Determinants of Direct Marketing Strategy Adoption by Agro SMEs’ in the Greater Accra Region, Ghana

Abstract

The study investigates the determinants of direct marketing strategy (DMS) adoption and its effect on gross sales of agro SMEs in the wake of the government’s industrialization efforts. A multistage sampling was used to select 120 agro SMEs in the Greater Accra Region of Ghana, and the study took place between August 2011 and June 2012. Out of the 120 Agro SMEs’ sampled, 39 firms were involved in processing level 1, 39 firms processing level 2 and 40 firms in processing level 3. A t-test was used to test the means of gross sales over the study period, of DMS adopting firms and non adopting firms. The double hurdle approach was used first to determine factors that influence SMEs adoption of DMS and second, to assess the effect of adoption on the gross sales of adopting firms. The results showed that DMS enhances growth in sales, since DMS adopting SMEs increased their gross sales significantly as compared to non adopting SMEs. The factors identified to influence the adoption of a DMS positively were, the processing level of product, location, organised structure of firm, type of packaging; whilst free zones status, use of wholesaler/distributors and internet use, negatively influenced adoption. The impacts of processing level engaged in, age of owner, packaging, and organized structure of firm; on the gross sales from DMS were estimated. Conclusion: In conclusion, the adoption DMS enhances growth of Agro SMEs’, when it is undertaken by organized firms involved in level 3 processing, located in urban areas. The study, recommends among others, encouragement in the adoption of DMS by stake holders such as MoFA, MoTI, NGOs, and DMS specific training should be given to agro SMEs.