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Jan-Daniel Laufhütte BA Business Administration, London South Bank University MARKETING OF CONSULTING SERVICES -
Jan-Daniel Laufhütte
BA Business Administration,
London South Bank University
MARKETING OF CONSULTING SERVICES
- Marketing methods used by
Management Consultancies
to market theirs services and
position themselves in the market -

OVERVIEW

Objectives, Objectives, Conclusions Conclusions & & Industry Industry structure structure & &
Objectives, Objectives,
Conclusions Conclusions & &
Industry Industry structure structure
& & conditions conditions
Methodology Methodology
Analysis Analysis
Recommen- Recommen-
& & Survey Survey
dations dations
Analysis Analysis Recommen- Recommen- & & Survey Survey dations dations MARKETING OF CONSULTING SERVICES 1 1
Analysis Analysis Recommen- Recommen- & & Survey Survey dations dations MARKETING OF CONSULTING SERVICES 1 1
Analysis Analysis Recommen- Recommen- & & Survey Survey dations dations MARKETING OF CONSULTING SERVICES 1 1

INDUSTRY STRUCTURE

INDUSTRY STRUCTURE ~£7.35 bn UK revenues (IFSL, 2003). 11% of the worldwide consulting services market -

~£7.35 bn UK revenues (IFSL, 2003).

11% of the worldwide consulting services market - represents the biggest market in Europe.

Top 10 consultants account for more than 50% of the total UK market.

Modest growth of 4-6% - compared to the past decades - expected in 2004 (Kennedy Information, 2004).

- compared to the past decades - expected in 2004 (Kennedy Information, 2004). MARKETING OF CONSULTING

INDUSTRY CONDITIONS

INDUSTRY CONDITIONS Accountancies withdraw from the consulting market. Major companies set up In-House- Consultancies.

Accountancies withdraw from the consulting market.

Major companies set up In-House- Consultancies.

M&A.

Vast majority of small consultancies.

Projects get smaller in value and size - therefore ‘biggers’ have to compete with ‘smallers’.

More sophisticated clients expect a collaborative relationship and new compensation schemes - e.g. prolonged payment terms, participation in risks and chances.

New innovative concepts - innovative drivers - are missing (Kennedy Information, 2004).

concepts - innovative drivers - are missing (Kennedy Information, 2004). MARKETING OF CONSULTING SERVICES 3 3
concepts - innovative drivers - are missing (Kennedy Information, 2004). MARKETING OF CONSULTING SERVICES 3 3
concepts - innovative drivers - are missing (Kennedy Information, 2004). MARKETING OF CONSULTING SERVICES 3 3
concepts - innovative drivers - are missing (Kennedy Information, 2004). MARKETING OF CONSULTING SERVICES 3 3
concepts - innovative drivers - are missing (Kennedy Information, 2004). MARKETING OF CONSULTING SERVICES 3 3

OBJECTIVES

OBJECTIVES Identify the main reasons why consultants market their services. Whether to intensify existing client

Identify the main reasons why consultants market their services. Whether to intensify existing client relationships or to gain new clients.

Identify the most common marketing approaches used by management consultancy firms to position themselves in the marketplace.

Determine which industry sectors and consulting services is given a particular future importance.

Detect if there are tendencies recognizable for the specialization of a certain group of consultants.

Develop a model that illustrates which marketing techniques should be used to market certain consulting services in chosen industry sectors.

METHODOLOGY & SURVEY

METHODOLOGY & SURVEY PRIMARY RESEARCH (survey) - CONVENIENCE SAMPLING Easily available representative (more than 65%

PRIMARY RESEARCH (survey) - CONVENIENCE SAMPLING

Easily available representative (more than 65% of the whole UK market) sample frame (MCA’s Top 100 UK consultants list).

Contact via e-mail and letters.

Estimate the importance and benefit of the following marketing approaches on the given scale. Please
Estimate the importance and benefit of the following marketing approaches on the
given scale. Please tick where appropriate!
1 = not important / 2 = important / 3 = very important
1
2
3
Cold contacts
Direct mailings
Personal contacts / networking
Referrals through currents clients
Presentations, seminars & workshops
Own publications, e.g. quarterlies, articles, books
Brochures
Press releases
Firm’s website
Directories
Sponsoring
Advertising
Development of innovative concepts

Questionnaire:

2 sections - topic section & statistic section.

No open questions.

Scale ‘1 = not important’ to ‘3 = very important’.

Sample of 70:

6 declined participation.

27 answered (42.19%).

SECONDARY RESEARCH (literature review) -recent publications, including books, journals, unpublished thesis, surveys and web-based sources were used.

ANALYSIS - Literature Review -

ANALYSIS - Literature Review - To attract new customers is well over-emphasised: ‘Marketing activities should be

To attract new customers is well over-emphasised:

Review - To attract new customers is well over-emphasised: ‘Marketing activities should be focused to a
Review - To attract new customers is well over-emphasised: ‘Marketing activities should be focused to a
Review - To attract new customers is well over-emphasised: ‘Marketing activities should be focused to a

‘Marketing activities should be focused to a larger extent on retaining and growing existing clients. (

) In

terms of a consultancy it means that a firm can only exist and grow, when it keeps its current clients by satisfying theirs expectations and adding value to theirs businesses.’ (pp.11)

Marketing as an overall-task of a service organisation - all members sign to a certain extent responsibility for marketing.

7 (marketing-) principles for consultants (Kubr, 2002).

Most consultancies are matrix-organized:

FUNCTIONAL PRACTISES

Strategy Strategy Marketing Marketing Organisation Organisation Operations Operations etc. etc. Consumer Goods
Strategy Strategy
Marketing Marketing
Organisation Organisation
Operations Operations
etc. etc.
Consumer Goods
Consumer Goods
Specialist
Manufacturing Manufacturing
Automotive Automotive
Pharma Pharma
Telecom Telecom
Utilities Utilities
Industry Consultant
etc. etc.
Generalist
Functional Consultant
INDUSTRY PRACTISES

Functional Practise = R&D.

Industrial Practise = sales-force.

Tendency towards specialisation.

ANALYSIS - Literature Review -

ANALYSIS - Literature Review - Techniques Techniques to to create create awareness awareness Direct Direct Approaches
ANALYSIS - Literature Review - Techniques Techniques to to create create awareness awareness Direct Direct Approaches
ANALYSIS - Literature Review - Techniques Techniques to to create create awareness awareness Direct Direct Approaches
ANALYSIS - Literature Review - Techniques Techniques to to create create awareness awareness Direct Direct Approaches
Techniques Techniques to to create create awareness awareness Direct Direct Approaches Approaches Indirect Indirect
Techniques Techniques to to create create awareness awareness
Direct Direct Approaches Approaches
Indirect Indirect Approaches Approaches
Specific Specific
Cold Cold Contacts Contacts
Non-specific Non-specific
Cold Cold Contacts Contacts
Word Word of of mouth mouth
Brochures Brochures
Events Events / / Sponsoring Sponsoring
Advertising Advertising
Memberships Memberships
Corp. Corp. Identity Identity / / Reputation Reputation
Presentations Presentations
Studies Studies / / Projects Projects
Self-Analysis Self-Analysis
Articles Articles / / Books Books
Medias Medias
Management-Concepts Management-Concepts

ANALYSIS - Literature Review -

ANALYSIS - Literature Review - DIRECT APPROACHES INDIRECT APPROACHES Inherent acquisition intention. More discrete
ANALYSIS - Literature Review - DIRECT APPROACHES INDIRECT APPROACHES Inherent acquisition intention. More discrete
ANALYSIS - Literature Review - DIRECT APPROACHES INDIRECT APPROACHES Inherent acquisition intention. More discrete
ANALYSIS - Literature Review - DIRECT APPROACHES INDIRECT APPROACHES Inherent acquisition intention. More discrete
DIRECT APPROACHES INDIRECT APPROACHES
DIRECT APPROACHES
INDIRECT APPROACHES
- Literature Review - DIRECT APPROACHES INDIRECT APPROACHES Inherent acquisition intention. More discrete & subtle,
- Literature Review - DIRECT APPROACHES INDIRECT APPROACHES Inherent acquisition intention. More discrete & subtle,
Inherent acquisition intention. More discrete & subtle, but certain proximity to customers. More commonly used
Inherent acquisition intention.
More discrete & subtle, but certain
proximity to customers.
More commonly used by smaller
consultants.
Needs a reliable and stable customer
base.
It is more likely to get a rejection
because potential clients may feel
alienated.
Effectiveness is hardly measurable.
Risk to place sales ahead of expertise.
Takes time and needs (financial)
investments to build-up a certain
reputation.
Reputation is easy to loose with one
insufficient solved case.

ANALYSIS - Survey Results -

ANALYSIS - Survey Results - Respondents were grouped according UK revenues Over £50 mill - 5
ANALYSIS - Survey Results - Respondents were grouped according UK revenues Over £50 mill - 5
ANALYSIS - Survey Results - Respondents were grouped according UK revenues Over £50 mill - 5
ANALYSIS - Survey Results - Respondents were grouped according UK revenues Over £50 mill - 5

Respondents were grouped according UK revenues

Over £50 mill - 5 no. (18.52% in the sample / 38.46% respondent quote within this group)

£10-50 mill - 13 no. (48.15% in the sample / 56.52% respondent quote within this group)

Up to £10 mill - 9 no. (33.33% in the sample / 32.14% respondent quote within this group)

85.2% use marketing to intensify existing client relationships and gaining new clients

77.8% expect a very high future importance for marketing, 22.2% expect a high importance

TABLE: Overall importance of marketing

Revenues ‘Over £50 ‘£10 - £50 mill’ ‘Up to £10 mill’ TOTAL Importance mill’ Overall
Revenues
‘Over £50
‘£10 - £50
mill’
‘Up to £10
mill’
TOTAL
Importance
mill’
Overall importance
2.80
2.77
2.78
2.78
To gain new clients
2.60
2.77
2.67
2.70
To position in the market
2.60
2.77
2.44
2.63

ANALYSIS - Survey Results -

ANALYSIS - Survey Results - Importance of different Marketing Approaches 3,00 2,50 2,00 1,50 1,00 0,50
Importance of different Marketing Approaches
Importance of different Marketing Approaches
3,00 2,50 2,00 1,50 1,00 0,50 0,00 Cold contacts Direct Seminars Networking Mail Referrals workshops
3,00
2,50
2,00
1,50
1,00
0,50
0,00
Cold contacts
Direct Seminars Networking
Mail
Referrals
workshops
& Own
publications
Brochures
Press releases
1,44
Firm's website
1,85
Directories
Sponsoring
3,00
Advertising
2,93
Innovative
concepts
2,33
2,00
1,67
2,22
2,37
1,30
1,56
1,41
2,48

Particular Importance of ‘Networking & Referrals’.

Indirect approaches were on average higher valued than direct ones.

‘Press releases’, ‘Sponsoring’ & ‘Advertising’ were significantly higher valued by the group ‘Over £50 mill’.

The group ‘Up to £10 mill’ gave ‘Direct Mail’ a higher importance.

Overall the ‘Development of innovative concepts’ got the third highest score.

ANALYSIS - Survey Results -

ANALYSIS - Survey Results - Future importance of Industry Sectors 3,00 2,50 2,00 1,50 1,00 0,50
Future importance of Industry Sectors
Future importance of Industry Sectors

3,00

2,50

2,00

1,50

1,00

0,50

0,00

Finance 2,63 Government 2,48 Communications 1,81 & Media Retail & Consumer 2,00 Goods Healthcare &
Finance
2,63
Government
2,48
Communications
1,81
& Media
Retail &
Consumer
2,00
Goods
Healthcare &
1,93
Pharamceutical
Utilities &
1,96
Energy
Manufacturing
1,67
Transportation
1,96

‘Finance’ (2.63) and ‘Government’ (2.48) were ranked first and second.

Reflects the current market situation, where both are the biggest sectors.

Smaller consultants (‘Up to £10 mill’) weight ‘Finance’ most important, whereas bigger ones focus on ‘Government’.

The ‘Government’ sector grew and grows as a business sector and in importance.

‘Healthcare & Pharmaceutical’ ranked only 6 th overall, despite the expectation that it will become the 3 rd largest sector. (Kennedy Information, 2004).

ANALYSIS - Survey Results -

ANALYSIS - Survey Results - Future importance of Consulting Services 3,00 2,50 2,00 1,50 1,00 0,50
Future importance of Consulting Services
Future importance of Consulting Services

3,00

2,50

2,00

1,50

1,00

0,50

0,00

Outsourcing 2,48 IT-Services 2,33 Strategy 2,37 Operations 2,33 Human 1,96 Resource Finance 2,00 Programme
Outsourcing
2,48
IT-Services
2,33
Strategy
2,37
Operations
2,33
Human
1,96
Resource
Finance
2,00
Programme
2,41
Management
Marketing &
1,74
Sales
Others
1,00

‘Outsourcing’ (2.48 or 51.9% ‘very important) still has growth potential.

The ’Up to £10 mill’ group gave ‘Outsourcing’ the highest importance

(2.78).

Downsizing of outsourcing cases.

The score of 2.41 for ‘Programme Management’ illustrates clients’ demand for more collaborative approaches.

“Traditional” services as ‘Strategy’ and ‘Finance’ is given a higher importance by the group of ’Over £50 mill’ consultants.

’Over £50 mill’ consultants weight ‘HR’ with 2.80 significantly higher (compared to 2.08 and 1.33).

Estimated future importance of Industry Sector

High

Low

ANALYSIS - Conceptual Approach -

Sector H i g h Low ANALYSIS - Conceptual Approach - 3 2 1 2 3
Sector H i g h Low ANALYSIS - Conceptual Approach - 3 2 1 2 3
Sector H i g h Low ANALYSIS - Conceptual Approach - 3 2 1 2 3

3

2

1

2 3 Government 2.48 / £925 mill Finance 2.63 / £1430 mill Retail & Consumer
2
3
Government
2.48 / £925 mill
Finance
2.63 / £1430 mill
Retail & Consumer Goods
Healthcare &
mill
Pharmaceutical
2.00 / £ 396.6
Utilities &
Energy
1.93 / £ 161.9
mill
1.96 / £4
24 mill
Transportation
1.96 / £ 164.1 mill
Communication & Media
1.81
/ £500.9 mill
Manufacturing
1.67 / £218.5 mill
1
4
0
150
300
450
600
750
900
1050 1200 1350 1500

Market size of

300 450 600 750 900 1050 1200 1350 1500 Market size of Industry Sector in £

Industry Sector in £ mill.

FINK, D. & KNOBLACH, B. (2004) Die großen Management Consultants. München: Verlag Vahlen, pp.249.

Management Consultants . München: Verlag Vahlen, pp.249. Sectors in quadrant 1 may either surge, stagnate, or
Management Consultants . München: Verlag Vahlen, pp.249. Sectors in quadrant 1 may either surge, stagnate, or
Management Consultants . München: Verlag Vahlen, pp.249. Sectors in quadrant 1 may either surge, stagnate, or

Sectors in quadrant 1 may either surge, stagnate, or even slump.

early investments where appropriate.

Quadrant 2 sectors are the most important, because these will set off and gain in importance.

Quadrant 3 represents ‘Bread & Butter’ projects.

importance, due to the fact that

these revenues represent the firm’s financial backbone.

Consulting demand is at its maximum or already above and may decrease.

High

4 th

quadrant

unprofitable

importance.

sectors

and

are

likely

be

significant

to

have

no

ANALYSIS - Conceptual Approach -

ANALYSIS - Conceptual Approach - Revenues in ‘Finance’ and ‘Government represent a stable base for investments

ANALYSIS - Conceptual Approach - Revenues in ‘Finance’ and ‘Government represent a stable base for investments
ANALYSIS - Conceptual Approach - Revenues in ‘Finance’ and ‘Government represent a stable base for investments
ANALYSIS - Conceptual Approach - Revenues in ‘Finance’ and ‘Government represent a stable base for investments

Revenues in ‘Finance’ and ‘Government represent a stable base for investments in other arrays.

‘Healthcare & Pharmaceutical’ as well as ‘Transportation’ are promising.

‘Retailing’ and ‘Utilities & Energy’ should be taken into consideration.

‘Communication & Media’ should be seen more critical and resources divest if necessary.

‘Manufacturing’ seems to be less important in the future.

Diffusion Rate G overnment Finance 2.63 / £1430 mill 2.4 8 / £925 mill Consulting-
Diffusion
Rate
G
overnment
Finance
2.63 / £1430
mill
2.4
8 / £925 mill
Consulting-
Demand
Retail & Consumer Goods
2.00 / £ 396.6 mill
Life-Cycle
Healthcare &
Pharmaceutical
1.93 / £ 161.9 mill
Utilities & Energy
1.96 / £424
mill
Demand-Cycle
Transportation
1.96 / £ 164.1 mill
Communication & Media
1.81 / £500.9 mill
Manufacturing
1.67 / £218.5 mill
Thematisation
Expansion
Dominance
De-Thematisation

FINK, D. & KNOBLACH, B. (2004) Die großen Management Consultants. München: Verlag Vahlen, pp.257.

CONCLUSIONS

CONCLUSIONS 2 categories of marketing techniques - direct approaches vs. indirect approaches: Indirect approaches

2 categories of marketing techniques - direct approaches vs. indirect approaches:

Indirect approaches were given a higher importance - higher prospects of success.

Direct approaches success is doubtful.

Due to the industry’s crisis marketing gained in importance and an appropriate reputation is the focal point of all marketing activities.

Only a minority does marketing primary to reach prospective clients. The majority does marketing to intensify current client relationships in order to secure existing businesses.

‘Networking’ and ‘Referrals’ are given an outstanding importance as marketing techniques.

‘Press Releases’ are valued exceptional high by bigger consultancies.

To present a positive corporate image in the aftermath of diverse corporate scandals.

Supported by ‘Own Publications’ which may affect positive ‘Press Releases’ and foster the reputation.

The ‘Firm’s Website’ gets more important because with modest efforts several approaches can be united. ‘Presentations’, ‘Publications’, ‘Press Releases’ and ‘Developments’ can be posted on the Internet.

RECOMMENDATIONS

RECOMMENDATIONS Direct marketing techniques should not be used with the exception of direct mailings to inform

Direct marketing techniques should not be used with the exception of direct mailings to inform existing customers about latest developments and new trends.

Increases customers’ loyalty and retention.

Reputation is the key for success and needs to be promoted adequately by ‘Presentations’, ‘Own Publications’ or ‘Press releases’.

Internet / ‘Consultancy’s website’ is an excellent marketing tool.

Findings, surveys, successful solved cases, etc. can be posted.

Particularly smaller consultancies should make use of it since costs are foreseeable.

Because ‘major’ consultants act as generalist, smaller consultancies should focus and bundle their resources.

Increasing number of smaller cases.

Opportunities for niche-players with customised services.

Even though ‘Outsourcing’ is given future potential, there is the inherent risk to outsource a part of one’s own business. Therefore stable resources in traditional arrays with long-term potential such as ‘Strategy’ and ‘Operations’ are recommendable.

JAN LAUFHÜTTE ROSELLENER KIRCHSTR. 34 41470 NEUSS GERMANY jan@laufhuette.de UNIVERSITY OF APPLIED SCIENCES
JAN LAUFHÜTTE
ROSELLENER KIRCHSTR. 34
41470 NEUSS
GERMANY
jan@laufhuette.de
UNIVERSITY OF APPLIED SCIENCES BONN-RHEIN-SIEG - Student of Business Administration. Diploma-Degree
‘Diplom-Kaufmann’ due to be awarded in August 2005. Expected grade: Good. Diploma Thesis: ‘Supply Chain
Management as integral part of Marketing Strategy’.
LONDON SOUTH BANK UNIVERSITY - Student of Business Administration. Graduation in July 2004 with ‘Bachelor of
Arts - Upper Second Class Honours Degree (2:1)’.
PHONE
+49 2137 799768
FAX
+49 2137 7477
MOBILE
+49 172 9376138
UNIVERSITY OF COLOGNE - Student of Political Economics (10/1997 – 10/2001). Preliminary Diploma: Satisfactory
KNECHTSTEDEN GRAMMAR SCHOOL - Graduating with ‘Abitur’ (A-Levels). Disciplines: Mathematics, German,
Pedagogics, Sports.
TROOSTWIJK AUCTIONS GMBH & CO. KG, Cologne - ‘Sales Trainee’ (08 - 09/2002) responsible for several
marketing campaigns.
PROXCHANGE GMBH, Cologne - ‘Sales & Marketing Trainee’ (11/2001 - 06/2002). Duties included Market Research,
Customer Acquisition, Key-Account-Management and Advertisement.
WIDEX PETERS GMBH, Düsseldorf - ‘Working Student’ (07/1997 - 10/2001) in several departments, e.g. Logistics and
Warehousing.
BDO DEUTSCHE WARENTREUHAND AG, Cologne - ‘Accounting Assistant’ (03 - 04/1999). Duties included: Reading
the proofs of accounts. Reviewing balance and income & expenditure account.
DEUTSCHES ROTES KREUZ E.V., Neuss - ‘Community Service’ (07/1996 - 08-1997)
“CIAO ITALIA” CENTRO DI LINGUA E CULTURA ITALIANA, Rome - 1 month attendance (08/2000) at the language
institute sponsored by the Italian Cultural Institute in Cologne.

ISTITUTO DI LINGUA E CULTURS ITALIANA “MICHELANGELO”, Florence - 4 month attendance (09 - 10/1998 & 07 - 10/1999) at the institute. Advanced level degree.