Master of Business Administration: Factors contributing to poor quality marketing in Malawi-a case study of TNM mobile company.

The aim of the study was to investigate factors leading to poor quality marketing, reduced, constant or minute increases in market share and low return on investment for TNM in Malawi. The outputs of this study were significantly important as basic application models that would enhance existing theoretical models and strategic practices to improve the quality of marketing, increase market shares and profitability for companies to address challenges that contribute to poor or low quality marketing. To consult more MBA essays, please see at: Bộ Luận Văn Thạc Sĩ Quản Trị Kinh Doanh MBA

FACTORS CONTRIBUTING TO POOR QUALITY MARKETING IN MALAWI-A CASE STUDY OF TNM MOBILE COMPANY

BY

RICHMOND ELIJAH MKOPA MSOWOYA

DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS

ADMINISTRATION

IN THE

DEPARTMENT OF BUSINESS STUDIES

MANAGEMENT COLLEGE OF SOUTHERN AFRICA (MANCOSA)

SUPERVISOR: ALEX CHANZA

2010

Declaration

I, Richmond Elijah Mkopa Msowoya, do hereby declare that this dissertation is

a product of my own research work and all other sources of material used herein are duly acknowledged

This work has not been submitted to any institution for an award of any academic degree

………

Richmond Elijah Mkopa Msowoya

December 2010-:- Johannesburg, South Africa

Dedication

This dissertation is dedicated to God the almighty father, his son Jesus Christ and the Holy Spirit for making me what I am today

Acknowledgements

I recognize with great honor, the suitable and insightful comments given by my supervisor Alex Chanza, who made this report affluent and absolute Many thanks also go to Dr Adolf Lowies and Mr Indrasen Moodley who aptly guided

me put the ideas together in the initial stages of this work Special thanks go to

Dr Adolf Lowies and Tracey Naidu for their guidance and corrections during the final stage of dissertation writing

In addition, I am thankful to the entire Department of Business Studies staff of Management College of Southern Africa

I am sincerely indebted to the following for their support, encouragement and inputs, which facilitated this work:

 My wife Danily and daughter, Lusubilo for their support, perseverance and understanding my intermittent presence at home during study periods Let the Lord almighty father and the Holy Ghost be in their midst

 Sam Donald Mhango and Eliza Mhango for their unwavering support during my entire period of study May the good lord continue to enrich you with never ending blessings

 Research assistants, Isabel Chirambo, Hagira Gelo, Anthony Njima and Chisomo Maimba and all research participants for their understanding and co-operation

 God almighty, for his abundant mercies and grace and for elevating me to this level

 Shellie Texen Elijah Msowoya, my father and Judith Esnayi Nyalilino, my mother, for raising me up despite the hardships of raising children May the Lord almighty continue to give them strength and success each and every day

Abstract

In Malawi, TNM (a mobile telecommunication) company strived to remain competitive on the market with the first mover advantage by retaining a larger market share in order to increase return on investment However, it failed to achieve that by constantly experiencing reduced, constant, or minute increases

in market share and profitability to shareholders

The aim of the study was to investigate factors leading to poor quality marketing, reduced, constant or minute increases in market share and low return on investment for TNM in Malawi The outputs of this study were significantly important as basic application models that would enhance existing theoretical models and strategic practices to improve the quality of marketing, increase market shares and profitability for companies to address challenges that contribute to poor or low quality marketing

This was a case study that adopted quantitative techniques and used interviews based on semi-structured questionnaires, and desk literature The population for the study was obtained from staff of TNM Malawi

The findings revealed that there was a very strong correlation (35.7%, with a standard deviation of 1.2 and frequency of 81) between poor quality marketing and return on investment This suggested that poor quality marketing had significant negative impact on return on investment at TNM

From empirical study results, it was recommended that that TNM needed to improve its technological innovations, marketing strategies, recruit talented pool

of markers, improve on customer relationship management, continued its

investment efforts in infrastructure development The company needed to devise proactive strategies for external forces that were beyond its control

Table of Contents

Title Page ……….i

Declaration ii

Dedication iii

Acknowledgements iv

Abstract v

List of Acronyms and Abbreviations xi

List of Tables xii

List of Figures xiv

Chapter One 1

Introduction 1

1.1 Background to the Problem 1

1.1.1 TNM and Airtel in Malawi 6

1.2 Problem Statement 7

1.3 Aim of the Study 8

1.4 Objectives 8

1.5 Research Questions 9

1.6 Significance of the Study 9

1.7 Conclusion 10

Chapter Two 11

Literature Review 11

2.1 Introduction 11

2.2 Definition of Marketing 11

2.2.1 Achieving a Balance 16

2.3 Marketing and Quality 17

2.3.1 Service Quality (SERVQUAL) 20

2.4 Relationship Marketing (RM) 21

2.5 Customer Relationship Management (CRM) 22

2.6 Marketing and Research 24

2.6.1 Understanding Marketing Intelligence and Research 25

2.7 Economic Theories on Increasing Return on Investment 27

2.8 Existing Gaps in Literature 28

2.9 Conclusion 29

Chapter Three 31

Research Methodology 31

3.1 Introduction 31

3.2 Research Aims and Philosophy 31

3.3 Research Approach or design 32

3.4 Study population 34

3.5 Sampling and sampling procedures 34

3.5.1 Sample size determination 34

3.5.2 Sampling criteria 39

3.5.3 Sampling design 39

3.5.4 Sample selection 40

3.6 Instruments for Data collection 41

3.6.1 Questionnaire design 41

3.6.2 Validity of instruments 41

3.6.3 Reliability of Instruments 42

3.6.4 Pre-testing of the data collection instruments 42

3.7 Data Collection 43

3.8 Data management and Analysis 43

3.8.1 Data Management 43

3.8.2 Data analysis 44

3.9 Ethical considerations 44

3.10 Dissemination of the study results 45

3.11 Limitation of the study 45

3.12 Conclusion 45

Chapter Four 47

Statement of Findings and Analysis of Data 47

4.1 Introduction 47

4.2 Sample Description: 47

4.3 Quality of Marketing 48

4.3.1 Quality of Marketing in Malawi 48

4.3.2 Quality of Marketing at TNM 49

4.3.3 Correlation between Quality in Malawi and at TNM 52

4.3.4 Factors leading to poor quality marketing in Malawi 55

4.3.5 Factors Contributing to Poor Quality Marketing at TNM 56

4.4 Return on Investment 59

4.5 Impact of Poor Quality Marketing On Market Share 71

4.6 Challenges Facing TNM 74

4.7 Overcoming Challenges 79

4.8 Executing Quality Marketing at TNM 82

4.9 Strategies to increase ROI at TNM 84

4.10 Summary of Research Findings 85

4.11 Conclusion 86

Chapter Five 87

Discussion of Findings and Linking to Literature Review 87

5.1 Introduction 87

5.2 Quality of Marketing 87

5.2.1 Quality of Marketing in Malawi and at TNM 87

5.3 Factors Leading to Poor Quality marketing in Malawi and at TNM 88

5.4 Return on Investment and Market Share 90

5.6 Strategies to Increase ROI 95

5.7 Conclusion 98

Chapter 6 99

Conclusions and Recommendations 99

6.1 Introduction 99

6.2 Findings from the study 99

6.2.1 Findings from Literature Review 99

6.2.2 Findings from Primary Research 101

6.3 Conclusions 102

6.4 Recommendations 103

6.5 Conclusion 105

6.7 Areas Requiring Further Research 106

Bibliography 107

Annexures 122

Annex 1 122

Consent Email from TNM 122

Annex 2 123

Consent Form (English) 123

Annex 3 125

Key Informant Check-list 125

Annex 4 130

Summary of Interview Schedules 130

List of Acronyms and Abbreviations

ROI-Return on Investment

TNM- Telekom Network Malawi

SPSS-Statistical Package for Social Scientists

Airtel-A mobile company operating in Africa, Middle East and Asia and branded from Zain

re-CRM-Customer Relationship Management

MANCOSA-Management College of Southern Africa

RM-Relationship Marketing

4 Ps-These are marketing mixes which include; Promotion, place, product and price

SCA-Sustainable Competitive Advantage

KSFs-Key Success Factors

SERVQUAL-Service Quality

Zain-The name of one of Malawi mobile company before rebranding to Airtel Celtel-Airtel Company‟s name before rebranding to Zain

TQM-Total Quality Management

TQMk-Total Quality Marketing

SS-Sample size

List of Tables

Table 1: Determining Minimum Returned Sample Size for a Given Population Size for

Continuous and Categorical Data 36

Table 2: The quality of Marketing in Malawi 48

Table 3: Quality of marketing at TNM 50

Table 4: Correlation between Quality in Malawi and TNM 52

Table 5: Comparison of quality of marketing in Malawi and at TNM 52

Table 6: Chi-Square Tests 52

Table 7: Symmetric Measures 53

Table 8: Symmetric Measures 54

Table 9: Factors leading to poor quality marketing in Malawi 55

Table 10: Factors Contributing to Poor Quality Marketing at TNM 56

Table 11: Statistics 59

Table 12: Statistics 60

Table 13: Relationship between poor quality marketing and ROI and Effects on TNM 62

Table 14: Chi-Square Tests 67

Table 155: Symmetric Measures 67

Table 166: Effects of poor quality marketing ROI 68

Table 17: Effects of poor quality marketing and ROI 69

Table 18: Impact on TNM Market Share 71

Table 19: Impact on TNM Market share 72

Table 20: Statistics 74

Table 21: Challenges Facing TNM 75

Table 22: Complementary Challenges 77

Table 23: Overcoming Challenges 79

Table 24: Executing Quality at TNM 82

Table 25: Strategies to increase ROI 84

Table 26: TNM Financial highlights for the Year ending June 31st 2010 91

Table 27: Company Performance Trading on Malawi stock Exchange 92

Table 28: Declared dividends for years 2008 to 2010 93

Table 29: Traded Stocks by Volume and Value 94

Table 30: Malawi companies trading Statistics (Jan-March 2011) 95 Table 31: A low–cost competitor optimizes its value chain across multiple dimensions 97

List of Figures

Figure 1: Measure of market performance 13

Figure 2: TQMk-A symbiosis 18

Figure 3: Customer focused exchange 19

Figure 4: Graph showing the quality of marketing in Malawi 48

Figure 5: Pie chart showing the quality of marketing at TNM 50

Figure 6: Bar Chart 54

Figure 7: Chart showing Factors Contributing to Poor Quality Marketing at TNM 58

Figure 8: Bar Chart 60

Figure 9: Poor Quality marketing, ROI and effects on TNM 61

Figure 10: Poor Quality Marketing and ROI 70

Figure 11: Bar Chart 73

Figure 12: Bar chart showing challenges at TNM 76

Figure 13: Complementary challenges 78

Figure 14: Overcoming Challenges at TNM 81

Figure 15: Quality Assurance at TNM 83

Figure 16: Strategies to increase ROI 84

Figure 17: Promotional Tunes Figure 18: Promotional Messaging 90

Chapter One

Introduction

Many companies in developing countries face gargantuan challenges in marketing their products and services compared to those located in developed economies (Naresh, Malhotra, Francis, Ulgado, Agarwal, Imad, and Baalbaki, 1994:5-15) Malawian companies are no exception as they encounter problems

of reduced market shares, and low return on investment (ROI) One of the major challenges is the failure to develop proper marketing strategies and adopt appropriate and high quality marketing tools aimed at enticing or convincing a large pool of new customers, retaining existing ones, commanding large market shares and increase profitability or return on investment In order to execute good strategies of improving the quality of marketing there was need to explore and understand the factors that lead companies to low profitability and reduced market share The study therefore investigated factors that contributed to poor quality of marketing resulting into unanticipated poor returns on investment

1.1 Background to the Problem

Many businesses throughout the world experience enormous challenges in breaking through markets, satisfying customers' and commanding large market shares for their business ventures In achieving success, companies need to execute strategies that make them winners against their competitors in order to command large market shares and increased ROI Gray, Matear, Boshoff and Matheson (1998; 884) underscore that managers have been facing challenges

on how to implement marketing strategies because of failure to establish a generalisable model of market orientation and also the lack of a parsimonious measure of market orientation which managers can use to pinpoint organizational short-comings This suggests that companies face strategic and

operational difficulties in developing and translating marketing concepts because

of lack of ability (requisite knowledge, skills and systems) or opportunity Gray et

al (1998:884) and LeClair (2000: 194) underline that although marketing decision makers bring experience and knowledge to the development and implementation of marketing strategy, there are always gaps in information that can lead to lapses in judgment, unintended consequences, and strategic errors This refers to lack of sensitivity inside the company by management to respond

to the needs of customers using appropriate marketing tools Menon and Varadarajan (1992), as cited in LeClair (2000: 194) note that when an organization is experiencing environmental instability, marketing managers will need more knowledge-enhancing information and demonstrate a greater utilization of that information

Liu (1995), cited in Asikhia (2010:197) explicate that sensitivity pertains to the fact that companies must be able to detect underlying customer concerns and that core customer problems lie outside management purview until a shock event occurs to highlight the inadequacy of existing approaches and, as a consequence, management features expose the extent to which the company is able to scan and interpret environmental signals This indicates that customer orientation is central to the origin of an effective customer focused marketing strategy Nwankwo (1995), as cited in Asikhia (2010:197) proposes a two state scheme to categorize levels of sensitivity namely pro-active and reactive sensitivity Asikhia (2010:197) explains that proactive sensitivity arises from a genuine desire to integrate customer interests into the decision mechanisms of the company Asikhia (2010:197) suggest ways in which organization can demonstrate such a level of customer concerns and these include:

 Viewing all customers, as marketing opportunities not market opportunities;

 Developing customer strategy based on perceptive marketing research;

 Developing power downward, especially to front-line staffs that deal with customers at critical moments; and

 In fusing organizational members with the vitality, enthusiasm and spirit to deliver true excellence in customer care

He further adds that reactive sensitivity involves a more mechanical approach to customer-orientation management He summarizes that reactive sensitivity is characterized by:

 Passive, often confused or misguided attention to customer orientation;

 Defensive attitudes in responding to customer complaints; and

 Coerced management attention: that is management usually only acts for the customer when forced to act

Neira (2010: 48) argues that customers believe they are “just as good as the next person” and usually compare themselves to other similar customers Neira (2010:49) further maintain that academic evidence has shown that consumers react negatively when they are treated less well than some other group and that there is widespread agreement on the relevance of maintaining a perception of equity among different customers He further cites that prior research on equity has established that a consumer‟s utility for an option depends not just on its absolute characteristics but also on whether the customer is getting a better or worse deal than some other group of customers, so that the customer is repelled when the provider offers another group of customers a better deal

Similarly, Parasuraman, Zeithaml and Berry (1985), cited in Sargeant and Asif (1998: 67) identified four gaps, which were responsible for the difference between expected and perceived quality namely:

 Not knowing what customers expect-the difference between consumer needs and management‟s perceptions of these needs;

 Not selecting the right service design-the difference between management perceptions of customer needs and the service standards set;

 Not delivering to service standards -the difference between service specifications and actual service delivery; and

 Not matching performance to promises-the difference between the standards conveyed in external communications and the actual delivered service

Denison and McDonald (1995: 58) summarize some of the business challenges leading to poor levels of marketing, leading to reduced market share and reduced return on investment as:

 Garda (1988) and Lazer (1993), in Denison and McDonald (1995: 58) argue that buyers and suppliers of products and services are becoming more global in their approach to business Hence, the challenge is restructuring domestic marketing operations to compete internationally

in larger, disparate markets;

 Customer expertise, sophistication, and power-Customers, generally, are becoming more demanding as their expectations of quality, reliability, and durability grow constantly The marketing challenge is twofold: first, of exploring ways to become closer to the consumer; second, of developing a means and experience base to cope with the complexity presented by multiple market channels;

 Lack of market growth In many sectors, market maturity has been reached, characterized by overcapacity, and exacerbated by current

recessionary forces It also presents a new challenge to marketing, namely, how to create and stimulate new-to-the-marketplace demand, rather than being satisfied simply by competing purely on a market-share basis McKenna (1991) as cited in Denison and Macdonald (1995:59) caution that the latter approach simply “turns marketing into

an expensive fight over crumbs, rather than a smart effort to own the whole pie”;

 Process thinking A direct outgrowth of the technology explosion in information handling and communications has been the switch out of a single-product approach to business to systems thinking;

 Time-based competition Time horizons continue to become more compressed and the pace of change is still accelerating The need to hit the market early and recover the investment fast is very apparent

In this context, price setting becomes vital These challenges present industry with the need to restructure and re-evaluate the way in which

it undertakes marketing, in a functional sense, as well as to reexamine the ways in which marketing can be introduced and accepted as a business philosophy; and

 Changing the marketing mindset-some recent empirical studies have contributed by identifying the criteria associated with the better performers over the last decade

However, Doyle (1992), cited in Denison and Macdonald (1995: 60) observe that many of the leading companies of an age do not manage to continue there for very long One of the reasons cited was that if they remained market leaders, they have stake in maintaining the status quo and become guilty of not moving forward, only to be overtaken by competition

1.1.1 TNM and Airtel in Malawi

There are several telecommunications operators in Malawi but this study concentrated on TNM in comparison to Airtel Anonymous 1 (2010: 2) and Anonymous 2(2010:3), highlight that Telekom Networks Limited, was incorporated as a private limited company on 24 March 1995 and the name of the company was subsequently changed to Telekom Networks (Malawi) Limited

On the other hand, Airtel Malawi Limited was incorporated on 3 September 1998

as Celtel and launched operations in 1999 On 1st August 2008, Celtel Malawi joined other operations across 14 countries in Africa and rebranded to Zain Malawi Subsequently, in September 2010, it rebranded to Airtel However, as at

31st August 2008, the number of subscribers for TNM stood at 461,814 and 695,224 in 2009 (TNM, 2009:3) compared to 964,000 for Airtel (Anonymous 1, 2010: 5) Ironically, Zain Malawi was the second cellular phone company to grace the Malawi market but it soon overtook the competitor to become the market leader, a position it still currently holds A testimony of how strong the brand is in the Malawian Market was how Zain Malawi managed to reclaim its top position after a fire disaster incapacitated the network for a period of two weeks

in March 2007 A few months later in August 2007, Zain Malawi's customer base increased astronomically from 376,000 subscribers to 500,000, representing a market share of 68%, emerging once again as the Market Leader Airtel Malawi made history once more in July 2008, by attaining a subscriber base of over 1 Million Customers, a first in the Malawi Telecommunications Industry (Anonymous 2, 2010: 4) the number which TNM managed to attain in 2010 (1,

140, 000) with a market share of 32%(TNM, 2010:7) when Airtel had already attained 1, 958, 000 subscribers in the same year In 2008, the number of TNM subscribers reduced drastically from 540 510 to 461 814(TNM News, 2009:1) representing a 14.5% loss The major constraints attributed to slow growth of TNM was poor marketing strategies including poor service delivery Fortunately, the government of Malawi through its economic liberalization policy created a

conducive environment for telecommunications to compete freely as it plays no role in the competitive market, beyond that of neutral arbiter

Government removed import duties on mobile phone handsets and telecommunications equipment in May 2008 However, Government subsequently introduced an excise tax of 10% on all airtime usage in June 2008 and value added tax was reduced from 17.5% to 16.5% (Anonymous 1, 2010: 10)

of two weeks in March 2007 A few months later in August 2007, Airtel Malawi's customer base increased astronomically from 376,000 subscribers to 500,000, representing a market share of 68%, emerging once again as the Market Leader Airtel Malawi made history once more in July 2008, by attaining a subscriber

base of over one Million Customers, a first in the Malawi Telecommunications Industry

However, poor retention and loyalty of customers through execution of poor quality marketing has been identified as one of the problems that contribute to commanding a smaller market share and reduced profitability for TNM The purpose of this study is therefore to investigate factors leading to poor quality marketing, reduced, constant or minute increases in market share and low return

on investment in order to come up with practical recommendations for increased market share and return on investment

1.3 Aim of the Study

The aim of the study was to investigate factors leading to poor quality marketing, reduced, constant or minute increases in market share and low return on investment in order to come up with practical recommendations for increased market share and return on investment

1.4 Objectives

 To identify factors contributing to poor quality marketing at TNM;

 To determine the effects of poor quality marketing on ROI;

 To examine factors leading to customer dissatisfaction with companies; and

 To make recommendations to management to improve the effectiveness

of marketing at TNM

1.5 Research Questions

 What are the factors leading to poor quality marketing in Malawi?

 What are the factors leading to poor quality marketing at TNM?

 What are the effects of poor quality marketing on ROI?

 What strategies can TNM execute to overcome challenges leading to poor quality marketing?

1.6 Significance of the Study

This research emanated because of the rapid pace at which Airtel Malawi (established in 1999) grew and increased the number of customers on the market despite its late establishment on the market as compared to TNM, which was established four years earlier

It is envisaged that this study will make major contributions to the theoretical models and framework for marketing strategies especially in establishing challenges and linkages in the areas of customer retention, loyalty, increased market share, and return on investment

Empirically there was worthiness in examining factors that accounted for poor quality marketing and its application to customer retention, loyalty, increased market share and reduced returns on company‟s investment The study therefore provided documentation of factors responsible for poor marketing strategy execution and made practical recommendations to companies especially TNM with a view of influencing corporate policies, planning and implementation

1.7 Conclusion

This chapter highlighted a summary of why companies remain either competitive

or are outpaced through the execution of poor quality of marketing resulting in low market share, and reduced returns on investment The problem statement, study aim, objectives, research questions and the significance of the study have been stated The next chapter focuses on review of the existing literature

on increasing return on investment

2.2 Definition of Marketing

Anonymous 7(2011: 5) uses the Chartered Institute of Marketing definition as

“the process that identifies, anticipates and satisfies customer requirements profitably”; Kotler (1999:10) as “a nodal and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others''; and Drucker (1985), cited in Anonymous 7 (2011; 12) as; “encompassing the entire business from the point of view of the final result, that is, from the customer's point of view” Ries and Trout (1986) cited in Brooksbank (1994: 14) sum it as a “totally intellectual war in which you try to outmaneuver your competitors on a battleground that no one has ever seen.”

All the above definitions underscore the need to emphasize on customers‟ needs and wants, value and satisfaction; exchange, transactions and relationships; and markets Anonymous 7(2011: 5), Kotler(1999: 10), Anonymous 7(2011:12), Ries and Trout(1986) definitions point to the need for a continuous research spirit,

constant interaction with customers, appropriate positioning and interactive customer relationship management However, the definition of Ries and Trout (1986) as cited in Brooksbank (1994: 14) can only be applied through the adoption of competitive advantage strategies and use of the mind to outdo those leading in the market and remain market leaders

Despite the elaborate definitions presented above, one may argue that marketers are only anxious at getting customers to buy whether they want the product or not and observation made by Anonymous 8 (2011: 1) suggest that marketers are guilty of manipulating customers into making unwanted purchases Hence, one may conclude this behaviors exhibited by marketers may not lead to getting loyal customers and, consequently, unlikely to lead to longer term success

Contrary to the behavior of marketers, marketing encourages companies to

“recognize” the priority of satisfying customers‟ needs; however, the ability to satisfy them depends on the capabilities embedded throughout the firm‟s supply-chain and operational processes For example, it is easy to picture companies which may be extremely customer-oriented but lack the operational skills, resources or capacity to meet customer needs The results of which may include frustrated customers and conflicts between marketing and operational departments within the firm Similarly, companies may demonstrate a high level

of lack of customer orientation because of “favourable industry structure” (Porter,

1980, cited in Doyle and Wong, 1997: 516), or “inherited monopoly advantages” (Kay, 1993, cited in Doyle and Wong, 1997: 516), achieve high levels of sales and profit performance

Earlier studies by Doyle (1994:2-9) confirms that market performance is measured by sales growth or market share as depicted in Figure 1 This suggests that staff with high levels of capability, motivation, empowerment, and strategic intent characterize successful businesses Hence, managers in successful companies should place more emphasis on understanding and

responding to changes in the marketing environment, learning about customers and being proactive in searching for new opportunities in the market Studies by Doyle (1994:5) further observe that the rationale for the centrality of financial performance is straight forward, unless shareholders see an adequate return then the business will not be viable in its present form

Figure 1: Measure of market performance

Source: Doyle and Wong (1997: 516)

Doyle (1994:9) cautions one potential for Conflict where it is easy to “buy” improved financial performance at the expense of market share He further contends that raising prices, cutting brand support and reducing capital employed normally boosts returns on investment, but such a “turn-around” leads to a creeping erosion of market position Kaplan and Norton (1992:81-9) reveal that managers are acutely aware of the distinction between long term and short term performance and caution that high short-term performance can be paid for through missing long-term market opportunities

On the other hand, Doyle and Wong (1997: 514) underscore that Economic studies of growth performance and competitiveness of business have invariably disregarded the contribution of professional marketing This was further exacerbated by direct challenges to the contribution of marketing in some instances Brady and Davis (1993), cited in Doyle and Wong (1997: 514) confirm that a survey by management consultants McKinsey found that marketing departments were “often a millstone around an organization‟s neck” and other similar consultants, Coopers and Lybrand, concluded that the marketing departments were “critically ill” Such critics have argued that marketing impedes companies‟ re-engineering around core value-adding processes so increasing costs and reducing effectiveness In particular, they argue that marketing gears companies towards the proliferation of low value line extensions rather than genuine excellent competitiveness The authors conclude that effective marketing may be desirable but it appears to be neither a necessary nor a sufficient condition for successful growth and profitability

Grønholdt and Martensen (2005:103) observe changes in the definition of marketing which impact on the overall organization One of the changes emanate from the four Ps that entail “creating, communicating, and delivering customer value.” They observe that it is no longer sufficient to deliver products and services of high quality; because customers also need to experience a clear and superior value Thus, the value delivery sequence is integrated (Lanning and

Michaels (1998); Christopher et al.(2002) cited in Martensen, (2005:103)), which reflects the shift from the traditional view of business as a series of functional activities to an externally-oriented view which sees the business as being concerned with value delivery Creating value for the customer‟ is also central in relationship marketing In Relationship Marketing (RM), there is a change from transactional marketing towards relationship marketing strategy, which aims at creating long-term profitable relationships with customers

Marketing has been cited by McDonald (2006: 103) to contribute towards a general raising of the level of consumer expectations These expectations are more than simple aspirations: they represent a desire to acquire a specific set of gratifications through the purchase of goods and services The desire for those gratifications is fuelled by marketing‟s insistent messages

However, one may argue that sometimes marketers exaggerate the advantages offered by their products and confuse customers with their messages This is especially the case when product claims are seen as misleading customers into

believing a product can offer a certain level of value that, in fact, it cannot

Further, if the individual lacks the financial resources with which to fulfill such expectations, then marketing inevitably adds to a greater awareness of differences in society and to dissatisfaction and unrest among those in that situation Recent studies by Shively (2011: 5), posit that in society, marketing critics have stated that marketing has created false wants and too much materialism, too few social goods, cultural pollution, and too much political power Society judges people by what they own rather than by who they are

It is for this reason that one may further argue that the purpose and application of marketing would be to intentionally create partial truths about products and services and exploit fears and weaknesses of customers

Categorically, McDonald (2006: 103) further emphasizes that no matter what

“marketing” is performed, the consumer is still sovereign as long as he or she is free to make choices–either choices between competing products or the choice not to buy at all Indeed, it could be argued that, by extending the range of choices that the consumer has available, marketing is enhancing consumer sovereignty rather than eroding it It should be noted, too, that although promotional activity may persuade an individual to buy a product or service for the first time, it is unlikely to be the persuasive factor in subsequent purchases, when the consumer is acting from first-hand experience

2.2.1 Achieving a Balance

Recent studies by Boyle (1997: 523-533) unearth that successful companies would seek balanced financial and marketing performance For example they would not over-emphasize short-term financial performance at the expense of long-term market growth He suggests four items in measuring performance namely, return on capital employed, market share, sales growth and the managers‟ assessment of overall performance A market orientation is the route

to building customer preference It is envisaged that there is a strong correlation between marketing and business performance The authors categorically argue that companies with a strong market orientation are more likely to be high performers Market-led companies are able to collect information about customer needs, disseminate it through the business and generate an effective response However, some authors argue that marketing is not a quick panacea for success

or sufficient of itself It also needs to focus on investing in the skills of staff and engaging their commitment Further to that, marketing strategy and marketing planning also seem to be highly correlated with performance Hence, the strongest marketing predictors focus on creating sustainable competitive advantage, good cross-departmental relationships, and an emphasis on the real value-added innovation rather than trivial differentiation

Tollin and Jones (2009:524) underscore that marketing has moved from a goods-dominant view, in which tangible output and discrete transactions were central, to a service-dominant view, in which intangibility, exchange processes and relationships are central” (Vargo and Lusch, 2004: 2) In a parallel development, a number of other researchers point to the need to redefine the focus of marketing towards a value-based logic Kim(1997) and Mauborgne (2005), cited in Tollin and Jones (2009:524) make a similar point in stressing the value of redefining markets in terms of customer value creation rather than seeing them from the confines of traditional conceptualizations of the market Davenport, Leibold, and Voelpel (2006:117) postulate that companies need to escape from the conventional competitive-goods mindset and adopt a collaborative value-innovation mindset”

2.3 Marketing and Quality

Alemna (2001:265) defines quality as the „totality of features and characteristics

of a product or service that bear on its ability to satisfy stated or implied needs Webster (1994:67) identifies quality as delivering superior customer value and marketing as the process of defining, developing, and delivering value This suggests that marketing can act as the driving force in achieving the primary objectives of total quality: quality; efficiency; customer retention; and profitability Inevitably, it also suggests that literature on both marketing and quality stress the importance of customer value Morgan and Piercy (1998: 190-203) found that conflict between marketing management and quality management had a negative impact on both market and financial performance

Mele (2007:23) underscore that “quality, like marketing, means putting the customer first, always” and notes that total quality management (TQM) and marketing represent complementary and synergistic business strategies in promoting efficient management of the process of value creation and delivery Evidently, the marketing-quality perspective envisages a “win-win” strategy

where the firm and its various stakeholders (including customers) all achieve

satisfaction It has been noted that “the tools and techniques of TQM promote

more efficiency in the implementation of marketing” (Edosomwan, 1993; Day,

1994; Johnson and Chvala, 1996, cited in Mele 2007:242-243) In a similar view,

Bathie and Sarker (2002:242) view TQM as having two components, namely,

product quality and service quality Bathie and Sarker (2002:244) designed a

symbiotic relationship between TQM and total quality marketing (TQMk) as

shown in Figure 2

Figure 2: TQMk-A symbiosis

Source: Bathie and Sarker (2002:244)

Accordingly, Zeithaml (1988:14), elucidates that perceived value represents an

all-inclusive evaluation by the customer of the utility of a product on the basis of

“what is got and what is given” Bower and Garda (1985), cited in Mele

(2007:243) suggest that the delivery of value consists of the following phases:

choose the value; provide the value; and communicate the value Webster (1992:

1-17) saw the creation process in similar phases: defining; developing; and value-delivering Christopher, Payne and Balantyne (2002), cited

value-in Mele (2007:243) outlvalue-ined a similar framework for relationship value that involved: value determination; value creation; value delivery; and value assessment In the process of the creation and delivery of customer value, marketing and quality both have important roles to play This emphatically indicates that there should be no missing gaps existing in the phase combinations as the result of such existing gaps might contribute to poor quality marketing (see Figure 3)

Figure 3: Customer focused exchange

Source: Bathie and Sarkar (2002:242)

In addition, Kotler (1990:20) asserts that the organization “must carry out internal marketing (IM)” as well as external marketing in order to execute marketing excellence Kotler further explains that IM is “the task of successfully hiring, training, and motivating able employees to serve the customer well” emphasizing that IM must indeed precede external marketing, as it makes no sense to promise excellent service before the company staff is ready to provide it In

support of the above assertion, Pitt, Bruwer, Nel and Berthon (1999:1) state that two basic ideas underlie the concept: namely that everyone in the organization has a customer; and that internal customers must be sold on the service and be happy in their jobs, before they can effectively serve the final customer Pitt et al (1999: 5-6) then advise that if quality service is to be delivered, employees themselves must be convinced that it is worth delivering both to customers and each other However, if employees themselves endure poor quality of service from their colleagues and the organization as a whole, it is likely that their service delivery will suffer in turn

Since the study takes into cognizance the service rather than the product industry, we may argue that assessment of quality is more complicated as it is not a function of statistical measures but that of customers perception about the services Studies by Cummingham and Young (2002) confirm that service quality evaluations are highly complex and may operate at several levels of abstractions

2.3.1 Service Quality (SERVQUAL)

Asubonteng, McCleary and Swan (1996:64) define service quality as the difference between customers‟ expectations for service performance prior to the service encounter and their perceptions of the service received Service quality theory predicts that clients will judge that quality is low if performance does not meet their expectations and quality increases as performance exceeds expectations (Oliver, 1980:460-69) Hence, customers‟ expectations serve as the foundation on which service quality will be evaluated by customers In addition,

as service quality increases, satisfaction with the service and intentions to reuse the service increase

Mattson (1991:18) succinctly argues that poor service quality occurs when a gap exists between a person‟s expectations and his perceptions of the actual service performance This may be greatly influenced by personal values Recently, research on services conducted by Durvasula, Madhavi and Lysonski (2011:33) unearthed that personal values may play a significant role in how consumers evaluate the quality of a service in their relationship with the firm Durvasula et al (2011:34) hints that the challenge for those who develop marketing activities in this sector is to determine how the service is being perceived, consumed, or enacted Recent studies by Durvasula et al (2011:37) suggest the adoption of SERVQUAL, which focuses on attributes of services, looks at the gap between expectations of a service and what is actually perceived Using the SERVQUAL measure, a high quality service would perform at a level that matched the level that the consumer felt should be provided

SERVQUAL is designed to measure service quality as perceived by the customer Asubonteng et al (1996:62) highlight that as competition becomes more intense and environmental factors become more hostile, the concern for service quality grows If service quality is to become the cornerstone of marketing strategy, the marketer must have the means to measure it The most popular measure of service quality is SERVQUAL, an instrument developed by Parasuraman, Zeithaml, and Berry (1985:41-50) Not only has research on this instrument been widely cited in the marketing literature, but also its use in industry has been quite widespread (Brown, Churchill, and Peter (1993: 126-39)

2.4 Relationship Marketing (RM)

Kanagal (2009: 1-17), defines relationship marketing as the identification, establishment, maintenance, enhancement, modification and termination of relationships with customers to create value for customers and profit for organization by a series of relational exchanges that have both a history and a future He observes that these relational exchanges can be viewed under

transaction cost analysis and social exchange theories depending on the context This confirms that RM improves profitability, builds partnering, addresses customers better, buys in customer attention, protects emotional well being, understands consumer psyche, and builds trust with customers to mention a few areas

Relationship marketing has become a major component of marketing that has attracted the attention of most scholars Palmer (1996:19) argues that organizations‟ interest in developing closer relationships with their private and corporate customers has come about for two principal reasons: the increasingly competitive nature of markets has resulted in good product quality alone being inadequate for a company to gain competitive advantage – superior ongoing relationships with customers supplement a firm‟s competitive advantage; and the emergence of powerful, user-friendly databases has enabled large companies to know more about their customers, recreating in a computer what the small

business owner knew in his or her head

If RM improves profitability for companies, why do companies register declining levels of loyalty by customers? One may be tempted to conclude that marketing programs executed by companies are futile This suggests a need for a more focused attempt at retaining customers

In summary, RM suggests that good relationships lead to good quality and good

customer satisfaction Good quality arises as internal relationships / employee relationships are fostered Good customer satisfaction arises as specific customer needs and wants are understood better and served better Good quality and customer satisfaction leads to customer retention and consequent improved profitability

2.5 Customer Relationship Management (CRM)

Barran, Christopher and Zerres (2010:2), defines customer relationship management as a process that maximizes customer value through ongoing marketing activity founded on intimate customer knowledge established through collection, management and leverage of customer information and contact history It is about perfecting relationships to maximize a customer‟s value over time

However, the above accentuation cannot work in isolation without effective

communication Effective communication is founded on the ability to engage

customers in a dialogue that results in greater satisfaction with the brand Formal customer communication programs typically contain variably valued and targeted customer offers Objectives for such programs include:

 Customer retention;

 Increase in purchase quantity; and

 Increased buying rate

Kanagal (2009: 16) summarizes keys to successful CRM communication as including:

 Development of communication with customers in mind;

 Development of simple not complex communications;

 Making data collection transparent to users; and

 Providing customers with value in addition to the offer carried with the communication

Much as CRM is based on establishing intimate customer knowledge, one may argue that many strategies of customer relationship management, lack the basics

of customer insights This is because companies are deficient on the capability to capture critical customer data and analyze that data to create deep insights into how customers behave, how they would like to interact, and what they truly want and need In his research study, Zablah (2004: 2) proposes that the relative

success of CRM initiatives was heavily influenced by the interplay between three key organizational elements: people, processes, and technology

2.6 Marketing and Research

This theory focuses on the attention companies give to market research, in order

to understand more about the needs and requirements of the niche of customers they are serving The context examines the value of market research in identifying areas of concern that can be addressed in order to augment marketing

Hill, McGowan, and Maclaran (1998: 70) cite a large number of research studies into the relationship between planning and organisational effectiveness They point out that the findings however have been conflicting, with some researchers confirming a positive relationship (Ansoff (1969); McDonald (1989); Unni(1981)),

or no consistent relationship between the two, (Lindsay (1982); Wood and La

Forge (1979)) So the idea that company performance improves as a consequence of engaging in a planning process and applying well known marketing decision making techniques has not proved easy to confirm conclusively

Greenly and Bayus (1993); Hooley (1990); and McDonald (1992), in Hill et al.(1998:70), point out that despite the many operational difficulties that have been documented in relation to effective marketing planning, much research advocates the value of planning for a firm‟s growth and development McDonald(1989:7), in a review of the marketing planning literature states that

“the claimed benefits of better co-ordination of interrelated activities, improved environmental awareness, better communication among management and better use of resources, and so on, appear to be there for the taking and there is a strong relationship between marketing planning and commercial success”

However, issues of customer privacy are likely to become most controversial issues marketers would face in the coming years If this continues, marketers may soon face greater legal limits on how they conduct business

2.6.1 Understanding Marketing Intelligence and Research

Lymperopoulos and Chaniotakis (2005: 486), reveal that the terms “market intelligence”, “market research”, and “corporate intelligence” are, in general, used interchangeably in the literature However, “marketing intelligence” can be understood as a more wide-ranging information-gathering function than “market research” (Wright and Ashill, 1998, as cited in Lymperopoulos and Chaniotakis, 2005:486)-with the latter referring only to the scanning and analysis of the immediate marketing environment and the monitoring of immediate competitive activity Similarly, (Trim, 2002, as cited in Lymperopoulos and Chaniotakis, 2005:486) cite that “corporate intelligence” refers to the acquisition of knowledge using human, electronic, and other means and the interpretation of knowledge relating to the environment (both internal and external) in which the organization operates One would succinctly note that the three concepts recognize the scanning and analysis of the marketing environment, and the monitoring of competitive activities that are crucial to the effectiveness of any marketing effort

It is clear from the three concepts that as a result of increasing complexity and competitive pressures in today‟s business environment, there is a growing need for efficient and effective environmental scanning

Walle (1999:515) observe that members of the marketing profession have long been interested in understanding the strategies, capabilities, and options of their rivals It is envisaged that gaining these insights is the essence of competitive intelligence For example, possessing information such as the production capabilities of a competitor's factories, furthermore, can provide valuable insights This suggests that the financial health of a competitor may influence a decision to

confront the rival ``head on'' or (as an alternative) to strategically avoid direct conflict

Walle (1999:521) draws parallels between competitive intelligence and marketing research, and examines that the real trick for both marketing researchers and competitive intelligence practitioners is to appropriately envision how and why competitive intelligence has expanded beyond its original roots and missions The above arguments indicate that today's business leaders and survivors are seeking relevant qualitative data This holds for both in marketing research and in competitive intelligence

Marketing research has unearthed many business challenges facing marketing including “internalization of business (buyers and suppliers of products and services are becoming more global in their approach to business); customer expertise, sophistication and power; lack of market growth; process thinking-the shift from selling ready-made, tangible products to selling by reputation and on capability to manufacture according to exact client specifications; and time-based competition”(Denison & McDonald, 1995:58-60)

In changing the marketing mindset, he alternatively offers strategic changes that include solutions such as structural change, focus and future driven strategy

 Structural Change-changing the organizational structure of the marketing department to accommodate the business challenges This entails moving away from a formal, top down, hierarchical structure, which is bureaucratic, as everyone is directly accountable for their actions It impedes the creation of innovative ideas and it hinders the company‟s ability to respond quickly to market opportunities;

 Focus- companies are disbanding their central function and establishing multiple cores, comprising multifunctional, customer-facing teams This