Marketing strategy 2010

A robust marketing plan is at the core of any successful business and its strategy for growth. Reviewing it regularly to take account of normal developments in the marketplace - changed customer expectations and behaviours and emerging markets, for example - is vital to ensure that both the strategy and the business are as relevant as possible to capitalise on any available opportunities going forward. However, in abnormal circumstances - such as the current recession - the need to re-evaluate the strategy is even more pressing and, rather than being a driver for growth, can make the difference between survival and failure.

According to Damien McLoughlin, Professor of Marketing at UCD Michael Smurfit Graduate Business School, the fundamental shift in the economy has made it critical for companies to re-examine their marketing plans. "A lot of managers in Ireland have cut their costs rather than changing their business model," he says. "There almost has been an implicit hope or wish or expectation that next year is going to be like 2006, or that maybe in two years time it'll get back to 2006/early 2007. It's abundantly clear at this stage that that is not going to happen."

He points out that the Irish economy has been reset, as has the way in which consumers spend and how wealth is created. "On the back of all of that, if you take into account other factors - the rise of India and China, the opportunities that exist in South America, climate change, geo-political factors - all the big things that we have been talking about for five or 10 years, the business environment in Ireland has been reset. This is not a temporary correction, it's not a normal situation and everybody needs to revise their strategy."

Segmentation for excellence

Regardless, however, of this extraordinary situation all companies should, as a matter of good practice from a marketing point of view, re-examine what they do at least once and ideally twice a year, according to McLoughlin. "A lot of people confuse excellent marketing with excellent advertising or with excellent products," he says. "To my mind excellent marketing is really about excellent segmentation. You focus really sharply on what it is the customer needs and what it is you need to sell in order to meet those needs.

"If you look at the great marketing firms, those people are asking themselves, on a 24-hours a day, seven-days a week basis, what customers want and how they can meet those needs," he continues. "Obviously not every firm has the level of resources to dedicate to that, but I think at least twice a year, and certainly as we move into 2010, it's going to be a very challenging environment and firms need to re-examine their segments."

He estimates that around 20pc of Irish companies are already thinking along these lines. "Some of our big plcs - Paddy Power, Kerry Group and Glanbia, for example - are all thinking very long and hard about what the world's going to look like in the near term," he says. "And I know there are lots of firms that aren't as well known that are also doing the same thing. It's not just a question of large firms doing it.

"So many firms have just run to the idea of cutting costs fast and that's been a good thing," he continues. "It's an indication of how mature our economy is that firms moved so quickly to cut their costs. But I think a lot of people believed that was the end of the story. And it's very clear that great opportunities exist elsewhere but not enough Irish companies are thinking along those lines."

Cost cutting not a strategy

McLoughlin is adamant that companies should not be cutting their marketing budgets as part of their overall cost cutting. "It's the easiest thing in the world to say, we're not going to do that campaign, we're not going to hire that graduate, we're not going to that trade fair," he says. "I think those firms that have cut their costs in those areas over the last year, that didn't invest in international markets, those firms now know that that was the wrong thing to do.

"As the North American market starts to creak open again, as China looks to be a good opportunity again, as Europe appears to be reaching the bottom and in some parts heading out of it again, they're not ready for those opportunities," he points out. "I think it's absolutely crazy for a firm at this point not to be investing in the new opportunities."

But there is still time. "If you did miss the boat and you didn't recognise that this recession would end some day and it was not going to be as bad elsewhere as it is here, it's still not too late," he stresses. "There are still resources available to you. The State agencies are a superb resource in this regard. When times are good it's very easy to criticise them but several outfits, particularly Bord Bia, have really come to the fore as fantastic resources for firms. There are also human resources: a lot of people are available who are very hungry and keen to get back into the saddle."

A central role

It's vital, he says, for the marketing strategy to be right at the centre of any business plan. "I can't see how a firm has a strategy that is not driven by the market," he says. "How can you grow a business without selling more stuff to the customer that you already have or selling more stuff to new customers, or creating new stuff to sell to existing or new customers? The idea that marketing can not be at the centre of strategy is crazy. What we've seen in the last 10 years is that many firms put financial engineering at the centre of their strategies and look at where they are today."

According to McLoughlin, companies don't need to have a marketing department to do marketing or to be market driven. "What you need to have is senior leadership in the organisation that recognises that, if you really want to have a product that will sell at a price that will sustain your business, it has to be something that customers will go into distributors and stores and ask for," he explains. "That means it has to be exactly or as close as possible to what they want. It doesn't require a marketing genius to tell you that.

"Marketing is a very, very easy-to-grasp discipline and it doesn't require hiring 100 marketing people or a marketing director to do that. An owner-manager of a firm with five employees, all of whom are involved in production, can take a piece of paper out today and write down very simply: What are my products? Who am I selling to? What else could I sell to those same customers? Who else could I sell this product to? If I had a new product, what would it be and which of the customers that I currently have would buy it? And, which new customers could I get if I had this product?

"That's a one pager and a pencil. It doesn't require a marketing consultant; it doesn't require huge plans. It's one piece of paper and a CEO or an entrepreneur who wants to grow their business," he says.

"Of course there are much higher levels of sophistication that you can get involved in from there but, at its absolute core, that's what marketing is about. And I think that's what a good marketing person should be doing for you. When I talk to CEOs about marketing, that's what I talk about. I don't talk about Facebook and Twitter and Google. What I talk about is, how do you want to grow your business. And the only way you can grow your business is to get new customers or to sell more to the customers you've got. That's it. There are no other ways."

New opportunities

A major factor in terms of future success, according to McLoughlin, is to move away from the sterling economy. "We have all of our own troubles at the moment but this continued love affair we have with the sterling economy just continues to come back to haunt us. We need to look beyond the sterling economy. There are absolutely outstanding opportunities for Irish firms in South America, India and China."

He also believes that companies need to revisit the idea of branding. "There's such a low level of commitment to branding in Ireland," he says. "What we have seen in the economic collapse is that when you're selling a commodity product, people will walk away from it. When you're selling a brand, they can't. LVMH, the luxury goods company, is actually benefiting in the recession, because people don't buy three handbags, they buy one Louis Vuitton. And LVMH doesn't discount, because it doesn't have to, and it's continued to grow, albeit it in a slightly more modest way."

Finally, companies should look at the availability of high-calibre marketing human resources at the moment, says McLoughlin, who, understandably believes that marketing graduates offer particularly good value in the current climate. "You can get a graduate now at a very low price," he says. "And what you're getting is a bundle of energy and enthusiasm and action and new knowledge, which can make a big difference to a firm in a short period of time.

"There's also an unprecedented pool of people who have had the horrible shock of losing their jobs and are willing to work for substantially less than they were two years ago to get back into the jobs market."

McLoughlin is positive about the future for Irish companies and their ability to succeed in the new business environment. It's critical, however, that they review what they are doing as a matter of urgency.

Irish companies grasping new opportunities

A number of Irish companies are managing to exploit new opportunities and grow their businesses by putting marketing at their core and by keeping pace with what their customers are looking for, according to Damien McLoughlin.

"A firm like Flahavan's is an extraordinary example of a firm that has made a very long-term commitment to marketing and has sought value for money for its marketing," he says. "It has had exceptional commitment to new product development. Flahavan's is not a market driven firm, it's a market driving firm. It's driving the market to think, why don't you buy a healthy Irish product and give it to your kids and eat it yourself for breakfast. It's doing that with really good quality advertising, with exceptional new product development and it's now starting to move into international markets.

"Elsewhere, you could look at Kerry Group with Cheese Strings, which is an outstanding product; you've got Bulmers with pear cider - what a great, great product; Cully & Sully, with their prepared meals; Butlers Chocolate with its Café, that's such a brilliant idea; and Paddy Power with online gambling. Then there's Glanbia, what a great business, great marketing skills, marketing department and marketing leadership, as Kerry has as well. These guys are all doing the right thing in terms of understanding what customers' needs are, and they're building their business around that."