MARKETING - MYTH, PHILOSOPHY AND BUSINESS PRACTICE

DR MUMTAZ M MALIK

Senior Lecturer, Leeds Business School Leeds Metropolitan University, Leeds, United Kingdom

ABSTRACT

This paper presents the findings of a survey which was conducted in the Leeds Metropolitan area tojind out why companies are not marketing orientated. Our results show that although most managers pay lip service to the marketing concept their companies on the whole remain product orientated. Most claim they undertake some kind of planning but the level of sophistication of this process remains questionable. Very few use market research and rely on personal selling to market their products. Many companies do not conduct PEST, SWOT and competitive analysis on a regular basis. Own product analysis, product portfolio analysis and product life cycle analysis do not fare any better. This lack of marketing orientation is largely attributable to two factors -firstly that the marketing function is being undertaken predominantly by non-marketing people. When there is a marketing structure together with a market specialist within the organisation, they tend to concentrate more on specialist Junctions such as advertising, market research, public relations and market planning and far less on pricing, selling and new product development. This challenges the myth that marketing is the sole responsibility of the marketing function, and the management of the 4 "P"'s the exclusive domain of the Marketing Manager/Department. Secondly, the lack of marketing orientation is also due to the fact that the majority of people performing marketing tasks and having responsibility for implementing the company wide marketing concept have no formal marketing training. The paper concludes that marketing orientation can only take place when those responsible for running the organisation and performing the marketing functions are properly trained and appreciate the importance of marketing for the long term survival of their business.

Correspondence Address: -

Dr Mumtaz M Malik, Senior Lecturer - MarketingLeeds Business School, Leeds Metropolitan University,

4 Queen Square, Leeds, LS2 8AF, United Kingdom

Tel No:- (0532) 832600 Ext 4439, Fax No:- (0532) 833227

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1. INTRODUCTION

There has been considerable debate about marketing, marketing concept, marketing orientation, marketing philosophy and marketing function. Over 130 definitions of marketing have been so far published.

But what does marketing mean to people who have to practice it? A pilot study conducted at Leeds Business School among 15 local companies had revealed that many companies did not appear to be taking the role and importance of marketing very seriously. Some companies had visible marketing trimmings planning, but in real terms were still product orientated. Marketing as a concept and function had fairly low priority. Most of the respondents thought marketing was to do with "sales" or advertising.

Also, we found that increasing level of business failures or poor performance were being explained mainly due to "loss of market". How had these businesses reached the door of bankruptcy, and more importantly, how many are likely to follow a similar path?

This research project was undertaken tor-

la). Shed some light into the myths and realities of marketing both as a function and a management concept.

(b). To ascertain the extent of this lack of marketing orientation among the companies and develop a practical framework to encourage marketing orientation.

2. LITERATURE REVIEW

Various studies have attempted to link the application of marketing to a better corporate performance. Doyle (1989) cites Webster's study which was conducted among 21 of the largest US corporations and found "chief executive belief is that marketing is the most important management function in their business". Peter and Waterman (1982) found marketing orientation as one of the key characteristics of successful companies: "they learn from the people they serve, many of the innovative companies got their best product ideas from their customers".

Limfreicht and Hays (1982) came to a similar conclusion about successful German companies. Parkinson (1982) contrasted British and West German machine tool industries and concluded: "in the German companies in the sample, the customer's involvement in the product development process was seen as axiomatic if the company wanted to be successful. In the UK companies, the prevailing attitude was not to involve the customer in the process until the product was put on the market". Pascall and Athes (1981), Ohmae (1982) and Ouchi (1981) took customer orientation as a key to understanding how successful Japanese companies organise themselves and operate.

Carson and Cromie (1989) looked at 68 small firms and concluded that "business proprietors of small firms have quite a different approach to marketing compared to what is displayed by professional marketing managers in large companies". Their study shows that two-thirds of the 68 companies adopt a non-marketing approach to marketing planning, a third were "implied marketers" and very few "sophisticated marketers". Cohn & Lindbore (1982) conducted research in 1972 where small

002.

business owners and managers differ from professional marketing managers in large companies. They note that the former tend to hold negative attitudes to marketing, perceive marketing as a cost, treat distribution and selling as an uncontrollable problem, and, most significant, believe that each case is "so specific that it cannot be approached using general rules". Gaedeke and Tootelian (1980) comment that the owner of a small business needs to be "his own expert" in many areas as he cannot employ specialists like large companies.

Hooley, Lynch & Shepperd (1990) study is a step in the right direction. Their survey covered 1380 chief executives of companies and found that "there is clearly a confusion for many about what marketing is and does". They found that 14 % of the companies in this study could be classified as "product orientated", 26 % selling orientated" and 60 % as "marketing orientated". In terms of using what is called the "trimming of marketing" they found that 47 % use SWOT analysis, 33 % product life cycle, 17 % conduct marketing audit and 9 % use Boston Consulting Group Matrix. In terms of planning, 48 % try to predict and adopt to the situation, 38 % undertake "scenario planning" and 10 % "wait and see" and then do something. 23 % do annual budgeting. 21 % prepare annual marketing plans and 49 % prepare annual marketing plan and long range plan. Their main conclusion was that "marketing should be viewed not as a merely departmental function but more crucially, as a guiding philosophy for the whole organisation. Our evidence points to improved performance among companies that adopt this wider approach to business".

Muller-Heumann (1993) and his team in New Zealand have also started an empirical research. Their survey covers 414 chief executives of companies with more than 50 employees in New Zealand. He concludes "from the perception of CEOs many marketing activities are shared to different degrees and with different responsibility patterns between marketing managers and CEOs. It challenges the orthodox view that marketing managers are entirely responsible for planning, development, implementation and control of marketing mix."

These various studies have tended to concentrate on either particular industry, largest companies or the most successful ones. Hooley, Lynch and Shepperd (1990) have attempted a boarder approach of the UK market and their random sample consisted of 5,100 chief marketing executives, of which 1,380 actually responded.

But in practice who is responsible for carrying out the marketing related functions? Is it the marketing manager or the marketing department? Or is the marketing related functions being undertaken by other members of the management in what Gummesson (1991) calls "part-time marketers"? How is marketing actually being practised by these companies? Is there a gap between theory and practice?

We at Leeds Business School have undertaken a comprehensive research program to shed some light into the myths and realities of marketing as a function and as a management concept. This paper presents results of our findings.

3. METHODOLOGY

Rather than to look at a particular industry or select a nation or region wise sample, we at Leeds Business decided to concentrate on "our own back yard" ie our immediate catchment area. It was felt that research with a micro focus, ie city focus, would provide the feedback which can be used to develop solutions to assist the needs of businesses in the catchment area. It was also felt that the "city" approach could be extended to other parts of the country and even internationally for direct comparative studies in the future.

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Therefore all limited companies (N = 992) with a yearly turnover of over £0.5 million in Leeds Metropolitan area (LS post code) were targeted for this study. A detailed questionnaire was sent by post to the census.

3.1 RESPONSE

A response rate of 21 % was achieved with two mail shots over a period often weeks. Leeds is in the North of England and has a good mixture of manufacturing and service industries. It is being developed as a major regional business centre.

The coverage achieved in our survey is a fairly good representation of the type and size of business in the area.

4. RESULTS OF THE SURVEY

4.1 WHAT IS MARKETING?

We asked the people who are engaged in business to tells us what they thought "marketing" was. They were given a list of six statements but were also encouraged to give their own version if they felt any on the list were inappropriate.

Most (65 %) agreed that "marketing is to find out what customer wants and then provide it". 12 % thought "marketing is about finding new customers to sell your product to", 4 % felt "marketing is another fancy name for selling" while 3 % thought "marketing is advertising". 11 % gave their own version - a sample of their answers is reproduced below to illustrate the diversity of views:-

"Marketing controls and guides the promotion of the company and it'sproducts."Managing Director

"Marketing is the business" Development Officer

"Marketing involves advertising and promoting the product range as well as investigating new approaches to their functions."

"Marketing is the management process responsible for identifying, anticipating and satisfying customer demands profitably." Marketing Director

4.2 PRODUCT ORIENTATION VERSUS MARKETING ORIENTATION

Most of the respondents were aware of the marketing concept and what it entailed, ie finding out what the customer wants and them supplying it. However, this concept was not being translated into actual practice by most of them. In the survey we asked the respondents to tell us, unprompted, what business they were in today and what business they had been in say five years ago. It was hoped their answer would reveal whether they were paying lip service to the marketing concept or were they genuinely committed to marketing philosophy, ie we are in the rail road business versus we are in the

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transportation business. By looking at two different time periods, it was felt that any progress made by companies could be detected.

It was found that 84 % of the companies described their current business in product manufacturing and supply terms. A further 11% described their business in terms of selling products/services. Only 4 % of the enterprises explained their business in marketing terms. There was virtually no change over the five year period.

Levitt (1962) described "the seller who concentrate on the product instead of customers needs are said to suffer from market myopia. In our survey we found that 96 % of the companies seem to be suffering from this syndrome as can be seen from the cross-section of responses below:

FIG 1 TODAY VERSUS 5 YEARS AGO

Today:- "Consulting Engineer" Five Years ago:- Same

Today:- "Design and manufacturing of work and tool handlingequipment"

Five Years Ago:- Same

Today:- "Energy" Five Years Ago:- "Energy"

Today:- "Advertising" Five Years Ago:- "Advertising"

Today:- "To provide a quality water treatment service toindustry"

Five years ago:- "Selling Water Treatment chemicals to industry"

Today:- "We are body builders supplying the market with an extremely wide range of refrigerated vehicles as well various specialised vehicles to other businesses"

Five years ago:- "Similar to today but less wide ranging"

In a further attempt to gauge the extent of their commitment to market orientation, we asked them directly as how they practised marketing. They were given three statements and were asked to position themselves as to how they sold their products/services.

It was found that 57 % "sell their existing/new products to whoever will buy them". 23 % of the companies said they "attempt to serve a wide range of markets/needs with equal effectiveness".

The remainder 20 % claim that "having identified market needs, they focus upon specific target markets".

The answers to this question reveal the lip service respondents seem to be paying to marketing; 65 % believe that "marketing is to find out what customer wants and then provide it". However, when it comes to application of the concept, in practice, 57 % of them try "to sell their products to whoever will buy them".

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4.3 COMPANY MISSION

76 % of companies say they have set a "mission" for themselves. What is this mission? 93 % of the companies actually reproduced the mission statement for us. The analysis of these statement however, show that 61 % of them are "very general/very broad" in nature while 37 % were "specific". A cross section of these statements is reproduced below:-

"To stay in business"

"To make money"

"To make profit by satisfying customer needs"

"To be the best in the business"

"To survive recession and differentiate oneselffrom competition"

"To maintain market share in one sector and expand in other major industrial sectors"

"To become the most profitable company specialising in ..."

"complete customer satisfaction with regard to quality through the profitable development of markets with products"

"To be Britain's best value fresh food superstore serving ordinary working people and their families"

"To be recognised as one of the UK's premier design consultants"

"To maintain profitability and increase turnover each year"

"To be number one supplier in Europe for each market area" etc

When these results are cross analyzed by type of goods produced, number of people employed or markets serviced if was found that there was a higher tendency among "industrial goods" companies to have a "mission statement" than "consumer goods" enterprises. The tendency to have a mission statement was also found to be higher among companies which were "international" in operation and companies with more than 500 employees.

What emerges is that missions set by companies are mostly, what Wilson and Gilligan say are "vague, unrealistic, over ambitious or simply public relations exercise". Most companies do not realise that mission statement should "provide vision and direction for the company" (Kotler 1991) or that "it should clearly define the business domain, and distinctive competencies of the company" (McDonald 1989).

4.4 OBJECTIVES OF THE ORGANISATION

What kind of corporate objectives have companies set up for themselves? They were given eleven statements and were also asked to write down their objective if it differed from our list. As can be seen from the table below, most want to differentiate the product and make it different from that of the competition. Most also want to grow in the market they are already in. Half

DOG.

wanted to identify a niche in the market and focus their efforts to satisfy the needs of that market. Taking the business away from the competition is preferred by 44 % while 40 % want to "maintain a lead on their competitors".

FIGURE 2 COMPANY OBJECTIVES

JiL'Sa:^.illllli^^

To differentiate our products from others in such a way that a customer feels he is getting something special from us, which he cannot get from our competitors

Grow in the market we are in

To identify a niche in the market and focus our efforts to satisfy the needs of this market

Grow by taking business away from the competition

To concentrate on developing new customers

To maintain a lead on our competitors

Grow by diversifying into other markets

To constantly innovate new products to keep a lead on our competitors

To be the lowest cost producer

Build up market share even at the expense of short term loss or low profits

Stay as we are because that is what our customer wants us to be

Other

68 %

62 %

52 %

44 %

42 %

40 %

38 %

30 %

15 %

11 %

2 %

3 %

"Growth by diversification" is a goal for nearly two-fifths of the companies. "To be lowest cost producer" is mentioned by only one in every seven.

11 % take a long term view of their operations. They want to build up market share even if it means short term loss or low profits.

When the objectives are cross analyzed with other demographic like type of business, no of employees, size of turnover, geographical spread of operation, the picture to emerge is as follows:

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FIGURE 3 OBJECTIVES OF COMPANIES

..: ' ...-.-••'^Slm Consumer- ~W3& Goods only f|||

industrial : : :i 111

."Mix :: 111

"Service : |||

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: $«- ; -lllllManufacturing

Business/Professional

Retail/ ::i| Distribution HI

"Private ?*. s ;.; -; ..:;;;:

Public : ; : ; 1 : : ;|;|

BASE

27

72

23

60

37

20

63

62

23

43

66

19

72

39

23

37

72

82

28

47

119

41

Differential products

59

65

61

75

76

80

56

69

74

74

68

63

65

74

83

62

67

65

64

64

67

62

markets

llliliil

33

64

74

67

46

75

65

61

70

67

61

63

63

67

52

62

60

60

64

57

59

57

liiii!lilllll

15

24

9

10

5

11

19

43

7

12

11

22

38

13

11

6

26

7

8

14

14

products

33

36

17

23

16

55

27

37

22

14

32

32

37

28

52

30

33

41

29

25

29

29

customers

26

36

56

52

30

50

51

42

30

33

42

58

42

33

48

46

44

37

61

38

34

38

Diversify

7

46

43

38

30

35

32

35

65

30

38

32

44

49

17

51

29

40

54

28

36

33

business from . competition

30

47

61

43

35

40

46

39

70

47

38

47

46

64

39

35

44

48

36

49

42

40

Market

4

14

22

7

2

5

14

10

22

2

11

21

14

12

4

13

11

18

7

4

10

10

"Product differentiation" is most frequently mentioned by "service" companies and those with a yearly turnover of £ 11-20 million.

"Grow in the market we are in" is cited most frequently by "mix" producers and companies with a turnover of over £20 million.

"To be lowest cost producer" seems to be priority for "industrial goods" producers, manufacturers and those with a turnover of over £20 million.

"Grow by diversifying into other markets" is mentioned more by industrial goods producers than consumer goods manufacturers.

"To grow by taking business away from the competition seems to be more important in companies producing industrial and consumer (mix) goods. The same seems to be true for companies with turnover of over £20 million.

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"Product innovation" seems to be equally important to "consumer goods" companies and industrial goods companies.

Producers of "mix" products head the list as having "to concentrate on developing new customers followed by "service" companies.

Taking a longer term view seems to be more common in "mix" companies, those employing more than 500 people and companies operating in the UK/EC markets.

What emerges is the philosophy of immediate survival. Very few companies seem to be bothered with taking a long term view about their business. This is consistent with their "mission statements" ie "to survive the recession". Obviously the objectives reflect the current economic environment in the UK and the preoccupation of most businesses is "getting through the recession without going under".

4.8 PLANNING

What kind of planning is undertaken by business enterprises? We found that 69 % of the companies say they prepare a formal business plan while for 16 % planning is restricted to preparing annual budgets.

46 % of the companies claim they prepare detailed yearly marketing plans. 29 % go a step further and prepare long range (3 year +) marketing plans.

55 % of the companies say they use "planning as a management tool to control and monitor our performance". 50 % try to predict the future and then adopt to it. 44 % believe that planning is essential and without it business cannot survive.

Only 9 % of the companies said they "wait and see what happens and then react to it"

Out of the 143 companies who prepare a formal business plan, 52 also prepare a detailed yearly marketing plan - that is 36 %. Out of 143 companies, 39 (ie 27 %) not only prepare formal business plan and yearly detailed marketing plans, but also claim to prepare "long range (3 year + )" marketing plans.

The companies who are preparing formal business plans are obviously more committed to the concept of planning and contribution of planning to business survival. We found that out of 143 companies who say they prepare business plans, two-thirds say that "they use planning as a management tool to control and monitor their performance". 62 % are of the opinion that "without planning business cannot survive"

We also found that the process of preparing a formal plan seems to be more common among "service" and "industrial" goods companies. Preparation of detailed marketing plans and long range marketing plans (three years plus) also follow the same pattern.

The larger the turnover, the greater the practice of preparing a formal business plan, long range marketing plans and detailed yearly marketing plans. The same is true for public limited companies.

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FIGURE 4 TYPE OF PLANNING BY COMPANIES

BASE Prepare detailed marketing plans

27

72

23

60

48

72

56

77

18

19

13

15

15

31

22

32

37

43

35

52

37

20

63

62

23

46

85

59

76

100

14

10

22

18

8

8

20

29

32

61

19

55

40

53

74

43

66

19

72

67

61

84

74

9

18

11

22

23

24

32

38

39

23

37

72

84

74

76

68

46

13

35

26

64

56

43

37

22

7

15

119

42

24

31

But how sophisticated is this process of planning, implementation and control? The research looked at specific marketing tools and attempted to find out how they were being used by the enterprises. It was hoped that the use of these nuts and bolts of marketing would provide an indication of how marketing orientated the companies really were. The following uses of marketing tools were examined:-

4.6 THE USE OF ANALYTICAL TOOLS

4.61 Role of Pest (Political, Economic, Society and Technology) Analysis

24 % of the companies scan the political environment on a regular basis. Thirty per cent examine the economic policies and economic conditions on a regular basis to see what threats and opportunities are

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there for them. A third claim they keep track of what is happening in the society they operate in as they believe changes here could affect their business. This trend is reversed where technology is concerned. Three-fifths keep abreast of technological developments which are likely to affect them and their customers on a regular basis. Most of the companies are ignoring the macro factors they are operating in, perhaps in the belief that they have little power to influence them.

More producers of industrial and consumer goods (mix) companies and "service" companies scan the political environment on a regular basis to see how it would affect them than industrial or consumer goods producers. This practice seems to be prevalent also in companies employing more than 500 people and those whose turnovers are over £20 million.

Economic policies and economic conditions are regularly examined to see what threats and opportunities are there by more consumer goods companies than industrial goods producers - the same is true for companies employing more than a hundred people and companies with £20 million plus turnover.

More "mix" and "service" companies and those with larger numbers of employees and higher turnover regularly keep track of what is happening in the society they operate in as they believe changes here will affect their business.

Developments and changes in technology seem to be more important than what is happening in politics, economy or society. Virtually all companies show great deal of interest in keeping abreast with technological developments which affect them and their customers.

4.6.2 Role of Swot (Strengths, Weaknesses, Opportunities and Threats) Analysis

52 % of the companies regularly undertake an analysis of what and where their strengths are whilst 50 % do the same to find out their weaknesses.

63 % of the companies claim they regularly analyze and identify where the opportunities lie for their business. 57 % do the same to identify "threats" to their business.

More companies engaged in "services" and "consumer goods" seem to undertake SWOT analysis than "industrial " or "mix" companies on regular basis. This tendency is also followed by larger enterprises. What was surprising to find was that more companies "operating on regional and UK/EC" basis undertook SWOT analysis than those who cover either UK or "international" markets.

4.6.3 Role of Competitive Analysis

80 % of the respondents say that they monitor what is happening in their industry on a regular basis whilst 72 % keep a close eye on their competition. However, only half analyze their competitors' products regularly. Two-fifths examine their rivals' prices but a third analyze their competitors advertising on a regular basis. A small number

(18%) claim that they analyze their competitors plans on a regular basis.

To "monitor what is happening in our industry" on a regular basis seems to be a wide spread activity.

More industrial goods producers regularly keep " a very close eye on their competition" than "consumer goods suppliers or "service" companies. More employees they employ or higher the turnover, more likely the companies keep a watch on competitors on a regular basis.

How about analyzing competitors products, their prices, advertising and plans? More "consumer goods" companies analyze their competitors' products regularly. Also more "industrial goods" and "mix producers" analyze the competitors prices, their advertising and competitors plans on a regular basis than "consumer" goods or "service" suppliers.

4.6.4 Role of Product Analysis

58 % of the companies regularly analyze their products in relation to their customers' wants. 50 % analyze their products in relation to what their competitors are offering on a regular basis.

Only 15 % claim they use product life cycle concept (PLC) on a regular basis to see which stage their product has reached. A further 38 % claim they screen new product ideas regularly.

43 % review their product portfolio regularly. 35% evaluate their product mix regularly against the market potential

42 % of the companies say that they undertake, on a regular basis, product profitability improvement analysis, while 23 % review brand positioning regularly.

More consumer goods companies undertake on a regular basis "own product analysis" in relation to their customer wants than industrial, mix or service companies.

More consumer goods companies and industrial producers undertake regular analysis of their products in relation to their competitors than service providers or mix producers.

Product life cycle idea is used more regularly by consumer goods companies than industrial goods producers.

Consumer goods producers also screen their new products on a regular basis than industrial suppliers.

Product portfolio review is undertaken regularly by more consumer goods suppliers than industrial, mix or service providers.

Profit improvement Analysis is conducted on a regular basis by more consumer goods and mix suppliers than by industrial or service providers.

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Larger companies also tend to undertake various type of product analysis more regularly then smaller ones as can be seen from FIGURE 5, below.

FIGURE 5 OWN PRODUCT ANALYSIS ON A REGULAR BASIS

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Leas than 20 employees

21-40

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101-500 si

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56

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58

58

39

39

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45

38

57

65

46

45

47

58

62

55

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44

53

41

51

46

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lliill22

13

18

12

13

20

18

6

30

17

7

21

29

18

5

16

20

15

17

12

12

19

liiiti liilil63

35

39

24

42

25

29

48

41

41

31

42

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33

56

32

41

31

42

30

55

iBii70

37

39

42

33

35

41

46

59

37

42

37

46

57

46

49

38

38

58

42

38

53

nu57

27

18

44

39

32

30

27

66

42

29

42

34

48

3O

30

35

32

46

24

31

31

Improvement

52

31

58

44

33

53

42

31

30

49

28

56

41

39

36

48

46

42

30

35

40

44

positioning

35

14

29

21

20

42

20

17

32

24

14

5

34

27

15

30

24

-

-

-

22

24

4.6.5 Role of Advertising and Sales Promotion

The majority of the companies (82 %) use personal selling to persuade the customers to buy their product instead of rivals. Nearly 40 % use advertising and PR on a regular basis, 34 % use direct mail shots regularly, and only a third use exhibitions to promote their product. The majority (75 %) say they use brochures/leaflets to promote their products regularly. Only 16 % of the companies regularly use "sponsorship" in their communication mix.

Q1.3.

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Personnel selling is used on a regular basis more by industrial goods companies to persuade customers to buy their products instead of competitors than "consumer goods" companies or "service" companies.

Service companies seem to use public relations and direct mail on a more regular basis than others. Industrial companies tend to use less tele-marketing and more of exhibitions, brochures and leaflets in their selling effort.

4.6.6 Role of Pricing

Half the respondents use pricing as a weapon to compete, to win new customers and hold on to existing ones. Two-thirds claim they use pricing on a regular basis to position their product in the market place.

Companies engaged in retail/distribution business and manufacturing of products use pricing more regularly to hold on to their existing customers and also to win new customers. "Consumer goods" companies use pricing more regularly to position their products in the market place than "service", "mix" or "industrial" goods producers.

Companies operating in international markets also tend to use pricing more regularly as a weapon to compete, win new customers, hold on to existing customers and position products than companies who are dealing on UK basis.

4.6.7 Role of Marketing Research

Only a fifth of the companies use marketing research on a regular basis to find out who their customers and competitors are. 28 % regularly conduct market research to see if their product is meeting the needs of their customers. 19 % regularly conduct research to see who their competitors are and what they are up to. 14 % use research to find out if they are using the right channels to distribute their products on a regular basis, while 13 % conduct research to know if their advertising is working.

FIGURE 6 ROLE OF MARKETING RESEARCH

FIND OUT CUSTOMERS PRODUCT MEETING NEEDS OF CUSTOMER

Regularly

ADVERTISING IS WORKING

Regularly

BASE = 200 COMPANIES

COMPETITORS

Jo Need^_ —— | — /^ ^XRegularly

BASE = 204 COMPANIES

RIGHT CHANNELS

——— Regularly No Need/'\ ^N^

BASE =197 COMPANIES

TEST NEW PRODUCTS

Regularly

/< — r\

BASE = 197 COMPANIES BASE =196 COMPANIES BASE = 195 COMPANIES

Only 11% use research on a regular basis to test new products. Consumer goods and service companies are more likely to conduct market research on a regular basis than industria or mix producers to find out who their customers are. Larger companies and public limited ones are more likely to use market research regularly than smaller enterprises.

Fewer industrial goods suppliers conduct market research on a regular basis to see who their competitors are and what they are doing than "consumer" or "service" companies.

Fewer industrial goods companies conduct market research on a regular basis to find out if their product is meeting the needs of their customers than "consumer goods", "mix" or "service" companies. More industrial goods companies undertake market research "from time to time" than either "consumer goods" or "mix" companies.

76 % of the industrial goods companies and 68 % of the consumer goods have never or consider there is no need for them to use marketing research to find out if their new advertising activity is working or not. 66 % of the service providers fall into the same category.

The larger the company the more the tendency to use marketing research to test the effectiveness of advertising.

66 % of the "industrial" companies and "consumer goods" companies consider there is no need for them to use marketing research to test new products before launching them. 62 % service companies and 40% of "mix" producers fall into this category.

Larger companies use market research to test new products more regularly than medium or smaller companies.

68 % of the consumer goods companies have never conducted, and indeed, consider there is no need for them to conduct marketing research to see if they are using right channels of distribution. 57 % of industrial goods and 48 % service enterprises fall in this category.

The larger the company the greater the tendency to use marketing research on a regular basis or from time to time to determine the suitability of channels of distribution for their products/services.

5.0 RESPONSIBILITY FOR MARKETING FUNCTION

55 % of the companies do not have a marketing department although 90 % have a sales function. Where there is a marketing department, the tendency to combine sales with marketing is greater.

Who has the responsibility for performing the marketing tasks?

The traditional view of practice of marketing seems to be that marketing is practised in companies when there is a marketing a person/department in a company; and marketing revolves around the management of the marketing mix - the classic four

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"P"s. Also it is the responsibility of the Marketing Manager/Department to manage the four "P"s. In our research we have found that this does not seem to be the case.

What emerges is that marketing tasks are being performed more by the general management and sales function rather that the marketing personnel as can be seen in FIGURE 6, below.

FIGURE 6 DIRECT RESPONSIBILITY FOR MARKETING FUNCTIONS

168 81 % 4496 4496 5796 36% 49% 71 % 52%

130 44% 94% 37% 36% 39% 39% 59 % 50%

80 80% 45% 80% 74% 76% 53% 56% 61 %

34 18% 9% 12% 9% 27% 91 % 27% 24%

30 20% 30% 20% 13% 20% 80% 40% 33%

24 58% 16% 63% 62% 71 % 13% 25% 29%

19 16% 21 % 21 % 21 % 32% 47% 42% 39%

In 80 % of the companies who participated in our survey, the owner/ Managing Director/General Manager was responsible for marketing in 81 % of the companies. He was responsible for pricing in 71 % of them, followed by Public Relations (57 %), marketing planning (52 %), new product development (49 %), selling and advertising (44 % each) and marketing research (36 %).

The Sales Director/Sales Manager was the next heavily involved person in marketing related functions - heading the list was pricing (54 %), marketing planning (50 %), followed by marketing research and new product development (39 % each), advertising (37 %) and public relations (36 %).

38 % of the companies had a Marketing Manager/Director. Obviously he was responsible for the marketing activity in all of them, but what were the specific marketing related activities was he responsible? We found, that he was responsible mostly for advertising (80 %), marketing research (76 %), public relations (74 %) marketing planning (61 %). He was responsible for pricing in only 5.6 % of the companies, new product development, 53 % and selling -the least (45 %).

In some companies, they did not have a Marketing Manager but a marketing Services Manager/Director. This function mainly concentrated on marketing research (71 %), advertising (63 %), and public relations (62 %). His involvement in marketing planning, pricing and selling was not significant.

DIG.

5.1 Responsibility for Marketing Functions when there is Marketing Department

Even when there is a marketing department in the company, there are other non-marketing people who are involved in marketing and marketing related functions. (FIGURES)

In our survey, we found there were 90 companies (45 %) out of 211 which had marketing departments. The Marketing Manager/Director was responsible for mostly advertising, marketing research, public relations and marketing planning whilst new product development, pricing and selling seem to be the activities least handled by the Marketing Manager and marketing departments.

The General Manager/Managing Director was also found to be involved in marketing activities even when there was a marketing department in the company. His involvement was highest in "pricing", followed by new product development and marketing planning. He was also involved in PR, selling, marketing research and advertising.

The Sales Manager/Director also has a strong role in marketing related tasks in a company which has a marketing department. His involvement is highest in pricing followed by marketing planning, new product development, PR and marketing research.

FIGURE 8 RESPONSIBILITIES FOR MARKETING TASKS WHEN THERE IS MARKETING DEPARTMENT

Owner/MD/ General Manager

Marketing Director/Manager

Sales Director/ Manager

Marketing Services Director/Manager

Product Manager

Base No of companies:- 9QMarketing

24%

62%

24%

10%

4%

Selling

21 %

29%

51 %

4%

7 %

Advertising

16%

61 %

12%

12%

2 %

PR

26%

57%

16%

13%

3%

Market Research

19%

60%

14%

14%

4%

New Product Development :

33%

39%

22%

3%

18%

Pricing

46%

34%

33%

3%

7 %

Market Planning

33%

51 %

28%

6%

9%

5. MARKETING TRAINING

Our research shows that 59 % of the respondents have no formal training in marketing yet they are performing, and are expected to perform, marketing related functions.

Only 23 % of the respondents have a first degree. 19 % have post-graduate qualifications. 43 % of the respondents have less than "A" level qualifications.

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38 % of the respondents belong in professional bodies and therefore have professional qualifications. Only 9 % of the practitioners in marketing were found to be members of the professional body representing marketing ie The Chartered Institute of Marketing.

6. CONCLUSION

Two recent studies by the Society of Practitioners of Insolvency show that most of the companies going bankrupt was due to two main reasons: "loss of market" and "lack of management training". Our survey shows that most companies in our area continue to be product orientates, and are run by management which is poorly educated and trained. Marketing function continues to be performed, often on a part- time basis and mostly by General Management or others who have no marketing related training. Very little meaningful market research is undertaken. PEST, SWOT, competitor and product analysis are not used on a regular basis by most companies. Consequently the effort devoted to corporate planning and marketing planning needs to be questioned.

If companies want to survive in the long term they need to plan for their future which means that they have to forecast and research requirements for their market and them provide what the market wants at a profit. This involves continuously matching their resources with the changed in need of the market which is in a continuous states of development. Companies standing still will find that they have "lost the market" to others who are better able to research, forecast and provide what the market needs.

Marketing, both as a concept and function is at the core of business survival. The continuous implementation of the marketing concept by professionally qualified marketing practitioners will ensure that there is continuous fit between company's resources and the need of the customer, and consequently fewer companies heading for insolvency.

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