Kiwi tech sector on the rise, but life on e-frontier still a struggle

Ah, technology, you great saver of time, you great increaser of productivity/laziness and, if you believe the results of the second annual ‘Market Measures’ survey, you potentially great maker of money. But while the results seem to show that the Kiwi tech sector has laughed in the face of the recession (or at least sent it a few snarky emails and posted some anonymous comments about it on a blog), the boffins think many of these companies could be doing much better if they started taking a more strategic approach to marketing.

The survey, which was conducted by Concentrate, a tech-centric marketing consultancy, and PricewaterhouseCoopers, looked at the sales and marketing activity of 144 New Zealand technology companies and the results were impressive: the average growth rates were 39 percent, which was down on 2008 but still impressive considering the dire economic situation in 2009.

Owen Scott, Concentrate’s managing director, says the results also painted a picture of brave but lonely pioneers battling it out in tough export markets (speaking of export markets, make sure you enter your success story in the new export marketing category at this year’s TVNZ/NZ Marketing awards).

Even the smallest of the technology companies are trading offshore, selling directly to customers rather than through a distributor. And Scott says too many companies were out there fighting for one sale at a time, rather than taking a more strategic approach to growing large-scale businesses.

“A symptom of this in the survey results is that while our exporters are positioning their products as premium they are typically only attracting market or below-market prices. That is leaving a lot of value on the table and constraining what they could achieve in terms of growth rates and size.”

The highest performing companies surveyed were taking a more strategic approach.

“Typically they are focused about selecting target markets, have developed a strong and convincing positioning around their brand, invest in building brand awareness and demand generation, and work with resellers and other partners in their chosen market.”

Given the Government’s renewed focus on fostering innovation, Scott says there should be some concern about this overall weakness in the country’s ability to commercialise products effectively.

“Despite some obvious success stories, Kiwis don’t have a great record at commercialisation; at finding people to sell our inventions to at a profit. That New Zealand hasn’t yet built a lot of large scale technology-based businesses, with a few outstanding exceptions, is evidence of this commercial weakness.”

Concentrate and PricewaterhouseCoopers are running a national series of seminars to present the survey results and identify the main implications for technology companies looking to review their export marketing strategy. A copy of the report and details of the seminar series are available on www.concentrate.co.nz.

Background information

  • Results were compiled from an online survey conducted in late 2009. 144 companies participated, covering a range of technology exporters, including electronic, software, telecommunications and associated services.
  • Auckland and Canterbury were the most common locations and firms ranged in age from start-ups through to established companies (20 years +). Turnover mirrored national statistics, with a large number generating less than $1 million annually, to those generating $50 million plus.

Key findings

  • The study showed a strong correlation between strategic marketing and exceptional growth performance; top performers are also effective users of social media
  • Annual turnover growth was down, but still at 39 percent
  • 77 percent of companies export, mainly selling directly with a small team
  • Companies position their product as premium but attract market or below-market prices
  • Investment in sales and marketing is high at 40.1 percent of turnover, but focused on the sales transaction
  • Companies feel their greatest sales and marketing weakness was promotion and rated social media, advertising and sponsorship as their least effective tactics

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