Marketing Institute National Conference –

Burlington Hotel, Thursday 17^th February 2005

Ladies and Gentlemen

Your Institute and its professionals are the bridge between the market place and a company’s profitable growth trajectory. In a world where all sorts of barriers and distortions to world trade are falling away, your knowledge and experience are important in building campaigns that extend Ireland’s reach into new and global markets. As freer, but more competitive commerce becomes the norm under further trade liberalisation, marketing expertise will become an indispensable skill in any company. In Ireland your Institute is at the frontier of professionalism for anyone connected with marketing.

We have benefited from free trade within an EU context for so long, that for most people our positive experiences of being part of a wider economic and social Union are probably at this stage taken for granted. Since I became Minister for Enterprise, Trade and Employment I’ve been struck by the extent to which Ireland is regarded as a role model in many ways, both in terms of how we have managed our economy but also how we have benefited from membership of the EU. I won’t go into all the details of our transformation since 1973, but it has been remarkable. I see it more than an industrial revolution, a social and economic one as well. Not only did it encompass very generous transfers of agriculture, structural and social funds, it opened our economy, our trading patterns and our attitudes. Membership of the EU did not guarantee our success, but without membership I doubt if we would have achieved the transformation of Ireland that is so clear now. Financial transfers alone are by no means the measure to judge the benefits of EU membership. Internal economic and social policy reform were encouraged by EU advances and we have and we have the undoubted benefits of the Single Market and the Euro. It is beyond question that economic policy and performance has been influenced in every area by EU membership.

It is almost impossible to overstate the importance of marketing and sales expertise to business growth. The ability of firms to successfully innovate, hinges on your ability to apply customer and market knowledge to developing attractive products and services. Customers are the key source of innovation and in some cases the only real source of product driven research and innovation. Front line sales and marketing staff are the best placed to appreciate real customer need and to be the first to recognise profitable trends and value creation models in changing markets. I say this at the peril of criticism from other corporate functions, but I believe that it sometimes can be difficult for the wisdom of marketeers to find its rightful place in building corporate strategy.

From the earliest and smallest start ups, to large multinationals, the knowledge you bring to building strong profit centres in served markets, must be properly communicated to and heard by corporate strategists. On the basis of recent surveys I hope we are achieving due recognition of the importance of marketing expertise and its proper recognition as strategically indispensable. In a recent report, I recall that 86% of the SMEs surveyed claimed they generate new ideas based on customer feedback.I was happy to see the Marketing Institute participate in this study on the Sales, Marketing & Innovation Capabilities of Irish Exporting SMEs, which was published by Forfás as Innovate Market Sell.

The dynamic of the international marketplace is changing rapidly and dramatically. The advent of electronic sales systems, mass customisation of goods and services and globalisation of marketing and taste are all driving an unprecedented pace of change. This places increased demands on the awareness and market intelligence skills of sales and marketing professionals and the responsiveness and creativity of innovation functions within your enterprises. Marketing capability is critical in spotting the exciting potential of innovation and indeed for the future success of our small and medium-sized enterprises exporters.

I believe that creating a continuous positive loop between innovation and market knowledge will be the key competitive advantage firms have to acquire, just to survive. Innovation will prove commercially successful if it is genuinely customer driven. Marketing performance must depend heavily on the ability of people in these positions to communicate marketplace opportunities to their product/service development base.

Eoin O’Driscoll’s Enterprise Strategy Group recently outlined some of the potential obstacles to Ireland’s continued enterprise success. Among the most important themes to emerge from the Group’s report is indeed the need for greater innovation, across both products and services, to be driven by a far deeper understanding of market dynamics and customer need. This is one area of the ESG’s work that directly relates to your conference and to the experiences that I expect David McKernan and Michelle Mone will tell you about later today.

I believe that in many respects there has been insufficient emphasis on the essential links between technology development and building market expertise and presence. The competitive nature of the global economy and the sometimes fleeting nature of opportunities mean it is vital that our companies develop the capacity to internationalise successfully and nimbly, through technological niches. Markets have a tendency to become global much more quickly than in the past. From earlier stages in companies’ growth cycles, most firms must build the means to do business at an international level. They must have the skills to win international sales and reputations, while establishing an overseas presence in core markets. This of course requires the ability to successfully market in territories that are unfamiliar or indeed come to terms with vital cultural sensitivities and business practices. Across the corporate agenda this involves a substantial investment over a wide range of areas to facilitate business success, by integrating financing, human resources, innovation, or technology assimilation. This investment will count for very little if our companies don’t shift into a higher gear of professional marketing to successfully market and sell the products of our ingenuity to new customers in different and exciting markets and regions.

I am aware of a view that Ireland lacks sufficient skilled and experienced staff to market its output abroad to best effect. Bearing in mind the success of indigenous firms in export markets and the high figure from the Forfás survey that I mentioned earlier, I am inclined to believe that the basis exists within companies and the State agencies to create a step change in our approach.

Enterprise Ireland has had a close look at how its overseas business division operates and is planning specific performance objectives that recognise the more complex needs of its internationalising clients. A key innovation in the agency’s future activity that I would like to see, is a better alignment of overseas staff with specific enterprise sectors such as High Potential Start-ups. This means that unique expertise in new and selective markets and sector combinations can be developed.  

These changes will be associated with an extensive review of Enterprise Ireland’s overseas activity recently completed by my Department. Implementing the Department’s report will see significant changes in the way the agency helps its clients whose operations require an overseas dimension. I want to see that any operational changes bring about a regime whereby clients receive both in depth business development guidance and advanced market intelligence and services comparable to best international practice.

I would like that the opportunities that easier access to world markets offer will be matched by marketing support delivered with a new focus and determination. These must and will connect more directly with the very different abilities firms need to acquire a distinctive footprint in developing markets.

In the longer term, I expect new organisational arrangements within Enterprise Ireland to emphasise flexibility and freedom to provide programme responsiveness that matches enterprise need. I would like to see Enterprise Ireland’s activities encompass assistance to firms to internationalise their business by whatever means is deemed most appropriate. Many of the most dynamic Irish firms have chosen to invest overseas to be closer to their customers and have actively developed global business relationships to acquire specialist skills, access new technologies or source lower cost inputs.

As Irish companies become more internationally focused and move up the value chain, it may be necessary to tackle competitive challenges in new and flexible ways. This may mean acquiring new technology or skills through alliances or other collaborative activity. This is a legitimate business strategy for certain companies as it can ensure longer term survival against intensifying competition, while retaining high skills and high knowledge activities at home. I think we should aim to help your activities across the full range of internationalising strategies and not simply in relation to the rather more narrow objective of export promotion.

It has been reported that companies often encounter difficulties in sourcing high calibre sales personnel with international experience and sectoral knowledge. As a result, they often recruit their sales personnel from their technical ranks. However, this can result in sales teams, which have skills gaps that need to be addressed. The Enterprise Strategy Group made a recommendation that marketing graduates and experienced professionals be placed with companies on a cost-sharing basis, in order to increase our pool of sales and marketing talent. It is widely agreed that improving the availability of sales and marketing expertise is vital to future enterprise development. Possibilities relating to the recommendation on placements are currently being examined and I would like to promote some distinctive progress on this over the coming year. I think it fair to say that any programme should be targeted at small and medium-sized enterprises, as it is clear that only a small minority of these and micro-enterprises have either the financial or management resources to recruit dedicated marketing personnel.

Marketing cannot be the exclusive preserve of larger companies. I’m tempted to think that the smaller you are, the more important is the marketing function. At the level of micro-enterprise, when asked to identify their needs for future micro-enterprise supports, 32% of agency clients in a recent review conducted for Forfás identified new markets. I’m glad to say this is where my Departments has had significant but perhaps little noticed success with the FÁS Overseas Graduate Programme. This Programme, with a 21 year track record, was started by FAS as a response to the needs of Irish industry for young graduates with international experience. I think it is a good example of a strategic long-term programme that provides quality international experience to young Irish graduates across a range of Business, Engineering and Science disciplines.

The Programme has had a significant long-term effect in placing newly qualified graduates into full time employment with companies abroad and particularly in China, Japan and Taiwan. It has created a unique cadre of over 1,000 Irish people who have lived or are living in some of our most important export markets. Many have gone to Japan and are working for themselves or for Japanese companies. They have local networks and excellent language skills and are an impressive point of contact with companies and society. The Programme has been extended to the rapidly growing Chinese market and in time those who return to Ireland will be a source of recruits for your companies wishing to export to or do business in the China or the Asia region.

I know the work of the Institute caries a strong and important education function. It is important in the longer-term we look at the strategic relationship between the education sector and providing marketing and sales skills training. There are multiple courses across the third level sector providing students at various levels with essential marketing skills and I think in many respects the Enterprise Strategy Group touched on a hugely important point – there needs to be better integration of marketing skills into the broader third level curriculum. Equipping graduates with a knowledge of how markets work, introducing them to strategies for market entry and emphasising the importance of marketing as an integral part of any business will support an easier transition between ideas and reality. The ability of our young graduates to harness their creative potential, to understand the process of commercialisation, will of course naturally be of huge personal benefit. It is also necessary from an economic perspective if we are to move our economy into a recognised leadership position in providing the essential products and services that will power the 21^st. century economies.

Among the third level sector Institutes of Technology are especially important because their reach extends throughout the regions, and their expanding activities as SME partners expose their students to market realities, commercial research priorities and the entrepreneurship skills that make successful and profitable enterprises.

Over the past decade or so Ireland has developed as a leading exporter of high technology products and services for global markets and, through developments in information and communications technologies, has become an important hub for global electronic commerce and knowledge based activities. The sustained increase in Government expenditure in several areas on Science and Technology infrastructure over recent years is beginning to have an impact. As an example of our success in this area I announced earlier in the week a 400 job expansion at Yahoo’s Irish operation.

To maintain the momentum of economic growth and social progress, Ireland’s dynamism has to more than match the competitive challenges thrown up by the global competitors. Recent years have seen the opening up of the east to business, providing cost advantages, attracting enormous inward investment and capital flows while creating competitive challenges for us as well. In order to continue to grow, we have to continually adapt, playing to our strengths, enhancing those strengths, and creating new markets. I recall reading a long time ago that one of the immutable laws of marketing is

“If you can, be first.

If you can't be first, create a new category in which you can be first."[1]

This is the attitude we should be taking towards enterprise development and your verve and flair for promotion and marketing will be the drivers in creating of new markets and tomorrow’s prosperity. Our economy has been transformed over the last decade with unprecedented rates of growth in productivity, jobs and living standards that have outpaced most other industrialised countries. Advances in science and technology have had a significant impact on our economic development. How we have harnessed them has shaped our economy, society, our prosperity and above all our aspirations. Our creative application of science and technology will determine our future economic and business development and whether progress keeps pace with our expectations.

In this regard I believe that marketing is the nexus between customer responsiveness and the creative genius that runs through corporate Ireland. Superior performance in innovation and technology development will direct economic growth and the affluence that has been a feature of recent social history. It is universally recognised that more intensive relationships between SMEs and the research community will generate significant returns to both individual firms and the economy in terms of productivity, competitiveness and new product and market development. At the heart of my vision for enterprise development in Ireland is the triumvirate of investment, invention and, where you come in, market intelligence and connectedness.

To encourage more SMEs to become more research driven and technology intensive, we need to build both their research abilities and the support structures that help companies realise the relevance of science to their business and the relevance of science to your marketplace. Market-led innovation is the route to success in the swiftly moving, technologically advanced, globalised economies of the twenty first century.

The ability to create and exploit knowledge is now an integral feature of every successful advanced economy – we have to excel in the research and commercialisation field if we are to retain our position in the premier league of developed economies. To establish the research infrastructure that enterprise needs to be competitive, we have placed Research and Development at the heart of our economic strategy. In the current National Development Plan, we are achieving a five-fold increase in investment in technology, innovation and scientific research.

Spending of €2.5 billion is planned for the period 2000 to 2006, compared with €0.5 billion over the period 1994 to 1999. This commitment will build the skills needed for a modern knowledge-based economy and strengthening Ireland’s research base. Our scientific and research deficit is being tackled in a determined way through Science Foundation Ireland where €400 million has already been spent in putting together research teams and building centres of research excellence. Across the third level sector we have built almost 100,000 square meters of research space and funded over 1,500 researchers.

I think two central conclusions of the Enterprise Strategy Group was that an increased focus on research must become a core pillar of our national enterprise policy and that we must act sooner rather than later. In the context of gearing up for the technological challenges that we will face, I think there is nothing abstract or indulgent about investing in advanced research.

I also recognise that innovation supports require better coordination and market focused expansion, both in depth and scale. Extensive programmes to promote applied research, collaborative relationships between business and researchers and in bringing innovations to market already exist – we need to increase the uptake of these programmes by business, but always guided by the market intelligence you bring to the table. Yesterday I chaired the first meeting of the new Cabinet sub committee on Science and Technology. We adopted demanding targets that business investment in R&D should increase from €917 million in 2001 to €2.5 billion in 2010 or 1.7% GNP. This would entail a doubling of the number of companies with minimum scale R&D activity and a quadrupling of the number of enterprises performing significant R&D.

We’re building the infrastructure and providing the incentives. More than ever before, there are opportunities to forge unbreakable bonds of customer loyalty through innovation and research excellence. We need your creative spark of ingenuity to extract the benefits of customer driven research and innovation.

Vital to the development of an economy built on innovation must be the understanding that marketing departments do not merely introduce companies to the market, but also introduce the market to companies. Innovation that does not enable a company to meet or create a demand will not stimulate business growth. Without the lens on the market, which is furnished by your activities, business creativity will not be focused to exploit opportunity. Maximising business performance through market sensitive innovative activities means enhanced productivity and profitability. It also means greater competitive strength and building a pervasive ability to retain market share. We need to work on bringing knowledge to the marketplace from the third level, research centres and other sources of technology that generate ideas and products that have commercial potential.

This involves working to ensure a free and flexible flow of ideas out of the research system, ideas that can be captured, protected and commercialised. The State sector is working to help transform ideas into reality by supporting the transfer of this commercialised exploitable knowledge out of the research community and into companies. This can take the form of either a direct transfer to firms, or to the creation of new, technology based firms with strong growth potential. I want to ensure that high quality applied research is carried out in areas directly of relevance to the longer term benefit of Irish enterprise.

As Minister with responsibility for policy on enterprise, trade and employment, I am determined to see that the aggregated human and financial resources available to the agencies under my Department are deployed to greatest productive effect in support of enterprise generation and the needs of existing business. My priority is to take concrete steps to see that the action programmes and interventions of the agencies going forward will reflect the interests of business through strategically thought-out and co-ordinated approaches to service delivery, programme design and project implementation. The enterprise agencies – separately and collaboratively - will continue to be crucial players in supporting and bolstering enterprise activities, engaging in a partnership with the enterprise base that both challenges and cajoles in equal measure in the on-going pursuit of business success and excellence. We are all in this together: government, business and the wider society.

ENDS

ETE 1312

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