Greg Cross looks at opportunities for New Zealand companies in the global recession.
KEY POINTS:
Focus, focus and focus are the three most important elements of any market entry or market development strategy. Understanding your target customers' pain points is the critical part of being able to establish your value proposition and close sales.
The past 12 months have brought substantial changes to the economic environment in many of the countries our exporters do business in.
On the positive side, an improvement in currency exchange rates, particularly with the United States, means revenue returns are higher. But at the same time the costs of investing in market entry are much higher for our earlier-stage companies. Weak balance sheets and lack of capital are forcing many companies to rethink their business plans.
With change comes opportunity but we need to stop and evaluate how we adjust. Cutting costs and controlling expenditure is the first and most obvious strategy for most, but to stop there and not evaluate what growth opportunities exist as a result of the change in economic conditions could lead to a waste of years of international market experience, customer and network relationships and millions of dollars.
Often New Zealand companies are where they are because of their nimbleness, creativity and ability to adapt. These characteristics can often be the platform for significant competitive advantage during difficult times, so follow the pain. The critical issues for our export companies to consider are:
How has the change in economic environment changed the pain my customers are experiencing?
A careful review may reveal compelling new value propositions that are now at the top of your customers' priority list, potentially creating sales opportunities that didn't exist before. At the very least, tough times provide an opportunity to further strengthen relationships and networks within your market. Companies that have stayed close to their customers during tough times are the ones that have prospered when conditions improved.
What is this new environment doing to my competitors?
Maybe a competitor's weaknesses will be exposed as the tide has gone out, maybe they just don't have the nous or the ability to react and respond as quickly. Maybe they have become internally focused on cost cutting and redundancies and have dropped the ball with their customers.
I know of a number of New Zealand exporters who are growing revenues faster than they were before the downturn simply because of the cracks that have emerged in the competition.
Competitive focus and analysis is something far too many New Zealand companies do way too little of - now is a great time to develop these skills and hone that competitive position.
What is happening to the market structure?
As market landscapes change during 2009, acquisition and consolidation will occur, providing opportunities for companies which have adapted and executed well to be the acquirer as opposed to the acquired.
Identifying the opportunities that emerge from competitors, complementary product/service providers or even channel partners may be well worth the time and focus. While capital markets are tight now, that will change and investors will be looking for strong export companies to invest in.
Even if you can't solve the pain your customers are experiencing - maybe you can make them feel better about living through it. I know of at least one exporter who is enjoying dramatic success in an industry decimated by the downturn who is doing just that. Yet another illustration of that old saying - no pain, no gain.
* Greg Cross is a director of The Icehouse and chairman of the NZTE Beachhead Advisory Board. Visit www.theicehouse.co.nz
