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
Industrystructure
structure Methodology
Methodology Analysis
Analysis Recommen-
Recommen-
&&conditions
conditions &&Survey
Survey dations
dations

Literature
LiteratureReview
Review

Survey
SurveyResults
Results

Conceptual
ConceptualApproach
Approach

MARKETING OF CONSULTING SERVICES 11

INDUSTRY STRUCTURE

~£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).

MARKETING OF CONSULTING SERVICES 22

INDUSTRY CONDITIONS

Accountancies withdraw from the consulting

market.
Major companies set up In-House- POTENTIAL
POTENTIALENTRANTS
New
ENTRANTS
Newsingle
singleororsmall
small
Consultancies. consultants
consultants
Low
Lowbarriers
barriersofofentry
entry

M&A.
SUPPLIER’S
SUPPLIER’SPOWER COMPETITIVE
COMPETITIVERIVALRY BUYER’S
BUYER’SPOWER
Vast majority of small consultancies. Mainly
POWER
Mainlyuniversities
universitiesand
and Increasing
RIVALRY
No
Noswitching
POWER
switchingcosts
business Increasing becauseof
because of costs
businessschools
schools economic
economicsituation,
situation,new
new
New
Newcompensation
compensation
Projects get smaller in value and size - competitors
competitorsand
continuous
and
systems
systems
Make
Makeconsultants
consultantspartly
continuouschanges
changes partly
therefore ‘biggers’ have to compete with bear
bearthe
therisk
risk

‘smallers’. SUBSTITUTES
IT-&
SUBSTITUTES
IT-&Technology-
Technology-
companies
companies
More sophisticated clients expect a In-House-Consultancies
In-House-Consultancies
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).

MARKETING OF CONSULTING SERVICES 33

OBJECTIVES

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.

MARKETING OF CONSULTING SERVICES 44

METHODOLOGY & SURVEY

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). Estimate the importance and benefit of the following marketing approaches on the
given scale. Please tick where appropriate!
Contact via e-mail and letters.
1 = not important / 2 = important / 3 = very important

Questionnaire: Cold contacts

1 2 3

Direct mailings
2 sections - topic section & statistic section. Personal contacts / networking

No open questions. Referrals through currents clients

Presentations, seminars & workshops

Scale ‘1 = not important’ to ‘3 = very important’. Own publications, e.g. quarterlies, articles, books

Brochures
Sample of 70: Press releases

Firm’s website
6 declined participation. Directories

27 answered (42.19%). Sponsoring

Advertising

Development of innovative concepts

SECONDARY RESEARCH (literature review) -recent publications, including books, journals,

unpublished thesis, surveys and web-based sources were used.

MARKETING OF CONSULTING SERVICES 55

ANALYSIS - Literature Review -

To attract new customers is well over-emphasised:

‘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).
FUNCTIONAL PRACTISES
Most consultancies are Strategy Marketing Organisation Operations etc.
Strategy Marketing Organisation Operations etc.
matrix-organized: INDUSTRY PRACTISES
Consumer
ConsumerGoods
Goods

Functional Practise = R&D. Manufacturing

Manufacturing Specialist
Automotive
Automotive
Industrial Practise = sales-force.
Pharma
Pharma

Tendency towards specialisation. Telecom

Telecom

Utilities
Utilities
Industry Consultant
etc.
etc.

Generalist
Functional Consultant

MARKETING OF CONSULTING SERVICES 66

ANALYSIS - Literature Review -

Techniques
Techniquesto
tocreate
createawareness
awareness

Direct
DirectApproaches
Approaches Indirect
IndirectApproaches
Approaches

Specific Non-specific Word of mouth Brochures

Specific Non-specific Word of mouth Brochures
Cold Contacts Cold Contacts
Cold Contacts Cold Contacts
Events / Sponsoring Advertising
Events / Sponsoring Advertising

Memberships Corp. Identity / Reputation

Memberships Corp. Identity / Reputation

Presentations Studies / Projects

Presentations Studies / Projects

Self-Analysis Articles / Books

Self-Analysis Articles / Books

Medias Management-Concepts
Medias Management-Concepts

MARKETING OF CONSULTING SERVICES 77

ANALYSIS - Literature Review -
DIRECT APPROACHES
Inherent acquisition intention.
More commonly used by smaller
consultants.
It is more likely to get a rejection
because potential clients may feel
alienated.
Risk to place sales ahead of expertise.
MARKETING OF CONSULTING SERVICES
INDIRECT APPROACHES
More discrete & subtle, but certain
proximity to customers.
Needs a reliable and stable customer
base.
Effectiveness is hardly measurable.
Takes time and needs (financial)
investments to build-up a certain
reputation.
Reputation is easy to loose with one
insufficient solved case.
88
ANALYSIS - Survey Results -

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 ‘Up to £10
TOTAL
Importance mill’ mill’ 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

MARKETING OF CONSULTING SERVICES 99

ANALYSIS - Survey Results -
Importance of different Marketing Approaches
3,00

2,93
3,00 Particular Importance of
‘Networking & Referrals’.

2,48
2,37
2,33
2,50

2,22
Indirect approaches were on
2,00
average higher valued than direct
1,85

2,00

1,67
ones.

1,56
1,44

1,41
1,30
1,50
‘Press releases’, ‘Sponsoring’ &
1,00 ‘Advertising’ were significantly
higher valued by the group ‘Over
0,50 £50 mill’.
0,00 The group ‘Up to £10 mill’ gave
‘Direct Mail’ a higher importance.
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highest score.

MARKETING OF CONSULTING SERVICES 10

10
ANALYSIS - Survey Results -
Future importance of Industry Sectors

3,00
‘Finance’ (2.63) and ‘Government’ (2.48)
were ranked first and second.
2,63

2,48

2,50
Reflects the current market situation,
2,00

1,96

1,96
1,93
where both are the biggest sectors.
1,81

2,00

1,67
1,50
Smaller consultants (‘Up to £10 mill’)
weight ‘Finance’ most important,
1,00 whereas bigger ones focus on
0,50
‘Government’.
The ‘Government’ sector grew and grows
0,00
as a business sector and in importance.
Pharamceutical

Manufacturing

Transportation
Government

Consumer

Utilities &
Finance

Communications

Retail &

Healthcare &

Energy
Goods

‘Healthcare & Pharmaceutical’ ranked

& Media

only 6th overall, despite the expectation

that it will become the 3rd largest sector.
(Kennedy Information, 2004).

MARKETING OF CONSULTING SERVICES 11

11
ANALYSIS - Survey Results -
Future importance of Consulting Services

‘Outsourcing’ (2.48 or 51.9% ‘very

3,00
important) still has growth potential.
2,48

2,41
2,37
2,33

2,33
2,50
The ’Up to £10 mill’ group gave
‘Outsourcing’ the highest importance

2,00
1,96
2,00

1,74
(2.78).
1,50
Downsizing of outsourcing cases.

1,00
1,00 The score of 2.41 for ‘Programme
Management’ illustrates clients’ demand
0,50
for more collaborative approaches.
0,00
“Traditional” services as ‘Strategy’ and
Resource

Finance

Marketing &
IT-Services

Strategy

Operations

Others
Management
Outsourcing

Programme
Human

‘Finance’ is given a higher importance by

Sales

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).

MARKETING OF CONSULTING SERVICES 12

12
ANALYSIS - Conceptual Approach -

3
2 3
Government
Finance
2.63 / £1430 mill
Sectors in quadrant 1 may either surge,
2.48 / £925 mill stagnate, or even slump.
Estimated future importance

High

early investments where appropriate.

of Industry Sector

Retail & Consumer Goods

Quadrant 2 sectors are the most
Healthcare &
Pharmaceutical
2.00 / £ 396.6 mill important, because these will set
Utilities & Energy
2 1.93 / £ 161.9 mill 1.96 / £424 mill off and gain in importance.
Transportation Communication & Media Quadrant 3 represents ‘Bread & Butter’
1.96 / £ 164.1 mill 1.81 / £500.9 mill
projects.
Low

High importance, due to the fact that

Manufacturing these revenues represent the firm’s
1.67 / £218.5 mill
financial backbone.

1
1 4 Consulting demand is at its maximum or
already above and may decrease.
0 150 300 450 600 750 900 1050 1200 1350 1500
4th quadrant sectors are likely to be
Market size of
Industry Sector in £ mill. unprofitable and have no significant
FINK, D. & KNOBLACH, B. (2004) Die großen Management Consultants. München: Verlag Vahlen, pp.249.
importance.

MARKETING OF CONSULTING SERVICES 13

13
ANALYSIS - Conceptual Approach -

Revenues in ‘Finance’ Diffusion

and ‘Government
represent a stable base
for investments in other
arrays.
‘Healthcare &
Pharmaceutical’ as well
Rate Finance
Government 2.63 / £1430 mill
Consulting- 2.48 / £925 mill
Demand Retail & Consumer Goods
2.00 / £ 396.6 mill Life-Cycle
Healthcare &
Pharmaceutical
Utilities & Energy
1.96 / £424 mill
1.93 / £ 161.9 mill
Communication & Media
Demand-Cycle
Transportation
1.96 / £ 164.1 mill
1.81 / £500.9 mill

as ‘Transportation’ are
promising. Manufacturing
1.67 / £218.5 mill

‘Retailing’ and ‘Utilities &

Energy’ should be taken Thematisation Expansion Dominance De-Thematisation

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

‘Communication & Media’ should be seen more critical and resources divest if necessary.
‘Manufacturing’ seems to be less important in the future.

MARKETING OF CONSULTING SERVICES 14

14
CONCLUSIONS

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.

MARKETING OF CONSULTING SERVICES 15

15
RECOMMENDATIONS

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.

MARKETING OF CONSULTING SERVICES 16

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JAN LAUFHÜTTE
ROSELLENER KIRCHSTR. 34
41470 NEUSS
GERMANY
jan@laufhuette.de

UNIVERSITY OF APPLIED SCIENCES BONN-RHEIN-SIEG - Student of Business Administration. Diploma-Degree PHONE

‘Diplom-Kaufmann’ due to be awarded in August 2005. Expected grade: Good. Diploma Thesis: ‘Supply Chain +49 2137 799768
Management as integral part of Marketing Strategy’. FAX
+49 2137 7477
LONDON SOUTH BANK UNIVERSITY - Student of Business Administration. Graduation in July 2004 with ‘Bachelor of
MOBILE
Arts - Upper Second Class Honours Degree (2:1)’.
+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.