Master MSC thesis presentation cristina_nazaremartins_19nov2010_eng version

The impact of a strategic alliance through Outsourced Marketing in the competitive advantage of the SMEs in Portugal | Author: Cristina Nazaré Martins

Master MSc Thesis Presentation

The impact of a strategic alliance through outsourced Marketing (OM) in the competitive advantage of the

Small and Medium Enterprise (SME’s) in Portugal

Friday, 19th November [email protected]



Introduction


The Strategic Alliances

• Lin and Lin (2010): … through complementarity can enhance synergies between them.

• Hynes e Mollenkopf (2008): … can reach the point of creating competitive advantages.


Theory, Domain and focus

5

MarketingMarketing


Problem and Research Questions

• Central question

“The strategic alliances through Outsourced Marketing has impact in the SMEs’ competitive advantage?”

• Research questions

The resources’ management through Outsourcing is correlated with the factors of businesses’ competitiveness?The resources’ management through "periphery" Outsourcing has an impact on company’s performance?The resources’ management through Outsourcing has an impact on the efficient cost management?The Marketing’ significance in a company has an impact on the decision to engage Outsourced Marketing services?


State of the Art


Marketing Management

Adapted from Lambin (2000)


Outsourcing: Strategic Alliances

Stra

tegi

c A

llia

nce

s



Marketing Outsourcing


Theories


Performance management

Font: Kotler, 2008; Murray, Kotabe and Wildt (1995); IAPMEI (2010)


An

alyt

ical

Mod

el


Methodology


Adopted Methodology

Positivist Paradigm:The reality and the results are rigorous, external and objectives.

Interpretativist Paradigm:Through preliminary support techniques to the questionnaire survey and final interviews to validation/results interpretation.

Quantitative methodology based in the hypothetical-deductive method.


Techniques of data collection

Non-documentary research techniques and non-participant observation, in the form of surveys and interviews

Instrument for data collection:1st phase: survey by questionnaire, the population of 297 000 SMEs in Portugal (IAPMEI 2007), having been obtained a sample of 103 SMEs.

2nd phase: Final interviews , for a better interpretation and validation of the obtained results, to five Marketing consultancy companies (“Designarte”, “Love2Brand”, “QSP Marketing”, “MPG Media Global Agency”, and “Jotoliveira”.

Universe 297.000 SMEs

Sample 103 SMEs

Activity sectors (7): retail (31,7%), construction (13,9%), energy (0,1%), manufacturing industry (14,3%), extractive industry (0,3%), services (30,1%) and tourism (9,5%).

Portugal (Continent and islands): North (30%); Center (20%); Lisbon (30%); Alentejo (5%); Algarve (5%); Madeira and Açores (10%).

Random sampling method (probabilistic)

Sample and sampling procedures


Field research and results’ analysis


Statistical Analysis

• The questionnaire was seen until the date of April 29, 2010, by 940 addressees;

• 523 started to fill it

• Just 181 completed it

• The remaining 342 dropped out completing, after starting to answer the questions (cancelled questionnaires).


Descriptive analysis

Marketing significance (%)

Attitude towards Marketing Management (%)

Companies that do not consider Marketing significant choose to Outsource (Azhar 2008)

The marketing manager’s skills are crucial to consider Marketing relevant to the organization

No significance

Minor significance

Average significance

Signifi-cant

Very significant

Insourcing

Marketing Management

function outsourced

The qualification of the marketing

manager provides levels of efficiency and

effectiveness

Efficiency and effectiveness of outsourced

Marketing

Totally disagree

Disagree

Neither agree nor disagreeAgree

Totally agree


SMEs choose to relegate more operational marketing activities to third parties, opting to maintain inside the business strategy.

Current management resources of Marketing (%) Outsourced Marketing services (%)

Descriptive analysis

Strategical Marketing + Operational Marketing

Strategical Marketing

Operational Marketing

Strategic Marketing plan

Sales plan

Product distribution plan

Operational Marketing plan

Brand and Communication plan

No answer

Communication plan

Product and price management plan

Others


• Majority Increase of financial indicators (0,1% - 20%)

• Only 12% of respondents say they disagree and totally disagree the statements about the impact of OM on the results achieved by SMEs

Increase in financial indicators (%)

Relationship between OM and obtained results (%)Descriptive analysis

Turnover Profit Market share Intern rate of return

Cash flow Other

Drastically increase (>30%)

No increase (0%)

Very few increase (>0% < 5%)

Few increase (>5% <10%)

Average increase (>10% <20%)

Quite increase (>20% < 30%)

Total agreement

Total disagreement

Gaining a competitive advantage

Preference of outsourced Marketing over insourcing

Efficiency in managing sales

Deliver the desire results

Benefit

Good satisfaction in sales management

Increase demand of products and brands

Notoriety (awareness) increase

Market share increase

Return on investment (ROI)

Cost efficiency

Effectiveness inthe sales targets

Totally disagree Disagree Neither agree nor disagree Agree Totally agree


The variables intersection: H1

Independent variable Correlation (+ / -) Dependent variables

Resource to OM

+ Competitive advantage

+ Notoriety

+ More efficient sales management

In SMEs exists a positive

association between OM and

competitive advantage:

• 41% of the answers were positive

Intersection between OM and Competitive advantages ( in number of cases)

Significant correlations between Outsourced Marketing (OM) and Competitive advantages

Competitive advantage

NotorietyMore efficient sales

management

Totally disagree

Disagree

Neither agree nor disagreeAgree

Totally agree


In SMEs exists a positive

association between OM and:

• Profit (88%),

• Internal rate of return (90%),

• Cash-flow (90%),

•ROI (41%).

Independent

variableCorrelation (+ / -) Dependent variables

Resource to OM

+ Profit

+ Internal rate of return

+ Cash flow

+ Return on investment (ROI)

Correlations between Outsourced Marketing (OM) and the financial indicators’ performance

Intersection between OM and Performance concerning the achievement of the ROI (in

number of cases)

Intersection between OM and Performance concerning the increase in financial indicators (in number of cases)


Totally disagree

Disagree

Neither agree nor disagree

Agree

Totally agree

Profit

Cash flow Internal rate of return

No increase (0%)

Very few increase (>0% < 5%)

Few increase (>5% <10%)

Average increase (>10% <20%)Quite increase (>20% < 30%)

Drastically increase (>30%)


Outsourcing has an impact on Marketing

management concerning the non

financial performance:

• More Efficient sales management (50%);

• Good satisfaction in sales

management(41%).

Independent

variableCorrelation (+ / -) Dependent variables

Resource to OM

+More efficient sales

management

+Good satisfaction in sales

management

Correlations between Outsourced Marketing (OM) and the non financial indicators’ performance

Intersection between OM and the Performance of the financial indicators (in number of cases)


Totally disagree

Disagree


Agree

Totally agreeMore efficient sales management

Good satisfaction in sales management


When SMEs opt for Marketing Resource Management through Outsourcing occurs a

positive impact on cost efficiency:

• In 48% of the SMEs it was observed such

increase.

Independent variable Correlation (+ / -) Dependent variables

OM + Cost efficiency

Correlations between Outsourced Marketing (OM) and cost efficiency

Intersection between OM and cost efficiency (in number of cases)


Totally disagree

Disagree


Agree

Totally agree

Cost efficiency through the resource to Outsourced Marketing


There is a positive association between

probability of resource to OM and the variables set.

As variables set increase or decrease, also increases or decreases the resource to

outsource Marketing.

Independent variableCorrelation (+

/ -)Dependent variables

Importance attributed to Marketing +

Probability to OM

Attitude on the existence of an internal

marketing department+

Attitudes towards the reliance on

outsourcing for the function of Marketing

Manager

+

Preference for Marketing Outsourcing +

Correlations between Marketing significance and the resource to OM

Intersection between OM and probability to outsource Marketing (in number of cases)


Not at all important

Minor

Averagely importantImportant

Very importantUnlikely

Less likely

Likely

Most likely

Certain


• 50% of SMEs claim to be likely the resource to OM.

• 20% of these SMEs claim be certain to recourse to OM.

• 46% of the SMEs agrees with the use of outsourcing for the Marketing manager function.

• Only 20% of the Marketing Managers have academic education in the area.

• 45% of SMEs surveyed prefer the OM vs. 36% that prefer Insourcing Marketing.

Intersection between the attitude towards marketing management and probability of resource to OM (in number of cases)


Totally disagree Disagree Neither agree nor disagree Agree Totally agree

Intern Marketing department

Outsourcing the Marketing manager function

Preference of OM over the Marketing insourcing

Un

like

ly r

esou

rce

to

OM

Less

like

ly r

esou

rce

to O

M

Like

ly r

esou

rce

to

OM

Mos

t li

kely

res

ourc

e to

OM

Cert

ain

res

ourc

e to

O

M

Un

like

ly r

esou

rce

to

OM

Less

like

ly r

esou

rce

to O

M

Like

ly r

esou

rce

to

OM

Mos

t li

kely

res

ourc

e to

OM

Cert

ain

res

ourc

e to

O

M

Un

like

ly r

esou

rce

to

OM

Less

like

ly r

esou

rce

to O

M

Like

ly r

esou

rce

to

OM

Mos

t li

kely

res

ourc

e to

OM

Cert

ain

res

ourc

e to

O

M


Factorial analysis and Cronbach's Alpha reliability test

It was observed that all variables tested, after having carried out the factor analysis, and having found the components associated

to variables, present a satisfactory internal reliability consistency .

Variables ScaleCronbach's

Alpha

Marketing resource management Behaviour 0,844

Performance associated to MO Facts 0,984

Marketing and its management Attitude towards Marketing 0,755

Outsourced Marketing Facts and opinions towards MO 0,958

Reliability Test from obtained scales

Highlights :

• Facts associated to the OM’s performance;• Facts and opinions in favour of OM.


Conclusion


Conclusions about the research hypotheses

The management of resources through outsourcing creates

competitive factors in SMEs, with an impact on performance.

Significance of Marketing in SMEs increases the use

of outsourcing leading to efficient cost management.

Management of non-core competencies in SMEs in

Outsourcing of Marketing are synonym of competitive advantage.


Contributions to management

Both the Operational Marketing and Strategic Marketing are susceptible to be Outsourced.

This research leads to a new frame about the make or buy decisions

regarding the practice of marketing.

Matrix of relationship between core competencies and strategic importance

Font: own elaboration


Limitations

Limited availability of SMEs to provide information, in order to

ensure some barriers to entry to new competitors;

Legal limitations: Law for data confidentiality;

Portuguese business culture: resistance to outsourcing, issues

and sensitive topics.


Recommendations

1. The questions should be asked to executive directors or even to the SMEs’ shareholders.

2. Focus on only one sub-theme and simplification of the questionnaire for a higher concentration and adherence.

3. Outsourcing practices in human resources management or in research and development can be compared to this investigation.

4. Make a cultural and geographical comparison to understand whether the results are exclusive to Portuguese SMEs or are also the same results in other European countries.

5. Cluster analysis in terms of characterization of SMEs, as defined by IAPMEI.


Master MSc Thesis Presentation

The impact of a strategic alliance through outsourced Marketing (OM) in the competitive advantage of the

Small and Medium Enterprise (SME’s) in Portugal

Friday, 19th November [email protected]

Business

Master MSC thesis presentation cristina_nazaremartins_19nov2010_eng version