marketing of consulting services
TRANSCRIPT
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Marketing of Consulting Services
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Abstract
This report describes the different marketing approaches used byconsultants to market their services. The Consulting Industry underwentsignificant changes in recent years. Mergers & Acquisitions took and takeplace, IT-Companies thrust themselves with own subsidiaries into the marketand more sophisticated clients expect new payment terms, to name someexamples. As a result marketing gains in importance for consultants.Therefore the particularities in marketing professional services areexplained. The typical matrix-structure of a firm and its implication formarketing are illustrated. There are various techniques used to marketadvisory services. These are grouped and defined in this study and, wherepossible, examples aredisplayed.
Main objective of this dissertation was to find out which are the preferredmarketing ways applied by consultants. Thus a survey was undertakenthroughout the consulting industry. A representative sample of the industry
was asked for the importance of different marketing approaches. To derivesome meaningful recommendations from the survey regarding the mostappropriate marketing techniques, respondents had to estimate the futureimportance ofchosen industry sectors and consulting services.
As it turned out it is not the primary goal to gain new clients with marketing.Intensifying existing client relationships has a similar importance. Somesignificant differences were identifiable. These can be partly attributed todifferent financial capabilities of the organisations. However, some favouredmarketing techniques are identifiable. Generally the more subtly indirecttechniques are preferred, whereas the direct techniques are seen as lessimportant. The opportunities and the importance of certain industry sectors
and consulting services are perceived differently by smaller consultanciesthan their bigger competitors. At the opposite of the major consultanciessmaller competitors tend to specialize and hence weigh the importance ofindustries and especially services considerably different. Nonetheless thereare industries identifiable, which gain in importance for consultants as wellas trends towards certain consulting services besidesOutsourcing.
This dissertation is presented in seven sections.
Section one gives background information and a brief description of thecurrent situation in the consulting industry. The second section deals withinternal structures within consultancies and important aspects in marketingprofessional services. In section three different approaches used by
consultancies to market their services are explained. Findings of the twoprevious sections are summarised in section four. A brief overview ofsampling methods and the chosen study design are explained in sectionfive. Results of the conducted survey and an approach to systemisemarketing decisions are discussed in section six. Finally some conclusionsand recommendations are made.
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1. Introduction
Consultancies have always been quite reluctant to market their services.
They normally assumed that their own success feeds their reputation and
generates permanent demand and therefore new clients. There are different
ways to market advisory services. In order to find out the most preferred
methods used by management consultants to market their services, this
dissertation was undertaken. In a second step it was analysed how
consultants rate the future importance and impact of chosen industry and
service sectors. According to these estimations recommendations regarding
a focussing of marketing efforts on certain industry sectors and consulting
services were deduced.
Marketing of ConsultingServices
Marketing methods used by Management Consultancies to
markettheirs services and position themselves in the market-
1.1. Background
As the International Financial Services, London reported in its latest
memorandum (IFSL, 2003, p.1), the recession has reached also the
consulting business. 2002 was the first year in the past decade, where the
management consulting market grew (in terms of revenues) only by single-
digit numbers. The same development was expected for the following years.
Before it has been one of the fastest growing industries in the UK.
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Marketing of Consulting Services- Introduction -
1.1.1. Recentyears
During the recent years the business faced significant changes. Corporate
scandals, like ENRON in the United States, brought professional service
firms under the spotlight. Accountancies have withdrawn from the consulting
business. Mergers and acquisitions took and take place. For instance IBM
took over the consulting business of PWC and more recently on this years
January 29th
AtosKPMG acquired SchlumbergerSema (Kennedy
Information, 2004a, p.5).
However, the UK consulting market is after the U.S. the second largest
single market for consulting services, with a stake of 11% of the total $119bn
market (IFSL, 2003, p.6). It corresponds to $13.1bn (7.35bn). An article in
the Management Consulting International January issue (Kennedy
Information, 2004b, p.1) predicted that the UK consultancy market is primed
for a return to modest growth in 2004. Expected is 4 6%. The Kennedy
Information, Inc. argues that the UK market, due to a slightly growth in the
last year will lead other Western European markets in recovery (2004c, p.2).
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Marketing of Consulting Services- Introduction -
1.1.2. Identifiable trends
A couple of major trends are identifiable:
Major IT-Companies set up their own consultancies or acquireestablished ones. Examples are, as mentioned before IBM, t-systems,
Oracle, Hewlett-Packard or SAP. The trend, of setting up consultancies,
so-called In-house-Consultancies, can also be seen in other industries,
e.g. logistics (DPWN Deutsche Post World Net) or manufacturing (VW -
Volkswagen).
There is a tendency to mergers of bigger consultancies to huge servicegroups on the one end of the market and to single or smaller consultants
on the other end of the market, which operate at lower costs and
therefore put pressure on fees. Projects are getting smaller, in value and size. Nowadays clients aremore cautious and price-conscious. Big players have now to compete
and position themselves against smaller competitors, which often worked
successfully as a niche-player on smallerprojects. Clients prevail new compensation schemes. Consultants have to acceptprolonged payment terms and to participate in risks as well as in profits. Akin to the past decades, innovative concepts are missing. In the 1970sthere was corporate strategy, in the 1980s total quality management,
business process re-engineering or ERP and in the 1990s Internet, E-
commerce and Y2K (Kennedy Information, 2004d, p.10).
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The financial sector lost ground. According to Abbott (2003, p.2) theproblem will be reduced when the whole economy has turned around.
Subsequently the financial sector will restart spending more on
consultancy. Revenues in this segment slumped by 19.8%, from 1.783
mill in 2001 to 1.430 mill in 2002.
Summarised can be assumed that because of the growing competition and
the lack of innovative drivers, marketing may gain in importance.
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Figure 1: Management Consultants Service & Industrysectors
Service sectors Industry sectors Outsourcing IT-Services Strategy Operations Human Resource Finance Programme management Marketing & Sales
Finance Government Communications & Media Retail & ConsumerGoods Healthcare & Pharmaceutical Utilities & Energy Manufacturing Transport
The questionnaires were sent in the months March and April. The
respondent quote was 42%. Analysis was undertaken by the means of
SPSS.
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POTENTIALENTRANTS New single orsmallconsultants Low barriers ofentry
SUPPLIERS POWER Clients seek forintegrated solutions
BUYERS POWER No switching costs Newcompensationsystems Make consultantspartlybear the risk
COMPETITIVERIVALRY Increasingbecauseofeconomicsituation,new
competitors and
continuous changes
SUBSTITUTES IT-&Technology-companies Inhouse-Consultancies
COMPETITIVERIVALRY Increasingbecauseofeconomicsituation,new
competitors and
continuous changes
BUYERS POWER No switching costs Newcompensationsystems Make consultantspartlybear the risk
Marketing of Consulting Services- The Consulting Services Industry -
2. The Consulting Services Industry
As mentioned in the introduction the consulting industry experienced
significant changes during the last a couple of years (see Figure 2).
Figure 2: Porters 5 Forces in the ConsultingIndustry
POTENTIALENTRANTS New single orsmallconsultants Low barriers ofentry
SUPPLIERS POWER Clients seek forintegrated solutions
SUBSTITUTES IT-&Technology-companies Inhouse-Consultancies
Source: Kotler, P. (2000) M ar k e ting M a nag e m ent. The Millennium Edition, NewJersey: Prentice-Hall, p.218.
Together with the market for consulting services the number of consultants,
often single or small consultants, soared. According to Bythell (2004) the
number of consultants rocketed from 18.000 in 1980 to 555.000 in 2000.
Clients are looking for new payment methods and integrated solutions.
Consultants have to bearpart of the risk and changed payment terms (see
1.1.2.). This led on the one hand to collaborative alliances between
consultants and client-companies and on the other hand to the advent ofIT-
Jan-Daniel Laufhtte 8Student-No: 2304958
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Marketing of Consulting Services- The Consulting Services Industry -
Services firms, such as Hewlett, Fujitsu, Oracle, or SAP. The latter entered
the consulting industry by setting up own consulting subsidiaries or acquiring
established consultancies.
2.1. Management Consultants
The study at hand is focused on management consultants. On principle
consultancies can be subdivided into Information-Technology-Consultants
(IT), Management-Consultants and Human-Resource-Consultants (HR). By
and by it got harder to distinguish between those categories. Nowadays the
strategic aspect of implementing and operating IT-systems or personnel
development preponderates. The Management Consultancies Association
(MCA) defines management consultancy as follows:
Management consultancy is the creation of value for organisations,through the application of knowledge, techniques and assets, toimprove business performance. This is achieved through the rendering
ofobjective advice and / or the implementation of business solutions.(CitedinInternationalFinancial Services, 2003)
The stated definition illustrates that the distinction between IT-, HR-, and
Management-Consultants is blurred and all three types can therefore be
subsumed to Management Consultancies. Consequently In the following it
will notbe differentiated between the three identified types. For the reason of
completeness a brief definition of all three (see Figure 3) follows.
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Marketing of Consulting Services- The Consulting Services Industry -
Figure 3: Functional Orientations ofManagement-Consultants
CCoonn
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taanncciieess
ITIT-C-
Coonnssuultlat
anntsts
MMaannaaggeemmeennt-
tC-Coonnssuultlatanntsts
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Support of companies in planning,development and implementation
of IT-systems and operating ofthose, too.
Support of companies in the areasof strategy, organization and
management on companiesexecutive level.
Support of companies inpersonnel acquisition, personnel
development, outplacement as wellas salary and contract design.
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OOrgrgaannisisaatitoionna
al-lC-Coonnssuultlitningg
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Support of clients by environmentalanalysis, internal analysis
and choice of strategy.
Support of clients in the process offormal re-organisation of internal
structures, respectively re-divisionof functions between the client andits customers.
Make a client fit forfuture organisational changes.
Source: FINK, D. (2003) D ie gro ss en M anag e m e nt C on s ultants . Verlag Vahlen,Mnchen, p. 7-12.
Information-Technology-Consultants support their clients mainly in applying,
using and operating IT-systems. Human-Resource-Consultants advice their
client firms in personnel acquisition, development and linked areas.
Traditional Management-Consultants are primarily focused on strategy and
management. Management-Consultants services can be subsumed into the
three arrays Strategy-, Organisational- and Change-Consulting.
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2.2. First steps
Kotler et al (1999, p.7) define marketing as the delivery of customer
satisfaction at a profit. The main tasks of marketing are attracting new
customers by providing superior value, and keeping current customers by
developing satisfaction. In terms of a consultancy it means, that a firm can
only exist and grow, when it keeps it current clients by satisfying theirs
expectations, and adding value to theirs businesses. In turn the success with
one customer attracts new clients, who create new advisory demand.
Demand for consulting services occurs, when the client company lacks the
required expertise, or its own specialist works full-time on other projects and
hence lacks the time to advise. Furthermore the company may be too close
to or involved in a problem and needs an objective advice from someone
outside the organization. Finally a firm facing several options may need
recommendations how to react on external trends.
Although consultants are sometimes reluctant to market theirs services,
even one of their pioneers, James McKinsey, knew how important marketing
was and still is. He spent a lot of time on business dinners where he subtly
explained his prospective clients of what worth his services could be for
them. Whereas in past times consultancies marketing consisted mainly of
networking, carrying out small surveys, speaking on management
conventions and trusting their strong reputation it is nowadays generally
accepted that professional services asconsulting have to be marketed more
actively. Reasons are the steadily increasing competition, where it is
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indispensable to position the firm and its services in the right market to get in
touch with the right clients.
2.3. The Advisory Process
Doyle (2002, pp.357) says that manufacturing companies are usually
organized along functional lines. Hence decisions are made department by
department, whereas each department has got the possibility to develop its
own specialist skills, organization and culture appropriate to the tasks that it
faces. Problems emerge by integrating these separate organizations. A
service organization in contrast has to be designed as a whole with all
members signing responsibility, to a certain extent, for marketing. Therefore
the marketing of consulting services cannot be reduced on certain points
within the consultancies value chain. Even though a consultancy created
awareness and prospective clients interest in its services, not only its
appearance and proposal must be convincing, since a successful executed
case is a powerful marketing tool. The advisory process of a consultant can
generally be divided into 7 parts, as illustrates Figure 4.
Figure 4: The AdvisoryProcess
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Due to the fact that marketing of a consultancy is an overall task, thus it
cannot be limited to first two steps of the advisory process. Awareness
summarizes that phase, where consultants may create awareness by using
several marketing approaches. Potential clients, who discover a specific
need for consulting in theircompany, will then contact the consultancy in the
so-called lead-phase.
2.4. Principles for Marketing of Consulting Services
Consultancies have to consider that they are working in a highly confidential
business environment and hence to bear in mind certain rules. Kubr (2002,
p.649) developed 7 principles for marketing consulting services:
1. Regard the clients needs and requirements as the focal point ofall
marketing!
2. Remember that every client is unique!
3. Dont misrepresentyourself!
4. Dontoversell!
5. Refrain from denigrating otherconsultants!
6. Never forget that you are marketing a professionalservice!7. Aim at an equally high professional performance in marketing and
in execution!
Marketing has to be focused on clients needs. Every case must be relevant
and of any value for the client and not simply for selling a service. Clients
expect a unique customized solution and not a standardized product. In
marketing its services a consultancy must not give a wrong impression about
its capabilities and competences. Otherwise clients expect more than the
consultant is able to deliver. Denouncing competitors is unprofessional.
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INDUSTRY
PRACTISES
Clients sensitivity, local cultural values and norms must be taken into
account. Therefore the appropriate marketing approaches and techniques
have to be used. Marketing continues and does not end when the service is
once sold. To execute the case properly has a pivotal marketing effect, since
a successful solved case increases the firms reputation and may gain new
clients.
2.5. Organizational structures within consultancies
The major consultancies are matrix-organized. On the one hand there are
the functional practices, which correspond to the usual business functions
and on the other hand industry practices, which represent the different
industries a consultancy is working in (see Figure 5).
FUNCTIONALPRACTISES
ConsumerGoodsConsumerGoods
ManufacturingManufacturing
AutomotiveAutomotive
PharmaPharma
TelecomTelecom
UtilitiesUtilities
etc.etc.
StrategyStrategy
MarketingMarketing
OrganisationOrganisation
OperationsOperations etc.etc.
Specialist
IndustryConsultant
FunctionalConsultant
Generalist
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Consultants of the industry practices are the sales-force for ideas and
concepts developed by their colleagues of the functional practices.
Therefore it is expected that the functional consultants invest time of their
billability in the benefit of research & development. Billability is the
percentage of her or his work time a consultant is available for cases.
Normally the billability should be around 75%. Initially, when the consulting
service was established as a business discipline, most consultants were
generalist and applied their skills to the given cases. By the time more and
more specialised know-how was required most firms reorganised into a
matrix-structure and hired specialist for the different areas. The consultants
reacted to the more complex business environment, in which often a deeper
knowledge was indispensable.
That a deeper knowledge whether industrial or functional is important stated
Hans-Paul Brkner, CEO of the Boston Consulting Group, in an interview
with the Consulting Magazine (2004):
There needs to be a number of senior people who really understand
the issues and who can provide different industry points and who cancombine different functional expertise that no single person orboutique couldpossibly bring to bear. (cited in The Last ElectedCEO
A Talk With Accentures ApproachableLeader)
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2.5.1 The origin of the matrix-structure
The matrix-organization resulted from the restructuring-efforts at McKinsey &
Company in the aftermath of oil crisis and the economic downturn in the
1970s, when the firm faced more focused new competitors like the Boston
Consulting Group (BCG). At this time McKinseys consultants were seen as
excellent generalist problem solvers. But they often lacked the deep industry
knowledge or the substantive specialised expertise that clients were
demanding (Bartlett, 1999, p.3). In contrast to McKinseys client-
relationship-approach with long-standing client-relations, BCG started
competing form its Boston-base with its fly-in-fly-out-model. BCG made use
of some simple but powerful tools, as the experience curve or the growth-
share-matrix, and progressed quickly (Fink, 2003, pp.85). To counter BCG
the matrix-structure was against resistances in the firm set up and
Research & Development were more emphasized. A series of publications
was started, which culminated in some bestsellers as In Search of
Excellence or The mind of the strategist and the The Knowledge Resource
Directory (KRD) in which all the firms worldwide specialists are registered.
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2.5.2. Consequences of the matrix-structure
As a consequence of the matrix-structure four varying types of consultants
can beidentified: The traditional Generalist, the prototype a consultant, who serves allbusiness functions over all industry sectors. A Functional Consultant, who is specialized in one business function,e.g. Marketing and offers her / his services to all industries. An Industry Consultant, who is focused on a single industry sector, butprovides all functions forthis.
The Specialist, who offers her / his services, i.e. marketing, only withinone industry.Also a generalists manpower may consist of specialists along the traditional
value chain or of different industries. For bigger projects / cases, where
specific know-how is needful these specialists are recruited out of the
companies network to work together.
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to retain and gain clients -
3. Marketing Approaches to retain and gain clients
The intangibility of consulting services affects the possibilities of marketing.
Contrary to products services do not have a fancy package for the client to
see, touch, hear, or smell. It cannot be sold like automobiles or deodorants
(Greiner & Metzger, 1983, p.42). A consultancy sells promises no
guarantees. Prospective clients can hardly detect, if the offered services are
of any use for them. Nowadays clients are also more cautious. Kubr (2002,
p.650) argues, that clients wish to reduce their risk by finding out whether
the consultants abilities match the technical and human dimension. The
technical dimension defines the technical know-how needed to solve a
clients problem. The human dimension on the other hand describes which
soft-skills are required in dealing with the client. Thus, the consultancies
marketing efforts have to convince its client that it is able to cope with the
given situation.
3.1. Service marketing mix
Traditionally to attract new customers was often overemphasized. A well-
managed firm will work hard to retain and grow its existing customers
(Lovelock, 1996, p.150). It is said that it costs five to six times more to attract
a new customer than to keep an existing one. Marketing activities should be
focused to a larger extent on existing clients claims.
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gain clients -
3.1.1. Product
A consulting firms productive capacity is its human resources. Therefore not
only productivity in terms of billability is important, but also upholding the
firms most creative and productive employees interest and involvement is
crucial. The service marketing mix has to take into account both goals, thus
the consultancy has to provide an adequate product mix for its clients
(external customers) and employees (internal customers), as well.
Figure 6: Product Mix for a Professional Service Firm
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Source: LOVELOCK, C.H. (1996) S er v ic es M a rk e t ing . 3rd
edition, New Jersey:Prentice Hall, p.188.
Figure 6 illustrates of which projects a professional firms product mix should
consist. Beside so-called Bread & Butter projects the organisation has to
conduct some challenging Pacesetter projects, to keep its best personnel
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interested and to foster, if successful, its own reputation.
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The consultancies industry practices market their services within the
industries they are representing and working in (see 2.5.). While a specialist
can fully focus its marketing efforts on a certain service for a certain industry,
a generalists marketing has to cover all his services for all industries. Since
consulting services are intangible they are often difficult to understand and
their worth for the clients company cannot be examined in advance (Doyle,
2002, p.335). To generate confidence, tangible aspects should be
emphasized. In case of a consultancy the office should look innovative and
prosperous, forinstance.
3.1.2.Price
The price is highly dependent on the case-size. It is obvious that a small
case involves fewer consultants and needs lesser time than a case for a
global company undertaken in several countries during a longer space of
time. Also the involved consultants are different paid. Evidently a director
gets a higher salary than a junior consultant and creates therefore more
costs for the client. But on the other hand the client may insist to be advised
by executive consultants. It can be assumed, that consultancies are well
informed about the price structure within the market. When a consultancy
prepares a proposal it is aware of the competitors pricing strategy. As a
result prices do not differ significantly, as long as all consultants offer the
same service. However, due to the advent of single and small consultants,
fees got under pressure during recent years. Only if a consultancy is in a
unique market-position, it may have the opportunity to charge a higherfee.
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Nowadays exists also the opportunity that consultancies take over clients
businesses. Deutsche Bank for instant outsourced its data processing
service centre in Heidelberg (Germany), which is now managed by CSC
(Computer Science Corporation). Both, Deutsche Bank and CSC share a
profit equally. Bain& Company used a similar method to determine its fees.
Bill Bain was the opinion that only measurable results counted. Hence his
consultants developed the so-called Bain-Index, which reflects the share-
development after engagement of Bain & Company. Bain offered his
customers to link the consulting fees directly to the share value added or
other parameters. (FINK, 2003, p.128)
3.1.3. Communication
Promotion illustrates the different given possibilities to create clients
awareness for the offered managing consulting services. Due to the fact,
that services are sometimes difficult to understand and their worth is
unpredictable, they are more complicated to advertise, promote and
communicate than products. Because of their experiential nature, word of
mouth is generally more powerful than advertising. Consequently, service
firms seek to encourage customers to tell their friend and business partners
about the good performance they receive (DOYLE, 2002, p.335). Networking
and Referrals are highly important, especially in the consulting industry.
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3.1.4. Distribution
A high-involvement service as consulting has to be distributed directly
because consultant and client have to meet each other. Generally, before a
case is stipulated several meetings take place in which discrepancies are
clarified. Mostconsultancies pursue a multi-service strategy. The firm seeks
to grow by capitalizing on its reputation and knowledge of its customers to
sell new services. The company maintains the simplicity of a single site and
customer base, but adds to the operational complexity of the business with
its growing range of new services (DOYLE, 2002, p.356). Also for
distribution a wide network is useful fora consultant. So the firms reputation
and consequently its services can be spread more easily.
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Brand Name TCS
Category IT Services
Sector IT and Technology
Tagline/Slogans Experience Certainty
USP India's largest IT company
STP
Segment Enterprises seeking IT solutions
Target GroupLarge overseas enterprises along with domestic clients. Focus onemerging markets as well.
PositioningTrustworthy company with big customers
SWOT
Strength
1) High command on local and domestic market(India)
2) Strong brand backing (TATA)
3) Strong Ethics
Weakness 1) Not very strong in product segment
Opportunity 1) emerging markets
Threats
1) Attrition and Employee loyalty
2) Bigger MNC's entering India and competing for global clients
3) Focussing on organic growth
Competition
Competitors
1) Infosys2) Wipro
3) Mahindra Satyam
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Accenture
Parent Company Accenture
Category Consulting, IT, Technology
Sector General Management
Tagline/ Slogan High performance delivered
USP
They are application oriented firm and worlds largest consultancy by
revenue
STP
Segment Large companies looking for consulting
Target Group Fortune 500 companies and other big organizations
Positioning Management consultants
SWOT Analysis
Strength
1. They provide technological solutions
2. They have extensive geographic reach in over 120 countries
3. They are the firm with largest revenue in the world in consultancy
sector
4. They use the same procedures and processes in approaching
projects, making it easy for employees to move from location to
location without retraining
5. Good advertising and brand building through TVCs and print ads
6. Strong employee base of nearly 250,000
Weakness
1. Accenture has been trying to break into serving small to mid-size
companies but faces stiff competition.
2. Stiif competition from across the world means slow market share
growth
Opportunity 1. They will benefit from its standing as one of the leading IT
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companies as the technology is constantly evolving
2. Due to the recession businesses are going to be looking for ways to
cut back and streamline their operations. Thus Accenture stands a
great chance as it is expert in outsourcing.
3. Global penetrations and offering special fees for smaller projects
Threats 1. Premium offering may not resonate with midmarket customers
Competition
Competitors
1. IBM
2. Capgemini
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POTENTIALENTRANTS New single orsmallconsultants Low barriers ofentry
SUPPLIERS POWER Clients seek forintegrated solutions BUYERS POWER No switching costs Newcompensationsystems Make consultantspartlybear the risk
COMPETITIVERIVALRY Increasingbecauseofeconomicsituation,new
competitors and
continuous changes
SUBSTITUTES IT-&Technology-companies Inhouse-Consultancies
COMPETITIVERIVALRY Increasingbecauseofeconomicsituation,newcompetitors and
continuous changes
BUYERS POWER No switching costs Newcompensationsystems Make consultantspartlybear the risk
2. The Consulting Services Industry
As mentioned in the introduction the consulting industry experienced
significant changes during the last a couple of years (see Figure 2).
Figure 2: Porters 5 Forces in the ConsultingIndustry
POTENTIALENTRANTS New single orsmallconsultants Low barriers ofentry
SUPPLIERS POWER Clients seek forintegrated solutionsSUBSTITUTES IT-&Technology-
companies Inhouse-Consultancies
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Customer Relationship MarketingAnother supporting aspect is relationship marketing. Especially McKinsey
& Company is well known for placing its former consultants in leading
positions in private companies, where they provide the firm with useful
information or hire McKinsey for cases, due to the still existing contact
(see 3.2.1.). At the board of the Deutsche Post AG, 5 out of 8 members
are McKinsey alumni ( h ttp :/ /w w w.d p w n .d e), and all over Germany there
are round about 300 McKinsey alumni in executive positions (McKinsey
& Co werden 75, Berliner Zeitung, 2001). A survey throughout
consultancies revealed that consultants obtain revenues predominantly
with existing clients. Interactive Marketing is an important key word. It is
understand as the sum of cultivation and usage of personal networks,
recommendations ofbusiness partners and colleagues and the personal
relationship with the consultant (Grass, 2002, p.5)
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3.3.2. Events / Sponsorships / Seminars & Workshops
Sometimes advisory companies sponsor sophisticated events or organise
seminars and workshops to promote theirservices. SponsorshipsIf consultants sponsor an event, it is normally an outstanding one. For
instance Arthur D. Little sponsors the World Economic Forum, the World
Sports Forum, the IMDLearning Network and the EBSEuropean
Business School as a strategic partner. Booz Allen Hamilton sponsors
the Booz Allen Classic at Avenel, an annual golf tournament. Sponsoring
such a sophisticated event mirrors on the one hand how consultants
want to be perceived elitist and on the other hand addresses one
specific target group. Those chief executives, who are fond of golf, and
decide about hiring consultancies. SeminarsSeminars and workshops can be conducted by the consultancy itself or
in collaboration with partners, e.g. associations, scientific institutions or
chambers of commerce. To guarantee an appropriate participation
normally no fees are charged. Speakers are usually consultants of the
hosting firm or externals closely linked to the consultancy, who present
the firms services and underline its excellence by references and case
studies.
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WorkshopsWorkshops are more useful for discussions about current business
themes. Here the participants are actively involved and give the
consultants often unconsciously details about own consulting
demand. DinnerseminarsDinner seminars or fireplace conversations are a common means to
intensify existing clients relations. Client partners are invited for a dinner
or a discussion in a sophisticated ambience. Marvin Bower carried on
James McKinseys approach and began in this way upgrading the size
and quality of McKinseys clients.
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3.3.3. Memberships /Directories
Being member in a consultancies association is a sign of seriousness and
quality, since those associations have usually certain rules and codes of
behaviour. Even better is to get into (potential) clients associations.
Because clients are unlikely to select a consultant straight without checking
and completing information on him or her, it may be wise to be listed in
directories. A directory normally also indicate, in addition to the consultants
name and address, areas of competence and a description provided by the
consultant concerned (Kubr, 2002, p.541). Examples for consultant
directories are FEACO (Federation Europeene des Associations de Conseils
en Organisation), IMC (Institute of Management Consultants
ww w . im c . c o . u k) in the UK, or the BDU (Bundesverband Deutscher
Unternehmensberater e.V. w w w.b d u . d e).
3.3.4. Presentations
Consultants can act as guest speakers at a target groups convention and
present themselves in this way in front of a number of potential clients. Even
though no cases result of these efforts the attendance list may be used for
further marketing steps and at least the contacts list can be enlarged. To get
the opportunity to present the consultancy should keep the contact with the
organizer of the congress orconvention.
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But the consultancy has also to bear in mind, that there are also some risks
in presenting itself in front of an expert audience. In over-emphasising the
own problem-solving skills the consultant could be perceived as a wiseacre
orknow-it-all and ruin his chances to get any case. Hence something new,
better known to the consultant than to the audience should be introduced.
3.3.5. Self-Analysis
Some consultancies developed checklists. Companies get them for a low fee
and can carry out a self-analysis about their strengths and weaknesses. The
completed forms are sent back to the consultancy for an analysis. The
consultancies gatheruseful information about the prospective clients and on
which criteria they may focus theirmarketing efforts. Probably they get even
more information than during a proposal.
3.3.6. Medias
Lambert (1998, p.148) says that there is no promotion so effective or
satisfactory as free ink. It should be the principal objective of the consultants
being presented as an acknowledged expert in his service field in the
Medias (Huler, 1998, p.174). Great publicity creates press conferences
and public appearances together with a key client, especially when the
consultant is lauded explicit. Booz Allen Hamilton pursues an interesting
approach. Whenever the firm or one of its peers is mentioned in the media
the media release is tracked and recorded. In doing so BAH measures the
effectiveness to spread messages and findings. Additionally trends can be
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identified quickly and marketing efforts can be focused (Kennedy
Information, 2004c, p.12).
Another method to gain interest is the companys website, where required
information, contact details or booklets can be ordered by the potential
clients (see Figure 7).
Figure 7: Mercer ManagementConsulting
Source: Mercer Management Consulting website. Available at< htt p :/ /w w w .m er c e rm c . co m> (accessed 22 February 2004)
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3.3.7. Brochures /Booklets
At the opposite to cold contacts (see 3.2.) brochures provide more general
information about the organization and are not focused on a specific
customer problem. At the major consultancies the prospect sometimes has
to subscribe into the data-base with his position and company name for
ordering a brochure and gives the consultant in doing so already important
information.
3.3.8. Corporate Identity /Reputation
While the consultants themselves can determine the corporate identity, their
reputation is highly influenced by the clients perception and satisfaction. Corporate IdentityThere are many different ways to emphasise the firms corporate identity.
It includes such methods as offices in exclusive locations, engagement in
social clubs or hiring staff at the leading business schools. The War for
Talents was once led so fiercely that the dean of the Harvard Business
School prohibited the recruiters of Bain & Company, McKinsey &
Company, etc. to enter the campus. Recruitment is an important point,
since the clients expect the best and the latest from the leading
business schools. Hence it is quite commonto hire the juniorconsultants
directly from there.
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Another possibility to create corporate identity is to emphasize on
uniformity, in order to stress reliability and security. Marvin Bower, the
long standing McKinsey & Company CEO, determined in his Guiding
Principles every single step of the advisory process. Starting with a
worldwide common presentation style and ending with the dress code,
with straw-hat in thesummer, Bowler-hat in the winter and long socks the
whole year (McKinsey & Co werden 75, Berliner Zeitung, 2001).
Discretion was the first maxim atBain & Company and according to this
its consultants acted. They did noteven
have business cards, wherefore
they got the nickname KGB (Fink, 2003, p.200). ReputationReputation is the key success factor in the consulting business (see
3.3.1. Referrals). Wilson (1998, p.129) states, that reputation is the most
valuable asset a consultant has. So valuable that it has to be nurtured
and protected as much as possible. Because it is very hard to earn, but
can be easily lost by one bad project. The impact of reputation is
illustrated by the following threeexamples.
When Accenture (accent + future) split itself of from its parental firm
Andersen Worldwide it tried to transfer some of Andersens reputation to
the new set up brand. Accenture managed to establish itself successfully
and increased its reputation as Management and IT-Consultant. In the
following it loosened its linkage to Andersen, so the ENRON-scandal, in
which Andersen Worldwide was involved, did not affect the firm.
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For Marvin Bower reputation was equivalent to revenue growth. With
growing status and reputation, revenues would grow anyway, he
assumed (Fink, 2003, p.84).
Another good example is Arthur D. Little (ADL). ADL got a high
reputation by developing and innovating scientific processes as
converting salt water into fresh water, pioneering in pollution control and
environmental protection, or secure disposal of hazardous waste. Even
though ADLs position as No.1 deteriorated during the 1980s, because
rivals like McKinsey & Company and the Boston Consulting Group were
adopting sophisticated marketing strategies supported by publications
and simple models, ADL is still perceived is an innovator.
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3.3.9.Advertising
Advertising is only a viable option for bigger advisory firms. But it is still not
seen as suitable by some consultants. The problem with advertising is that it
requires high expenditures and its long-term effect is debatable, but it may
support a firms positioning endeavour. Wilson (1998, p.129) criticises, that
advertising campaigns are usually a sign of no imagination and an
avoidance of getting out and selling services.
However, Andersen Consulting with its 1990 advertising campaign changed
the general opinion within the business. The firm launched a series of high
profile, highly visible publicity campaigns, covering the whole array, from
television to boarding. The campaigns message was clear and simple:
metamorphosis in a world of change (Czerniawska, 1999, p.70).
Andersen Consulting, respectively then Accenture launched another
campaign, when split itself from Andersen Worldwide. Investing US$175
million to promote and advertise the new name, with print advertising (65%
of its budget), television advertising (25%), and Web and billboard
advertising (10%) (Greenemeier, 2000). ADL launched in 1995 a major
advertising campaign to reposition itself and provide a clearer image for its
customers (March, 1996, p.15) and Bearing Point developed recently an
advertising campaign, too. It is advantageous that a large number of
potential clients can be reached at once, provided that the firm knows which
journals and magazines its potential clients tend to read. Print ads are much
more common than radio or television advertising. Accentures latest
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advertising campaign features Tiger Woods, the world best golf star, who is
used as synonym for Accentures high performance (see Figure 8).
Figure 8: Accenture advertising campaign motive
Source: Accenture (2003) G o o n . B e a T iger . Available at< htt p :/ /w w w . a cc en t ure.co m> (accessed 1 March 2004)
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Figure 20: Demand- & Life-Cycle
Diffusion
Rate
Consulting-Demand
Retail & Consumer Goods
2.00 / 396.6 mill
Government
2.48 / 925 mill
Finance
2.63 / 1430 mill
Life-Cycle
Healthcare &Pharmaceutical
1.93 / 161.9 mill
Utilities & Energy
1.96 / 424 mill
Transportation
1.96 / 164.1 mill
Communication & Media
1.81 / 500.9 mill
Manufacturing
1.67 / 218.5 mill
Demand-Cycle
Thematisation Expansion Dominance De-Thematisation
6.4.1. Criticallyevaluation
The introduced model represents an attempt to gather recommendations on
the basis of which data consultancies could focus their marketing activities
on certain sectors. Problem in using this model may occur due to the fact
that the scale for the X-axis is inappropriate. Here the overall-revenues for
the largest sector were used as a means to determine a limitation to the
market size. But even though the market growth slowed down it is not
predictable if there is any saturation of demand. Additionally the vast
majority of respondents ticked, apart from forFinance and Government, in
the middle of the given scale or did not even give estimation.
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7. Conclusions & Recommendations
This study identified two main categories in which consultants marketing
techniques can be grouped. Firstly there are direct approaches, which do
have an immanent acquisition intention, and secondly indirect approaches,
which are subtler. The latter were given a higher importance by the
questioned consultancies. Success of the direct approaches is doubtful.
They also may provoke refusal and nullify any chance to get a case or even
an order to submit a proposal. Hence generally indirect approaches are
more commonly used. But it has to taken into account that the sampled
consultancies represent the top of the market and therefore can afford to use
more sophisticated techniques. Nonetheless it can be concluded that indirect
techniques have higher prospects ofsuccess.
7.1. Conclusions - Why market consultants their services
There are two main reasons for consultancies to market their services, on
the one hand to gain new clients and on the other hand to intensify the
existing client relationships. Only a minority does marketing primary to reach
prospective clients. By the majority the respondents market their services to
both, existing and potential clients. This is underlined by the fact that the
major part of revenues is made within established customer relationships
(Grass, 2003, p.6). Due to the fact that the consulting business underwent a
slight crisis the firms are now willing to market their services more actively.
Especially the major consultancies valued the future importance of
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marketing as very important. It mirrors the fierce competition, in which they
have to compete with smaller competitors for smaller projects. That is why
they seek to focus their marketing efforts on intensifying current clients
relationships. In this way they try to secure their existing businesses and
gather new cases through theirnetworks.
7.1.3. Future ConsultingServices
The requested consultants expect further demand for Outsourcing advice.
But also Programme Management is a future field of activity. The latter
expresses the tendency to more collaborative relations between consultants
and clients (see 1.1.2.). Again the smaller consultants rank these two service
areas above all others. It can be concluded that especially in the Finance
sector there is a demand for these services and the smaller consultants see
the opportunity for specialization and reallocation their resources towards
these service arrays. Bigger consultancies see opportunities for the more
traditional services, e.g. Strategy and Operations. Also IT-Services are
seen as important. This result may mirror the fact that many IT-companies
entered the consulting business in recent years. In similarity to the previous
estimation of industry sectors future importance major consultants gave on
average higher values to the several services. This fact illustrates that most
of thema matrix-organized and act as generalists (see 2.5. and 7.1.1.). On
the contrary their smaller competitors tend to act as niche-players.
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It can be summarized that there will be more Outsourcing and Programme
Management services offered, preferably by smaller consultants. The
major consultants will focus on traditional services, such as Strategy,
Operations and Finance. But also Human Resource services may gain in
importance. The big IT-/Management-Consultants will supply IT-solutions.
Due to their market size, there is hardly the possibility for others to make
ground.
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