Marketing 3.0 and Sri Lanka

Last week I had the opportunity of meeting Hermawan Kartajaya, one of the top 50 gurus who has shaped the world of marketing. His perspective to the changing landscape of marketing and what business must do sure opened my mind set to a new way of thinking business and Sri Lanka’s policy decision making.

Hermawan currently holds the office being the President of the World Marketing Association and partners the great Philip Kotler in many initiatives in different parts of the globe and was thekey note speaker at the Chartered Institute of Marketing Annual Conference 2012. Let me capture the 10 key credos that he shared in his work of Marketing 3.0 and link it to the key implications to Sri Lanka.

1) Love your customers but respect your competitors:

Last Sunday’s news report on the EU mentioning that Sri Lanka has not requested an extension of the GSP+ facility disturbed me. Whilst we have proved to the world that Sri Lanka is resilient and can perform to reflect a double digit growth last year in apparel exports to the US and EU even without the trade facilities as per the works of Hermawan Kartajaya, we must learn to love our customers from a nation perspective and respect the competitors.

We must engage the EU and workout a modality that is mutually right for a sovereign country like Sri Lanka and the demands that the Diaspora is making via the EU.

Let’s not forget that when the apparel industry began in the 1980s it was termed by many a mere contract manufacturers and some even used to refer to the industry as ‘tailors,’ but thereafter with some strategic thinking by the industry, it has given leadership to the world by making Sri Lanka the fashion apparel of the world for ethically manufactured clothing.

This has given teeth to the industry in competing with price savvy merchandise coming in from Cambodia, China and Bangladesh. Today this noble industry is targeting US$ 5 billion in export revenue and also visioning that Sri Lanka becomes the ‘Apparel Hub’ in Asia for R&D and technology sharing for fast fashion, which is a case study to the world. Let’s bite our pride and keep the engagement is my view in my experience of trade and commerce.

I would commend the apparel industry for working with the Government and the ADB for the US$ 1 billion impetus to start low-cost garment factories in the areas of Monaragala, Bibile, Badulla and may be Hambantota.

This clearly means that as per the work of Hermawan Kartajaya, its being sensitive to change and being ready to transform given that the GSP+ facility exit in fact affected the business of the SME sector. We must now not only drive the supply chain but also work on the demand side to ensure the business traction is maintained.

2) Be sensitive to change and ready to transform:

I totally agree with the comments made by the Chairman of the Planters Association (PA) that a wage increase at this moment of time will be detrimental to the tea industry.

Just for the record, the wage increase between the time period of 1991-2011 is a staggering 986% and it needs to be managed given that the Sri Lankan daily wage rate is 137% of the average auction price whilst the other producing nations like India is at 93% whilst Kenya is at a healthy 79%.

As per the words of Hermawan Kartajaya, let’s be sensitive to change and ready to transform even if we are working in a political economy.

It’s time that the tea industry takes a cue from the apparel sector and focuses on the supply chain correction issues, given that the industry must be commended for the work done on the brand Ceylon Tea, by taking the high ground with some focused decisions on conforming to global standards on MRL levels and has gone further by developing a new standard for tea globally, that has resulted in Ceylon Tea being the first certified ozone friendly tea globally. The new Ceylon Tea campaign that will hit the global media is also feather in the cap for the strong working partnership between private and public sector.

3) Guard your name and be clear on who you are:

When Hermawan Kartajaya talked about guarding your name and being clear in who you are, the one thought that struck me was that whilst category branding is giving leadership to Sri Lanka and the world, be it apparel or tea and now cinnamon, what have we done with the overriding Nation Brand Sri Lanka?

As we speak now we have not given a clear signal to the world especially post the war coming to a close. Sri Lanka as a brand has many allegations which I feel the time is right to correct if we are serious about making our brand a 50 billion dollar brand. As at now, as per the Nation Branding index, Sri Lanka is valued at 23 billion dollars only.

4) Customers are diverse, go first to who will bring the most:

Last Sunday’s papers throw out many debates with our strong link with China and India, especially the former given the preferential land arrangements and tax concessions extended on the Shangri-La investment.

Let’s accept it that as per the words of Hermawan Kartajaya, customers are diverse and let’s go after the ones that bring in the most.

It’s true that one can argue the special treatment does not hold ground on the consistency of policy, but we have no option as the West is poor and the rich are Brazil, Russia, India and China (BRIC) and if we are keep on getting traction on GDP we have to move in this manner.

By the way Sri Lanka’s GDP at 59 billion dollars means we are smaller that the companies like Apple, Pfizer and Peugeot, which are at 65, 67 and 74 billion dollars.

5) Always offer a good package at a fair price:

When Hermawan Kartajaya mentioned this, the thought that crossed my mind was the 150 dollar minimum rate that came to being in the city hotels. The question to ask is, are we giving a traveller a product for the value?

Current thinking is no and we must understand that upgrading a property is more expensive than building a new one and such decisions must be made understanding competitor dimensions. If not things can be tough in today’s rough business environment.

In fact some stay in rented apartments rather than staying in city hotels which does not augur well for the industry even though from an economic perspective it does not matter as Sri Lanka benefits.

6) Make yourself available and spread good news:

If one reads the media, we can see that Sri Lanka is not spreading good news. A triple murder in Wellawatte and the Christmas day murder of a foreigner when in the last 30 years of war not a single foreigner got killed.

The Kahawatte killings and the power crisis due to Norochcholai adds to the tale of woe apart from the Z score fiasco and diesel issue that grounded many buses. As Hermawan Kartajaya said, we must spread good news and be available for comment to the world if we are to progress in the world of business and marketing.

7) Get your customers and keep growing:

Let’s accept it; the export business is in a dilemma. The latest is a 15% drop in the latest month export proceeds in to the country. A quick view from freight forwarders will show the real picture with regard to the next few months’ exports.

It’s time that we take stock and understand who the customers we have lost are per sector and who are buying less due to the economic fallout in the West. The fact is that the UK is at a double dip recession even with the Olympics being staged in the country, which spells out the issue at hand.

Once we know the exact details, with a private-public partnership may be the options can be worked out. This must be done via closed door forums so that options can be discussed in detail. Private sector chambers like the National Chamber of Exporters must take leadership so that it’s easier to garner strategic reforms in a country.

8) Whatever your business is, it is a service business:

I really like this thought of Hermawan Kartajaya that whatever business one is in, it is in the service business. Rather than crying out the issues that an investor is up against, may be the better option would be to do a touch point study so that we can understand the ‘as is’ situation of a investor from the point one lands to Sri Lanka. This touch point study that can be done by a specialised research agency can help shape the key changes required based on cause and effect rather than just outcomes.

Let’s accept it that when an economy has been growing at around four per cent a year in the last 30 years, we cannot expect the administration system to run at 8% when the salary and motivation factors are the same. This means reforms have to come in and it will be painful. The private must support this agenda.

9) Always refine your business process in quality, cost and delivery:

I saw a news release that in the case of 198 companies of the 228 odd listed organisations, the last quarter revenue drop is 17%. I guess more fact finding will have to be done so that we can understand the reasons. But becoming lean, mean and clean will have to come to play.

Clean meaning the SEC regulations. The recent resignation does not hold good for brand Sri Lanka given that investigation on 17 key players were just coming to headway when the resignation hit the country. As Hermawan Kartajaya said, refining business processes is a must.

10) Gather information but use wisdom in making decisions:

The last point on Hermawan Kartajaya’s 10 step credo on Marketing 3.0. The pointer is Sri Lanka tourism. Whilst the numbers are moving up, a report that flashed was that only 30 per cent of them have visited Pinnawela Elephant Orphanage and nine per cent Yala.

In this backdrop, if we increase the entrance fees, this does not augur well for Brand Sri Lanka Tourism. What we must do is take stock and regulate our key sites for quality experiences without harming nature rather than just focus on price.

Next steps

What is important is for a Government ministry to develop a Brand Sri Lanka board so that every communication can be understood from a global perspective and rather than regulating the root cause, understand and agree as per the Hermawan Kartajaya Marketing 3.0 research.

(The author can be contacted via [email protected]. He is an alumnus of Harvard University, Boston. The thoughts expressed are his own and not the views of any organisation he serves in Sri Lanka or internationally.)