The idea that marketing is a key factor in superior organizational performance is not new and substantial research now demonstrates that a market orientation is the bed rock of company performance. This has been demonstrated in both manufacturing and service industries including the professional services. However, two of the major challenges facing professional firms in adopting a more market oriented stance are the restrictions placed by the respective professional associations on the use of marketing activities (such as promotion) and the mind set of existing practitioners. Research shows that many in the professions deem marketing to be below them and not fitting with the image of an industry that has longed pronounced that profit is not a primary goal but that of altruistically serving clients.
This perspective is understandable when one realizes that the perception held by many professionals of marketing is one of advertising and promotion, the type of things that we as consumers are exposed to every day.
To tackle these issues requires two simultaneous processes that must be undertaken by those within and outside the professions. Firstly, marketers need to make clear that promotion is only a very small part of marketing and that a market orientation (note the use of the word market as opposed to marketing-this is not just semantics) is a much broader concept that entails an organizations posture to the market. This includes the type of customers the organization will serve and with what kinds of services, how it will maintain relationships with its existing clients and attract new ones, and crucially, what type of people should the firm hire and how to retain them. One of the unique aspects of the professional service organization is that not only are they competing for new clients, they are very frequently competing to attract and retain talent. As one well known professional once put it 'my most important assets walk out the day and go down the lift everyday'. Secondly, senior staff within the professions must take responsibility for the strategic direction of their firm and assign resources within the organization to understand and build marketing capability. They must take the lead in communicating the need for a strong customer centric organization and break the resistance and apathy that has so often gripped the professions by harnessing forces for change. These forces include the competitive nature now apparent in the professions, the move by most professional associations around the world to reduce restrictions governing marketing activities, and in Hong Kong, the opportunities presented by such initiatives as CEPA.
The marketing of professional services is already a mature industry in the US and growing rapidly in places such as the UK. In Asia and Hong Kong, although still in the embryonic stages in terms of acceptance and understanding, the need for a systematic approach to strategic management of professional service firms will only grow and those firms that take the initiative in building the necessary capabilities will benefit greatly in comparison to those firms that continue with the old way of doing things.
Marketing is as much a mind set as anything else, it is an organizational culture that should pervade the entire organization and people within a firm should realize that any organization is a customer satisfying entity. Although professional service firms are unique and require special application of traditional strategy and marketing concepts that few firms are capable of delivering, it is imperative that professionals open their minds to the adoption and acceptance of a market orientation as the foundation upon which their future firm success will rest.
Since the 're-birth' of the marketing concept prompted by the writings of such people as Frederick Webster in 1988, marketing has once again been placed as an important consideration for organizational performance, and hence has caught the attention of senior management in many businesses that are typically not considered prime prospects for marketing (such as non profit groups, governmental and quasi governmental bodies, and religious organizations). Even the bastions of the educational sector have taken on board some of marketing's trappings.
This is good and bad. There is a substantial difference between the trappings of marketing (such as having a person designated as a marketer) and the substance of marketing, which is concerned with the value that is created for the customer. One may use the analogy of promotion orientation and market orientation to gain a better understanding of the difference between trappings and substance.
A promotion orientation takes the perspective that the organization will sell what it has and that persuasive communications are the key to marketing success, hence the proliferation of organizations advertising, using newsletters, and building web sites. This orientation takes an inside out perspective and is a short term tactical approach to marketing that is unlikely to be sustainable in the longer term as customers no longer want to buy what you are selling and in the form you offer it. The trappings of marketing are not necessarily unimportant but in isolation do not make up what marketing is and means.
In contrast, the substance of marketing is analogous to what is known as a market orientation. This is not the same as a marketing orientation and the difference is more than semantic. Marketing orientation places the emphasis for marketing in the function of the marketing department and hence artificially separates marketing activities from the rest of the organization. It also carries the negative associations of the term marketing that so often seem to exist in the minds of organizational members. A market orientation can be defined according to the two seminal works in this area by Kohli and Jaworski and Narver and Slater. These academics (Jaworski is now a consultant at Monitor Group) have done much to operationalize the implementation of the marketing concept in the form of market orientation.
According to Kohli and Jaworski (1990):
'market orientation is the organization wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization wide responsiveness to it' (p.6)
According to Slater and Narver (1995):
'a business is market oriented when its culture is systematically and entirely committed to the continuous creation of superior customer value' (p.22)
In addition, Narver and Slater (1990) state that market orientation consists of three behavioural components of customer orientation, competitor orientation, and inter-functional co-ordination.
There are several key points to take from these definitions. Market orientation is both a culture (values and beliefs about customers, a business philosophy) and a set of behaviours. That is, there is a difference between accepting the marketing concept and implementing it. Moreover, the responsibility of responding to market needs falls on the entire organization and not only on the marketing function. Empirical support for the market orientation construct is strong both in Asia and the western world as organizations that exhibit higher degrees of market orientation show business performance levels above their peers. Organization wide action is the key to satisfying customers and an understanding of a customer's entire value needs is what we mean by the substance of marketing. Trappings count for nothing if you have chosen the wrong value. Customer value migrates and pushing what you have will not provide long term profit driven sustainability. Innovation is a key word and this consists of a combination of market driving and market driven management.
I Marketing Culture in the PSF – what it looks like
It should be clear now that adopting a marketing culture is not about the few rainmakers in a firm (assuming such people exist). It is about a firm wide commitment and adoption of the belief that clients and client value should be at the heart of the firms activities and processes. In other words, marketing is 'how we do things around here', it is an organizational culture. More formally, organizational culture can defined as a shared pattern of beliefs and behaviour that are both explicit and implicit.
According to Bruce Marcus and August Aquila in their book Client at the Core, building a marketing culture in professional services requires:
- Top management support
- Good marketing professionals
- Education
- A marketing structure within the firm
Research in the architectural industry by Morgan, Foreman and Poh (1994) state that the 4 major hurdles to implementing a marketing effort are:
- Ensuring all staff are trained in the fundamental advocacy of marketing in satisfying customer needs
- Recognizing the need for an integrated marketing approach using grounded market intelligence on which optimal decisions should be made
- Firms top management and partners providing a consolidated commitment to marketing
- Active involvement at all hierarchical levels in the formulation of marketing plans so that successful implementation can be enhanced
One can see from such requirements it is not simply a 1-2-3- step process, rather it requires attitude and behaviour modification. In a revealing study, Lloyd Harris studied the barriers to adopting the ideas of marketing in both law firms and accountancy firms. He found that resistance by seniors, professionalism conflict, lack of expertise, and structural difficulties to be some of the key obstacles to adopting more of a marketing mind set. These areas fit very well with the 4 requirements suggested above Bruce Marcus and August Aquila. This highlights the very important fact that instilling a marketing culture is as much a management and leadership issue as a marketing one. One cannot expect a firm wide adoption of the marketing concept without top management support and strong leadership. What PSF is going to change its structure to a client centered or industry structure without it being pushed through by the most senior people within the firm? The lack of expertise can be overcome with outside help as well as the hiring of marketing professionals. These professionals can act as change agents or catalysts for the changes that are needed with the support of top management. Linda Tay and Neil Morgan suggest two crucial factors that can aid a PSF in adopting a stronger market orientation:
- A greater risk tolerance among senior managers
- Careful organization of the marketing function
In their study of surveying firms, the authors found that in order to develop and accept innovative and client oriented changes in service and structure, senior managers had to be more willing to try new things and not be threatened by change. Unfortunately, in the PSF, resistance to change is legendary, particularly amongst seniors, yet without their support, enduring change will not happen nor be successful. It is here where the PSF differs substantially from traditional service firms or other commercial organizations. Senior managers within these firms are exposed to the ideas of marketing so much more than those within the professions and hence there is a marketing tradition and a willingness to accept risk. In the PSF, there is no such tradition, rather there is a tradition that the PSF serves its clients altruistically and that marketing is something we neither need nor do. Such an attitude leads down one path, extinction. Recent research by McKinsey shows that only the most profitable law firms will survive due to the ever increasing competitiveness of the professions.
Most successful marketing efforts of professional service providers also ensure that somebody within the firm has overall responsibility for the marketing function. This is usually with the appointment of a marketing director or manager. Even if this is not feasible within a small firm, someone must be given ultimate responsibility in this area. The danger here is that the partners in the firm hire a marketing person and then wash their hands of marketing and think that the issue is now settled, a 'we can leave it to him/her' attitude. This is not going to work. In the cases I have seen in Asia, too many marketing staff are given responsibility for external marketing activities (such as promotion) and not enough to guiding the strategic direction of the firm through internal activities such as training and development for all staff to understand their role in delivering client satisfaction. Moreover, adopting a marketing culture requires integration of people and information across the entire firm and at all levels. This will not happen by itself and certainly cannot be the sole responsibility of the marketing department. Another area that comes up is the coupling of marketing and business development BD). In some firms it is deemed the same thing, in others they are separate departments. Marketing sets the tone for BD. In other words, marketing creates the right culture and sets the strategic direction of the firm in terms of markets the firm should serve and the services it should provide. Once you have a good understanding of these issues will the firm be able to sell effectively. BD without marketing is like shooting in the dark, you will hit your target every now and then but with a huge waste of resources and in the process you will probably upset a number of potential clients by trying to sell them something they neither need nor recognize the value of.
II Firm Structure, Marketing Culture & Performance
As has been stressed a number of times here, marketing is a process and business philosophy that requires a fundamental change in the way professionals think and act. Being client focused is not something that most professionals are good at and yet this is what clients are demanding. In order to fully embrace a marketing culture, the PSF must have the right foundations upon which it can act and respond appropriately to the changing demands of clients and the business environment in general. Nothing demonstrates this as well as issues relating to the structure and management of a PSF.
For example, law firms are well known for structuring around practice groups such as litigation, patents, corporate finance etc and this has worked well in the past. But as industries become more competitive and clients more demanding, industry practice groups will become the norm as different market segments will have different needs that can be best served by such organizational structures. This will require new ways of working and thinking for most lawyers and above all else, strong and committed leadership. The substance that is created by organizing around client needs is the true acid test of whether your firm is living and breathing a marketing culture.
When one considers the ideas of industry or client teams (and the concept applies equally well to other professionals in some form or another), one must consider the fundamental change that must occur within the PSF for this to be successful. Going back to the initial definitions of market orientation cited at the onset of this piece, it becomes apparent that in order to set up and implement effective industry teams, the PSF must become deeply engaged in target market segments and develop an in depth understanding of the needs of the clients within these segments. However, information collection is only the starting point, generation and dissemination of this information that is actionable and implanted across organizational departments such as different practice groups, partner clients and support groups will determine whether such an effort is worthwhile. This idea of cross functional coordination is not unusual to other types of profit making commercial organizations but to the PSF it certainly is. Overcoming fiefdoms and the idea that my client is my client is absolutely vital if the development of a true marketing culture is to progress. The benefits of using such client focused teams are many. Organizational members share and develop news skills whilst developing a big picture view of their clients business as well as their own. Additionally, the inter functional coordination necessary enhances organizational communication to the point where using market intelligence becomes the basis for decision making and innovation. In essence, client teams become marketing teams and if you can develop the skills necessary to implement such practices effectively, you will have developed competencies that keep you ahead of your competition.
Another common issue related to firm structure and marketing is that of partnerships. Partnerships and incisive decision making do not often go hand in hand and hence it becomes crucial that someone within the firm has the final decision making authority over marketing and management matters. That person should have a high level of seniority within the firm and command respect from others. He/she should also be committed to the marketing concept and the necessary effort that is required in its effective implementation. One need only look at the recent demise of once preeminent professional services firms such as Arthur D Little or Brobeck Phleger and Harrison (once called one of the most powerful law firms in San Francisco by the Wall Street Journal) to realize that an inward focus and lack of a market driven structure causes rapid decline and eventual distinction. The PSF must have an outside inside view of the value creation process.
In terms of marketing culture and ROI, research consistently shows that there is a positive relationship between marketing culture variables and firm performance. This has been demonstrated in a number of service industries. These variables have been described as service quality, interpersonal skills, innovation, internal communication, and selling (Appiah-Adu and Singh, 1999). The authors found that service quality exerted the most significant impact on ROI with all other variables having a significant impact also. Although ROI may not be the most appropriate measure of performance for a PSF, it does highlight the link between a marketing culture and performance. All these variables are fundamental aspects of a market orientation. The idea that service quality leads to client satisfaction and hence profitability is known as the service profit chain. It is a marketing culture that will enable the PSF to fulfill the needs and expectations of its clients and hence earn a return above the norm. It should be noted that fundamental to all aspects of implementing a marketing culture discussed here is the idea that a firm must chart its course by having a clear strategic direction and developing a coherent strategic plan. As was mentioned earlier not all clients or target markets will be right for you.
III Conclusion
Marketing and management become strongly intertwined when discussing the ideas of implementing a marketing culture. It is a firm wide effort that as much as anything requires a basic change of attitude amongst professionals and firm seniors that must have strong leadership to effect such change. Crossing these organizational barriers is never easy but one will reap the rewards if one is prepared to take the risk. Firm leadership is crucial and in may ways can be described as marketing leadership. Marketing is so fundamental to a firm that thinking of it as something separate or as something you do when business is slow is a sure fire way to lead your firm to extinction.
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