Hi-tech company cutbacks

Many marketing departments in Canadian high technology companies have been slashed by as much as 50% over the past two years, a new study has found.Reduced resources and increased competition have forced many high-technology companies to rely on their u.s. parent...

Many marketing departments in Canadian high technology companies have been slashed by as much as 50% over the past two years, a new study has found.

Reduced resources and increased competition have forced many high-technology companies to rely on their u.s. parent companies for the development of their marketing strategies, according to a joint study conducted by Peat Marwick Stevenson & Kellogg and the Information Technology Association of Canada.

‘What is happening in Canada’s unique information technology sector – and why – is a trend that should be of intense interest to marketers everywhere,’ Barry Gander, director of communications at itac, says.

The study, released last week, examines the marketing and sales practices within the information technology industry and reveals several new trends.

Increased dependence on u.s. parent companies, more hiring out of work to specialized marketing services, a move toward direct marketing, and a shift in the skills required by marketers were among those trends identified in the survey.

Sharpening of focus

There is a sharpening of focus among many Canadian companies that are looking to employ those strategies which are more cost-effective, according to Robert Love, partner in charge of marketing consulting services at pms&k.

‘This often means the development of marketing programs is done in the u.s., for the u.s. market, and simply implemented here in Canada by Canadian staff,’ the survey says.

Canadian marketers should be concerned about having less control over their marketing strategies, according to marketing consultant and author, John Dalla Costa.

Less work also means marketers will have fewer opportunities to do innovative work, Dalla Costa says.

He says there is also a significant ripple effect in the economy when marketing jobs are lost in Canada. Not only does it mean fewer jobs for marketers, but for advertising agencies and everyone else serving the marketing and advertising community.

‘It really doesn’t make sense,’ Dalla Costa says. ‘We are learning in business that we have to customize more and more – that’s the customer logic.’

But Dalla Costa says the current thinking of multinationals ‘is that we have to consolidate more to make more money.’

Ultimately, he says, companies need to get closer to their consumers, but they are ‘not going to be doing that by moving the people responsible for that closer to Cincinnati.’

Although the study focusses on information technology companies, global marketing strategies are becoming more prevalent among many u.s. multinationals.

Maintained independence

Dalla Costa notes European subsidiaries have maintained much of their independence.

‘We haven’t fought enough,’ he says. ‘As Canadians, we’re complacent. We should be fighting our guts out for every single advertising and marketing job in this country.’

Love says the emphasis on cost efficiency means Canadian companies will have to employ different marketing tactics in the latter half of the ’90s.

There will be a continued reliance on direct marketing tactics.

Love says the study indicates most high technology companies will place an increased emphasis on telemarketing, direct mail programs and customer seminars, and will reduce expenditures on trade shows.

The survey says there is also a shift in skills required by Canadian marketers.

More companies are turning to specialized outside marketing organizations to fill this gap.

Skills issue

The incongruence between the skills possessed by Canadian marketers and those demanded by the marketplace was ranked as the No. 1 issue of concern for 1994, according to the survey.

And while marketing jobs are being reduced, most companies are maintaining their salesforces, although they are increasingly being concentrated in the Toronto area, Love says.

Both hardware and software companies with sales of more than $500 million participated in the study, he says.

Of the companies surveyed, 45% had reduced their marketing staff in the past 24 months and 17% had reduced them by more than 50%.

‘On the plus side, most of our respondents felt that all of the expected cuts had been taken, and only 10% expected more cuts in 1994,’ Love says.

‘Now marketers have to look ahead to see how they can make it work,’ he says.