The Changing Face of Mexican Marketing.
Over the past year the Mexican stock exchange (Bolsa Mexicana de Valores) has recorded a 21.2% growth in peso value and 21.1% in dollar value (source: The Economist). That is pretty good going for an economy with a 2007 GDP growth forecast of below 5%. Profit growth reported by leading manufacturing companies has generally been strong, despite a relatively weak retail market. The same cannot be said for many middle and small size companies (PYMES) who are being squeezed by low growth, commodity pricing and wafer thin margins. PYMES are struggling to come to terms with the new business realities in the transition to a competitive market economy. Unfortunately for many, the outlook is not good.
Companies linked to regional or global partners, through alliances, representations, or franchise systems, are generally adapting well to more competitive markets and changing business conditions, through the adoption of new technology platforms and well focused marketing strategies. Companies lacking such alliances are now at a serious disadvantage.
Many reasons are given for the plight of the PYMES: limited access to credit; low productivity; low investment in employee training; low investment in information technology; slow adoption of international standards (ISO qualifications); lack of innovation; poor customer service; lack of marketing resources and so on. But these are not the only reasons.
Old habits die hard, especially in medium and small enterprises. Mexican business culture and traditions still run deep. Years of protected markets, government policy and mountains of petty regulations meant that survival and success in business depended on building an extensive network of trusted family connections, influential and well rewarded contacts in the right places and close personal relationships with clients. Money, power and contacts were the keys to success, rather than strategic management, innovation and marketing.
Mexican businessmen have a well deserved reputation as shrewd deal makers and savvy negotiators rather than visionary innovators and brand builders. Marketing traditionally has been seen as the domain of the multinationals (P&G, Colgate Palmolive, Coca Cola, Frito-Lay) and the large national conglomerates. In most medium sized companies, marketing, where it exists, is seen as the promotional arm of the commercial/sales department, rather than as a means of adding value and competitive advantage.
Industry consolidation, new rules and opportunities are beginning to change the face of traditional business practices in
Change brings winners and losers and for the PYMES sector the future will be no different. For some time yet the losers will outnumber the winners by a large margin as consolidation gains momentum.
In future Brand Width columns we shall be taking a closer look at some of the winners and the marketing and brand building strategies that are driving their businesses.
