The Effect of Marketing Effectiveness and Efficiency on the Marketing Performance of Medium and Large Financial Service Enterprises in Ethiopia

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ THE EFFECT OF MARKETING EFFECTIVENESS AND EFFICIENCY ON THE MARKETING PERFORMANCE OF MEDIUM AND LARGE FINANCIAL SERVICE ENTERPRISES IN ETHIOPIA

TEMESGEN BELAYNEH ZERIHUN*; V. SHEKHAR**

*Ph.D Research Scholar, Osmania University, Department of Business Management, Hyderabad, Andhra Pradesh, India. *Principal, UCC & Business Management, Osmania University, Department of Business Management Hyderabad, Andhra Paradesh, India.

ABSTRACT

The purpose of this empirical study is to examine the effect of marketing effectiveness and efficiency on the marketing performance of medium and large financial service enterprises (MLFSEs) in Ethiopia. The approach of the study is analytical survey method. Based on a multi- item construct of marketing effectiveness, marketing efficiency and marketing performance, data were generated from randomly selected 200 middle and top-level managers. The generated data were analyzed by using multiple regression method. The research findings suggest that marketing effectiveness and efficiency have a positive and significant impact on the marketing performance dimensions as measured by an amalgam of six components, notably: financial, competitive, consumer behavior, consumer intermediate, direct customer, and innovative measures. The findings have also shown that although marketing effectiveness and efficiency were found to be a significant predictor of marketing performance, the results further indicate that the strength of a particular marketing effectiveness and efficiency vary according to the specific marketing performance dimensions where marketing effectiveness is the strongest predictor vis-à-vis to efficiency. Focusing on effectiveness and neglecting efficiency may result in an unprofitable growth in the Ethiopian financial service enterprises. Finally, conclusions and managerial implications of the findings are presented along with future research directions.

KEYWORDS: Financial services, Marketing effectiveness, Marketing efficiency, Marketing performance. ______

INTRODUCTION

Marketing is regarded as the pivotal force behind strategic planning and business operations, and, hence, as an intrinsic component of organizational efforts. Accordingly, over the last few years, the concept of marketing effectiveness has attracted increased attention among academic researchers and business practitioners (Dunn et al, 1994). The issue of marketing effectiveness is of particular importance to those associated with the management of services enterprises. In

recent years, the increasing liberalization of the services market and its gradual transition from a www.zenithresearch.org.in sellers‟ market to a buyers‟ market has had a profound impact on organizations competing in the

industry (Appiah-Adu et al, 2001).

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/

The concept of marketing effectiveness and efficiency has been discussed by different authors. For instance, Drucker (1974:45) states: “Effectiveness is the foundation of success - efficiency is the minimum condition for survival after success has been achieved. Efficiency is concerned with doing things right. Effectiveness is doing the right things”. Thus, efficiency is concerned with the outcomes of business programs in relation to the resources employed in implementing them (Walker & Ruekert, 1987). More specifically, efficiency concerns the relation between the results of marketing (marketing output) to the effort and resources put into marketing (marketing input), with the aim of maximizing the former relative to the latter (Bonoma & Clark, 1988). Performance measurement is an issue of growing importance among academicians, practitioners and researchers where it remains a critical and much debated issue (Jusoh et al, 2008). Performance measurement system is important for an organization as it plays a key role in developing strategic plans, evaluating the achievement of organizational objectives, and compensating managers (Ittner & Larcker, 1998). Particularly, marketing performance measurement continues to be a large and growing concern for marketing scholars and managers alike. Academic interest in marketing performance measurement is largely based on the assumption that greater marketing accountability enhances firm performance and marketing‟s stature (O‟Sullivan et al, 2009). Given the firm‟s survival depends on its capacity to create value, and value is defined by customers (Day, 1990), marketing makes a fundamental contribution to long-term business success. Therefore, evaluating marketing performance is a key task for management (Eusebio et al, 2006). Therefore, the objective of the present study is to assess the degree of impact of marketing effectiveness and efficiency on the overall marketing performance within the financial service enterprises in Ethiopia.

REVIEW OF RELATED LITERATURE

A study of relevant literature is an essential step to get a good comprehension of what have been made in the recent times. Such reviews are the secondary sources abstracted from articles, Internet, proceedings, reports, etc or synthesized by the researcher. A review of the literature has shown the interchangeable, sometimes even conflicting use of key concepts such as marketing effectiveness, marketing efficiency, and marketing performance (Gao, 2010). Thus, discussions on these related concepts have immense value for the practitioners and managers in the field.

MARKETING EFFECTIVENESS

The competitive environment of modern day business appears to necessitate the successful implementation of marketing concepts, if a firm is to advance in its chosen market segments. Over the last few years, the concept of marketing effectiveness has attracted increased attention among academic researchers and business practitioners (Dunn et al, 1994; Ghosh et al, 1993; Lai et al, 1992; Norburn et al, 1990). The idea behind effectiveness is that any measure of performance should incorporate the objectives of the decision maker. In the organizational management literature, this is referred to as a goal-attainment view of organizational effectiveness (Lewin & Minton, 1986). Walker and Ruekert (1987) defined effectiveness as

success versus competitors, which is certainly a common goal framework in marketing www.zenithresearch.org.in

management. Drucker (1974: 45) described effectiveness as “doing the right thing,” while

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ according to Clark (2000: 7) effectiveness is defined as “the psychological distance between what was expected to result from a marketing program and results as returned.”

A business that adopts a relationship marketing orientation will improve its marketing performance (Sin et al, 2002). This implies that the marketing manger should give attention for the customer philosophy to improve the marketing profitability. In connection to this, Porter (2001) argued that Internet is the most powerful tool available today for enhancing operational effectiveness. By easing and speeding the exchange of real-time information, it enables improvements throughout the entire value chain, across almost every company and industry. He also further contend that the Internet help the organization to achieve sustainable competitive advantage by operating at a lower cost and by strategic positioning (doing things differently from competitors, in a way that delivers a unique type of value to customers). According to Kotler (1977), the marketing effectiveness of a firm entails an amalgam of five components: customer philosophy; integrated marketing organization; adequate marketing information; strategic orientation, and operational efficiency.

The researcher argues that a marketing success is often measured by marketing effectiveness, such as whether objectives are accomplished or not, but it can also be expressed in terms of achieving certain results. Therefore, marketing effectiveness affects marketing performance.

MARKETING EFFICIENCY

The efficiency of marketing has been an important area of study in marketing performance assessment. Efficiency represents the comparison of outputs from marketing to inputs of marketing, with the goal of maximizing the former relative to the latter (Bonoma & Clark, 1988). Sometimes called marketing productivity, and efficiency approach examines how best to allocate marketing activities and assets to produce the most output. Walker and Ruekert (1987:19) defined efficiency as “the amount of effort relative to outcome of a business programs in relation to the resources employed” suggesting return on investment (ROI) as a measure. Bonoma and Clark (1988) defined efficiency as the amount of effort relative to the results, but particularly stressed the „fit‟ of marketing programs with the company‟s existing marketing structures. Most simply, Drucker (1974: 45) referred to efficiency as “doing things right.” Virtually all-early research in marketing performance assessment has drawn up on the efficiency approach, measuring outputs relative to inputs (Clark, 2000). According to Zhu et al (2004), efficiency refers to increasing employee productivity, by reducing or streamlining internal processes. Therefore, from this one can deduce that marketing performance depends on marketing efficiency.

MARKETING PERFORMANCE

Marketing performance measurement continues to be a large and growing concern for marketing scholars and managers‟ alike (O‟Sullivan et al, 2009). No matter what condition an organization may be in, assessing marketing performance finds marketing management‟s day-to-day energies

mostly devoted to matters of efficiency (doing things right) and effectiveness (doing the right www.zenithresearch.org.in

thing) (Connor & Tynan, 1999). An organization‟s marketing performance success depend more

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ on effectiveness and efficiency, however, the starting point should be measurement of marketing effectiveness, for doing the wrong things efficiently is pointless. Efficiency is not a measure of success in the market place. It is rather a measure of operational excellence or productivity. It is therefore, concerning with minimizing costs and improving operational margins. On the other hand, effectiveness is linked to a company‟s ability to design a unique model of embracing business opportunities through exchange relationships. Effectiveness, therefore, is related to the company‟s own recipe to generate a sustainable growth in its surrounding business network. Gaertner and Ramnarayan (1983) argue that effectiveness is not a characteristic of organizational outputs but rather a continuous process relating the organization to its constituencies; it is negotiated rather than produced. An effective organization is one that is able to create accounts of itself and of its activities that relevant constituencies find acceptable. The accounts may be for various purposes to various audiences and for various activities.

The diagram below, thus, shows that focusing on efficiency and neglecting effectiveness would result in an ephemeral profitability. In contrast, focusing on effectiveness and neglecting efficiency may result in an unprofitable growth. Therefore, a balanced approach that aims at high efficiency and high effectiveness would require for the success of organizations and this would make organizations to “stretch” their endeavors. Effectiveness may be seen as a long term while efficiency may be seen as a short-term achievement. For instance, sales or business managers who are responsible for a particular segment of a business may act within a long-term horizon of growing their sales volume. Similarly, marketing managers responsible for a number of products appear to act within a long-term horizon of building advertising awareness and market share. When efficiency comes, it appears that mangers are primarily concerned with short-term cost cutting to meet quarterly profits and operating cash flow.

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EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ FIG.1. EFFICIENCY VERSUS EFFECTIVENESS TRADE-OFF

Ephemeral profitability

Sustainable profitability

High

Efficiency

Low

Unprofitable growth

0 Low High

Effectiveness

The researcher believes that to be successful in the competitive and globalized marketing environment, marketing management must be effective in working with other departments and earning their respect and cooperation. Moreover, the key mangers should recognize the primacy of studying the market, distinguishing the many opportunities, selecting the best parts of the market to serve and gearing up to offer superior values to the chosen customers in terms of their needs and wants. These assure the sustainable growth of marketing performance within the organization, which in turn depend on the optimal level of marketing effectiveness and efficiency. www.zenithresearch.org.in

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ Furthermore, the organization must reflect a well-defined system for developing, evaluating, testing and launching new products because they constitute the heart of the business‟s future. In today‟s market, effective marketing calls the executives to have adequate information for planning and allocating resources properly to different markets, products, territories, and marketing tools and should have a core strategy that is clear, innovative and data based. However, not all these marketing programs and plans bear fruit unless they are efficiently carried out at various levels of the organization. Thus, marketing managers should maintain optimal levels of efficiency and effectiveness that will lead the sustainable profitability and growth of the organization. After a thorough examination and careful constructing of the theoretical and empirical literatures, the researcher developed the following conceptual model for this research problem.

Marketing Efficiency

Marketing Performance

Marketing Effectiveness

Therefore, the researcher hypothesizes as:

H: There is a significant positive relationship between marketing efficiency, effectiveness and the firms‟ marketing performance.

METHODOLOGY OF THE RESEARCH

From the researcher point of view, generally there is no optimal research methodology or method. According to Yin (1994), research strategy should be chosen as a function of the research situation. Each research strategy has its own specific approaches to collect and analyze empirical data, and thus each strategy has its own advantages and disadvantages. Therefore, based on the research questions, objectives of the research, the hypotheses to be tested, and aims as well as the methodologies and methods used in the other similar studies in the field, the researcher adopted an analytical survey method.

The researcher identified the medium and large financial service enterprises as a target of population. Proportionate stratified random sampling technique was employed in selecting the

respondents of the study. This is because the study population is somewhat heterogeneous www.zenithresearch.org.in namely, banks and insurance companies (Temesgen & Shekhar, 2011). For heterogeneous

population with appropriate lists, the stratified random sampling is appropriate technique to

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ increase the sample‟s statistical efficiency and representativeness for a given sample size (Krishnaswami & Ranganatham, 2010). To determine the desired sample size, the researcher assumed 95% level of confidence, 5% level of precision and 50 % variability (maximum variability) with respect to the nature of the population being studied. Accordingly, 200 randomly selected middle and top-level managers are included based on Yeman‟s (1976) simplified formula in the study.

n = 1+ N (e) 2

Where N -the target population, n- sample size and e-level of precision

QUESTIONNAIRE DESIGN PROCEDURE

For investigating the effect of marketing effectiveness and efficiency on the marketing performance of medium and large financial service enterprises in Ethiopian (MLFSEs), a cross- section of stratified randomly selected enterprises is used in generating the intended data. The structured questionnaires are administered personally for the middle and top-level managers of the sample unit companies. To get the intended data from these managers, the researcher adopted some instruments, which are used by others with little modifications in accordance with the nature of the current study. In addition, the remaining questionnaires are developed by the researcher.

To measure the marketing effectiveness of the financial sectors, the researcher examined Kotler‟s (1977; 1997) instruments. These instruments are the best known, most frequently cited and widely used out of others (Carson‟s 1990; Hooley & Lynch‟s 1985), where it has been used principally to determine the relationship of marketing effectiveness with some other variable, (Webster, 1995). Kotler‟s (1977:72) rating instrument utilizes 15 three-point scale questions to audit the marketing effectiveness of a company through a combination of five dimensions.

The researcher, thus, used these five dimensions of marketing effectiveness measures (namely customer philosophy, operational efficiency, strategic orientation, adequate marketing information, and integrated marketing organizations) in the current study. For the five dimensions of marketing effectiveness measures, thirty-one individual scale items with a five point Likert scoring format (1= strongly disagree ; 5= strongly agree) were used. These instruments were also adopted in the study of “marketing effectiveness and business performance in the financial industry” by Appiah-Adu et al (2001) with Cronbach‟s Alpha of 0.79, 0.86, 0.81 ,0.71, and 0.70 for customer philosophy, operational efficiency, strategic orientation, marketing information, integrated marketing organization respectively.

For the performance of marketing measures, Jusoh et al (2008) contend that traditional financial measures are criticized because they are short-term rather than long-term focus, measuring the

past rather than future. Besides, they tend to be obsolete and easily manipulated by managers. www.zenithresearch.org.in

Thus, recently, Kokkinaki and Ambler (1999) have summarized marketing metrics in six

categories: financial, competitive market, consumer behavior, customer intermediate, direct

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ customer and innovativeness measures. Therefore, to overcome the shortcomings of the traditional measures, the researcher depends on the six categories of marketing performance measures developed by Kokkinaki and Ambler (1999) which are summarized as follows:

 Financial measures (as turnover, contribution margin and profit)

 Competitive market measures (as market share, advertising and promotional share)

 Consumer behavior measures (as consumer penetration, loyalty and customer gained)

 Consumer intermediate measures (as brand recognition, satisfaction and purchase intention)

 Direct costumer measures (as distribution level, profitability of intermediaries and service quality); and

 Innovativeness measures (as products launched and their revenue).

Scale for the marketing efficiency construct included in the study was not available in the literature. Therefore, the researcher developed new scale for this construct. First, the researcher independently generated a large pool of items for this construct included in the study. Care was taken to tap the domain of this construct as closely as possible. Next, items were tested for clarity and appropriateness in personally administered pre-tests with the selected sample units of middle and top-level managers, research scholars and academicians in the area. They were asked to critically evaluate the items from the standpoint of domain representativeness, items specificity and clarity of construction. Based on the detailed critique that was received, some items were eliminated, revised and others maintained to improve their specificity and precision. Therefore, these procedures helped for the development of content validity and reliability.

After all, pilot study was conducted for twenty randomly selected financial sectors to check the reliability of the whole instruments. Accordingly, Cronbach Alpha is calculated for all the constructs and found (α > 0. 90) significant value. The hypothesis is tested by using multiple regression method as follows.

RESULTS OF THE STUDY

The hypothesis (H) pertained to the effect of marketing effectiveness and efficiency on the marketing performance of medium and large financial service enterprises in Ethiopia. Marketing performance is measured by an amalgam of six dimensions, namely: financial measure, competitive measure, consumer behavior measure, consumer intermediate measure, direct customer measure and innovativeness measure. Accordingly, the multiple regression equation

was estimated and presented in table 1 through 7 by incorporating the overall and different www.zenithresearch.org.in

marketing performance dimensions as dependent variables and marketing effectiveness and

efficiency as independent variables. The following estimated regression model is applied:

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/

Y= a0 +b1X1+b2X2 + e1

Where a0 is the constant, b1 and b2 are the linear coefficients of marketing effectiveness and marketing efficiency variables respectively. While Y stands for marketing performance in the financial service enterprises and e1 stands for error term. In order to apply this regression model, the auto-correlation (with Durbin-Watson) and multicollinearity (with condition Index, VIF and Tolerance level) are examined and found no problems.

The results obtain indicated that marketing effectiveness and efficiency have a significant positive impact on the overall and different marketing performance dimensions. Thus, the hypothesis has support from the findings under study. More specifically, each table is described and interpreted as follows.

TABLE 1

EFFECT OF EFFECTIVENESS AND EFFICIENCY ON MARKETING

PERFORMANCE- FINANCIAL

Un Standardized Standardized Independent Variable coefficients coefficients T- value Beta St. Error sig Constant .801 .136 5.885 .000 Marketing Effectiveness .439 .090 .477 4.854 .000 Marketing Efficiency .397 .092 .423 4.313 .000 Model Summary R R2 Adj. R2 Std. error of the Durbin Watson estimate .887 .787 .785 .32928 1.019 ANOVA Summary

Model Sum of df Mean Square F sig squares Regression 78.862 2 39.431 363.661 .000 Residual 21.360 197 .108 Total 100.222 199

Table 1 above indicates the impact of marketing effectiveness and efficiency on the financial measures of marketing performance in the financial service enterprises in Ethiopia. Accordingly, 78.5% of the variation of the dependent variable is explained by the independent variables. In addition to this, there is a significant positive relationship between marketing performance as measured by financial construct, and marketing effectiveness and efficiency.

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EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ TABLE 2

EFFECT OF EFFECTIVENESS AND EFFICIENCY ON MARKETING

PERFORMANCE- COMPETITIVE

Un Standardized Standardized Independent Variable coefficients coefficients T- value Beta St. Error sig Constant .428 .110 3.897 .000 Marketing Effectiveness .667 .073 .706 9.139 .000 Marketing Efficiency .227 .074 .236 3.057 .000 Model Summary R R2 Adj. R2 Std. error of the Durbin Watson estimate .937 .868 .867 .26553 1.006 ANOVA Summary Model Sum of df Mean Square F sig squares Regression 91.440 2 45.720 648.456 .000 Residual 13.890 197 .071 Total 105.330 199

Table 2 above indicates that to what extent the competitive marketing performance measure is influenced by the marketing effectiveness and efficiency factors in the Ethiopian financial service enterprises. Consequently, 86.8% of the total variation of the competitive dimension of marketing performance is influenced by the identified independent variables. The result also points out that the positive effect of the independent variable is found statistically significant at 0.05 levels. Of the two independent variables, the marketing effectiveness has taken up the majority influences on the competitive measure of marketing performance.

In the contemporary marketing performance measures, consumer behavior is considered as one of the important dimensions to measure marketing performance. Accordingly, the researcher tried to show the effect of marketing effectiveness and efficiency on the behavior of consumers that the financial service enterprises‟ actions to penetrate the consumer in the market and retained the customers. Consequently, it is found that there is a positive significant relationship between these identified independent variables and dependent variable. It is also statistically confirmed at 0.05 levels. Moreover, as indicated in table 3 below, 90.3% of the variation of the dependent variable is explained by the effectiveness and efficiency variables.

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EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ TABLE 3

EFFECT OF EFFECTIVENESS AND EFFICIENCY ON MARKETING

PERFORMANCE- CONSUMER BEHAVIOR

Un Standardized Standardized Independent Variable coefficients coefficients T- value Beta St. Error sig Constant .430 .093 4.610 .000 Marketing Effectiveness .571 .062 .610 9.201 .000 Marketing Efficiency .336 .063 .353 5.329 .000 Model Summary R R2 Adj. R2 Std. error of the Durbin Watson estimate .950 .903 .902 .22585 1.580 ANOVA Summary Model Sum of df Mean Square F sig squares Regression 93.395 2 46.697 915.460 .000 Residual 10.049 197 .051 Total 103.444 199

TABLE 4

EFFECT OF EFFECTIVENESS AND EFFICIENCY ON MARKETING

PERFORMANCE- CONSUMER INTERMEDIATE

Un Standardized Standardized Independent Variable coefficients coefficients T- value

Beta St. Error sig

Constant .312 .084 3.695 .000 Marketing Effectiveness .651 .056 .682 11.611 .000 Marketing Efficiency .283 .057 .291 4.966 .000 Model Summary R R2 Adj. R2 Std. error of the Durbin Watson estimate .961 .924 .923 .20407 1.298 ANOVA Summary Model Sum of df Mean Square F sig squares

Regression 99.511 2 49.756 1194.757 .000 www.zenithresearch.org.in www.zenithresearch.org.in

Residual 8.204 197 .042

Total 107.716 199

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ Table 4 above indicates that marketing effectiveness and efficiency have a positive significant impact on the consumer intermediate measure. It could include the brand awareness, usage, performance as well as the enterprises‟ on time performance and commitment to meet customers‟ expectations. This means that marketing efficiency could influence the time length of providing service and effectiveness could influence the fulfillment of the customers‟ expectations. Accordingly, 92.4% of the total variation in the consumer intermediate measure is explained by marketing effectiveness and efficiency in the Ethiopian financial service enterprises. TABLE 5

EFFECT OF EFFECTIVENESS AND EFFICIENCY ON MARKETING

PERFORMANCE- DIRECT CUSTOMER

Un Standardized Standardized Independent Variable coefficients coefficients T- value Beta St. Error sig Constant .264 .103 2.563 .011 Marketing Effectiveness .680 .068 .691 9.936 .000 Marketing Efficiency .265 .070 .265 3.802 .000 Model Summary R R2 Adj. R2 Std. error of the Durbin Watson estimate .945 .893 .892 .24889 1.087 ANOVA Summary Model Sum of df Mean Square F sig squares Regression 101.867 2 50.933 821.557 .000 Residual 12.213 197 .062 Total 114.080 199

In the service-based economy, developing strategy, which can provide immediate response, quality management, services distribution management and profit shares plans among the trading partners have immense value in this competitive marketing environment. These strategic marketing performances are addressed through direct customer measurement system. Accordingly, table 5 above indicates that the level of impact of marketing effectiveness and efficiency on the direct customer measure. As a result, it is found that there is a positive impact of marketing effectiveness and efficiency on direct customer measure and found statistically significant. Moreover, 89.3% of its total variation is best explained by the exogenous variables.

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EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ TABLE 6

EFFECT OF EFFECTIVENESS AND EFFICIENCY ON MARKETING

PERFORMANCE-INNOVATIVENESS

Un Standardized Standardized Independent Variable coefficients coefficients T- value Beta St. Error sig Constant -.139 .119 -1.162 .247 Marketing Effectiveness .674 .079 .638 8.487 .000 Marketing Efficiency .333 .081 .310 4.120 .000 Model Summary R R2 Adj. R2 Std. error of the Durbin Watson estimate .935 .875 .874 .28896 .973 ANOVA Summary Model Sum of df Mean Square F sig squares Regression 115.269 2 57.635 690.234 .000 Residual 16.450 197 .084 Total 131.719 199

Innovation is one of the determinant elements of marketing performance measures. Table 6 above shows that whether marketing effectiveness and efficiency contribute for the innovative performance of marketing within the financial service enterprises. Accordingly, the result shows that marketing effectiveness and efficiency have a positive significant impact on the innovative measure of marketing performance dimensions. In addition to this, 87.5% of the total variation is explained by these identified variables and the remaining difference is attributed to the error term.

Table 7 below indicates the estimated regression equation results, which incorporated marketing effectiveness and efficiency as independent variables and overall marketing performance as dependent variable. Consequently, the regression result shows that there is a positive influence of marketing effectiveness and efficiency on the overall marketing performance in the Ethiopian financial service enterprises and found statistically significant at 0.05 levels. Moreover, 94.5% of the total variation of the overall marketing performance is explained by the independent variables.

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EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ TABLE 7

EFFECT OF EFFECTIVENESS AND EFFICIENCY ON OVERALL MARKETING

PERFORMANCE

Un Standardized Standardized Independent Variable coefficients coefficients T- value Beta St. Error sig Constant .349 .070 4.985 .000 Marketing Effectiveness .614 .047 .660 13.174 .000 Marketing Efficiency .307 .047 .324 6.476 .000 Model Summary R R2 Adj. R2 Std. error of the Durbin Watson estimate .972 .945 .944 .16195 .966 ANOVA Summary Model Sum of df Mean Square F sig squares Regression 96.350 2 48.175 1676.673 .000 Residual 5.660 197 .029 Total 102.010 199

DISCUSSIONS AND INTERPRETATIONS

In this section, the analysis and implications of the current findings and their interrelationships with previous research findings are discussed. The focus is mainly on the substantive interpretations of the results and the emergent findings.

The concept of marketing effectiveness and efficiency has been extensively discussed because of its strong association with many valuable of organizational outcomes such as stable long-term growth, enhanced consumer satisfaction, a competitive advantage, and strong marketing performance achievements. Table 1 through 7 indicates, there is a significant positive relationship between marketing effectiveness and efficiency, and marketing performance variables, which supports the hypothesis (H). Consequently, the results of this research have wider implications for academicians and practitioners in the field.

First, as the result shows in table 1, marketing effectiveness and efficiency affect marketing performance-financial measure, relatively with the same magnitude (β1 = 0.477, β2= 0.423). This implies that marketing effectiveness, which focuses on the achievement of marketing goals and programs; and marketing efficiency, which underlies on the cost reduction of marketing activities have almost an equal contribution for the performance of marketing within the financial service enterprises in Ethiopia. This is because of the fact that an organization‟s marketing performance success depend more on effectiveness and efficiency, however, the www.zenithresearch.org.in

starting point should be measurement of marketing effectiveness, for doing the wrong things

EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ efficiently is pointless. Thus, the financial dimension of marketing performance in the Ethiopian financial service enterprises is almost equally affected by marketing effectiveness and efficiency.

Secondly, although marketing effectiveness and efficiency were found to be a significant predictor of marketing performance, the results further indicate that the strength of a particular marketing effectiveness and efficiency vary according to the specific marketing performance dimensions. For example, referred in table 2 and table 7, marketing effectiveness is the strongest and marketing efficiency is the least predictor of competitive measure of marketing performance (β1 = .706, β2 = .236) respectively, in particular and overall marketing effectiveness (β1 = 0.660 β2 = 0. 324), in general. Thus, it is unwise to assume that the different marketing performance dimensions (except financial measure) and overall marketing performance measure are affected in the same manner by marketing effectiveness and efficiency within the financial service enterprises in Ethiopia. These calls for the service marketers and managers to decide which components of marketing performance are most important. If consumer intermediate measure, for instance, receives priority, then marketing effectiveness and efficiency must be planned and developed that emphasizes understanding the importance of designing the firm to serve the needs and wants of the chosen market with the lowest possible cost. Thus, a balanced marketing performance growth could be attained for a given targeted marketing performance dimension. The implication of the results further reveals those tables 2 through table 7 indicate the greater impact of marketing effectiveness than marketing efficiency does on the marketing performance measures. This means that the Ethiopian financial service managers and practitioners are giving too much focus on marketing effectiveness than efficiency, which results in unprofitable growth within the financial service enterprises. More specifically, focusing on efficiency and neglecting effectiveness would result in an ephemeral profitability. In contrast, focusing on effectiveness and neglecting efficiency may result in an unprofitable growth. Thus, a balanced approach that aims at high efficiency and high effectiveness would require for the success of organizations and this would make organizations to “stretch” their endeavors. These research findings are also substantiated by different researchers in the field. For instance, Gaertner and Ramnarayan (1983) argue that effectiveness is not a characteristic of organizational outputs but rather a continuous process relating the organization to its constituencies; it is negotiated rather than produced. An effective organization is one that is able to create accounts of itself and of its activities that relevant constituencies find acceptable. Effectiveness may be seen as a long term while efficiency may be seen as a short-term achievement. For instance, sales or business managers who are responsible for a particular segment of a business may act within a long-term horizon of growing their service sales volume. Similarly, marketing managers responsible for a number of services/products appear to act within a long-term horizon of building advertising awareness and market share. When efficiency comes, it appears that mangers are primarily concerned with short-term cost cutting to meet quarterly profits and operating cash flow. Marketing managers should maintain, thus, optimal levels of efficiency and effectiveness that will lead the sustainable profitability and growth of organizations.

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EXCEL International Journal of Multidisciplinary Management Studies Vol.1 Issue 2, November 2011, ISSN 2249 8834 Online available at http://zenithresearch.org.in/ CONCLUSIONS AND MANAGERIAL IMPLICATIONS Marketing effectiveness studies in different countries determined, that companies, which have high marketing effectiveness, operate better if making a comparison with competitors, which doesn„t have it. Thus, it is possible to maintain that one of the main factors which does influence on company‟s performance is effective marketing. The importance of marketing effectiveness grew in financial service companies were it is considered to be determinant factor. The measure of marketing effectiveness is an amalgam of five components. These are consumer philosophy, strategic orientation, adequate marketing information, operational efficiency, and integrated marketing organization. Whereas the efficiency of marketing is measured, with fifteen items construct, that focuses on cost and transaction related efficiencies. Furthermore, marketing performance is measured with six dimensions, namely: financial, competitive, consumer behavior, consumer intermediate, direct customer and innovative measures.

The primary purpose of this study, thus, is to determine the relationship between marketing effectiveness and efficiency, and marketing performance within the financial service enterprises in the Ethiopian context. The results of this study show that there is a strong and significant positive relationship between marketing effectiveness and efficiency, and marketing performance. These research findings also strongly support the empirical findings of other researchers in the field.

Although marketing effectiveness and efficiency were found to be a significant predictor of marketing performance, the results further indicate that the strength of marketing effectiveness and efficiency variables vary according to the specific marketing performance dimension. For example, marketing effectiveness is the strongest predictor of financial measure of marketing performance in particular and overall marketing performance, in general. Thus, it is unwise to assume that all the marketing performance dimensions are affected in the same manner by independent variables within the financial service enterprises in Ethiopia. Focusing on efficiency and neglecting effectiveness would result in an ephemeral profitability. In contrast, focusing on effectiveness and neglecting efficiency may result in an unprofitable growth. Therefore, a balanced approach that aims at high efficiency and high effectiveness would require for the success of organizations and this would make organizations to “stretch” their endeavors.

FURTHER RESEARCH IMPLICATIONS

In addition to managerial implications, several research implications are also apparent for researchers. Though the findings of this study demonstrate that the marketing effectiveness and efficiency relationship with marketing performance is significantly strong across the different medium and large financial service enterprises in Ethiopia, replications with other service industries and non-service industries would be desirable. Finally, further research on the effect of marketing effectiveness and efficiency on the overall organizational performance could also be needed.

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