Exporters learn brands are sales kings

By IRENE CHAPPLE marketing writer

Exporters are turning away from generic marketing as an increasingly sophisticated global marketplace demands brand recognition.

Generic marketing - promotion of a product over specific brands - is becoming irrelevant as consumers become more product conscious, and generic marketers such as meat and wool exporters have had to radically rethink their advertising tactics.

On Monday, the Meat Promotion Group, Meat New Zealand's self-financed industry body, will have its first meeting.

It includes exporters and Meat New Zealand representatives who will nut out the best way to spend a producers' levy of about $7 million - cash also covering research and development - to promote New Zealand meat abroad.

The core group of six will brainstorm the "objectives for the future, how we develop strategies, when we fit in and where, and the degree of funding required", says Bill Joyce, Meat New Zealand's general manager of market services.

"The Meat Promotion Group will really make sure we work more closely with our exporters," he says. "We need guidance."

Thirty years ago, he estimates, 90 per cent of meat exports were carcasses and brands were less relevant. Now, produce is sophisticated and branding is a vital tool.

The promotional group has been created in response to these changes - and discontent among meat producers.

Richmond NZ, the North Island's largest meat producer, introduced Bite Me Marvellous Meatballs and Big Tasty Beef Burgers throughout New Zealand in April. The burgers and meatballs are promoted as a healthy snack, have less than 10 per cent fat and are approved by the Heart Foundation.

Richmond chief executive John Loughlin says these new lines are the firm's first serious foray into the fast-moving consumer goods market.

Further products will be launched under the Bite Me label over the next two years.

That, he says, is an example of primary producers' increasing eagerness to differentiate products. Richmond still exports up to 95 per cent of its products, but Loughlin believes New Zealand Meat's major British market is in flux. He argues that British supermarkets' preference for house labels will change in response to consumers' desires for branded products.

Loughlin says issues such as food safety, in a country not long cleared of mad cow disease and various E. coli outbreaks, will also swing supermarkets' buying patterns away from generic brands.

"Then, if there is ever a problem, they can then sack the brand provider."

Loughlin supports generic marketing pushes into markets that may require education into the benefits of certain meats, such as this year's beef promotion in Taiwan, jointly financed by export groups in the United States, Australia and New Zealand.

That campaign, which runs until the end of this month, contrasts the nutritional benefits of beef and foods favoured by the Taiwanese.

However, Loughlin is heavily critical of the Quality Mark, introduced in 1997 by the New Zealand Beef and Lamb Marketing Bureau. The distinctive red, green and gold rosette features on New Zealand beef and lamb of a certain quality, judged by criteria including leanness and tenderness.

The marketing tactic backfired, says Loughlin, because it dragged high-quality products down to a standard of lesser meats. It miscarried in a market whose consumers happily pay top dollar for high-grade meat.

Bill Joyce defends the Quality Mark but says that, ideally, generic marketing and brand-specific advertising should work together.

He, too, points to the Taiwan initiative as an example of how exporters are responding to the changing market.

The three joint marketers are serious competitors, he says, joining hands to enter an immature market. Beyond that initial promotion, the gloves will be off: each country will promote the attributes of its homegrown meat, with New Zealand pushing its natural image and food safety.

Changes at Meat New Zealand could keep alive a promotional responsibility that, in the Wool Board's case, went belly up.

The Wool Board's Fernmark history is a salutary one for generic marketers in an export market.

The board - now being wound up - created the Fernmark brand in the mid-1990s with levies from wool growers throughout New Zealand. Spending for the brand's first three years was $10 million a year, with total promotional spending to last year reaching about $250 million.

Rights to use the Fernmark stamp globally were granted in return for manufacturers guaranteeing to use up to 80 per cent of New Zealand wool in products such as carpet.

But in 2000, the contentious McKinsey report on "improving profitability" recommended that woolgrowers stop levy-financed market promotion. Growers agreed and voted to cut levies, dissatisfied with lack of proof of the Fernmark's worth.

This made the Fernmark brand no longer affordable as a generic promotional tool.

That decision still angers New Zealand Wool Exporters Council executive manager Nick Nicholson, who believes promotion is vital to keep the industry alive.

"People keep referring to the sunset industry, but the wool industry is still a billion-dollar industry. New Zealand has the best reputation, and to not be pushing that as a country of origin is bizarre."

But Roger Buchanan, the Wool Board's general manger of policy, says the Fernmark simply could not compete with big spenders such as synthetic fibres giant DuPont.

'You get to the point where you are banging your head against a brick wall. But the brand will continue to exist, it will still be out there."

Buchanan agrees that the brand's value is likely to diminish over time, but says it is too early to measure.

Meanwhile, the intellectual property rights to the Fernmark have been vested in Wool Interiors, a company registered on April 4, with one share owned by the Wool Board. Ownership of the Fernmark will eventually go to the growers' new promotional vehicle, Wool Equities, which will license it to Wool Interiors.

But the brand's focus has been completely flipped. The Fernmark will now be sold to fee-paying manufacturers, who will then gain access to local technology.

"There will be a greater focus at the manufacturers' level," says Buchanan. "There has to be a value package [around the Fernmark]. It is away from the consumer level, so it won't be as in-your-face as it used to be."