2016). The COVID-19

pandemic has impacted negatively on small and medium-sized companies (SMEs), which

account for over 90% of all firms in Asia Pacific countries (UNDRR Asia-Pacific,2020). The

European Union defines SMEs as businesses with less than 250 employees. In the Philippines,

SMEs are extremely important to the economy. This industry is one of the main drivers of the

Philippines' economic development, accounting for 62.66 percent of total employment in 2020
(DTI). According to the Philippine Statistics Authority's 2020 List of Establishments, 952,969

(99.51 %) of the country's 957,620 businesses are MSMEs (PSA).

SMEs are already susceptible in the business environment, even before the pandemic.

Their lack of access to capital and market knowledge results in a technological and development

shortfall (Flamiano et al., 2021). Micro, small, and medium-sized businesses struggle to expand

and introduce growth inside themselves due to the restrictive business climate and issues

surrounding critical internal elements (AIM RSN PCC SME Survey, 2018). From an article

about Indonesian MSMEs it discussed how MSMEs' problems may be categorized into two

categories: internal and external. The primary challenge with MSMEs using E-Commerce is a

lack of funding from the owner or creator of the business. There are also constraints in terms of

personnel formal education, company management skills, and corporate understanding of

information technology. External issues include a hostile business climate, which makes it

difficult to get a company license and provides inadequate information. The growth of company

facilities and infrastructure is hampered as a result of this (Syuhada & Gambetta, 2013). As

Freeman, Carroll, and Hannan point out, competing with larger businesses stresses SMEs'

"liability of smallness" (1983).

In the study of Anjar Priyono, et al. in Department of Management, Universitas Islam

Indonesia, Yogyakarta, Indonesia (2020), “Identifying Digital Transformation Paths in the

Business Model of SMEs during the COVID-19 Pandemic”, one of the groups of SMEs they

interviewed are said to experience financial distress during the pandemic. The main priority of

SMEs in this group is avoiding immediate collapse by conducting revenue generation. Financial

strain is the central issue experienced by most SMEs in the thick of the pandemic. Accordingly,

SMEs are severely affected by reduced staff. This reduction in employees operating the business
was because of the inability of SMEs to continue to employ the employees. Only essential staff

were employed due to a shortfall in cash revenue (p.17). In another study conducted by Ahmad Z

S Assaf Al-Fadly (2020) on the SMEs in the hospitality and tourism sectors, he quoted that

revenues dropped to 30-50% during the lockdown as people have refrained from door deliveries,

bookings were canceled, and customers were refunded. Government health protocols and

measures have also restricted business operations, resulting in huge losses as cash flows had

come to a halt. The reduced business operations and work hours have further affected

productivity. The coordination between the players in the supply chain was challenging to

maintain. The effect of the lockdown was that many other interdependent businesses had to

follow (p.17).

According to Al Fadly (p.18, 2020), one way to bounce back diminishing business was to

redesign the market strategy. Most businesses introduced more sale discounts and complements

for their customers, which included brochures with safety measures to follow during the

pandemic. Another option to rebound the firm was to create new market strategies to work

remotely with an online presence and digital solutions. Some SMEs had already implemented

digitalization in their sales function before the pandemic, and when the pandemic emerged, it

extended this adoption to other functions. The digitalization of business processes, for example,

collaboration with digital shopping platforms such as Lazada, has driven the market forward and

encouraged other functions to adapt and adopt digital technologies (p.12). Among the SMEs that

Al Fadly studied were keen to conduct sales, advertising, and business development activities

remotely. The use of social platforms, such as WhatsApp and portals, SMEs were able to provide

their staff with the most up-to-date information on state regulations, as well as allow clients to

place an order and pay using mobile apps.. However, there are still SMEs that are left behind
even with the emergence of digital technologies. The two focus groups of SMEs that Prinoyo et

al. (2020) studied are still at an early stage of adopting digital technologies. These SMEs lack

digital literacy but are affluent in social capital. In response to the customers' increased digital

literacy during the pandemic, SMEs in these groups emphasize on reshaping the customer value

proposition because the priority of enterprises during this crisis was on how to survive by

maintaining stable sales volumes.

In the Asian scene, the study of Ahmad Anshorimuslim Syuhada and Windy Gambetta

(2013), revealed that problems of MSMEs in Indonesia in E-Commerce could be divided into

two factors: internal and external. Employee formal education, business management skills, and

the mastery of information technology in enterprises are limitations that limit MSMEs in terms

of business network and market penetration in this area. Limited technological infrastructure was

one of the factors that inhibited the development of marketing of MSMEs. Syuhada and

Gambetta determined that MSMEs during that time of study do not consider the use of

information technology and digital tools expensive but instead find it complicated to understand

and operate. What they need is a technological or digital platform that is more commonly used.

This fact also led to why most MSMEs already have a Facebook Fan Page and are interested in

the concept of Facebook Commerce as they think that Facebook can increase buying interest

from prospective buyers (p.5).

The study of Syuhada and Gambetta may not be applicable in some aspects as SMEs’

setting, and market environments have changed compared to the current pandemic settings, thus,

deviating from the said study, the systematic review of Dubbelink et al. (2021) discussed how

businesses adapt their social media marketing strategy amidst the COVID-19 pandemic. Existing

business resilience tools such as traditional business continuity plans and business recovery plans
mainly address natural hazards or operational risks, local and limited scope. Health-related

hazards seldom get reflected in their risk registers (UNDRR Asia-Pacific, 2020). For firms,

particularly SMEs, to survive the shock brought by COVID-19 and keep their business afloat,

they must adapt their operations and marketing and functional procedures.

As claimed by Dubbelink et al., digital marketing has been shown to positively affect

purchase intention, in which the perceived value of a brand is a central mediator. It is even said

that investing in the construction and refinement of brand equity through social media marketing

can result in positive consumer response, i.e., willingness to pay more and increase brand loyalty

(p.12). SMM has an impact on brand image, which results in higher trust. The emergence of both

the pandemic and digitalization has put greater emphasis on the adaptation of digital channels

such as online branding in business’ marketing initiatives which increase consumer trust,

purchase intentions, and brand awareness.

Part 3

One of the most challenging micro-environmental variables that small and medium

enterprises SMEs are faced with is marketing, and more particularly branding. According to a

study by Cronin-Gilmore (2012), one of the top reported reasons for small business failure was

inadequate marketing. In 2012 small businesses numbered close to 23 million were considered

vital to their communities. Cronin-Gilmore (2012) argued that small business marketing

strategies should be studied through case analysis, as it was both complex and sensitive to

connect with the individuals operating those small businesses. Each situation required the

researcher to understand the business operations, capabilities of the employees, needs of the
owner, demands of the consumers, target market, competition, and the ability for the business to

maintain and enact a marketing strategy.

Zontanos and Anderson (2004) also believe that for a small business to increase

profitability, it must concentrate on marketing through customer retention via relational

marketing. Small businesses that fail to connect with their consumers through relational

marketing and branding would lose out to others who succeeded in making connections

(Zinkhan, 2002). One of the ways that small businesses connected to their consumers in this

digital era was through social media (Taneja & Toombs, 2014). What makes the social media

portion of marketing so challenging for small businesses is the educational component of it and

the lack of training, prior experience, or know how these business owners may have with

computing (Taneja & Toombs, 2014).

Zontanos and Anderson (2004) also found that even though the entrepreneur was not

notably different from the entrepreneur’s competitors, the entrepreneur’s ability to build

relationships with consumers allowed the entrepreneur to increase business’ revenue beyond

expectations.

In addition to this, a research conducted by Cant, et al. (2013) identified that SMEs are

aware of the importance of branding; however, some SMEs do not have the necessary resources

available for it. The challenge now is to improve the skills and capabilities of SMEs to ensure

effective branding, which ultimately influences their success, as they play a vital role in the

economy.