Magazine article Marketing

Why Good Marketing Isn't Enough

Magazine article Marketing

Why Good Marketing Isn't Enough

Article excerpt

When Greg Hutchings, proud new owner of RHM first puts his feet under the desk, a new shake-up in Britain's food industry will begin. Alan Mitchell investigates.

It's limbo time at RHM. The usual Christmas marketing push is on, with perhaps a little more vigour than usual, but none of those involved know where they'll be this time next year.

RHM's proud new owner Greg Hutchings has built a reputation as one who keeps the businesses he buys. But by the time he takes over he'll have been approached by a number of companies keen to carve up RHM. And it's widely accepted that some of these offers will be just too tempting to pass over.

RHM, another great British company will be no more. So what? The simplistic analysis, which anyone reading the press or Hanson's bid documents would have picked up, is that RHM was simply another case of bad management, an accident waiting to happen.

Unfortunately for marketers, especially those at RHM, it's not half that simple. Indeed, the questions raised by the RHM affair should be exercising the minds of all involved in British business.

Lesson number one. Forget small is beautiful. RHM's demise proves that being big is no longer enough. We have entered the age of giantism.

Lesson number two. No matter what clever theories academics come up with to prove that the City is not short-termist, the insidious effect of short-termism is still eating away at the nation's industrial core.

And lesson number three. Faced with lessons number one and two, being a good marketer is simply not enough. These two forces are likely to simply sweep you to one side.

Take giantism. A cursory reading of Hanson's documents reveals the argument that RHM deserved to die because it was small. It had a "half-baked" and "indigestible" acquisition strategy, Hanson argued. Why, for instance, buy Nabisco's cereals business, declare it a "key element in RHM's plans" and then promptly sell it?

Looking back, the reason is obvious. RHM simply wasn't big enough. Having bought Shreddies and Shredded Wheat, RHM chairman Sir Stanley Metcalfe was faced with a dilemma. To tackle Kellogg's domination of the market he would have to invest millions in both plant and advertising. But then two more giants in the shape of Nestle's and General Mills' Cereal Partners appeared on the scene.

Their message was clear: "With you or without you, we're gunning for Kellogg. Either we buy you or we trample over you in the battle". Metcalfe was faced with the choice of being a cash-strapped number three, or of gracefully retreating and using the proceeds to ease his groaning balance sheet. It was an offer he couldn't refuse.

Yet in dosing so, he was confirming the small-fish statute of his company and underlining his inability to growth out of it.

Now take short-termism. Those who have worked closely with Metcalfe talk of two very different animals. The first was one that came to RHM in the early 80s. "Stanley Metcalfe was very good for the business," says one. "He had a lot of respect. He was a bright man, very capable. His decision to rationalise the bakery business was a very hard one." And there was "a will for growth, a preparedness to expand".

But the same source, who asks not to be named, goes on: "After the battle with Goodman Fielder his eyes went off the ball. He became obsessed with the fear of takeover. …

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