Business Analysis: Knowing your markets

  • 2011-11-09
  • By Charles Cormack

I was having a discussion last week with our Baltic client director about the relative success of some of our Baltic clients. I was keen to get her view on why some were doing very well, and some not so well.
My colleague has an impressive career history. Before joining us she had been the commercial director of Tesco in Ireland, looking after a 400 million euro purchasing budget. She understands more about the UK retail market than most of us will ever know, and she has brought all that knowledge to our client’s attempts to enter the UK market.
I wanted to understand why we were being very successful with some companies, and not with others in the same sector.  I was expecting to be told that it was down to quality and price, but was told in no uncertain terms that this was not the key reason; the key differential between success and failure is attitude.

Her view is that some companies understand what it means to export, and others “think” they do. Part of our job is to try to educate as we work with clients, but some just refuse to listen. There can be a certain stubbornness in the Baltic mentality, which has stood the people in good stead over their troubled history, but which does not help when they are trying to do business with a Western company.

There also seems to be an inability to listen to the requests or advice being given by us or the end client. I have many examples of this, and don’t want to bore the reader with them; however, I will mention two that happened last week. The first was with a large Baltic food company we have been working with. We had found them a distributor, who was keen to take their products to the UK and Ireland; we had then left the distributor and the Baltic client to sort out the details of their relationship and start working.

We then received a call from our Baltic client saying that they were unhappy with their distributor, as he had not sold any product. We knew the distributor well, as he is one of the best in the market, so we went back to him to find out what the issue was. To say he was frustrated with the Baltic client would be an understatement. 
Over the intervening 6 months since the agreement had been signed, they had increased their prices by 400 percent, changed the size of the packaging without telling him, forgotten to send requested samples on three occasions and not altered the English language on the packaging as he had requested. He then produced a detailed e-mail trail which demonstrated the growing issues, as he said “These people have no idea what it is like in the real world; they think we have a good product and the British have too much money, so they will buy it.”

The other example was a little different. We had a request from a large UK distributor who was looking for a number of containers of a certain product. He sent a detailed specification, including the full directions of where the containers should be shipped to, etc. He has not bought from the Baltics before, but decided to give one of our clients a chance. He asked for the quote to be in by 4 p.m. on Thursday last week; it did not arrive until Friday afternoon, and when it did, it was to a different port, and had the wonderful line “The products you receive will be different to the ones originally specified in the photographs we sent,” but no other information.  Needless to say, they won’t get the order, but the sad thing is that it will color that distributor’s view of working with Baltic companies.

And that is unfair, as the majority of the Baltic clients we work with do understand what they need to do. They are happy to change packaging, develop products for UK tastes, develop brands for the market, and price themselves competitively. Unsurprisingly these are the companies that are successful.
I guess the key lesson to learn from this for the Baltics is that, at a time when these markets are being sold to the rest of Europe as the place where East and West comes to do business, then, to act as the business “translator” there is a need to understand both languages.