Journal of Services Marketing

Emerald Article: Contemporary marketing in professional services

Mike Reid

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To cite this document: Mike Reid, (2008),"Contemporary marketing in professional services", Journal of Services Marketing, Vol.
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Contemporary marketing in professional

services
Mike Reid
Department of Marketing, Monash University, Clayton, Australia
Abstract
Purpose This empirical investigation aims to explore the nature of contemporary marketing practices in the context of the professional services
business environment.
Design/methodology/approach A self-administered questionnaire based on the CMP work undertaken by Coviello et al. was employed to collect
data. A total of 140 responses were obtained, representing a range of professions.
Findings The results suggest that professional firms are finding the market environment increasingly complex and competitive. Firms in the sample
also use a variety of measures to evaluate performance but primarily focus on financial measures. Firms in the sample also predominantly practice
interaction marketing, and interaction marketing is associated with higher levels of marketing performance.
Research limitations/implications To the extent that the study is exploratory and a partial replication of the work undertaken by the CMP group,
the results may be more applicable to the Australian marketplace. Nevertheless, the increasing complexity in the professional service environment is
universal and the results have broader implications.
Practical implications The results of this research suggest that the changing marketing environment will require dynamic marketing solutions,
including the development of strong relationship building and relationship management capabilities, the adoption of a market orientation, and
improvements to the integrated marketing communication capabilities of firms.
Originality/value This paper adds value to the growing body of literature on business-to-business professional services marketing and serves to
expand the application of the contemporary marketing practices framework to this context.
Keywords Professional services, Business-to-business marketing, Australia
Paper type Research paper

by highly qualified personnel, over a continuous stream of

transactions or service encounters (Jones, 1997; Thakor and
Kumar, 2000). The professions are facing a changing market
environment, with increased competition and more
technically savvy clients, and, as a consequence, competition
has evolved to incorporate process and outcome quality,
rather than simply technical quality. According to Sharma and
Patterson (1999) many of the professions have started to
adopt a market orientation and subsequently renew their
focus on effective management and leveraging of client
relationships, and are striving to improve the process of
service delivery. This research examines the degree to which
professional services have gravitated towards the more
contemporary relationship marketing paradigm. The
research employs the conceptual model and approach put
forward by Coviello et al. (2000) and others, through the
Contemporary Marketing Practices (CMP) group (see www.
cmp.auckland.ac.nz).

An executive summary for managers and executive

readers can be found at the end of this article.

Introduction
The nature of marketing and marketing thought has evolved
over the decades to incorporate many areas, such as
relationship marketing, services marketing and business-tobusiness marketing. The most recent definition of marketing
put forward by the AMA explicitly recognises the need to
create, communicate, and deliver value, and to manage
customer relationships in a way that benefits the firm and its
stakeholders (Darroch et al., 2004). The premise of this paper
is that owing to dramatic changes in the nature of the
professional services marketing environment, the way in
which marketing is practised is evolving from transactional to
relationship marketing (Lindgreen et al., 2004). Such
environmental changes include physical distance from
clients, time, economy, deregulation, globalisation, client
expectations, information technology, and, in particular,
competition.
The professions offer services that are highly complex,
intangible, highly customised, and are created and delivered

Contemporary marketing practice framework

The contemporary marketing practice (CMP) framework,
which has been reported extensively (e.g. Coviello et al., 1997,
2000, 2002; Lindgreen et al., 2004; Pels et al., 2000; Wagner,
2005), is a synthesis of research and thought from both the
European and American schools of thought (e.g. Berry, 1983;
Hunt and Morgan, 1994; Webster, 1992). The CMP
approach adopts a pluralistic framework in order to
incorporate both transactional and relational aspects of
marketing, and how firms relate to their markets through
various decisions and activities.
Numerous findings have emerged from the various CMP
studies, including the observation that managers are placing

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Journal of Services Marketing

22/5 (2008) 374 384
q Emerald Group Publishing Limited [ISSN 0887-6045]
[DOI 10.1108/08876040810889148]

374

Contemporary marketing in professional services

Journal of Services Marketing

Mike Reid

Volume 22 Number 5 2008 374 384

increased emphasis on the management of customer

relationships and, in particular, on retaining and leveraging
existing customers (Lindgreen et al., 2004; Pels et al., 2004).
The rationale for such focus is that strong relationships can be
leveraged into a greater share of wallet, particularly if the
insights gained from such relationships result in improved
value offerings to clients and more efficient value delivery by
firms (Storbacka et al., 1994). Another finding has been that
managers are placing increased emphasis on managing their
relationships, networks, and interactions, with a range of
internal and external stakeholders, and not just customers
(Lindgreen et al., 2004). There is a growing realisation that
successful marketing encompasses both internal and external
customers and community stakeholders, and this is
particularly so in the professions, where professionals must
be able to create and sustain relationships, pitch for new
business and sell specific services, as well as deliver both
process and outcome quality to their clients. A third finding
has been that firms often practise multiple styles of marketing
simultaneously, in that they may have very transactionoriented engagements with some clients, and very closely
managed relationships with others (pluralistic marketing).
Pluralistic marketing necessitates the careful allocation of
resources and the development of strategies that deliver
appropriate value to various client segments, and to the firm
(Lindgreen et al., 2004; Pels et al., 2004).
The CMP framework does not view transactional and
relational marketing as separate paradigms, but rather accepts
the premise that marketing is characterised by multiple
complex processes, and is therefore considered to be a more
pluralistic conceptualisation of marketing (Coviello et al.,
2002). A classification scheme is presented in Tables I and II
and represents an intersection of the different aspects of
marketing under the CMP framework (Brodie et al., 1997;
Coviello et al., 1997, 2000, 2002). The classification scheme
was derived from the CMP groups content analysis of
European and North American definitions of marketing, and
is based upon two marketing paradigms i.e. transaction

marketing and relationship marketing and a series of

managerial and relational themes. Overall, the value of the
framework proposed by the CMP group (Coviello et al., 1997,
2000, 2002) is that it extends the view of marketing to a
broader level, and captures both the transactional (transaction
marketing) and relational perspectives of marketing (database,
interaction, and network marketing). The descriptions of the
four main types of marketing provided by Coviello et al.
(2000) are as follows:
1 Transaction marketing (TM) relates to firms attracting and
satisfying potential clients by managing the elements in
the marketing mix. In general the transactional approach
involves creating discrete economic transactions that are
often treated in isolation, at arms length, and in the
context of a formal, impersonal process (Coviello et al.,
2000). In this form of marketing, customers (clients) are
passive in the communication relationship and the firm
actively manages the exchange, and manages
communication to buyers/clients in the mass market. At
a managerial level, managers focus on marketing a
product/brand to an identified group of clients.
Furthermore, marketing activities are usually relegated
to functional marketing areas, and managers focus on
developing internal capabilities related to the marketing
mix. Coordination with other functions in the firm is
limited, and the planning horizon for this type of
marketing is generally short-term (Coviello et al., 2000).
2 Database marketing (DM) is a tool or technique used by
businesses to develop and manage long-term relationships
between the company and its targeted customers. In this
type of marketing, the focus is still on the market
transaction, but now involves both economic and
information exchange (Coviello et al., 2000). The
marketer relies on information technology (possibly in
the form of a database or the internet) to form a type of
relationship, thus allowing firms to compete in a manner
different from mass marketing. More specifically, the
intent is to retain customers over time. Communication

Table I Type of marketing classified by managerial dimension

Transactional perspective
Type: transaction
marketing
Type: database marketing

Relational perspective
Type: interaction
marketing

Managerial intent

Customer attraction (to satisfy Customer retention (to satisfy

the customer at a profit)
the customer, increase profit,
and attain other objectives
such as increased loyalty,
decreased customer risk, etc.)

Interaction (to establish,

develop and facilitate a
cooperative relationship for
mutual benefit)

Managerial focus

Product or brand

Managerial investment

Internal marketing assets

(focusing on service, price,
distribution, promotion
capabilities)
Functional marketers (e.g.
sales manager, product
manager)

Relationships between
individuals
External marketing assets
(focusing on establishing and
developing a relationship with
another individual)
Managers from across other
functions and levels in the
firm

Managerial level

Product/brand and customer

(in a targeted market)
Internal marketing assets
(emphasising communication,
information, and technology
capabilities)
Specialist marketers (e.g.
customer service managers,
loyalty manager)

Source: Based on Coviello et al. (2000)

375

Type: network marketing

Coordination (interaction
between sellers, buyers, and
other parties across multiple
firms for mutual benefit,
resource exchange, market
access, etc.)
Connected relationships
between firms (in a network)
General manager

Contemporary marketing in professional services

Journal of Services Marketing

Mike Reid

Volume 22 Number 5 2008 374 384

Table II Type of marketing classified by relational exchange dimensions

Transactional perspective
Type: transaction
marketing
Type: database marketing
Focus (purpose)

Economic transactions

Information and economic

transaction

Communication pattern

Firm to market

Firm to individual

Type of contact

Arms-length, impersonal

Personalised (yet distant)

Duration

Discrete (yet perhaps over

time)

Discrete and over time

Formality

Formal

Formal (yet personalised via

technology)

Relational perspective
Type: interaction
marketing

Type: network marketing

Interactive relationships
between a buyer and seller

Connected relationship
between firms, seller, buyers,
and other firms
Individuals with individuals
Firms with firms (involving
(across organisations)
individuals)
Face-to-face, interpersonal
Impersonal interpersonal
(close, based on commitment, (ranging from distant to close)
trust, and cooperation)
Continuous (ongoing and
Continuous (stable yet
mutually adaptive, may be
dynamic, may be short- or
short- or long-term)
long-term)
Formal and informal (i.e. at
Formal and informal (i.e. at
both a business and social
both a business and social
level)
level)

Source: Based on Coviello et al. (2000)

Thus, network marketing encompasses relationships at

both the individual level and the firm level. The
relationships are part of a larger network and, therefore,
they can range from close (interpersonal) to distant
(impersonal) and have varying levels of power and
dependence, as well as degrees of communication.
Network marketing may be conducted at a general
management level or by part-time marketers from other
functional areas in the organisation, or even outside the
organisation. Relationships may be with customers,
distributors, suppliers, competitors, and so on (Coviello
et al., 2000).

patterns are generally driven and managed by the seller

and are, therefore, asymmetrical (similar to transaction
marketing). Marketing is still to the customer, rather than
with the customer. Relationships per se are not close and
are facilitated and personalised through the use of
technology. Such relationships do not generally involve
ongoing interpersonal communication and interaction
between individuals, and exchange is discrete, albeit over
time. Managerial investment for database marketing is in
the tool/technique and in supporting technology and
information. That is, it is an internal and controllable
marketing asset to be managed by specialist marketers. In
this type of marketing, the managerial focus widens to
include both the product/brand and specifically targeted
customers (Coviello et al., 2000).
Interaction marketing (IM) is different from database
marketing in that it implies face-to-face interaction within
relationships. Marketing occurs at the individual level
based on social processes and personal interactions.
Relationships are established between individuals in the
context of their organisation and can occur in both a
formal and informal manner, with the parties being
mutually active and adaptive. At a managerial level,
interaction marketing is truly with the customer, as both
parties in the dyad invest resources to develop a mutually
beneficial and interpersonal relationship. Interaction
marketing is not the responsibility of a specialist
marketer per se (as in database marketing), nor is the
practitioner necessarily in the position of seller. Rather,
interaction marketing can involve a number of individuals
across functions and levels in the firm, and may
encompass both buying and selling activities (Coviello
et al., 2000).
Network marketing (NM) occurs across organisations,
where firms commit resources to develop a position in a
network of relationships (Coviello et al., 2000). This is
generally accomplished through business and social
transactions over time, as a result of developing and
maintaining individual, interaction-based relationships.

From a general perspective it could be argued that the

conditions for undertaking the different types of marketing
might vary and pose challenges for different types of firms.
For example, Coviello et al. (2000) suggest that larger firms
may be more likely to practise transaction marketing, given
their scope of operations and markets served. They may also
be more likely to engage in database marketing, given their
relative resource base and infrastructure, and their likely
capacity to utilise advanced information technology. Coviello
and her colleagues also argue that in contrast, smaller firms
might be expected to be more relational in their approach to
the market, resulting from their need to be close to the client,
and their more extensive use of personal networks to develop
the business; thus emphasising interaction and network
marketing. In the context of the professions, one might
expect interaction marketing and network marketing to be the
prevailing paradigms, rather than the more traditional
transaction-based marketing one might find in FMCG type
industries.

Professional services marketing environment

The marketing of professional services is a growing area of
interest in both the academic and professional press
(Bloom, 1984; Jones, 1997; Lapierre, 1997; Thakor and
Kumar, 2000; Hausman, 2003). Nevertheless, the literature
surrounding the area is still underdeveloped relative to other
376

Contemporary marketing in professional services

Journal of Services Marketing

Mike Reid

Volume 22 Number 5 2008 374 384

areas of marketing. Thakor and Kumar (2000) suggest there

is still little agreement as to which services can be
considered professional. From a functionalist perspective,
the professions are often distinguished in terms of
possessing systematic theory and professional authority,
being sanctioned by the community, being governed by an
ethical code, and exhibiting a professional culture
(Greenwood, 1957; Thakor and Kumar, 2000).
Gummesson (1978) also identified a series of criteria that
distinguishes industrial-type professional services, including:
the service should be provided by qualified people, be
advisory, focus on problem solving, the service should be an
assignment from the buyer to the seller, and the
professional should be independent of suppliers of others
goods and services. In general, services such as engineering,
surveying, accounting, law, and medical services are
commonly cited as the traditional professions.
The nature of the professional services-marketing interface
is changing, with many professions facing a multitude of
complexities, including managing the impacts of
globalisation,
dynamism,
turbulence,
acceleration,
rationalisation, connectivity, convergence, ephemeralisation,
and consolidation (Daniell, 2006). In the past, many
professionals did not consider marketing as an activity
that was particularly relevant to them, and that selling was
beneath the professions. As Bloom (1984, p. 102) states:

the changes affecting marketing practice in organisations and

to understand the transition from traditional marketing
practice to a more relational exchange paradigm (see www.
cmp.auckland.ac.nz). The primary research questions being
investigated through this paper are:
.
Do the marketing practices of smaller professional services
firms differ from those of larger firms in their propensity to
practise interaction marketing and network marketing?
.
Do the market performance measures used by smaller
professional service firms differ from those used by larger
firms in terms of their comprehensiveness and scope, and
the degree to which customer or profitability based
measures are used?
.
Do the marketing practices employed by professional
service firms have an impact on performance of those
firms?
A self-administered questionnaire, based on the CMP work
undertaken by Coviello et al. (2000), was employed to collect
data related to the type of marketing practised by professional
service firms. The instrument also contained a series of openended questions related to market environment issues
affecting firms, and marketing-related behaviour. The
contact details of firms were derived from an ANZSIC
database supplied by Dun and Bradstreet.
Following an initial mail-out to 1,390 Australian firms, and
a follow up reminder letter, a total of 140 usable responses
were received and included in the analysis. The relatively low
response rate means that the study is considered exploratory.
Low response rates to mail surveys appear to be an issue for
todays researchers (Dennis, 2003), and may require
researchers to consider more extensive follow-up of initial
mail-outs, or the use of other approaches to data collection,
including the internet. A further consideration may be the
adoption of qualitative case-based methods for richer insight
into business problems and behaviour, although this may be
at the expense of broader generalisability of results.
The respondents to the survey were relatively evenly
distributed across a range of different professions (Table III).
Table III also illustrates that the sample is characterised by
smaller firms, firms that have been operating for a reasonable
period of time, and firms that consult primarily to businessto-business clients. In line with Coviello et al. (2000) the
analysis employs a two-level level categorisation, with smaller
firms having 100 or fewer employees, and larger firms having
over 100 employees. As Coviello et al. (2000) suggest, this
approach is not as sensitive as a four-level categorisation, but
is still a useful split for analysis.

. . . not many years ago, professionals could count on their reputations and
country club contacts to obtain a steady stream of clients and patients.
Today, though, lawyers, accountants, management consultants, architects,
engineers, dentists, doctors, and other professionals, must do extensive
marketing to maintain and build their practices.

Similarly, Lapierre (1997) suggests that in the past,

professionals did not have to perceive themselves to be sales
or market-oriented, but that increasing competition has
meant that professionals need to compete aggressively for
business.
In todays professional service firms, process and
outcome, or technical quality, as well as improved client
relationship management, appear to be central to success
(Hausman, 2003). The increasing complexity of the
professional service marketing environment means that any
business model based on a narrow characterisation of
relationships, whether in terms of format or evolution, runs
the risk of creating a form of marketing myopia (Pels,
1999). In other words, for professional service firms, market
exchanges based on relationships should be viewed as being
rich, complex, and diverse, rather than adhering to one
common format or evolutionary trajectory. This is especially
significant in that different exchange mechanisms,
transactional or relational, can co-exist in any given
market environment (Coviello et al., 2002), and clients
and professionals may have very different relationship
expectations and experiences that are shaped by their
particular organisational and industrial context (Pels et al.,
2000). In general, professional services firms are likely to
need to consider issues of increased market orientation and
how to build and leverage client relationships.

Results
Measuring performance of professional services firms
This section examines whether small firms are different
from larger firms in their use of marketing-related
performance measures. Larger firms, because of their size,
their likely complexity, and possible reporting requirements,
might be expected to apply a greater variety of performance
measures (Coviello et al., 2000). Smaller firms are suggested
to be more ad hoc in their control and measurement efforts,
and more likely to place measurement emphasis on only one
or two key indicators e.g. sales and profitability rather
than market share. As Carson and McCartan-Quinn (1995)
suggest:

Research questions and methodology

This research draws heavily on the work by Coviello, Brodie,
and associates, and the Contemporary Marketing Practice
(CMP) research group. The CMP group seeks to understand
377

Contemporary marketing in professional services

Journal of Services Marketing

Mike Reid

Volume 22 Number 5 2008 374 384

that is used extensively in this professional services

environment. This may be due to the difficulty in
determining actual market size and thus their share of it.
Using a t-test to compare mean responses to the above
used performance indicators, it was found that the only
statistically significant difference between large and small
firms was in the use of market share as a performance
indicator, where larger firms use this indicator more than
smaller forms (t 2:401). What is interesting about this
spread of results is that key measures of client-based
performance in services e.g. acquisition, satisfaction, and
retention appears to be used relatively inconsistently. This
suggests that professional service firms need to give more
consideration to measuring relational performance across an
expanded range of indicators.
The performance of respondents firms was also analysed
across a similar range of self-reported indicators (Table V). A
large proportion of respondents indicated that sales or fee
income, and indeed ROI, grew quite significantly over the
previous year. Interestingly, a significant 21.9 per cent of
small firms indicated that they had either no change, or
decreased fee growth. Similarly, 11.2 per cent of the larger
firms also indicated no, or decreased, sales/fee growth. A total
of 37 per cent of small firms and 20.4 per cent of large firms
also indicated that ROI had either not increased, or indeed
had decreased, over the previous year.

Table III Key characteristics of the sample

Characteristics

Percentage of sample

Size

Less than 100 employees

More than 100 employees

61.7
38.3

Age

Less than ten years ago

11-30 years
.30 years

12.8
40.4
46.8

Market focus

B2B
Consumer
Both

67.4
7.1
25.5

Type of firm

Engineering
Surveying
Law
Accounting
Architecture
IT
Unspecified/other

15.6
14.9
19.1
17.7
17.7
4.3
10.6

. . . the benefits of performance assessment and comparison that [the market

share] concept offers are lost [to a small firm] because its size and range of
activities mean that it will have an insignificant and often immeasurable share
of the market.

Performance and the market environment

The performance results suggest that the cost of business in the
professions may be increasing, and that a range of competitive
and environmental factors in the market may be impacting on
financial performance and profitability. A series of open-ended
questions, related to the market environment and its likely
impact on performance, were also included in the questionnaire.
The following issues were identified by respondents:
.
increasingly aggressive markets and growing levels of
price-based competition are creating a more dynamic and
less profitable market place;
.
market maturity in some areas with limited potential for
increased growth;
.
markets that are becoming more fragmented with an
increasing number of niche players and specialists;
.
greater difficulties in creating a memorable presence in the
market as more firms adopt a more aggressive promotion
strategy, and thus there is an increasing requirement to
actively protect existing relationships;

Data were collected on both the use of various performance

measures (Table IV), and on firm (self-reported)
performance. Respondents rated their firms actual use of
competitive measures, customer-based measures, and
financial measures. Each firms use of various market
performance measures was reported using a five-point scale.
The findings in Table IV are presented in terms of the
proportion of firms using the particular measure.
It is apparent that both small and large firms have a
tendency to use the more financially oriented indicators of
performance, such as fee (sales) growth and profitability. By
contrast, both types of firms are proportionally less likely to
always use client-based measures such as client acquisition,
retention, and satisfaction. Both types of firm indicated that
market share (competitive measure) is generally not a measure
Table IV Use of different performance indicators

Indicator
Sales/fee growth

Percentage of firms using indicators

Never use
Always use
Firms
1
2
3
4
5

Small
Large
Firm profitability Small
Large
Market share
Small
Large
Client acquisitions Small
Large
Client retention
Small
Large
Client satisfaction Small
Large

1.2
3.7

33.7
24.1
3.5
5.6
3.5
7.4
1.2
3.7

9.3
3.7
1.2
1.9
27.9
14.8
19.8
14.8
11.6
1.9
15.1
5.6

15.1
5.6
9.3
3.7
23.3
33.3
34.9
24.1
27.9
29.6
24.4
33.3

25.6
22.2
29.1
25.9
11.6
20.4
19.8
29.6
25.6
31.5
32.6
37.0

Table V Change in performance

Change in
fee/sales
revenue
Small Large
firms firms

48.8
64.8
60.5
68.5
3.5
7.4
22.1
25.9
31.4
29.6
26.7
20.4

Decreased
No change
Increased by 1-5 per cent
Increased by 6-10 per cent
Increased by 11-20 per cent
Increased by 21-30 per cent
Increased by more than 30 per cent

378

13.1
8.3
20.2
19.0
25.0
9.5
4.8

5.6
5.6
18.5
27.8
27.8
9.3
5.6

Change in
ROI
Small Large
firms firms
19.2
17.8
17.8
19.2
17.8
4.1
4.1

13.6
6.8
18.2
40.9
9.1
4.5
6.8

Contemporary marketing in professional services

Journal of Services Marketing

Mike Reid

Volume 22 Number 5 2008 374 384

the shift in the market whereby differentiation is based less

on technical service quality and more and more on
relationship quality and the increased costs associated
with doing business and securing and retaining clients;
increasing levels of innovation and development of new
products and services with short lifecycles means that
costs of development are increasing and return on
innovation requiring much shorter payback periods;
clients are increasingly more educated and more attuned
to the concept of value, and use this knowledge to pare
back project submissions or indeed to divide a project
amongst a series of specialist providers; and
clients have higher expectations regarding the level of
servicing and service quality they will receive but are often
not prepared to pay for a higher servicing.

have similar investment strategies in 4P activities, as

well as development of personal relationships.

In contrast to Coviello et al. (2000), these findings, in an

exploratory sense, suggest that larger firms are somewhat
more relationship-focused than smaller firms, perhaps
indicating a distinct movement towards developing this
aspect of their business in reaction to the changing market
environment. In reviewing the results, it is important to
acknowledge the caveats posed by Coviello et al. (2000), in
that while statistically significant differences exist for a
number of variables, such differences are small relative to
the number of variables examined. Furthermore, in certain
items, the differences might not always be managerially
important. For example, although a significant difference was
found between small and large firms in terms of the use of
specialist marketers, the overall mean was low across both
groups. Furthermore, the variables comprising two of the nine
dimensions were found to show no significant difference in
terms of firm size (planning focus and resource investment),
and four of the nine showing only minor differences in terms
of size (managerial intent, relational exchange, marketing
communication and formality).

It is obvious from the issues highlighted above that professional

service firms are facing significant competitive and
organisational challenges in the years ahead. Many firms in
Australia, as elsewhere, are facing the dual demands of
increasing their business performance, and reorienting their
organisational culture to become more market-oriented, albeit
within the confines of relatively strict codes of professional
conduct and legislation. It is evident from above, that changes in
the market environment such as the rise of para-professionals,
the development of information technology that enables more
fully informed clients, and indeed, technology that supersedes
some of the traditional skills and role of professionals, will
continue to place pressure on firms into the future.

Impact of type of marketing on performance

A regression analysis was conducted to determine which, if
any, of the CMP factors demonstrated a positive impact on
firm performance (Table VII). An initial t-test suggested that
there were no significant differences between small and large
firms in terms of performance, and thus the aggregated
sample is employed in this analysis. Each of the nine items
related to the types of marketing were aggregated into a single
item and then regressed against two performance factors
(identified through principal components analysis and
Varimax rotation of six self-reported performance items).
The results of this analysis indicate that interactive marketing
has a significant effect on financial related performance, and
both interactive marketing and database marketing have a
positive impact on client-related performance.
Overall, the results of the regression analysis are not
strongly conclusive, but do suggest that both types of
performance can be improved through improvements to the
way firms interact with their clients. In increasingly
competitive markets an 8 per cent and 11 per cent
improvement in performance (e.g. sales growth or client
retention) may result in an improved competitive position for
the firm. The results of this research have a number of
practical implications for managing the marketing of
professional services.

Marketing practices of professional service firms

Given that respondents face significant challenges in
maintaining and developing their businesses, it is now
appropriate to examine how they conduct their marketing
activities. This section reports on the results of an analysis of
contemporary marketing practices. Data were collected across a
series of themes underlying transactional versus relational
marketing, and across both managerial and relational exchange
dimensions (Coviello et al., 2000). Table VI shows 12 significant
points of difference between large and small firms.
Accounting for the significant differences, as well as the
general trend in the mean scores, it is apparent that smaller
firms tend to be slightly more transaction-oriented than their
larger counterparts. Relative to smaller firms, the larger firms
are more likely to:
.
focus more on client retention and development of
relationships than acquisition;
.
use more specialist and functional level marketers in
planning their marketing activity;
.
have a stronger focus on creating a wider, and more
integrated, or connected, set of relations with clients, but
place a similar emphasis on individuals building long-term
relationships;
.
emphasise communications to specific client segments,
but place a similar emphasis on personal interaction and
networking, and on enduring or ongoing exchange
relationships; and
.
balance both formal and informal interaction with clients.

Managerial implications
The findings from this research have a number of practical
implications for managing the marketing of professional
services. The implications relate to, the nature of the firm, the
nature of the marketing environment, and the nature of
contemporary marketing practices in the firm.
The nature of the firm
The respondent profile in this research reflected
predominantly small to medium-sized firms. The size of
the firm often means that managing marketing activities
often appeared to be undertaken by a director or CEO.
Having a director or CEO controlling and undertaking the

Both groups do have some distinct similarities, in that they:

.
have a similar planning emphasis, focusing on both the
service development aspect and the development of
individual clients; and
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Mike Reid

Volume 22 Number 5 2008 374 384

Table VI Comparing marketing practice by firm size

Small firms mean

Large firms mean

Transaction
Database
Interaction
Network

4.23
4.29
3.97
3.06

3.89
4.41
4.20
3.27

2.369 *

Transaction
Database
Interaction
Network

4.41
3.59
4.18
3.52

4.33
3.72
4.39
3.81

Transaction
Database
Interaction
Network

4.29
2.71
4.46
3.47

4.37
2.69
4.59
3.67

Transaction
Database
Interaction
Network

2.19
1.72
3.74
3.88

3.45
2.84
3.72
3.63

Transaction
Database
Interaction
Network

3.25
2.80
4.46
3.78

3.19
2.70
4.56
4.09

Transaction
Database
Interaction
Network

1.94
3.87
4.34
3.56

1.93
4.37
4.44
3.69

Transaction
Database
Interaction
Network

1.58
3.75
4.34
2.99

1.56
2.94
4.59
3.53

4.248 * *
2.496 *
2.672 * *

Transaction
Database
Interaction
Network

2.52
2.79
4.23
3.73

2.39
2.44
4.57
4.19

2.426 *
2.473 *
2.762 * *

Transaction
Database
Interaction
Network

3.62
2.87
3.78
3.30

3.59
2.74
3.87
3.70

2.282 *

Types of marketing

Managerial dimensions
Managerial intent
Attract clients
Retain clients
Develop cooperative relationships
Coordinate system-wide relationships
Planning focus
Product/service offering
General client base
Individual clients
System-wide relationships
Resource investment
4P activities
Communication technology
Personal relationships
Organisational/system relationships
Marketing done by . . .
Functional marketers
Specialist marketers
All employees
CEO or senior management
Relational exchange dimensions
Purpose of relational exchange
Generate financial returns
Acquire client information
Build individual long-term relations
Form system-wide relations
Marketing communication
Firm to mass market
Firm to specific client segment
Individual employees with their client
Senior managers networking
Primary client contact
Arms-length, impersonal
Somewhat personalised
Interpersonal
From personal to interpersonal
Duration of relational exchange
No future personalised contact
Some future personalised contact
Ongoing personal contact with individual
Ongoing personal contact with system
Formality of relationships
Formal meeting
Formal yet customised
Formal and informal, one-to-one
Formal and informal network

5.287 * *
4.707 * *

2.099 *

3.398 * *

Notes: *p # 0:05; * * p # 0:01

marketing function can have both positive and negative

consequences. From a positive perspective, clients welcome
contact from this level of the firm, and often these
individuals are well versed in the service offers that are
made by the firm. From a negative perspective, these
individuals are often extremely busy with other managerial

tasks, and may inadvertently neglect the marketing planning

and marketing implementation issues that arise on a day-today basis, or indeed over a longer term. If the CEO or a
director of the business is going to undertake the role of
marketing manager, then they must be provided with
necessary resources to do the job effectively. Such
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Journal of Services Marketing

Mike Reid

Volume 22 Number 5 2008 374 384

Table VII Impact of CMP on performance

Aggregate sample (n 5 140)
Financial performance
t
Significance
Transaction marketing
Database marketing
Interactive marketing
Network marketing
Model performance

2 1.281
1.231
2.036
0.201
R2 0:08; F 2:940

NS
NS
0.044
NS

Client performance

Significance

20.028
2.159
2.515
20.360
R2 0:11; F 4:013

NS
0.033
0.013
NS

managerial intent and the focus of relational exchange, and

marketing communication and client contact.
Respondents indicated that the focus of their marketing
activities was divided between client acquisition and client
retention, with a view to building a long-term relationship
with specific clients or customers. This was followed by
generating a profit or financial return, and building a business
network. The nature of relationships between clients and
professionals occurs at both the formal level, as in briefings for
projects, and at the informal and social level. Such
relationships are founded on a basis of trust, cooperation,
and commitment by both parties. Professional service
marketers need to ensure they have the requisite skills to
operate at this level.
Managerially, the objectives of building a relationship and
generating a profit are often linked, and this linkage can be
negative if relationship management costs outweigh the return
from relationships. In developing relationships, managers
need to understand the types of relationship their clients wish
to have with the firm, e.g. close versus distant, technical
versus social, or some combination of these. Understanding
the type of desired relationship will enable managers to
develop appropriate marketing tactics to engage the client
with the firm.
In keeping with the interaction marketing focus in this data,
marketing communication tended to be based around
personal interaction by professionals and managers, both in
extended networks and on a one-to-one basis. Several
implications exist for managers related to this area. Firstly,
the concept of face-to-face communications can be a powerful
tool for the firm, if individuals have the ability to
communicate the value of the firms offer to clients. This
ability to sell is based on the firm having a clear brand vision
and identity, and the internalisation of the brand by
employees. Further, it requires managers and employees to
clearly map out their networks with the business and broader
community, so that they recognise opportunities for
communicating the firms message of value.
Managers responsible for marketing in such professional
service firms must also ensure that they invest sufficient
resources into training consultants to build relationships. This
is not an easy task, as respondents suggested that many
technical specialists have often not had the opportunity or
desire to build personal business relationships with clients.
The concept of integrated marketing communications
(Duncan and Moriarty, 1998) is an important one in
professional services, in that it recognises that firms must
understand the touchpoints that exist for any client, and
understand how best to establish a dialogue between the firm
and the client.

resources might include available time, staffing, and budgets

for, research, training, and client relationship management.
The nature of the market environment
A number of implications exist as a result of the changing
nature of the market environment faced by professional
service firms. Respondents who suggested they were
performing worse than expected felt this was a result of
three main issues:
1 aggressive marketing tactics employed by competitors in
the market, especially the use of heavier price discounting
and price-based competition in the market;
2 dealing with more knowledgeable and demanding clients;
and
3 competing in markets or industry sectors where growth is
declining or has reached a plateau.
Under conditions of aggressive competition, managers need
to consider a number of approaches to marketing. Firstly, they
need to champion the notion that competing through
undercutting fees is a poor model for the industry. They
need to raise awareness amongst fellow service providers that
price-based competition downgrades the value of the
industry, and trains clients to choose on price rather than
value. This communication could be undertaken through
industry conferences, publications, and other industry
forums. In parallel, managers must learn how to sell their
services on the basis of value rather than price. This will
require managers to undertake research to determine clients
hot buttons, or motivations, and expectations, for
purchasing service offers.
In low-growth or static-growth markets, managers must
understand how to strengthen and leverage existing client
relationships in order to grow client share-of-wallet.
Important tasks are related to understanding the basis for
client commitment to the firm (hygiene factors and strategic
satisfiers), recognising alternative pathways to bond clients to
the firm, and how to use these bonds to narrow perceived
service provider alternatives in the market. The goal is to
leverage insights into clients, and their needs, wants, and
drivers, to generate improved profitability per client.
Managers would do well to examine the customer
relationship profitability model (Storbacka et al., 1994), and
consider how to build strong technical and relational bonds
with clients to ensure the best opportunity exists for onselling, cross-selling, and up-selling.
The nature of marketing practice
The examination of contemporary marketing practices
(CMP) in professional service firms results in a number of
implications for managers. These implications relate to
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Journal of Services Marketing

Mike Reid

Volume 22 Number 5 2008 374 384

Conclusion

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Marketing Management, Vol. 13 No. 5, pp. 383-406.
Carson, D. and McCartan-Quinn, D. (1995), Non-practice
of theoretically based marketing in small businesses issues
arising and their implications, Journal of Marketing Theory
and Practice, Vol. 3 No. 4, pp. 24-32.
Coviello, N.E., Brodie, R.J. and Munro, H.J. (1997),
Understanding contemporary marketing: development of
a classification scheme, Journal of Marketing Management,
Vol. 13 No. 6, pp. 501-22.
Coviello, N.E., Brodie, R.J. and Munro, H.J. (2000), An
investigation of marketing practice by firm size, Journal of
Business Venturing, Vol. 15 Nos 5/6, pp. 523-45.
Coviello, N.E., Brodie, R.J., Danaher, P.J. and Johnston, W.J.
(2002), How firms relate to their markets: an empirical
examination of contemporary marketing practices, Journal
of Marketing, Vol. 66, pp. 33-46.
Daniell, M.H. (2006), Mastering the dynamic nature of
modern strategy, Handbook of Business Strategy, Vol. 7
No. 1, pp. 35-41.
Darroch, J., Morgan, M., Jardine, A. and Cooke, E. (2004),
The 2004 AMA definition of marketing and its
relationship to a market orientation: an extension of
Cooke, Rayburn, & Abercrombie (1992), Journal of
Marketing Theory & Practice, Vol. 12 No. 4, pp. 29-38.
Dennis, W. Jr (2003), Raising response rates in mail surveys
of small business owners: results of an experiment, Journal
of Small Business Management, Vol. 41 No. 3, pp. 278-95.
Duncan, T.R. and Moriarty, S. (1998), A communicationbased marketing model for managing relationships,
Journal of Marketing, Vol. 62 No. 2, pp. 1-13.
Greenwood, E. (1957), Attributes of a profession, Social
Work, Vol. 2, pp. 5-45.
Gummesson, E. (1978), Towards a theory of professional
services marketing, Industrial Marketing Management,
Vol. 7 No. 2, pp. 89-95.
Hausman, A.V. (2003), Professional service relationships:
a multi-context study of factors impacting satisfaction,
re-patronization, and recommendations, Journal of Services
Marketing, Vol. 17 No. 3, pp. 226-42.
Hunt, S.D. and Morgan, R.M. (1994), The commitmenttrust theory of relationship marketing, Journal of
Marketing, Vol. 58 No. 3, pp. 20-38.
Lapierre, J. (1997), What does value mean in business-tobusiness professional services?, International Journal of
Service Industry Management, Vol. 8 No. 5, pp. 377-97.
Lindgreen, A., Palmer, R. and Vanhamme, J. (2004),
Contemporary
marketing
practice:
theoretical
propositions and practical implications, Marketing
Intelligence & Planning, Vol. 22 No. 6, pp. 673-92.
Jones, O.J. (1997), Responding to the challenge:
a professional services perspective, Facilities, Vol. 15
Nos 3/4, pp. 92-6.
Pels, J. (1999), Exchange relationships in consumer
markets, European Journal of Marketing, Vol. 33 Nos 1/2,
pp. 19-37.
Pels, J., Brodie, R.J. and Johnston, W.J. (2004),
Benchmarking business-to-business marketing practices
in emerging and developed economies: Argentina compared
to the USA and New Zealand, Journal of Business &
Industrial Marketing, Vol. 19 No. 6, pp. 386-96.
Pels, J., Coviello, N.E. and Brodie, R.J. (2000), Integrating
transactional and relational marketing exchange: a

Overall, this study enhances our understanding of

contemporary marketing in the context of professional
service organisations. The results suggest that both smaller
and larger firms face the same types of marketing issues, and
fundamentally act in a similar way. It was identified that the
market environment facing professional service marketers
continues to change, with the professional service marketing
environment becoming increasingly complex and competitive.
Clients are more demanding, and are more knowledgeable in
determining service quality, whilst the basis for competition
continues to move away from purely technical competence (a
hygiene factor) and further towards relationship management
and marketing. As Pels et al. (2001) suggest, managers must
appreciate the increasingly dyadic nature of marketing
exchange, and place particular emphasis on understanding
their market environment, their clients needs and
expectations, and indeed their targeted clients perceptions
of value. Importantly, there is also a need to match the desired
exchange paradigm of both the client and the professional,
balancing transaction-based marketing with relational
marketing approaches.
Although this cross-sectional study provides an interesting
insight into an aspect of business-to-business marketing, it
does have several limitations that may be addressed by other
researchers. Firstly, the research would have benefited from
an increased response rate, and researchers will need to
consider how they approach the recruitment of respondents,
the quality of the databases they employ, and indeed the
persistence of their follow-up contacts with potential
respondents, in order to gain sufficient completions.
Academically, further investigations of this type would
benefit from longitudinal research designed to track how
market complexities are dealt with by firms over a longer
timeframe. Indeed, the use of qualitative case-based methods
may offer more detailed insights into the management of such
change by the professions. Finally, researchers might also
consider cross-cultural research to address whether cultural
differences play a part in determining the nature of marketing
activities in the professions. This would also broaden the
generalisability of results into an international context.
In summary, it is likely that all professional service firms
will experience pressures to practise a range of different types
of marketing, depending on client expectations and market
conditions. The results of this exploratory survey suggest that
the changing marketing environment will require dynamic
marketing solutions, including the development or strong
relationship building and management capabilities, the
adoption of a market orientation, and improvements to the
integrated marketing communication capabilities of firms.

References
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(1997), Towards a paradigm shift in marketing? An
382

Contemporary marketing in professional services

Journal of Services Marketing

Mike Reid

Volume 22 Number 5 2008 374 384

pluralistic perspective, Journal of Marketing Theory and

Practice, Vol. 8 No. 3, pp. 11-20.
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communication effectiveness and service quality on
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Storbacka, K., Strandvik, T. and Gronroos, C. (1994),
Managing customer relationships for profit: the dynamics
of relationship quality, Journal of Service Industry
Management, Vol. 5 No. 5, pp. 21-38.
Thakor, M.V. and Kumar, A. (2000), What is a professional
service? A conceptual review and bi-national investigation,
Journal of Services Marketing, Vol. 14 No. 1, pp. 63-82.
Wagner, R. (2005), Contemporary marketing practices in
Russia, European Journal of Marketing, Vol. 39 Nos 1/2,
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Webster, F.E. (1992), The changing role of marketing in the
corporation, Journal of Marketing, Vol. 56 No. 4, pp. 1-17.

consider marketing an activity particularly relevant to them,

and that selling was beneath their professional standards.
Their own reputations, coupled with contacts, would
suffice in attracting a stream of customers.
Not any more. Thrust into todays competitive world,
professionals have to compete aggressively for business in
what has become an increasingly complex marketing
environment. In todays professional service firms, process
and outcome, or technical quality, as well as improved client
relationship management, appear to be central to success.
They are likely to need to consider issues of increased market
orientation and how to build and leverage client relationships.
Clients are more demanding, and are more knowledgeable
in determining service quality, whilst the basis for competition
continues to move away from purely technical competence
towards relationship management and marketing.
In a study of Australian professional service firms, and
against a background of the work of the Contemporary
Marketing Practice (CMP) research group, Mike Reid sought
to discover:
1 whether the marketing practices of smaller professional
services firms differed from those of larger firms in their
propensity to practise interaction marketing and network
marketing;
2 whether the market performance measures used by
smaller professional service firms differed from those
used by larger firms in terms of their comprehensiveness
and scope, and the degree to which customer or
profitability based measures are used; and
3 whether the marketing practices employed by professional
service firms had an impact on those firms performance.

Further reading
Ambler, T., Bhattacharya, C.B., Edell, J., Keller, K.L.,
Lemon, K.N. and Mittal, V. (2002), Relating brand and
customer perspectives on marketing management, Journal
of Service Research, Vol. 5, pp. 13-25.
Gronroos, C. (1978), A service-oriented approach to
marketing of services, European Journal of Marketing,
Vol. 12 No. 8, pp. 588-601.
Gronroos, C. (1991), The marketing strategy continuum: a
marketing concept for the 1990s, Management Decision,
Vol. 29 No. 1, pp. 7-13.
Rust, R.T., Ambler, T., Carpenter, G.S., Kumar, V. and
Srivastava, R.K. (2004), Measuring marketing
productivity: current knowledge and future directions,
Journal of Marketing, Vol. 68, pp. 76-89.

The results suggest that both smaller and larger firms face the
same types of marketing issues, and fundamentally act in a
similar way. It is likely that all professional service firms will
experience pressures to practise a range of different types of
marketing, depending on client expectations and market
conditions. The changing marketing environment will require
dynamic marketing solutions, including the development of
strong relationship-building and management capabilities, the
adoption of a market orientation, and improvements to the
integrated marketing communication capabilities of firms.
Managers must understand their market environment, their
clients needs and expectations, and indeed their targeted
clients perceptions of value. Importantly, there is also a need
to match the desired exchange paradigm of both the client
and the professional, balancing transaction based marketing
with relational marketing approaches.
In small to medium-sized firms, a director or CEO might
have to take on the marketing function something which
can have both positive and negative consequences. From a
positive perspective, clients welcome contact from this level of
the firm, and often these individuals are well versed in the
service offers that are made by the firm. On the other hand,
these people are often extremely busy with other managerial
tasks, and may inadvertently neglect the marketing planning
and marketing implementation issues that arise on a day-today basis, or indeed over a longer term.
If the CEO or a director of the business is going to
undertake the role of marketing manager, then they must be
provided with necessary resources to do the job effectively.
These might include available time, staffing, and budgets for
research, training, and client relationship management.

About the author

Mike Reid holds an undergraduate degree in marketing and
PhD in marketing management from University of Otago,
New Zealand. Prior to joining the University Mike was
engaged with the New Zealand meat industry in retail and
product development positions, and in market research and
consulting. Mike has published in such journals as Journal of
Advertising, International Journal of Advertising, Journal of
Retail and Distribution Management, and Journal of Wine
Research. Mike Reid can be contacted at: mike.reid@
buseco.monash.edu.au

Executive summary and implications for

managers and executives
This summary has been provided to allow managers and executives
a rapid appreciation of the content of the article. Those with a
particular interest in the topic covered may then read the article in
toto to take advantage of the more comprehensive description of the
research undertaken and its results to get the full benefit of the
material present.
Contemporary marketing in professional services
There was a time when people offering professional services
lawyers, engineers, surveyors, accountants, etc. did not
383

Contemporary marketing in professional services

Journal of Services Marketing

Mike Reid

Volume 22 Number 5 2008 374 384

Respondents who suggested they were performing worse

than expected felt this was a result of three main issues:
1 competitors aggressive marketing, especially price
discounting;
2 dealing with more knowledgeable and demanding clients;
and
3 competing in markets or industry sectors where growth is
declining or has reached a plateau.

the basis for client commitment to the firm, recognising

alternative pathways to bond clients to the firm. The goal is to
leverage insights into clients, and their needs, wants, and
drivers, to generate improved profitability per client.
Respondents indicated that the focus of their marketing
activities was divided between client acquisition and client
retention, with a view to building a long-term relationship
with specific clients or customers. This was followed by
generating a profit or financial return, and building a business
network. The nature of relationships between clients and
professionals occurs at both the formal level, as in briefings for
projects, and at the informal and social level. Such
relationships are founded on a basis of trust, cooperation,
and commitment by both parties. Professional service
marketers need to ensure they have the requisite skills to
operate at this level.

Under conditions of aggressive competition, managers need

to consider a number of approaches to marketing. Firstly, they
need to champion the notion that competing through
undercutting fees is a poor model for the industry. They
need to raise awareness amongst fellow service providers that
price-based competition downgrades the value of the
industry, and trains clients to choose on price, rather than
value.
In low-growth or static-growth markets, managers must
understand how to strengthen and leverage existing client
relationships. Important tasks are related to understanding

(A precis of the article Contemporary marketing in professional

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