IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY Istanbul, May 2015 PhD Tamara Jovanov Marjanova,

IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE:

A DEVELOPING ECONOMY

Istanbul, May 2015

PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia

PhD TAMARA JOVANOV MARJANOVA PhD ELENICA SOFIJANOVA

PhD LJUPCO DAVCEVPhD RISTE TEMJANOVSKI

Faculty of Economics, University “Goce Delcev”, Republic of Macedonia

• Inspiration: 1. Entrepreneurial companies are the basis for national and global

economic growth and, it is necessary to identify the factors of influence on their financial success;

2. Distorted marketing and management practices of companies that operate in a transitional economy, specifically Republic of Macedonia.

• Two main objectives: 1. To present the current situation, i.e. state of the art in the

communication processes of entrepreneurial companies in emerging economy,

2. Show the relationship and impact of integrated communications on financial success, specifically profitability.

IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY


INTRODUCTION


Characteristics of a transitional economy (Zurawicki and Becker, 1994)

Problems faced by Macedonian companies (current)

• Low economic development, • Low income, • First -generation managers,• Developing strategies for the first time, • Oriented to short-term financial results, • Small capital and scarce financies, • Limited number of business

operations, • Tendency for small investments.

• Low quality vs. consumer demands, • Lack of certification and

standardization of production processes,

• Lack of information about market possibilities,

• Scarce marketing and managerial knowledge

• Slow change from competition based on price to competition based on quality.


INTRODUCTION


Trends in marketing communication• Consumers rely more on publicity associated with the product and

the company, rather than advertising and, consider that activities related with publicity have more credibility;

• The percentage of companies that are active in social networks is constantly growing;

• Most of the suggestions and comments of customers come from e-mail;

• The organization of extraordinary events, creation of viral advertising messages for consumers can encourage them to transfer the information.


LITERATURE REVIEW (Importance of MC)1.Marketing communication is "a process that includes all the information that is transferred between parties who want to engage in mutually advantageous exchange or transaction / relationship" (Yudelson, 1999, p.66).

2.The promotional message can have different, but also complementary goals: differentiate; remind and reassure; inform or educate; encourage to purchase (Kotler and Keller, 2009).

3.The positive long-term effect of promotion on different indicators of performance of enterprises is confirmed by many authors:

4.Positive influence on increasing market share in long term (Srinivasan et.al., 2000).

5.Increased sale of product category (Nijs et.al, 2001).

6.Direct relation between the level of promotion and level of profit margins and revenues (Srinivasan et.al., 2004).

7.The perceived value and the sale of the brand is in a positive and direct correlation with, and it depends on promotion (Sriram et.al, 2007).



METHODOLOGYThis research is a part of an ongoing project, entitled “Strengthening the business capacity of women entrepreneurs in Republic of Macedonia, as a developing country”.Quantitative and qualitative methods. Primary data: structured questionnaires about attitudes and current practices of marketing management (parametric statistics - nominal and interval scale), and a follow-up, semi-structured interview;The analysis is based on parametric statistics and, the responses were measured on a nominal and interval (Likert) scale. Purposeful statistical sample of 38% (19) of the registered companies in the confectionery industry in Macedonia. Data was analyzed with IBM SPSS19. The conclusions are given on the base of descriptive and deductive statistics.Profitability was measured on a subjective scale.



HYPOTHESES

1.Entrepreneurial companies operating in a developing economy have intensive external communication with consumers.

2.The most popular element of promotion is economic propaganda.

3.The most popular medium of communication is the television.

4.Implementation of combined method of communication (integrated communication) directly affects profitability.

5.Usage of combination of different media of communication directly affects profitability.



RESULTS•Descriptive statistics 1.The statistical sample consist of nearly equal representation of small (31.6%), medium (36.8%) and large (31.6%) companies (by number of employees); 2.The profitability of companies is rather poor, with most of the companies reporting profits that are poor (15,8%) to moderately poor (26,3%) (42.1% cumulatively); 3.In terms of budget for promotion, most of the companies (80%) allocate less than 5% of the revenue from sale (annual amount from 500 to 700 euros for all marketing activities); 4.Most of the entrepreneurs did not distinguish marketing from promotional strategy.



• In terms of implementation of different elements of promotion, the analysis indicates that:



Statistics Economic propaganda

Sales promotion

Direct marketing

PR and publicity

Combination (min 3 different

elements)N Valid 19 19 19 19 19

Missing 0 0 0 0 0Mean 3.37 4.58 2.42 2.58 3.58Note: Min value = 1 (never); Max value = 5 (always)

• The companies mainly/often use sales promotion (4.58) and economic propaganda (3.37), or a combination of several elements of promotion (3.58)

• Apropos the choice of media used for promotion, we can say that :

1. There is prevalent use of traditional mass media;2. The majority of companies (80%) advertise on local television;3. Advertising in print is used by 20% of the companies;4. Around 20% have a proactive communication through social

networks;5. About 50% of them have created a web page;6. Outdoor advertising (billboards) are used by 50% of the surveyed

companies;7. Other sources (posters, brochures, flyers)are rarely used or not

used at all.



• Deductive statistics• Connection between different elements of promotion and

profitability



Correlations

ProfitabilityEconomic

propagandaSales

promotionDirect

marketingPR and publicity


elements)Profit. Pearson

Correlation1 0.651** 0.189 0.425 0.701** 0.690**

Sig. (2-tailed)

0.003 0.437 0.070 0.001 0.001

N 19 19 19 19 19 19

**. Correlation is significant at the 0.01 level (2-tailed).*. Correlation is significant at the 0.05 level (2-tailed).

• Deductive statistics• Connection between different media for promotion and

profitability



CorrelationsProfitability Television Radio Paper Internet


media) Profitability Pearson

Correlation1 0.566* 0.585** 0.385 0.538* 0.789**

Sig. (2-tailed)

0.012 0.009 0.104 0.018 0.000

N 19 19 19 19 19 19

**. Correlation is significant at the 0.01 level (2-tailed).*. Correlation is significant at the 0.05 level (2-tailed).

• Regression estimatesPhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia


Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error Beta (Constant)Combination (min 3 different elements)

2.009 0.984 2.042 0.0571.012 0.257 0.690 3.935 0.001

Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error Beta (Constant)Combination (min 3 different media)

2.639 0.637 4.140 0.0011.015 0.192 0.789 5.294 0.000

Notes: R Square: 0.622, Adjusted R Square: 0.600, F=28.032, Sig. F=0.000, N=19, *significant at 5%, * dependent variable: profitability

Notes: R Square: 0.477, Adjusted R Square: 0.446, F=15.488, Sig. F=0.001, N = 19, *significant at 5%, * dependent variable: profitability

CONCLUSION•In the case of transitional economy and the food industry within, the research has confirmed the direct impact of integrated communications on companies’ profitability.

•Recommended steps to overcome the identified weaknesses:•The goals of a company, except sales, should also be: communication, indication of market position; awareness; product trials; corporate image.•Address more than one key target group.•Make a difference between funds for promotional strategy and overall marketing activities. •Use a combination of elements in the promotional mix. Sales promotion and economic propaganda should have only occasional use.•Besides traditional non-personal media (audiovisual media), companies should also include interactive media - social networks and, use the website for direct contact.



Thank you!


Istanbul, May 2015

Documents

IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY Istanbul, May 2015 PhD Tamara Jovanov Marjanova,