CRITERIA OF EFFECTIVE MARKETING ANALYSIS OF CORPORATE MARKETING ACTIVITIES IN HUNGARY

Dr Szabolcs Nagy

Associate Professor

Faculty of Economics, University of Miskolc, Hungary

marvel@uni-miskolc.hu

“Balance and Challenges” 9th International Scientific Conference15-16 October, 2015, Miskolc-Lillafüred

Changing world, changing marketing

• Rapid technological development ignited a paradigm shift in marketing.

• Digital became an increasingly important source of competitive advantage. Leeflang, Verhoef, Dahlström, Freundt (2014)

• The effect of user-generated content on shareholder value (Tirunillai & Tellis, 2012)

• How companies can analyze big data (Feit, Wang, Bradlow, & Fader, 2013).

• Effectiveness is a buzzword.

• There is a growing demand for quantifing business processes including marketing activities.

• Marketing metrics have been in the forefront of marketing renewal since the Millennium (Paul W. Farris, Neil T. Bendle, Phillip E. Pfeifer, David J. Reibstein, 2006).

Marketing in practice

• While the theory of marketing is widely researched, scientific papers on marketing in practice can rarely be found in the literature.

• Hungary • Although a conference dealing with new tendencies in

marketing in Hungary was organized in 2012, and the conference proceedings was also published, but it contained analyses from the academic point of view (Józsa, 2012).

• A strong need for an empirical investigation on corporate marketing activities in Hungary to define the criteria of effective marketing has been formulated by the Hungarian Marketing Association (HMA).

Research methodology

• Design and implementation of the survey research • by Marketing Institute, University of Miskolc.

• In total• more than 1000 executives were approached.

• Duration• between 1 and 29 October, 2014

• Data cleaning• Respondents who did reply ‘‘don’t know’’ to at least half of the questions in the

questionnaire have been excluded from further investigations.

• Usable responses: 112

• Response rate• rather low.

• Although the sample is not representative in any respect, but it can be used to explain tendencies.

Small enterprizes are dominant in the sample.

62,3%

19,8%17,9%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

Small Enterprises Medium-sized enterprises Large Enterprises

Type of the company

The distribution of firms by NUTS region is uneven with companies operating in Central Hungary (69,7%)

overrepresented in the sample.

3,7% 2,8% 1,8%

10,1%

69,7%

2,8%

9,2%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

Southern Great Plain SouthernTransdanubia

Northern Great Plain Northern Hungary Central Hungary Central Transdanubia WesternTransdanubia

Distributions of firms by NUTS Regions

4 of 5 firms have Hungarian owners, 20,6% of the companies is owned by foreigners.

20,6%

79,4%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

90,0%

Foreign Hungarian

Ownership

Most companies in the sample are independent.

31,1%

68,9%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

Part of a group Independent

Group membership status

The revenue distribution is uneven.

28,4%

9,8%

15,7%

5,9%

10,8%

29,4%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

Less than 50M HUF 50-100 M HUF 100-250 M HUF 250-500 M HUF 500-1000 M HUF More than 1000 M HUF

Revenue

One of four companies has no formalized marketing activities in house, which means they really do not care about marketing.

33,9%

17,9%

22,3%

25,9%

There is an independent marketing department, function or unit

Marketing is integrated into another corporate function (sales, communication,trade)

Only one or more persons are doing marketing, but not in an organized way

There are no formalized marketing activities in house

0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0% 40,0%

How are marketing activities organized in your firm?

Nearly one half of the companies considered marketing as an important organizational function. 1 of 5 firms stated that

marketing is not really important.

not important12%

low10%

average29%

important26%

extremly important23%

How important is the marketing unit/department in your company?

25% of the companies spend no money or a very low amount of money on marketing.

25%

27%

34%

7%

7%

How big is your marketing budget?

zero or very low lower than average average more than average significant

Dominantly (typical of 18.2% of the firms) only one percent of the total revenues was spent on marketing.

The average spending ratio is 6,8%.

13,1%

18,2%

11,1%

4,0% 4,0%

16,2%

1,0% 1,0%

4,0%

10,1%

1,0% 1,0%

4,0% 4,0%

1,0% 1,0%

4,0%

1,0%

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

16,0%

18,0%

20,0%

0% 1% 2% 3% 4% 5% 6% 7% 8% 10% 11% 12% 15% 20% 25% 28% 30% 60%

How much percentage of your revenues do you spend on marketing?

Online marketing is reported to be the most typical marketing activity.

4,93

4,87

4,79

4,72

4,69

4,33

4,15

4,15

3,94

3,86

3,83

3,82

3,76

3,75

3,51

3,47

3,42

3,41

3,36

3,28

3,28

2,5

1 1,5 2 2,5 3 3,5 4 4,5 5

Online marketing including managing the webpage of the…

Brand building

Advertising

Image building

Content marketing

Managing events, fairs and trade-shows

Collecting market data, analysis, database building

Launching new products and services

Segmentation & positioning

Sales Promotion

Relationship marketing

Marketing-, market research, surveying

Developing strategic market plans

Sponsorship

Developing annual, operative marketing plans

Sales (trade)

Determining the product mix elements

CSR

Building CRM (Customer Relationship Management) system

Supporting R&D (product development)

Price management

Production planning

To what extent do the following activities belong to marketing? (1 not at all ... 5 fully)

Providing the best possible products and services to customers is the most typical marketing task in practice. Knowing and understanding customer expectations and providing high

quality products/services are ranked as the Top 3 priorities.

4,54

4,35

4,33

4,16

4,09

4,05

3,98

3,96

3,7

3,7

3,54

3,26

3,23

3,12

3,07

3,06

3,05

2,96

2,8

1 1,5 2 2,5 3 3,5 4 4,5 5

Providing the best possible products & services to customers

Knowing and understanding customer expectations

Providing high quality products & services

Maintaining good customer relationships

High level of customer complaint management

Keeping deadlines

Prompt reactions to customer demand

Having a flexible service system

Measuring customer satisfaction

Having products with significant competitive advantage

Being able to predict changes in the relevant market(s)

Having significantly more customers than our competitors

Analyzing market demand

Using information system to support marketing decisions

Measuring the value of each customer

Concentrating on the marketing of current products to avoid high R&D costs

Taking steps in the market to which the competitors are usually react

Working content-marketing strategy and program

Launching many new products and services

How well do the following statements characterize your organization?(1 not at all ... 5 a great deal)

The cooperation intensity of firms is found to be rather low. Companies responded that they have the most intense

cooperation with customers.

4

3,65

2,95

2,92

2,6

2,35

2,35

2,32

2,31

1,98

1,89

1,86

1 1,5 2 2,5 3 3,5 4 4,5 5

Customers

Suppliers

Professional bodies, associations

Consulting service providers, advisers

Other companies within the group (if applicable)

Competitors

Economic Development Organisation (chambers, business development foundations)

Universities and high schools

Central government entities, authorities, offices

Territorial development organizations, local goverments

Organizations supporting innovation (innovation agencies, technology centres)

Public or private research institutes

How intense cooperation have you established with the following organizations? 1= no or very low

intensity 5= very high intensity

Seven global vs local (Hungarian) trends in marketing (global trends: dominant changes that affected 777 companies worldwide)

Ability to interactwith and/or serve

customers in a newmanner

Ability to reachnew customer

segments

Increasing pace ofchange in themarketplace

Increasing access todata and insights

Greater ability toreduce costs in

various businessprocesses thorough

technology

Emergence of newbusiness modelsand new revenue

streams

Greater use ofanalytical tools andmodels in decision

making

HU2014 4,12 3,71 3,55 3,45 3,44 3,34 2,94

GLOBAL2012 56% 30% 25% 39% 25% 24% 24%

0%

10%

20%

30%

40%

50%

60%

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

stre

ngh

t: 1

= ve

ry w

eak

...

5=v

ery

stro

ng

* Methodology and GLOBAL2012 data were adapted from Leeflang, Verhoef, Dahlström, Freundt (2014)

CSR is widely misunderstood by business people.

3,26

3,072,99

2,86 2,86

1

1,5

2

2,5

3

3,5

4

4,5

5

customers employees the environment suppliers local communities andsettlements

To what extent do you agree with this statement? "The main objective of CSR is to be responsible for and to support..."

(1 not at all ... 5 a great deal)

The most significant correlation is between brand building and revenues. Managing and participating in events, fairs and trade show has also a significant positive impact on the revenues.

0,403

0,388

0,343

0,327

0,317

0,31

0,249

0,245

0,204

0,203

0 0,05 0,1 0,15 0,2 0,25 0,3 0,35 0,4 0,45

Brand-building (company & product)

Managing events, fairs and trade-shows

Online marketing including managing the webpage of the company

Advertising

Sponsorship

Image building

Content marketing

Marketing-research

Sales-promotion

CSR

Significant correlations between marketing activities and the revenue

There are significant correlations between revenues and other marketing and demographics variables. As for demographics variables, the type of the company (size of the firm) has the

highest impact on revenues.

Variable Correlation strength

Flexible reaction to customer needs 0,317

Flexible services system 0,272

Good relationship with customers 0,242

Ability to forecast changes in the market 0,213

Type of the company 0,731

Ownership -0,507

Group membership status -0,432

Sales orientation 0,283

Conclusions

• If marketing effectiveness is defined in terms of financial results, effective companies in Hungary are • building strong brands, • frequent participants of fairs, commercial events & trade

shows • good at online marketing, advertising and sponsorship.

• Image building, content marketing, extensive marketing research, sales promotion and CSR are also typical marketing activities of the best performers.

• Marketing practice in Hungary shows a diverse picture.• There is still room for improvement for several

companies that are currently uninterested in marketing.

Refrences

• Feit, E. M., Wang, P., Bradlow, E. T., & Fader, P. S. (2013). Fusing aggregate and disaggregate data with an application to multiplatform media consumption. Journal of Marketing Research, 50(3), 348–364.

• Józsa László (ed.): A Marketing új tendenciái - A Széchenyi István Egyetem KautzGyula Gazdaságtudományi Kar és a Regionális- és Gazdaságtudományi Doktori Iskola szervezésében megrendezésre kerülő konferencia kiadványa, Győr, 2012, Főszerkesztő: Prof. Dr. Józsa László. Szerkesztő: Konczosné Dr. Szombathelyi Márta és Dr. Huszka Péter, ISBN: 978-963-7175-75-6

• Paul W. Farris, Neil T. Bendle, Phillip E. Pfeifer, David J. Reibstein: Marketing Metrics: 50+ Metrics Every Executive Should Master, 2006, Wharton SchoolPublishing

• Peter S.H. Leeflang , Peter C. Verhoef , Peter Dahlström , Tjark Freundt: Challenges and solutions for marketing in a digital era, European Management Journal, Volume 32, Issue 1, 2014, 1 - 12

• Tirunillai, S., & Tellis, G. J. (2012). Does chatter really matter? Dynamics of usergenerated content and stock performance. Marketing Science, 31(2), 198–215.

More info & other publications

• LinkedIn• https://www.linkedin.com/pub/dr-szabolcs-nagy-

phd/33/91a/a26

• Academia• https://uni-miskolc.academia.edu/SzabolcsNagyDrPhD

• Researchgate• https://www.researchgate.net/profile/Szabolcs_Nagy3