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Posted On: Nov. 3, 2017
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Corporate hospitality: executive indulgence or vital corporate communications weapon? The Authors Roger Bennett, London Metropolitan University, London, UK. Abstract Heads of marketing in 189 UK companies known to engage in corporate hospitality (CH) completed questionnaires regarding their attitudes and approaches towards the practice. A cluster analysis of the replies revealed four distinct groups of enterprise: CH “warriors”, “pragmatists”, “reactors”, and “strategic hopefuls”. Corporate hospitality warriors displayed strategic CH orientations and carefully measured the outcomes. Pragmatists also evaluated the impacts of CH, but adopted essentially ad hoc approaches. Strategic hopefuls used CH strategically, yet without bothering to assess its consequences. Reactors undertook CH only because their competitors did so. Additionally the research examined the extents to which the sample businesses applied conventional marketing management methods to the CH function, and the respondents’ perceptions of the benefits and problems of CH. A regression analysis identified some major sources of satisfaction with CH activities. These included the employment of formal market research to match CH events with clients, the location of responsibility for CH in a marketing or public relations department, the adoption of strategic approaches to CH, and the formal evaluation of outcomes. Article Type: Research paper Keyword(s): Corporate hospitality; Entertainment; Marketing communications. Journal: Corporate Communications: An International Journal Volume: 8 Number: 4 Year: 2003 pp: 229-240 Copyright © MCB UP Ltd ISSN: 1356-3289 Introduction The topic of corporate hospitality (CH) has occupied a prominent position in the practitioner marketing literature for several years (see, for example, Luckhurst, 1996; Chetwynd, 1998; Flack, 1999; Thatcher, 2000; Croft, 2001; Fletcher, 2001; Parker, 2001; Irwin, 2002). Marketing magazines routinely carry special sections and reports on corporate entertaining, event marketing, and other CH related matters (e.g. Parker, 2001; Croft, 2001; Fletcher, 2001), while total expenditures on CH now exceed 5 per cent of the value of all advertising spending in the UK (Baxter, 2000). Yet, to the very best of the author’s knowledge, CH has not been the subject of serious academic (rather than practitioner) research. Accordingly, the current paper seeks to contribute to what is known about this important aspect of corporate communications by presenting the results of an empirical investigation into attitudes and approaches towards CH among a sample of 189 senior marketing executives in UK enterprises. The research focused on the question of whether the sample firms adopted strategic as opposed to ad hoc approaches to CH (as the practitioner literature increasingly suggests), and on whether conventional marketing management practices were applied to the implementation and control of CH activities (cf. Irwin and Asimakopoulos, 1992; Bennett, 1997 pp. 93-4). It is known that CH frequently overlaps with sponsorship (Hughes, 2000; Baxter, 2000; Fletcher, 2001; Parker, 2001; Irwin, 2002), so it is reasonable to enquire whether CH is managed in manners analogous to those appropriate for sponsorship. Irwin and Asimakopoulos (1992) suggested the following programme for the effective management of sponsorship programmes: 1. (1) setting objectives; 2. (2) placing responsibility for the function in a marketing or public relations (PR) department; 3. (3) evaluation; 4. (4) screening and selecting alternatives; 5. (5) integrating the function into the marketing communications mix; and 6. (6) assessing effectiveness vis-à-vis the achievement of prescribed objectives. All these matters were queried in the CH context as a part of the investigation. The results from studies of this nature are important because evidence suggesting that companies are using CH strategically would imply the continuing growth of the practice and hence the need for all marketing executives to learn more about the advantages, opportunities and problems associated with CH. Conversely, findings indicating a general failure to apply strategic approaches would imply that better management of CH could result in the function making even greater contributions to corporate communications in the future. At the theoretical level, outcomes to this type of investigation contribute to the theory of “liking” and the determinants of liking in the corporate sphere. Liking is known to encourage commitment (see Sears et al., 1991, Ch. 8), and it has been established that people tend to like individuals or organisations that reward them in some way. This extends to outsiders who overtly express positive evaluations (i.e. flatter) a person and agree with his/her views (Baron and Byrne, 2000). Psychological research has also established that, in general, individuals are more inclined to like people and entities associated with good experiences and to dislike those connected with bad experiences (Cramer et al., 1985). Indeed, the very anticipation of an enjoyable interaction can stimulate liking (Gold et al., 1984; Sears et al., 1991). Numerous studies in social psychology have demonstrated that liking is facilitated by physical propinquity and exposure, especially if the people in close proximity have similar goals (see Baron and Byrne, 2000). Gold et al. (1984) found that even the simplest elements of physical proximity such as eye contact, leaning towards a person, listening attentively, etc., have the capacity to increase liking. CH events typically bring host and guest into close proximity for several hours at a stretch, and create many opportunities for hosts to demonstrate shared interests with clients and similarities in values and attitudes (factors known to facilitate liking – see Lydon et al., 1988); to stimulate guests’ feelings at self-esteem; and generally to demonstrate their liking for attendees. Several investigations have concluded that behaviour which conveys liking for someone else results in a high probability that the recipient will reciprocate in positive ways (see Sears et al., 1991; Aronson et al., 1997 for details of the psychological literature supporting this proposition). Extent and nature of CH CH involves events and activities organised for the benefit of companies that wish to entertain clients, or prospective clients or employees, at the company’s expense. In Britain, the CH “industry” comprises approximately 5,000 event organisers, CH consultants, venue representatives, specialist caterers, activity operators, agents and brokers (Baxter, 2000). A Key Note 2000 market report estimated aggregate UK spending on CH at approximately £700 million, and predicted a rise in the value of the market to £834.7 million by 2003 (Baxter, 2000). MAPS (1998) forecast that the CH market would be worth £998 million by 2003.) Most of the anticipated expansion, the Key Note report alleged, was attributable to spectator sports. Spending on CH at spectator sports was expected to increase by 18 per cent between 2000 and 2003 (compared with 12.5 per cent for the sector as a whole), due in large part to wide-ranging investments in corporate entertainment capacity by the major sporting venues. Hughes (2000) cited agency research completed in 1997 which suggested that CH routinely accounted for just under 5 per cent of companies marketing budgets, representing therefore a very significant marketing outlay. According to Baxter (2000), soccer accounted for the largest number of CH events (16 per cent of the total), followed by horse racing (15 per cent), rugby (12 per cent), cricket (11 per cent), and golf (10 per cent). Participatory events accounted for 11.8 per cent of all CH expenditures; arts and culture for 5 per cent. Approximately 75 per cent of the market was devoted to client hospitality, the remainder to entertaining companies’ employees (90 per cent of corporate spending on client hospitality was directed towards current (as opposed to potential) customers.) Crucially, Baxter (2000) continued, aggregate CH expenditures rose by a larger amount (27.2 per cent) between 1995 and 1998 than for either sports sponsorship (23.9 per cent) or general advertising (15.1 per cent). Factors possibly contributing to this rapid growth include heavy investment in CH facilities by venues (Fletcher, 2001); increasingly ferocious competition within markets and hence the need to find new ways of obtaining a competitive edge (Croft, 2001); and the transformation of an economy based on manufacturing to one primarily devoted to the provision of services (and thus to the growing importance of personal relationships) (Baxter, 2000). Usefulness of CH for marketing and corporate communications Flack (1999) characterised CH as an extension of relationship marketing. It could be used to build trust and loyalty, shape or shift client perceptions of corporate identity, and develop favourable “word-of-mouth”. Further benefits commonly ascribed to CH include its capacities to “retain profitable business, increase sales from existing customers, win-back profitable business and gain new customers” (Irwin, 2002, p. 23); leverage sponsorship activities (Baxter, 2000); and delight attendees to such an extent that follow-up contacts are extremely well-received (Longbottom, 1997). Hosts might spend four or five hours with a client in a relaxed environment (Hughes, 2000). Crucially, the attendee’s contact with the host is memorable and enjoyable (Parker, 2001), since the “only surprises are pleasant ones” (CHEA, 2001, p. 1). Hence CH can “provide a platform from which to inform, inspire and motivate” the client (Irwin, 2002, p. 23). An NOP survey of 250 UK companies conducted in July 2000 discovered that 56 per cent of those questioned believed that the aims of CH could not be met in any other way (see Baxter, 2000). Half of the remainder thought that CH was the best way of achieving these aims. A total of 30 per cent of the respondents stated that their CH spending had increased in the previous two years, indicating a substantial degree of satisfaction with the practice. Problems connected with CH Rivalry among hosts has led to a proliferation of CH activities and thus to potential guests being inundated with invitations. Consequently, guests are becoming more demanding, so that specific events need to be increasingly exotic (and expensive) in order to arouse client interest (Luckhurst, 1998). This has allegedly led to companies competing with each other in terms of the creativity and originality of their invitations (CHEA, 2001), resulting in hosts feeling obliged to spend more and more on each event in order to attract acceptances (see Hughes, 2000). It is relevant to note moreover that, as the practice has spread, it has become difficult for successful companies not to engage in CH, as success means that an enterprise has a greater number of customers who will expect to be entertained (Baxter, 2000). Another danger is that CH may be construed by outside observers as bribery or corruption, especially if public figures are involved. Critics allege that CH frequently entails the provision of benefits that the recipients could not normally afford and which, by their very nature, are not business-related (Chetwynd, 1998). However, clients are (allegedly) unlikely to sense that they are being bribed, as CH is indirect and rarely includes the “gift” of a physical product (Ramsay, 1990). Luckhurst (1996) noted a trend towards the targeting of delegates’ partners rather than the executives themselves, even to the extent of partners being approached prior to the communication of invitations to the target managers. Technically, the provision of CH is illegal only if the benefit arising from it is obtained “corruptly”, e.g. if a contract is awarded in direct consequence of the hospitality received irrespective of the price or quality of the goods or services furnished (Chetwynd, 1998). Thus, hosts must take care to present CH as an aspect of a firm’s general PR and not as a direct “selling” activity. Then, corporate entertaining can be justified to the outside world as simply “another way of presenting the public face of the company” (Chetwynd, 1998). Strategic approaches Longbottom (1997) reported anecdotal evidence suggesting that expenditures on CH could be seen as a “barometer of business health”, expanding and contracting as national economic growth rates fluctuated. Luckhurst (1997a) and MAPS (1998) also claimed that CH expenditures were highly sensitive to movements in the overall economy. This was supposedly due to corporations not wanting to be seen “wining and dining” customers during recessionary periods when shareholders’ dividends were being cut and employees were facing redundancy. However, a growing body of practitioner opinion maintains that CH is increasingly employed strategically, rather than as an ad hoc device only applied during profitable periods (see for example Champ, 1996; Longbottom, 1997; Flack, 1999; Baxter, 2000; Hughes, 2000; Irwin, 2002, Thatcher, 2000; CHEA, 2001). For instance, Baxter (2000) noted “remarks by industry observers” which firmly suggested that CH “no longer acts as a barometer of economic activities, i.e. a slowdown in company activity does not necessarily mean a reduction in CH budgets” (p. 2). Indeed, CH was more and more “part of the marketing mix of host companies” and, as such, less and less sensitive to economic downturn (p. 1). Flack (1999) reported the outcomes to an agency survey of 251 medium to large sized UK companies conducted in 1998 which indicated that 60 per cent were planning to maintain their CH spending at constant levels, in real terms, for the next five years even if a recession occurred. Of the sample firms, 30 per cent stated that they intended increasing their CH expenditures. Clearly, the willingness of a company to sustain CH spending when times are financially difficult is a key indicator of the degree to which CH is regarded as a vital element of the strategic corporate communications mix. In fact, firms adopting a strategic approach to CH might spend more on CH during a period of financial exigency in order to portray a positive image (Flack, 1999). Also, the strengthening of relationships with major clients is arguably more important than ever when a recession seems likely. The practitioner literature offers further recommendations vis-à-vis the identification of strategic approaches to CH, including: • conducting formal research to pinpoint and target key customers for guest lists (Champ, 1996; Irwin, 2002; McKenzie, 1997; Thatcher, 2000) and to establish which events have the greatest appeal to a firm’s key clients (Longbottom, 1997; CHEA, 2001); • establishing clear objectives before selecting an event and who to invite (Irwin, 2002); • integrating CH into marketing communications programmes (Baxter, 2000); • using CH to leverage sponsorships (Baxter, 2000); • explicitly linking events to the corporate image and identity of the organisation (CHEA, 2001); • involving top management in the planning of CH activities (Baxter, 2000); • incorporating CH into business development strategies (Irwin, 2002); • developing bespoke activities in place of traditional events (such as sporting events) (Flack, 1999; Baxter, 2000); • locating CH expenditures in marketing (rather than general) departmental budgets (Irwin, 2002). Monitoring and evaluation Champ (1996) claimed that accountability for CH expenditures had risen dramatically: budgets were more strictly monitored and guests were more carefully selected. Conversely, Thatcher (2000) quoted the results of a survey of 77 UK companies which found that only 34 per cent of them actually evaluated events against marketing objectives; while 35 per cent applied no measurement at all. Only half the enterprises had a centralised annual plan for events; 72 per cent cited the personal preferences of senior management as an important determinant of the choice of a CH activity. This lack of formality was attributed to CH being regarded as a component of other corporate communications activities (PR, advertising or sponsorship for example), rather than as a standalone value adding marketing weapon. MAPS (1998) similarly found that two-thirds of host companies did not conduct research to measure the effectiveness of CH, even though effectiveness could be easily evaluated in terms of increased sales to customers who attended specific events. Baxter (2000) reported the results of a 1998 NOP survey which discovered that more than two-thirds of businesses made no attempt to measure the impact of CH. Of the remainder, 34 per cent relied heavily on attendee feedback, and 23 per cent on informal estimates of the amount of business they believed an event had generated. Comparable figures emerged from a survey of 260 blue-chip UK companies completed by the Total Research Organisation in 1996 (see Luckhurst, 1997b). This apparent lack of concern for evaluating the efficacy of CH among UK companies was explained by Baxter (2000) in terms of it being regarded as “the least scientific of all aspects of marketing” (p. 12). The effectiveness of CH was not assessed, Baxter continued, even when sponsorship (especially sports sponsorship) and CH expenditures overlapped because it was “extremely difficult to evaluate with precision what proportion of CH falls under sponsorship, as companies show different patterns and policies in their marketing spending” (p. 9). Another potential difficulty with evaluation is the length of the lead time between a client attending an event and his or her company placing an order with the host firm (McKenzie, 1997). This might be anything up to two years in duration, and circumstances might have changed dramatically in the intervening period. The study In order to investigate the abovementioned issues a mail questionnaire was developed subsequent to a review of relevant literature and discussions with employees of two major CH consultancies. This was used in a pilot study of a sample of 50 host companies selected at random from the sampling frame for the main study. After a follow-up, 19 replies were received, providing useful feedback and a basis for amending and improving the original questionnaire items. The sampling frame itself comprised two elements. First, 322 companies specified in the “client list” sections of the Web sites of CH agencies and consultancies belonging to a CH trade association. Second, and because the first component of the sampling frame involved firms that employed agents and consultants and which, ipso facto, might be expected to adopt more strategic approaches to CH, the questionnaire was mailed to a further 279 companies known to have hosted CH activities at 11 horse racing meetings, two tennis tournaments, three arts events, and 16 Premier and Football League matches. (The names of these businesses were obtained from venue Web pages, telephone calls to venues and personal observation.) A covering letter accompanying the questionnaire explained the nature of the research and was addressed to the head of marketing in each firm. Eventually, 100 replies were received from the first part of the sampling frame (31 per cent) and 89 from the second (32 per cent). Of the 89 businesses, 11 in the latter group employed a CH agent or consultant. The mean values of the responses of the 111 firms using and the 78 enterprises not using, a CH agent or consultant were compared via the facility available for this purpose on SPSS 11. No meaningful statistically significant differences between the replies of the two sections became apparent, i.e. it was not the case that companies engaging CH agents or consultants had different attitudes or behaviour vis-à-vis CH than businesses that did not use agents or consultants. Hence the two sub-samples were combined and the responses analysed for the entire 189-strong group. Although less than a majority of the firms approached replied, there was no evidence to suggest that the sample was biased or unrepresentative[1]. Results Of the 189 companies, 55 per cent employed between 1,000 and 10,000 people; 16 per cent had more than 10,000; while 18 per cent had fewer than 500 employees. A total of 19 per cent of the firms operated in the financial services sector; 15 per cent in “engineering, motors and electrical products”, 15 per cent in retailing, and 14 per cent in media and business services. The remaining companies were located across a wide range of sectors. Management of CH Two-thirds of the respondents agreed or strongly agreed that “highly formal” procedures were applied to the management of CH within their enterprises. Responsibility for CH rested with a marketing department in 17 per cent of the sample companies, a PR or analogous department in 24 per cent, a single senior non-marketing manager in 18 per cent, a finance department in 8 per cent, and with a sponsorship manager in 9 per cent. Multi-disciplinary team decision-making vis-à-vis CH activities was relatively unusual; only 8 per cent of the respondents stated that this occurred within their firms. When it did take place, it was always the case that the team included a member from the company’s marketing department. Hence, CH was seen as a marketing/PR or sponsorship issue in half the sample, and as a function requiring a marketing input in a further 8 per cent. This suggests that marketing skills were considered important for the planning of CH and that CH was seen as a tangible element of the marketing mix of the majority of the sample enterprises. (Witcher et al., 1991; Webster, 1992; Bennett, 1997; Irwin, 2002) and others have concluded that the location of responsibility for a specific function within a marketing department (rather than a finance or general administrative department) is a significant indication that senior management regards it as belonging predominantly to the marketing domain.) A third of the respondents reported that CH expenditures were incorporated into their companies’ marketing budgets. A further third operated separate and independent budgets for CH, while 15 per cent placed CH budgets in a finance department. The respondents were asked to indicate the percentage of their firms’ total marketing expenditures devoted to CH (1-2 per cent; 3-5 per cent … 8-9 per cent; more than 10 per cent). Of the sample, 55 per cent ticked the 1-2 per cent category, and 25 per cent the 3-5 per cent division. Hence, average CH spending was rather lower than the “typical” 5 per cent of a company’s marketing budget suggested by Hughes (2000). CH plans were drafted quarterly in 20 per cent of the companies; annually in 40 per cent, and every six months in 30 per cent. Respondents were questioned about the main influences on their firms’ choices of CH events and which people to invite, and how they arrived at decisions. The “in-house assessment of the goodness of the match between particular CH activities and specific clients” was cited as an “important” or “extremely important” method for selecting events and clients by 68 per cent of the sample. Only 10 per cent reported that the personal preferences of top management exerted an important or very important influence on choices (this contrasts sharply with the 72 per cent cited by Thatcher, 2000). A total of 36 per cent of the firms completed formal market research into the suitability of specific CH events. Two-thirds of the respondents regarded improvements in CH venues as an important or very important reason for the growth of CH in recent years (confirming the view of Fletcher, 2001), and three-quarters agreed/strongly agreed that better consultancy services and CH infrastructure were now available. Table I gives the outcomes to questions about objectives, the targeting of guests, and the host’s behaviour at events. The majority of the companies in the sample set both general and sales objectives for CH, but not specific targets for improving the firm’s image (see items 1 to 3). Nearly two-thirds of the companies had a central plan for CH activities (14 per cent more than the 50 per cent quoted by Thatcher, 2000) (see item 4). Company representatives were usually instructed on how to behave though they rarely received formal training (see items 8 and 9), and most firms sought to have their people in close proximity to clients for the longest possible period (cf. Hughes, 2000) (items 10 and 11). Overwhelmingly, invitations were aimed at pre-existing clients (cf. Baxter, 2000) (item 5). However, there was no evidence of guests’ partners being targeted (items 6 and 7) (cf. Luckhurst, 1996). Importance, benefits and problems of CH Three-quarters of the respondents agreed or strongly agreed that CH was “taken very seriously” by their organisations. A total of 68 per cent agreed/strongly agreed that CH was a “vital element of the marketing communications mix”; the same percentage that agreed/strongly agreed that the aims of their companies’ CH could not be achieved by any other marketing method (12 per cent higher than the 56 per cent found by the NOP survey reported by Baxter (2000). Respondents were asked whether, faced with a recession, their firms would cut their CH budgets pro rata by any more than the budgets of other marketing activities. A total of 65 per cent stated that they would not cut their budgets in this way (confirming the trend noted by Flack (1999) who cited 60 per cent of an earlier sample agreeing with this proposition). A total of 15 per cent of the respondents replied that their companies were likely to increase CH expenditures at the onset of a recession. Table II lists the results for questionnaire items concerning respondents’ perceptions of the benefits attributable to CH. (The items for this section were derived from the practitioner literature on the subject (e.g. Longbottom, 1997; Flack, 1999; Baxter, 2000; Irwin 2002). It can be seen that items 1 to 3 involving relationship marketing were seen as major benefits of CH (cf. Flack, 1999). Direct selling (cf. Longbottom, 1997) and image building (items 4 to 6) were also regarded as important. Conversely, and in contradiction of the suggestions of Irwin (2002), CH was not normally viewed as a useful way of gaining business from new rather than existing customers, or for winning back lapsed clients. Of the sample companies, 15 per cent were engaged in sponsorship. Of these, 82 per cent agreed/strongly agreed that CH was an extremely important device for leveraging sponsorship activities (the meaning of “leveraging” in the present context was explained in non-technical terms in the body of the questionnaire). Responses concerning the problems perceived to apply to CH are summarised in Table III. These findings are compatible with the practitioner literature which has posited that it is becoming increasingly difficult and expensive to attract clients to attend events (items 1 to 3) (see Luckhurst, 1998; Hughes, 2000; CHEA, 2001), and that competition (item 4) is leading to spiralling costs (Baxter, 2000; Croft, 2001). However, the respondents within this particular sample did not generally regard evaluation as a problem (contradicting the anecdotal evidence reported by McKenzie, 1997; MAPS, 1998; Baxter, 2000; and Thatcher, 2000) and they certainly did not believe that invitees or others would perceive CH as a form of bribery (cf. Ramsey, 1990; Chetwynd, 1998). A majority of the firms in the sample formally evaluated the effectiveness of the CH function in some way or other. A total of 48 per cent tracked post-event sales to attendees, more than three-quarters stated that they made informal estimates of the extra business generated by events, 65 per cent systematically gathered feedback from guests, and 55 per cent attempted to compare outcomes with initial objectives. Only 10 per cent of the respondents agreed or strongly agreed with the proposition that the impact of a CH event was “virtually impossible to measure”. These figures differ remarkably from those of reported agency surveys (see Luckhurst, 1997b; MAPS, 1998; Baxter, 2000; Thatcher, 2000), which typically concluded that no more than a third of firms engaging in CH bothered to measure the impact of CH on sales (23 per cent according to the NOP survey (see Baxter, 2000)) or other performance indices, or to evaluate outcomes against initial objectives. Companies in the present sample that did in fact track sales usually did so for up to a year after an event (64 per cent of these firms), with 20 per cent monitoring sales for two subsequent years, and 16 per cent tracking sales for more than two years. Strategic approaches Several of the abovementioned outcomes are compatible with the proposition that UK businesses are adopting more strategic approaches to CH. Majorities of the sample possessed highly formal procedures for managing CH, set objectives, planned CH centrally, and involved marketing staff heavily in CH decisions. Also, nearly two-thirds of the respondents stated that their firm’s would not cut CH budgets pro rata by more than other forms of promotion during a recession. Table IV summaries the responses to further questionnaire items that explored the strategic dimension of CH. It can be seen that most attempted to integrate CH into their overall marketing communications (cf. Baxter, 2000) and their general business development planning (cf. Irwin, 2002). Activities were designed to support image building programmes (cf. CHEA, 2001), but relied mainly on pre-existing rather than bespoke events (see item 5). Half the sample stated that CH was used to help attain strategic marketing objectives. Satisfaction A number of items were employed to assess levels of satisfaction with CH, as shown in Table V. A total of 45 per cent of the respondents were highly satisfied with the outcomes to their CH activities (see Table V item 1); 25 per cent disagreed/strongly disagreed with this item, with 30 per cent of the replies falling in the central (n = neither agree nor disagree) category. Similar outcomes applied to satisfaction with CH’s contributions to sales (n = 32 per cent), image building (n = 30 per cent), and the development of relationships of a quality that could not have been achieved in other ways (item 4, n = 28 per cent). Taking into account the percentages of the responses in the n = neither agree nor disagree categories, these figures suggest substantial satisfaction with the sample firms’ CH activities. A total of 38 per cent indicated their intention to increase CH spending in the future. Analysis To gain an insight into the characteristics of the firms that adopted strategic approaches to CH most intensely, the 189 companies were clustered in two dimensions with a composite “strategic approach” variable on one axis and an aggregated extent of “evaluation” variable on the other. Table IV items 1 to 4 and item 6 were highly intercorrelated (R > 0.55 in all cases) and hence were combined into a single scale to reflect strategic orientation. Likewise, the propensities to track sales, gather feedback from guests, and compare outcomes with objectives were all intercorrelated (R > 0.6), so these items were similarly aggregated to form a compounded “evaluation” variable. The firms were clustered using the K-means cluster facility available on SPSS. A four-cluster solution outperformed the alternatives[2] and generated clusters with significant differences (p < 0.05) between all the cluster means. Cluster 1 contained 41 companies that were relatively high on both their strategic orientation (cluster mean = 4.0) and their evaluation practices (mean = 3.2). These firms may reasonably be called CH “warriors”, as they adopted proactively strategic approaches to the practice and were eager to measure the results. A second cluster of 62 companies, hereafter referred to as “reactors; occupied the opposite quadrant and were low on both strategic orientation (mean = 2.2) and evaluation (mean = 2.0). Presumably these firms only engaged in CH because they observed competitors doing so, and did not wish to lose out. Cluster 3 also contained 62 businesses (named “pragmatists”) that were relatively high on evaluation (mean = 3.0), yet low on strategic orientation. The 25 companies in the final cluster are termed “strategic hopefuls”, as they adopted strategic approaches (mean = 3.6), but did not bother to measure the results (mean = 2.1). Mean values for all the questionnaire items were computed for each of the four groups of companies. Significant differences between two or more of the means occurred with respect to the items listed in Table VI. It is evident from Table VI that CH warriors spent relatively freely on CH, tended to locate responsibility for CH in a marketing department, drafted CH plans frequently, set targets, trained their staff in CH more than firms in other categories, targeted potential as well as existing clients to a greater extent, and were more likely to increase CH expenditures during a recession. Of the 36 financial services firms in the sample 16 (40 per cent) fell within the warrior cluster. Strategic hopefuls also spent quite a lot on CH, managed CH via a marketing department and set CH objectives. Nearly a third of this group were financial services companies. Pragmatists often used formal market research to match events and clients, set objectives, and some would target potential clients. Reactors were low on most elements connected with the strategic approach, and commonly believed that competitive pressures were forcing them to spend excessive amounts on CH activities. Determinants of satisfaction with CH A regression analysis was completed to establish the main determinants of satisfaction with CH. As the study was exploratory in nature, no a priori hypotheses were available to predict the variables most likely to exert a significant influence. Thus, an experimental approach was adopted whereby possible independent variables were identified from correlation matrices, the cluster analysis, and ad hoc stepwise regressions. The model that emerged is shown in Table VII. Three dependent variables were employed: overall satisfaction, plus satisfaction with CH as a means for increasing sales and for developing corporate image. It can be seen from Table VII that the adoption of a strategic approach had a significant impact in all three regressions. Likewise for the practice of evaluating the consequences of CH and using market research to match events and clients. The variables, location of responsibility for CH in a marketing department, and taking steps to ensure that the firm’s representatives were as physically close to clients as possible, contributed significantly to satisfaction in two out of three cases. Satisfaction with CH as a device for increasing sales depended additionally on the provision of staff training and the use of formal procedures to manage the CH function. There was no evidence from the regression analysis to suggest that firm size or the percentage of a company’s marketing budget devoted to CH had any influence on satisfaction. In general, firm size failed to correlate significantly with any of the attitudinal or behavioural variables. Conclusion The results generally confirm the trend towards the adoption of increasingly strategic approaches towards CH noted in recent practitioner literature. A conspicuous finding was that a large proportion of the sample formally evaluated the impact of CH activities; an outcome that contrasted sharply with the conclusions of previous surveys. Strategic orientations were most prevalent among financial services firms, supporting the suggestion of Baxter (2000) that service providers are a priori more likely to engage in CH than businesses in other sectors. It was clear, moreover, that many firms recognised the importance of the links between physical proximity and liking (see Baron and Byrne, 2000), and between the provision of pleasurable experiences to customers and their liking of the host company (cf. Gold et al., 1984; Sears et al., 1991). Majorities of the businesses in the sample adopted the marketing management practices advocated by Irwin and Asimakopoulos (1992), i.e. objective setting, locating responsibility for the function in a marketing department, integration at CH into the firm’s overall marketing communications plans and programmes, and evaluating the results. The main problems attributed to CH were its high cost and the risk of entering into “competitive spirals” of CH activities with rival companies. A number of practical implications for corporate communications managers ensue from the analysis. Satisfaction with CH was higher among businesses that formally trained their staff in relation to CH matters. This suggests the desirability of incorporating dedicated CH training into mainstream interpersonal skills training programmes. Other results from the regressions explaining satisfaction with CH indicated that firms should undertake formal market research into the suitability of particular venues, manage CH from a marketing department, carefully evaluate outcomes and, in general, adopt strategic approaches. It seems reasonable to conclude that increasing numbers of UK firms regard CH as a critical corporate communications weapon. As such, CH will soon become a function with which all communications managers will need to be familiar. Moreover, its growing financial and operational importance means that CH is an area worthy of substantial further academic investigation. Specific topics requiring additional research include the specific means whereby CH can be best integrated into a firm’s marketing communications mix, the effectiveness of various forms of CH cost control mechanism, the psychology of attraction in the CH context, and guests’ attitudes towards particular forms of CH offer. The metrics of CH also merit attention, notably the ways in which improvements in a firm’s corporate image consequent to a CH programme can be accurately measured. Notes 1. A slip was sent to companies failing to respond to the second mailing of the questionnaire requesting an indication of the recipient’s reasons not to participate. A total of 66 of these slips were returned. Also 14 firms wrote to the author declining to participate, usually giving a reason. The main explanation for non-response was “company policy not to reply to questionnaires” (34 per cent), followed by “too busy” (23 per cent), and “unwilling to disclose confidential information” (16 per cent). Also an analysis of the first and final quarters of the replies did not reveal any statistically significant differences in patterns of response. Hence, there were no grounds for believing that the participating companies were unrepresentative. 2. Solutions involving between two and seven clusters were extracted. The four cluster outcome had: the highest ANOVA F-values (3,186 degrees of freedom) for both the strategic orientation variable (F = 5.55, p =0.000) and the evaluation composite (F = 5.409, p =0.000), an R-square of 0.821 for differences between clusters (suggesting substantial within group homogeneity), and a semi-partial R-square of 0.225 for the fourth cluster (indicating minimal loss of homogeneity at the final step). Table IObjectives, targeting and control Table IIBenefits of CH Table IIIProblems of CH Table IVStrategic approaches Table VSatisfaction with CH Table VICluster analysis Table VIIRegression analysis References Aronson, E., Wilson, T., Akert, R. (1997), Social Psychology, 2nd ed., Addison-Wesley-Longman, New York, NY., . [Manual request] [Infotrieve] Baron, R., Byrne, D. (2000), Social Psychology, 9th ed., Allyn & Bacon, Needham Heights, MA., . [Manual request] [Infotrieve] Baxter, J. (2000), Corporate Hospitality: 2000 Market Report, Key Note, London, . 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