Embed Size (px)
Citation preview
Chapter 6
ANALYSIS OF MARKETING OPPORTUNITIES
It is important that a consultancy firm identifies its target of
opportunities to expand its service profiles by retaining the existing clients and
adding prospects. The consultant or the marketer entrusted with the task of
analysing marketing opportunities for consultancy services must have some
insider's knowledge of the service in which the firm is operating, the target
market and its segmentations, clients' behaviour, the service buying process
etc. A thorough understanding of the target clients helps the firm to decide the
nature, extent and quality of services to achieve maximum client satisfaction. ,-
The firm's marketing strategies are also formulated based on such information.
6.1 Identification of Target Market
The marketing plan of a consultancy organisation begins with the
determination of the marketing objectives. After setting the marketing objectives
the firm selects and analyses its target market.
In the study, all the respondents state that they can identify the group
of clients or potential clients who need the type of service which they are
rendering. Clients include individuals and organisations. Many consultants
maintain a profile of the users of their services. They also make some initial
contacts with potential clients of their services. It is seen that most of the
consultants study the behavioural profile of their clients, their needs and wants
and the level of their expectations. They also maintain frequent contacts with
their clients for retaining them on a long-term basis and projecting a fair
image of the firm.
6.2 Total Market and Served Market for Consultancy Services
It is not relevant to mention about total market for consultancy services
since many consultancy firms operate from single locations and are affected
by personal access barriers. However, the concept of total market is relevant -
to a global consultancy firm with diverse interests. The total market demand
is also affected by a number of variables which it is difficult for a firm to vary or
influence.
A consultancy firm's served market is the group of clients who
actually buy the services of the firm. It is relevant to know the actual market
the firm is serving to formulate appropriate marketing strategies. Table T34
shows the nature of market analysis carried out by consultancy firms under
study:
Table T34
Market Analysis by Consultancy Firms
Source: Research Data
Particulars
Forecast of total market .demand
Ascertaining market share of the firm in total market demand
(N = 200)
The table reveals that only very few firms (11.5 per cent) in the study --
forecast the industry demand or the total market demand for consultancy services.
No. of firms
23
14
Similarly only 7 per cent of the firms compute their respective shares in the
Percentage
11.5
7
total market demand. It is seen that the estimation of total market demand is
not very important to a consultancy firm for formulating its marketing strategies.
The market share of most of the consulting firms in the study is found to be
negligible. Most of the consultants are of the opinion that there is not much
gap between the potential market and the sewed market for many consultancy
services pointing to the fact that many consultancy firms face competition in
attracting sufficient number of clients or getting adequate volume of engagements.
6.3 Estimation of Market Demand
It is found in the study that out of 200 consultancy firms only 44
estimate the future demand for their services. The methods used by consultancy
firms for estimating future demands include buyer intention surveys, expert
opinion method, market tests and statistical methods. Table T35 presents the
methods used by consultancy firms in estimating future market demands.
Table T35
Methods used to estimate Market Demand
Source: Research Data
Met hods
Buyer intention surveys
Expert opinion
Market Testing
Statistical Methods
(N = 200)
The table reveals that only few firms (22 per cent) estimate their
future market demand. High degree of uncertainty regarding future and
contractual nature of the work of consultants make it difficult to estimate the
future demand by most of the consultants.
The survey of buyer intention appears to be the popular method
used by many consultancy firms making forecast of future demand for their
services. Under this method a sample of clients are asked to state their buying
intentions regarding the service for the forthcoming period. This method is found
No, of firms
27
7
4
6
-
Percentage
13.5
3.5
2
3 -
174
suitable for consultancy services repeatedly purchased by clients like tax
consultancy or investment consultancy.
Another method used by consultants to forecast demand is to ask
people who are close to the clients what those clients are likely to do. Such
expert opinion can be collected from branch managers or franchisees where
services are delivered through branches or franchisees. In the study only 7
firms are found using this method.
Consultancy firms launching new services, like that of software
consultants introducing a new software application, conduct market tests to
estimate future demand. It is found useful to analyse short-run client response -
in a localised market. The method is used by 4 firms in the study. -
-
' Statistical methods are used for demand forecasting by 6 firms in the
study. Statistical methods use past data for estimating future demand.
It is found in the study that though the majority of consultancy firms
do not estimate future demand, consultants are aware of the need for making
such forecast for efficient performance of a firm in terms of arranging resources,
supplies and personnel.
6.4 Market Segmentation and Targeting
In market segmentation, a consultancy firm divides its total market
for a service into several segments, each of which tends to be homogeneous in
all significant aspects. The firm then selects one or more of these segments as
the organisation's target market and a separate marketing mix is developed for
each segment in this 'target market. Table T36 shows the classification of firms
based on market segmentation practices.
Table T36
Consultancy Firms Practising Market Segmentation
Source: Research Data
The table reveals that the majority of the consulting firms (54 per
cent) do not practice market segmentation. It points out either the homogeneous
nature of clients or limited localised area of operation of consultancy services.
It is found that in the absence of proper segmentation firms adopt uniform
marketing programmes to all types of clients.
Percentage
46
100
Particulars
Firms practising market segmentation
Firms not practising market segmentation
Total
No. of firms
92
108 .-
200
Firms not practising market
Fig. F16 Market Segmentation by Consultancy Organisations
6.4.1 Basis for Market Segmentation
.-
Consultancy organisations generally follow partial market segmentation
strategies where the clients are divided along broad categorical lines. They are:
i) geographical or region-wise segmentation.
ii) Function or service-wise segmentation
iii) Demographic or client-wise segmentation
Table T37 shows the basis of market segmentation by consultancy
firms.
Table T37
Basis of Market Segmentation by Consultancy Firms
Source: Research Data
The table reveals that demographic segmentation is preferred by
Percentage
7
9.5
29.5
Basis
Geographical (Regionwise)
Functional (Servicewise)
Demographic (Clientwise)
(N = 200)
most of the firms making market segmentation. It shows that consultancy firms
No. of firms
14
19
59
group their clients on the basis of their demographic features like income,
occupation, education, financial standing etc. to pursue appropriate marketing
strategies.
Servicewise segmentation is practised by only 19 firms. This type of
segmentation is practised by consultants or firms rendering various consultancy
services like that of management consultants.
Geographical basis of segmentation is followed by 14 firms in the
study. It is appropriate for consultancy firms with rnultilocational service points
where the market is grouped into different geographical entities like regions,
cities or other local limits and separate marketing strategies are formulated for
each.
6.5 Market Selection Strategy
The market selection strategy of consultancy firms include
undifferentiated marketing, differentiated marketing or concentrated marketing.
Table T38 shows the market selection strategies of consultancy organisations.
Table T38
Market Selection Strategies of Consultancy Organisations
Source: Research Data -
The table shows that the majority of the consultancy firms
Percentage
36
11
53
100-
Strategies
Undifferentiated
Differentiated-
Concentrated
Total
(53 per cent) in the study follow concentrated marketing strategy. It is stated that
No. of firms
72
22
106
200
by serving a limited area or group of clients the firm commands strong market
image and goodwill. The firm enjoys greater knowledge of the client's needs and
behaviour and achieves better operational efficiency. However, it is pointed out that
concentrated marketing involves greater risk, and the market suddenly declines or
disappears in the event of new entrants or competitors in the market.
72 firms (36 per cent) in the study follow undifferentiated marketing
strategy. It is seen that in undifferentiated marketing the firm treats the entire
market as its target market and it markets a single service and designs a uniform
marketing strategy.
The differentiated marketing strategy is followed by 22 firms
(11 per cent). In differentiated marketing the organisation operates in two or
more market segments and follows separate marketing strategies for each. The
firm offers variations of the service to suit the level of expectations of clients in
each segment. It is stated that differentiated marketing is appropriate to
consultancy firms having large clientele with widely varying demographic
features. It helps a firm in revenue maximisation, developing new services and
improving quality of existing services.
I3 Undfferentlated I3 Differentiated
Fig. F17 Market Selection Strategies of Consultancy Firms
6.6 Client Analysis
Client is the centre of consultancy service and knowing the client is
the basis for effective, development, pricing, distribution and promotion of
services. It is necessary to analyse the buying behaviour of existing and potential
clients to develop a marketing orientation in consultancy organisations.
Client analysis is a systematic approach to understand how clients
see, think and act. Clients both individuals and organisations share some
common features with regard to their needs and wants. But the factors
influencing their buying decisions and also their buying behaviour differ widely.
Table T39 shows the summary of perceptions of consultancy firms
relating to various aspects of client behaviour and client analysis.
Table T39
Analysis of the Perception of Respondents regarding Client Behaviour
Source: Research Data
a. Clients are the basis of consultancy services
b. Client behaviour means understanding how clients think, see, feel and act
c. It is necessary to measure client's needs and wants for successful marketing
d. Client passes through different stages in the service buying process
e. Client's buying decision is influenced by a number of factors
f. The firm is sympathetic towards clients if the perceived services are not upto their expectations
Mean Value
5.00
4.685
4.935
4.755
4.845
5.00
The opinion of respondents are rated on a Five point scale 1. Fully
agree, 2. Agree, 3. Neither agree nor disagree, 4. Disagree, 5. Fully disagree.
(N = 200)
All the respondents unanimously agree that clients are the basis of
their operations. The design of the service offers, the selection and
implementation of appropriate marketing mix, all depend on the client needs
and their satisfaction. Most of the consultancy organisations tryto understand
the nature of clients' needs and behaviours. Almost all of them agree that
understanding and measuring clients' needs and wants are necessary for
successful implementation of marketing strategies. The statement that clients
pass through different stages in the service buying process is not acceptable to
some of the respondents. They are of the opinion that clients are not always
rational in approaching a consultant. The client's choice of consultants is often
based on accessibility, past experience and intuitions. The study reveals that
clients' buying decisions are influenced by a number of factors. It is also found -
that the consultants are sympathetic towards the clients if the perceived services
are well below the expectations of clients.
It is found necessary in the study that the various aspects of client
analysis must be stated here for the practical application by consultants. The
specific requirements of consultants are also taken care of while stating these
aspects of client analysis.
6.6.1 Client Needs
Clients approach a consultant for professional advice or technical
solutions to their problems. The needs of clients are surrounded by a degree of
uncertainty as far as the client is concerned. The benefit that a client receives
actually by purchasing a consultancy service is the reduction of the uncertainty
surrounding the problem. In many cases a client requires the assistance of a
consultant to ascertain the problem itself. Thus the service offered by the
consultant is 'confidence', that is, whether the client can confidently leave the
problem resolution with the consultant.
The service offered by a consultant is intangible. The intangibility of
the service offering makes it difficult to instil confidence in the minds of the
clients. Therefore, after identifying the client's needs or problems the consultant
has to induce him to buy the service by taking him into confidence.
6.6.2 Client Buying Behaviour - -
.- Buyer behaviour is the process whereby individuals or organisations
decide what, when, how and from whom to purchase a consultancy service.
Individual buying behaviour is influenced by a number of factors like personal,
sociological, psychological and environmental. Organisation buying behaviour
is more complex as it is a rational process. It is influenced by factors like
organisational goals and objectives, resources, structures and organisational
decision process.
The buying process through which the client passes includes five
stages. These are shown in Fig. F18:l
1. Kofler, Philip, Marketing for Non-profit Organisotions, Prentice Hall of India, New Deihi, 1985, p-236.
Fig. FlB. Five-stage Model of Client Buying Process
Need Arousal
6.6.3 Types of Buying Decisions
A consultancy firm is faced with the following three types of buying
situations:
Information Gathering
1. New Task Buy
In this type of buying situation the client has little experience in using
the consultancy services. The client is unfamiliar with the service providers
'
also. His problem is surrounded by a very high degree of uncertainty. It gives
much scope for the consultant for extensive problem-solving. Management
consultants, architects and project consultants face such clients with new task
Decision Evaluation
purchasing
Decision Execution
decisions.
2. Modified Rebuy
b
In the modified rebuy decision the client has some familiarity with
problem resolution. The client might have already purchased similar services
earlier. The client's uncertainty regarding the problem is also moderate.
Investment consultants and tax consultants often face such modified rebuy
situations. The task of the consultant calls for limited problem-solving and less
information than in the case of new task buy.
Post Decision
Assessment
3. Straight Rebuy
In this type of buying situation the consultant is faced with repeat
buys or rebuys by clients. The client purchases the services on regular basis
and has least uncertainty for problem resolution. Clients facing such straight
rebuy decisions are likely to seek the services from the same consultants they
have approached before.
It is found that the three types of buying situations have different
impact on the marketing efforts of consultancy firms. The marketing strategy is
to be developed appropriate to each type of buying situation.
6.7 Clients' Evaluation of Consultancy Services
The clients of consultants are interviewed and necessary information
and data are collected to analyse how they feel, respond and evaluate
consultancy services. The results of the data analysis, discussions with clients
and also the observations made by the researcher are summarised below.
6.7.1 Nature of Client
Table T40 shows the organisational status of clients of consultancy
services. Table T40
Status of Clients of Consultancy Services
I Nature of Clients I No.ofClients I Percentage I Individuals
Partnership Firms
Limited Companies
Source: Research Data
1 Total 200 - 1 100 I
Clients of consultancy services include individuals, organisations and
companies. The majority of clients in the study are individuals (63 per cent).
Corporate clients account for 30.5 per cent of total clients and firms account
for only 6.5 per cent. It is found that some consultancy firms have clients from
outside the State and a few firms have overseas clients, though not included in
the study.
Q Individuals
DJPertnorship limr
Fig. F19 Organisational Status of Clients
6.7.2 Need for Consultancy Services
The need or problem leading to the engagement of a consultant
vary from client to client. But an analysis of the needs and wants that give rise
to the interest in expert advice or solution reveals some common reasons for
seeking consultancy services. The response of the clients in this respect are
presented in Table T41.
Table T4 1
Reasons for Approaching a Consultant
Source: Research Data
The table reveals that the need for expert advice is the important
reason for seeking consultancy services by the majority of clients (64 per cent).
Complexity of problems is statedas the reason by 19.5 per cent of the clients.
In certain cases clients cannot even comprehend the problem correctly and -
they need the help of consultants for problem resolution. In other cases clients
are uncertain regarding the decision outcome, so they seek the help of
consultants. 'Others' in the table include cost-effectiveness, speedy execution
of work and liaisoning with government authorities, as suggested as reasons by
a few clients. It is found that few organisations dispense with employment of
full-time consultants as regular employees and engage only part-time
consultants, thereby reducing cost of operations. Consultants are also engaged
exclusively for liaisoning with government departments, institutions, suppliers
of machinery or know how.
Percentage
64
19.5
15
1.5
100
Reasons
Need for expert advice
Complexity of problems
Uncertainty of decision outcomes
Others (specify)
Total
6.7.3 Nature of Consultancy Sought by Clients
No. of clients
128
39 30
3 200
Keeping the classification of consultancy services already made for
the purpose of the study, 200 clients have been selected which reasonably
represent all types of clients for analysing their views on various aspects of
consultancy services. The composition of the clients who sought consultancy
services is presented in Table T42.
Table T42
Nature of Consultancy Sought by Clients
Source: Research Data
6.7.4 Criteria for Selection of Consultants
Percentage
24
10
16
12
7
15
12
4
100
Nature of Consultancy '
Management Consultancy
Investment Consultancy
ProjectIEngineering Consultancy
Software Consultancy
Ernployment/Educational Consultancy
Architecture/Interior Design Consultancy
Tax Consultancy
Others
Total
Clients use a host of factors to evaluate potential consultancy service
firms. The reputation of the consulting organisation, its positioning in terms of
market share, professional and technical skills, specialisation, experience, quality
of service vis-a-vis other firms, amount of fee levied, quality of personnel etc.
are important factors which are considered by clients for choosing consultants
(Table T43).
No. of Clients
48
20
32
24
14
30
- 24
8
200
Table T43
Criteria for the Selection of Consultants
(Ranked 1 - 5 in the order of importance)
Source: Research Data -
Table T43A -
Totd
200
200
200
200
200
Criteria .
Professional Competence
Reference by other clients
Reputation of the consultancy firm
Reasonableness of fees
Accessibility and locational factors
Total
Relative Importance of Criteria for the Selection of Consultants
No. of Respondents Ranks
Source: Research Data
The tables show that the reputation of the consultancy firm is the
most important criterion for choosing a consultant. 76.5 per cent clients consider
reputation of the firm as the most important criterion. 15 per cent clients consider
v
0
8
1
181
10
200
I
30
12
153
0
5
200
Rank
I1
I I1
I
V
IV
Criteria
Professional Competence
Reference by other clients
Reputation of the Consultancy firm
Reasonableness of fees
Accessibility and locational factors
Mean Score
4.00
3.07
4.68
1.165
2.085
I I
147
17
32
2
2
200
III
16
152
14
10
8
200
IV
7
11
0
7
175
200
the professional competence of the consultant as the most important criterion,
6 percent consider reference by existing clients as the most important criterion
while 2.5 per cent consider accessibility and location as the most important
criterion for the selection of consultants.
The professional competence of the consultant is the second important
consideration for choosing a consultant by most of the clients.
The next important consideration is reference by existing clients.
Accessibility and locational factors are ranked fourth in the order of importance
for selecting consultants. The fee levied by the consultant is the least important
consideration for choosing consultants as revealed in the study.
From the analysis it can be concluded that the reputation and
corporate image of the consultancy firm are the important criteria for selection
of consultants by clients.
6.7.5 Evaluation of Services by Clients
From the review of relevant literature five variables have been
identified for evaluation of consultancy services by clients. These are quality of
the service, accessibility, timing, dealings of service personnel and after sales
services. Clients' opinions regarding these variables are rated on a five point
scale and the results are presented in Table T44 below:
Table T44
Analysis of Clients' Evaluation of Consultancy Services
(Ranked on a 5 point Scale, 1. Excellent, 2. Very Good, 3. Good, 4. Poor , 5 . Very Poor)
(N = 200)
Variables
Quality of the service
Accessibility of the service
Timing of the service
Dealings of service personnel
Aftersales services
Source: Research Data
Table .- T44A
Relative importance of the Variables of Consultancy 'Services
Total
200
200
200
200
200
No. of Respondents
Source: Research Data
Variables
Accessibility of the Service
Quality of the Service
Timing of the Service
Dealings of Service Personnel
Aftersales Services
Clients are generally satisfied with the accessibility of the consultancy
services. The quality of the service, timing of the service and dealings of service
personnel are found to be moderately good. However, the after sales services
offered by consultants are poor in the opinion of clients.
V.Poor
-
- -
3
17
Mean Score
4.500
3.385
3.33
3.17
2.64
Poor
-
37
44
89
Good
131
18
76
81
43
Excellent
8
118
16
12
-
V.Good
61
64
71
60
51
a Excellent a Very Good
IF4 Very Poor
Quality of the service Acassibity d the Tlmlng of the service Dealings d scrvim Afterraks senricm service personnel
Fig. F20 Clients Evaluation of Consultancy Services
6.7.6 Benefits of Consultancy Services .-
It is difficult to quantify the benefits of consultancy services received
by clients in relation to the amount of fees paid by them. The following table
shows the clients' view regarding the benefits of consultancy services.
Table T45
Benefits of Consultancy Services Received by Clients
Source: Research Data
Particulars
Consultancy services helped in managing the affairs efficiently than before
Benefits received are more than the costs incurred
(N = 200)
No. of clients
126
Percentage
63
Most of the clients in the study (89 per cent) state that consultancy
services have actually helped them in managing their affairs efficiently. Many
clients do not make any cost-benefit analysis of consultancy services. However,
68 per cent of the clients state that the benefits received out of consultancy
services are more than the costs incurred. Thus it is inferred that consultancy
services are cost-effective and clients are really benefitted by these services.
6.7.7 Cost of Consultancy Services
Table T46
Clients' Opinion Regarding Amount of Fees Charged by Consultants
Source: Research Data
The majority of the clients (73 per cent) state that the fees charged
by consultants are moderate. 9 per cent state that the fees charged are very
high, and it is high in the opinion of 15.5 per cent clients. Only 2.5 per cent
state that fees charged are low. 'The analysis makes it clear that consultancy
firms charge moderate to high fees for their services.
Percentage
9 -
15.5
73
2.5
100
Particulars
Very High
High
Moderate
Low
Total
No. of clients
18
31
146
5
200
6.7.8 Evaluation of Client Satisfaction
The analysis of client satisfaction shows the following results.
able T47
Extent of Client Satisfaction
Source: Research Data " -
Particulars
Fully satisfied
Fairly satisfied
Not satisfied
Total
From the above data it is clear that the majority of the clients in the
study (67.5 per cent) are satisfied with the services they have received from
No. of clients
135
62
3
200
consultants. 31 per cent are fairly satisfied and only 1.5 per cent express
Percentage
67.5
31
1.5
100
dissatisfaction.
b
Though client satisfaction is the ultimate objective of any marketing
strategy, it is very difficult to evaluate it especially in the case of corporate and
organisational clients.
6.7.9 Clients' Suggestions for Improving Consultancy Services
Clients have made very valuable suggestions for improving the quality
of consultancy services and promoting more client satisfaction. An analysis of
these suggestions brings the following points in the order of their importance.
* Consultancy firms should ensure the timely delivery of their
services,
+@ Improve the quality of' services.
+& Ensure after sales services and offer service guarantees to clients.
r8c Help the clients in the implementation of suggestions.
+# Better training and motivation of service delivery staff.
