IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY Istanbul, May 2015 PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia PhD TAMARA JOVANOV MARJANOVA PhD ELENICA SOFIJANOVA PhD LJUPCO DAVCEV PhD RISTE TEMJANOVSKI Faculty of Economics, University “Goce Delcev”, Republic of Macedonia

Inspiration: 1.Entrepreneurial companies are the basis for national and global economic growth and, it is necessary to identify the factors of influence on their financial success; 2.Distorted marketing and management practices of companies that operate in a transitional economy, specifically Republic of Macedonia. Two main objectives: 1.To present the current situation, i.e. state of the art in the communication processes of entrepreneurial companies in emerging economy, 2.Show the relationship and impact of integrated communications on financial success, specifically profitability. IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia

INTRODUCTION PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia Characteristics of a transitional economy (Zurawicki and Becker, 1994) Problems faced by Macedonian companies (current) Low economic development, Low income, First -generation managers, Developing strategies for the first time, Oriented to short-term financial results, Small capital and scarce financies, Limited number of business operations, Tendency for small investments. Low quality vs. consumer demands, Lack of certification and standardization of production processes, Lack of information about market possibilities, Scarce marketing and managerial knowledge Slow change from competition based on price to competition based on quality. IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY

INTRODUCTION PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia Trends in marketing communication Consumers rely more on publicity associated with the product and the company, rather than advertising and, consider that activities related with publicity have more credibility; The percentage of companies that are active in social networks is constantly growing; Most of the suggestions and comments of customers come from e- mail; The organization of extraordinary events, creation of viral advertising messages for consumers can encourage them to transfer the information. IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY

LITERATURE REVIEW (Importance of MC) 1.Marketing communication is "a process that includes all the information that is transferred between parties who want to engage in mutually advantageous exchange or transaction / relationship" (Yudelson, 1999, p.66). 2.The promotional message can have different, but also complementary goals: differentiate; remind and reassure; inform or educate; encourage to purchase (Kotler and Keller, 2009). 3.The positive long-term effect of promotion on different indicators of performance of enterprises is confirmed by many authors: Positive influence on increasing market share in long term (Srinivasan et.al., 2000). Increased sale of product category (Nijs et.al, 2001). Direct relation between the level of promotion and level of profit margins and revenues (Srinivasan et.al., 2004). The perceived value and the sale of the brand is in a positive and direct correlation with, and it depends on promotion (Sriram et.al, 2007). PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY

METHODOLOGY  This research is a part of an ongoing project, entitled “Strengthening the business capacity of women entrepreneurs in Republic of Macedonia, as a developing country”.  Quantitative and qualitative methods.  Primary data: structured questionnaires about attitudes and current practices of marketing management (parametric statistics - nominal and interval scale), and a follow-up, semi-structured interview;  The analysis is based on parametric statistics and, the responses were measured on a nominal and interval (Likert) scale.  Purposeful statistical sample of 38% (19) of the registered companies in the confectionery industry in Macedonia.  Data was analyzed with IBM SPSS19.  The conclusions are given on the base of descriptive and deductive statistics.  Profitability was measured on a subjective scale. PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY

HYPOTHESES 1.Entrepreneurial companies operating in a developing economy have intensive external communication with consumers. 2.The most popular element of promotion is economic propaganda. 3.The most popular medium of communication is the television. 4.Implementation of combined method of communication (integrated communication) directly affects profitability. 5.Usage of combination of different media of communication directly affects profitability. PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY

RESULTS Descriptive statistics 1.The statistical sample consist of nearly equal representation of small (31.6%), medium (36.8%) and large (31.6%) companies (by number of employees); 2.The profitability of companies is rather poor, with most of the companies reporting profits that are poor (15,8%) to moderately poor (26,3%) (42.1% cumulatively); 3.In terms of budget for promotion, most of the companies (80%) allocate less than 5% of the revenue from sale (annual amount from 500 to 700 euros for all marketing activities); 4.Most of the entrepreneurs did not distinguish marketing from promotional strategy. PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY

In terms of implementation of different elements of promotion, the analysis indicates that: PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY Statistics Economic propaganda Sales promotion Direct marketing PR and publicity Combination (min 3 different elements) NValid19 Missing00000 Mean Note: Min value = 1 (never); Max value = 5 (always) The companies mainly/often use sales promotion (4.58) and economic propaganda (3.37), or a combination of several elements of promotion (3.58)

Apropos the choice of media used for promotion, we can say that : 1.There is prevalent use of traditional mass media; 2.The majority of companies (80%) advertise on local television; 3.Advertising in print is used by 20% of the companies; 4.Around 20% have a proactive communication through social networks; 5.About 50% of them have created a web page; 6.Outdoor advertising (billboards) are used by 50% of the surveyed companies; 7.Other sources (posters, brochures, flyers)are rarely used or not used at all. PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY

Deductive statistics Connection between different elements of promotion and profitability PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY Correlations Profitability Economic propaganda Sales promotion Direct marketing PR and publicity Combinatio n (min 3 different elements) Profit. Pearson Correlation ** ** ** Sig. (2-tailed) N19 **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

Deductive statistics Connection between different media for promotion and profitability PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY Correlations ProfitabilityTelevisionRadioPaperInternet Combination (min 3 different media) Profitability Pearson Correlation * ** * ** Sig. (2- tailed) N19 **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

Regression estimates PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY Unstandardized Coefficients Standardized Coefficients tSig. BStd. ErrorBeta (Constant) Combination (min 3 different elements) Unstandardized Coefficients Standardized Coefficients tSig. BStd. ErrorBeta (Constant) Combination (min 3 different media) Notes: R Square: 0.622, Adjusted R Square: 0.600, F=28.032, Sig. F=0.000, N=19, *significant at 5%, * dependent variable: profitability Notes: R Square: 0.477, Adjusted R Square: 0.446, F=15.488, Sig. F=0.001, N = 19, *significant at 5%, * dependent variable: profitability

CONCLUSION In the case of transitional economy and the food industry within, the research has confirmed the direct impact of integrated communications on companies’ profitability. Recommended steps to overcome the identified weaknesses: 1.The goals of a company, except sales, should also be: communication, indication of market position; awareness; product trials; corporate image. 2.Address more than one key target group. 3.Make a difference between funds for promotional strategy and overall marketing activities. 4.Use a combination of elements in the promotional mix. Sales promotion and economic propaganda should have only occasional use. 5.Besides traditional non-personal media (audiovisual media), companies should also include interactive media - social networks and, use the website for direct contact. PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia IMPACT OF INTEGRATED COMMUNICATION ON ENTREPRENEURIAL COMPANIES’ FINANCIAL PERFORMANCE: A DEVELOPING ECONOMY

Thank you! PhD Tamara Jovanov Marjanova, University “Goce Delcev - Shtip”, Republic of Macedonia Istanbul, May 2015