MARKETING ASPECTS OF ISO SYSTEM IMPLEMENTATION

. The paper analyses the effects of the ISO system implementation and certification. It covers the aspects that are internal (managerial, personnel related) and external (mainly - marketing and sales related). Since there are differences between the ISO system implementation motivations and the actual benefits after its implementation, these two are analysed separately. In addition to a traditional mail survey, the author uses the technique of two qualitative interviews with every sample company, getting managerial opinions before the project (these mainly reflect motivations) and one year after the project (mainly reflecting benefits). The analysis is based on a sample of Lithuanian companies, comparing the findings with information from Lithuania and other countries.


Introduction
The overall companies' concern about product quality often results in a series of attempts to move towards the Total Quality Management system (TQM) implementation or implement some more strictly defined quality standards. The most common decision refers to implementation of ISO standards.
ISO is a series of international standards that sets out widely accepted and understood requirements and recommendations for the quality of management systems. The main part of these requirements refers to regulations how 124 management operations shall be conducted and controlled. However, the ISO system has a much broader set of influences on business operations, generating numerous the internal and external effects to the companies. In addition to quality improvements, internal effects refer to changes in management procedures, cost savings, overall increase in operations efficiency and profitability. The group of external effects mainly ineludes company relationships with its partners: clients (most often) and suppliers (sometimes). Though both internal and external effects are heavily interrelated, some companies tend to concentrate mainly on seeking for internal and some others for external effects (benefits) when implementing ISO systems.
The group of internal effects is analyzed much more frequently and significantly deeper, since it directly represents the main objective for ISO system development. The second group, which deals with less straightforward external effects, is much less covered. This paper analyzes both internal and external effects, though the bulk of attention is paid to the external ones, which are mainly marketing-related.
Also, there are differences between the motivations of ISO system implementation and the actual benefits that the system generates for the company. These also differ depending whether the managerial or the marketing influence of ISO system implementation is discussed.
The analysis is based on the opinions of Lithuanian companies' managers. The results are compared with findings from other similar studies.

Quality, business success
Quality control Quality improvement programs

Background
Since the ISO series of standards sets out the requirements for management systems, its basic task is to ensure conformance to specification of any procedure in the company. In a broader sense, ISO standards seek to ensure that suppliers design, create and deliver products and services, which meet standards and specifications, thus preventing nonconformity [1]. In addition to this, the ISO system is a historical development from other simpler forms of quality management and a certain step towards TOM (Fig. 1) The worldwide statistics for ISO systems implementation shows a rather steady growth in the number of certified companies (Fig. 2). These numbers represent all types of ISO systems.
The number of implemented ISO systems as well as the development of new systems significantly varies by countries and regions. This is influenced by many factors (for example, historically used standards, country  world. This is again triggered by many factors, though European integration and willingness to increase company competitiveness play the major role. Lithuania represents a rather typical case in this respect, showing a late start and a rapid growth of the number of implemented ISO systems. The trend in Lithuania shows a process that is clearly accelerating (Fig. 3).

Objectives
There are numerous studies about the ISO system implementation reasoning and benefits. The main often discussed issue is whether ISO implementation pays back in terms of financial or other benefits. One way or another, the answer usually is positive. A research carried on the basis of publicly traded firms in the US found that certification does appear to lead to improved financial performance measured by return on assets (ROA). More precisely, it was found that firms that failed to seek certification experienced substantial deteriorations in ROA, productivity and sales, while firms that did seek certification generally managed to avoid such declines. In other words, firms that received certification did not, on average, see their absolute performance improve, but they did see their relative performance improve substantially, compared to their uncertified peers [6]. Even discussing specific environmental standards of ISO 14001, analysts argue that it is a business issue, not just environmental one. The invironment care is closely related to overall best practices in various industries and thus has an impact on overall business operations [7]. However, company managers may consider the ISO system implementation influenced by many different factors, many of which belong to the marketing area. In general, quality management and marketing have been both described in philosophical, cultural and process terms. Like marketing orientation, TOM can be regarded as a philosophy in that it entails a set of principles that give meaning to (in this case) quality issues within a business. As with market orientation, TOM can also be seen in a cultural light since it implies that a set ofvalues, attitudes and beliefs must be present in an organisation for people to implement the policies that promote the quality standards. In addition, both market orientation and TOM can be approached from a system's perspective, as demonstrated by the existence of ISO standards [8]. In a practical sense, though being directed to improve the managerial procedures, ISO systems go beyond this and serve for companies as an important marketing tool. Managers declare this during intervicws and in many other occasions, and many studies show differences of their attitudes on this issue. Even more importantly, the initial motivation of ISO implementation might pre-define its practical usage, effectiveness and benefits and may lead to different overall performance of the company. Therefore an analysis that would relate management motivations with qualitative benefits and quantitative business performance changes would be important.

Research
The analysis is based on two types of independently held research procedures among the same population of Lithuanian certified companies.
The first procedure is a traditional mail survey of sample companies. The questionnaire for it was developed by modifying similar research tools used by Francis Buttle in the United Kingddom (1997), as well as by Carmen Escaniano, Esteban Fernandez and Camilo Vasquez in Spain (2001). All of them analyzed the motives and benefits of ISO certification. The Lithuanian questionnaire differs from these by more numerous and detailed questions about marketing-related aspects of ISO certification and includes phrase adjustments that are more typical for Lithuanian business environment.
The survey was performed at the end of 2002 when the general population of ISO-certified Lithuanian companies included 263 companies. A judgmental sample was drawn to select respondents from various indu::;tries, though specific attention was paid to the service business. The questionnaires were mailed to 70 pre-selected companies. Reminding follow-up phone calls allowed to achieve a very high response rate, (68.6%) and to have a total sample of 48 companies, which equaled to 18.25% of the total population.
The sample included 33.3% of companies involved in manufacturing, the remaining part being engaged in various services and trade activities. There was an almost equal distribution of companies by the number of employees into categories (11-50, 51-100, 101-250, and more than 251, only one company representing a category below 10). By turnover, 50% of the represented companies belonged to the group that generates 5-25 million Litas (EUR 1.5 -7.5) of annual sales.
The second research procedure was based on sets of in-depth interviews with management before starting the ISO system implementation and one year after the project was formally finished. This was a standard procedure of Business Advisory Service Programme (BAS Programme) operation, and thus interviews were held during the last 5 years, based on the occurrence of new ISO projects. The procedure was related with the possibility of granting a subsidy for ISO system implementation (partial payment to business consultants), thus during the first meeting the managers were really motivated to specify their expectations about ISO systems.
The second meeting was held a year after BAS Programme paid subsidy to a company. At that moment, the majority of companies already had ISO certificates granted. Even if this was not the case, the company managers were able to define the benefits of ISO project generated changes and to evaluate the efficiency of the undertaken project in terms of its pay-back time. In addition to this, both 128 BAS Programme staff and company managers rated the ISO proje~t quality. The evaluation based on a 4-degree scale (highly unsatisfactory, unsatisfactory, satisfactory, highly satisfactory) was done about the consultant's, company's and subsidy programmes' performance. The integrated result of these three judgemental evaluations was taken as an input quality measure. The qualitative evaluation of the output (result) was done by the BAS staff, judging about a company's performance during the period after the first interview. This judgement included objective aspects (such as change of sales, scale of operation) as well as less objective ones (quality of management, changes in strategy, etc.).
In addition, in each case sales volume and employees number in a company at the year of the interview was recorded and compared.
The sample included 65 Lithuanian companies that received subsidies for the ISO 9000 or 9001 : 2000 system implementation. According to the BAS Programme definition, all of them belonged to the category of small and medium enterprises, i. e. had less than 250 employees, the majority were private and locally owned.

s. General Findings
The in-depth interviewing disclosed a very distinctive domination of external (marketing) motives when the companies considered ISO system implementation. As much as 63% of managers indicated marketing motives as the main driving forces to implement an ISO system. However, there was a very surprising difference in attitudes when a discussion about ISO benefits took place during the second interview. The absolute majority of managers (80%) emphasized managerial benefits, and more than half of those who previously had been mainly concerned about external motives now discovered internal (managerial) benefits of ISO implementation (Fig. 4).
The mail survey was used to deeper analyze both the motives and the benefits of ISO system implementation. The respondents were asked to grade 10 of most frequent motives based on their company, specifics. The Likert rating scale (ranging from 1 = no importance to 5 = very important motive) was used.
The most important motives reaching the mean of evaluations above 4 included: a) willingness to improve the consistency of functions within the company, to increase efficiency, and b) to improve product quality. None respondent ranked any of these motives 1, and standard deviation in ranking these two motives was the lowest, which tells about the uniformity of the very high valuation among all the respondents. Both motives are of internal nature, i. e. mainly directed towards the improvements within the company. However, all the nearest following motives were external, leaving other two internal motives at the very bottom of ranking (Table 1).  The external motives are lead by two interrelated motives of increasing competitiveness and maintaining / increasing market share, pushing a more concrete motive of tender requirement below them. Another very motive concrete often mentioned in the interviews of customer pressure surprisingly was ranked the lowest among all external motives.
The benefits of ISO implementation were also analyzed on the basis of a list identified on the basis of a literature review, discussions with consultants and company managers. The list included 17 most often used benefits.
Respondents were asked to grade each of these benefits based on their company specifics, using the Likert rating scale ranging from 1 = no benefit to 5 = very important benefit.
Again, two top rankings are given to the most traditional internal benefits of ISO system implementation. Both of them fully correspond to the two most important motives for certification, and iUs possible to conclude that two main expectations of ISO implementation are met.
However, next evaluations are less correlated with the sequence of motive ranking ( Table 2).
It seems that many managers have discovered how well the ISO system can be used as a marketing/promotional tool or how helpful it is in tenders only after ISO system implementation. At the same time, the correlation between the ranking of internal and external motives is lower than between the rankjng of internal and external benefits (0.396 and 0.572, respectively). This means that the managers were driven by a few motives but have discovered more numerous and intermixed effects (benefits) of certification. Also, the motives seem to be better understood and higher evaluated (average rank 3.67) than the benefits (average rank 3.04). This might mean

Discussion
The two methods, which were used in parallel, generated a rather extensive description os the motives and benefits that drove managers to implement ISO systems. However, the specific role of marketing motives and marketing benefits requires further discussion. Both the interviews and the survey reflected the attitudes and opinions of management. To make the picture more objective, two additional approaches can be used. These include: a) analysis of companies' performance and b) independent opinion of experts. Data for this. were generated during the process of interviewing.
Corbett, Montes, Kirsch and Alvarez-Gil used ROA analysis to discover the objective evaluation of ISO benefits. In our case, only An overall decrease of sales over the period between the two interviews (average period 1.5-2 years) was experienced by 26% of the contacted companies. At the same time, 30% of the sample had stable sales or increased them by up to 50%, 24% by 50-100% and 20% by more than 100%. However, the results were distributed differently among the companies that indicated mainly the managerial or marketing benefits (Fig. 5).
The figure shows that the companies that indicated mainly the managerial benefits of ISO system implementation experienced a rather modest growth. In the fastest growing group we find mainly companies that experienced the marketing benefits of ISO.
Employee number changes are also different in companies that experienced managerial  and marketing benefits of ISO. However, it somehow repeats the conclusion of sales growth analysis: the modest growth group consists of companies experiencing managerial benefits, while the faster growing ones are dominated by those which indicated marketing benefits (Fig. 6).
Interestingly enough, the modest growth group managers before the project were motivated mainly by the marketing motives and the majority of companies that reduced the number of employees by the managerial motives (Fig. 7).
Change of the number of employees does not necessarily mean increase or decrease in  business scale or efficiency. Companies that are motivated by managerial motives often initially seek for a clearer organizational structure that requires a lower number of employees, and only after achieving this are again concerned about growth. In a long run, both managerial and marketing benefits produce almost the same influence on business efficiency expressed in sales change per employee (Fig. 8).
Another approach to the reasoning of ISO system implementation can be based on the cost of an ISO project itself. Though many internal costs and company resources can be hardly precisely measured, managers can judgcmentally add them to the costs of hiring ISO consultants and put against company performance improvements. Again, some differences occur on the basis of managerial or marketing orientation. It is noticeable that managers that have been motivated to implement ISO by marketing motives indicate a faster pay-back of the project cost (Fig. 9).
The same trend is even more obvious when the ISO project pay-back is related to the main henefits of the project. The long pay-hack group is heavily dominated by companies that mainly indicate the managerial benefits of ISO (Fig. 10).
All these indicators are either defined by company managers or registered from the companies' performance. However, an outside expert opinion can be used to provide an additional point of view on specific projects. It is most valuable when judging about the ISO consultancy project (the "input') quality and the overall performance of the company (the 'output').
The 'input' ratings (which are generated from both the managers' and expert's opinions) are very positive, though the highest possible ratings are more often given by managers that mainly experience marketing benefits of ISO (Fig. 11).
Outside experts also evaluated the overall performance of a company during the period after the first interview. This judgemental evaluation included not only objective aspects (such as change of sales, scale of operation), but also the noticed changes in the quality of management, changes in the strategy ability to   (Fig. 12).
Overall performance evaluation can hardly hc attributed to just thc [SO system that was implemented during the analysed pcriod. However, some authors (Corbett, Kirsch) observed significant changes in company performance not immediatciy after thc ISO system certification, but also dtuing the process uf its implementation. This allows to conclude   The current findings in Lithuania can be compared with the results obtained in other countries only to a limited extent due to methodological differences. I [owever, some observations can be made.
The analysis of ISO implementation motivations in Lithuania disclosed the impor-tance of marketing motives as a driving force in general (if only one major general motive is considered) and a significant influence of specific managerial motives, such as willingness to improve consistency of functions within the company, increase the efficiency and improve product quality. The group of managerial motives is rather similar with findings in Spain in 2001, but significantly differs from results of earlier studies in the UK and Sweden. In these, external motivation was discovered to be the major driving force towards ISO implementation (which is similar to the Lithuanian study), but these studies defined customer pressure as the main driver to have ISO [9], which is not the case in Lithuanian findings. More specifically, the most important marketing motivations for Lithuanian companies included increasing competitiveness and support in maintaining I increasing the market share. This differs both from the findings in Spain and in the UK, since Spanish companies mainly expected to use ISO certificate for improving company image [10] and UK ones for anticipating the demand from future consumers for ISO.
The study confirmed that after ISO system implementation the managers typically value the managerial benefits higher than the marketing ones. Specific most valued managerial benefits in various countries are different. The most important benefits for Lithuanian companies include clearer procedures, improved management control as well as the overall improvement of quality. In the UK study, the most valued benefits were related to profitability, followed by process improvements and then by marketing benefits. Spanish companies rank higher a better understanding of processes and responsibilities (the same as Lithuanian), but improved quality of products I services is only in the fourth place, allowing exter-136 nal (marketing) benefit of image improvement to take the second position. It is remarkable that sales increase, market share increase and exports increase are the least ranked benefits in Spain, whereas in Lithuania similarly defined benefits take much higher positions.
The results of the Spanish survey are similar to the Lithuanian ones in one specific aspect: in both countries companies rank motives ( expectations) higher than benefits (results). This might mean the overall managers' overestimation of ISO benefits (or lack of adequate understanding about it), which is not specific to Lithuania only.

Conclusions
Studies in many countries show that most often the main driver for ISO system implementation and certification is environmental pressure, which can be expressed in concrete marketing motives. Therefore the benefits of ISO system implementation are heavily linked with reduction ofthis pressure. However, the Lithuanian experience has some specific features.
Analysis of the Lithuanian companies' management opinions confirmed that marketing motives are dominating over the others when management makes decision to implement an ISO system. However, after the system implementation, management tends to value higher the managerial (internal) benefits of ISO system implementation. As very important the Lithuanian managers mention such managerial benefits of ISO implementation as clearer procedures, better management control and product quality improvements [11]. Therefore, according to the management opinion, marketing forces are mainly driving the start of ISO system implementation, but later the managerial benefits become of main importance.
Though the shift of the management's attention during the process of ISO system implementation from marketing forces towards management is very noticeable, some indicators prove very distinctive and objective marketing benefits of ISO system implementation. These include a significant groWih in sales as weil as a faster payback of ISO implementation project