Cashing in on ideas
New Zealand is good at ideas and innovation but not so good at selling them into a global market. So what are we doing about it?
Tuesday, December 08 2009 || Features || BY Andrea Fox
Serial entrepreneur Selwyn Pellett is an acknowledged international marketing whiz. Director of home-grown, global high-speed technology company Endace — and with several decades of experience in international sales, marketing and strategic planning under his belt — Pellett doesn’t mince words about our marketing performance.
Noting there are several types of marketing — from product to public relations marketing — he says there’s a mentality here that is “cost up, instead of what the market can stand”.
It’s because we are a frugal nation that doesn’t understand value, he says.
“For me this is an unattractive market to sell into, because we know the price of everything and the value of nothing. When we are selling, we take the same approach, and the temptation is to sell our products down. This is where very professional product management comes in when you start selling offshore.
“Typically I’ve run companies with margins in excess of 50% and up to 80%. You get that by intimately knowing your end customer and what they need. Typically in a company the only person holding the margins up is the marketing manager or the CEO. You have to be very diligent to prevent margins being eroded.”
Pellett suggests New Zealanders are weak at brand building, “lousy” at PR.
“People will change their logos and their brand values, change all aspects of their brand and not understand why they can never build one. You [have to] set out and say ‘this is what this company stands for’ and you are consistent all the time. Brands take a long time to build, but once they are established they deliver every day.”
On the PR front, Pellett, spokesman for the Productive Economy Council, offers the following example of what can be achieved by thinking outside the “free market” such as talking to journalists, or spending squillions on advertising that your customer might never see.
Pellett and his team at electronics exporter Prolificx were poised to make a big sale. “We thought, ‘these people are about to make us millionaires and what do they get out of it?’ The answer was nothing. So we said ‘let’s get them down to New Zealand, put them on helicopters and boats, and let’s really wow them with New Zealand’. We spent money we didn’t have; it was all on our credit cards. We spent $20,000 giving them holidays we would have loved to have had. It paid dividends for the next four years. Relationships were built and the enjoyment these guys got out of their relationship with New Zealand probably delivered over time $7 million to $10 million of sales.”
Pellett says New Zealanders spend a lot of money on trade shows overseas but they have never worked for him.
But running conferences has paid off.
“If you want to be king of an empire, or a particular market put on your own conference and invite all the learned people to come and listen. We set ourselves up as being experts in the market.
“And you can’t sell a secret so you need to make sure the internet is working for you. New Zealanders are increasing their knowledge in this area, but they are still weak.”
Sky blue sky
Unlimited often heard that universities did too much ‘blue sky thinking’ for their money. So they should, says Peter Lee, chief executive of UniServices, the University of Auckland’s 21-year-old commercialisation business.
“It’s a world-class university and there is great research going on here, but it’s blue sky. I’m not ashamed or embarrassed to use that term. It’s investigator-led research. That is the nature of this institution — it teaches — and to teach you do research in your field and follow your nose for new information. As a result of that knowledge, there might be insights for business that are equally unexpected.”
UniServices makes its money from contracts with business and organisations. It has 750 people on its payroll, not counting those in the university working for it, has launched 30 companies to date of which 25 are still in business — though some are on “life support” in the current economy, Lee says, and more than 20 licensing agreements. At any one time UniServices is running 2500 contracts, mostly with business.
Last year its revenue from commercialising the university’s R&D was a record $101 million and Lee says this year’s earnings will beat that. Research funding grants to the University of Auckland last year were around $85 million, spread across departments from music studies to hard sciences, he says.
