We need marketing, not just sales

By ROD MacKENZIE*

New Zealand's need to export is self-evident. It's the key to our prosperity, or lack of it, and is therefore a great motivating force in shaping companies' attitudes to doing business internationally.

But exporters are not driven by a sense of obligation to the nation. Our tiny economy offers only limited opportunities for growth. Global markets effectively offer unlimited prospects and encourage innovation, product enhancement and brand differentiation.

Given these factors, what stops companies exporting? And why do such an incredibly small proportion of exporting companies account for the bulk of our foreign exchange earnings?

The answer to the latter lies with our continuing reliance on primary industries. For 100 years or more most of our foreign exchange earnings have come from the meat, dairy and, more recently, the seafood and timber sectors.

Not to suggest that it's a bad thing that we have this foundation of exporting to build on - rather that the building process is taking far too long and every now and then, at the whim of the international commodity markets, the foundations start to look shaky.

Decades of trading in commodities have also shaped us as a nation of salespeople rather than marketers. This paucity of international experience in branding, product development and market research is a real impediment to export growth.

Even in the domestic market these skills are relatively scarce - and yet they offer the greatest potential for rapid growth in the primary sectors in which we have established reputations.

Why don't more companies export? First there is the financial base needed to get established.

Taking a company successful in the small domestic market and trying to match that achievement in a market many times larger and more diverse requires significant investment and carries with it equally significant risk. Small mistakes in large markets can be costly for companies operating on a New Zealand scale.

Private sector funding for export ventures is, surprisingly for an export-oriented nation, not as accessible as it is in many other Western markets.

This is the point at which many in business turn to the Government for protection and support. The danger here, however, is that the presence of subsidies and the like is as fickle as the exchange rate.

Export businesses built on either of these two pillars are doomed to fail when their competitive advantage is taken away by a change in government or an unpredictable swing in the value of the dollar, or both.

Second, the competitive pressures in overseas markets demand expertise, whether it be marketing, language or general business skills, which are generally in short supply. Lessons learned in the domestic market are often of no use internationally.

Even Australia, once widely touted as an extension of the domestic market, is treacherously different and requires an intimate first-hand knowledge that New Zealand companies often find difficult to acquire.

Increasing private sector funding and international marketing and education, then, are two areas that can be fixed in order to encourage greater participation in exporting.

There is a need for private sector funding at realistic levels that recognises the risks involved but does not load unrealistic premiums on the cost of the money.

Indirect subsidies that provide for market establishment and customer acquisition are already available through the Government's export promotion agency Trade New Zealand, in particular where exporters are prepared to work co-operatively together.

Similarly, Government agencies have a significant role to play in helping businesses prepare themselves for the market. Both Trade New Zealand and its sister agency Industry New Zealand focus on developing skills within organisations to meet international market demands and finding marketing strategies to meet local requirements.

Networking, education and mentor schemes are also invaluable in providing vital export knowledge. Trade New Zealand's National Export Conference (May 14-15) is being held for this very reason.

* Rod MacKenzie is general manager marketing at Trade New Zealand.