You'll purchase a Swiss watch but what about Swiss software, asks Jonathan Dodd
News this week that Shell's New Zealand assets are now in Kiwi hands puts the spotlight on the consumer.
Certainly the marketers of Shell will have another benefit to cite in their marketing - or do they?
Casual observers may think that the answer is obvious. New Zealand-owned is good, overseas-owned is bad.
That's why there are services such as 100 per cent NZ, who will enable you to freely badge your business as "100 per cent NZ", and a swathe of criticism every time New Zealand business goes overseas, or otherwise cedes some ownership (note the current concerns over Chinese farming investment).
Search for "New Zealand owned and operated" and Google returns over 220,000 results - clearly many marketers have seen fit to promote this fact.
It is also clear from the big guns of New Zealand marketing (who have presumably researched this issue), that local ownership is worth crowing about.
Kiwibank and TSB have made such an issue of their ownership that ASB Bank has felt it necessary to retaliate by promoting its long New Zealand history.
One can assume that local ownership is being promoted either because these marketers have found them to be of value to the consumer or because they are seeking to promote the issue's importance out of self-interest.
But the case for promoting local ownership is not as straightforward as this. Time once was when "made in Japan" meant inferior quality, and whereas "Swiss-made watches" may represent high quality, such associations could not be easily transferred to, say, "Swiss-made software".
Thus the act of placing "New Zealand owned and operated" in front of one's brand may not be as automatically beneficial as it may seem - a few considerations need to be made first.
To begin, being locally owned and operated has to be of value to the consumer. This value can derive from two broad areas, the first being differentiation from the pack.
As with the banking cases cited above, customers will often be attracted to localised brands if they are operating in poorly differentiated, somewhat commodified sectors, such as banking.
If your rivals' owners can be vilified in some (good natured) way, all the better. But beware - it may be acceptable to have a knock at "Aussie banks" but a New Zealand-based software firm would get little traction having a dig at Silicon Valley.
This brings us to the second aspect in which the country of origin can be worth promoting - where the source represents genuine advantages over similar products from other countries.
As with the Swiss watch example, New Zealand owned and operated companies have to prove how their local base offers something special to the consumer beyond the political niceties of "keeping the profits local".
If this can't be proven, then a marketer will struggle to make consumers really care about the issue, especially if they are being asked to pay a premium.
This need not of course preclude one from trying - after all, 42 Below proved it is possible to sell vodka to Russians and New Zealand is gradually developing a reputation for high-end design expertise (Phitek, Orca, Rakon, Navman) - but these examples are led by quality of product first and foremost, not country of origin.
Another aspect that companies such as Shell have to consider is the brand guidelines that they and all other users of the brand will have to abide by.
Although locally owned representatives of multinationals such as Shell and Burger King are able to create and run locally produced marketing materials, guidelines naturally exist.
Promoting the benefits of being owned and operated within a country of operation by definition is a critique of those brands' operations elsewhere in the world where local ownership doesn't exist.
Finally, it's important to point out the fact that consumers are becoming more savvy as to marketers' claims. "Greenwash" is well-known but what of "blackwash" - trying to appear more Kiwi than one is?
Marketers will be aware of the 2004 case of Carter Holt Harvey vs Cottonsoft Ltd, in which the judge ruled that with Cottonsoft only conducting the last of the four-stage manufacturing process in New Zealand, their toilet paper could not be marketed as "New Zealand made".
Hence we have the new labelling that many will be familiar with: "Designed in New Zealand" (and made in China).
Certainly this could be argued as keeping our IP and design skills local, but when New Zealand products such as Canterbury rugby jerseys, Moro Bars and Swanndris are no longer being made in New Zealand, some lustre cannot help but be lost.
How many consumers, one wonders, feel cheated when they buy Wattie's tomato sauce in squeeze bottles only to read that the sauce in these bottles comes from Australia?
For Shell at least, nobody expects locally produced petrol and oil at the pumps anytime soon, and it's well known that petrol stations really only profit from their grocery sales - this is where differentiation and profits lie.
If Shell is looking for a way to play up its local ownership and differentiate itself from the slick internationals, while retaining the core international Shell branding, then it is this grocery angle that might provide dividends.
So a Kiwiana theme could be a good replacement for Shell's current store branding, but don't expect a switch from the scallop shell to a paua shell anytime soon.
* Jonathan Dodd is based at market research company Synovate. jonathan.dodd@synovate.com
