TALES FROM THE ROAD 6 –MARKET ENTRY STRATEGIES

Selling carpets to Turkey was probably one of my greatest achievements. Well that’s a bit of a cheat because it was carpet tiles actually. Yet some of the markets of near Europe had somehow eluded us. Our competition was mainly from multi-national US companies, who through acquisition had come to dominate the European market for carpets and carpet tiles. The only way to compete was to be better and bolder.

Thankfully the company had just invested in the development of the first ultrasonic cutting technology for carpet tiles, to create invisible edges and create the illusion of a carpeted floor but in carpet tiles. That, plus the purchase of new tufting machinery ensured that we stayed a step ahead in both technology and design, for a while at least because our competitors were ravenous for a further share of the market and later world domination. And it gave me both technical and aesthetic unique selling points on which to hang my hat.

I had tried and largely failed to sell into Spain for several years, not that it had been a priority market for us. The good distributors all seem to have been taken, and I was left with a mix of regional retail outlets who were trying to break into the commercial market, and sales agents who couldn’t really offer the infrastructure that we required. Then one year, I met Beppe. How you shorten Guisseppe to Beppe I am not really sure. It’s probably the drink. He is a fine man, an Italian national working at the time as Export Sales Manager for Hewetson in Hull, now Kingspan. Beppe speaks four languages fluently.

Hewetson manufactured raised access flooring panels for offices and public buildings, the idea being that all your computer cables would be channelled beneath the office floor. This of course meant that you couldn’t roll a broadloom carpet over the panels because then you would not be able to maintain the cables and junction boxes in the subfloor. So carpet tiles were a natural fit. We then teamed up to form a three way strategic partnership with a UK adhesives manufacturer so that our carpet tiles could be glued onto Hewetson’s panels and all sold as one package.

Well Beppe introduced me to Hewetson’s distributors in Madrid, whose business had a very long name that was a bit of a tongue-twister. And I went to visit them. Enrique collected me from the airport and took me straight for lunch with his two co-directors in a dimly lit but really classy restaurant, where their Spanish hospitality excelled over a fabulous meal, which started with the best asparagus dish I have ever tasted, then a fish dish with more fabulous asparagus. There was no asparagus in the cheesecake that followed.

As the meal concluded, the warmth of our conversation metamorphosed quickly into a very serious and at times sharp business discussion. You know the form. They wanted exclusivity when they hadn’t sold a bean for me, and I wanted them to show me what they could do before agreeing an exclusive contract. Outnumbered 3 to 1 and very full of food (and the odd glass), I was able to agree a compromise that led quickly to a very good business relationship and friendship, and later to a good deal of business.

Our main problem remained that we were small fry in face of multinational competition. The Spanish market was dominated by Interface, with Esco rolling in a distant second. We were absolutely nowhere! All the architects, specifiers and contractors were not especially interested in looking at new products from the UK. They had all they needed. So between their directors and ours, we hatched a plan to win a prestigious reference installation in three key cities, Madrid, Barcelona, and Bilbao and to buy our way into the market with a deal that could not be ignored.

Well we failed in Bilbao. It took a while in Madrid. But we had an early success in Barcelona, where Enrique had a great relationship with the Site Manager of the new Forum Centre, a multimedia centre on the waterfront, and we won a deal for 10,000m2 of carpet tiles at a low price. We had effectively sold the product at cost to win the business. It was a calculated risk that paid off. That one prestigious order kickstarted our business in Spain, made our competition sit up and take notice of us (which is always good fun to see), and within a couple of years Enrique and his team were consistently one of our top performing distributors.

So what lessons did I learn?

1.       Where there’s a will there’s a way. Buying the market led to more profitable installations.
2.       Collaborating with suppliers of complementary products is a useful way into a market.
3.       You can have the best product in the world but you have to give people a reason to buy it.
4.       Never negotiate on a full tummy.

JOHN REED