Marketing In-focus, Inc

In the fall term of 2002, Donna Mason was considering what she would like to do after completing her undergraduate business degree. She was in the last academic year of study at an eastern Canadian business school. She was at one time considering going into the family furniture business with her two older brothers, but the closer she came to graduation, the less attractive this option seemed. She had applied to several consumer goods companies for a marketing position, and she was confident that at least one would result in a job opportunity. However, Donna's first choice was to open her own small consulting firm, Marketing In-Focus, Inc.

Donna first started to think seriously about consulting after talking to one of her marketing professors. He told her that there was a dramatic increase in demand for marketing consulting in recent years. Donna decided to do some investigating on her own, and she found an article in Consultation titled “The Management Consulting Profession: An Empirical Description" by Terry L. Maris. The article stated that a higher percentage of consultants serviced the manufacturing sector than any other sector.

As she continued her search, Donna found that there was little published information that would help her decide where opportunities might exist, although she found a lot of information in trade magazines related to consulting. Specifically, Donna wanted to know who in companies made the decision to hire a consultant, what types of consulting were most commonly needed, what criteria were used to decide which consulting firms were selected, and most importantly, whether companies preferred to use large consulting firms or if they would consider using small independent consulting firms such as the one she wished to start. Donna decided to conduct her own marketing research.

MARKETING RESEARCH STUDY AND RESULTS

Donna decided that she would focus specifically on manufacturing firms with 20 or more employees, located in principal cities within a two-hour drive from where she hoped to operate her business. Following a search of Scott's Directories for that region, she was able to identify 681 firms. She randomly chose 100 of these firms for her research sample. Donna divided the sample into four equal groups, and convinced three of her friends to each conduct 25 telephone surveys for her. She did the first 25 surveys herself to ensure that there were no problems with the questionnaire. Among the 100 companies chosen for the study, 7 had gone out of business or had disconnected telephones and could not be located by company name, 6 were abandoned by interviewers after a minimum of three callbacks, and 5 refused to cooperate.

Among the 82 firms that cooperated, only 30 used management consultants (36.6%). The average number of employees among these firms was 274; those firms that did not use consultants averaged only 67 employees. There was one firm included in the sample that employed 2300 people, and another that employed 1100 people. All other respondent firms had less than 1000 employees. If the two largest firms were dropped from the sample, the average number of employees of companies that employed management consultants was 173.

Exhibit 1 provides the questions Donna asked in her survey, along with a summary of respondent answers.

Question 1 Has your firm used the services of an external consultant or consulting firm within the past three years?

Yes 30        (Go to Question 2)

No 52        (Go to Question 8)

Question 2 Who in your firm decides which external consultant or consulting firm is to be hired?

Question 3 For what reasons has your firm hired an external consultant or consulting firm within the past three years?