Just 6%

Once upon a time, not long ago, Romanian businesses reported, annually, extraordinary double-digit profits and growth. I heard about impressive market shares and sustained economic growth. I saw figures that showed a 50% profit after taxes. Incredible, but untrue! Those figures were inflated for the ultra-positive cosmetology of the business in order to sell them. Unfortunately, this is no longer the case. The recession, the panic, the pessimism brought us down to earth, in an uncertain area of ​​survival and possibly in the civilized area of ​​the annual net profit of around 6%, as we usually find throughout civilized Europe.

As long as our companies were taken to the top of the wave, in a precarious economy, but with a boom and with an insatiable appetite for consumption, their managers only followed the trend and accounted for the figures in each quarter and at the end of the year. Systemic, systematic, eye-catching management was almost absent and it could be seen only at a few regular multinationals that were doing so since forever.

I noticed that trade policies and strategies, in the case of Romanian companies, were limited to the simple operation of producing and selling, a heirupism, however, profitable. As long as our El Dorado worked, so did they. Today, without extremely well-documented and precise strategies, price, distribution and brand, Romanian products and companies will become segregated in the absence of business, careful examination of the cost on each “route to market”, portfolio evaluation and rationalization depending on its real profitability.

Since last year, we noticed that Romanian brands/companies need restructuring in thinking and action. Total or partial, it doesn’t matter. Sounds drastic but, the market, the consumers and the global economic climate will force them to make various revisions, reorientations and changes in their strategy, sometimes cutting to the chase. Brands will also suffer a lot if they are not managed properly, in accordance with the market. Obsessively, I have to repeat that any form of branding is useless in the absence of product relevance, price, sales channels and accurate cost assessment.

Unfortunately, I often hear two voices. The first one which says that: we need a rebranding, something fresh. The second one which says that: we do not need to invest in the brand, our main focus is to survive. Invariably, in both situations, I have to ask: “Why?” Almost invariably, the first voice answers: “we believe that we no longer do well enough on the market”. The second one says that: “we do not sell brands, but we have this product at a very good price!” Both responses are suicidal and typical for a documented lack of reaction to change. When everything starts to change around you, choosing to stay in the past is knowingly committing suicide, believe me! When there is such a multitude of products on the market and an obvious growth trend in this regard, choosing to sell the product and not the happiest mix between product, price and brand is also pure suicide.

I want to highlight this: the market will sift and it will separate the companies and the brands. I hope to hear it from those who still dream of beautiful PowerPoints in front of them, who speak the outdated language of marketing and market share and who, in fact, have not been in stores for a long time, from hypermarkets to small neighbourhood or rural shops. Business with the laptop could be done, collecting high salaries, bonuses and all expenses paid, two years ago, when everything was on the rise. Now, the only thing on the rise is the consumer, his budget and your costs.

Horse glasses were invented a long time ago. For me, the example of a large company that still invests serious amounts in its portfolio of impulse products – which are no longer bought – is proverbial due to the strategy of “true branded products”, an extraordinarily beautiful theory, but functional only in times of growth or economic linearity and with an educated consumer. Unfortunately, Romania is not going through this period. The same company, which recorded significant declines at the end of last year, raised management salaries to a level of about 10,000 euros net, bought 500,000 euros luxury cars and granted fabulous Christmas bonuses. The same company, which invests in commodities marketing, without results, is considering delisting their tractor brand, on the grounds that it does not fit into the policy and strategic trend of having brands at European level. However, the collimator brand for delisting, made fabulous annual sales and tailor-made profits, the only one, along with an African country, of all their global brands. Everything else, including the ones with commodity marketing, had been losing money for several years.

I think the words and the time of the successful stories are over. For some, the time has come to close the door behind them – forced or voluntary – and leave the room for those who understand what is happening and who change accordingly, with their eyes on numbers, consumer and brand.