§ 9.58 p.m.
§ Baroness O'Cathain rose to ask Her Majesty's Government what steps they are taking to encourage marketing and its contribution to business success.
§ The noble Baroness said: My Lords, I begin by thanking the usual channels for giving us valuable parliamentary time at the end of a long and arduous Session to permit us to have this important debate this evening. I am sorry that as it is so late certain Members 1241 of the House are unable to fulfil their commitment to us. I thank all noble Lords who have given up their valuable time to take part in the debate. Last, but by no means least, I thank those who will be making their maiden speeches tonight. I am sure that I speak for the whole House when I say that we are very much looking forward to their speeches. I do not believe that any of us will forget the anxiety that we felt at the time of our maiden speech, but I can say that the ordeal is not as frightening as it might appear. The whole House will be wishing the maiden speakers well.
§ I turn to the matter in hand. I have framed this Unstarred Question deliberately wide in order to enable us to have a truly wide-ranging debate on this most important subject: marketing and its fundamental importance to business success. I believe that it is the first time that there has been such a debate in this House. There certainly has not been one during the seven years I have been a Member. That is both sad and fairly predictable. It is sad because it indicates that the subject is not as highly regarded as, say, animal welfare or salmon fishing in Scotland. It is predictable because I believe that governments, of whatever persuasion, have never been persuaded of the value of marketing. I hope that things are changing.
§ This Government have shown themselves to be brilliantly successful marketers in the utterly professional way they planned their marketing campaign to the electors in the spring of 1997. They developed a new product; they listened to their customers; they organised excellent research programmes; and executed—I use the word advisedly—a campaign which really worked. If they applied the same strategy and tactics to the re-energising of manufacturing industry there would be no deep-seated concern about current exchange rate levels or interest rates. Perhaps it is not too cheeky for my first question to the Minister to be phrased thus: do the Government intend to lay as much emphasis on marketing while in government as they did while preparing for government?
§ The Government should be convinced of the benefits that accrue from good marketing. The Minister's right honourable friend the Secretary of State for Trade and Industry and the Minister himself were marketers of considerable ability in their previous existence. That gives me reason to hope that marketing will play a pivotal role in all their discussions both here and in the EC forum. Making the best use of talents is so important; the DTI now has at least two Ministers with strong and proven marketing talents. When are they going to use them to endorse the importance of marketing in the business life of this country?
§ Noble Lords speaking in the debate tonight have wide and varied experience in marketing. The wording of the Question accepts that marketing contributes to business success. I am sure that each one of our speakers tonight subscribes to that. However, many businesses still do not realise its importance. Is there any way that the Government, using their powers of communication and persuasion, can get the message across?
§ Immediately I realise that I am laying myself open to the charge: "if marketers are so clever why can they not market the concept of the fundamental importance of 1242 marketing so that every business has it front of mind?" That charge is valid, but not universally so. Here I must declare an interest. As President of the Chartered Institute of Marketing I know that the institute is unswerving in its dedication to preaching the importance of marketing.
§ The Privy Council has recently approved the granting by the institute of individual chartered marketer status, which entails the continual uprating of skills; in other words, continual education and lifetime learning. Those chartered marketers operate throughout the country and will certainly provide a collective impetus for improving marketing standards in business. Recent research indicated that some 44 per cent. of company directors would be very keen to employ chartered marketers as their marketing directors, reinforcing the view that it is essential to condition ourselves to lifetime learning and the continual uprating of skills.
§ Possibly one reason marketing is not given as high a profile as it should is that there is a basic misunderstanding of what it really is. I know that there is no such misunderstanding in the minds of the contributors to tonight's debate, but, for the record, perhaps it will not come amiss to state what I believe to be a good definition of marketing. Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably; in other words, getting the right goods, at the right quality, to the right customer at the right time and at the right price. What marketing is not is finding ways of getting rid of products produced without due regard either to markets or to consumer research.
§ Marketing is the cerebral research and analytical function which anticipates consumer and customer needs and puts in train the process to supply those needs. Input into design, engineering, production, distribution, pricing and selling should all be within the ambit of the marketing remit in business. I am not saying that marketers must be engineers or production managers but they must be there when the original decisions about the products are actually taken. Good marketing can help in those functions and, indeed, should so help.
§ A recent study by the Wharton Business School in the United States showed that the top 1,000 most successful US companies laid serious and heavy emphasis on marketing. We honestly need such emphasis here. It grieves me that so few of our companies have marketing on the agenda at their board meetings. It should certainly have equal pegging with finance and personnel because, not to put too fine a point on it, without marketing, there will be no finance and personnel because there will not be a business.
§ The message of the importance of marketing is slowly getting through to British companies but there is still a long way to go. For example, 49 per cent. of the top 200 companies in this country have a marketing director on the board whereas 88 per cent. of the top 200 companies have a finance director on the board.
§ This country has an incredibly successful record in design and innovation. Perhaps the Minister will correct me if I am wrong, but I believe that I read somewhere 1243 recently that some 40 per cent. of the current most successful products in the world have been designed in this country. That is not bad for a country with 1 per cent. of the total world population. But who has benefited from that incredible performance? No, it is not us, at least not for the whole of the 40 per cent. Our designs have been taken up and exploited by other switched-on, marketing-alert countries and their manufacturing and distribution companies. I hope that the Minister can give us some comfort that his department will do all in its power to ensure that a greater proportion of that undoubted talent is exploited here.
§ We lead by example in so many international fields. There are thousands of examples of excellent, state-of-the-art marketing achievements in the UK. But business in that context does not necessarily mean commerce or manufacturing industry. It embraces all manner of services—the arts, education and sport, just to mention a few. We have speakers on those subjects this evening.
§ The Government are committed to highlighting excellence as a means of encouraging by example. Will the Minister give a commitment that he will do all he can to ensure that marketing is highlighted? I make three suggestions. I should be grateful for a response from the Government because I have indicated already to the Minister that I shall make those suggestions.
First, a White Paper on competitiveness is expected some time in the near future. As recently as 2nd November, the Secretary of State said:
Competition drives innovation, customer service, competitiveness. It underpins British business success".
When he launches the White Paper, it would be great if he mentioned the fact that marketing underpins British business success, and it would be even better if he gave a massive push for marketing in the White Paper. I do so hope that that will happen. If it does, this debate will have been worthwhile.
§ One of the Government's initiatives has been the establishment of Business Links. The Business Link movement recognises that it has insufficient marketing experience and is probably scratching around looking for such expertise. The Chartered Institute of Marketing proposes that a series of regional centres of marketing excellence, using the expertise of both the marketing faculties of regional universities such as Warwick, Cranfield, Strathclyde, Manchester and the London Business School, and the excellent facilities provided by the institute itself in Maidenhead could be the pivot around which Business Links could operate. I have not gone into that suggestion in any great detail but it would seem to be logical and probably efficient and effective. Thirdly, I should like to see that benchmarking of companies by the DTI is continued. It started in 1996, and I would make a very strong point about benchmarking those 1,000 companies from a marketing point of view.
§ I am very conscious that we have but a short time for tonight's debate and that I am already running over my time. I am not complaining about that; indeed, it is 1244 marvellous to have the opportunity to debate the issue. I know that there are many interesting speeches to come, so I am sure that we shall have a constructive and memorable debate. I greatly look forward to hearing every contribution.
§ 10.9 p.m.
§ Baroness Scotland
My Lords, I should like to take this opportunity to thank the noble Baroness, Lady O'Cathain, for instigating this debate and also the Members from all sides of your Lordships' House for the warmth of the welcome and the help that I have received since my Introduction last November. The noble Baroness has by no means been least among those who have given me help, succour and a great deal of encouragement.
I should also like to take this opportunity to trespass upon your Lordships' time to say a particular thank-you to the Attendants and to the Doorkeepers. They have been my constant companions in the last year. One of my finer qualities is not, I am afraid, powers of direction. They have benignly and indulgently watched me go round and round in circles before shepherding me safely in the right direction.
That warmth is something upon which I now seek to draw for comfort in making my maiden speech. Some may question why it has taken me so long to rise to my feet to speak. I am one of 12 children and my family would, if asked—in fact, they would probably volunteer to do so—assure your Lordships that I seem to have an innate inability to do anything at what is usually considered by others to be the proper time. I finished my degree at the age of 20. I was called to the Bar at the age of 21; became the youngest woman to take Silk at the age of 35 and last year became the first Afro-Caribbean and youngest person to be elected as a Bencher of Middle Temple. My family had come to fear that such undue haste and lack of appreciation for what is due to age had become a fixed and well-established feature of my character. But I can assure your Lordships that I rise now halt of limb and burdened with my ever-increasing years safe in the knowledge that, on this occasion, I am neither the youngest nor the first but in all probability one of the last of my vintage to do so.
I welcome this opportunity to address the issue of marketing in the United Kingdom as we approach the new millennium. During the time I have been privileged to be a Millennium Commissioner, I have had the advantage and the joy of seeing at first hand the extraordinary skill and wealth of talent which is evident throughout our country. I have been struck by the quality and diversity of the contributions made by all sectors of our community.
Britain is now a truly multi-cultural society benefiting from peoples who hail from every corner of the globe. That diversity has enriched and changed the nature of who and what can truly be described as British. We have an internal multifaceted customer base with whom to explore new ideas. Creating products which address the needs and tastes of our disparate peoples enables our industry to develop the skills and sensitivity with which to assist our entrepreneurs to meet the challenges 1245 presented by the global market. We already export approximately £1 billion-worth of goods to the Caribbean region alone and the market share is increasing. It has grown by 5.5 per cent. since last year and there is no reason to suppose that this should decrease. A similar picture of growth should be true of both Africa and Asia.
As in all marketing, getting the image right is vital to positioning Britain itself in our rapidly changing world markets. Therefore, exploiting our internal markets, taking advantage of our diversity and the richness of our people and marketing that globally can do nothing other than enhance the value of our markets, the market share and indeed the good opinion in which this country is held. I note that my four minutes are up. I shall not trespass further upon your Lordships' time, notwithstanding the several sheaves with which I had intended to delight you!
§ 10.14 p.m.
§ Lord Saatchi
My Lords, it is a pleasure and privilege to follow the maiden speech of the noble Baroness, Lady Scotland. If I may say so, it is easy to discern from that speech why she has risen so brilliantly in her profession. The crisp insights that we heard in her brief four minutes are, I hope, only a taste of what your Lordships' House can look forward to on many occasions in the future.
When my noble friend suggested that I might speak in this debate as a practitioner in marketing, of course I said yes, but I knew at the time that I would approach this subject with some trepidation because I stand before your Lordships as one whose profession perches perilously somewhere along the continuum between perception and reality.
At first glance there seems to be no answer to the question of whether what we do in marketing is rooted in perception or reality. All of us know that the sensations produced by the same object can vary with the circumstances. Lukewarm water will appear hot to a cold hand, and cold to a hot hand. Colours look different under a microscope. Even the sun in the heavens we see only as it was eight minutes before.
What is real? After 2000 years of human progress it seems that the real nature of things remains as inaccessible as it was to Aristotle.Fire burns both here and in Persiahe wrote,But what is thought just changes before our very eyes".The decision he said, "rests with perception".
Even the perception of physical objects cannot be relied on. The great philosopher Descartes said he could not be sure that the table at which he was sitting was really there because the only thing about which he could be certain was that while he was thinking that the table might not be there after all, it was definite he was there looking at it, because he thought he was.
It was in the third dream of René Descartes on 10th November 1619, in the small Bavarian village of Ulm, that he foresaw a universal method by which all human problems whether of science, law or politics, 1246 could be solved by the same method: the method of reason. The dream pointed to the illumination of the whole of knowledge by systematic logical computation.
As your Lordships know, scholars in the humanities have long sought a set of general, testable, explanatory propositions applicable to the whole area of collective human behaviour. Men of business have been quick to see the commercial merit in adopting as a "science" what is now known as marketing. Yet today people are suspicious of marketing and its handmaiden advertising, and it is easy to see why. When Descartes himself doubted the existence of the table at which he was sitting, or his own existence for that matter, he knew who to blame—the "demon" which deceived his reason so that he took false statements to be self-evidently true. Nothing, he said, escapes the demon's reach.
Some people see advertising and marketing as these arch-deceivers—mind-altering substances on which more money is spent than on all the drugs produced by the pharmaceutical industry put together. Yet today most people perceive themselves to be better off to buy advertised goods. Is that belief an illusion? Take detergents, for example. At first sight Ariel and Persil are similar products in different boxes. Therefore the levels of loyalty they command from their adherents must be irrational. The owners of these two brands, Unilever and Procter & Gamble, dominate the global detergent market with their images for these brands. That is proof, the critics would say, of the power of advertising to control the public mind.
I cannot deny that the object of the exercise with these brands is to build their reputations so that their customers are loyal and will refuse all substitutes. However, it is precisely from the competition to create those image monopolies that better products and services emerge. Competition through advertising for the favour of consumers helps to create the pressure for innovation. That is why advertising, which is usually seen as a weapon that helps only the advertiser, makes one of its least recognised contributions to society. It is a two-edged weapon. It acts on the told, but reacts on the teller because it focuses such attention on his product claims that every effort has to be made to make them true.
It is important to say that the thinking process—the noble Baroness, Lady O'Cathain, referred to the cerebral process—involved in developing marketing programmes has an excellent effect on the idea or thing being advanced. Its action is that of a threshing machine; it sorts the intellectual wheat from the chaff. I assure noble Lords that those thoughts arise from a process that is at least similar to the Darwinian method of scientific discovery: tests and refutations, selection by elimination, so that only the fittest theories survive. The result flows from a developed carefulness and attention to detail, a habit of being clear, a sceptical perusal of alleged facts—
§ Lord Saatchi
My Lords, I am describing the admirable qualities of scholarship which I see as 1247 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 1248 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 1249 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 1250 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 1251 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 1252 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 1253 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.
1254 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.
§ Lord Garel-Jones
My Lords, noble Lords who have spoken have been absolutely right to both congratulate and thank my noble friend Baroness O'Cathain for introducing this groundbreaking debate. Perhaps I may say also that we have listened to two most distinguished maiden speeches from speakers who both spoke of their awe and trepidation. I believe that the House is entitled to say that they are also—although too modest to do so—both entitled to speak with a certain pride. The House will look forward to distinguished contributions from both of today's maiden speakers.
The noble Lord, Lord St. John of Bletso, made some criticisms in his speech with which I agree about our failures in the past. I intend to do likewise. However, it is worth reminding ourselves here in Britain that we 1255 have not always failed. Indeed, my noble friend Lord King of Wartnaby and the noble Lord, Lord Marshall, have each in their turn presided over one of the great marketing successes in the United Kingdom. I think that we should remind ourselves, too, that if one were to list the 50 major transnational corporations inside the European Union, the United Kingdom would have more names on that list than any other country in the Union. Let us not get into the usual business of knocking Britain. However, at the same time it is worth recalling that too often our failure to understand the importance of marketing has meant that we have let down British inventors, British innovation and British engineering skills.
I give one example, of which the whole House will be aware. It was a British firm, Rover, which moved the old Land Rover, with which we were all so familiar, to being the Range Rover—a real breakthrough in the concept of motoring. Yet today that company does not enjoy the share of the market in those types of vehicles that that incredible concept which it pioneered rightly deserved. I believe that that was a failure of marketing.
How can we improve our performance? Like many noble Lords on this side of your Lordships' House I am reluctant to extend the writ of the Government into any field. I say that not just of this Government, but of any government. However, my noble friend Lady O'Cathain was right to draw our attention to the Chartered Institute of Marketing. If the DTI is able to work in partnership with the institute to help small and medium-sized businesses in the way my noble friend suggests, and to set bench-mark standards, that is the sensible way to proceed.
Perhaps I may refer to the final secret of marketing, if there is such a thing. My noble friend Lord Saatchi gave us a lesson in that. I had the privilege of being in the room when my noble friend was appointed to market the Conservative Party in the mid-1970s. He will agree with me, as I think will noble Lords opposite, that the starting point in marketing is a good product and a good service. But then one has to tell the truth about that product and that service. Quite often those who have invented the product or made the service, as was the case with my party in the mid-1970s, are not the right people to convey that message to their fellow citizens. In that regard we have to be grateful to my noble friend. No doubt noble Lords opposite have others similarly skilled to whom they owe thanks for marketing their product.
Finally, my noble friend Lord King of Wartnaby is right to tell the House that we stand on the brink of the information technology revolution. The whole House will be eager to hear from the Minister as to how the White Paper will reflect the importance of marketing to British industry; and the way in which we shall use that in the new information technology revolution which lies ahead.
§ 10.56 p.m.
§ Viscount Thurso
My Lords, from these Benches I congratulate the two maidens. The brevity of my 1256 welcome is only matched by the sincerity, but with a time limit of four minutes one cannot pay too long a tribute. The noble Baroness is welcome and I am sure she will make a tremendous contribution to your Lordships' House. I thank the noble Lord, Lord Marshall of Knightsbridge, for his kind breakfast this morning, which I very much enjoyed with 250 other people. I am sure he too will make a great contribution.
I am extremely grateful to the noble Baroness and congratulate her on bringing forward this Question in your Lordships' House. When I first saw the Motion for debate I asked myself what there was to debate. It is such a statement of the obvious that I wondered where the questions would come from. However, as I reflected I realised how sagacious and perceptive the noble Baroness had been. The debate has proved how much the subject needs to be aired. I am slightly shocked to find from the noble Viscount that in 22 years it has never been aired in your Lordships' House.
Marketing is the key to business success and productivity. In this country we have the culture of the finance director. Perhaps alone among the many developed industrial countries, we look for our chief executives among our finance directors. I am constantly looking over my shoulder at my finance director wondering when he will take my job. But in America, for example, the chief financial officer does not necessarily become the chief executive officer. It is very much a route chosen in this country. It has a rather black and white balance sheet approach. We do not always see the longer term investment that is required by marketeers.
When I first began in business as an apprentice commis in the Berkeley kitchens a long time ago, the Savoy Group had no marketing department. About three or four years later a gentleman was employed who was known as the business promotions manager, but no one knew what he did—except that he had a lot of free lunches. There was the press office, but its job was entirely to make sure that the press did not have too much access to customers of the Savoy. I am happy to say that the Savoy has moved a long way and, as I moved up in the company and on out of the company, I came more and more by sheer simple practical experience to understand the vital role of marketing. First came sales, but later I grew to understand the all-encompassing role that marketing needs to play in a business. Like any convert, I now display religious zeal.
One or two of your Lordships may be aware of my current business. Marketing is right at the centre of it. It has pre-eminence over the finance department, much to the annoyance of my finance director. It is involved in our human resources department. I believe that the vision we have for serving our customers is so important that it is part of what we do in our recruitment campaign and it is an integral part of our training. Therefore, marketing and human resources work closely together. We research precisely what it is that our customers want and we continue researching to see whether or not we have satisfied their aspirations. The noble Lord, Lord King of Wartnaby, has already said that the customer is king. I have that very same motto in my office. That is the one rule that exists in my business. I believe that 1257 much of the success it now enjoys is due to the fact that we developed a vision for the business that was conceived out of our customers' wishes, which we have prosecuted irrespective of all other considerations.
One of the anxieties that I have about British business is that on many boards—I am on a number of plc boards—we all talk the talk but when one gets down to a business one does not necessarily find that the talk is walked. I am not going to say anything about that, but I am employed by British Airways to lecture to its middle management on leadership skills. Sometimes what they say to me at those meetings does not always accord with what the boardroom might think they say. However, I shall leave it at that.
In her opening remarks, the noble Baroness made one crack about the fact that salmon fishing appears to get more debating time in your Lordships' House than many other subjects. As one of the repertory company that appears in the House to debate salmon fishing with monotonous regularity, may I say to her that there is a link between salmon fishing and marketing: both share the same aspiration, which is to fish where the fish are and use the right fly.
§ 11.2 p.m.
§ Baroness Miller of Hendon
My Lords, I join with others of your Lordships who have thanked my noble friend Lady O'Cathain for initiating this debate on what is a very important and clearly a most neglected topic. I was told recently that the convention of this House is that only the speaker following the maiden speakers is meant to thank them. I am absolutely delighted that so many of your Lordships have done so and I am taking the liberty of doing likewise.
I speak as a longtime member of what was called the Institute of Marketing. I am just one very small example of the wide and diverse range of qualifications and experience of the real world outside the Palace of Westminster that especially abounds in your Lordships' House, and has abounded in greater amounts this evening.
I began by teaching marketing techniques such as how to discover what the customers want and how to create empathy with a potential customer. The noble Lords, Lord Marshall and Lord Borrie, said how important that is. I taught how you managed to help the customer buy from you something that they want and not to go out and sell something that they do not want, as my noble friend Lady O'Cathain said. There is the need for the people producing a product to know how to promote it and the need to advertise it. There is also the need to help people to feel that it is something that they require. There are also the various methods of closing a sale; post-selling and helping the customer to believe that they made the absolutely right decision in buying your product. There is also the setting of personal goals and objectives and self-motivation. I believe that self-motivation is an important part of it and all good salesmen need a lot of motivation and re-motivation, especially after a bad day has lowered their confidence. I recall one very successful insurance agent who used to drive to work every day listening to 1258 tapes such as "How to influence people". When I asked him why he continued to do so, he said, "I need to pump myself up every single morning".
Then disproving the aphorism that "those who can, do, and those who can't, teach", I set up my own very successful marketing business which operated in the United Kingdom, Germany and Australia. I have taken a few minutes of your Lordships' time to explain my qualifications because I would like to make one special point.
Although it is absolutely true that good salesmen and marketeers are born, not made, just like accomplished musicians, carpenters, sportsmen or indeed members of many trades and professions, all those instinctive skills must have proper training and, equally, experience. Simply taking a young person, giving him a job in whatever area and telling him about the products on offer does not turn him into a salesman. Businesses which take the trouble to train their sales staff and supervise them can enjoy the dividends of the extra business that they will generate.
However, small firms have neither the time nor the resources to take on the whole burden of training sales people, especially as no sooner have they done so any salesman worth his salt will take his expertise off to more lucrative opportunities. Therefore, there is a strong case for including marketing and salesmanship in the many commercial courses that are taught in our schools, colleges and universities. I very much hope that the Government will encourage all educational establishments to do so.
Your Lordships will see that I am turning my pages quickly. I am afraid that the one thing I have not done in marketing is to tell people to keep to time. I have just noticed that I have taken four minutes and am only about half way through my speech.
I conclude by saying that marketing is not simply the work of a sales person behind a counter. It includes the people who need the knowledge and skill to sell everything. Marketing includes making a product or providing a service, listening to customers, and carrying out research. It must not be forgotten that no matter how good the product is it needs to be sold. Perhaps the days are gone when you could say, in the words of Emerson, that if you build a better mousetrap the world will beat a path to your door. Someone may copy it and try to sell it cheaper than you unless you happen to be the better salesman.
I hope that the Minister will tell us that the Government are in favour of good marketing skills; that as part of their programme of education they will ensure that money is invested. That is what it will be; an investment in training people in all the skills of marketing, which are no less important than any other commercial skill, as noble Lords have said tonight.
I hope that in due course we will hear about tax incentives for all manner of training and research and development. Investment is paid for out of profits and profits come from being competitive in the marketplace. The Government can ensure that British industry is 1259 competitive and has the money to invest by removing the impediments which take money out of investment budgets and simply add it to social engineering costs.
§ 11.8 p.m.
§ Lord McIntosh of Haringey
My Lords, I gladly join other noble Lords in congratulating the noble Baroness, Lady O'Cathain, on choosing the topic for today's debate and on the way she introduced it. I also congratulate her on her appointment as president of the Chartered Institute of Marketing, to which she referred. Like the noble Baroness, Lady Miller, I was a member of the institute for many years. Indeed, I was a member of the Institute of Marketing and Sales Management before it became the Institute of Marketing and then the Chartered Institute of Marketing. The noble Baroness did well not only in the way she introduced the subject but also in the range of expert speakers whom she encouraged to take part. In particular, she encouraged two excellent maiden speeches from my noble friend Lady Scotland and the noble Lord, Lord Marshall.
My noble friend Lady Scotland was right to draw attention to the marketing assets of diversity and, in particular, diversity in a multi-cultural and multi-ethnic society. There are lessons for all of us to be learned from what she said.
The noble Lord, Lord Marshall, played a key role in setting up the Marketing Council. He deserves our congratulations on that; his expertise was evident in his speech. I am only sorry that other noble Lords took away my chance to refer to the customer as king.
Like the noble Baroness, I have been involved in marketing all my life. I was a professional market researcher and social researcher for nearly 40 years. In addition to being a member of the Institute of Marketing, I was also, many years ago, chairman of my own market research society and I am retiring as president of that society next week. Therefore, it cannot be said that I am speaking in any way for the market research business. But it is recognised as being one of the core disciplines in marketing more generally.
I thank the noble Baroness, Lady O'Cathain, for her complimentary remarks about new Labour's use of marketing. The noble Viscount, Lord Montgomery, referred to our key seats strategy, and that of the Liberal Democrats who, I think, copied it from us. We successfully targeted key seats and we used our effort, as he said, to fish where the fish are. It will be seen at the next election that the Labour Party will successfully build up customer loyalty which we intend to result in repeat purchasing.
The answer to the noble Baroness's question is that the Labour Party itself, I understand, will continue to use those marketing skills which she praised so highly. But also—and this is a quite separate answer—the Government are keenly appreciative of the need for marketing this country in the most general, as well as in particular, senses. We understand what marketing is about and we shall apply it to government policies, making the correct and proper distinction between party and government.
1260 The Government want to develop a partnership with business. We need to do that because after all the Government are the biggest single business in the whole country. In his recent speech to the CBI conference, the Secretary of State for Trade and Industry said:The partnership I want to build is one where business and government are clear about their respective responsibility. both to each other and the wider community".That does not mean that the Government are going to impose a nanny state on the marketing community in this country. There are contributions which government can make and I shall deal with those later. But we respect the professionalism of marketing and all the skills which exist in the marketing sector. As the noble Viscount, Lord Montgomery, said, we recognise that there are different jobs for marketing and government.
However, my noble friend Lord Borrie was right also to draw attention to what is the key element of all of that. It is communication—taking notice of the customer and listening to the customer. Customer service, as he rightly put it. That is what we intend to promote in our own activities and what we intend to encourage business to promote in its activities.
We recognise that marketing covers a wide range of specialist skills and disciplines. Successful businesses are closely integrated. The marketing function is no longer isolated or remote but it is the key driver. I do not know—and I do not think I very much care—what are the professional origins of those in boardrooms as long as they are good at their jobs. It may well be, as some have suggested, that we have too many people with financial backgrounds but I do not know many people with financial backgrounds nowadays who have not been steeped in marketing and respect for customers. Fundamentally, what makes a good manager—and I think that the noble Lord, Lord Saatchi, had it right here—is the respect for reason, for rational thinking and for rational analysis. That is what I believe marketing can contribute.
It is certainly true, as the noble Lord, Lord Marshall, said, that we do have companies in Britain which are champions for marketing and whose marketing is both memorable and effective. If he will allow me to say "British Airways and Virgin" without drawing breath, I think he will understand the need that I have to be impartial in these matters. I am not convinced that we have underestimated the importance of product design and development. Indeed, that starts right from the very beginning.
The noble Lord, Lord Garel-Jones, referred to some of the failures of marketing. It is quite true that many UK businesses do lag behind the average performance of our strongest competitors in other countries. It is that difference between the best and the poorest which we must devote our attention to. One of the ways of doing so is the encouragement of professionalism in marketing. We have a strong private sector infrastructure supporting the development, status and professionalism of marketing; for example, the Marketing Council, the Chartered Institute of Marketing and the various specialist bodies, including the Market Research Society, representing the advertising and direct-sales sectors.
1261 Without those professionals, we recognise that we will not have the core skills to present our products effectively. That is why it is so important that we have the initiative of the chartered marketer with its emphasis on life-long learning and on quality control to which my noble friend Lord Borrie referred. After all, it is in the context and under the discipline of professionalism that we can do what the noble Lord, Lord Garel-Jones, rightly said; namely, to tell the truth.
I move on now to say something about the Government's support for marketing. This is not in any way a partisan analysis. I recognise the support given by the previous government—for example, the consultancy project initiated by the noble Lord, Lord Young of Graffham, in 1988 which had a marketing consultancy strand which worked very well. There was also the "Managing in the 90s" campaign which ran from 1990 to 1997 which developed marketing workshops and disseminated best practice guidance and case studies. Therefore, I deny the contention made by the noble Baroness, Lady O'Cathain, that governments are not persuaded of the value of marketing. I believe that both this Government and the previous government have been.
The noble Baroness referred to Business Links. Advice is now available to small and medium enterprises on marketing issues through this scheme. There are 85 Business Links now open with 240 outlets. They do not all have specialist marketing advice in-house, but they do have the ability and the responsibility to refer to local quality assured consultants such as the Chartered Institute of Marketing members. Of course, they also have access to training and development on marketing issues. We are supporting the Marketing Council's project "Grow with Marketing" in which a group of Business Links are working with the council to create marketing champions and thereby raise marketing expertise. We are working with project partners to see that this is taken up across the whole Business Links network.
In answer to the second question posed by the noble Baroness, Lady O'Cathain—in fact, she asked me three questions but I cannot deal with them in the right order—we are indeed very interested in her suggestion about developing links with local colleges and universities. The noble Lord, Lord King, also made a similar point in that respect. I shall be asking the Department of Trade and Industry to consider that suggestion.
Reference was made to the DTI's UK Benchmarking Service. Companies using it are able to benchmark their marketing expenditure against the service's database. The answer to the noble Baroness's third question is that a specialist marketing module has been devised within the benchmarking index. It has been built up by the British Marine Equipment Council for use by its members using the service and is starting to be used more widely by some Business Links.
Other government support for marketing is quite widespread. Under the DTI's sector challenge initiative, 186 projects have been given grants totalling £35 million for raising competitiveness. Some 64 per 1262 cent. of those specify the need for better marketing opportunities and marketing skills. There is a whole range of projects for marketing for exporters to which I do not have time to refer. I refer to the development of the DTI web site. My noble friend Lord Haskel was right to refer to the need to master electronic marketing. I refer to export promotion services more generally which include marketing scholarships to the best business schools in the USA and Canada.
The noble Lord, Lord Cowdrey, referred to the need for tax exemptions, in particular for sport. As noble Lords who listened to the debate on hotel accommodation last week will know, we are not very sympathetic to demands for tax exemptions in particular sectors. But, of course, where business support for sport is a business decision—in other words, it is designed to increase profits and market share—then it is a proper business expense and is recognised as such in our taxation system.
For the future we are building on the Fit for the Future Best Practice Campaign. We are collaborating with the CBI on taking forward its ideas on that. That was welcomed in the pre-Budget report two weeks ago. The benefits to business of adopting best practice in marketing should be an important part of that campaign and therefore we welcome the discussions that have taken place between the Marketing Council and the CBI and hope this will lead to a strong, best practice in marketing message.
As regards the competitiveness White Paper—here I come to the first question of the noble Baroness, Lady O'Cathain—of course I cannot anticipate what will be in the White Paper but I would be astonished if the Secretary of State did not stress the importance of our need to compete in today's competitive markets when he publishes the White Paper in due course.
I agree with the noble Baroness, Lady Miller, that we can no longer rely on the motto that if you make a better mousetrap the world will beat a path to your door. We recognise the importance of marketing as a driver for competitiveness. We have some excellent exemplar countries and some world-class players in this field. We look forward to continuing to work in partnership with the Marketing Council, the Chartered Institute of Marketing and other professional bodies to encourage more companies to use marketing within their business strategy to achieve business success.