Marketing Practices and Performance of Small Service Firms

Abstract

Marketing practices have been examined in many studies, yet the literature is dominated by a focus on larger firms offering a service that is often contractual or potentially continuous in nature. To contrast with this, the authors identify the practices of smaller firms likely to provide a noncontractual service and then test the link between marketing practices and firm performance. Results from 242 firms in the tourism accommodation sector indicate that success requires an emphasis on both transaction marketing and interaction-based relationship marketing to acquire customers and achieve sales growth. More contemporary practices such as database marketing, e-marketing, and network marketing are in evidence, but they are not found to influence performance. Furthermore, it is success with customer acquisition rather than customer retention that leads to profitability for these firms. The implications of these and other results are discussed and begin to provide a more balanced perspective to the literature.