To keep your organisation fighting fit it is important to not only understand the workings of your own business, but you need to understand what’s going on in the industries surrounding your business.
Managing director of Marketing Focus, Barry Urquhart shows businesses how to stay ahead of the game with some keys to innovation, and offers advice on the valuable lessons businesses can learn from the Australian Agriculture sector.
There is a certain measure of logic in the current trend for entities, big and small, to progressively look introspectively to their own unique cultures before focusing on the external marketplace.
However, the answer to achieving optimum market penetration, revenue, margins, profits and customer satisfaction may not necessarily lie with internal or external forces alone.
The Australian agriculture sector presents a significant and intriguing case study that casts light on the reality of numerous other industry and commerce groupings.
Prospects in the intermediate to longer term for beef, sheep, pork and similar products look exceptional. Demand for protein (primarily meat) is forecast to double in the ensuing 10 years, driven largely by increases in the middle class populations of India and China. The numbers are impressive. Some 200 million people in each country will enter and begin exhibiting the buying preferences and habits of the international middle class. Interestingly, the growth in the middle class of the Middle East cannot be overlooked.
Many marketers and business analysts will salivate at the boundless opportunities, particularly given the efficiency of Australian farmers who are rated among the most astute in the world. That is what dry climate and marginal land farming does to a nation’s professionals, who, during the past 100 years have increased production rates some 400 to 500 percent on the same land holdings.
Even with all of those favourable variables, together with a general lowering of debt and an increase in off farm investments to complement seasonal and volatile cash flows, success for Australia is not assured. The nation remains geographically the most isolated in the world. That situation is exacerbated by inadequate port facilities and increasing shipping costs.
Should Brazil and Argentina ever lift their performance levels to something comparable to Australia, Aussie farmers will be vulnerable.
A similar scenario will arise with the market forces necessary to satisfy increases in demand for lamb (the USA is a key market). The New Zealanders tend to have a competitive edge. Such is the nature of globalisation.
The past tendency to look to government support and finances may be futile. Since 1901 when Australia was the richest nation per capita, the percentage that the agriculture sector represents of the nation’s international trade has fallen from 70 percent to 13 percent. The political power that the rural population once exercised has to some considerable extent evaporated, and that is not because of the drought or climate change.
Future success for Australian farmers will be determined to some considerable degree by the impact they are able to collectively make through effective supply chain management, branding and clustering efforts in specific products and to defined, targeted markets.
It is a message worthy of contemplation by business owners and leaders in the small business sector, or ideally, in business generally.
Twelve consecutive years of booming international, national and local economies has fostered a prevailing sense among many of being comfortable. The recognised or perceived need to change is not widespread.
Some leaders, farmers included, have stated the absence of any need for immediate change and innovation. Rather, they have pointed to the need to recognise and respond when ‘the tipping point’ has arrived. Unfortunately, making do until you are forced to change is fraught with danger.
Don’t wait for the ‘Tipping Point’
There are countless recent examples of industries and businesses waiting for the tipping point to evolve before formulating and implementing strategic business development initiatives.
Awaiting the tipping point did not accord newsagents any advantage or momentum once Woolworths took control of Caltex Service Stations and Coles did similar with the Shell national network. Both began selling newspapers from their service station centred convenience stores.
Independent liquor stores have been on the back foot for some time following the arrival of the tipping point in which Coles and Woolworths now operate over 50 percent of retail liquor outlets and record greater than 60 percent of national retail liquor sales.
The recent announcement by the Ford Motor Company that the sales of six-cylinder Ford Falcon sedans has continued to decline, that the manufacturer of six-cylinder engines in Australia will soon cease and that greater emphasis will be placed on the sales and importing of the four-cylinder Ford Focus range of vehicles, along with their smaller engines, reflects another case study of an entity waiting the arrival of ‘the tipping point’.
The underlying message is simple and direct: don’t await the arrival of the tipping point, at which time major decisions are inevitable and options are limited. Proactively seek out ways to make your products and services stand out from the crowd.
As with the agricultural sector, every endeavour should be made by all entities to avoid ‘commoditisation’. An inability to differentiate products and services ultimately leads to rampant and widespread price discounting.
And just identifying huge and growing market potential, complemented with world best practice and cutting edge efficiency is no assurance for success.
Care, attention and resources should be allocated to the establishment, operation and maintenance of an integrated, short supply chain. It must necessarily ensure continuity of supply, responsiveness, face-to-face interaction with growers, manufacturers, suppliers, distributors, associates and retailers (in real time) and above all, the capacity to change and innovate.
This should involve collaboration with and the involvement of select strategic alliance partners.
One key essential for market advantage in the increasingly globalised marketplace is a distinctive, recognisable and well-promoted brand name. Inherent in the branding is the need for creative packaging of the products, the services, the company and its people. Good quality products and services are now a prerequisite for market entry, not an imperative for success. Improvements in quality and price competitiveness currently effect enhancements which are marginally incremental, rather then quantum in nature.
The greatest returns from investment at present come from training and education. Moreover, the greatest impact of training is being achieved from studies in the more general disciplines of psychology, sociology, marketing and management.
Developing insights as well as the capacity to investigate and better understand differing markets, cultures, industries and individuals minimises risks, broadens scope, enhances prospects and contributes to achieving greater momentum.
Education develops improved self-confidence, which is a catalyst for individuals to seek greater knowledge, typically beyond the narrow parameters of many professional disciplines, like engineering, accounting, law and agronomy.
A sole focus on productivity, efficiency, costs and quality will often result in seemingly incomprehensible suboptimal performance in sales, profits and market penetration. Output is not sufficient to achieve and sustain success.
Instead I would suggest you need to focus on impact, and that will be best attained from supply chain management, branding, target marketing and a commitment to innovation and education.
* Barry Urquhart is managing director of Marketing Focus, Perth (www.marketingfocus.net.au). A keynote speaker, author and facilitator of management and staff development workshops, he recently delivered the closing address to a major Agribusiness Conference.
