I

Table of Contents

1  Introduction - 1 -  

1.1  Problem statement - 1 -  

1.2  Outline. - 2 -  

2  Challenges for the professional services marketing. - 2 -  

2.1  Differences as compared to the marketing of physical goods - 2 -  

2.2  The change in the professional services market - 3 -  

3  The marketing of management consulting services. - 4 -  

3.1  The Marketing Approach. - 4 -  

3.2  The steps of the approach in detail. - 5 -  

3.2.1  Defining the target market - 5 -  

3.2.2  Positioning the service. - 6 -  

3.2.3  Promotion and Communication of the service. - 7 -  

3.2.4  The First Contact Phase - 10 -  

3.2.5  Client Acquisition. - 10 -  

3.2.6  Service Delivery - 11 -  

3.2.7  Client Relationship Management. - 13 -  

4  Conclusion. - 14 -  

Table of  Appendices. - 16 -  

References ............................................................................................. - 18 -

- 1 - 1Introduction

1.1 Problem statement

The professional service sector has experienced a steady growth: In recent years it seems to dominate the US economy rather than the consumer good sector does. In industrialized countries it can be generally observed that the share of output contributed by services is increasing. 1

As for the professional management consulting sector, there are only a few multinational companies that do not call on consulting services on a regular basis. Now smaller companies and businesses as well as the public and non-profit sector are also increasingly taking up this professional advice. In Germany, low entry barriers and high growth rates have led to a large, complex market with high intensity of competition. ² Facing an increasingly competitive environment, service providers are searching for new or improved ways of differentiating themselves and of increasing their competitive advantage. As a result, differentiation has become a significant factor for survival and success. Marketing expertise plays an essential role in the process of differentiation and accordingly there has been a rapid acceptance and adoption of marketing programs by professional service providers in the past few years. But professional service firms see themselves confronted with a wider range of problems while marketing their service offering as compared to marketing of goods since the decision process of the client is much more complex mainly because of uncertainty involved.

This paper first aims to explain these difficulties that professional services are facing in planning and implementing their marketing program and then goes on to highlight in the main part how providers of professional management consulting services can market their services in an effective way against the background of these distinctive problems.

¹ See THAKOR/ KUMAR (2000), p.63.

² See BARCHEWITZ/ ARMBRÜSTER (2004), p.1.

- 2 - 1.2Outline

To deal with the question of how professional services can be marketed effectively, the management consulting sector will serve as an example and the following methodology will be applied on this seminar paper: The second chapter will highlight the special challenges that the marketing of professional service firms generally tends to face. These challenges arise from the differences of services compared to physical goods and the changing profile of the professional service market in recent years. Afterwards the main part, chapter three, will deal with the concrete activities that are condition for an effective marketing of professional management consulting services. In this connection, the first section gives an overview of the marketing model that has been developed and that will be applied in the following context. The second section will describe the different steps of the marketing process in detail. This includes the definition of the target market, the positioning of the consultancy and its services in the market, the communication, the establishment of the first contact, the acquisition process, the delivery of the consulting service and finally the client relationship management. The closing part of this paper consists of a summary of the most important arguments as well as the examination of limitations and possible future developments.

2 Challenges for the professional services marketing

Due to the development of the professional service market in the recent years and their uniqueness as compared to physical goods, the marketing of professional services meets increasing challenges, which will be represented in the following chapter.

2.1 Differences as compared to the marketing of physical goods

To understand the problems that professional service marketers are facing, it is best to clarify the nature and diversity of services marketing by considering its differences to the more traditional consumer goods or industrial marketing. The most important and relevant characteristics from a marketing viewpoint that distinguish a service from a physical product are its intangibility, inseparability, heterogeneity, perishability and the participation of the customer in the process. 3

³ See BLANKSON/ KALAFATIS (1999), pp.107-108; KOTLER/ HAYES/ BLOOM (2002), p.12.

- 3 -The primary assets of a professional service firm which can be summarized by knowl-edge, experience and reputation, are intangible. This means that they cannot be directly perceived by human senses. The same can also be stated for the services that these firms deliver, ⁴ which makes it difficult for potential consumers to evaluate the service and its quality not only prior to purchase but also after the completion of the purchase and con-sumption phase. Therefore consumers find themselves in a high level of uncertainty and perceive the purchase of a service to be riskier than the purchase of products. ⁵ In addition to that there exists an inevitable connection between the professional service and its provider as the successful delivery of a service requires the presence of the pro-ducer. The people are the interface between the professional service provider and the client. ⁶ Along with this inseparability of services goes the heterogeneity. As the service is inseparable from people, the service quality delivered to clients can vary; the standard depends on the provider and it is difficult to assure the quality in advance. ⁷ The criterion of perishability states that in contrast to manufactured goods, services cannot be stored. As a result, a professional service firm might have more problems to maintain consistency during demand fluctuations. ⁸ The last important characteristic that distinguishes services and goods is the participation of the client in the delivery proc-ess. ⁹ This is of special relevance in the consulting sector as the consultancy firm devel-ops an individual solution in cooperation with the client; there is no standardization.

2.2 The change in the professional services market

Professional services providers such as lawyers, accountants or consultants once enjoyed a high degree of esteem and client loyalty was a tradition. In addition, people were willing to accept the advice received from the professionals unquestioningly. But this situation has changed radically: Today’s clients can no longer be seen as naive, but rather as informed persons who can define their wants and needs and participate in the whole process of the service delivery. While in the past they were searching for trained and experienced professionals that are qualified in the skills needed to solve a problem or to create new business opportunities, nowadays, clients want to cooperate with pro-

⁴ SeeDELONG/ NANDA (2003), p. XIV.

⁵ See SHARMA/ PETTERSON (1999), p. 152.

⁶ See AQUILA/ MARCUS (2004), p.28.

⁷ See BLANKSON/ KALAFATIS (1999), p.108; VICKERSTAFF (2000), p.355.

⁸ See KOTLER/ HAYES/ BLOOM (2002), pp. 12-13; BLANKSON/ KALAFATIS (1999), pp.107-108.

⁹ See KOTLER/ HAYES/ BLOOM (2002), p.14.

- 4 -fessionals that show a great understanding of the customers’ specific and complex needs and that own the ability to meet these needs. 10

Because of the increased competitive market of professional services, potential clients can afford to be choosy among the options that different services offer. The professional service market is turning from a seller into a buyer market. ¹¹ As a result, the professional service provider can no longer wait for the client to come, but they have to take up the initiative by the implementation of specific marketing programs. To gain and retain clients, professional service providers have to convince potential customers that they can satisfy their needs. This implicates a great challenge for the marketing of services.

3 The marketing of management consulting services

3.1 The Marketing Approach

As for the marketing of consumer or other tangible goods the first aim of professional service marketing is to convince the potential client to get into contact with the provider. But the marketing process still continues after the service contract has been signed. It is executed during and even after the completion of the project. ¹² “Marketing does not [only] precede a professional service, […] [but] is an essential condition of a truly professional service.” 13

The traditional approaches emerging from the Fast Moving Consumer Goods market can not be generally transferred to the services sector, but the literature still does not supply service providers with a general applicable marketing approach. Therefore, in the sequel, a partly self-developed, process oriented approach is used to describe the marketing of management consulting services. ¹⁴ It is in line with the different steps that a consultant passes: From the preparation for the establishment of first contacts until the acquisition and execution phase and the client relationship management. The central point in the marketing process is the relationship between the consultants and the client. The first three marketing activities are a preparation for the development

¹⁰ See MERCER MANAGEMENT CONSULTING (2004), p.4; AQUILA/ MARCUS (2004), p.15.

¹¹ See AQUILA/ MARCUS (2004), p.16; RICHTER (2004), p.9.

¹² See FERGUSON (1996), p.19; BARCHEWITZ/ ARMBRÜSTER (2004), p.68.

¹³ KUBR (1996), p.528.

¹⁴ See Appendix 1.