14 August 1985 Marketing skills required for successful exporting

Success by New Zealand in exporting to the United States or to any other market depended on marketing expertise, marketing skills and the resources put into the market, Dr John Morris, the 1985 Sir John Ormond Visiting Fellow at Lincoln College, said in a public lecture at the college.

Dr Morris, a New Zealander from North Canterbury, is Vice-President of the Safeway supermarket organisation in
the United States.

He spent July and part of August teaching marketing courses at the college, and speaking to businessmen on export marketing.

New Zealand had been production oriented and was short of marketing expertise and skills, Dr Morris said.

Universities in New Zealand had not developed marketing skills, so that farmers and farm organisations had stepped in to fill the vacuum.

This was no longer appropriate to the market place.

Dr Morris said most Americans had a favourable image of New Zealand as a country of green pastures, clean air and clean water.

This was an upmarket image and one that should be built on.

New Zealand should try to develop brand franchises for products brands and logos that evoked that image Americans had of New Zealand.

Dr Morris said there were tremendous opportunities in the United States for New Zealand products.

However, this required a very professional and sustained approach for investment, and investment of time by experts rather than by amateurs.

The reputation of New Zealand in the United States was not particularly good because of attempts at marketing by amateurs who did not follow up.

New Zealand needed to think in terms of flexibility rather than for ever, because markets were changing and would continue to change.

Flexibility meant being professional so there had to be expertise.

Quality and value had to be compared with selling on price alone, because "at the luxury end of the market people equate prices with quality.

Dr Morris said he made an urgent appeal for New Zealand to get away from the notion "it's the best in the world, therefore it will sell itself."

Most New Zealand products were good, but these had to be marketed.

New Zealand should work from a basis that markets "don't care about us" and take it from there.

New Zealand must produce what the market wanted, not was convenient to produce.

The United States was not a frozen meat market ; the growth segment was the fresh market, where people were
prepared to pay a premium of 20 cents to 30 cents a pound to get a fresh product.

Dr Morris said the quality end of the market should be emphasised for New Zealand products.

Lamb could be upgraded to a shish kebab and sold for $3.59 instead of trying to sell hamburgers competing with 69 cent ground beef.

New Zealand cheddar cheese exported to the United States was used for processed cheese at .the bottom end of the market.

"The growth part of the market is in speciality cheeses. In our stores we are now putting in cheese shops with 220 different types of imported cheese," he said.

'In most stores not one is from New Zealand. The opportunity is there to upgrade the product and I don't understand why the Dairy Research Institute is not spending more time developing new cheese for export markets.'

Dr Morris said the affluent end of the market was developing and growing fastest in the United States.

This required better and more sophisticated packaging and better market research than in the past.

New products, new varieties and new uses for products should be developed.

The Gala apple had been very successful on the U.S. market, and "might well be the next kiwifruit."

New Zealand had done well in developing the kiwifruit, but because of the success everybody else was now growing kiwifruit.

"You need to differentiate the product : put a sticker on saying that unless it is from New Zealand it is not a real kiwi."

New Zealand could develop markets in counter-seasonal produce such as asparagus, strawberries, raspberries, blueberries, blackberries, nectarines, peaches and apricots "all coming in around Christmas and January midwinter in the Northern Hemisphere."

Dr Morris said that was a very successful market and had promise. 

New Zealand had to work at the marketing effort and at developing new products and new varieties.

There was a need to invest in marketing rather than investing in production.

But promotional support was needed ; unpromoted products did not sell.

Dr Morris said there a need to be innovative, and he was not convinced that producer monopolies were the
best way to get innovation, Several competent marketers were needed from New Zealand in each market.

In the meat industry there should be there should be three-to-four strong New Zealand-owned companies competing in the market.

"We want innovation, we want rivalry, we want new products, we want new marketing ideas," he said.

"We only need judicious injections of Government support ; not Government doing it, not Government sanctioned
monopolies doing it.

"What the role of government is in my opinion is providing the environment for risk takers to get into the market."

Dr Morris said there had to be thinking in terms of target markets there was no way New Zealand could supply the whole U.S. market.

"We can't be all things to all people. The realistic thing to say is where is the best chance of success.

"Don't be mesmerised by size, do be concerned about targets. The exporter has to manage the market."

Dr Morris said the exporter had to develop the marketing strategy ; the exporter had to develop the promotional themes.

"The broker isn't going to do it for you, and I can assure you that the retailer is not going to do it for you."

Dr Morris said that another thing that had to be done was to set goals, and review these constantly.

"Make better use of tourists. The easiest exporting to do is to have the tourist carry it on the plane with them."

But something had to be done about quality standards in New Zealand.

"There is no quality control of venison you get in restaurants here in New Zealand.

"In one of the best restaurants in Christchurch a couple of week ago the venison I had was a disgrace.

"If a tourist tastes that product they are not likely to buy it in the United States.

"You have got the opportunity to give them the exposure to a good product, associated with the happy experience they have in New Zealand."

Dr Morris said that New Zealand also had to provide service that tourists wanted.

Dr Morris said the market in the United States was extremely competitive : "if you don't provide the right product there is somebody else waiting to do so."

"Our company would say that if we are to increase our business we have got to take it from somebody else."

In New Zealand there were many monopolies or quasi-monopolies ; it was a much tougher world in the export business, he said.

"Our margins last year on what we sell were 0.83 per cent. To sell $100 of groceries our net profit after tax was 83 cents."

Dr Morris said that on the U.S. market there was a constant need to look for an edge on the competition : by better service, by better advertising and promotional support, or by new products.

New products were the lifeblood of the business ; about 1500 products were added and deleted each year in the average supermarket.

Only 107 new food products out of 10,000 introduced since 1970 had achieved a successful sales level.

Dr Morris said that was a less-than one- per-cent success rate for eight new products a year.

A new product had between 12 and 24 weeks to prove itself, or else it was replaced by something else.

The market demanded professionals, and this was one of the points he wanted to make to the agricultural sector of New Zealand, he said.

Getting a job with most U.S. food product and distribution companies, with whom New Zealand exports were competing, required a Master of Business Administration degree.

Some New Zealand farmers were acting as marketing agents, and they did not have the skills to compete.

Dr Morris said that in the United States all of industry was undergoing a massive restructuring.

This was largely because of the strong value of the U.S dollar and import competition.

When the dollar did come down the United States was going to be a very potent competitor in markets, including markets New Zealand now had.

"The market demands that you have done your homework ; it is not a matter of a naive New Zealand exporter corning over and saying tell us what you want and I'll produce it.

"You won't even get to first base with that attitude.

"If you have to do your homework you have to do your market research you have to develop your products and you have to understand the market.'

Dr Morris said the system also demanded that the New Zealand company did the marketing.

"The retailer is not going to market the product for you ; it is your product and your responsibility.

"You've got to get the retail buyer to take the product, and then you have got to get the customer to take the product
off the shelves.

"The market is unforgiving ; make a mistake and the market won't forget about it and you won't be invited back.

"There is always somebody else waiting to provide the product and take up that shelf space," he said.