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TO AVOID FINES return on \\ 2 LIBRARY Michigan State University IGAN STATE xllliiiiiiiiiiigiii 93 01 9 this checkout from your record. DATE DUE DAT E DUE DATE DUE ___'———— M ______—'— I’— SU Is An Affirmative Action/Equal Opportunity lnstiIuIion encircmuna-p. THE PROMOTIONAL DECISION-MAKIN G PROCESS OF A SMALL BUSINESS-TO-BUSINESS FIRM: A CASE STUDY By Julianna Dixon A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF ARTS Department of Advertising 1994 ABSTRACT THE PROMOTIONAL DECISION MAKING OF A SMALL BUSINESS—TO—BUSINESS FIRM: A CASE STUDY By Julianna Dixon The significant economic contributions that small firms make to the economy, the limited amount of research on promotional decisions in such small firms, and the growth in environmental consulting services led to a case study of a small business-to-business firm's promotional decision making. The case study of a small environmental consulting firm was used in conjunction with a theoretical framework on the promotional decision making in small consumer-oriented firms to investigate two main issues: 1) Does small business-to—business firms' promotional decision making differ from small consumer-oriented firm's promotional decision making? 2) If there are differences, on what dimensions do small business-to— business promotional decisions differ from small consumer-oriented promotional decisions? The case study analysis suggests that small business—to-business firm's promotional decision making is similar to the theoretical framework on promotional decision-making in small consumer oriented-firms, with subtle variations occurring within specific stages. However, more research, specifically more case studies, are needed in this area and would benefit both practitioners and students. ACKNOWLEDGMENTS I would like to gratefully acknowledge the insight and counsel provided by Dr. Bonnie Reece. Her patience and encouragement were crucial to the inception and completion of this work. I would also like to thank Dr. Cornelius Pratt and Dr. Ed Mahoney for their contributions. Most importantly, I appreciate the unconditional support and understanding of my family and friends who have inspired me to reach above and beyond what I once thought were my limits. iii TABLE OF CONTENTS LIST OF TABLES ........................................................................................................ vi LIST OF FIGURES ..................................................................................................... vii Chapter 1. INTRODUCTION ............................................................. ............................. 1 Purpose, Significance, and Contributions of this Study .......................... 3 Problem Statement ...................................................................................... 4 Organization of Thesis ................................................................................ 5 2. LITERATURE REVIEW .................................................................................. 6 Introduction ................................................................................................ 6 Small Business Definition and Concepts Relevant to General Advertising and Promotion Decisions ...................................................... 6 Small Business Literature on Promotional Decisions .............................. 8 A Model of the Promotional Decision—Making Process in Small Consumer-Oriented Firms ......................................................................... 14 Business—to-Business Literature on Promotional Decisions .................... 18 Factors Affecting Promotional Decisions in Business-to—Business Firms ............................................................................................................. 20 Examination of Literature .......................................................................... 30 Case Study Design and Method ................................................................. 35 iv 3. CASE STUDY: RESOURCE MANAGEMENT GROUP, INC ............... 39 Introduction ................................................................................................ 39 Industry Trends and Competition ............................................................. 4O RMG's Market Position .............................................................................. 44 An Assessment of RMG's Current Promotional Activities ..................... 47 4. ANALYSIS AND DISCUSSION OF CASE STUDY .................................. 54 Discussion and Conclusions ....................................................................... 58 Case Study Results and Presuppositions ....................................... 58 Discussion of Findings ...................................... - .............................. 59 Implications of the Research .......................................................... 64 Contributions of the Research ....................................................... 66 Limitations of the Research ............................................................ 67 Suggestions for Future Research .................................................... 67 Appendix A. Trends: Management and Consulting Industry ............................................. 70 B. Resource Management Groups, Inc. Direct and Secondary Competition... 71 C. Resource Management Groups, Inc. Services ................................................. 73 D. Resource Management Groups, Inc. Selected Clients ................................... 74 E. Resource Management Groups, Inc. Advertisements ..................................... 75 List of References .................................................................................................... 79 LIST OF TABLES Table 1. Research Design for Case Study ....................................................................... 36 2. RMG's Promotional Decision Making in Relation to Theoretical Framework ......................................................................................................... 57 vi LIST OF FIGURES Figures 1. Davis's .Model of The Promotional Decision-Making Process in Small Firms..16 vii CHAPTER ONE INTRODUCTION The only purpose of advertising is to sell; it has no other justification worth mentioning. Raymond Rubicam Founder, Young 86 Rubicam Advertising A major concern of small businesses is how to get enough sales in the present and in the future (Stephenson 1984). Inadequate sales can result from many variables, but this problem is made even more difficult when there is a reliance on referrals, a lack of market research, and an underutilization of promotions (Stephenson 1984). Marketing topics related to sales generation are critical to entrepreneurs (Wichmann 1983; Stephenson 1984; Carson 1985; Peterson 1989; Weinrauch et al. 1991). Ironically, despite this concern and the increase in popular, trade, and academic literature on small business in the past fifteen years, small business marketing topics have received minimal attention (Peterson 1989; Weinrauch et al. 1991; Davis 1993). Marketing suthpics such as advertising and promotion decision making have been essentially neglected in the small business literature (Davis 1993). Davis (1993) attempted to rectify the lack of research in this particular area by developing a theoretical framework for the promotional decision-making process in small consumer-oriented retail and service firms. Until Davis's (1993) work, theory development in this area had been virtually absent from small business research. Davis (1993) recommended that future research in this area could benefit 1 2 practitioners and students by the development of case studies. This thesis tests Davis's ( 1993) promotional decision-making framework by applying it to a particular small business by means of a case study. Such a case study provides an opportunity to illustrate the use and importance of Davis's (1993) theoretical framework. In addition, by focusing on a small business-to-business firm, this thesis explores the question of whether the framework is appropriate beyond the settings from which it was developed. The case study in this thesis describes a small business-to-business environmental planning and consulting firm located in Grand Haven, Michigan. Resource Management Group, Inc., (RMG) began in 1987 and, since that time, has expanded in Michigan to Big Rapids and Escanaba. During these years of grOWth, RMG has relied on "word-of-mouth" references for advertising. It appears RMG has reached its limits of growth with this method of relying on referrals, with no formal promotional planning. Thus, RMG has attempted some advertising and promotional efforts. It is these efforts that will be examined in the case study. The selection of RMG for the case study analysis is based on four factors. First, the literature on small business-to-business firms is virtually nonexistent. More research is needed in the area of business—to-business communications as a whole (Hartley and Patti 1988). As a result, the business-to-business literature that exists is aimed at larger firms and is practitioner-oriented (see Messner 1963; Bellizzi and Lehrer 1983; Haas 1986; Ross 1986; Beck 1992; Messner 1992). Second, the economic impact that business-to—business communications decisions have is quite significant (Hartley and Patti 1988). One survey suggests that expenditures from business-to-business communications range from 3 percent to 29 percent of sales, and exceed $100 billion annually (Bailey 1975). Thus, such an economic impact suggests business-to-business communications is an area of importance, therefore, not to be overlooked. 3 Third, there has been an increase in business-to—business competition, thus putting business-to-business marketers and entrepreneurs in the position to develop sophisticated advertising and promotions to remain competitive (Hartley and Patti 1988). Finally, an increase in environmental concerns in our society has led to steady growrh in environmental consulting services in recent years (see Hendrickson 1993). Consequently, topics such as advertising and promotion decisions have the pOtential to become a major concern among business—to—business entrepreneurs in this particular industry. Purpose, Significance, and Contributions of this Study The purpose of this study is twofold. The first purpose is to examine the similarities and differences in the promotional decision-making process of small consumer-oriented retail and service firms compared to small business-to-business firms, with respect to Davis's (1993) model. This accomplishes the second purpose, to generate a better understanding of how advertising and promotion decisions are made in small business—to-business firms. The significance of this case study is evident when one examines the literature. As mentioned earlier, the majority of advertising and promotion research has overlooked small firms. Davis (1993, p.9) noted the analysis of advertising and promotion decisions in small firms by researchers have mainly "been of an 'exploratory' nature, characterized by very small sample sizes, focus limited to one type of industry, lack of substantial empirical work and/ or tentative findings" (Brockhaus 1987; Cooper and Dunkleberg 1987; Vesper 1987; Low and MacMillan 1988). As for the business-to—business literature, advertising and promotions are mainly aimed at large industrial firms (see Parasuraman 1981; Naples and Wulfsburg 4 1987; Jackson, Keith, and Burdick 1987; Hartley and Patti 1988). Moreover, business-to-business literature, in a manner similar to the small business literature, has emphasized "how-to" advice rather than substantial empirical work and findings (see Messner 1963; Bellizzi and Lehrer 1983; Haas 1986; Ross 1986; Beck 1992; Messner 1992). As for theory development, until Davis's ( 1993) work, there has been little in small business marketing research. Many case books used in academia appear to be oriented toward larger firms (Davis 1993). In addition, in the business-to-business literature there is no evidence of a theoretical framework regarding the promotional decision-making process in firms. It is anticipated that this research will make several contributions to the field. Specifically, this research provides three contributions: 1) A case study of the promotional decision making in a small business—to- business firm. 2) A comparison of the promotional decision-making process in small consumer- oriented firms with the promotional decision-making process in a small business—to-business firm. 3) Some initial evidence that could be used in building a promotional decision making framework for business-to-business firms. Problem Statement There are several reasons for the purpose of this inquiry. First, the literature regarding the advertising and promotional decision making of small firms, including small business-to-business firms, is lacking (see Davis et al. 1985; Vesper 1987; Davis 1993). Consequently, this provides little guidance for practitioners. Second, the significant economic contributions of small businesses to the economy (see Wichmann 1983; Davis et al. 1985; Peterson, Albaum, and Kozmetsky 1986), and 5 third, the growth in environmental consulting services in recent years (see Hendrickson 1993), make this an area of increasing importance. As a result, two research questions were developed to serve as the foundation of this thesis, and to guide the data collection and analysis. These questions are listed below. 1) Does small business-to-business firms' promotional decision making differ from small consumer—oriented firms' promotional decision making? 2) If there are differences, on what dimensions do small business-to—business promotional decisions differ from small consumer-oriented promotional decisions? Organization of Thesis The remainder of this thesis is organized into three chapters. Chapter Two reviews the literature, presents the theoretical framework that guides the case study research, and explains the case study design and method. Chapter Three provides the case study of the promotional decisions made by a small business-to—business firm. And Chapter Four examines the case study to confirm and/ or challenge the theoretical framework and discusses the findings of the case study analysis. In addition, Chapter Four discusses the implications of this study as well as its limitations and suggestions for future research. CHAPTER TWO LITERATURE REVIEW Introduction A review of the literature produces a composite picture of the issues in the field and provides a justification for the research. Small business literature on promotional decision making will be examined first, followed by the presentation of Davis's (1993) theoretical framework for small business promotional decision making in consumer-oriented retail and service firms. Next, the business-to-business literature on promotional decision making will be surveyed. The literature review concludes with a discussion of both the small business and business-to-business literature followed by the case study design and method. Small Business Definition and Concepts Relevant to General Advertising and Promotion Decisions For the purposes of this thesis, a small business will be defined according to the U.S. Small Business Administration in Section 3 of the Small Business Act of 1953. The act defines a small business as "one which is independently owned and operated and which is not dominant in its field of operation." Other concepts and definitions relevant to advertising and promotions are also necessary before beginning the review of the literature. One of the major concepts in marketing is the marketing mix (Kotler and Armstrong 1990). The marketing mix is comprised of the following controllable marketing variables: product, place, price, and promotion (Kotler and Armstrong 1990). This thesis is 6 7 concerned with promotion, which typically includes advertising, personal selling, sales promotion, and publicity (Kotler and Armstrong 1990). This research focuses on advertising and sales promotions. The academic literature differentiates between advertising and sales promotion. Advertising has been defined as "any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor" (Kotler and Armstrong 1990, p.406; Peter and Donnelly 1991, p.135). Nylen (1986) indicated that advertising is different from other forms of promotion in that it is paid for, it appears in the mass media, and it informs or persuades pe0ple about products, ' services, beliefs, or actions. On the other hand, Kotler and Armstrong (1990) defined sales promotion as short-term incentives to encourage purchase of a product or service. Sales promotion has also been identified as encouraging immediate or short-term response that may or may not occur in the mass media (Schultz and Robinson 1982). Sales promotion is comprised of retail promotion (distributor to consumer), trade promotion (marketer to distributor), and consumer promotion (marketer to consumer or industrial user) (Rossiter and Percy 1987). Some common promotion techniques include trial samples, coupons, trade coupons, bonus packs, premiums, contests, sweepstakes, and special events (Rossiter and Percy 1987). According to advertising and promotion texrs, advertising and promotion decisions typically fall into seven major categories: 1) setting objectives, 2) selecting target audiences, 3) determining budgets, 4) deciding positioning alternatives, 5) determining creative strategy and production methods, 6) selecting communication channels, and 7) evaluating results (Schultz and Robinson 1982; Nylen 1986; Rossiter and Percy 1987; Patti and Frazer 1988; Blattberg 1990; Scholtz 1990). These categories will be examined with respect to the small business and business-to- business literature. The factors that are relevant to promotional decisions in general, 8 and the actual promotional decisions themselves will be discussed in the review of the literature. It is hoped that this will provide a better understanding of the promotional practices of small businesses and business-to-business firms, which in turn will provide insight into the rationale for RMG's promotional decisions. Small Business Literature on Promotional Decisions As stated earlier, a major challenge for small business owners is marketing and advertising--getting sales and keeping them (Patti and Walker 1980; Franklin and Goodwin 1983; Wichmann 1983; Stephenson 1984; Van Auken, Doran, and Rittenburg 1992). Moreover, marketing subtopics such as advertising and sales promotions have been found to be a key component of small business success (J ustis and Jackson 1980; Winchmann 1983; Carson 1985). Despite this, small business firms are somewhat reluctant to implement these concepts (see McNamara 1972; Meziou 1991; Carson 1985; Peterson 1989; Van Auken, Doran, and Rittenburg 1992). Small Firms' Reluctance to Undertake Promotions There are several factors that may contribute to a small firm's reluctance to attempt promotions. First, small firms often operate with limited financial resources (Welsh and White 1981; Carson 1985; Seglund 1985; Weinrauch et al. 1991; Van Auken, Doran and Rittenburg 1992). As a result, most small firms find it necessary to resort to innovative low-cost methods of marketing and advertising (see Davidson 1988 ; Weinrauch et al. 1991). These financial constraints lead to the second factor-- time pressures. Small businesses often do not have the time to design promotional plans, much less formulate creative, low-cost methods of advertising, because they are generally too preoccupied with day-to-day operations (see Justis and Jackson 9 1980; Carson 1985; Varadarajan 1985; Van Auken, Doran, and Rittenburg 1992). A third factor influencing small firms' hesitation to implement promotions is their reliance on referrals. Stephenson (1984) noted that many entrepreneurs, especially small service firms, rely heavily on word-of-mouth referrals as their major source of advertising. It is only a small leap in logic then to infer that such reliance on referrals may contribute to small firms' reluctance to construct a formal promotional plan. Moreover, Stephenson (1984) explained that this reliance on referrals is a contributing factor to inadequate sales. . Other evidence suggests that small businesses have not adopted marketing subtopics, such as advertising, because it may not coincide or compliment their company goals (Peterson 1989). This is because many are not profit maximizers and exist for other reasons such as: independence, sense of pride and achievement, even providing minimal income for pursuit of recreation and leisure activities (Peterson 1989). Lastly, many small businesses are skeptical of how advertising and promotions can work for their business. As a result, they fail to understand the effectiveness of advertising and promotion plans; therefore, they are unwilling to invest the time and money necessary to develop such plans (Lincoln and Naumann 1982). Despite these factors, there is some evidence of promotional activities in small firms. As mentioned earlier, however, the research that has been conducted on the marketing subtopics, such as advertising and promotions efforts of small businesses has been limited. Setting Promotional Objectives Planning activities that assist in setting promotional objectives include operational planning activities (i.e., short term planning: monthly, quarterly, one to two years) and are practiced regularly by some small firms (see Gable and Topol 10 1987). On the other hand, strategic planning (i.e., long term: three to five years, related to firm's mission and goals) is seen as uncommon in small businesses (see Robinson and Pearce 1984; Shrader et al. 1989). Moreover, advertising and promotional planning have been classified as operational planning activities and ranked third on a list of eight operational planning activities performed by small businesses (Gable and Topol 1987). Several studies indicate that research activities are used in the decision-making process in small firms (Rice and Hamilton 1979; Welsch and Young 1982; Franklin and Goodwin 1983; Peterson 1984; Sprecht 1987). However, it has also been found that, while marketing research information is available, small firms tend not use it or utilize it poorly (Barnes, Pynn, and Noonan 1982; Stephenson 1984; McDaniel and Parasuraman 1986). For instance, McDaniel and Parasuraman ( 1986) found that of 106 small businesses only 64 of the firms had conducted a formal marketing research study in the previous three years. Of those 64 firms, 70 percent had conducted an internal study (using internal resources, such as employees); 47 percent had conducted an external study (used sources outside the company, such as market research firms); and 17 percent had conducted both internal and external research (McDaniel and Parasuraman 1986). There are several reasons for this inadequate use of market research. Many small business owners believe they do not have the time or expertise, that marketing research is very costly, and the information gained from this kind of research is too technical to be of use (Barnes, Pynn, and Noonan 1982; Boughton 1983; McDaniel and Parasuraman 1986). The final study relating to setting promotional objectives is a survey of 31 small food service firms (V aradarajan 1985). Seventy-five percent of the businesses were found to base their promotion decisions on perceptions of market conditions and the competition's activities (V aradarajan 1985). The remaining 25 percent based 11 their promotion decisions on recommendations from an advertising or sales promotion agency, media agent, manufacturer, and/ or wholesaler (V aradarajan 1985) Target Audience Decisions Although identifying target audiences is accepted as being desirable and practiced by most small firms, entrepreneurs often have difficulty with the identification and selection process (see Wichmann 1983; Peterson 1984; Vacarro and Kassaye 1990). For example, Vacarro and Kassaye (1990) found, in a study of retail liquor entrepreneurs, that the owners had neither effectively or efficiently targeted customers on a geographic basis. On the other hand, Peterson (1991) examined the acceptance and practice of the target marketing concept in small businesses generally. An average of two-thirds of the sample of 519 small retail, service, manufacturing, and wholesale firms indicated that they practiced target marketing (Peterson 1991). Factors Affecting Budget Decisions Perceived affordability has long been considered to be a key factor in setting promotional budgets in small firms (V aradarajan 1985). A study of 109 small firms implied that the type of firm (car dealer, restaurant, etc.) affected the size of their promotional budgets (Otnes and Faber 1989). Becker and Kaldenberg (1990) studied 416 dental practices and determined that firm revenue and location (urban, surburban, rural) influenced the advertising budget. They found that suburban practices with higher incomes spent more on advertising than firms with urban or rural practices and firms with less revenue (Becker and Kaldenberg 1990). Knight and Crimmins (1986) nOted that generally small businesses do not utilize co-op opportunities. Patti and Walker (1980) stated that small retailers are often unaware of co-op opportunities, and those that are aware may not perceive that 12 the dollar value is worth the required administrative work. In addition, the small size of these firms may limit their co-op participation. Finally, as is true for some larger firms as well, small businesses may not agree with the co-op advertising requirements imposed by the manufacturer (Patti and Walker 1980). Positioning. Creative Strategy, and Production Decisions Little attention has been given to positioning, creative strategy, and production decisions in the literature. In scholarly literature, no evidence of use of positioning in small firms was located. Some practitioner-oriented and "how to" literature suggests that the positioning concept may be too abstract and difficult for entrepreneurs to understand; as a result, it receives little consideration from small business owners (see Dean 1980; Cassell 1983; Gray 1984). Kelley and Hoel (1991) was found to be the only article related to creative strategy decisions for small business advertising. The study focused on the impact of color, size, and c0py quantity on yellow pages advertising effectiveness. Nevertheless, a survey conducted by Venture magazine, indicated that 52 percent of entrepreneurs write their own advertising and promotion copy,15 percent work with an advertising agency, and 12 percent supervise the work of an in-house advertising staff (see "Creating an Image..." 1986). No scholarly literature examined promotion creation and production decisions by small firms; however, trade publications and practitioner-oriented literature suggest that financial and image concerns are major factors in deciding production matters (see Dean 1980; Cassell 1983; Gray 1984; McDermott 1986; "Spotwise Spots..." 1986; Maher 1988; Lewis 1990). Media Selection Decisions The majority of empirical research addressing small business advertising practices and decisions has concerned traditiOnal advertising media selection. It 13 appears that most small businesses focus their advertising efforts in newspapers (Jackson, Hawes, and Hertel 1979; Gaski and Malone 1986; Otnes and Faber 1989). However, putting advertising dollars in other media and promotions has been noted as well (Larkin and Hecht 1979; Jackson, Hawes, and Hertel 1979; Patti and Walker 1980; McDermott 1986). Van Auken, Doran, and Rittenburg (1992) found, in a study of 132 small Iowa businesses, that referrals, newspapers, radio and telephone directories were used as promotional channels during a firm's first year in operation. The researchers found that television was used the least by all types of small firms. In. addition, small service firms were found to use all forms of advertising less frequently than other types of small firms (Van Auken, Doran, and Rittenburg 1992) Further, in the current year of operation, media channel usage was similar to that used in the first year; although, the use of newspaper, flyers, radio, and telephone directories tended to go down somewhat and the use of television increased somewhat (Van Auken, Doran, and Rittenburg 1992). Service firms however, used more radio, flyers, and referrals in their current year than in their first year of operations (Van Auken, Doran, and Rittenburg 1992). In addition, referrals were ranked as the most effective channel, above television, radio, telephone directory, flyers, community events, magazines and newspapers (Van Auken, Doran, and Rittenburg 1992). As for non-traditional media promotions, such as premiums, coupons, contests, newsletters, etc., scholarly research is lacking. Findings from a study of 107 small gift shops (Jackson, Hawes, and Hertel 1979) showed that 56 percent participated in some form of promotional activity in conjunction with or instead of traditional media advertising. Another study (V aradarajan 1985) indicated that a number of small food establishments were involved in coupon promotions. Other marketing literature addresses the appropriateness of various sales promotions for small firms (see Allchild 1986; Goldstein 1986; Stock 1988; McIntyre 1989; Vacarro 14 and Kassaye 1990; "ABC's of Promotion..." 1991). Lastly, additional works suggest the factors that play a part in the influencing of promotion channel selection decisions in small businesses. These factors consist of: type of business/ industry, size of the promotion budget (Otnes and Faber 1989); affordability (Dean 1980; Cassell 1983; Gray 1984; Seglund 1985; Varadarajan 1985); and the characteristics of the target audience (V acarro and Kassaye 1989). No literature was located on how actual media selection decisions were made in small firms. Promotion Evaluation Decisions Only one study examined how small businesses evaluate their promotional decisions. Varadarajan (1985) surveyed 31 small food outlets regarding the evaluation of coupon promotions. Findings indicated that 95 percent of the businesses reported basing effectiveness on coupon redemption rates, 81 percent recognized changes in store traffic, 76 percent examined effect on dollar volume, 52 percent looked at effect on sales volume, 43 percent measured changes in profits, and 10 percent analyzed change in market share (Varadarajan 1985). Despite these efforts at evaluation, at least 50 percent of the small business owners reported that they did not keep written records of the effectiveness of past promotions, which eliminated the opportunity for comparing past and current promotions (V aradarajan 1985). Other data on how small businesses evaluate promotional activities was not found. A Model of the Promotional Decision-Making Process in Small Consumer-Oriented Firms As stated earlier, theory development in the area of promotional decision making in small businesses has been practically nonexistent. Davis (1993) noted this with concern and described this as a "phenomenon" due to the fact that "small 15 businesses have been heralded as the new economic growrh leaders, as advertising and promotion expenditures continue to grow, and as business leaders consider new ways to make business decisions." The justification for selecting Davis's (1993) model is because it is the first theoretical model that explains and predicts promotion decision behaviors in small firms. Utilizing the framework with the case study on RMG allows applications and illustrations for educating students and practitioners of entrepreneurship. Davis (1993) developed the model after examining the general characteristics of small businesses and their promotional decisions, the overall decision-making processes in organizations, the general promotional decision models, two theoretical models of marketing activities in small firms, and the statistical findings of a survey of 144 small consumer-oriented retail and services owners/ managers. The model describes the promotional decision-making process in small consumer-oriented retail and service firms. In the model, the decision-maker is generally the business owner or some other member of management who has been given the responsibility of promOtions for the firm. This model is presented in Figure 1. The model suggests four stages that a decision-maker in a small firm advances through when making promotional decisions. Stage One is the Integration of Information. In this stage the decision-maker scans the environment to observe marketing-oriented stimuli. The model indicates the key marketing oriented-stimuli that the decision-maker may gather information from or consult for advice. The stimuli are: business associates, media salespeople, employees, family, customers, friends, competitors, newspapers, and trade publications. Stage Two is the Planning and Objective Setting stage. In this stage, the model provides four decision methods that a decision-maker may utilize in seeking solutions to problems and/ or opportunities. The decision-maker may use a combination of the four decision methods: 1) relying on past experience, 2) using 16 DECISION MAKER'S ROLE ILLUSTRATED DECISION PROCESS ta e 1: In r i nof ENVIRONMENTAL SCANNING Information L Decision-maker scans \\ business environment on an ongoing basis Observemarketing-oriented‘stimuIi and observes \ ,' marketing-oriented Business stimuli. The decision- Associates maker actively ‘, ,’ participates in a flat, \ t ,’ informal \ ,’ information network gathering information about promotion \ ‘/ I opportunities. Decision-maker also / Decision - Maker \ Media Salespeople observes competitors' Family activities and may Customers consult written information sources. / / Friends \ l Competitors Newspapers and Trade Publications __-_-_-____.____________._.._-_________—__-__—__-___.._————--—--————-—————___ Deeision methods: Decision—Maker Stage 2: Planning and Obieetive Setting Decision maker seeks a satisfactory solution to problems and/or opportunities, using a combination of decision methods. Solutions are sought on the basis of perceived need. Use Past Experience - Use Intuition ° Observe Competitors - Get Advice from Business Contacts Figure 1 Davis's Model of The Promotional Decision-Making Process in Small Firms 17 Stage 3: Prmgtion Key influenge on prgmotign tegigl geeieigns: Tegtigl Degieione Decision-Maker Decision maker makes key promotion choices with respect to communication channels, messages, . Image of firm and production methods. These . choices are heavily - Target audience concerns influenced by a desire to project a positive image of the firm, financial ability of the firm, and perceived - Financial resources target audience characteristics and Tactics: l Set Budget Communication 0 Message Theme 0 Production Channel Choices Choices Technique Choices Vs \ ‘\ l / , , ,7 Stage 4: Eveluetign of ‘ ' " Prgmgtign Tectig MARKETPLACE REACTlON , Evaluation methggs: Marketplace reactions to Msmmfl promotions are observed. Some decision makers may not evaluate this reaction; most engage in various evaluation techniques. If the evaluation is deemed not staisfactory, the decision-maker returns to Stage 1 for new information. If the evaluation is satisfactory, tactics similar to those chosen in Stage 3 are repeated; experiments with new supplemental tactics may occur. Fail to evaluate - Measure sales - Talk to customers - Note customer traffic - Compare sales to same period last year Unsatisfactory ‘ Satisfactory Evaluation Evaluation Repeat Stage 3 tactics. Return to Stage 1 for supplemental ideas. Return to Stage 1 for new ideas. Figure 1 (continued) l8 intuition, 3)observing competitors, and 4) seeking advice from business contacts. In addition, the decision-maker typically seeks solutions based on perceived need. Promotion Tactical Decisions is the third stage in Davis's (1993) model. At this point in the model the decision-maker makes promotion choices regarding communication channels, messages, and production methods. The model suggests that these choices are influenced by a desire to project a positive image of the firm, the availability of financial resources, and perceived target audience concerns. In the model, once the decision-maker has been influenced by these factors, the budget is then set and choices are made with respect to communication channel, message, and production alternatives. The fourth stage is the Evaluation of Promotion Tactics, in which marketplace reactions to promotions are observed. In this stage, the model indicates that some decision-makers may fail to evaluate and others may engage in several evaluation methods. These evaluation methods are: measuring sales, talking to customers, noting customer traffic, and comparing sales to the same period last year. In the model, if the evaluation is considered unsatisfactory, the decision-maker returns to Stage One the, Integration of Information for new ideas. If the evaluation is satisfactory, the decision-maker will repeat the tactics implemented in the Promotion Tactical Decisions stage and return to Stage One for supplemental ideas. Business-to—Business Literature on Promotional Decisions Introduction Traditionally, consumer advertising receives more attention in the literature than business-to—business advertising (Blasko and Patti 1984; Gross 1987). The existing business-to-business literature on promotional decision making is generally 19 aimed at large industrial firms selling products or goods, not services, with minimal attention given to adoption and implementation of these concepts within the firms (Parasuraman 1981; Naples and Wulfsburg 1987; Jackson, Keith, and Burdick 1987; Hartley and Patti 1988). Moreover, popular, trade, and academic literature have been directed towards "how-to" advice primarily targeted at large firms (see Messner 1963; Bellizzi and Lehrer 1983; Haas 1986; Ross 1986; Beck 1992; Patti, Hartley, and Kennedy 1991; Messner 1992). This exemplifies the need for research on promotional decisions in smaller business-to-business firms, selling not only products, but services as well. In addition, it has been noted that business-to-business communications is "... a field in the discovery phase of the theory-building process, business-to-business communications requires extensive descriptive research to 'provide the insight for defining and conceptualizing theoretical concepts'" (Schurr 1982). There is no single, specific definition of industrial marketing or, as it is referred to today, business-to-business marketing (Cooke 1986). The definitions that do exist are not consistent with one another and it has even been claimed that there are no significant differences between business-to-business marketing and consumer marketing (Corey 1983; Cooke 1986). Despite this claim, there is considerable evidence that business-to-business marketing differs significantly from consumer marketing (see Cooke 1986; Ross 1986; Patti, Hartley, and Kennedy 1991; Messner 1992). There are three main areas where differences can be found: in the actual type of products (goods and/ or services) sold, in the characteristics of industrial markets, and in the promotions and advertising activities (Cooke 1986). The differences in industrial markets versus consumer markets are: derived demand, reciprocity, multiple buying influencers, stable long-term buying relationships, rational buying motives, and concentrated markets--both customers and location (Cooke 1986). The last distinction, 20 promotions and advertising activities, is due to the different types of goods and services that are sold in business-to-business markets compared to consumer markets. Because the products are different, industrial sellers use different marketing strategies, thus different promotional tools (Cooke 1986). Historically, personal selling has been the most widely used promotional tool in business—to—business communications (Patti 1979; Cooke 1986; Jackson, Keith, and Burdick 1987; Naples and Wulfsberg 1987; Hartley and Patti 1988). Nonetheless, business-to-business advertising can complement the efforts of salespeople and, in the long run may reduce the cost per sales call (Jackson, Keith, and Burdick 1987). Moreover, advertising can be designed to reach those individuals not normally reached by salespeople (Pingry 1972; Jackson, Keith, and Burdick 1987). Consequently, the importance of business-to-business advertising has increased dramatically in the past few years (Jackson, Keith, and Burdick 1987; Hartley and Patti 198 8). Several factors have contributed to this new attention, these factors include the growth in managerial expertise, a better understanding of the industrial buyer, and a better understanding of the effectiveness and efficiency in targeting audiences (Jackson, Keith, and Burdick 1987). In addition, the growing number of media and programming alternatives, the development of international markets, and increased product benefits and attention to differential advantages have lead to a grOWth in the importance of promotions for business-to-business firms (Havens 1980; Hartley and Patti 1988). Factors Affecting Promotional Decisions in Business-to-Business Firms The seven advertising and promotion categories that were examined in the small business literature will also be discussed with respect to business-to—business 21 firms. Before discussing these, an examination of the promotional factors that have an impact on industrial buyers' purchase decisions will be addressed. This will allow a better understanding of the promotions that most business-to-business firms could benefit from implementing. Promotional Factors Affectigg Purchase Decisions in Business-to-Business Firms In addition to personal selling, industrial advertisers have used Other promotional tools: trade shows, sales promotions, direct mail, and technical literature ' (brochures) (Jackson, Keith, and Burdick 1987). Parasuraman (1981) analyzed the extent to which promotional and organizational factors influenced industrial purchase decisions in manufacturing and nonmanufacturing firms. Promotional factors included personal selling, direct mail, print advertisements, and trade shows. Likewise, organizational factors included purchase requisition specifications and recommendations made by other firms. Parasuraman (1981) found that purchase specifications wielded a substantial amount of influence, personal selling and recommendations had a moderate amount of influence, trade shows exerted a limited to moderate amount of influence, and print advertisements and direct mail had a limited amount of influence. Parasuraman (1981) concluded that personal selling is the most important, out of the promotional tools available, to business-to-business marketers. Moreover, it was concluded that personal selling can be most effective if directed at departments and individuals having the greatest influence on the purchase decision (Parasuraman 1981). Jackson, Keith, and Burdick (1987) evaluated the importance of different promotional elements across different buyclasses and different product types. Specifically, the study examined three types of buyclass (a new buy, a modified rebuy, and a straight rebuy) and five different product types (major capital items, 22 minor capital items, materials, component parts, and supplies). It could not be concluded from the study that industrial buyers' perceptions of the relative importance of promotional elements varies with buyclass (Jackson, Keith, and Burdick 1987). On the other hand, the study confirmed that industrial buyer's perceptions of the relative importance of promotional elements depends on the type of product being purchased. Other significant findings were that, when making a purchase decision, industrial buyers considered salespeople to be the most important promotional element, technical literature to be the second most important element, and direct mail to be the least important promotional element (Jackson, Keith, and Burdick 1987). Patti (1979), examined the extent to which industrial buyers and marketers in the machine tool industry had the same perception of the relative usefulness of the following communications channels: salespeople, company catalogs, trade advertising, direct mail, and trade shows. Trade advertising was considered the most important source of information by 37 percent of the buyers (Patti 1979). Twenty— seven percent of the buyers selected salespeople as the most important (Patti 1979). On the other hand, 72 percent of the marketers selected salespeople as the most important source of information, followed by company catalogs, trade advertising, trade shows, and direct mail (Patti 1979). Therefore, industrial buyers appear to perceive trade advertising as the most essential source of information, while industrial markets feel personal selling to be the best source of information (Patti 1979) In summary, it could be said that personal selling exerts the most influence over industrial buyer's purchase decisions (Parasuraman 1981; Jackson, Keith, and Burdick 1987) Trade advertising and technical literature seem to be next most important promotional elements followed by trade shows (Patti 1979; Jackson, Keith and Burdick 1987). The promotional element appearing to wield the least amount of 23 influence over industrial buyers' purchase decisions is direct mail. Setting Promotional Objectives Planning activities are fundamental in setting promotional objectives. One study examined 50 industrial firms and their planning practices (Ames 1968). It was determined that the majority of the firms were aware that effective planning strategies are dependent upon "market and economic facts, focuses on points of leverage, and results in operating programs, not just budgets" (Ames 1968). However, it was found that the firms have trouble putting the planning concepts into practice (Ames 1968). Consequently, trade and academic literature regarding planning activities for industrial firms have been primarily prescriptive in nature (see Schanck 1979; Bellizzi and Lehrer 1983; Kriegel 1986; Yeskey 1986; Patti, Hartley, and Kennedy 1991). Another study, conducted by Hartley and Patti (1988), used content analysis to evaluate business-to-business advertising objectives. In the study, advertising objectives were examined from the Business/ Professional Advertising Association Gold Key Awards entrants. Hartley and Patti (1988) defined an advertising objective as being comprised of four components: communication tasks, specification of target audience, the degree of change desired in the audience, and the time period in which the change should occur. Ninety-four percent of the business-to-business advertisements analyzed had communication tasks, which suggests that the concept of advertising requiring objectives has been accepted in the business-to-business advertising community (Hartley and Patti 1988). Unfortunately, overall the authors determined that the business-to-business advertisers did not use the four components of an advertising objective (communication tasks, specification of target, the degree of change desired, and the time period in which the change should occur). Likewise, they did not specify objective tasks, did not measure results 24 through using the stages of a communication hierarchy-of—effects, and did not match objectives to evaluation measures (Hartley and Patti 1988). Target Audience Decisions The literature on segmenting and targeting particular audiences is similar to the rest of the business-to-business literature; it is geared toward "how-to" advice (Webster and Wind 1973; Haas 1982; Bellizzi and Lehrer 1983; Bonoma and Shapiro 1984; Shapiro and Bonoma 1984; Ross 1986; Morton 1990; Sinclair and Stalling 1990; Patti, Hartley and Kennedy 1991; Messner 1992). Kotler (1978) described market ' segmentation as a series of three steps: (1) market segmentation; (2) targeting; and (3) positioning. The business-to-business literature focuses predominately on segmenting. A variety of models and schemes have been proposed (see Hummel 1960; Wind and Cardozo 1974; Green 1977; Cardozo 1980; Johnson and Flodhammer 1980; Spekman 1981; Wind, Robertson, and Fraser 1982). Little empirical evidence, however, has been given about implementation and current practice (Bonoma and Shapiro,1984; Peter and Doyle 1985; Wilson 1986). Thus, the majority of business- to—business segmentation and targeting decisions appear to be based on simple and intuitive methods (Churchill and Orville 1981). One study was found on business-to-business firms' current practice of targeting audiences. Hartley and Patti's (1988) study collected and evaluated entries from the Business/ Professional Advertising Association Gold Key Awards. The business-to—business firms' advertising was examined for the specification of advertising objectives, such as target audience. Sixty—eight percent poorly defined the target market, and none of the firms gave an explicit description of the target market (Hartley and Patti 1988). 25 Budget Decisions Advertising budgeting practices have received minimal attention in the business-to-business marketing and advertising research literature (Blasko and Patti 1984). Harding (1968) conducted a mail survey of 557 subscribers to Industrial Marketing. He found three budget methods to be practiced most frequently. The "task approach" was practiced by 35.6 percent of the respondents, the "arbitrary" was reported by 27.7 percent, and the "percent of sales" method was practiced by 24.4 percent (Harding 1968). - Subsequent studies have also examined the advertising budgeting practices of business-to—business firms. San Augustine and Foley (1975) surveyed a random sample of firms on the 100 leading business publication advertisers list, as compiled by the American Business Press. The budgeting method used most often was the "arbitrary approach", and the "affordable approach" was second among the firms (San Augustine and Foley 1975). This study also revealed that none of the firms used quantitative models to set budgets and that only 10 percent of the firms surveyed reported practicing the "objective and task approach." Permut (1977) found that the two most frequently mentioned budgeting methods of West European industrial advertisers were the "affordable approach" and the "arbitrary approach." A 1977 U.K. study conducted by Gilligan had similar findings. Blasko and Patti (1984) investigated the budget practices of the top 100 industrial advertisers listed in the 1981 issue of Industrial Marketing. Their findings showed that 74 percent of the respondents used the "objective and task approach" as a budget setting method. The "affordable" method was second in terms of frequency with 33 percent, and 28 percent used the "percent anticipated sales approach" (Blasko and Patti 1984). These authors concluded that, since 1975, industrial advertisers have moved from the subjective "arbitrary approach" to the more goal-oriented "objective and task" method (Blasko and Patti 1984). Unfortunately, they also concluded that a 26 large percentage (33 percent) of industrial advertisers were continuing to use the subjective and intuitive "affordable method" (Blasko and Patti 1984). Finally, Lynch and Hooley's (1987) study of U.K. executives confirmed Blasko and Patti's (1984) conclusion that there has been a noticeable shift in the sophistication of advertising budgeting practices among larger industrial advertisers. Positioning Decisions In the business—to-business literature, the concept of positioning alone has received little attention. Generally it has been addressed as an afterthought in literature that focuses on segmentation. Positioning or carving a niche, as it sometimes is referred to, is well known and frequently attempted by industrial companies; however, the companies are not as successful as they should be (Garda 1981). This lack of success can be attributed to the reluctance of management to change current strategic plans, especially if those plans are working. In addition, Garda (1981) suggests that industrial companies lack an understanding how to segment the market to their advantage, and they perceive that, although segmentation appears to work well for consumer product manufacturer, it loses its "magic" in an industrial environment. Consequently, the academic, trade, and popular literature addressing positioning concepts have been directed towards "how- to" advice (see Garda 1981; Donath 1982; Barone 1984; Patti, Hartley, and Kennedy 1991). In addition, similar to the segmentation literature, it is lacking in practical examples of applying the positioning concept in industrial market situations (Doyle and Saunders 1985). Doyle and Saunders (1985) gave one of the few real examples in the literature of presenting market segmentation and positioning techniques and applying them to an actual industrial marketing problem. Specifically, the situation involved a basic raw material producer switching into a specialty chemicals market. Bennion (1987) 27 also illustrated a framework for the steel forging industry of the implementation of segmentation and positioning. The study was helpful because it was representative of other industries (Bennion 1987). Creative Strategy and Production Decisions Patti, Hartley, and Kennedy (1991, p.157) described creative strategy as "what you want to say" and creative tactics as "how you choose to say it." In 1983, Bellizi and Lehrer recognized that, as more business-to-business marketers were using advertising as a promotional tool, better advertising management techniques were necessary. Bellizi and Lehrer (1983) established major steps or guidelines for developing better industrial advertising on such topics as theme, copy, headlines, layout, and media selection. Glover, Hartley, and Patti (1989) evaluated the advertising message strategy practices of business-to-business advertisers. By obtaining a sample from the entries of the Business/ Professional Advertising Association Gold Key Awards, they were able to examine the firms' strategy statements (Glover, Hartley, and Patti 1989). To provide a framework for this analysis, they developed an integrated message strategy framework from other managerial models. Overall, 82.3 percent of the advertisements specified a message strategy from the integrated framework. Unfortunately, only 33.8 percent of the advertisements specified a strategy that matched an appropriate specified objective. This suggests that, in business—to- business advertising, advertising objectives may not always guide the development of message strategy (Glover, Hartley, and Patti 1989). The researchers noted this as not surprising given the lack of managerial models for message strategy development in business-to—business advertising. Other academic, trade, and scholarly literature on creative and production decisions have been more prescriptive in nature (see Donath 1982; Bly 1983; Garbett 28 1984; Bellizzi and Hite 1986; Stevenson and Swayne 1988; Wilhide 1988; Patti, Hartley and Kennedy 1991; Messner 1992). For example, empirical evidence was found on the effect of copy length on industrial advertising readership. Soley (1986) found that long copy is more effective that short copy in industrial advertising. This study also suggested that very long copy (more than 200 words) may not be as effective for encouraging readership as advertisements with somewhat shorter copy (approximately 150 words of copy). Virtually no attention has been given to the adoption and practices of production decisions in business-to-business firms. However, there have been studies conducted on the appropriateness and effectiveness of the components of layouts and various styles of layouts regarding readership (see Hendon 1973; Hanssens and Weitz 1980; Soley and Reid 1983; Twedt 1986; Chamblee and Sandler 1992). Media/ Promotion Selection Decisions As mentioned earlier, personal selling has been the most widely used promotional tool in business-to-business communications (Patti 1979; Cooke 1986, Jackson, Keith, and Burdick 1987; Naples and Wulfsberg 1987; Hartley and Patti 198 8). Consequently, minimal attention has been given to the actual process of how business-to-business firms make media selection decisions. The academic, trade, and scholarly literature that exists is largely directed toward "how-to" advice (see Ljungren 1976; Kamin 1978; "Buying and Selling... 1982; Bellizzi and Lehrer 1983; Williams 1983; Davids 1986; Kastiel 1986; Ross 1986; Sanders 1986;Bly1987; "Hints... 1988; Gordon 1989; Pinto 1989; Eisenhart 1990; Patti, Hartley, and Kennedy 1991; Messner 1992). This literature is aimed at the practitioner and provides effective techniques and methods for selecting various promotions. 4L 29 Evaluation of Promotions Naples and Wulfsberg (1987) noted that ". . .in the minds of industrial CEOs, general managers, and decision-makers, industrial advertising's bottom-line effectiveness has never been proven to their satisfaction." This could be due to the fact that the business-to-business academic and scholarly literature on promotion evaluation is predominantly prescriptive and/ or appears to focus on whether or not industrial advertising is effective in general (see Morrill 1970; The PACT Agencies 1982; Zinkhan 1984; Naples and Wulfsberg 1987; Donath 1988; Patti, Hartley, and Kennedy 1991). There is relatively little material related to the adoption and implementation of promotion evaluation techniques in business-to—business firms (Jackson, Ostrom, and Evans 1982). One study conducted in 1978 revealed that 97 percent of industrial firms conducted sales analysis as an evaluation technique; however, the actual type of sales analysis conducted or on what control segments was unknown (Twedt 1978). Morgan and Morgan (1980) examined how product line profitability was evaluated in industrial firms. They found that 51 percent of the firms used direct costing and 44 percent analyzed the net profit of product lines. Jackson, Ostrom, and Evans (1982) surveyed 244 U.S. manufacturing firm's marketing executives to identify the control segments that were being evaluated and the measures used to evaluate them. The results indicated that most industrial manufacturing firms evaluate more than one activity or segment of their business. The most frequently examined segment was product with 97 percent of the respondents indicating that they examined the performance of products. This was followed by salespeople, customers, geographic area, and order size. The most widely used measure was sales volume. This was followed by sales volume as compared to an objective or quota, contribution to profit, expenses, net profit, and return on assets committed to the segment (Jackson, Ostrom, and Evans 1982). 30 Evaluation methods for advertising were not found to be noted among business-to- business firms. Examination of the Literature The small business literature gives insight into the characteristics and practices that are the most common in small firms. One such characteristic is that small firms are reluctant to attempt advertising and promotion activities. Some other characteristics inherent of small firms, that also appear to contribute to this reluctance are: a reliance on referrals, a lack of financial resources, and time constraints due to preoccupation with day-to-day operations. From the business-to-business literature, it appears that the characteristics inherent to business-to-business firms provide some understanding to the promotional decisions they make. For example, because business—to-business firms sell different types of products compared to consumer-oriented firms, they employ different marketing and promotional strategies. More specifically, personal selling is the most widely used promotional tool in business-to-business communications. Historically, personal selling either was the only or the major promotional tool in business-to—business firms. This may explain why the business-to-business literature is lacking research on the implementation and practice of various promotional decisions. The literature on promotional decision making in business-to-business firms is directed toward large firms and is predominately prescriptive in nature. Therefore, it is evident from the business-to-business promotional literature that there is a need for research on promotional decisions in smaller, business-to-business firms. It can be said from the literature that a major similarity between small business firms and business-to—business firms is that both do little in advertising and promotion, but for different reasons. In addition, other similarities and some 31 differences can be found in the literature between small business firms and business- to-business firms with respect to the seven major advertising and promotion decision categories (setting objectives, selecting target audiences, determining budgets, deciding positioning alternatives, determining creative strategy, selecting communication channels, and evaluating results). As for setting promotional objectives, it is evident that small businesses are aware of the need for planning with respect to promotions and practice operational planning (short-term planning) regularly. On the other hand, it is apparent that business-to—business firms are aware of effective planning strategies for promotions; however, they have difficulty implementing such strategies. Small businesses are familiar with identifying and selecting target audiences, but have trouble implementing and practicing the process. The business-to-business literature however, is predominantly "how-to" advice that focuses primarily on segmenting with little attention given to targeting. Only one Study indicates that business-to-business firms pracrice identifying and selecting audiences, and over half the respondents in the study implemented the process poorly. In small firms, perceived affordability is the key factor in determining promotional budgets. Likewise, it is evident from the business-to-business literature, that business-to-business firms also depend on financial resources, often referred to as the "affordable approach", to set the promotional budget. In addition, business- to-business firms are noted as using other methods such as the "task approach," the "arbitrary approach," and the "percentage of sales approach". Thus, it could be concluded that some business-to—business firms are more sophisticated in their practice of budget methods than small businesses. The small business and business-to-business literature indicates that there is a limited amount of research in regards to the concept of positioning. The literature suggests that in both types of firms the concept is understood; however, companies 32 are not successful in attempting to implement it. This suggests a possible reason for the significant amount of practitioner-oriented and "how-to" literature in the both small business and business-to—business literature regarding positioning. Creative and production decisions have been neglected somewhat in both the small business and business-to—business literature as well. Factors that influence creative and production decisions are evident; however, the actual adoption and practice of creative and production decisions in small firms and business-to-business firms appear to be overlooked. Similarly, the small business and business-to—business literature is predominantly prescriptive in regards to creative and production decisions. This suggests that creative and production decisions are areas of possible difficulty for small business and business-to-business firms to undertake. The small business literature provides evidence regarding the media decisions that are made by small firms, but this coverage does not extend to the area of how small businesses make these media decisions (i.e., criteria used). It can be said from the small business literature that most small firms tend to utilize referrals, newspapers, radio, telephone directories, and television, which is utilized the least. The small business literature also gives evidence of the use of sales promotions by small retail firms. On the other hand, the business-to-business literature does not provide evidence of the media typically used or the process of how business-to- business firms make their media selection decisions. This may be due to the fact that personal selling has been the most widely used promotional tool in business-to- business communications. In addition, other obvious differences in business-to- business firms' media selection include trade publications and trade shows. Overall, the literature is largely directed toward "how-to" advice in the area of media selection. Finally, in looking at promotion evaluation decisions, in both small businesses and business-to-business firms, very little evidence was found to indicate that promotions are evaluated. As for small businesses only one study on the evaluation 33 of coupon promotions was located. Similarly, the business-to-business literature lacks evidence on the adoption and implementation of promotion evaluation techniques. However, evidence exists in the business-to—business literature on firms employing evaluation methods for more than one activity or segments of their business. A Small Business-to-Business Firm's Promotional Decisions Given the present discussion regarding the similarities and differences in the promotion decision categories of small business and business-to—business firms, several presuppositions can be made. More specifically, presuppositions can be made as to how a small business-to-business firm, like RMG, would make promotional decisions with respect to Davis's ( 1993) framework on promotional decision making in small firms. As for Stage One, the Integration of Information, there appears to be nothing contrary in either of the small business or business-to-business literature to suggest that this stage is not possible for a small business-to-business firm. In fact, it would seem plausible to expect a small business-to—business firm to participate in this stage. This could be concluded because it appears small firms tend to seek other information sources to help in the decision process due to their reluctance to attempt advertising and promotions. As for Stage Two, the Planning and Objective Setting Stage, the literature suggests that a small business-to—business firm may lack planning and objective setting for promotions. From the literature it could be presumed that a small business-to-business firm may be aware of the need for promotional planning; however, it might have difficulty in the implementation of such planning and objective setting. Thus, it could be said that a small business-to-business firm may 34 be in its infancy with respect to this stage. Stage Three, Promotion Tactical Decisions, covers target audience concerns, positioning, creative strategy, production techniques, and the factors that influence these decisions. Because of the lack of evidence in the business-to-business literature, it is difficult to speculate about a small business-to—business firm's promotional decisions. It could be said that media selection choices would be limited due to the fact that business-to-business firms have in the past relied on personal selling as their main promotional tool. It could also be presumed from the business— to—business literature that a budget setting method, such as the."affordable approach", might be used by a small business-to—business firm. The small business literature is also limited with respect to communication, creative, and production techniques, making it difficult to make assumptions regarding a small business-to- business firm's actions in this particular stage. However, from the small business literature it could be said that financial resources may be a major factor in influencing the promotional decisions made in a small business-to—business firm. As for Stage Four, Evaluation of Promotion Tactics, because of the lack of evidence from the small business literature and the business-to-business literature regarding the evaluation of promotions, no prediction can be made with confidence about the actions of a small business-to-business firm. However, due to the lack of evidence of promotional evaluation in small business and business-to-business firms, it could be presumed that a small business-to-business firm might fail to evaluate promotions. To summarize, four presuppositions can be derived from the above discussion. Whether these presuppositions hold true will be evident as the upcoming chapters on the case study and analysis unfolds. The presuppositions for a small business-to—business firm, with respect to Davis's (1993) framework on promotional decision making in small firms are stated below. 35 1) A small business-to-business firm is likely to advance through Stage One, the Integration of Information, of Davis's (1993) model of promotional decision making in small firms. 2) A small business-to-business firm is likely to have difficulty with promotional planning and objective setting in Stage Two of Davis's ( 1993) model. 3) A small business-to-business firm is likely to have limited media selection, message, and production decisions due to a reliance on personal selling and limited financial resources, with respect to Stage Three of Davis's (1993)model of promotional decision making. 4) A small business-to-business firm is not likely to evaluatepromotions. Case Study Design and Method As stated earlier, the examination of the promotional decision making of a small business-to-business firm will help demonstrate whether Davis's ( 1993) promotional decision framework for small businesses is appr0priate beyond the settings from which it was developed. In addition, it will provide an opportunity to illustrate the use and importance of the framework. The promotional decision making of Resource Management Group, Inc., (hereafter referred to as RMG) will be the business under study. The promOtional decision making of RMG is beyond the control of the researcher, and the research question is concerned with how RMG's promotional decision making differs from Davis's (1993) framework of the promotional decision making in small consumer-oriented firms. These two factors, the extent of control over behavioral events and the type of research question, make the case study an appropriate research design (Yin 1984). Robert Yin's (1984) book, Case Study Research: Design and Methogg provides a five component research design for case studies. The components are provided in the Table 1 as they apply to this thesis. 36 Table 1.--Research Design for Case Study Study Question(s) Does a small business-to-business firms' promotional decision making differ from small consumer-oriented firms? If there are differences, on what dimensions do small business-to-business promotional decisions differ from small consumer-oriented promotional decisions? Study Proposition Theoretical proposition. Specifically applying a theoretical framework for promotional decision making in small consumer-oriented firms to case study on promotional decisions in a small business-to- business firm. Unit of Analysis A small business-to-business firm's promotional decisions past and present. Linking Data to Pattern-Matching. Propositions (Method of Analyzing Case Study Evidence) Criteria for Interpreting Comparison of theoretical framework to case study Study's Findings evidence. For the first component Study Questions, Yin ( 1984) notes that the questions a researcher sets out to study, although varying according to substance, are typically II II H II formed in terms of "who, what, where," "how," and "why". A case study analysis is most appropriate for "how" and "why" questions (Yin 1984). Study Propositions are the second component in the research design. A study proposition "directs attention to something that should be examined within the scope of the study." (Yin 1984, p.30) The third factor, Unit of Analysis, is the unit under study. For example, in case studies the unit of analysis could be an individual, program, event, decisions, 37 implementation process, and organizational change (Yin 1984). The fourth component, Linking the Data to Propositions, and the fifth component, the Criteria for Interpreting the Findings, represent the data analysis steps (Yin 1984). Yin (1984) also notes six possible sources of evidence for gathering data for case studies. The sources are: documentation, archival records, interview, direct observations, participant-observation (investigator is more than passive observer), and physical artifacts. For this case study, four sources of evidence were used to collect data: documentation, archival records, participant-observations, and direct observations. Documentation included such items as articles and news releases from the newspaper, administrative documents (receipts for printing and designing information for distribution), and information regarding promotional efforts. Archival records consisted of service records and data base of the number and type of clients served over the years and organizational records (advertising budget for previous year). Both direct observations and participant observation occurred of the promotional decision-making process. Yin (1984) also provides two general analytical strategies for analyzing evidence: relying on theoretical propositions and developing case descriptions. The former is the more preferred and will be used for the purposes of this thesis. The dominant mode of analysis used in this thesis, pattern-matching, has also been suggested by (Yin 1984). Pattern-matching is a technique where several pieces of information from a case may be related to some theoretical proposition (Campbell 1975). Specifically, pattern—matching is comparing an empirically based pattern with a predicted one (Yin 1984). The case analysis in this thesis compares an empirically based pattern, RMG's promotional decision-making practices, and a predicted pattern, Davis's (1993) theoretical framework. These two factors, comparing an empirically based pattern to a predicted pattern, make pattern-matching an appropriate mode of analysis (Yin 1984). Pattern-matching will be used in Chapter 38 Four by examining the information from the case on the business-to-business promotional decision making of a small firm, to see how these decisions relate to (confirm or challenge) the theoretical framework for promotional decision making in small consumer-oriented firms. CHAPTER THREE CASE STUDY: RESOURCE MANAGEMENT GROUP, INC. Introduction An increase in environmental concerns and legislation in recent years (World Resources Institute 1993) appear to have increased demand for environmental consulting services (see Hendrickson 1993a). In 1987, Timothy Bureau, a former Michigan Department of Natural Resource (DNR) official, decided to capitalize on this grOWth in demand by forming Bureau and Associates, Inc., an environmental planning and consulting firm in Grand Haven, Michigan. The name was changed to Resource Management Group, Inc. (RMG), when Bureau was joined by several other partners, including former DNR officials, Ronald F. Brown and Charles L. Wolverton. Over the last several years RMG has grown, with offices expanding in Michigan to Big Rapids and Escanaba. During these years of growrh, the majority of RMG's business has come from "word-of-mouth" advertising. However, RMG has recognized that, in order to continue to grow and compete aggressively, formal promotions are necessary. Because of this recognition, the firm has attempted various promotional efforts. Before discussing these promotional efforts and decisions, it is helpful to examine the industry, the competition, and RMG's market position to understand the environment in which RMG's promocional decision are made. 39 40 Industry Trends and Competition General Industry Trends for Management and Consulting Firms The management and consulting industry provides information and expertise to a variety of clients on a contracted basis. Since 1988, the management and consulting industry in general has grown steadily in receipts and employment. The U.S. Department of Commerce: International Trade Administration and the Bureau of the Census: U.S. Department of Labor estimated from receipts that management and consulting firms in the United States reached $66.5 billion in revenues in 1992, an increase of almost 2 percent over 1991. In addition, employment increased to approximately 620,000 employees in 1992, an increase of almost 2 percent over 1991 (U.S. Industrial Outlook 1993). See Appendix A for trends and forecasts from 1988 to 1993. A recent trend in the industry concerns the fact that activities of management and consulting firms have come under increased scrutiny, and the results have been somewhat negative (U.S. Industrial Outlook 1993). There appear to be several concerns expressed regarding this issue. For example, some clients feel that large consulting firms' claims of expertise are embellished; and as a result, the client ends up paying quite a bit of money to teach the consultants their business (U.S. Industrial Outlook 1993). In addition, some clients feel that the majority of the time consulting firms send in their top people to sell the firm, then after the sale, subordinate personnel with less experience and expertise are assigned the project (U.S. Industrial Outlook 1993). Consequently, many clients are preferring small "boutique" consultancies to larger firms (U.S. Industrial Outlook 1993). Resource Management Group, Inc. is 41 such a firm, and this characteristic appears to be one of factors contributing to the company's success thus far. Smaller firms, like RMG, concentrate on small but profitable consulting niches. For RMG, environmental planning and consulting appears to be a successful niche, as well as being an influential area due to the issues surrounding development versus protecting the environment. Specific trends for the environmental consulting services industry will be addressed in the next subsection. Another trend in the management and consulting industry is the reality that professional liability insurance (also known as errors and omissions insurance) is rapidly becoming a necessity. This is largely due to the fact that consulting firms have significant exposure to liability claims resulting from inaccurate or incomplete advice (U.S. Industrial Outlook 1993). In addition, due to the high cost of acquiring insurance, some firms, especially small consulting firms, may not be able to obtain this insurance. For management and consulting firms in general, demand for services was expected to increase in 1993. More specifically, receipts were expected to be an estimated $70 billion in 1993, approximately 5 percent higher than in 1992 (U.S. Industrial Outlook 1993). Employment was forecasted to reach 635,000, 2 percent above the 1992 level (U.S. Industrial Outlook 1993). At this time evidence on 1993 figures for the management and consulting industry in general and forecasts for 1994 were not located, and appear to have not yet been compiled. Industry Trends for Environmental Consulting and Engineering Firms In 1993, it appears that growth for the environmental consulting and engineering industry has slowed somewhat (Hendrickson 1993a). Farkas, Berkowitz 86 Company, a Washington, D.C., based consulting firm, compiled statistics assessing the environmental consulting and engineering industry (Hendrickson 42 1993a). Farkas, Berkowitz 8!. Company found that the $9 billion environmental consulting and engineering industry (representing 12 percent of the overall $75 billion environmental protection market) grew at a 10 percent rate in 1992, and was estimated to be growing at a 5-10 percent rate in 1993 (Hendrickson 1993a). These growth rates represent a fall from a growth of 30 percent only two years before (Hendrickson 1993a). Some of the factors that may have contributed to this slow growth recently are best summarized by William T. Lowrenz of William T. Lowrenz 86 Company, a consulting firm in Concord, New Hampshire. Lowrenz concluded in a recent study that the industry has been affected by "the activities of the new administration in Washington, the devastating effects of the recession, the chaos caused by natural disasters, and the emerging focus on global environmental opportunities."(Hendrickson 1993a, p.EC2) A major trend in the industry is the fact that small businesses and multinational corporations are recognizing the need to minimize waste (Hendrickson 1993d; World Resources Institute 1993). In addition, this corporate social responsibility for the environment is cost effective, adding to the bottom line, and enhances corporate image (Hendrickson 1993d; World Resources Institute 1993). Consequently, this may increase demand on companies offering environmental consulting services (Hendrickson 1993d). In terms of recent industry growth in geographic regions, the slower growth has been characterized by markets in the Northeast, in Florida, and in California (Hendrickson 1993c). On the other hand, healthy markets have been in the Great Lakes and Northeast regions (Hendrickson 1993c). For the future, there seems to be opportunity for the industry to continue to grow modestly due to expanding federal markets (Hendrickson 1993b). More specifically, the cleanup projects of the Department of Defense (DOD) and the Department of Energy (DOE) are seen as the "boom" markets of the 1990s 43 (Hendrickson 1993b). Growth is expected to be driven by the public sector spending to clean up federal facilities, primarily the DOE and the DOD (Hendrickson 1993b). The U.S. Environmental Protection Agency has estimated that the cleanup costs at the federal facilities could amount to $400 billion over the next 30 years, providing contract opportunities for environmental consulting and engineering firms (Hendrickson 1993b). Overall, the environmental consulting and engineering industry in 1994 is expected to continue to grow modestly at an estimated 10 percent (Hendrickson 1993e). Competition As mentioned earlier, the number of management and consulting firms in general has grown over the last several years (U.S. Industrial Outlook, 1993). Due to the proximity of the Great Lakes, Michigan (and other Great Lakes states) have the responsibility to protect viable ecosystems such as wetlands and dunes. In the past two decades, the protection of natural resources has become a high priority to society as a whole (see World Resources Institute 1993). A number of state and federal laws have been enacted to protect these resources, such as Michigan's Goemaere-Anderson Wetland Protection Act of 1979 and the Inland Lakes and Streams Act of 1972. This seems to have created a need for specialists in the area of environmental planning and consulting. There are firms that specialize in wetland consulting, lakes and streams analysis, environmental impact assessments, and regulatory compliance. These services or a combination of these services are offered by RMG's competition. Therefore, RMG's competition is diverse. The company's direct competition can be classified into two groups: 1) other environmental consulting firms in Michigan(which vary in services offered) and 2) engineering firms that provide environmental consulting services and are located in Michigan. Some engineering 44 firms are considered competition because they have begun to employ biologists; as a result, some have added natural resource consulting to their list of services offered. Direct competition appears to be primarily within the state of Michigan because, like RMG, these firms will be competing for similar, smaller jobs. In addition, it would seem that potential customers in the state would most likely begin their search for an environmental consulting firm within Michigan. It appears closer location is generally preferred over out-of—state due to such factors as travel expenses, local familiarity with laws, and familiarity with the state's Department of Natural Resource's personnel. It appears that the majority of RMG's direct competition are concentrated in the Ann Arbor, Detroit, Grand Rapids, and Lansing areas of Michigan. For example, such competitors include WW Engineering 8?. Science located in Livonia, Michigan, and SEG Engineers 8: Consultants, Inc., in Lansing, Michigan. Secondary competition (out of state) merits mentioning due to the fact that in some instances they could be considered potential competitors of RMG. These include consulting firms in nearby states (Ohio, Minnesota, and Wisconsin) and consulting firms located in more distant states (California, New Hampshire, and Maine). Some of these firms tend to be national in operations with offices in several states and with primarily larger, governmental projects. See Appendix B for a listing of current and potential competitors. As for advertising and promotions, in preliminary research it was observed that competitors use print advertising most frequently. More specifically, these firms use promotional materials such as printed brochures and pamphlets describing the firms' services, in conjunction with some advertisements in local publications. RMG's Market Position Resource Management Group, Inc., is a natural resource consulting firm specializing in wetland permitting and mitigation design. The company has appeared 45 to position itself against competitors by offering a broad range of related services covering wetlands, lakes, streams, ponds, marinas, real estate, coastal sand dunes, and offering services as expert witnesses. See Appendix C. From preliminary research and observation, it appears that the majority of RMG's competition does not offer such diversity in services. This variety of integrated services seems to give RMG a competitive edge. It looks as if what sets RMG apart, in addition to a broad range of services, is the company's regulatory expertise. Out of RMG's fifteen employees, three have over 30 years combined experience working at the DNR in Michigan. Therefore, RMG's knowledge of the regulatory processes and state and federal laws dealing with wetlands, inland lakes and streams, sand dunes, and Great Lakes resources appears to be extremely thorough. It seems that the staff expertise and experience with the laws, legislation, and familiarity with the state's DNR personnel is RMG's unique selling point or proposition. It appears that most firms do not offer this breadth of services and, those that do, lack the depth of RMG's regulatory expertise. It also appears that existing and potential clients are not aware of the value of RMG's regulatory expertise i.e., do not know the laws or the ramifications of those laws. In addition to this lack of awareness regarding laws, there also appears to be a general lack of awareness regarding RMG as a company. This has been concluded from evidence of past clients saying they did not know RMG had existed until someone referred them to the company. Thus, it would seem that word—of-mouth references from past clients have been RMG's best source of new clients. Moreover, it could be said that this repeat business is a result of RMG providing quality services. In addition to technical expertise, RMG appears to be competitive with respect to prices. This information was obtained from RMG and was based upon the rates of RMG compared to several other consulting firms in Michigan. Clients are 46 charged an hourly rate, ranging from $45 to $125 per hour based upon the size of the project, number of staff needed, and the employees level of seniority. The target market or clients of RMG can be best classified by type of business: corporate (i.e., Meijer, Inc., Amway Corporation), legal, developers, marinas, contractors, government (i.e., City of Battle Creek), engineers, architects, and school systems that are typically located in Michigan. See Appendix D for a selected list of RMG's recent clients. For corporate, developers, marinas, contractors, and government clients, RMG generally assesses a site that a client is contemplating building on or developing to make sure they are in compliancewith natural resource and wetland regulations. If the clients are not, alternatives, if any, are suggested. If the clients are in compliance with regulation RMG might suggest an environmentally safe plan and/ or work as a liaison to the DNR to help its clients obtain the necessary permits to begin the project. For legal clients, a law firm usually employs RMG to be an expert witness for a client that has violated a natural resource or wetland regulation. As for other clients such as engineers and architects, RMG is typically employed by an engineering or architectural firm currently working on a particular project when one or more of their services are needed. Such services could include wetland mitigation/ restoration, planning and designing for ponds or wetlands, regulatory determinations or any other services listed in Appendix C. According to Dodge and Robbins's Life Cycle Model of Small Business Characteristics and Problems (1992), it would appear that RMG is the Early Growth Stage (Life Cycle Stages: formation, early growth, later growth, and stability). Characteristics of the Early Growth Stage include rapid grOWth, highly reactive to market demands, and matching demand with supply (Dodge and Robbins 1992). Some external and internal problems that are characteristic for a small business in this stage are expansion, market assessment and identification, dealing with competition, financial planning, and cash flow (Dodge and Robbins 1992). 47 Overall, RMG seems to be following industry trends by continuing to grow by expanding their locations to include Big Rapids and Escanaba. In fact, compound annual grOWth was 47% over the last 5 years. Current evidence indicated that in 1992, sales were approximately $750,000. In April 1993, RMG was ranked No. 23 in the state on the "Michigan Private 100" listing. The Michigan Private 100 is the ranking of the fastest growing private companies in Michigan. An Assessment of RMG's Current Promotional Activities _ - Resource Management Group, Inc., has implemented a number of promotion efforts. These efforts are outlined below and are followed by a discussion of RMG's promotional decision making. 1. Printed Information for Distribution 0 Business Cards 0 Brochure Rolodex Cards Information Packet (pocket folder) which may include: Services list, Client list, Reference list, Resume on each staff member, specific fact sheets of services offered with photos, subcontractor and special consultant credentials, brochure, rolodex card, and business card. 0 O 2. Telephone Directory Advertising 0 Directory listings in telephone directories, which consist of a regular line listing with one extra line that says, "Wetlands and other natural resource consulting" in Ameritech listings for Grand Haven, Grand Rapids, Holland, Big Rapids, Grand Traverse, Charlevoix/ Emmet, and Arenac/Iosco/Ogemaw. 3. Reference Directory 0 listed in: Grand Rapids Bar Association Pictorial Directory, Thomas' Greater Michigan Regional Industrial Buying Guides 1993, Dames and Moore, Michigan Contractor and Builder 1994 Construction Materials and Suppliers Directory, Michigan Lawyers Weekly Environmental Law Directory, and U.S.A. Oil Industry's 1994 Environmental Directory. 48 0 Also includes government lists: USCOE computerized vendor reference system, City of Ann Arbor Vendor List for Purchasing, U.S. Small Business Administration PASS (Procurement Automated Source System). A . Selected Advertisements in Publications, Magazines, Periodicals (see Appendix E) O Lakes and Streams Association, program for annual meeting 1992 0 Restoration and Management Notes, Winter 1992 issue advertisement for RMG plant book (book containing wetland plant information, discussed in following section) 0 Trout Unlimited, December 1992, for fisheries services 0 Sponsorship/ Underwriting in Great Lakes Wetlands Newsletter . Contact Letters on An Individual Basis Send one page or two page letters with information or information packs, prompted by telephone inquiries, personal contacts, news articles on recent development, etc. Responses to resumes which include brochure and book order form. L” O O 6. Direct Mail Mass Solicitation Selected direct mail efforts to: O Engineers: 11/91 to southwest Michigan and northwest Michigan engineers and engineering consultants 6/ 92 to Engineering firms listed in Texas Lawyer's Weekly 1/ 93 to Engineering firms listed by Michigan Department of Transportation 1 / 93 to other miscellaneous Engineering firms Realtors: 8/ 91 Northern lower peninsula for Big Rapids and Roscommon 1991 Grand Haven sent to Holland Board Spring Escanaba sent to UP Realtors 1993 - Members of Society of 12/92 to Region 2 for books Wetland Scientists: 8/ 93 to Region 10 for books Landscape Architects: 5/ 92 to top 10 U.S. Landscape Architectural firms (except Johnson, Johnson and Roy) Various Other Attorneys, Landfills, Architects, and Developers 49 7. Publications: Plant Book1 (Discussed in detail in next section.) . Region 3 wetland plant book . Region 1 wetland plant book 0 Region 2 wetland plant book, 12/ 92 0 Region 9 and 10, Fall 1993 8. Participation in Conferences and Seminars 0 Attending professional conferences Display tables at conferences--have display board with logo 0 Giving seminars O Promotional Decision Making at RMG At RMG there is no employee with a formal marketing or advertising background. Consequently, promotional decision making and implementation are predominantly completed by a combination of four people in the firm. Roberta E.J. Sabine is the Senior Environmental Analyst/ Designer and a member of the Board of Directors for RMG. She is also responsible for managing the office. At RMG, office management is where the promotions for the company is handled; as a result, Sabine is the person primarily responsible for the implementation of RMG's promotions. Promotional ideas are discussed among Sabine, Timothy C. Bureau (Chairman of the Board of Directors and Managing Partner), Charles L. Wolverton (President and Managing Partner), and Ronald F. Brown (Managing Partner). The ultimate decision making is done by Bureau, with input from Sabine, Wolverton, and Brown. Sabine is then responsible for the management and implementation of the promotion. For example, if RMG needs a new brochure, Sabine would be responsible for working with the graphic designer and printer. Sabine would then take a rough draft of the brochure to Bureau, Wolverton, and Brown for their input. RMG does not use a sophisticated method of setting the budget for promorions. In the past, RMG's promOtional budget had been based on affordability. The most recent information available indicated that advertising budget expenditures 1 Plant book is a wetland plant reference guide for wetland scientists. 50 in 1992 were approximately $4,022. In addition, the firm did not appear to have formal communication plans or objectives. As mentioned earlier, it is apparent from the significant amount of word-of-mouth referrals at RMG, that RMG provides quality services. Such quality services are worthy of being advertised or marketed so that the company can reach its full potential. It is evident that to communicate this range and quality of service, thereby obtaining future clients, RMG could benefit greatly from a marketing plan with specific communication objectives. RMG did not recognize this until April 1993. At this time RMG decided to hire a person with a marketing and/ or advertising background to assess the company's past and current marketing and advertising efforts and to formulate a marketing plan with recommendations for future promotional efforts. Due to RMG's lack of financial resources, the company decided to hire a person only for a temporary period. If the results proved satisfactory and affordable then the company would decide how to proceed. RMG is currently evaluating the recommendations from this assessment. The following sections describe each of the promotional efforts outlined earlier. In addition, the promotional decision making behind these promotional efforts will be discussed. Printed Information and Directory Listing The printed information for distribution has stayed the same with little variation since its inception in 1988. The information is professional in appearance. In particular, the information packet is informative and easy to read. All the printed information was done by a local graphic designer and printer, with RMG supplying the necessary information for production. The information has RMG's logo on it, a logo that was created by Bureau and Sabine. Decision criteria for printed information such as this are based first on affordability, and then on the materials produced by their competitors. This information appears to have no creative 51 strategy. The information was designed to be strictly informative for potential clients. Consequently, it is evident that RMG has not formally identified and/ or targeted a particular audience for this information. No evaluation or tracking research has been conducted on the effectiveness of the various printed information. Telephone directory listings are renewed every year. RMG has listings in the following local Ameritech telephone directories in Michigan: Grand Haven, Grand Rapids, Holland, Big Rapids, Grand Traverse, Charlevoix/ Emmet, and Arenac/Iosco/ Ogemaw. Affordablility is the criterion used to decide how many directories that RMG will be listed in; and, proximity to RMG's three offices is the criterion employed to decide which directories will be used. During the past year, Sabine has asked employees to inquire where and/ or how a new client learned of the company. This is the extent of testing or evaluation for all promotions and it has not been well received by all employees. In the last year however, only one potential client indicated that they had discovered RMG through the telephone directory; and, in the end that person did not use RMG's services. As a result, the company is apprehensive about continued use of the directories. Decisions to be listed in other reference directory listings were made by Sabine based on affordability. All the reference directories listed in the outline of RMG's promotional efforts were free except for two: Grand Rapids Bar Association Pictorial Directory and Michigan Lawyers Weekly Environmental Law Directory. Advertisements Various advertisements have been run in selected publications, magazines, and periodicals. See Appendix E for sample advertisements. The advertising is purely informational, i.e., there appears to be no creative strategy for the advertisements. The content of the advertisements were decided by Sabine, Bureau, Wolverton, and Brown, with input from various other employees. Objectives were not set for the advertisements in the beginning of the decision making process. In addition, no 52 extensive research took place to decide where they might best reach their clients. As a result, it would appear that no target audience selection and identification took place in RMG's decision making. The main decision criterion utilized for the advertisements were affordability followed by the examination of the competition's attempts at advertisements. As for selecting media for the advertisements, with the exception of the advertisement for plant book sales in Restoration Management Notes, the advertisements appear to have been placed in the wrong media vehicles to most effectively reach potential clients. For example, the publications RMG used are typically not read by their potential clients, but instead are most often read by wetland scientists, environmental planners and consultants, and conservationists. The advertisement for the plant books in Restoration Management Notes was effective because it reached the right audience, wetland scientists. Contact Letters and Direct Mail Solicitations Contact letters give information about RMG's services and are prompted by telephone inquiries, people met, and news articles on new developments. Sabine is responsible for both contact letters and the direct mail. The direct mailings have been haphazard efforts, with little thought given to planning or objectives. The message content of the direct mail solicitations is purely informational regarding the company and its services. Sabine has directed these mail solicitations to potential target audiences; however, minimal research for the target audience selection and identification took place. As was true for other promotional efforts, there has been no formal evaluation measure of either of these promotional activities. Plant Books The plant books are reference guides that RMG has put together that indicate wetland plant status as well as both common and scientific names for wetland plants. 53 The plant books have been quite popular; in fact, RMG has made a profit on the books. RMG puts together the information, with the company's name and logo on the front, and a local printer takes care of printing and binding the books. The books are typically purchased by wetland scientists and other environmental and engineering consulting firms. The books appear to have given RMG an Opportunity to improve the company's name recognition in the environmental consulting and engineering industry in Michigan. Seminars and Conferences Attending and participating in conferences and seminars seem to have been useful tools for networking and increasing awareness among those who know little or nothing about RMG. It could be said that this is a form of personal selling for RMG. These events are sporadic, occurring only a few times a year. RMG typically takes literature (information packet, brochures, etc.) and business cards to these events. There has been no initiative or strategy to develop and conduct seminars regularly for different audiences (Real Estate, Public Officials) with different messages. In addition, there have been few business contacts or leads that have come from these seminars and conferences. Timothy Bureau, Charles Wolverton, and/ or Ronald Brown usually attend these events. CHAPTER F OUR ANALYSIS AND DISCUSSION OF CASE STUDY As mentioned in Chapter Two, a pattern-matching logic will be used for the case study analysis. Yin (1984), stated that "such a logic compares an empirically based pattern with a predicted one." For this study, the empirically based pattern is RMG's promotional decision making practices, and the predicted pattern is Davis's (1993) theoretical framework, presented in Chapter Two, on promotional decision making in small consumer-oriented firms. Stage One of Davis's (1993) model (see Chapter Two, Table 1) is the Integration of Information. In this Stage the decision maker scans the environment, observing marketing-oriented stimuli. The decision-maker observes and gathers information informally from: business associates, media salespeople, employees, family, customers, friends, competitors, newspapers and trade publications. At RMG, the integration of information does take place. As stated earlier, there are four key players in the decision-making process, each having input, with one (Timothy Bureau) making the final decision. RMG periodically consults all marketing-oriented stimuli in Stage One. This appears to be an arbitrary process for RMG and seems to be low on its list of priorities for the company. Planning and Objective Setting is Stage Two in the promotional decision- making process. Starting with this stage, RMG's practices begin to differ somewhat from the theoretical model. In the model, the decision-maker uses a combination of 54 55 decision methods for setting objectives and planning. These decision methods are: past experience, intuition, observing competition's activities, and getting advice from business contacts. RMG does not set any objectives for promotions, thus does not fit the model for this activity. In Stage Two, the planning that occurs is minimal at RMG. It appears to take place before the actual tactical decisions are made in Stage Three. For example, such planning would involve the status of current promotions (i.e., if changes are felt necessary) and planning for future promotions (i.e., new ideas are generally discussed as they relate to affordability). However, minimal research is done in the planning stage at RMG and it appears to be a low priority in the promotional decision making process, therefore, reducing the planning stage's length and effectiveness. Like the model, the decision-makers at RMG utilize the decision methods (past experience, intuition, observing competitors, getting advice from business contacts), although in a rudimentary fashion. Stage Three is Promotion Tactical Decisions, and the first stage in which RMG's practices differ significantly from the framework. In this stage the decision- maker makes promotional choices with respect to communication channels, messages, and production methods. In the framework, these choices are influenced by a desire to project a positive image of the firm, financial resources, and perceived target audience characteristics. For RMG, these choices appear to be influenced predominantly by the financial resources of the firm. Thus, no formal budget setting takes place. Next, the competition's activities influence decision-makers. For example, the decision-makers at RMG look for the media in which the competition advertises, and content of the competition's advertisement before making promotional decisions. The last factor that plays an influence at RMG is how will the selected media and content of the message fit the image of the firm. 56 From the case study analysis, it appears that minimal attention is given to target audience concerns. RMG conducts little research, particularly in the areas of geographies and demographics, to effectively target potential clients. RMG's limited financial resources and limited research appear to limit the company's alternatives as well as hinder effective decision making with respect to target audience concerns, communication channels, and message content. As evident from the case study, production decisions are left up to graphic designers, with the four decision-makers at the company giving the final approval on such matters. To summarize, the tactical decisions that are made at RMG appear to be elementary decisions based on financial resources, with no formal budget setting method. Therefore, RMG's promotional activities are not consistent with the framework at this stage. In Stage Four, the Evaluation of Promotion Tactics, reactions to promotions are observed. Some decision-makers fail to evaluate and others practice various techniques such as: measuring sales, talking to customers, noting customer traffic, and comparing sales to the same period in the previous year. If the evaluation is unsatisfactory, the decision-maker returns to Stage One for new information. If the evaluation is satisfactory, the decision-maker repeats to Stage Three tactics and returns to Stage One for supplemental ideas. RMG's practices are overall consistent with the model in this stage. In the past, RMG has failed to evaluate their promotions. In 1992, RMG began informally asking their customers and potential clients how they came to learn of the company. In addition, RMG has begun to pay more attention to sales from the past year and customer traffic. However, no measurement or tracking of sales over the years has taken place. Currently, the evaluation of promotions at RMG can be described as in its infancy. Consequently, there has not been a significant amount of satisfactory or unsatisfactory evaluations to determine RMG's follow up reaction (i.e., returning to other stages). 57 To summarize the data, Table 2 illustrates the promotional decision making of RMG as it relates to Davis's (1993) theoretical framework. Table 2.--RMG's Promotional Decision Making in Relation to Theoretical Framework Stage in Decision Making Process RMG's Status at Each Stage as it Corryares to Decision Making Process Stage 1: Similar process does occur. Observe all Integration of Information marketing-oriented stimuli. Stage 2: No objective setting. Some planning Planning and Objective Setting does occur. Decision making does rely on the four criteria in framework. Stage 3: Key influences differ (in order of Promotion Tactical Decisions importance): financial resources, competition's activities, and image of firm. Limited attention given to target audience concerns. No budget setting. Limited decision making on communication channels, message, and production techniques due to lack of research. Stage 4: Similar process does occur. In past Evaluation of Promotion Tactics have failed to evaluate. In 1992, began to talk to customers. In addition, have begun to pay attention to sales from last year (no actual measurement) and customer traffic. 58 Discussion and Conclusions This section addresses the results of the case analysis with respect to the presuppositions made in Chapter 2. In addition, the key findings and implications of the case study research are discussed. Contributions and limitations are then indicated, followed by suggestions for future research. It is essential to understand and keep in mind that the interpretive explanation of qualitative analysis does not produce knowledge in the same sense as quantitative explanation (Patton 1990). Patton (1990) stated that in qualitative analysis "the emphasis is on illumination, understanding, and extrapolation rather than causal determination, prediction, and generalization." Case Study Results and Presuppositions The presuppositions derived in Chapter Two, from the review of the body of literature, can be looked at with respect to the data collected from the case study. The presuppositions are restated below. 1) A small business-to-business firm is likely to advance through Stage One, the Integration of Information, of Davis's (1993) model of promotional decision making in small firms. 2) A small business-to—business firm is likely to have difficulty with promotional planning and objective setting in Stage Two of Davis's (1993) model. 3) A small business-to-business firm is likely to have limited media selection, message, and production decisions due to a reliance on personal selling and limited financial resources, with respect to Stage Three of Davis's (1993) model of promotional decision making. 4) A small business-to-business firm is not likely to evaluate promotions. The first proposition appears to be strongly supported by the case study analysis. RMG's decision-making process is consistent with Davis's (1993) framework in this stage. The second proposition could be considered to be 59 supported by the case study analysis. As noted in Table 2, RMG does n0t set objectives; however some planning does occur. The planning that does occur appears minimal, in conjunction with very little research. This could imply that the RMG does have difficulty with planning and objective setting in Stage Two of Davis's (1993) framework; therefore, indicating a moderate degree of support for the second proposition. This suggests that RMG's actions are somewhat inconsistent with the framework at this particular stage. The case study analysis indicates some degree of support for the third proposition. It is apparent that RMG is limited in its decision making with respect to media selection, message selection, and production techniques (see Table 2). However, it does not appear to have been related to a reliance on personal selling, but financial ability instead. Therefore, this lends some support to the third proposition. In addition, it suggests RMG varies in some ways from Stage Three, Promotion Tactical Decisions, of Davis's (1993) framework. As noted in Table 2, in the past RMG has failed to evaluate its promotions. However, in 1992, RMG began efforts to evaluate promotions through informally asking clients and potential clients where they had heard of the company and increasing attention to sales and customer traffic. Thus, proposition four does not appear to be completely supported by the case study analysis. Moreover, due to these recent evaluation efforts, RMG is in part consistent with Stage Four, Evaluation of Promotion Tactics in Davis's (1993) model. ' Discussion of Findings In Chapter One of this thesis, two questions were raised which have guided this research. These questions are restated here and their responses discussed. 60 1) Does small business-to-business firms' promotional decision making differ from small consumer-oriented firms' promotional decision making? The analysis in Chapter Four showed that RMG's promotional decision making does advance through each stage of the framework, with subtle differences occurring within stages. More specifically, RMG's promotional decision making appears consistent to Stage One and Stage Four of Davis's (1993) framework. However, in Stage Two and Three, some inconsistencies between RMG's promotional decision making and the framework begin to occur. Nevertheless, it can not be concluded with confidence that because RMG differed from the framework for promotional decision making in consumer-oriented firms in Stage Two and Three, that all small business-to-business firm's promotional decision making differs from all small consumer-oriented firm's promotional decision making. The differences in promotional decision making could be attributed to several factors such as the type of small firm (i.e., consumer-oriented, retail, business-to—business), the number of employees, the type of goods sold (i.e., product or service), and the marketing and/ or advertising expertise (if any) in the company. From the review of the literature, it appears that the factors that played a part in RMG's promotional decision-making are characteristic of most small firms. Moreover, it could not be determined accurately, from a single case study such as this, that the differences that were found in RMG's promotional decision-making process were inherent to characteristics of business-to-business firms. 2) If there are differences, on what dimensions do small business-to-business promotional decisions differ from small consumer-oriented promotional decisions? As mentioned above, the evidence indicates that there are some differences that occur between RMG's promotional decision making and the framework. 61 However, it can not be concluded with confidence that the differences in promotional decision making would occur between most small consumer-oriented firms and business-to-business firms. Nevertheless, the differences can be discussed, and from the literature some inferences can be made as to why RMG's promotional decision making differed from the framework. RMG's actions are consistent with Stage One, Integration of Information, in Davis's (1993) framework. As stated in Chapter Four, RMG does periodically consult all the marketing-oriented stimuli in Stage One. This could be due to the fact that since small firms are reluctant to attempt advertising and promotions (McNamara 1972; Carson 1985; Meziou 1991; Peterson 1989; Van Auken, Doran, and Rittenburg 1992), a small business-to-business firm may want to seek other information sources to help in the promotional decision process. In Stage Two, Planning and Objective Setting, RMG does not set objectives. Nonetheless, the company does utilize the four decision methods suggested in the framework for the minimal planning that is practiced at the company. This is possibly due to several factors that are also consistent with the small business and business-to-business promotional literature. First, like most small firms, RMG does not have the time to construct promotional plans and objectives because they are generally too preoccupied with day-to-day operations (see Justis and Jackson 1980; Carson 1985; Varadarajan 1985; Van Auken, Doran, and Rittenburg 1992). Secondly, similar to some small firms, RMG's sales have largely come from word-of-mouth referrals; thus they are inexperienced and hesitant to construct promotional plans (see Stephenson 1984). Lastly, consistent with the business—to-business literature, it appears RMG has difficulty implementing planning strategies (see Ames 1968; Hartley and Patti 1988). This could be concluded from RMG's apparent lack of objective setting and research, which could hinder implementation of planning activities. 62 In Stage Three, Promotion Tactical Decisions, promotional decisions such as communication channel choices, message choices, and production method choices are made with respect to three key influences. Resource Management Group, Inc., contrary to the model, makes these promotional decisions predominantly using one criterion-~financial resources. This is followed by the competition's activities and then image of the firm. Target audience concerns receive minimal attention. In addition, when promotional decisions are being considered, alternatives are limited due to lack of research. _ RMG's practices in this stage are consistent with the small business promotional literature and may be attributed to several factors. It has been noted that small firms often operate with limited financial resources (Welsh and White 1981; Carson 1985; Seglund 1985; Weinrauch et al. 1991; Van Auken, Doran and Rittenburg 1992). Consequently, a small firm like RMG finds it a necessity to make promotional decisions based on financial ability (see Varadarajan 1985; Becker and Kaldenberg 1990). In addition, RMG is in the Early Growth Stage of the Life Cycle Model of Small Business Characteristics and Problems (Dodge and Robins 1992). In this stage financial planning and cash flow are typical problems (Dodge and Robins 1992). RMG's reliance on the competition's activities are consistent with Varadarajan (1985) findings. Seventy-five percent of 31 small food service firms were found to base their promotion decisions on perceptions of market conditions and the competition's activities. Moreover, it appears from the analysis of the industry trends, that the environmental planning and consulting industry has been steadily growing (Hendrickson 1993a), thus increasing RMG's competition and the need to be aware of their activities. RMG's lack of attention to target audience is characteristic of other small businesses as well. Although the process of identifying target audiences is accepted and practiced, small business owners have difficulty with 63 the identification and selection process (see Wichmann 1983; Peterson 1984; Vacarro and Kassaye 1990). RMG's lack of research practices is also consistent with the literature. While marketing research information is available, small firms tend not to use the information or utilize it poorly (Barnes, Pynn, and Noonan 1982; Stephenson 1984; McDaniel and Parasuraman 1986). Like other small firms, RMG's lack of research may be due to the fact they do not have the time or expertise and that marketing research is typically very costly (See Barnes, Pynn, and Noonan 1982; Boughton 1983; .McDaniel and Parasuraman 1986). Stage Four, the Evaluation of Promotion Tactics, is the final stage in which marketplace reactions to promotions are observed. The framework suggests some businesses fail to evaluate, while others engage in various techniques. RMG in the past has failed to evaluate their promotions. As mentioned earlier, RMG has recently begun to implement some basic evaluation techniques for promotions. ' RMG's practices seem to be similar to the framework at this stage, except the fact that they are jusr starting to evaluate, thus their evaluation methods are somewhat incomplete at this time. This could be explained by, as mentioned earlier, small business do not have the time to design promotional plans, much less evaluation strategies, because they are too preoccupied with day-to-day operations (see Justis and Jackson 1980; Carson 1985; Varadarajan 1985; Van Auken, Doran, and Rittenburg 1992). In the small business literature, only one study evaluated small business promotion evaluation methods, suggesting the concept is in infancy in most small businesses. Similarly, the business-to—business literature is also lacking in promotion evaluation methods, thus making it difficult to asses RMG's promotion evaluation methods as consistent with business-to—business firms. To summarize, it could be concluded that RMG's promotional decision- making process appears to be consistent with the stages in Davis's (1993) model on 64 promotional decision making in small firms, with some variation occurring within Stage Two and Three. RMG has some difficulty with promotional objective setting, media selection, message selection, and production decisions, all which according to the literature, appear to be characteristic of some small businesses and business-to- business firms. RMG has just begun promotion evaluation methods which appear to be consistent with the small business literature; however both the small business and business-to-business literature are lacking in research in this area. In conclusion, Resource Management Group, Inc., is a small business-to- business firm having the characteristics of a small business in its reliance on referrals, limited financial resources, and lack of market research. RMG's promotional decisions, whether contrary or consistent with in the stages of the small business promotional decision-making framework, appear to be dependent upon these factors and the fact that RMG is in the Early GrOWth Stage of the Small Business Life Cycle. Conclusive thoughts on how RMG's promotional decision making relates to other business-to-business firms is unclear. This is because the business-to-business literature's prescriptive nature has made it difficult to accurately conclude the degree of similarity that RMG's promotional decision making has compared to other business-to-business firms. However, it can be said that RMG is not characteristic of other business-to-business firms in that they do not rely on personal selling as a major promotional tool. Implications of the Research The findings from the two research questions have provided a number of specific implications for managerial planning and decision making and for academic research. From the literature review and the case study analysis, an obvious implication is that Davis's (1993) framework could provide direction and guidance for small business and business-to-business entrepreneurs. The prescriptive nature 65 of some of the small business and business—to-business literature, the reliance of small businesses on word-of-mouth references, and the lack of promotional plans by some small business and business-to-business firms, suggest that entrepreneurs are in need of some guidance and direction in their promotional decision-making process. Another management implication from the findings suggests that entrepreneurs of small business-to-business could possible be more effective if attention was focused more on planning of promotion decisions, which includes research, setting objectives, and promotion evaluation methods. From the review of the literature and the case study analysis findings, these appear to be the areas that entrepreneurs have the most difficulty with and if improved upon would in turn benefit other promotion decisions, such as communication channel selection, message channel selection, and production techniques. The management implications also provide areas where academic research could be concentrated to enrich the literature by giving insight into the practice and implementation of promotions by small businesses. In addition, this could help entrepreneurs develop better promotional plans. There are specifically two major areas in which the findings provide implications for academic research. First, clearly more research is needed on business-to-business promotional decisions. The business-to—business literature is predominantly prescriptive and directed at large industrial firms selling products. Thus, research on actually how business-to- business firm's make promotional decisions, implementation of those decisions (i.e., criteria used and influences), and research on different types of business-to-business firms (i.e., smaller firms and service firms), could benefit practitioners and students of entrepreneurship. Secondly, research could benefit from more theory development in the area of small business and business-to-business research on promotional decision making. Davis's (1993) theoretical framework for small consumer—oriented and retail firms 66 appears to only begin to fill the void in the area of theory development for small businesses and their promotional decisions. As Hills and LaForge (1992, p.53) stated on the topic of theory development in small business marketing, "One need in the entrepreneurship field is to create an integrated framework within which entrepreneurship knowledge can be analyzed and utilized for the purposes of explanation and prediction." Other research implications are suggested in the last section of this chapter. Contributions of the Research This thesis has provided a better understanding of the promotional decision- making process in small consumer-oriented firms and the promotional decision- making process in a small business-to-business firm. This research has confirmed some previous findings regarding small firm promotional decision making. Moreover it could be said, this research confirms the theoretical model developed by Davis (1993) which explains and predicts promotion decision behaviors in small businesses. This work has provided a case study of the promotional decision making in a small business-to-business firm. This is essential due to the fact that the existing business-to—business literature on promotional decision making is aimed at large industrial firms selling products, with little attention given to the adoption and implementation of these concepts within the firms. In addition, the case study has application for small business-to-business owners and students of entrepreneurship, as it portrays the realities of promotional decision making in a small business-to- business firm. Finally, this research has provided some initial evidence that could be used in developing a promotional decision making framework for business-to-business firms. As mentioned earlier, this is an important step as it has been noted in the business— 67 to-business literature that business-to-business communications is a "... field in the discovery phase of the theory-building process, business-to-business communications requires extensive descriptive research to provide the insight for defining and conceptualizing theoretical concepts'” (Schurr 1982). Limitations of the Research The primary limitation of this research is that it provides very little basis for scientific generalization. Although this may be a major criticism to some, as Yin ( 1984) noted in his book Case Studj Research: Design and Methods, Case studies, like experiments, are generalizable to theoretical propositions and not to populations or universes. In this sense, the case study, like the experiment, does not represent a 'sample,' and the investigator’s goal is to expand and generalize theories (analytic generalization) and not to enumerate frequencies (statistical generalization). In this respect, this research fulfills the goal mentioned above. However, the external validity of this research could benefit from multiple case studies in this area, which brings to light a potential area for future research. Another limitation of this research is the fact that Davis's (1993) framework on promotional decision making in small firms is only the beginning of theory development in this area. As a result, the findings based on this framework could be seen as somewhat premature at this time. Suggestions for Future Research Given the findings of this research and the stated limitations, future research could gain from the development of other case studies on business-to-business promotional decision making, as well as small business-to—business research on promotional decision making. The case books used in academia appear to be aimed 68 at large business-to—business firms. The development of case studies in this area could benefit practitioners as well as students. Another investigation should look at the factors that might cause variation to occur within the stages of Davis's (1993) theoretical framework. More specifically, factors such as type of firm and competition in industry would be worthwhile to examine. As mentioned earlier, in the Implications of the Research, Davis's (1993) framework has only begun to fill the gap in the area of theory development for small business and business—to-business promotional decision making. Consequently, more theory development in this area could both enrich the academic literature and benefit practitioners. A survey of small business-to-business owners' promotional decision making might provide a more in depth look at the differences in business-to-business promotional decisions from compared to consumer-oriented firms. In addition, this would improve the lack of research on business-to-business promotional decision practices as well as benefit business-to-business owners and practitioners. Moreover, specific evidence on business-to-business practices such as, objective setting, target audience decisions, positioning, creative strategy, and evaluation methods have been virtually neglected and would benefit practitioners, teachers, and students. Research such as this will enrich the academic literature and in the long run ultimately benefit practitioners. It is evident from this case study research and the review of the current literature that small business entrepreneurs are reluctant to attempt and have difficulty implementing advertising and promotions. Thus, suggestions for how the results of this research can help entrepreneurs in the present is necessary. An abridged version of the case study of RMG's promotional decision making, how those decisions compared to the promotional decision~making framework, and recommendations for a promotional plan for RMG, could be 69 published or made available to Michigan small business owners through a well read small business trade journal or magazine. As a result, entrepreneurs would have the opportunity to observe and identify with a fellow small business owner and how they handle promotional decisions. Moreover, recommendations would provide small business owners with a possible guide for their own firm's promotional decision- making process. In conjunction with making this research available to entrepreneurs, a phone number or address could be provided at the end of the recommendations for entrepreneurs to receive advertising and promotional advice. This could be orchestrated by this university's College of Communication Arts and Sciences and the Eli Broad College of Business as part of an internship or independent study program for students. With the guidance of professors, students could receive credit for answering entrepreneur's questions. In addition, this could be made a collaborative effort by involving other universities inside and outside the state of Michigan to help small business owners all over. Finally, workshOps on advertising and promotions for entrepreneurs could also be given at this university. This too could be organized in the same manner, with students receiving credit for coordinating such events. Useful applications such as these are necessary to provide entrepreneurs with the help and understanding they need for today and tomorrow. APPENDICES 70 APPENDIX A Trends: Management and Consulting Industry Year ' ts Percent C Em l t Percent C 1988-89 9.1 12.5 1989-90 6.8 6.8 1990-91 3.6 -1.0 1991-92 4.7 1.8 1992-93 5.3 2.4 Source: U.S. Department of Commerce: International Trade Administration (ITA). Bureau of the Census: U.S. Department of Labor. Bureau of Labor Statistics. Source: U.S. Industrial Outlook 1993 71 APPENDIX B Resource Management Group, Inc., Direct and Secondary Competition Applied Technologies, Inc. , Brookfield, WI Applied Science & Technology Inc. , Ann Arbor, MI ASI Environmental Technologies, Canton, MI Avendt Group Inc., Flint, MI Baker Environmental, Inc. , Merrillville, IN Bennet Engineering, Inc., Muskegon, MI BHL Consultants Ltd, Grand Rapids, MI Bierlein Environmental Services Inc., Saginaw, MI Braithwaite Consultants, Inc., Ann Arbor, MI Braun Intertec Environmental, Inc. , Mendota Heights, MN CBCaEnvironmental Services, Oak Creek, WI CC Johnson & Mathan PC, Grand Rapids, MI, Other Offices in: MD, IL, CO Clayton Environmental Consultants, Inc., Division of Marsh & McLennan, Novi, MI Dell Engineering, Inc., Holland, MI Delta Environmental Consultants Inc., Farmington Hills, MI Durr Industries, Inc., And Durr Engineering and Management, Inc., Plymouth, MI Edwards, Johnson & Associates, Midland, MI EnecoTech, Farmington Hills, MI Envirens, Inc., Timonium, MD Envirologic Technologies Inc. , Jackson, MI Environmental Concern, St. Michaels, MD Environmental Consultants, Inc. , Rochester, MI Environmental Control Technology Corporation--ENCOTEC, Subsidiary of Rollins Environmental Services, Ann Arbor, MI Environmental Science & Technology Inc. , Jackson, MI Environmental Science & Technology Inc., Farmington Hills, MI Environmental Science and Engineering, Inc., Williamston, MI Environmental S/E, Glen Ellyn, IL Environmental Audits Inc. , Racine, WI Environmental Consultants, Incorporated, Clarksville, IN Fishbeck, Thompson, Carr, & Huber, Lansing, MI and Ada, MI Glenn Lukos Associates, Laguna Hills, CA Gove Associates, Inc., Kalamazoo, MI Great Lakes Consulting & Technical Services Co., Livonia, MI GZA Geo Environmental Inc, Grand Rapids, MI and Livonia, MI Holcomb Environmental Services, Jackson, MI Hopper-Shaman Inc., Grand Rapids, MI Hubbell, Roth & Clark, Inc., Bloomfield Hills, MI Hunter-Keck Environmental Service, Inc. , Lansing, MI 72 APPENDIX B (continued) Resource Management Group, Inc., Direcr and Secondary Competition Johnson Johnson & Roy, Inc. Ann Arbor, MI Jones Richard & Associates, Grand Rapids, M] Jones & Stokes Associates, Sacramento, CA Lear Environmental Services, Inc., Farmington Hills, MI Lehoczky & Associates, Inc., Royal Oak, MI Mackenzie Environmental Services, Grand Ledge, MI McLaren/Hart Environmental Engineering Corporation, Southfield, MI MEC Environmental Consulting, Oak Park, MI Michigan Environmental Services Inc. , Livonia, MI Midwest Environmental Consultants, Inc. , Tolwo, OH Normandsau Associates, Inc., Ann Arbor, MI Northern Environmental Management Inc. , Marquette, MI and Traverse City, MI NTH Consultants, Ltd, Farmington Hills, MI Peerless Environmental Services, Inc., Saginaw, MI Rich & Associates, Inc., Southfield, MI Richards and Associates, Inc., Traverse City, MI SEG Engineers & Consultants, Inc., A Snell Environmental Group, Company, Lansing, MI Serco Laboratories, Roseville, MN Sludge Management Corporation, Washington, MI Superior Environmental Corp., Grand Rapids, MI Swanson Environmental, Inc., Farmington Hills, MI Terra Environment Corporation, Kalamazoo, MI Testing Engineers and Consultants, Inc., Troy, MI The Companies of Greenspring Biohabitats Ecological Wilderness, Brooklandville, MD The Traverse Group, Inc., Ann Arbor, MI The WBDC Group, Grand Rapids, MI TMI Environmental Services, Grand Rapids, MI Troppe Environmental Consulting, Akron, OH Western Michigan Environmental Services, Inc., Holland, MI Wilkins at Wheaton Environmental Services, Inc., Kalamazoo, MI Woolpert, Dayton, OH WW Engineering & Science, Inc., Livonia, MI ‘This list is comprised of approximately 75 companies that could be considered RMG’s competition. It merits mentioning that this information was compiled with the goal of selecting current competitors, as a result, there are most likely some competitors missing. Source(s): Consultants and Consulting Organizations Directory EZM’ s "Environmental Engineering 8: Management Buyer’s Guide“ RMG’s Competition Data Base Various Magazines and Directories 73 APPENDIX C Resource Management Group, Inc., Services Wetlands - Boundary Determination and Mapping ° Local, State and Federal Construction Permits . Mitigation/Restoration Analysis. Design and Monitoring Lakes, Streams, - Planning and Design for Ponds Ponds - Seawalls, Docks and Erosion Control ~ Related Local. State and Federal Construction Permits - Fisheries Habitat Enhancement . Lake and Watershed Management Analysis Marinas - Feasibility Studies (Devel0pmentIPennitting) . Planning and Configuration Design - Local. State and Federal Construction Permits Real Estate - Regulatory Determinations . Waterfront Site Planning - Development Feasibility Studies . Environmental Design and Development/Planning ~ Review of Proposed Landscape/Planting Designs Coastal ~ Regulatory Determinations/Assessments Sand Dunes - Local, State. and Federal Construction Permits - Coastal Structures and Erosion Control - Great Lakes Site Analysis . Development Feasibility Studies Expert Witness . Accepted in Michigan and Federal Courts - Drainage and Stormwater Management . Wetlands, Lakes, Streams. and Ponds - Water Related Construction and Development - Aerial Photography Interpretation - Coastal Structures and Processes - Wildlife Other Services . Resource Surveys/Studies - Project Quality Control 8. Permit Compliance Inspections . Wildlife and Fish Stocking - Surface Resource Analysis (ElA/EIS) ~ Endangered Species Surveys/Studies - Agency Negotiations/interaction - Cultural Resource Assessments 74 APPENDIX D Resource Management Group, Inc., Recent Selected Clients / RESOURCE MANAGEMENT GROUP, INC. RECENT SELECTED CLIENTS ,V/l LEGAL Dykema Gossett Honigman. Miller, Schwartz & Cohn Miller, Canfield, Paddock & Stone Miller. Johnson, Snell a Cummiskey Rhoades. McKee. Boer, Goodrich & Titta Sullivan, Ward. Bone. Tyler 5 Asher Vamum. Riddering. Schmidt & Howlett CORPORATE Amway Corporation Consumers Power Company Empire Iron Mining Partnership Foremost Corporation Haworth Corporation Herman Miller, Inc. Laidlaw Waste Systems Meijer, Inc. . Monitor Sugar. Inc. Perrigo, lnc. Pfizer Specialty Minerals. Inc. Thompson-McCuIly. Inc. U.S. Gypsum Corporation Waste Management of Kentucky, Michigan, and North America DEVELOPMENT AC. Geenan Company Stan Aldridge ‘ Biltmore Properties First Golf, Inc. Galien River Associates General Growth Corporation Grooters Development Harrison & Associates The Horizon Group Landquest-Crystal/Crystal Springs Parkland Development Primeland Company RG Properties United Development MARINAS Anchor Marina Bayshore Marina Eagle Point Grand River Sailing Club Harbourtowne Keenan Marina Muskegon Conservation Club North Shore Marina Patterson Marine South Haven Marine Thompson Marina CONTRACTORS David C. 805 Construction Dykema Excavators Hradsky Brothers. Inc. Northport Construction Pioneer Construction V & T Marine Visser Brothers Wolverine Building Products GOVERNMENTAL Cities of Battle Creek, Dearbom. Grand Haven, Holland. Grand Rapids,Kentwood Marshall. Midland. Montague. Portage, Spring Lake. Wyoming Holland Charter Township Kent County Drain Commission Laketown Township Ottawa County Drain Commission U.S. Forest Service ENGINEERS/ARCHITECTS Blodgett Memorial Hospital Boss Engineering Dell Engineering Design Plus Architects Exxel Engineering Gourdie Fraser & Associates GMB Architects Johnson, Johnson 8. Roy Merritt Engineering Moore & Bruggink Nederveld Engineering Northwoods Land Surveying Prein 8. Newhof Spicer Engineering Wakely Associates WBDC Group Westshcre Engineering OTHERS Avis Farms Bay View Association Caberfae Golf Course/Skiing Forest Hills Public Schools Grand Valley State University Grandville Public Schools Kentwood Public Schools Lakewood Shores Resort Old Kent Bank 8. Trust Sandy Pines SSM Tribe of Chippewa Indians South Haven Public Schools Vacation Properties Network West Michigan Horticultural Society Zeeland Public Schools Zelenka Nurseries 7S ' APPENDIX E Resource Management Group, Inc., Advertisements Big Rapids Pioneer, March 1993 / RESOURCE MANAGEMENT // GROUP, INC. ~ son. Enosrorv como'r. expands mm AND mm MANAGEMENT SERVICES WETLAND spncmus'rs Lake/Pond Fisheries Management Stream Habitat Assessment/Improvement Lake modation Needs Hydrological Assessments Deer/Wildlife Management Wetland Determinations . ' Wetland Restoration/Mitigation Design Permitting Assistance Over 75 Years of Natural Resource Experience P. O. Box 1122, Big Rapids, MI 49307 TX:(616)796-4540 P. O. Box 487, Grand Haven, MI 49417 TX:(616)847-l680 P. O. Box 1252, Escanaba, MI 49829 TIN-9007894 133 76 APPENDIX E (continued) Resource Management Group, Inc., Advertisements Trout Unlimited December 1992 March 1993 Resource .esource Management anagement . Group Inc. roup, Inc. OUR SERVICES INCLUDE: e Stream rehabilitation . e Stream rehabilitation _ e Stream bank stabilization 0 Fish population Surveys z-gggeeigguslg'gigssuweys ’ ’ Fisheries ““593 _ e Habitatimprovement . 0 Habitat improvement e'maagroir'i‘vgrtaerbar'atseisstudies - - .. e rs e e Macrornvertebrate studies . W atlean d delinea‘iion O Watershed analysis 0 Wetland restoration 0 Wetland delineation e gydrplogipgl aggseisge‘gs ° 0 ran wn r r e Wetland restoration . MDNR permitting e Hydrological Assessments ' ' (Grant writing assistance OVER 75 YEARS 0F. ”m,“ EXPERIENCE IN NATURAL 3,32. m,.,,,,,,_',:‘f’,,‘,’,’,",‘f:; RESOURCES consumers the stewardship of eurenvinemmm. ‘0' .mng momma. gum Please send for references end ““w'“ M'”"‘""" 0"” '3 additional information. (.0. Con 3122.“: v.0. ea «nu at. m. Ml «aor- Grand Haven. in sun P‘O' 5"" 7 722 i (sternum reieneusao 51'! RIP/48; MI 49307 no. cause“: (6 161796-4540 bear-be. u «a: . 77 APPENDIX E (continued) Resource Management Group, Inc., Advertisements Restoration and Management Notes, Winter 1992 m AVAILABLE Pocket-sized reterence guides. tor wetland plant indicator status, with alphabetic lists for both common 31d. scientific names. listen 1 - Mm (MENHMLMACT. n.wv.kY.NY.PA.NJ.MO.DE.VA. OH) rec-lore 2 - sorm-raasr (NC.SC.GA.FLTN.ALM$.LA.AR) EC“ 3 - NORTH m (MI.IN.ILMO.IA.M.MN) For each book. send 31$ 9 32 $8M (MI residents add 4% tax to total). For bulk order quotes. order terms. or to be notified when other regions are tarnished. eel (615) 847-1660 or use our 24-hour Iaa line: (616) 647-9970. RESOURCE MANAGEMENT GROUP, INC. / Environmental Planners & Consultants PO. Box 487-8 I Grand Haven, MI 49417-0487 78 APPENDIX E (continued) Resource Management Group, Inc., Advertisements Lakes 85 Streams Association Program, 1992 MICHIGAN'S LAKES AND STREAMS NEED HELP! 1’eople crum'elcrgely metereurroohiccnon. mbolcncedormed llsh populo. mbkeweedproblenummumcndmaicnmmugmsbhumdmedmm mwmmmnmwumeeomperm. oucnfiedprcteuicncls.aeeaauiolmmeqwfuyolmdugcn'slckesmdsnm WeMmcgmerp.hctRMG)hesova7$yeasdcunbhednoWresouces mwmemmexpenmehMeWWdflcwmesmd Mememwesnammmwoflu'mecwmcmlexmw srrecmmwogemenr problem. Insrecd. WMmWflmeerdwpfi- naycpucom.weconprOWdecpmfes§ond.mbicsed.occuaeanacge mplmlumbkeamecm.RMGlecwescwidevaierydnonmemm~9 FISHERIBMANAGEMENTANDWTEDSERVICB ewwmmhww Camel Our team is mined and experienced in the fields of midlife biology. hydrogeology. lend- ”? design. forestry. wenonds. regucrory anew-m. pemurmg Strategy end We: buology. LerIIMG cesisryou hmemronmenrolneeds. RESOURCE MANAGEMENT GROUP, INC. 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