Examining the Characteristics of the Adopted Methods during the Process of Scheduling Marketing Efficiency among Hungarian Companies

Examining the Characteristics of the Adopted Methods during the Process of Scheduling Marketing Efficiency among Hungarian Companies

Ferenc Katona

Universitas Budensis, Keleti Károly Economic Faculty

katona.ferenc@kgk.uni-obuda.hu

Abstract

In these difficult times the question may often arise, ‘what actions do companies take to survive’? We frequently see different solutions for cost reductions, redundancies or cutting back on employee bonuses. But apart from pulling the belt tight, are there any other applicable tools to widen their possibilities for the future and moreover, do companies make use of those at all? Marketing tools may ensure a wide range of alternatives for companies to promote and popularize themselves and their products. These tools, above some expensive solutions, also include a number of relatively cheap options, some of which are effective and others having no beneficial use. The question is, whether companies make use of these tools and if so, whether they try to examine and investigate the results of their marketing actions? In my study bellow I would like to find out the answers for these questions.

Key words

Marketing efficiency, advertising, marketing planning, analysis of marketing activities

1. Economic Efficiency and Marketing Efficiency

The meaning of economic efficiency is described by Kopányi (1997) as the ratio of the value of expenditures to the achieved results, which technically cover the same terms. According to Engle (1941), technical efficiency is a part of economic efficiency. The differences between the two terms derive from the fact, that technical efficiency can be defined on its own, however economic efficiency is relative, only having meaning in relation to another term (Eagle 1941). Looking at it from a different angle, economic efficiency is such an efficacy of economic activity, where the principle of economy would prevail by fully utilizing possibilities during the activities (Francsovics and Kadocsa, 2005, 181).

At the same time, effectiveness may also be described by the ratio of resources used, to the achieved results (Ambler et al, 2001), or it might also mean the economical implementation of our aims (Bauer and Berács, 1998), or perceived as the net sales per unit of input (Beckman, 1940, 138), as well as the ratio of profit or sales to the marketing efforts per unit (Sevin, 1965). 

Binet (2003) claims that something is only efficient, when there are results to be seen, especially in particular of the predetermined or desired results. Thus, efficiency in his interpretation means to achieve the desired goal and so the measurement and evaluation of efficiency means the comparison of results and goals, intentions given by the client.   

On the contrary, efficiency indicators also look at the question from a different angle, when they provide an account for the usage of the company assets (Cohen, 1996). The author actually identifies efficiency as the effectiveness of the return on current assets.

Advertising effectiveness is meant to be the return on advertisement costs, deriving from the profit growth due to the turnover of adverts (Bauer – Berács, 1998).

Certain researches pointed out the fact too, that marketing efficiency measurement is significant in those industries, where the budget spent on marketing activities is higher (Foster and Gupta, 1994).

Marketing activities typically form the non-manufacturing part of the company. The marketing processes merging one into another are mostly incomprehensible, hardly manageable. The cost-intensive expenses for the application of particular marketing means are known, while determining their resulting effects is much harder.

(Katona, 2009)

Now – without trying to quantify the efficiency of marketing actions or advertising – I will attempt to demonstrate a few typical aspects of marketing activity patterns for Hungarian companies, moreover the facts how deeply are controlling elements (planning and feedback) involved in this activity.

2. Research Methodology and Features of the Sample

So far in the research almost a hundred questionnaires have been worked up. The two-third of companies in the sample are based either in Budapest or in Pest County, therefore we can not draw conclusions on the whole Hungarian business world from the sample.

Discrepantly to the multitude of features the sample included a much smaller ratio of micro enterprises, then in the tested multitude. I applied a few categories somewhat differing from the statistical multitude, for example my first category covers those companies employing 0-20 persons and 61% of the enterprises within the sample belonged to this group. Further categories are: 20-49 persons group – 14%, 50-99 persons group – 4%, 250-499 persons group – 6%, 500-999 persons group – 5%, 1000-4999 persons group 0% and above 5000 persons 2%.

More than 40% of the companies participating in the sample are managers held, while 35% of them are in domestic private ownership.

27% of the companies within the sample operate in small trade or large trade, 18% of them in the building industry, 13% of them in manufacturing, 8-8% of them in the hospitality industry and in the transport sector. Other industries only include companies between 0-5%, except for the other services with 11%.

Three-quarters of the companies in the sample are only active on the domestic market, thus only one-quarter of them deal with export activities. In regard to the export markets, the Eastern-European market and the Western-European market play a major role, 16% and 18% of the companies are present at these markets with their goods and services.

3. Investigation on Advertising Tools Applied by Companies

The two most popular advertising tools claimed by the interviewed companies would be paper advertisement (39%) and “word of mouth” advertising (42%). The lately practically means, that these enterprises fully rely on fate and most of them do absolutely nothing to acquire consumers, they do not pursue to familiarize the company and its products with the potential consumers.

Next level is formed by the online advertisements (31%) and the PR activities (29%), a bit less remarkable then the two most popular forms of advertising. It might be an issue, how much the respondents were aware of the meaning of public relations. Doubts may rise from the fact that the greater part of the sample consists of micro and small enterprises, who invest much less energy into PR activities, since these certain activities require significant professional knowledge. The reason why this tool has also been selected by the entrepreneurs, could simply be a defence reaction, fearing that the absence of this tool in their questionnaire would result in a bad image of their enterprise for neglecting the importance of public relations.

The next three most commonly used advertisement tools are: exhibitions and events (25%), flyers (24%) and sales promotion (23%). These results reflect to the presupposition propounded in the beginning of the investigation, that smaller enterprises rather select and prefer marketing tools with lower costs. The share of appearance in the broadcast media, and the application of billboards or direct marketing letters only exceeded 10%.

Figure 1.

Source: Own Primary Research

If we look at the various advertising tools in concern with the size of the companies, then we will notice some significant differences. We will discover for example, that in the life of medium-sized and large enterprises, broadcast media plays an important role. For companies employing less then 100 persons, television and radio advertising are seldom used, those, making use of these channels are less then 10%. As an exception, companies with 50-100 employees do apply radio advertising, for almost 30% of them use this channel.

It is also a remarkable outcome, that for companies employing 100-250 persons, the following ways of advertising are a priority: newspaper ads, sales promotion, public relations and exhibitions, since these tools are used by the two-third of these companies.

Obviously, we must carefully examine the results and we should not draw any far-reaching conclusions, especially when we analyze companies categorized according to the number of their employees, since the low number of companies within the sample would derive in a rather distorted representation of the analysis.

Figure 2. 

Source: Own Primary Research

4. Index Numbers used by Companies for Analysing Efficiency

The following diagram bellow tells us about the ways how companies attempt to analyze the efficiency and performance of their marketing and advertising actions. It is clear that most of the companies (39%) do not analyze the efficiency of their marketing actions after the campaigns. 40% of the companies applying the index numbers, would only consider the growth rate of revenue, identifying it with the increase of results induced by the marketing action. The second most commonly used index is the measurement of increase in customer satisfaction (21%), and the third is market share growth with 15%. Just over 10% of the responders marked the following indicators: effect on the increase of corporate profits, the increase of awareness regarding their goods or the company itself or the alteration of consumer attitudes. Positive changes relating to brand loyalty and the effects of an image alteration of the company or the product was only considered important by 6 and 4% of the respondents.

Figure 3.

Source: Own Primary Research

Analysing the indicators used by the companies according to their size, it stands out, that two-thirds of them employing 100-250 persons apply the research on revenue and profit growth. Inspection of market share growth and alteration in consumer satisfaction were observed in the largest proportion for companies with 250-500 employees.

 Interestingly, the simplest indicator (change in revenue) is not important for companies with employees over 500, however those of less then 500 employees it is the most popular indicator.

The lack of examining marketing performance is typical for the smaller enterprises. For enterprises with less then 20 persons, this ratio is 46% and for those with 20-50 persons it is 33%. It is a rather surprising result, that half of the companies with 500-1000 employees do not examine the results of their own marketing performance. This is most probably, as I already noted earlier, explicable by the low amount of companies within each group included in the sample.     

Figure 4.

Source: Own Primary Research

5. Analysis Techniques Applied in Planning Marketing Activities

The research clearly demonstrates, that a noticeable amount of the companies (44% within the sample) do not carry out any kind of a marketing plan. Even in case of the other enterprises, the available tools for planning their marketing activities are rather poor. Only about a quarter of the enterprises claimed that they would use the following elements in the process of marketing planning: benchmarking (26%), SWOT Analysis (25%), profitability index (25%) and payback period (24%), as a planning tool. The extensive use of the last two tools is somewhat questionable, for it would suppose that a quarter of the companies consider marketing activities as an investment – one that produces returns and shows return in time -, rather then only a cost increase factor. Although we must underline the fact, that 41% of the respondents believe that marketing costs are long-term investments, according to the questionnaire. The credibility of these results is however questionable in several respects.

The next group of the applied tools would include: the discounted cash flow method (15%), the net present value calculation (14%), the product life cycle analysis and the internal rate of return (13-13%), as well as the portfolio analysis techniques (11%).

Figure 5.

Source: Own Primary Research

Conclusion 

I would have like to demonstrate, that the small and medium-sized Hungarian enterprises do not abound in a wide range of marketing communication tools. However, when they apply certain tools after all, they do not tend to use the most up-to-date and most effective solutions. The application of marketing communication tools mostly lacks of planning and structure, no elaboration of a serious concept before “deployment” is typical.

Just like with the planning process of their marketing communication tools, only an insignificant proportion of the companies would pay attention to the evaluation of their efficacy or performance. If we seriously examine their activities in the process of their marketing planning, then we will see that their set of tools only include the simplest procedures, lacking any serious concept or notion. Even within the evaluation process of marketing actions, that slightly more than half of the companies apply, again, they would only use the most elementary indicators. It is unlikely that most of these companies would examine more deeply, which other factors and in what levels would have had effects on their revenue growth.

Print media plays the major role in regard of the applied media tools within marketing communication. The following tools also form a relatively large group: online advertisements, sales promotion, flyers, exhibitions and nursing of public relations. All in all we can state it, that the application of marketing communication tools is not satisfactory and what is even more distressing: most of the time they lack the appropriate feedback.

References

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