MARKETING FOCUS: Failing the euro test - UK marketers know that it’s coming and will have a dramatic effect. But are they prepared for the euro? Laura Mazur finds out

The good news about the imminent debut of the euro is that a survey, carried out exclusively for Marketing, reveals that 97% of marketers believe the single currency is an important issue for them. The bad news is that while half say it will have a significant impact on their business, a meagre 27% have a formal marketing strategy dealing with the euro’s arrival.

The good news about the imminent debut of the euro is that a

survey, carried out exclusively for Marketing, reveals that 97% of

marketers believe the single currency is an important issue for them.

The bad news is that while half say it will have a significant impact on

their business, a meagre 27% have a formal marketing strategy dealing

with the euro’s arrival.



The survey, carried out by the Chartered Institute of Marketing (CIM),

comes as momentum builds in the business community to get to grips with

the euro and its impact on the UK.



For the small- to medium-sized companies we have the obnoxious Martin

Skinner, star of the Treasury’s ad campaign created by TBWA GGT Simons

Palmer, to galvanise British companies into greater euro-awareness. Last

week over 100 City and business figures, including Tony Hales of Allied

Domecq, Lord Marshall of British Airways and Martin Sorrell of WPP

Group, declared their support for the euro in the Financial Times.



But whether or not companies support the UK joining the single currency

isn’t the main issue. With the majority of European Union countries

signed up to it, from January 1999 it is going to have an impact on UK

marketers, and they do not appear to be ready for it.



The effects of the single currency will include a reduction in trading

barriers and full-blown price transparency, with Europe-wide marketing

becoming the norm. All of which means marketers ignore its effects at

their peril.



Steve Cuthbert, CIM director-general, says that the Institute carried

out the survey, which covers all sizes and sectors, because there was a

’sneaking feeling’ members weren’t as prepared as they should be.



Getting the facts right



He is right, judging by some of the main findings. Of the 200

respondents, 66% correctly said that the start date on the Continent is

January 1999.



The rest got it wrong, giving either January 2000, 2001 or 2002 (when

euro coins and notes appear) as the kick-off.



Of the 71% who say they have no formal strategy to assess the euro’s

impact on their marketing, the breakdown is also telling. Those involved

in distribution, not surprisingly, are the most prepared: 67% have a

formal strategy, leaving about one-third without.



A definitive 94% of marketers say that either their company doesn’t

intend to demand suppliers price in euros when the single currency

begins in a few weeks (66%), or they don’t know (28%).



The Treasury believes its message is getting through, however, if not as

fully as it would like. According to Lord Simon, minister for trade and

competitiveness in Europe, small- and medium-sized British companies are

waking up to the implications, as evidenced by the fact that the

response rate from the target audience to the Martin Skinner campaign

was 10%.



This is said to be three times the average for such campaigns.



Speaking to the first national meeting of the heads of the 12 regional

euro forums a few weeks ago, Lord Simon said that the advertising

campaign had led to 300,000 requests for fact sheets on business

preparations for the euro.



But he admitted the interest is patchy: while the best response levels

have been in the south-east and East Midlands, response from the

north-east, north-west and London has been 20% below the national

average.



Cuthbert argues that the best approach for companies is to use some

common sense: ’Ask yourself what is the euro going to do to competition,

particularly in the euro zone (the 11 founding countries signed up to

single currency in the first wave)? What are the implications for you as

a competitive supplier in the marketplace? People really need to work

this through.’



One of the biggest misconceptions still to be beaten is that the euro is

essentially a problem to be solved by the IT department. It isn’t just

about changing your IT systems to be able to convert from sterling to

the euro. The new euro zone will account for nearly half of British

exports and over 40% of British overseas direct investment.



Competition is also bound to intensify as companies of all sizes

formerly wary of trading across borders because of currency fluctuations

feel confident enough to push into new markets.



Of even more concern, says Cuthbert, is the fact that the four countries

staying out (Sweden, Denmark, Greece and the UK) become a minority in

terms of the weight of trade. So decisions on things such as pack size

and supply will be made with reference to harmonisation in the euro

zone, since it will have the most financial clout as a group.



Simple choice



It also becomes easier for buyers to use Continental suppliers because

of the ease of price comparability. ’You see this in all purchasing

patterns,’ says Cuthbert. ’If there is a simpler option, people take it.

They don’t like complicated options, or confusion marketing. At the

moment the UK is one of 15. Now there will be this big trading bloc. Too

many people have just failed to see the significance of it to them.’



Some of the trade associations have heeded the call by trying to bring

their members up to speed. The British Tourist Authority (BTA), for

example, has published an explanatory leaflet following research which

showed low levels of awareness among the more than 200,000 companies

that make up the British tourist industry. Considering two-thirds of the

UK’s 25.5 million overseas visitors come from Europe, this is not before

time.



The tourist trade will be in the front line, warns the BTA. Even though

euro notes and coins don’t appear until January 2002 (national

currencies in the 11 participating countries disappear completely six

months later, on July 1 2002), companies, from conference organisers to

bed and breakfasts, should start preparing. This includes anything from

training staff to handle enquiries, to revising advertising and any

internet presence to reflect the ability to deal in euros.



The BTA believes that the extent to which businesses need to prepare for

the euro depends on a number of factors, including the following:



- The proportion of customers from the euro-zone countries



- The relationship a company has with businesses that operate in the

euro-zone



- The marketing done to the euro-zone, including indirect marketing done

through the internet or with brochures at ports of entry from the

euro-zone.



A particular problem in the UK is that the political wrangle in the

press seems to be drawing attention away from the crucial business

issues, as the findings of media evaluation company Carma International

show. It is in the middle of analysing British and French national press

attitudes and perceptions with regard to the process of European

Monetary Union (EMU) and the euro.



Education weakness



While the full report will be published in January, interim results from

May to August of this year show that of a total of 696 articles, a mere

21 focused on the training and education of people about the euro and

what to expect.



The vast majority of the press coverage is not about what the euro will

mean, but concerns the political dogfight taking place over Britain’s

role in it.



Only 5% of articles mentioned a company’s own employees as an interested

stakeholder group, while the impact on communications fared even

worse.



Only 4% of the articles discussed the effect on external business

communications, with a paltry 1% looking at internal communications.



This is in sharp contrast to France, which according to Carma has moved

beyond political discussions to examine more practical issues and

information.



For instance, coverage has slanted more to how French businesses should

be reorganising themselves and what investment is needed to get

ready.



Even more significantly, the message that the euro should be a key

element in business communications was emphasised in 10% of the 562

articles analysed.



And while the UK is still trying to spread the euro message to

small- and medium-sized companies, the French government is now planning

a new communications programme for groups such as women, the elderly and

the less educated.



As Sandra Macleod, Carma’s European managing director, points out: ’This

has been a political football in the UK, and the media have focused on

the ’should we join/ should we not’ debate, without anyone taking the

responsibility of driving the message home that it will happen and we

must know about it and prepare.



’So it’s no surprise that so few businesses and people are informed. No

one has really taken ownership of that role in this country - so

far.’



Finding a company that is facing up to a euro future is somewhat of a

challenge, but Norwich Union, one of the UK’s leading financial services

organisations, has been working full tilt for the past year.



Charles Barrows, EMU programme director at Norwich Union, says that the

initial stage has encompassed getting ready for the first wave on

January 1 1999, since it has business in parts of the euro-zone such as

Ireland, France, Spain, Italy and Belgium. Between January 1 and 4 - the

’conversion weekend’ - it has to ensure that all bonds and equities are

re-denominated in euros.



Conversion plans



But it has by no means ignored UK preparations. Despite the uncertainty,

Norwich Union has already carried out a detailed impact analysis across

its entire UK business operation. According to Barrows: ’We have worked

on the assumption of when the UK might join and how long the transition

might be.



’Using those assumptions, we have developed a plan for how we would

manage the conversion, looking in particular at costs and risks,’ he

continues.



’The key aim is to ensure a smooth transition, working to communicate

effectively with our customers and business partners throughout the

period of change.’



This is the nub of the matter: communicating with customers, complex at

the best of times but rendered even more so when talking in two

currencies.



For example, he notes: ’At some stage we will have to explain to

customers how we have converted their policies and investments. Clear

communication is critical.’



Barrows is also active in getting this message across to others through

his work as chairman of the Association of British Insurers (ABI), which

includes sitting on one of the working parties of the Treasury’s euro

preparations unit.



That group is planning to release a national changeover plan by early

next year to give high-level guidelines about the length and time of

transition that the government would aim to give businesses to

prepare.



According to Barrows: ’Neither ABI nor Norwich Union are looking at this

as a good thing or not. What we are saying, from a risk and customer

management point of view, is how do we ensure that if and when we join

we have a smooth transition? That’s what people need to think

about.’



THE CIM SURVEY: WHO THEY ARE



The 200 respondents to the CIM’s survey are predominantly UK-based: 181,

compared with three in other EU countries, one from the US and two from

a non-EU European country. The location of their headquarters vary: 80%

are in the UK, 6% in another EU country, 6% in the US and 4% outside the

EU.



The majority (38%) employ fewer than 50 people, followed by 22% with

101-500 and 12% with 50-100. There are 16 respondents with between

501-1000 employees, 17 with 1001-5000, five with 5000-10,000 and 15 with

10,000-plus.



When asked whether they are in favour of joining the single currency the

majority were for, with only 27% against. This is also where size makes

a difference: the largest group against joining, at 37%, were those

which employed fewer than 50 people.



ROTHERHAM TRIES OUT THE EURO



Dual pricing was the name of the game in the Yorkshire mining and steel

town of Rotherham last month, when it become the guinea pig for euro

shopping in the UK.



The currency trial was the idea of Rotherham’s Chamber of Commerce and a

recognition of the amount of European investment that is helping to

rejuvenate the town.



Dummy euros were circulated to shoppers and they were given a week to

try to get to grips with the idea of the new currency. With an exchange

rate set of 70p to one euro, over 30 town centre shops were selling

products in both pounds and euros.



In Tesco a basket of mixed fruit cost 5.45 euros, or pounds 3.95, while

a florist had bouquets on offer for 3.60 euros, instead of pounds 2.50.

Reactions from the locals were mixed, with some just confused by the

whole exercise and others embracing it with enthusiasm.



But the attitude among business in Rotherham is that the euro is coming

and everyone should be prepared. British Steel, the town’s biggest

employer, will start invoicing in euros from January 1.



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