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Abstract
This study examined the relationship between competitor orientation and marketing effectiveness of small and medium scale enterprises. A survey research design was adopted and the judgmental sampling technique was used. The sample size of this study was judgmental sample of (120) respondents. In this study both primary and secondary data were used, the instrument of data collection was the questionnaire. The questionnaires were administered to selected small and medium scale enterprises in Port Harcourt. Questionnaire were adopted, modified and refined to suit the present study. The data collected were processed electrically using statistical package for social sciences (SPSS Version 22). The Pearson product moment correlation was used to test hypothesis. The study found a positive significant relationship between the three dimensions of competitor orientation (differentiation, cost leadership, and market scope) and marketing effectiveness of small and medium scale enterprises in Rivers State. Based on the findings of the study we recommend amongst others that, management of small and medium scale enterprises should improve on product differentiation, through the improvement and creation of product excellence that are not owned by other companies and the creation of variation of products better than the competitors products, creation of convenience for customers to have the products and the creation of unique products compared to competitors.
Table of Contents
Cover Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Abstract vi
Table of Contents vii
List of Tables ix
List of Figures x
List of Appendices xi
CHAPTER 1 1
INTRODUCTION 1
1.1 Background of the Study 1
1.2 Statement of the Problems 5
1.3 Purpose/Objectives of the Study 6
1.4 Research Questions 6
1.5 Research Hypotheses 7
1.6 Significance of the Study 7
1.7 Scope of the Study 8
1.8 Limitation of the Study 9
1.9 Definition of Terms 9
CHAPTER 2 11
REVIEW OF RELATED LITERATURES 11
2.1 Conceptual Review 11
2.1.1 Competitors Orientation 11
2.1.2 Dimensions of Competitors Orientation 15
2.1.3 Concept of Marketing Effectiveness 22
2.1.4 Measures of Marketing Effectiveness 28
2.1.5 Competitor Orientation and Marketing Effectiveness 34
2.2 Theoretical Framework 36
2.2.1 Organizational Knowledge Theory (Nonaka, 1995). 36
2.3 Review of Related Empirical Studies 38
2.4 Summary of Review of Related Literature 40
CHAPTER 3 42
RESEARCH METHODOLOGY 42
3.1 Research Design: 42
3.2 Population of the Study 42
3.3 Sampling Techniques Used 42
3.4 Sample Size 43
3.5 Sources of Data 43
3.5.1 Primary Source (s) of Data 43
3.5.2 Secondary Sources of Data 43
3.6 Research Instrument for Data Collection 43
3.7 Validity and Reliability of Instrument 44
3.8 Techniques for Data Analysis/Test of hypotheses 45
CHAPTER FOUR 46
DATA PRESENTATION AND ANALYSIS 46
4.1 Questionnaire Distribution and Retrieval: 46
4.2 Data Analysis and Presentation 47
4.3 Descriptive Statistical Analysis 49
4.5 Discussion of Findings: 54
CHAPTER 5 57
SUMMARY, CONCLUSION AND RECOMMENDATIONS 57
5.1 Summary 57
5.2 conclusion 57
5.3 recommendations 57
Bibliography 60
List of Tables
Table 4.1: Questionnaire Administration and Retrieval 46
Table 4.2: Age of Respondents 47
Table 4.3: Sex of Respondents 47
Table 4.4: Academic Qualification 48
Table 4.5: Differentiation and Marketing Effectiveness 49
Table 4.6: Cost Leadership and Marketing Effectiveness 50
Table 4.7: Market Scope and Marketing Effectiveness 51
List of Figures
Fig2.1: A Conceptual framework showing the relationship between Competitors Orientation and Marketing Effectiveness. 11
List of Appendices
Appendix I 62
Appendix II 63
CHAPTER 1
INTRODUCTION
1.1 Background of the Study
Marketing effectiveness measures how effective a given marketer’s marketing strategy is toward meeting the goal of maximizing their spending to achieve positive results in both the short-and long-term (Mulky, 2011). Marketing effectiveness is also related to return on marketing investment. Marketing effectiveness produces far more than return on investment, a financial calculation used to determine whether an investment achieves a satisfactory return compared to other uses of cash (Mulky, 2011). Measuring the effectiveness of marketing activities should be among the most important priorities of each company (Mulky, 2011).
Effectiveness is the power to produce the desired result. Marketing effectiveness is the extent to which a firm, by the use of certain resources, fulfils its objectives without depleting its resources and without placing undue strain on its members and/or society (Manzoor, 2011). It is the maximum combined utility of the primary constituents (Matthew, 2005). It plays an important role in accelerating organizational development (Bulent, 2009). It is the net satisfaction of all constituents in the process of gathering and transforming inputs into output in an efficient manner (Matthew, 2005).
Georgopoulos and Tannenbaum (2016) define effectiveness as the extent to which an organization as a social system, given certain resources and means, fulfills its objectives without incapacitating its means and resources and without placing undue strain upon its members. This conception of effectiveness subsumes the following general criteria: (1) productivity; (2) flexibility in the form of successful adjustment to internal organizational changes and successful adaptation to externally induced change; and (3) absence of intra organizational strain, or tension. Effectiveness oriented companies are concerned with output, sales, quality, creation of value added, innovation, and cost reduction. Marketing effectiveness has attracted a great deal of attention in academic and managerial circles (Mavondo, 2004; Nwokah, Ahiauzu, 2008).
In the view of Nwokah and Ahiauzu (2008) marketing effectiveness is the extent to which an organization acquires market share over competitors, advertising and promotional share of the market. Hence, marketing effectiveness can be enhanced through competitor’s orientation.
Kohli and Jaworski, (1990) describe competitor’s orientation as the ability and the will to identify, to analyze and to respond to competitors’ actions. This includes the identification and construction of competitive advantages in terms of quality or specific functionalities, that allows the firm to position the new product well. Another factor which characterizes the competitive position of a product is its cost (Porter, 2000). The lower the cost, the greater the potential for profits, either by setting higher margins or by penetrating the market with a lower price which has positive effect on product innovation success (Muhammad, 2010).
A competitor orientation is both proactive (when, for example, a firm is looking for a “highly attractive market”) and reactive (when it responds to a competitor’s action). Indeed, some scholars assert that a competitor orientation can be hostile to a customer orientation (Deshpande Rohit, John, Farley and Frederick, Webster, 1993), whereas others suggest that an effective strategic orientation requires a balanced mix of customer and competitor orientations (Voss and Voss, 2000).
Kevin, Brown, Dev and Agarwal, (2007) described competitor orientation as an element of market orientation. This means that “a seller understands the short-term strengths and weaknesses and long-term capabilities and strategies of both the key current and potential competitors”. However, some small organizations seem to view competitor orientation differently and are not as concerned with long-term strategies. Scholars suggests that most small businesses are short-term oriented (Carson 1990), and that short-term results are perceived to be more important than long-term strategic issues (Zatezalo and Gray, 2000). Managers in small businesses are more concerned with running daily operations than with long term business planning (Amer and Bain 1990). Hence, for small businesses, short-term results are often a priority over projected long-term benefits. However, in order to develop a sustainable competitive advantage, firms may need to improve appropriate small business marketing and planning skills.
Kero and Bertrand (2017) stated that, an unbalanced focus towards the competitors is not desirable since exclusive attention on the competition can lead to the neglect for the difficulty of customers. According to Mohammad, (2013), competitor orientation focused on understanding the strength and weaknesses of existing and potential competitors as well as discovering their attitude and converting them into better ideas to satisfaction customers. To maintain a competitive advantage in the marketplace, Grinstein (2008) proposed a balances mix of customer and competitor orientation.
Mohammad, (2013) is of the view that competitor orientation is surrounded by questions: (a) who the competitors are? (b) What types of technologies do they offer? (c) Whether they represent an attractive alternative from perspective of the target customers (Slater and Narver, 1994); (d) what marketing tools they used to promote their products and services? Different studies have suggested that competitor orientation is critical for the long-term survival of the firm with higher level of innovative success (Hakala, 2011; Herath and Rosli, 2014; Henri, 2015, cited in Kero and Bertrand (2017). From the foregoing therefore, the study seeks to examine the relationship between competitor orientation and marketing effectiveness of small and medium scale enterprises in Rivers State.
1.2 Statement of the Problems
Marketing is the key to small business growth and success. However, small businesses often have problems with marketing, due to their unique characteristics, as well as their limitations (Carson 1990). This does not mean that small businesses are less involved in marketing in order to compete, but it means that the form of marketing they employ may be different from larger organizations. Studies have suggested that competitor orientation is critical for the long-term survival of small firm with higher level of innovative success (Hakala, 2011; Herath and Rosli, 2014 and Henri, 2015). Studies have also shown that the use of external information affect the competitive strategy of firms and has a positive effect on the success of new products (Joshua, 2007). An additional problem has been that previous researches on competitive strategy and competitor’s orientation were mostly conducted in western/developed countries. Recent studies have called for research of competitor orientation in non-western or developing countries settings. In particular, countries in transition to market based economies are good candidates for competitor orientation research as firms sovereignty issues become increasingly important (Gloria and Daniel, 2005, Erik, 2008). Hence this study determined to examine the relationship between competitor orientation and marketing effectiveness of small and medium scale enterprises in Rivers State.
1.3 Purpose/Objectives of the Study
The purpose of the study was to examine the relationship between competitor orientation and marketing effectiveness of small and medium scale enterprises in Rivers State. The specific objectives were as follows;
1. To examine the extent to which differentiation associate with marketing effectiveness of small and medium scale enterprises in Rivers State.
2. To examine the extent to which cost leadership associate with marketing effectiveness of small and medium scale enterprises in Rivers State.
3. To examine the extent to which scope market associate with marketing effectiveness of small and medium scale enterprises in Rivers State.
1.4 Research Questions
Based on the objectives of the study, the following research questions were used to guide the study.
1. To what extent does differentiation associate with marketing effectiveness of small and medium scale enterprises in Rivers State?
2. To what extent does cost leadership associate with marketing effectiveness of small and medium scale enterprises in Rivers State?
3. To what extent does scope market associate with marketing effectiveness of small and medium scale enterprises in Rivers State?
1.5 Research Hypotheses
The following hypotheses were postulated to guide the study.
H01: There is no significant relationship between differentiation and marketing effectiveness of small and medium scale enterprises in Rivers State.
H02: There is no significant relationship between cost leadership and marketing effectiveness of small and medium scale enterprises in Rivers State.
H03: There is no significant relationship between scope market and marketing effectiveness of small and medium scale enterprises in Rivers State.
1.6 Significance of the Study
Competitor orientation is the ability and the will to identify, to analyze and to respond to competitors’ actions. The process includes the identification and construction of competitive advantages in terms of quality or specific functionalities, and allows the firm to position the new product well. Hence, the study will help managers of small businesses to be more concerned with running daily operations than with long term business planning for them to develop a sustainable competitive advantage and improve appropriate small business marketing and planning skills. From the foregoing, it is believed that the completion of this work will provide empirical material on the relationship between competitor’s orientation and marketing effectiveness. Also, it is believed that the work will serve as a stepping stone for future researcher as it will provide useful materials for further studies.
In another development, the result of this study will also guide marketers on the relationship between competitor’s orientation and marketing effectiveness. This simply means that it will enable them to develop strategies that can foster their marketing effectiveness which in turn will enhance sales performance of small and medium scale businesses.
1.7 Scope of the Study
The study is delimited under the following heading: content scope, geographical scope and unit of analysis.
Content Scope: The content scope of this study involves an investigation to ascertain the relationship between competitor’s orientation and marketing effectiveness of small and medium scale enterprises in Rivers State. The dependent variable is marketing effectiveness, measured by customer retention, market share and sales growth. While independent variable is competitor’s orientation measured by differentiation, cost leadership and scope market.
Geographical Scope: This study is delimited to Port Harcourt Metropolis with reference to selected small and medium scale businesses which includes Jegin Consult, Plot 9 Block 33 Woji Port Harcourt, City Core Limited, 3, Azikiwe Road, Port Harcourt, Rivers State, Port Harcourt, and Region Agency, 119, Up Abuja Line, Building Materials Market, Mile 3, Diobu, Port Harcourt, Rivers State.
Unit of Analysis: The unit of analysis in this research involves both senior and Junior staff of the selected small and medium scale enterprises at the time of the study.
1.8 Limitation of the Study
In course of carrying out this research, the researcher met with a lot of constraints. Among these constraints were: The time frame which this research was expected to be completed which was too short.
Secondly, the cost in carrying out this research work which acted as a barrier and the researcher was not financially buoyant to cope with all the cost.
Finally, assembling the relevant materials needed for this work was a problem. It was difficult due to the fact that some of the respondents were not willing to give us the required coorperation.
1.9 Definition of Terms
Competitor’s Orientation: It is the ability and the will to identify, to analyze and to respond to competitors’ actions.
Cost Leadership: It is the process of establishing a competitive advantage by having the lowest cost of operation in the industry.
Customer Retention: It refers to the ability of a company or product to retain its customers over some specified period.
Differentiation: It is the process of differentiating or distinguishing between two or more things or people.
Market Share: It is the portion of a market controlled by a particular company or product.
Marketing effectiveness: It is the measure of how effective a marketing plan is at optimizing spending to achieve positive short and long-term results.
Sales Growth: It is the amount by which the average sales volume of a company’s products or services has grown, typically from year to year.
Scope Market: It’s an estimated value of product or service in a particular market or area. It’s a potential clientage of your product/service.
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