A renewed approach to services marketing

effectiveness
António Pimenta da Gama

António Pimenta da Gama Summary

is based at IADE (Institute Purpose – Marketing as a function is under increasing pressure to develop and implement
for Visual Arts, Design and business-oriented methods and measures to improve its effectiveness. This paper approaches the
Marketing), Lisboa, subject of marketing audits and aims to examine its impact and perceived benefits in service
Portugal. organizations. Based on the Index of Services Marketing Excellence framework, it seeks to develop an
updated instrument and to test the hypothesized relationships – connections between input and output
marketing measures.
Design/methodology/approach – Data were taken from DunsPep Financial Sector Database. First, to
validate the measurement instrument content, five individual interviews with marketing managers were
carried out. Then, the same type of professionals were surveyed. Regarding structural equations
modelling, a PLS-GRAPH was utilized.
Findings – This work tries to demonstrate the connection between marketing activities and company
performance, sustaining the importance of a framework designed to evaluate the former. Findings were
able to confirm the usefulness of marketing auditing.
Research limitations/implications – The major limitation of this paper is traduced in sample size
(n ¼ 51).
Practical implications – According to conclusions, marketing audits can be viewed as a tool to
evaluate activities and to increase marketing awareness and comprehension, leading to practice
improvement. In this sense, the awakening seems to be achieved of an instrument that presents itself
with interest to marketers and managers of service companies.
Originality/value – In this work, the theoretical perspective was used not only to update the original
instrument, but also to study the subject from a perspective beyond that usually associated with audits.
Keywords Marketing, Company performance, Marketing audit
Paper type Research paper

1. Introduction
Organizations intending to improve their performance as a condition of survival and future
development need to analyse their main functions periodically, through operational methods
that allow the evaluation of current performance and function as management guides.
Marketing, while a major corporate function, appears to be a relevant aspect for evaluation
due to the increasingly difficult market challenges facing the majority of firms nowadays
(Kotler, 1999). As the adage says, we cannot manage what we can not measure.
Most existing measures of marketing performance focus on outputs. However, processes
are the ‘‘glue’’ that binds together everything a company does. Therefore, input measures
must also merit attention (O’Sullivan and Abela, 2007; Grewal et al., 2009). However, broad
understanding of marketing input quality under the form of processes has had a less clear
impact, largely because of the difficulty inherent to their complexity. This is the reason why
the definition of good marketing practice has been most often object of conceptual and
qualitative treatments rather than rigorous empirical studies.

DOI 10.1108/13683041111131583 VOL. 15 NO. 2 2011, pp. 3-17, Q Emerald Group Publishing Limited, ISSN 1368-3047 j MEASURING BUSINESS EXCELLENCE j PAGE 3
 Additionally, some recent management concerns and research directions in services
marketing point to the impact of processes on organizational performance (Grove et al.,
2003; Ye et al., 2004).
It is a fact that audits have been presented almost exclusively on the perspective of what to
measure and how to measure, paying little attention to the benefits of the process. In this
work we aimed to demonstrate the connection between input marketing measures and
output marketing measures, fulfilling an existing gap in the literature. In this sense, the
theoretical perspective was used not only to update the original instrument, but also to study
the subject on from an additional perspective. By doing so, we intended to empirically prove
an objective reason for the usefulness and importance of auditing as a way to improve
marketing performance.
We begin by introducing marketing performance evaluation conceptual framing, followed by
an approach to marketing audits. Next, hypotheses are stated, together with results,
discussion, and conclusions.

2. Literature review
2.1 Marketing performance assessment
Marketing performance assessment has been studied for decades, remaining although a
difficult resolution subject. In recent years, the study of marketing performance and the
relationships between its measures has come to attract renewed attention from the
academic community. Unfortunately, marketing performance is the product of a host of
processes and conditions: marketing activities span multiple functions both within and
outside the firm, and their results are subject to many lagged effects (Clark et al., 2006),
which makes it even harder to disentangle cause-and-effect relationships. The subject is
also responsible for the continuing erosion of relative power suffered by marketing
departments, and a great deal of internal pressures to which area professionals have been
subjected (Sheth and Sisodia, 1995, 2002).
Despite the proliferation of financial and non-financial isolated measures (Ambler et al.,
2004), marketing performance as a whole, translated into a clear and reliable universal
instrument by which the respective merits can be evaluated, has received limited attention in
the literature (Ambler and Riley, 2000). In fact, besides the conceptual modelling works
proposed by Bonoma and Clark (1988), Morgan et al. (2002), Rust et al. (2004), Woodburn
(2006), the concept of market orientation (e.g. Kohli and Jaworski, 1990; Narver and Slater,
1990; Desphandé et al., 1993) and the instrument known as marketing audit, it is difficult to
find other relevant contributions on the specific subject. Given this situation, it will probably
not come as a surprise the fact that the Marketing Science Institute has chosen for the last
decade (2000-2010) the subject ‘‘marketing performance/marketing productivity’’ as one of
its main research priorities. The Marketing Leadership Council has also contributed with
important reports (Marketing Leadership Council, 2001, 2002), and in the UK, the Metrics
project has come to attract considerable industry support.
Traditionally, marketing productivity analysis – mainly from efficiency perspective – and the
marketing audit concept – mainly from effectiveness perspective – have dominated the
approaches to marketing performance evaluation (Morgan et al., 2002).
A historical revision of the subject (Clark, 1999) suggests that the respective measures have
evolved in three consistent directions throughout the years:
1. from financial measures to non-financial measures;
2. from output measures to input measures; and
3. from one-dimensional measures to multidimensional measures.
This does not mean a radical shift from some forms of evaluation to others, but only the need
to consider a broader set of indicators. We took that evolution to sustain the theoretical
model followed in this research, depicted in Figure 1.

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Figure 1 The expanding domain of marketing performance

Non Financial Output

Measures/Market Performance
(Customer Satisfaction)

Multidimensional Input
Measures/Marketing
Processes and Activities
(Marketing Audits)
Financial Output Measures/
Financial Performance
(Company Profit)

2.2 Marketing audits

The introduction of the concept in the relevant literature dates back to the late 1950s, through
a report produced by the American Management Association, entitled Analysing and
Improving Marketing Performance: Marketing Audits in Theory and Practice (Newgarden
and Bailey, 1959). The report defined, for the first time, this activity’s domain and some
associated elements – concept, objectives, problems, types, and content, a consequence
of the seminal work by Shuchman et al. (1959).
The process of marketing auditing is, for many organizations, still a relatively new and
under-utilised activity. Our judgement is that, beyond the objective problems and pitfalls
involved in its implementation, the fact that some companies use just some of their elements
– sometimes very few – in an unsystematic way, has contributed to the lack of clarity
surrounding their broad application. The situation, however, seems to evolve positively, as
the method is increasingly being used.
A common approach to marketing audits consists of the use of diagnosis questions –
ranging from a few dozen to more than 1,000 – checklists (Kotler et al., 1989; Parkinson and
Zairi, 1993; Brownlie, 1996; Wilson, 2002), from which the conceptual and normative nature
of most of the literature on the subject is derived. As for whether marketing audits have
reached a high degree of methodological sophistication, the answer is generally negative.
Whereas two certified accountants will handle a given audit assignment using approximately
the same methodology, two marketing auditors are likely to bring different conceptions of the
auditing process to their task. Nonetheless, despite the weaknesses, its more enthusiastic
supporters maintain that it is the ‘‘better way to analyse, evaluate, and improve the marketing
function’’ (Kotler, 1999, p. 232), or the ‘‘discipline’s most complete strategic control
mechanism’’ (Rothe et al., 1997, p. 2). More recently, in one of the few empirical studies,
Taghian and Shaw (2008) revealed evidence that justifies periodic accomplishment of
marketing audits as a prerequisite for well-succeeded market strategies.

2.3 Marketing audits and services

The basic notion of accurately assessing an organization’s marketing effectiveness applies
as well to service contexts as to manufacturing ones, but the current state of the art in
conducting marketing audits falls short of what is needed by service organizations. The
marketing audit literature generally places little direct emphasis on the distinguishing
characteristics of services. Wilson (2002) provides the most direct treatment of services in
the marketing audit literature, identifying ‘‘the service element in marketing’’ and ‘‘service
businesses’’ as two of 28 major marketing audit components. However, dissimilarly to Berry
et al. (1991), the author does not advance an integrative audit framework based on services
marketing literature.

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 Other contributions within the domain of services-based organizations’ marketing audits
have focused on the evaluation of a certain aspect of its functioning, as for example culture
(Webster, 1992), or on respective practices in specific contexts (Woodside and Montelepre,
1994; Solod and Glisson, 1996; Reid, 2008), these last situations limiting its generalised
application. Heskett et al. (1997) also consider a service-profit chain management audit
checklist, although focusing more on the sequence and interdependence of elements
leading to superior global performance than on the conditions determining good marketing
practice.
A certain number of differences between goods and services (intangibility, heterogeneity,
simultaneity, perishability) have been consistently cited in the literature (e.g. Shostack, 1977;
Berry, 1980), justifying the rationality of an individualised treatment of the respective
marketing, namely through the consideration of an enlarged marketing mix including
people, processes, and physical evidence.
In fact, a nuclear aspect in services marketing derives from the circumstance that
consuming a service is consuming a process, not only its final outcome. In the case of
tangible goods, production and consumption are processes separated in space and time,
so there is a need to bridge this gap. In services, production and consumption are frequently
simultaneous and involve interactions between client and provider. So, marketing has to be
included in the system in a different way, once the process is broader and more spread
through the organization. This stresses the role of marketing in facilitating marketing
throughout the organization, not just performing marketing for the organization
(Gummesson, 1994; Berry, 1999; Grönroos, 2000, Lovelock, 2001).
The Index of Services Marketing Excellence (ISME), as an approach to marketing auditing
that both accommodates the unique characteristics of services and has the versatility to be
applied across a variety of such contexts, was defined as the ‘‘systematic, periodic,
objective, and comprehensive examination of an organization’s – or organizational unit’s –
preparedness for services marketing and its current effectiveness along the dimensions of
marketing orientation, marketing organization, new customer marketing, existing customer
marketing, internal marketing, and service quality’’ (Berry et al., 1991, p. 261). The original
instrument incorporates a total of 66 items evaluated on a seven-point Likert scale (totally
agree to totally disagree).
The ISME framework, while anchored in the relevant literature, differs from traditional
marketing audit frameworks in two important ways. First, it explicitly incorporates a number
of evaluative criteria that reflect goods-services differences and are therefore essential for
accurately assessing services marketing performance. Second, it does not directly
addresses external environmental issues that are often included in other frameworks.
Evaluating performance using this framework is therefore designed to complement, rather
replace, the examination of external issues that are normally included in the strategic and
marketing planning process.

3. Research
3.1 Hypotheses and rationale
Hypotheses statements were driven by the need to demonstrate the relationships between
input marketing measures (independent variables) and output marketing measures
(dependent variables) on the evaluation of marketing activities impact. In fact, literature
about performance measurement has been criticized, among other reasons, for its limited
predictive power.
It is hypothesised that:
H1a. There is a positive relationship between market orientation and company
profitability.
H1b. There is positive relationship between market orientation and customer
satisfaction.

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The majority of empirical works about the subject shows a positive relationship between
market orientation and some measures of financial performance, particularly profitability
(e.g. Narver and Slater, 1990; Dobni and Luffman, 2000; Matear et al., 2002). There is also
evidence about the connection between market orientation and customer satisfaction
(Webb et al., 2000; Gray et al., 2002; Castro et al., 2005):
H2. There is a positive relationship between marketing organization and company
profitability.

Although the investigation about the impact of organizational arrangements on company

performance is scarce, there are some works who suggest a positive relationship between
marketing organization and company profitability (Krohmer et al., 2002; Vorhies and
Morgan, 2003; Olson et al., 2005):
H3. There is a positive relationship between new customer marketing and company
profitability.

As Peter Drucker pointed out 50 years ago, the only valid reason for the existence of a
company is to have customers. Therefore, it appears obvious that customer acquisition
remains a necessary condition for business survival and development:
H4. There is a positive relationship between existing customer marketing and company
profitability.

Several studies have demonstrated the contribution of customer retention to financial

performance (e.g. Reichheld and Sasser, 1990; Loveman, 1998; Edvardsson et al., 2000):
H5. There is a positive relationship between internal marketing and customer
satisfaction.

Because of the lack of empirically tested models, investigation regarding internal marketing
in all its conceptual broadness is somehow limited. Nevertheless, there are some studies
who positively relate some of the main internal marketing goals with customer satisfaction
(Brady and Cronin, 2001)
Service quality – from customer perspective – was not considered in the model, although
there is a host of literature to support the positive relationship between this variable and
company performance, both financial and non-financial (e.g. Cronin et al., 2000; Dabholkar
and Overby, 2005).
As dependent variables, ‘‘Company profitability’’ (return on sales – two items) and
‘‘Customer satisfaction’’ (one item) were selected, both evaluated by respondents in
self-reported terms. These metrics constitute a frequent choice when organizational
performance is used (e.g. Gray et al., 2002; Matear et al., 2002).

3.2 Method
Data were taken from DunsPep Financial Sector database, including banks, insurers, and
other related business (factoring and leasing, capital management, credit acquisitions).
Financial industry is one of the most dynamic sectors in the economy, and also a fertile
ground for the application of services marketing principles.
First, we aimed to validate the content of the updated ISME instrument (the literature review
which allowed to operate the concepts is summarily presented in Table I; full-scale
composition is shown in the Appendix).
It is worthwhile noting that all new items regard topics where a positive relationship between
its practice and some measure of organizational performance, and/or having been
sustained by reference authors was empirically proved.
Five individual meetings with marketing managers from the most representative companies
(banks and insurance companies) were carried out. Then, the same type of professionals
were surveyed. Questionnaires (n ¼ 227) were sent electronically, with items being

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Table I Variable composition
Variable Description Items Literature source

Market orientation ‘‘Extent of the set of cross-functional processes 10 The Desphandé and Farley (1998) scale was
and activities directed at creating and satisfying used. The authors recommend this
customers through continuous parsimonious measure of market orientation
needs-assessment’’. The evaluation of market when the concept is part of a broader study, as
orientation involves examining the extent to in the case
which a customer focus pervades the
organization
Marketing organization ‘‘Degree to which the company and marketing’s 12 In addition to the original scale (Berry et al.,
structures encourage and support an effective 1991), two new items were included, respecting
marketing’’. Evaluating an organization along the ‘‘fit between organizational marketing
this dimension requires assessing marketing structure and business strategies’’ (Ruekert
department’s impact on organizational et al., 1985; Walker and Ruekert, 1987; Vorhies
decisions and activities, the extent to which the and Morgan, 2003) and ‘‘marketing structure
department facilitates performance of contribution to an effective and cross-functional
marketing functions throughout the marketing practice’’ (Ruekert and Walker, 1987;
organization, and the extent to which the overall Krohmer et al., 2002)
organizational structure is conductive to being
customer-oriented
New customer marketing ‘‘Degree to which attracting new customers is 12 In addition to the original scale (Berry et al.,
given sufficient priority in marketing 1991), three new items were included,
programming’’. Contributing to superior respecting the importance of ‘‘conducting
performance along this dimension are the regularly formal market research’’ (Lovelock,
existence of carefully and systematically 2001; Zeithaml and Bitner, 2003), ‘‘knowing
developed strategies for attracting new consumers’ choice criteria’’ (Fitzsimmons and
customers and the allocation of adequate Fitzsimmonns, 1994), and ‘‘providing value to
resources to implement those strategies potential customers’’ (Gale, 1994; Woodruff,
effectively. 1997; Berry et al., 2002)
Existing customer ‘‘Degree to which retaining and building 15 In addition to the original scale (Berry et al.,
marketing relationships with existing customers is given 1991), four new items were included, respecting
sufficient priority in marketing programming’’. ‘‘customer classification according to their
As in the case of new customer marketing, the profitability’’ (Zeithaml et al., 2001), ‘‘monitoring
existence of formal strategies and adequate customer loyalty’’ (Dick and Basu, 1994;
resource allocation are critical to performance. Reichheld, 1996), ‘‘providing value to existing
An additional evaluative facet is loyalty customers’’ (Gale, 1994; Woodruff, 1997; Berry
management et al., 2002), and ‘‘knowing reasons for
customer defection’’ (Reichheld, 1996)
Internal marketing ‘‘Extent to which an organization gives 14 With the exception of two items from Berry et al.
importance and uses marketing concepts to (1991), the Foreman and Money (1995) scale
attract, prepare, motivate and retain was used owing to its to superior psychometric
high-quality employees, as with communicating properties
with them’’. Assessing this dimension involves
evaluating employee recruitment strategies,
training and internal communications, employee
satisfaction, and employee reward programs
Company profitability Sales profitability (ROS) 2 Company profitability is part of a reduced set of
metrics associated with higher-performing firms
(Ambler and Riley, 2000; Ambler et al., 2004)
Customer satisfaction Internal perception of customer satisfaction 1 Customer satisfaction is part of a reduced set of
metrics associated with higher-performing firms
(Ambler and Riley, 2000; Ambler et al., 2004)

evaluated on a seven-point Likert scale. From these, 51 were received and used,
representing a satisfactory response rate of 22.4 per cent.
With respect to structural equation modelling (SEM), PLS-GRAPH was utilised. The
preference for a method based on ordinary least squares and principal component analysis,
such as PLS, arose from the advantages in relation to methods based on covariance and
factor analysis, namely with regard to sample size, prediction orientation, and confidence
level on the theory that links measures with their respective constructs (Barclay et al., 1995;
Chin et al., 2003).

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 4. Results
Interview results confirmed the soundness of ISME dimensions for the stated purpose. In
fact, the interviewees revealed total unanimity regarding the adequacy of the considered
dimensions and considerable agreement on their content, confirming the concept of
theoretical consolidation and therefore suggesting the instrument’s content validity.

For hypotheses testing, as recommended in the literature (Anderson and Gerbing, 1988;
Bollen, 1989; Barclay et al., 1995), analysis was conducted by stages: the first respecting
measurement model evaluation – individual item reliability (l), scales reliability (Cronbach a;
composite reliability-rc), convergent validity (average variance extracted – AVE), discriminant
validity (AVE squared root), and the second respecting structural model evaluation –
dependent variables explained variance (R 2), structural paths (b) and respective significance
(t-value), model predictive relevance (Q 2), and goodness of fit (GoF) criterion.
After three iterations, were it was necessary to remove some items (MOR 1, 9, 10; MOG 6; NCM
3; ECM 7, 8) due to correlation similarity, all items reported load factors (l) superior to the most
demanding level of 0.7. Information in Table II allows a positive conclusion on the remaining
conditions for model stability: Cronbach a and rc . 0:7 (Nunnally, 1978; Hair et al., 1998),
AVE . 0:5 (Fornell and Larcker, 1981), and AVE squared root (superscript’’a’’ in Table II).
As can be observed from Table III, both R 2 and Q 2 dependent variables values fill up
established criteria results: R 2 $ 0; 1 (Falk and Miller, 1992) and Q 2 . 0. In what regard to b
significance, it can be concluded a non conformance in the first proposed relationship
(t , 1). Finally, the model’s global quality test (GoF) reported a reasonable value of 0.544.

5. Discussion
Most of the published empirical works concerning the effects of market orientation on
financial performance have shown a general positive relation between these variables (e.g.
Narver and Slater, 1990; Desphandé and Farley, 1998; Kumar et al., 1998; Dobni and
Luffman, 2000; Gray et al., 2002). In our situation, the relationship between market
orientation and profitability, although modestly positive (b ¼ 0:198), cannot be considered
statistically significant (t value ¼ 0:812). We think the divergence between the results here
obtained and the existing ones was due to the crisis still affecting the financial industry.

Table II Descriptive statistics and correlation matrix

Descriptive Scale reliability and
statistics convergent validity Correlation matrixa
Variable Mean SD a pc AVE 1 2 3 4 5 6 7

1. Market orientation
(MOR) 5.012 1.148 0.821 0.849 0.715 (0.845)
2. Marketing
organization (MOG) 4.828 0.983 0.875 0.911 0.636 0.511 (0.794)
3. New customer
marketing (NCM) 4.724 1.020 0.903 0.897 0.597 0.614 0.732 (0.773)
4. Existing customer
marketing (ECM) 4.213 0.995 0.890 0.934 0.631 0.597 0.651 0.443 (0.794)
5. Internal marketing
(IM) 3.663 1.089 0.917 0.903 0.578 0.503 0.308 0.628 0.494 (0.760)
6. Company profitability
(PRO) 4.915 0.850 0.773 0.868 0.788 0.488 0.312 0.517 0.450 0.618 (0.887)
7. Customer
satisfaction (CS) 4.740 0.957 – – – 0.610 0.502 0.730 0.586 0.546 0.632 (1)
a
Note: The italicized numbers on the diagonal are the square root of the variance shared between the constructs and their measures.
Off-diagonal elements are correlations among constructs. For discriminant validity, diagonal elements should be larger than off-diagonal
elements

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Table III Path values, t statistics (t-student), explained variance (R 2), model predictability (Q 2), and hypotheses support
Structural paths Hypotheses
Proposed relationships (þ) (b)* t-valuea R 2; Q 2 support

Market orientation (MOR) – company profitability

(PRO) 0.198 0.812 No
Market orientation (MOR) – customer satisfaction
(CS) 0.546 3.210 R 2 (PRO) ¼ 0.549 Yes
Marketing organization (MOG) – company
profitability (PRO) 0.228 2.713 Q 2 (PRO) ¼ 0.417 Yes
New customer marketing (NCM) – company
profitability (PRO) 0.403 3.661 R 2 (CS) ¼ 0.312 Yes
Existing customer marketing (ECM) – company
profitability (PRO) 0.395 1.844 Q 2 (CS) ¼ 0.538 Yes
Internal marketing (IM) – customer satisfaction
(CS) 0.269 2.009 Yes

Notes: *Bootstrap; p , 0; 05; at(0,05;499) ¼ 1.9647

As for the relationship between market orientation and customer satisfaction, the results
(b ¼ 0:546; t value ¼ 3:210) confirm the proposed hypothesis and are compatible with those
presented in the literature (Webb et al., 2000; Matear et al., 2002, Castro et al., 2005). The
distinction between financial performance and market performance is not only valid, but also
relevant, since the latter helps understanding the mechanisms through which the links between
market orientation and financial performance are established (Desphandé and Farley, 1998).
In the last two decades there has been a movement to understanding marketing less as a
separate corporate function than as a set of values and processes that allow customer
acquisition and retention, in which all functions and employees should be involved).
Although scarce attention has been paid to the impact of marketing organization in company
performance, some works managed to positively relate these two aspects (Moorman and
Rust, 1999; Krohmer et al., 2002; Vorhies and Morgan, 2003; Olson et al., 2005). Our
conclusions (b ¼ 0:228; t value ¼ 2:713) are in line with those presented in the literature.
The most obvious circumstance of acquiring customers as a prerequisite for company’s
financial performance was confirmed (b ¼ 0:403; t value ¼ 3:661). In the same line, the
importance of customer retention (Reichheld and Sasser, 1990; Loveman, 1998;
Edvardsson et al., 2000) also revealed a positive confirmation (b ¼ 0:395; t
value ¼ 1:844). Dissimilarly to what happens in consumer goods markets, where there is
little or no contact between consumers and manufacturers, services frequently allow some
degree of personal contact, which translates itself in the possibility of establishing
relationships with customers, with mutual benefits to both parties (Gwinner et al., 1998).
The idea that internal marketing is of particular relevance in service organizations, an that
employees are all part of an internal market are the concept’s most prominent aspects
(Foreman and Money, 1995). Also, the sense of internal marketing in service organizations is
usually associated with aspects related with recruitment, training, motivation, and retention
oh high quality employees, in order to provide superior service to customers. Given limited
research on the direct impact of internal marketing activities, the proposed relationship was
predominantly supported on the works that positively relate one of its goals, such as
employee motivation, with organizational performance, here evaluated in terms of customer
satisfaction (Brady and Cronin, 2001; Hwang and Chi, 2005). The results (b ¼ 0:269; t
value ¼ 2:009) confirm the stated hypothesis.

6. Conclusions
In this work we tried to stress the connection, within a service context, between marketing
activities and company performance, sustaining the importance of an instrument designed
to evaluate the former.

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The marketing audit here advocated offers some promise for researching activities based on
services marketing performance and its consequences, since marketing as a discipline has
historically focused more on the results than on the processes and systems which allow it
(O’Sullivan et al., 2009; Grewal et al., 2009). Additionally, on a theme that has received
scarce attention in the literature and is also characterised by conceptual and normative
treatments, this study provides empirical evidence of marketing auditing usefulness.
As to management practice, there seems to be achieved the awakening of an instrument,
that, although subject to improvements, presents itself with undeniable interest to the
marketing and management of service companies. In fact, audits can be viewed as a tool to
evaluate processes and therefore to increase marketing awareness and comprehension,
leading to practice improvement. Based on results, we are convinced that if companies
develop an adequate set of measures and systematically collect and analyse relevant
information, then marketing could be viewed in a more objective and credible way.
We are aware of a major limitation of this paper, traduced in sample size. Although PLS
makes it possible to work with relatively small samples, results eventually could have been
more consistent if respondent number was larger. Also, the use of self-reported measures for
dependent variables, namely in the case of customer satisfaction, can lead to some bias.
Nevertheless, the option was dictated by severe company rules restricting access to such
information. For those reasons it is prudent to consider conclusions as exploratory in nature.
In order to deepen the study of marketing performance in service organizations, we suggest
the evaluation of some additional variables impact on the considered theoretical model.
Specifically, we refer to marketing culture (Webster, 1992, 1995) and marketing capabilities
(Day, 1994; Vorhies, 1998) as probable antecedents of ISME dimensions.
Finally, we think longitudinal studies could prove very useful towards achieving a better
understanding of the effect of good marketing practices on company performance.

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Further reading
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Appendix
Market orientation
1. Our business objectives are driven primarily by customer satisfaction.
2. We constantly monitor our level of commitment and orientation to serving customer
needs.
3. We freely communicate information about our successful and unsuccessful customer
experiences across all business functions.
4. Our strategy for competitive advantage is based on our understanding of customer’s
needs.
5. We measure customer satisfaction systematically and frequently.
6. We have routine or regular measures of customer service.
7. We are more customer focused than our competitors.
8. I believe this business exists primarily to serve customers.
9. We poll end users at least once a year to assess the quality of our products and
services.
10. Data on customer satisfaction are disseminated at all levels in this company on a regular
basis.

Marketing organization
1. The senior marketing executive in this company has organizational ‘‘clout’’ to influence
customer satisfaction.
2. The marketing department has enough people to ‘‘get the job done’’.
3. The marketing department staff has the authority it needs to be effective.
4. The marketing department does a lot to help other employees in this company to be
effective marketers.
5. The marketing department in this company plays an important role in formulating
strategy.
6. The relationship between the marketing department and the top management of this
company is good.
7. I feel the marketing department understands the needs of employees in other
departments.
8. The activities of various departments in this company are well coordinated to ensure
customer satisfaction.
9. The strengths and weaknesses of our marketing department are considered when we
make strategic decisions.
10. The organizational structure of this company facilitates entrepreneurial thinking.

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 11. I consider that the marketing department structure is adequate to the implementation of
business strategy in this company.
12. When making decisions, the marketing department takes into account the opinion of this
company’s executives.

New customer marketing

1. Formal strategies are in place in this company to attract new clients.
2. We devote sufficient resources to attracting new clients.
3. In this company we market our services to specific market segments rather to one
overall market.
4. The market segmentation strategy we use in this company seems appropriate to me.
5. Our employees are well prepared to sell our services to prospective clients.
6. Our employees are strongly motivated to sell our services to prospective clients.
7. We do a good enough job differentiating our company from the competition in the eyes
of clients.
8. We have a solid understanding of our competitor’s strengths and weaknesses.
9. I am normally confident about our capability in fulfilling promises made to clients.
10. We regularly do formal marketing research in order to identify client’s needs.
11. We seek to understand client’s choice provider criteria.
12. In this company we pay attention in providing value to prospective customers.

Existing customer marketing

1. We have formal strategies for marketing to existing clients.
2. We devote sufficient resources to marketing to existing clients.
3. We give existing clients specific reasons to do additional business with us.
4. We demonstrate our clients how much we value their patronage.
5. When a client has a problem with our services, we will do whatever it takes to rectify the
situation.
6. The way we respond to client complaints and problems is a strength of this company.
7. We communicate with existing clients for the express purpose of reminding them of the
benefits they receive from us.
8. Our company stands behind what it sells.
9. Our employees are well prepared to sell our services to existing clients.
10. Our employees are strongly motivated to sell our services to existing clients.
11. When clients have problems or special needs, they do not experience difficulty in
reaching appropriate company personnel quickly.
12. We internally classify our clients, according their profitability and loyalty profiles.
13. We regularly monitor our client’s loyalty, through appropriate measures.
14. In this company we pay attention in providing value to existing customers.
15. If a client abandons this company, we try to know the causes and we utilise the obtained
information to improve our future action.

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Internal marketing
1. Our company offers employees a vision that they can believe in.
2. In this company the organization’s vision is well communicated to employees.
3. This company has formal ‘‘marketing’’ strategies for recruiting new employees.
4. This company places considerable emphasis on hiring excellent people for open
positions.
5. Skill and knowledge development of employees happens as an ongoing process in our
company.
6. In our company, the employees are properly to perform their service roles.
7. Our performance measurement and reward systems encourage employees to work
together.
8. In this company, those employees who provide excellent service are rewarded for their
efforts.
9. Our company recognises outstanding employees in internal media (for example,
company newsletters).
10. This company measures and rewards employee performance that contributes most to
the organization’s vision.
11. This company places considerable emphasis on communicating with employees.
12. This company communicates to employees the importance of their service roles.
13. This company has the flexibility to accommodate the differing needs of employees.
14. Our company uses data gathered from employees to improve their jobs, and to develop
business strategy.

Company profitability
1. How do you evaluate this company’s profitability (ROS) during the last year? (intervals
range: 1 – ,0 per cent; 7 – . 25 per cent).
2. How satisfied or unsatisfied do you consider yourself with this company’s profitability
(ROS) during the last year?

Customer satisfaction
Globally, how satisfied or unsatisfied do you think this company’s customers were, during the
last year?

About the author

António Pimenta da Gama has a PhD in Management and Marketing. He has been Professor
and Department Coordinator at IADE (Institute for Visual Arts, Design, and Marketing) since
1996 and is a member of IADE-UNIDCOM (Research Unit for Design, Communication, and
Marketing). He has held several sales and marketing management responsibilities in
companies such as Bull and Hewlett Packard, and as an international lecturer. He is also the
author of the book Marketing Audits. António Pimenta da Gama can be contacted at:
[email protected] or [email protected]

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