Failing to Meet Customer Needs -- Letting the Competition in

This dissertation examines a service company Advanced Alchemy which engages in providing value-added marketing, recruitment and other services to major companies operating within technology industries. The work examines some major marketing theories in order to frame the discussion of the companys environmental and organisational contexts. These frameworks are then used in analysing how well orientated the company is in terms of its targeted customers through exploiting its internal resources. The report continues with examining the impact of some of the key environmental factors influencing the success of the companys strategies. Research including documentary analysis, a questionnaire ,focus groups and semi-structured interviews were used in a performance evaluation of the companys marketing position and also to explore indetail the attitudes towards the major tensions and challenges facing the company among its staff and customers. The report concludes that while the company has done well historically and may continue to do well in the short term improvement is needed in certain key strategic areas for the company to successfully retain and/or enlargeits market share and retain its competitive advantages within the market given the challenges it faces. Marketing is a core concept within modern business theory and operation. It has been widely discussed and it is argued that commercial success follows companies which are able to create and retain customers through providing them with better value than competitors. As such a fundamental conception of marketing is that companies achieve their strategic goals in terms of profitability and corporate growth by satisfying customers, (Houston, 1986). With this then there are many marketing theories exploring the idea of a marketing mix which is viewed as an important marketing tool in marketing planning and evaluation. The 4Ps framework is a basic framework reflecting these ideas. However the 7Ps mix is argued to be particularly vital as a tool in service industries. This framework holds that the elements of product (service), price, place, promotion, physical evidence, process and people are basic ones of consideration for service organisations such as marketing services agencies. In this sense a corporate brand name not only refers to product but also means the process and organisational intangible resources such as people and professional services possessed by the organisation, (Jones, Comfort Hillier, 2004). The early stages of marketing development theory were concerned more with the marketing concept. Authors such as Felton (1959) proposed that the discipline of marketing focus on the integration and co-ordination of all the marketing functions pursued by companies. However due to the intensive levels of competition in the modern business world the marketing function has become closely linked with gaining competitive advantages for a company. Therefore it is unsurprising to note more companies viewing marketing as a strategic planning function which contributes to achieving long term corporate goals. Kotler et al (1996)suggest that the achievement of organisational goals depends on determining the needs and wants of the target market and delivering the desired satisfactions effectively and efficiently. From this perspective it becomes clear that understanding customers as well as market characteristics and then satisfying these needs better than competitors requires an effective linkag e of corporate resources including human resources, financial resources and physical resources. In short a good understanding of the competitive environment and internal strategic resources available is essential for companies choosing between appropriate corporate strategies in order to maintain competitive positions in their respective markets. The competitive strategy proposed by Michael Porter (1998) to some extent depends on an analysis of the industrial environment in which new entrants, substitution, bargaining power of buyers and suppliers as well as rivalry comprise the competitive overview of an industry. It is useful to be aware that competition goes well beyond the established competitors to include various players. In the business information provision industry for example as buyers (partners) have become more concentrated and specific the industry has come under increasing pressure. Flowing from this once the forces affecting competition positions in a certain industry have been identified the firm is in a position to assess its internal strengths and weaknesses. At strategic level these strengths and weaknesses along with driving forces in the environment are the key elements which affect each competitive advantage which can be exploited by a company. Based on the analysis of environment and corporate strategic resources it is also important to understand customers in particular in the modern business world. It is argued that an organisation who knows its customers better is more likely to satisfy their needs more effectively. Therefore strategic customer analysis plays a vital role at the marketing planning level while firms which fail to meet or respond quickly enough to customers demands will lose their competitive position eventually. As Porter (1998) argues the best strategy for a certain firm will ultimately be a unique one reflecting its own circumstances in terms of tangible and intangible elements. As a result it is essential to examine marketing strategies of particular companies bearing in mind driving forces in the environment along with a good understanding of internal strategic resources. In addition due to new consumerist characteristics of global economies it is critical to look at and consider consumer behaviour a t a strategic level. This is particularly the case for service industries such as the business information company Advanced Alchemy which faces challenges from intensive competition as well as pressure from desired customers and internal changing dynamics. The first objective is to define the major environmental influenceswhich have significant effects on the marketing strategy of AdvancedAlchemy. It is important to be aware that environmental factors includeexternal driving forces as well as internal corporate contexts in termsof organisational culture and strategic resources. According toChisnall (1989) corporate performance is closely related to effectivemarketing strategies along with effective human resource management,RD design as well as the financial situation of the company.However due to intensive competition in the industry and internalfinancial problems Advanced Alchemy faces major strategic changes atboth corporate level and business level. Of note here then is thatdifferent strategic planning to a large extent depends on bothindustrial characteristics and corporate competitive capabilities. In addition to environmental forces it is vital to understandcustomer behaviour in particular relating to demands for businessinformation. Consumer behaviour though is a complex phenomenon whichcan be described as a dynamic interaction between affect and cognition,behaviour, and environmental events, (Blythe, 1997). Because of the newcharacteristics of the global economy customers require immediateresponses to their demands in terms of goods and information withtechnology based on e-commerce systems being arguably able to meetthese demands. Therefore the second objective of this work is toexplore the main determining elements on customers choices in terms ofutilising e-commerce based services. The final objective here is to define the competitive strategies forAdvanced Alchemy which assists the firm in exploiting opportunitiesalong with its existing strengths in creating and retaining competitiveadvantages in responding to competition within its market. It isinteresting to mention that in the business information providingindustry differentiation in terms of service and better quality isoften employed by companies as a significant strategic tool nonethelessit is stressed that differentiation does not allow the firm to ignorecosts since price wars often occurs in service industries. According toPorter (1998) cost leadership should be emphasised as a primarystrategic target which contributes to the choices influencing thepicking of the marketing strategy best suited to the firms position inthe industry. Marketing is argued to be an essential ingredient for businesssuccess both in the literature and within the practical business world.As a concept it is concerned with the creation and retention ofcustomers at a certain price namely in the most profitable way fororganisations, (Jobber, 2001). This is because the cost of attracting anew customer is much higher than the cost of maintaining an existingone. Thus firms seek to build up efficient and effective communicationchannels with consumers through the use of an effective marketing mix.However both organisations and individuals have been subject tounprecedented changes in the way they pursue and are involved inbusiness and commercial enterprises in the 21st century, (Kalakota,1999). Characteristics such as the internationalisation of businessand technological development generate increasingly intensivecompetitive environments which require companies adapt to new dynamicswithin marketing structures. While this true for all organisation s itcan be argued to particularly so for service companies, (Chesher Kaura, 1999). One of the most important challenges for businessescurrently is the need to satisfy increasingly demanding customers whoexpect immediate responses to their requests both for goods andinformation. The role of marketing in meeting such a need has continued to increasein response customers expectations regarding the provision of aprofessional service and product at an effective cost. In Grahams(1999) outline the term marketing strategy is often linked with theInternet because it provides a wide range of free communication andmarketing channels such as emails, websites and chat rooms in order togather useful business data and exploit these novel communicationchannels through viral marketing techniques for example. Ofconsideration also is the fact that marketing does not solely concernitself with material things but includes intangible elements such asservice quality, experiences and communication on a number of levels.As a result the choice of an appropriate marketing model is clearlylinked with attaining a complex understanding of consumers and theirbehaviours and preferences, (Moore, 2003). The fact that consumerbehaviour is complex means that an effective marketing mix should seekto learn customer requirements through research and the accumulation ofmarketing data and trends. Such measures are necessary in order for thecompany to be a success in the marketplace. At the same time the use ofan appropriate marketing strategy will in turn be constrained by theavailability of corporate resources and the business structure whichallows for internal strengths to be exploited successfully in takingadvantage of external opportunities. Another important perspective within marketing philosophy is thedistinction between efficiency and effectiveness, (Anonymous, 1989).The essential difference between efficiency and effectiveness is thatthe former is concerned with cost and the latter is customer focused.This can be seen reflected in one of the core features of marketingwhich can be defined as the satisfaction of customer needs in aprofitable way. It is fair to say that the focus on customer needsrequires efficient internal networks in managing the employing ofstrategic resources. This is true in terms of human resources and isparticularly relevant for business models such as Advanced Alchemys.In addition strategies exist and operate at different levels in thecompany. Chisnall (1989) defines marketing strategic planning as marketchoosing, product development, devising effective marketing strategiesin terms of organising marketing resources and forecasting possiblelevels of demand based on customer research. It is obvio us thateffective environmental analysis along with an evaluation of existingstrategies provides a basis for the forecasting element of thisdefinition. Based on the idea of a marketing mix service meaningprofessional delivered and provided services should be considered ascentral to the competitive strategy as well as a cost effective methodof implementing such a strategy. A strategic marketing mix is essentially a conceptual framework whichis able to help companies structure their approach to each marketingchallenge that they encounter within external environments. This meansthat an effective marketing mix should have an overarching focus oncustomers as well as consider the needs of other groups such as thirdparty organisations who may influence the company in terms of product,service and marketing goals. Public relations and engagement with avariety of actors is therefore more and more a particular aspect ofnote in determining marketing strategic considerations, (White, 1991).In the case of Advanced Alchemy the internal financial difficultiesfaced by the company might cause deficiencies and inabilities inmeeting customers needs effectively due to the lack of cash flowprohibiting certain responses to adverse market conditions faced by thecompany. At this stage a clear understanding of the demands ofcustomers tends is an important objective for the com pany so as tominimise the waste of resources and target those resources which areavailable in the most effective and efficient way. Consumer Behaviour Analysis Peter and Olson (2005) argue that an understanding of consumers isessential for marketers and in particular marketers of businessinformation services. This is because the nature of B2B models requiresmarketers understand consumers and deliver the products and servicesthey want and need in the most effective manner as major consumers arecorporate entities themselves constrained by strategic considerationsin operating within their own competitive environments. A B2C modelapplied in such instances provides a means of developing one-to-onerelationships with consumer and establishing consumer databases for thepurposes of online research and collation and analysis of data in orderto satisfy these needs more effectively. Therefore a review andappraisal of consumer behaviour is a vital exercise. Consumer behaviour involves thoughts and feelings as well as actionsthey pursue in the purchasing process. It includes all the things thathave an effect on behavioural patterns such as advertisements, price,product quality and others such as contextual social factors such asincome. As Solomon (2003) argues consumer behaviour is a dynamicprocess which means consumers purchasing decisions are a complexprocess and will be influenced by factors such as technologicaldevelopment, word of mouth and most importantly the perceived value ofpurchases. However the fact that the environment in which consumersfunction is constantly changing means it is important that marketersengage in continuous consumer research and analysis to keep abreast ofimportant trends in this external environment. Influences here includefor example the fact that product life cycles in terms of physicalproducts and the provision of services are shorter than ever before socompanies have to create superior value and attract customers throughproduct differentiation strategies. While such points may seem ofrelevance only at first glance to individual consumers the same traitsand characteristics may be applied in limited manners to consideringcorporate or larger organisational customers who form the main customerbase for Advanced Alchemy. Along with shortening product lifecycles the development of technologyespecially the Internet has had vital influences on consumer behaviourin relation to new e-commerce models. The emergent global culture whichis a major trend due to the predominance of a global economy isexpected to have influences on peoples attitudes, emotions andbehaviours flowing from increased participation in Internet commerce.In the case of the company focused on here the B2B service process isable to compete through adopting online models such as online trainingand e-planning for business level functions at a variety of levels andleverage communication at a variety of levels through for example theuse of corporate intranets. It is useful as such to examine e-commercefrom a global perspective. Also segmentation is very important inconsumer analysis simply because different consumers have differentneeds, (Solomon, 2003). In applying this perspective it is criticalthen to divide consumers into essential groups of concern for thebusiness in which members are as similar as possible to other membersof the same group but differ as much as possible from members of otherdivisions. In reaching such divisions the necessity of research becomesan even more paramount goal. It is also important to mention as Gummerson (1996) suggests thatmanaging relationships is a key ingredient to successful organisationalmarketing. He believes that a related relationship involves customers(organisational partners particularly) and suppliers (the third partyand call centres) in which there is a shift from activities aimed atattracting customers towards being concerned with the retention ofexisting customers. In short the premise of relationship marketing isan addressing or balancing of the benefits of certain long termadvantages among all the linked parties including buyers, suppliers,and competitors in the same industry as well as potential entrants tothe industry. The growth of the business information service industryhas resulted in reasonably high profit margins for all of the companiesoperating in the industry. A healthy competitive environment then isable to enhance service quality through refining strategies exploitedby players in the industry in gaining advant age over other actors. Environmental themes can be grouped into macro and microenvironmental levels. However the influence of each force on a certaincompany varies from one company to the next and varies also across thedifferent levels of environmental concerns. For example managers in thebusiness information company typically note that the pace oftechnological development particularly in e-commerce and the speed ofglobalisation in terms of communications and multinational businessmanagement is influences on their companies but differ from one companyto the next on whether these influences are positive or negative fortheir respective organisations. It is also necessary to be aware thatthe influences of each environmental force may be complex in terms ofisolation and measurement and may also present both opportunities andthreats for the business at the same time. Mintzberg (1994) argues thatenvironmental change is both an emergent and dynamic process andtherefore companies must seek to understand the contex ts in which theyoperate. A means of understanding this is through the use of the PESTELframework which offers one means of examining the external environmentsin which organisations operate in. The elements of this framework aredefined as political, economic, social, technological, environmentaland legal factors, (Johnson Scholes, 2002). In the case ofAdvanced Alchemy it is important to be aware of technologicalenvironmental factors particularly those related to e-Commerce whichaffects its partners, suppliers and customers to a large extent. Forexample its online recruitment service for partners is useful ingathering large amounts of candidate data in a short time and itsprovision of e-training services is useful for multinational partnerswho require effective training models to be deployed rapidly and at lowcost within different countries. The second important factor for thecompany is economic environmental factors within a national context.This is closely linked with customers attitude towards businessinfo rmation services based on economic performance nation wide. Forexample while economic growth has occurred in America it has beenmatched and superseded by a proliferation of entrants within industriesoften amounting to a hyper-competitive market which results in lowerrevenues for companies. These tighter operating margins and marketconditions are true for Advanced Alchemy due to poorer economicperformance generally in the UK and arguably also for its competitorssuch as Harte-Hanks. In addition to macro environmental forces industrial sectors havemajor effects on corporate marketing planning. According to Porters(1980) five forces framework buyers, suppliers, substitutes, potentialentrants and competitive rivalry are significant determinants of thecompetitive capabilities of a company. For service companies buyerbehaviour is more concerned with organisational buying activities. Thismeans those companies buy marketing services to help them achievebusiness goals such as effective training programs, enabling pathwaysto successful product sales as well as improvements to managementmodels. At this stage understanding organisational buying behaviour isabout satisfying their diverse requirements in each single offeringprovided by the company. It is useful to mention that service buyerstake into account lifecycle costs which include maintenance costs andresidual values as well as purchase price when they display preferencesfor business information services. As such a te chnique advanced servicefor example one exhibiting better quality becomes an essentialprerequisite for Advanced Alchemy in maintaining its competitiveposition in the industry. In the industrial five forces frame work asdefined by Porter (1980) rivalry is seen as a central element whichmeans the survival of a company relies on competing in the industryeffectively and overcoming rival operators. It is obvious that the paceof globalisation generates intense competition for companies in avariety of industries including Advanced Alchemys leading to increasedrivalry within the industry. Globalisation also has the effect offorcing Advanced Alchemy to not only compete with local businessservice firms but new international competitors also. Marketing Mix (4Ps to 7Ps) Numerous marketing theories deal with suggesting the correct elementsand attributes of an effective marketing mix. Of particular relevancehere though for marketing services is the 7Ps framework which consistsof product (service), price, place, promotion, physical evidence,process and people. It has been a framework that has been widely usedby service organisations such as business information providingcompanies such as Advanced Alchemy, (Jones, Comfort Hillier,2004). However due to the rapid changes in the external environment interms of technological development and globalisation this company facesmajor challenges. The nature of these challenges and their relationshipwith the companies marketing strategies means it is useful toinvestigate integration of marketing mix in the business informationservice field. Utilising a 7Ps framework means conceiving of product as the first andmost important element for any organisation since the core goal formarketing is to satisfy customers needs by offering right products(services) to the right organisational customer, (Jobber, 2001). In thecase of business information and service provision companies the corebusiness is to provide useful business analysis as well as marketingstrategic planning resources and tools for customers (partners).Differentiation is an important tool exploited by service firms withprice, which is used by customers as an indicator of quality, playing avital role in marketing and in effective implementation of suchstrategies. This is because a pure price war in this industry placesAdvanced Alchemy in a battle for achieving cost effectiveness based onand matched with high or superior quality of service. It is alsoimportant to mention that managing relationships through for exampleword of mouth is increasingly important for compani es in competitivemarkets dealing with organisational customers, (Smith and Taylor,2004). Another key element in a services marketing mix is place. AdvancedAlchemy sells directly from sales people as well as selling andmaintaining physical presences at trade shows. Blythe (2000) points outthat every element in the mix communicates especially through person toperson channels of communication. Also according to the literaturecustomers are more sensitive, aware and willing to take advantage oftechnological developments and new services forms, (Dennis, Harris andSandhu, 2002). Mass business information channels along withprofessional services combine tangible assets and intangible resourcein servicing partners in profitable ways. Promotional tools includingadvertising campaigns, below-the-line promotions as well as onlinepromotions are used by companies as part of a branding strategycapturing the notion that the best kind of loyalty is brand loyalty,(Kapferer, 2004). Last but not the least as mentioned in the former section peopleplay a central role in the services industry however it is also arguedthat the serving process is important as a two-way communication simplybecause it is a direct way for sales people to communicate withcustomers, (Harrison, 1995). Staff whom are able to provide highquality service with a customer-friendly attitude is the hallmark andbenchmark of a consumer responsive company. In todays marketplaceeffective personal communication is a means of achieving success forservice firms such as Advanced Alchemy. Exploiting and capturing theseelements then needs to be a cornerstone within strategic planning forthe company. The methodology used in the course of conducting this researchaimed at employing a case study approach with Advanced Alchemy beingthe object of the case study. In terms of research tools bothquantitative and qualitative methods were deployed towards collectingdata of relevance to the objectives of the research as set out in theintroduction. These research methods concentrated on exploring externalfactors of relevance to Advanced Alchemy and exploring the manner inwhich internal strengths and weaknesses within the company related toor responded to these. The first stage of the research was a detailed horizon scanningincorporating elements for a PESTEL analysis towards identifying themajor environmental challenges which were faced by the company.Material utilised here included nationally sourced statistics relatingto economic performance, market performance within the industry,identification of any regulatory/legal structures of concern to thecompany and an assessment of major technological developments with abearing on the companys business model and modes of providing servicesto its customers. This stage in essence sought to identify themes orconcerns which would serve as the basis for more in-depth researchwithin the company itself, (Bell, 1999). Following on from the documentary analysis and horizon scanningstage preliminary quantitative research was carried out within thecompany in the form a survey. The sample for the survey was drawn fromfour major groups within the company these being sales personnel, humanresource personnel, line management and executive management. Thequestionnaire sought to collect attitudinal and behavioural data whichwas then utilised in conducting a market orientation assessment of thecompany, (Hooley et al, 2004). This data in terms of analysis wasframed in a manner exploring how well human resource was strategicallyexploited and how well in tune employees in the organisation were withthe demands of its organisational customers. Following on from this survey follow up qualitatively based researchwas undertaken. This part of the research included five focus groups,four of which corresponded to the groupings outlined above in relationto the questionnaire and one which was a mixed sample of all of thesegroupings. The focus groups sought to collect data related to thethemes and issues raised by the documentary analysis related toperceptions of the major environmental challenges faced by the company,(Saunders, Lewis Thornhill, 2003). In particular it sought toexplore the different responses to these themes from various levels ofemployees within the company. As well as seeking to collect data inthis regard of interest also to the researcher were the internaldynamics between employees at similar levels or functions within thecompany and with the final focus group between different levels of thecompany. This in particular sought to explore the effectiveness of theflatter communication channels and flatter hierarchi cal managementstructures employed by the company in its deployment of a corporateintranet. This was a particularly useful means of generating data onhow well management mission statements concerning customer needs werecommunicated to personnel dealing with these customers and also howcustomer needs were translated into effective training schemes forsales personnel, (Fern, 2001). Along with focus groups six semi structured interviews were carriedout, four within the organisation and two such interviews were carriedout with two of the companys biggest customers. The use ofsemi-structured interviews allowed for a rich collection of dataallowing for thick explanations of themes and issues highlighted bydata generated by other methods to be gained, (Gubrium Holstein,2002). The interviews within Advanced Alchemy were again divided intothe groupings outlined above with an interview conducted with arepresentative from each. The interviewees were drawn from therespective focus groups. These interviews were conducted where possibleas short a time as possible after the focus groups had been conductedin order that the themes and contents discussed in the focus groupswould still be fresh and thus deeper exploration of the themes easierachieved. The finding from these interviews was used in a comparativesense with the interviews conducted with purchasing representatives oftwo of Advanced Alchemys biggest customers. As such data in theseexternal interviews was sought on how well matched the concerns andissues raised by employees within Advanced Alchemy as well asmanagement mission statements matched with or converged with issues andsentiments expressed by its major customers. Such data was in turncompared with the documentary analysis in order to arrive at atriangulated snapshot of how well the companys marketing plan wasbeing implemented internally and how well it addressed the needs of itscustomers, (Coffey Atkinson, 1996). A number of methodological problems were faced in the conduct ofthis research. First and foremost was the often sensitive nature of thedata collected in terms of business practice related to competitiveperformance, (Chisnall, 2005). In order to gain participation andconsent from the company research findings were discussed in anextensive manner with key personnel in the company with a right of vetobeing offered towards any data deemed to be of too sensitive a nature.In the main however through pointing out the advantages of the researchto business practice internally such fears and considerations wereusually allayed. This problem in turn was connected to and related toethical considerations and problems of participant bias related to morejunior level employees in the company, (Strati, 2000). Both of theseproblems were addressed through the seeking of full informed consent toparticipating in all of the research methods used and the ensuring ofconfidentiality and anonymity over respons es to questions, particularlywithin the interview setting, (Marshall, 1997). The researcheracknowledges however that in the case of the focus groups and inparticular the mixed focus group participant bias may havesignificantly influenced the content of the data due to the internalpower structures of the group reflecting wider organisational powerstructures. Marketing Mix (7Ps) Advanced Alchemy is a leading provider of marketing and salesdevelopment support to IT, telecoms and other technology companies.Thus the major products provided include lead management (inbound andoutbound lead management), consulting based on market research, partnerrecruitment and management, field sales , partner/channel telemarketingas well as sponsored distributor support and ecosystem building,(Advanced Alchemy, 2005). In short the products are based onprofessional services for marketing activities in particular for IT andtechnology related companies. As discussed in the literature reviewevery element in a marketing mix communicates with customers. Productsfor Advanced Alchemy as such are professional services provided fortheir clients in an effective way in terms of cost and quality service.It is important then to look at the service provision process which isargued to be the most important and direct way of communicating withcustomers and attract potential consumers, (Duncan Everett,1993). The servicing process is delivered directly through sales peoplenamely who in this case are professional marketing consultants. Theywork with two types of client, large enterprises and smaller venturecapital funded companies looking to expand and gain rapid market share.During this process the team members discuss with partners continuouslyin order to communicate effectively allowing adjustments to be made tocope with partners requirements. A key finding of the interviewsconducted with the companys customers was the acknowledgement of highresponsiveness in most cases from sales personnel. However dueintensive changes particularly in technology related industries delayeddecisions by clients was identified in the focus groups as causinginefficiency for Advanced Alchemy in terms of human resource costs bychasing unwanted leads for example. A strength emphasised in theinterview conducted with a line management representative was that athorough understanding of the IT market especially in Europe allowedthem to provide useful advice and effective marketing models includinglead generation campaigns, channel support for distributors as well asother marketing initiatives for customers. It is unsurprising to note that people played an essential role in themarketing mix for Advanced Alchemy since a professional workforce withoutstanding marketing knowledge in IT, telecom and technology linkedfields contributed to the achievement of corporate strategic goals andcustomer demands. This was highlighted in particular in the mixed focusgroup but this quality was also confirmed in the customer interviews.Firstly sales objectives were achieved by people along with conductingpromotional activities in order to help partners make a purchasingdecision, (Wernerfelt, 1995). The interview with a sales personre-iterated the positive benefits to sales people in attending tradeshows where up-to-date market knowledge and positive customerinteractions could be achieved. It is fair to say th at the majorcommunication goals were generally achieved by sales personnel. Thisagrees with points raised by Torrington, Hall and Taylor (2002) in thathuman resource is the most important strategic resource for anyorganisation and in particular service based companies who rely ontheir front-line staff to support brand images. Unlike other manufacturers or retailers the major products forAdvanced Alchemy are services thus the most important tool used forpromotion is the provision of quality services in terms of superiorknowledge in technology and marketing fields as well as support from aneffective business model. Therefore Advanced Alchemy utilised acorporate website, public relation campaigns in Planet Hollywood aswell as direct marketing in order develop an integrated promotion mix.In the mixed focus group the response to such promotions was positivehowever in interviews with line management and the sales person a themeexpressed was that the PR activities of the company needed to be bettertargeted to the environments in which its major customers operatedwithin. Public relations as discussed in the literature review havebecome one of the most effective communication channels with consumers.The usage of sponsorship for TBC Advanced Alchemy aimed at establishinggood relations with customers and the general public. In addition topublic relations another promotion tool exploited by Advanced Alchemyis direct marketing at the sales spots. Again in the interviews with aline management and sales person it was felt that certain methods weremore successful than others such as engaging with the public generallyversus pitched sales spots. Price element is often used by customers as an indicator of thequality of products. The price structure used by the company is basedon day rate and risk reward basis generally. However Advanced Alchemyseems to be in a weak position in the price war due to its limitedfinancial resources compared with its major competitors. This point wasrepeated in concerns expressed in customers interviews over therelative inflexibility of pricing offered by the company.Differentiation in the service field is then arguably the mostimportant strategy for Advanced Alchemy in maintaining customers. Thephysical evidence and place support Advanced Alchemys marketingactivities. The corporate website can be seen as important evidencewhich helps existing and new customers acquire useful information andspreads the brand name through viral marketing. As Heyman (1999) arguesviral marketing can be especially effective when a website communicatesefficiently bearing in mind in the value chain each functioncontribu tes and interacts in achieving corporate goals. It isreasonable to say that the physical evidence and marketing place to alarge extent support other elements in the marketing mix. Again incustomer interviews the sophistication of the companys web presencewas highlighted. Environmental and SWOT Analysis Rooted in the environmental analysis literature the PESTEL frameworkallows for examination of the external environment a company operatesin. It is necessary to look at the macro environment which AdvancedAlchemy operates in. The economic situation in the UK has significantinfluences on Advanced Alchemys marketing strategy. The poor economicperformance nationally has limited the budgets for companies onpurchasing marketing services from outside agencies such as AdvancedAlchemy. This has resulted in a price war in the information serviceindustry in order to keep market share through price tooling whichgenerated threats and challenges for Advanced Alchemy. In additiontechnological development has had major impacts on the companysstrategic decisions since customers are more technology sensitive anddemands for technological advanced marketing models showing increasedreturns on investment have increased. The interview with an executivemanagement representative saw the point being made that AdvancedAlchemy saw opportunities in using e-marketing models in satisfyingcustomers as well allowing for expansion of the company. However alsonoted in the interview was that technological development results inmore demanding clients who expect better quality and advanced marketingmodels, channels and support in their service provision, (Ziithaml,Parasuraman Malhotra, 2000). Government support for certainindustries such as IT, telecom and automotive industries alsoinfluenced Advanced Alchemy in terms of potential businessopportunities. Based on Porters (1980) industrial five forces model it is usefulto look at the micro environmental context. It is obvious that rivalryinfluences Advanced Alchemys performance to a large degree. Due toglobalisation they not only have to compete with local companies butalso international companies such as Harte-Hanks. Furthermore the powerof customers has increased to a large degree since how to meetcustomers demands effectively but at a profitable price is a challengefor Advanced Alchemy and one noted in all of the focus groups. At thisstage customer focus should be central to the corporate positionhowever due to the lack of budget Advanced Alchemy fails to meetcustomer needs in some respects. In particular the HR focus groupexpressed concerns over the lack of budget being available for trainingschemes for sales personnel to equip them with the most currentknowledge responsive to customer needs and market conditions. Call centres can be seen as the suppliers for Advanced Alchemy and as aresult it is vital to establish good relationships with them. Due tothe decline in the national economic growth rates it is unclear as towhether new entrants will seek to gain entry into the industry. Howevercompetition based consistently on marketing specialists has becomeincreasingly intense with pressure coming mostly from existingcompetitors locally and internationally. Moreover marketing consultantcompanies face the threat of substitution from professional softwarewhich can set up technologically advanced marketing models forcompanies. However in the HR and Sales personnel focus groups it wassuggested that a possible strategy for the company could be to investin developing these models internally through investment in employeeswhich would allow for the company to maintain a technological edge aswell as a human resource edge over these types of competitors. Table 1 SWOT Analysis Opportunities vertical business opportunities (auto) Growth in areas like Adrenalin potential new clients increasing sales within existing client baseThreats intensive competition substitution volatile market decline of UK economy mature market size Strengths Strong client base Well known brand name within event circuit Strong reference base Successful campaigns Increasing client attrition rate professional workforce strong organisational culture Differentiation strategy Cost Effective Strategy Weaknesses lack of marketing awareness in some field eg. Outside Baptie circle inconsistent branding strategy inconsistency and unreliability in call centre Inconsistent Branding Strategy As discussed in the methodology a questionnaire was employed togenerate broad attitudinal data from employee groups within the companywhich was used in conducting a marketing orientation assessment. Oneclear finding from the questionnaires was a sense of disconnectednessfrom the customers of the company. The impression given from the datawas that the mission of Advanced Alchemy was unclear and un-clearlystated in relation to customer needs and failed to build a strong senseof satisfying customer demands directly. Data from the interviewssuggested that Advanced Alchemy was focused more on the quality oftheir products more than understanding of consumer demands. Table 2 Customer Orientation Strongly agree 5Agree 4Neither 3Disagree 2Strongly Disagree 1Dont know 0 Information about customer needs collected regularly 4 Our corporate objectives and policies are aimed directly at creating satisfied customers 0 Levels of customer satisfaction are regularly assessed and action taken to improve matters 4 We put major effect into building stronger relationships with key customers and customer groups 2 We recognise the existence of distinct groups or segments in ourmarkets with different needs and we adapt our offerings accordingly 3 Total Score13 Information about major competitors was collected by AdvancedAlchemy however evaluation and analysis of their products were notcompleted regularly according to the line management focus group. Thisinefficiency in analysing key competitors resulted in low reaction tocompetition. Also noteworthy is the fact that the differentiationstrategy did not work properly due to the lack of understanding towardskey customers and customer groups. Table 3 Competitor Orientation Strongly Agree 5 Agree 4Neither 3Disagree 2Strongly Disagree 1Dont Know 0 Information about competitor activities is collected regularly 4 We conduct regular benchmarking against major competitor offerings 3 There is rapid response to major competitor actions 2 We put major emphasis on differentiating ourselves from the competition on factors important to customers 2 Total Score11 The ability to meet customer needs in service organisation depends on aprofessional workforce a point highlighted in all focus groups andinterviews. From the survey data it was clear that effective team workcontributed to the companys previous success but that changes in theexternal environment generated major challenges for Advanced Alchemywhich the company was unable to respond to due to budgetaryconstraints. A strong sense of team spirit was highlighted at all ofthe focus groups and was confirmed to lesser degrees in the interviewsconducted. Table 4 Inter-Functional Co-Ordination Strongly Agree 5 Agree 4Neither 3Disagree 2Strongly Disagree 1Dont Know 0 Information about customers is widely circulated and communicated throughout the organisation 4 The different departments in the organisation work effectively together to serve customer needs 4 Tensions and rivalries between departments are not allowed to get in the way of serving customers effectively 3 Our organisation is flexible to enable opportunities to be seized effectively rather than hierarchically constrained 3 Total Score14 It is obvious that a strong organisational culture resulted inskilled human resource including senior management team and employeesbeing available to the company. Their understanding of their role inmeeting customer needs was a central tenet the companys organisationalculture. In both focus groups and interviews as well as the customerinterviews the team values and reflected organisational culture of thecompany was continually highlighted as a positive feature. Table 5 Organisational Culture Strongly Agree 5Agree 4Neither 3Disagree 2Strongly Disagree 1 Dont Know 0 All employees recognise their role in helping to help create satisfied end customers 4 Reward structures are closely related to external market performance and customer satisfaction 4 Senior management in all functional areas give top importance to creating satisfied customers 4 Senior management meetings give high priority to discussing issues that affect customer satisfaction 5 Total Score17 Budgetary constraints drove Advanced Alchemy to focus more on shortterm profits rather than long term market share with possibleramifications for future customer relationships, a concern highlightedin the executive focus group and customer interviews. However thismarket-orientated approach allowed the company to focus on the market.Namely they adopted a market driven strategy in order to maintain longterm competitive position, (Webster, 1994). Generally speaking AdvancedAlchemy performed with a long term framework in mind however their weakfinancial background puts them into a poor position of fundingstrategic plans over the long term. Table 6 Long-term Perspectives Strongly Agree 5Agree 4Neither 3Disagree 2Strongly Disagree 1Dont Know 0 We place greater priority on long term market share gain than short run profits 3 We put greater emphasis on improving our market performance than on improving internal efficiencies 4 Decisions are guided by long term considerations rather than short run expediency 3 Total score10 The total score for Advanced Alchemy using this evaluation too is 65which indicates a moderate market orientation has been made by thecompany. This is an assessment in tune with the qualitative data whichhighlighted the past successes of the company, its ability to performwell certainly in the short term but fear and uncertainty associatedwith longer term strategic ability for the company to competesuccessfully. Definite areas of improvement were suggested in terms oftraining, in more targeted marketing activities and clearercommunication of mission goals and customer needs to all levels of thebusiness. In consideration of the analysis of resources in Advanced Alchemy itcan be argued that human resource is the most important ingredient fora successful service based company. Intensive competition in themarketing service industry forces companies compete in terms ofworkforce rather than products and the efficiency of service processrelies on skilled personnel at all levels, (Pfeffer, 1994). Accordingto Hooley, Saunders and Piercy (2004) any organisation should have aclear understanding of the resources they have but most importantly itis vital to identify the significant resources that can help createcompetitive advantages and can be sustained into the foreseeablefuture. In the case of Advanced Alchemy their human resource is able toovercome their weaknesses in terms of a weak financial position andcontribute to differentiation strategy. However without investment inhuman resource it is doubtful whether this function can be sustained inthe long term a point re-iterated in both the foc us group and interviewinvolving human resource personnel. The lack of up-to-date knowledge related to current customers may alsolead to loss of competitive position and even failure for the companyconsidering the high cost of its services. It is interesting to notethat due to the characteristics of the marketing service industryparticularly in IT and technology related fields there areopportunities for Advanced Alchemy to employ a cost orientated strategythrough utilising an e-commerce model. This was a point which theexecutive management focus group was keen on. It has been suggestedthat the use of e-commerce not only helps companies build up effectivecommunication channels internally but also allows integration withsuppliers and customers as well, (Porter, 2001). The corporate websitedid not work effectively in some aspects such as gathering feedbackfrom partners through questionnaires and attracting new customersthrough strategic web-linking. Blythe (2003) argues that the when adiscrepancy appears between expected performance and actual performancemanagers have to take action. While rhetoric was observable in thefocus group little direct action was taken to rectify this. Blythe(2003) also suggests that criticisms should be communicated asconstructive feedback in order to avoid negative sentiments occurringwithin employees. Market-led strategy to Custom- orientated strategy The results showed that Advanced Alchemy exploited a market-ledstrategy which can easily lose competitive position for the company dueto environmental factors. Bearing in mind the objectives related toobtaining market share good quality products are essential. In AdvancedAlchemys industry the company which meets customer needs is able toobtain a stronger position in competing. A gradual shift away from anemphasis on market or service to an emphasis on customer value requiresAdvanced Alchemy to exploit effective tools to communicate with itstarget consumers and relate this communication to internal networks. Inaddition target segmentation based on the understanding of thecharacteristics of different customer groups means Advanced Alchemyshould concentrate more on how to add value to customers in differentsegmentations. Arguably it is easier to create an initial good position in themarketplace rather than sustaining competitive advantages in a longterm, (Hooley, Saunders, and Piercy, 2004). Human resource and goodreputation in the field as well as having a positive reference groupmeans Advanced Alchemy generated competitive advantages quickly yet thelack of knowledge and reliable understanding of customers allowedcompetitors to re-establish their own positions. This process has beencompounded by the weak financial position of the company. The retentionof competitive advantages requires value products as well as cleartight definition of market targets namely through effectivesegmentation, (Payne, 1993). The more clearly a firm focuses ontargeted markets the more likely it is to serve those targetssuccessfully. This was a point raised in the focus group and interviewsconducted with line management in that in the case of Advanced Alchemythis is significantly vital in developing supporting channels ford istributors. Figure 1 Innovation through marketing, quality and customer service Competition is increasingly intensive thus it is necessary forAdvanced Alchemy to compete through strategic innovation. Innovatoryprocesses can be obtained by human resource where investment in thisresource is of a sufficient level to create an organisational culturefostering innovation. However innovation relies on knowledge ofconsumer behaviour to a large degree and the ability to manage changetends to be important in completing innovation cycles, (Roger, 1962).Innovation also can be generated during the branding process anddifferentiate Advanced Alchemy as a technological advanced andcustomer-orientated caring company. The role of technique relatedsupporting programmes can be provided to customers in terms ofexclusive service and know-how with customer-focused specialistshelping to maintain old customers and attract new customers. It isessential to control the service process thus a feedback system shouldbe established in order to gather fresh data about customer needs andcommunic ate to them and channel this communication to all levels of thecompany. Good relationships with customers and suppliers as well asemployees could be achieved by regular and effective communication,(Ulrich, 1992). Competing through relationship marketing Figure 2 Relationship marketing orientation CS = customer service RM = Relationship Management Relationship marketing has been a topic of lengthy discussion amongacademic and practical marketing executives. In this process humanresource is viewed as the major trend in marketing and a key point insuccessful business management, (Christopher et al, 1991). According toEgan (2001) customer service needs to be placed in a central positionsupported by the seven marketing elements outlined in the literaturereview. However Gummesson (1996) argues that the term mix should bereplaced by relationship since each element interacts thus the maintask is to manage the relationship amongst all the factors effectively.Customer service then is about building long term relationships ofmutual advantage to both parties and the provision of quality customerservice involving understanding about what they buy and the determiningfactors which influence their buying behaviour. In short customerservice is not only a HRM concept but also a marketing principle whichrefers to interactive reflexive relations hips between personnel and thecustomer. However building relationships is time consuming and costlyhence Advanced Alchemy should form a strategic agenda dealing withawareness about consumers to begin with. 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