Reseller News

Concentrate: Tech companies continue growth in recession

Local technology companies had average growth rates of 39 percent in 2009 but could achieve better export sales according to the second annual Market Measures sales and marketing activity survey.

The survey, which is conducted by Concentrate and PricewaterhouseCoopers, included respondents from 144 companies.

Key findings from the study showed a strong correlation between strategic marketing and growth performance while top performers are also effective users of social media. Seventy seven percent of companies export, mainly selling directly with a small team.

Other findings showed that companies position their product as premium but attract market or below-market prices while investment in sales and marketing is high at 40 percent of turnover, but focussed 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

Concentrate’s managing director Owen Scott says growth was down on the 2008 year but still impressive.

“Even the smallest of our technology companies are trading offshore, selling directly to customers rather than through a distributor.”

He 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.”

He says the highest performing companies surveyed were taking a more strategic approach.

“Typically they are focussed 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.”

According to Scott, there should be concern about this overall weakness in the ability to commercialise products effectively.

“Despite some obvious success stories, kiwis don’t have a great record at commercialisation or 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.”