The industrial field is the most important component of the national economy. Export orientation of industrial products has always been under the careful attention of the state, as it has brought tangible export revenues to the budget. A recent meeting with the President on relevant issues of the development of the industrial complex was focused, not only on the ability to produce a competitive high-tech product, but also on the ability to sell it in a reasonable timeframe.
There is a lack of customers today, and manufacturers will have to ‘catch’ their customers according to the rules of the ‘hunt’. If you do not use the adjusted strategies, do not know their ‘habitats’, you can end up with an empty ‘bag’.
Let’s be honest, Belarusian suppliers have special problems with foreign deliveries. This is evidenced by the negative balance of foreign trade, and by the overfilled warehouses. Many companies try to attribute their failure to unfavourable factors such as stagnation in Russia, the economic crisis which has still not been overcome in the developed countries or revolutions and wars in some Middle East countries, traditional consumers of Belarusian products. However, a ‘favourable economic situation’ happens several times in a decade. During the mid-2000s, when demand for our products was high, the price of energy and raw materials rose continuously, outstripping output prices. There are always negative factors in the world. Blaming them permanently for falling sales is the approach of a negligent pupil, who always has many reasons why he did not finish his homework.
Maxim Poklonsky, from the IPM Business School, the Head of the Business Academy for Owners project, sees the problem of exporters in a different way. As a consultant, he studied marketing technology in various enterprises, and noted that the sales and marketing departments of companies often ‘pay more attention to actions that play a small role in concluding a contract’. Maxim Poklonsky developed his own system of audit of functions in terms of their relevance to the sales. It turned out that the paperwork, assembly requisitions from contractors, only occupy 50th position.
Actually, sending a quick note with the help of a computer or the receipt of a fax are simple functions in the complex business of marketing. But many employees of ‘foreign-economic’ departments do this work manually at Belarusian enterprises. The main problem is to find consumers, negotiate effectively with them, but not to draw up a contract. Mr. Poklonsky rightly believes that in order to establish successful sales in another country, it is obligatory to start with the analysis and formation of a ‘market map’. In his opinion, it is advisable to draw a diagram that shows the entire structure of the market: producers, intermediates and ultimate consumers, official and non-governmental organisations, which may influence the choice of consumers, and their opinion. It is very important to establish links between all market structures and to find ‘agents of influence’, to approach them and to work out alternative channels of distributions. In Europe, for example, the choice of materials in the construction industry is strongly affected by field associations. And it is very important to establish positive contacts with specialists, whose points of view are important in these organisations. In some cases, such contacts enable us to forego the need for investing heavily in the creation of a dealer network, advertising, expensive presentations and participation at exhibitions. However, alternative sales channels may be unique in each case, depending on the host country, goods, the level of competition and other factors.
Problem of choice
Offering a wide range of goods is not always good for consumers, and it can provoke the emergence of ‘pain spots’, when the choice of goods turns into a painfully long process. The expert advises producers to try to save their buyers from discomfort. According to him, companies that produce laptops have made the lives of ordinary people hell. There are hundreds of models of different designs, screen sizes and other numerous characteristics. The number of options, depending on various parameters, is almost infinite, and consumers come to a standstill. From Maxim Poklonsky’s point of view, until recently, the situation with tablets was rather good. “If you talk about colour, everything is simple: black or white,” explains the expert half-jokingly, or possibly half seriously. “It’s the same with the screen, performance and other parameters, so that even an ignorant technology consumer can quickly make an optimal choice.”
In general, for sales to be successful, it is important to learn the consumer’s properties of their own products and the products of your competitors and then to compare it with requirements of your customers. Based on this analysis every marketing department has their own strategy of sales. They naturally focus on their products’ strengths and hide the weaknesses. “Without this principle, sales managers will be under attack during meetings,” said Maxim Poklonsky. “Contractors will always point to the weaknesses of your products, demanding discounts or other preferences.”
Another problem with exports is the encouragement of staff. Deliveries abroad have one feature — the time from the first acquaintance with the potential client to concluding the contract and shipment of the product may take a few months or even a year and a half. It is normal, especially when it comes to developing new markets. But how does one monitor the work of marketers? How does one encourage them? If you just focus on the concluded contracts, not every ‘freshman’ will survive the long months with minimum earnings. And managers have a destructive desire to grab what’s lying on the surface, rather than to ‘dig’ the market deeper, to find work
for the future.
In order to formalise the process, Mr. Poklonsky advises the use of so-called ‘sales funnel’ technology. It divides the journey of a client to cash desk (from the first acquaintance to shipment of goods) into a series of stages. Maxim Poklonsky identifies 70 of them. Due to such imaging, business leaders can always understand the level of their sales, estimate the prospects, encourage some employees, and hurry others.
Time is not cheap
In general, Mr. Poklonsky can talk about the development of export sales for hours, giving numerous examples from his own experience of counselling Belarusian businesses. There are hundreds of nuances in the difficult task of conquering foreign markets and no universal approaches and strategies. Every company and its products should be carefully studied and examined, and then a strong marketing system skeleton should be built.
But there is one paradigm common for all industries and manufacturers: stable exports do not mature quickly. They must go through all the stages of ‘maturation’, including a serious preparatory phase, which takes time, specialists and money to pay for their services. Of course, there is always luck, when there is a deficiency of some products on the global markets and customers ‘consume’ almost any goods, not particularly paying attention to the price. But it is an accident, like receiving a good poker hand. Industrial production is a fascinating process, but it is not gambling, which requires mathematically verified approaches. Unfortunately, judging by the backstage notes of the participants of the Forum of exporters which was held in Minsk, the demand for analysis and conceptual development is not high among domestic enterprises. Perhaps it is the reason why exporting in Belarus is not the most successful indicator.
However, there are pleasant exceptions. Although the year was difficult for the country, and many of the planned economic indicators were not reached, the situation with innovative development is much better. The share of innovative products in the total volume of products sent to customers amounted to 18 percent, as much as was planned. The volume of exports of high-tech products, expected to reach $5 billion was, in fact, $11 billion. At the same time, the share of such products in the total volume of exports was up to 20 percent, when the proposed plan was only 11 percent.
But technological progress is developing, and everything that is considered a high-tech product today, will be commonplace tomorrow.
“That is why we constantly exclude some of them from the list under the heading ‘High-tech products’,” says the Chairman of the State Committee on Science and Technology Alexander Shumilin. “Internal combustion engines of standards Euro-4, Euro-5, produced by Minsk Motor Plant JSC have just been excluded from the list. The same fate was shared by the giant tires produced by Belshina, loading and transport vehicles, special purpose vehicles produced by Minsk Tractor Works and Minsk Automobile Works, Amkodor JSC.”
Innovation and science cannot be separated; in any case, these two areas are very dependent on knowledge-intensity of GDP. This indicator is not impressive in our country. What level was it, following the results of the last year?
The Republican budget for science to GDP in 2013 amounted to 0.3 percent, that is higher than in 2012 (0.25 percent). In general, taking into account the expenditure of their own funds, costs spent on science and innovation, this makes 0.6 percent to GDP, which is lower than in 2012, when the figure was 0.67 percent. Nevertheless, it is surely insufficient. Therefore, the task is to achieve at least 1 percent, and this question is constantly being raised in Parliament. After all, world’s common level is 2.5-3 percent and 3.5 percent in most developed countries.
How much is investment in Belarusian science repaid?
We counted and found out that today Br1 Rouble from the budget spent on science brings Br44 Roubles income. And now, we observe a good period of growth (40 percent compared to the last year), and this figure will grow.
Our economy is still down with that ‘Soviet disease’ — resistance to innovation, reluctance to change. Are there any preconditions to ensure that the program of improving the scientific sphere will reverse the situation? Perhaps this question is quite timely.
Starting this year, we seriously stake on the commercialisation of science, and this will increase the interest of the real sector in the implementation of novelties. For example, in our previous legislation, in order to use the scientific development, one must money up front. Sometimes, very large sums must be paid at the same time. Not every organisation has such opportunities. It was decided to allow enterprises to pay the owner of the technology that sum gradually, while the product is being used.
There were ideas to allow the use of technology by taking less money than was spent on its creation, for the purpose to bring it to plants.
There were such ideas. But under our system of control, they are fraught with problems. If a director of an institute would sell the product cheaper, then there are no guarantees that tomorrow’s supervisors will not come and say that he caused a loss to the state, and put the difference in price into his pocket. Therefore, it is easier to put the development on the shelf. New rules must break this deadlock.
However, there is still an impression that the innovation process lacks a certain natural ease. All reasonable measures have to be literally pushed to overcome the resistance. What does such a competent speaker as Chairman of the State Committee on Science and Technology, Alexander Shumilin, thinks about such situation?
The developed program of the improvement in the scientific sphere is aimed at making innovative development logical. For example, we began to develop venture financing. National laboratories will be created, salaries of scientists will be gradually increased and the mechanism of payment of royalties will be improved. We will attract young people to science through a package of social guarantees. We will help inventors to patent their inventions using a special fund, and will improve the co-ordination of all participants in the innovation process. This, and many other things, is provided by the program. However, it is impossible to anticipate all the twists and turns on the way of development, and that is why the sphere of science is doomed to eternal progression.
By Veniamin Mishin
<img class="imgl" alt="" src="http://www.belarus-magazine.by/belen/data/upimages/2009/0001-009-492.jpg">[b]The industrial field is the most important component of the national economy. Export orientation of industrial products has always been under the careful attention of the state, as it has brought tangible export revenues to the budget. A recent meeting with the President on relevant issues of the development of the industrial complex was focused, not only on the ability to produce a competitive high-tech product, but also on the ability to sell it in a reasonable timeframe.[/b]