Dick Smith gives multinationals a wake up call Published May 01 It seems the business environment has never before been so tough for multinationals in Australia.  One person in particular - Dick Smith - has had a field day in publicity terms (as well as inflicting some significant market share damage along the way). So why has Dick Smith been so powerful and successful in his campaign to buy ‘Australian Made’ and buy Dick Smith?  What are the ramifications for multinationals?  Is this just confined to the food industry or does it potentially impact across the board? Essentially he’s used classic PR techniques: He has defined a clear message that is simple, emotional and it is delivered with no corporate-speak. He has spent a lot of time building the Dick Smith brand in its own right, and can now transfer that brand to other products i.e. groceries.  ‘Dick Smith’ has become a powerful money-making brand with well-established values. He’s also spent years building up his personal profile and reputation with the media.  He’s great copy and seldom - if ever - refuses to speak to the media.  He understands the need to be accessible in both good and bad times. He understands how to exploit and leverage media.  He’s cleverly used media he knows appeals to the masses to reach his market segments. He’s got a raft of ‘opinion formers’ or ‘influencers’ who will endorse his sentiments - from trade unions to the elderly. He knows there’s a huge vacuum caused by the timidity of multinationals over the years to show what they do for the Australian community.  And boy has he exploited it. He understands the importance of the ‘pull v push’ marketing strategy which creates consumer pressure on the retailer to stock the product (the big brands might hold sway with the retail trade but Dick Smith’s army of consumers can’t be denied). He’s persistent.  He seldom lets any detractor or critic off the hook.  He understands that attack is often the best means of defence. He understands the credibility and consumer power of editorial compared to advertising.  He launched the brand and drove demand through news and editorial and complemented it with advertising. ‘Dick Smith the brand’ has simply out-branded - and out-marketed - the competition.  Over-riding everything has been his position as an entrepreneur and single operator who has no corporate constraints to hold him back.  And never mind the validity of some of the claims - it’s the perception that’s important.  So where does that leave the multinationals? First: reaping the results of years of timidity and ‘low profile’ in this marketplace.  Low corporate profile essentially equates with low or non-existent goodwill so that when it gets tough there’s virtually nil credibility and no chips to call in. Second: re-thinking corporate communications strategy and policy.  Historically multinationals have preferred the anonymity, which comes from working through industry groups.  That tends to give credibility to the weakest but restrict the strongest participant.  Some of the multinationals need to seriously consider whether they mightn’t be better served investing in their own corporate profile.  Third: taking a crash course in understanding the media and society and how to work with them both.  Multinationals are expert at segmenting their consumers and understanding that they can’t appeal to everyone, but when it comes to corporate policy this strategic approach seems to be missing.  Fourth: bringing brand marketing and corporate communications closer together.  Many are already doing it but surprisingly a lot still don’t (in fact some ‘pure’ brand focussed corporations still don’t even have a corporate communications capability - either in-house or through an agency!) The irony is that the multinationals have - generally speaking - a pretty convincing story to tell.  But they haven’t chosen to tell it.  Many have adopted the attitude that they only market brands not corporations.  Others have believed a low profile would lessen the risk of being criticised.  However, to media and consumer activists, keeping a low profile can often been seen as trying to hide. Also multinationals have become so used to marketing in silos - brand by brand, often competing with other brands internally for kudos, that there’s not been enough consideration of the overall corporate perspective. Because there’s been little evidence of heavy investment by multinationals in their corporate reputation in Australia (compared to their marketing expenditure or value of assets they manage locally) they were always susceptible to being caught short by a local attacker.  The issue of multinationals in Australia goes far beyond Dick Smith - he’s just been clever in exploiting it to make money.  It is an emotive argument that especially impacts on, and appeals to, the lower socio-economic groups within our society and the media that reaches them.  Multinationals in food, grocery, drugs, petrol and other mainly low-value necessities are in the firing line. However one thing is for sure.  The ‘Australian owned v multinational positioning’ is entering a new phase.  Even if consumers don’t apply pressure, don’t be surprised if Australian companies try to jump on the bandwagon. (Watch the Herron v Panadol battle as it develops). There’s also been recent evidence that some of the larger multinational pharmaceutical companies are prepared to publicly tell their story.  Corporate advertising is a good start and one way to quickly react to short-term issues and opportunities.  But to be successful- it needs a full, planned, integrated and sustained communications effort with PR at the centre. Below is one of the best articles we have seen which addresses some of the issues associated with Dick Smith Foods. The Australian, Edition 1, FRI 27 APR 2001, Page 013 Grocer Dick flogs paranoia By: Dennis Shanahan, POLITICAL EDITOR Beware of capitalists wrapped in the flag GROCER Dick Smith has been running a campaign against my journalism, claiming it is “hypocrisy” and a result of the “advertising clout in the press” of the “big foreign companies that exploit the ‘Australian Made’ logo”. On this page last month (March 1) I wrote about the marketing of Dick Smith Foods. I argued that patriotism and the promotion of Australian-made goods were laudable, but there was a danger in combining the two sentiments in a marketing campaign. It could promote xenophobia and jingoism, which undermine the values the flag stands for and threaten the jobs of the Australians it claims to be protecting. With this in mind, and the fact that Smith's flag-covered advertising was attracting support from populist political movements that are rabidly anti-foreign, I suggested that “we need to take a grain of salt with Dick Smith Foods”. I had the temerity to question the commercial motives of a grand old hand at marketing in Australia, Smith, who has appealed to, and profited from, variously, patriotism, nationalism and the sale of cheap foreign imports, his face and his name. After all, Smith sold his electronics network, which used cheap Asian electronic imports, for $25 million after establishing it as a brand, just as he is establishing Dick Smith Foods. Since my article appeared, Smith has issued a press release falsely accusing me of criticising him because I had been put up to it by foreign companies and lobbyists. As well, he has sought television and radio appearances, and run a national advertising campaign, costing him at least tens of thousands of dollars. Smith went to these lengths despite The Australian offering to publish his reply to my article. He has declared on radio, during a debate on foreign ownership, that “most of the foreign companies are headquartered in the US and they are going to take over the world ... It's not xenophobia, it's a fact.” Is this exploitation of free publicity and paranoia? Sounds like it to me. Smith appears to be scared that, stripped of the Australian flag, he will appear as an emperor with no clothes. Smith is nothing more than a label. That is the secret to his capitalist success - a brand name he can sell. Since my article, others have queried his tactics and motives: former RSL boss Bruce Ruxton, former deputy prime minister and minister for trade Tim Fischer, social commentator Hugh Mackay and ABC editorialist Stuart Littlemore. Are Ruxton and Fischer traitors? Are Mackay and Littlemore fellow Murdoch press travellers? No. Smith's iconic pedestal is being chipped away. The man who claims on his grocery goods to be providing a future for our children, using produce from Aussie farmers and keeping taxes and profits here, produces nothing and employs virtually no one at Dick Smith Foods (three to four people on a cumulative turnover of more than $60million). He competes with Australian producers who do not have the benefit of his advertising profile, and uses the packaged breakfast goods of a manufacturer that has a US-based headquarters and uses its non-profit status to pay no tax. THAT'S right. The supplier, Sanitarium, has the status of a charitable organisation and runs a $200 million per year food processing business, which pays no tax because it is controlled by the US-based Seventh Day Adventist Church. There is no way of knowing where the profits or non-profits of Sanitarium go. (Its status is being investigated by the Coalition's federal inquiry as a part of a wider review of the status of charitable bodies.) Like all of Dick Smith's foods, the breakfast cereals are produced by somebody else. Smith whacks his label on somebody else's product and sells it, even if it competes with other Aussie products. But there are foreign-owned companies that employ Australians (more than three or four), pay tax, offer jobs for our children and grandchildren, and process Australian farm produce as well as sell it. Whether it's Vegemite, an Anzac biscuit that gives a profit share to war veteran charities or a McDonald's hamburger, they all contribute to the Australian economy through taxes and job creation. Whether you like them or not, buy them or not, foreign companies produce more in Australia and employ more Australians than Dick Smith Foods, and do not deserve to be denigrated or accused of being part of a one-world conspiracy.

PR Influences Australian Public Relations Newsletter. Article: Dick Smith uses PR to give multinationals a wake up call. Information Content: Opinion & Comment, Marketing