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Lord Hunt of Kings Heath: My Lords, I think that the noble Lord has overrun his time.
Lord Saatchi: My Lords, I am describing the admirable qualities of scholarship which I see as
typifying marketing. That is how marketing came to be the conspicuous feature of our age and why it deserves every support from our Government.10.21 p.m.
Lord Marshall of Knightsbridge: My Lords, it is with a sense of awe and trepidation that I rise to address your Lordships for the first time. Although I thank the noble Baroness, Lady O'Cathain, for her pertinent comments, they have done nothing to alleviate that feeling. That is not to say I have been without due preparation. I am for ever grateful for the warm welcome, kind advice and sage guidance your Lordships have extended. I must also recognise the immense courtesy and assistance received from the officers and staff of your Lordships' House.
One noble Lord explained how transition to this House should be made by relating the story of the Zen Buddhist who came to London and set himself up as a hot dog seller. After the first transaction, his customer turned back and said, "Hey, that was a £20 note. Where's the change?" "Sir", said the Buddhist, serenely, "change must come from within." I shall try to follow that advice.
The opportunity to make my maiden speech by contributing to this important debate is much appreciated. The deregulated and liberalised markets we now work in at home and overseas place the customer, quite rightly, as the sole arbiter of business success or failure, with all the implications that has for competitiveness in terms of producing efficiency and value for money. It means that companies have to get to grips with their customers--both actual and potential--like never before. The noble Baroness, Lady O'Cathain, described what this means in practical boardroom and workplace terms. I am grateful to her for the articulate way she defined marketing. I would further observe that marketing is the process of achieving that ultimate business goal of marrying the willing seller to the willing buyer in the most efficient, cost-effective way possible. Every employee of a company should consider himself or herself a part of the total marketing effort.
Marketing is different from other strategic methods because it is linked to long-term growth and development through the customer. By their very nature, marketing-based business strategies call for thoughtful investment for sustained (and sustainable) development and they have clear implications for employment, job security and broad wealth creation.
Britain has a good number of world-class businesses, but there are also many--too many--under-performing companies. We must recognise, as other countries have already, the importance of marketing to future success. The agenda set by the Secretary of State for Trade and Industry has marketing, in the form of innovation, enterprise and investments, at its core. I am greatly encouraged by his policy initiative.
My belief is that to translate policy intent into tangible success in every sector and at every level of business we need to install best-practice marketing as a
vital characteristic--a hallmark--of British commerce and industry and especially to benefit the small and medium enterprise sector. The proposals put forward by the noble Baroness, Lady O'Cathain, would contribute significantly to that objective, and I commend them to the Minister.I also support the suggestion of underpinning new enterprise policies with a government-backed programme for the promotion and recognition of world-class marketing in our commerce and industry. Much good work is being carried out to encourage greater competitiveness through marketing excellence by the Chartered Institute of Marketing and also by its fellow bodies, the Marketing Council and the Marketing Society.
A partnership linking the powerful business momentum that those organisations are creating with equally powerful enterprise policies from government can, and, one hopes, will, bring about significant acceleration to Britain's drive for global competitive success.
10.26 p.m.
Lord St. John of Bletso: My Lords, it is an enormous pleasure for me to congratulate my noble friend Lord Marshall of Knightsbridge on his outstanding maiden speech. My only regret is that my noble friend was not given more time to elaborate on this topical subject.
My noble friend's distinguished business career, particularly his chairmanship of British Airways and board membership of several of the top public companies in Britain, as well as his chairmanship of the London Development Partnership and his having previously been a board member of the Chartered Institute of Marketing, makes him extremely well qualified to speak in this debate. We hope to hear a lot more from him in the future.
I am grateful also to the noble Baroness, Lady O'Cathain, for having given us this opportunity to have, as she described it in her letter to us, a constructive debate. As a consultant to Merrill Lynch, and having been an equities analyst and later an equities broker, I am always acutely mindful of the marketing mix of the "4 P's"--product, price, promotion and place. However, on such a broad subject, I wish to focus my few remarks on the value of British designs and brands.
There is no doubt that the age of the global village is totally upon us, accentuated by the Internet, electronic commerce, the onset of the euro and global trading. As our goods and services become more accessible worldwide, Britain must obviously do everything it can to maintain its competitiveness.
Being competitive on price is not enough. We need to look for new ways to compete. Never has there been such a need to focus on the ownership of intellectual trade marks and brands. These are important to the prosperity not merely of companies but of the British economy as a whole.
While Britain has traditionally prided itself on the quality of its goods and services, there is unfortunately now evidence to suggest that this frequently equates with being expensive rather than providing value for
money. I do not say that all British goods are expensive; obviously many goods and services in this country provide excellent value. But our negative reputation often precedes us. To counterbalance that, more needs to be done through effective marketing to enhance and promote the appeal of British goods and services.Although the Government have promoted incentives, quality standards, ISO 9000 quality management systems, and research and development in the fields of science and technology, they may possibly have failed to understand the value of true ownership of the revenue streams controlled by brands and reputations.
Sadly, over the past few years the British economy has seen an unprecedented change in ownership of several of its well-known brand heritage, which includes the loss of such names as Rover and Range Rover to BMW, Holland and Holland to the French, and many other notable brand names. In a sense, the international community has seen Britain as a pantry of unexploited brand opportunities, ripe for the picking, to be exploited for the traditional English or British value that has such unique appeal. If British companies do not learn how the art of branding can add value to their products and services, they will fail, first, to capture the imagination and, secondly, to capture sales in competitive world markets.
Good engineering and good functional design alone are no longer sufficient to bring a product to market successfully. Products have to be attractive, appealing, relevant, compelling and, most importantly, effectively marketed. With the Internet becoming the world's most accessible market place, the need for more effective marketing is increasing. I hope the Minister can give us some encouragement and say what measures the Government can employ to enhance and promote the appeal of British goods and services worldwide.
10.31 p.m.
Lord King of Wartnaby: My Lords, I too congratulate the noble Lord on his maiden speech. I commend to you his remarks and those of the noble Baroness. Although too modest ever to admit anything of the kind, the noble Lord, to misquote Sir William S. Gilbert, is the very model of a modern marketeer.
I have cause to know. I remember walking into an office in British Airways. On the wall was a large sign which read, "The Customer is King". Underneath a wag had inscribed, "He is also the Chairman". The point is that it was with the noble Lord as Chief Executive that British Airways was transformed from an ailing state-owned organisation into one of the most successful and profitable airlines in the world.
The transformation was achieved by emphasising again and again and again the primacy of the market: the need--to quote the noble Baroness--to identify, anticipate and satisfy the requirements of the customer. It is as simple as that.
The noble Lord's contribution, more than anything else, was to transform the quality of service we were delivering to a high standard our staff were proud of, our customers enjoyed and our shareholders--first
government and then, after privatisation, the public--and the City reaped the benefit. Successful marketing is knowing what the customer wants and delivering it.In a slight aside, if I may, some of the marketing and spin doctoring in cool Britannia worries me. Our nation is going through the most major constitutional change since the Edwardian era. Many of the changes proposed at Westminster and around the UK look badly thought out but appear popular and seem to reflect the feeling of the times. I just wonder if all these changes are going to lead to a more stable and united Kingdom, or will they lead to division in a few years' time? The customer and the voter seem happy now, but will they be happy in the future?
However, I had better drift back to the main thrust of my remarks, some of which I have deleted. In my lifetime I have seen introduced into general use the motor car, the aeroplane, the telephone. Each has widened the horizon of our lives. Today we stand on the threshold of a marketing revolution more far-reaching than those brought about by any of these inventions. We are in a new world of electronic communication and interactive digital television every bit as breathtaking as that beheld by Cortez when he first sighted the Pacific Ocean, silent upon a peak in Darien.
It is vital for our future prosperity that we in this country understand and exploit the market opportunities which the new technologies are creating at a dizzying speed. This will not just happen. Government must give a lead. Our educational institutions, including the universities, both old and new, must play their part and ensure that our young people are prepared and equipped for this brave new world.
I welcome the emphasis given by the Secretary of State for Trade and Industry to the importance of the quest for greater competitiveness across British industry. It is imperative that we begin to close the gap in productivity growth between us and our neighbours and competitors.
For these reasons I look forward to reading the forthcoming White Paper and I entirely endorse the remarks of the noble Baroness. We are indebted to her for introducing so timely a debate upon a subject of such importance to our economic well-being.
10.36 p.m.
Lord Haskel: My Lords, I am most grateful to the noble Baroness, Lady O'Cathain, for introducing the debate and agree with her that marketing cannot be considered in isolation. The products and services being marketed have to live up to the promise of the marketing. Too often good marketing over-sells itself by promoting a product or service in an attractive and beguiling way, and the customers then feel duped when they find there is no substance. Then marketing becomes hype, and hype only does damage. The success of New Labour's marketing campaign, to which the noble Baroness referred, is due to the fact that we have a very good product.
The main point I should like to make is the way information technology is changing marketing. The noble Lords, Lord King and Lord Marshall, touched on
this point. Information technology is dramatically cutting the cost of access to and communication with customers. The most quoted example of this kind of marketing is Amazon Books, which is the most popular shopping site measured by volume of traffic. But what is the second most popular shopping site? The answer is Blue Mountain Arts. In researching this debate I found to my amazement that Blue Mountain Arts attracts some 6 per cent. of all Internet traffic in the USA. It provides greetings, thank-yous and invitations for every conceivable occasion. They are animated, pictorial or just words in enormous variety. But the creativity and innovation do not end there.The extraordinary thing is that they are all free. You just download from the website. Its income comes from advertising and providing information about the huge number of people who use the site. I do not know whether this is a marketing dream or a marketing nightmare, but the marketing implications are enormous.
Understanding the new technology and media is probably the biggest challenge facing marketing today. Perhaps this is how business can start to cut its huge marketing cost base and so become more competitive. So I hope that the Government will continue with their IT For All scheme and nurture electronic commerce and marketing. I hope also that regulators will see that the price of high capacity land lines will be brought down. In the USA they are half the price of British lines.
The Management and Best Practice Directorate at the DTI has an important role to play, not only in diffusing best practice but also in trying to close the huge disparities which exist in marketing skills from company to company. A report last week forecast that by 2003 5 per cent. of all global sales would be via the Internet. We want UK industry to have a large part of it.
10.39 p.m.
Lord Cowdrey of Tonbridge: My Lords, I too am most grateful to my noble friend, Lady O'Cathain, for initiating this debate because it gives me the opportunity to highlight the revolution that has taken place in the business of sport.
When I first played for England in Australia in the 1950s, black and white television was in its infancy. There was no coverage, no advertising, no sponsorship--just a crackling radio commentary for an hour at the end of the day. Who could possibly have envisaged that sport would become the major commercial activity throughout the world that it is today?
Astonishingly, the sports media generate such substantial economic activity that sport has become one of the largest industries in the world, the eleventh largest industry in the US. In Britain, sport accounts for over 1.7 per cent. of GNP and employs half a million people--probably more.
A real concern is that the United Kingdom is at a serious disadvantage compared to its international competitors for events such as the various world cup events we stage, the world swimming championships and, we hope, the Olympic Games. Other countries tax
international sporting events more favourably, putting the UK at a serious disadvantage. Yet it is these events which provide the resources for sport and the international sports federations to reinvest in the development of their activity, much of which takes place at the grass-roots level.I appeal to the Minister to give fresh consideration to tax exemption on the profits of all international sports events; to apply VAT zero-rating on admissions to international sports events; and to provide exemption from "foreign entertainers withholding tax" for international sports events held in the United Kingdom. I am told that the cost to the Exchequer would, in relative terms, be minimal.
I am sorry to have to say it, but sport continues to be the Cinderella of UK policy, playing second fiddle to the arts. The full potential of this remarkable marketing tool remains unfulfilled in the United Kingdom. Its power to promote Britain is enormous and will increase year by year. It should, I suggest, be a central plank in government marketing of the UK internationally.
Happily, people still love coming to compete in, and watch, top-quality sport in the UK--provided the facilities for competitor and spectator are up to date. We have so much to gain if we give it our full attention and get it right. For example, the extremely successful Euro 1996 brought 280,000 visiting spectators and media, spending over £120 million in eight cities and surrounding regions and generating an extra 4,000 full-time equivalent employment years. The total economic impact of this event was calculated to be £195 million.
Internationally, sport is a key part of the process of globalisation and the creation of a global culture. Britain has a unique place in all this and we must seize every opportunity. In conclusion, I say to the Minister that I can think of no better way of marketing this country than through our sport.
10.43 p.m.
Lord Borrie: My Lords, I have no doubt that, if one has a worthwhile product, or, in modern management-speak, a worthwhile customer proposition, marketing can make all the difference between modest progress and lasting success. I thank the noble Baroness who initiated the debate. I very much agree with her definition of "marketing". In the interests of time, I shall not repeat it, but I should like to add to it something that has not so far been mentioned. I believe that marketing includes every conceivable way in which the producer or marketer is in touch or communication with the customer. It is a matter of getting to grips with the customer, as the noble Lord, Lord Marshall, said in his maiden speech. Therefore, it includes not just the obvious forms of marketing such as paid-for advertising, promotional methods of all kinds and shop front displays but ensuring that there are well trained, helpful and pleasant staff on duty front-of-house and on the telephone who take a positive attitude to customer complaints from which they are willing to learn.
Good customer service in every conceivable way is one of the most powerful competitive weapons that exists. No amount of fine words in expensively
produced brochures will make up for delayed delivery, failure to answer inquiries or a defensive attitude to justifiable complaints.The Question of the noble Baroness asks what the Government can do to encourage marketing and its contribution to business success. She has listed a number of matters. I liked her comment about re-energising manufacturing industry and her suggestion that the White Paper on competitiveness to emerge in a week or two should place emphasis on marketing.
If I mention just a few negative matters it is because of the shortness of time and not because I am in disagreement with the noble Baroness. It is the job of government to provide a framework so that marketing at home and abroad is honest, informative and does not amount to unfair competition and distort the marketplace to the disadvantage of the customer. The Government and agencies such as the Office of Fair Trading need to monitor whatever legal or self-regulatory rules are in place about misleading advertisements, the misuse of others' brand names and how price reductions and so-called bargains are offered.
We have a system of mixed governmental and self-regulatory control of various forms of marketing. I do not suppose that anyone who has taken part in the debate, even if he has not spoken about this aspect of marketing, will disagree that the Government must provide some kind of framework. When in the next Session this House receives the Financial Services and Markets Bill no doubt it will debate where the line should be drawn between government regulation and self-regulation. It is most important that we get it right. Where that line should be drawn is a matter for debate. I shall be interested to hear what the Minister can say this evening on where in general the line should be drawn.
10.47 p.m.
Viscount Montgomery of Alamein: My Lords, my noble friend Lady O'Cathain said that this was the first time this subject had been raised in the time that she has been here. I believe that I am the longest serving Member of this House to speak in this debate. In the 22 years that I have been here this very important subject has not arisen and it is long overdue.
I spent 48 years of my working life in marketing. I am still going strong. I began as a salesman and continued up the greasy pole until I decided to become independent. Since then I have been involved in marketing but always overseas.
This is a vital subject. My noble friend Lady O'Cathain cited the success of the Labour Party campaign. I entirely agree. However, I believe that an even more remarkable success was that of the Liberal Democrats who managed by very cunning targeting to achieve a huge increase in the number of seats with a lesser number of votes. That revealed great skill in marketing for which they are to be commended, even though some of us did not necessarily want that to happen. Certainly the party to which I belong has a lot to learn from both those exercises, and I hope that they will do so.
I turn to my own personal experience. I should like to cite two examples from a very different world. I spent some years of my life in the perfumery and cosmetic business. That is a business entirely concerned with marketing, almost exclusively. We did not have any "bean counters" on the board; they were confined to keeping the figures. We started from the top down.
We worked out what product we wanted to sell and to whom. We then worked out, eventually, whether we could produce, package, merchandise and advertise it. If the cost price meant that it was not possible to produce the product, we forgot all about it and tried something else. The whole process depended entirely on marketing.
We used advertising a great deal. I can recall having been a client of a number of companies which have subsequently been absorbed into the great Saatchi empire. However, I left that business some time ago. That is an example of how such matters develop.
At the other end of the scale, when I was subsequently an adviser to a number of different companies, I found myself advising companies in the heavy engineering and manufacturing field. I found that they worked entirely the other way around. To a certain extent that point was reflected by the noble Lord, Lord Borrie. They had been somewhat conditioned by selling to nationalised state domestic enterprises--mostly monopolies--and tended to work from the bottom up, on a cost-plus basis. Therefore, when one tried to direct their attention to selling overseas, it was hardly surprising that their products were grossly overpriced and never sold.
That is a good example of how one must work entirely from a customer oriented base. That point was brought out most cogently by the speeches of both noble Lords involved in their different capacities with British Airways. As my noble friend Lord King said about his friend and colleague, the noble Lord, Lord Marshall, British Airways has applied that concept intensively.
To go back to the beginning, my noble friend Baroness O'Cathain stated that marketing is the key to business success. That is absolutely right. It is a subject in which the Government become involved at their peril. It is best left to the people at the sharp end who know what they are doing. Governments usually become involved in bureaucracy, which does not work in marketing, whereas political parties need it.
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