Trade Fair Trends in Central East European Context Vázené Dámi á Pánové! Dovolte mne pozdravit’ Vám v meni madarskih organizátorov veletrhy á vystavy. My name is Károly Nagy and I am executive secretary of the Hungarian SOVA. Also I am an international marketing consultant mostly in exhibition related issues. My intention today is oriented to present you the effects of world economy, of changes in marketing strategies and its repercussions as consequential changes in Central East European exhibition industry.

Central East Europe? What can we consider as Central East Europe? Why? Components of measuring trends Visitors Exhibitors Investment in participation Our option to consider Central East Europe is geographical – e,g, containing Austria as well. Second is more close to my perception and it is little more than V4 countries having very similar past and present situations, problems. But I also add some parts of neighbouring countries like Romania, Ukraine and Serbia. Though there may be further points for reconsider – e.g. by language proximity. Another point I wnat to raise that if we want to see trends we need to have quantitative data. In the exhibition world they usually are visitors, exhibitors and size of fairs. Number of visitors show how many people, business and consumers, decision makers are willing to invest their time, money and personal effort to be there. Fairs are one media where you pay intentionally to get this marketing exposure. Number of exhibitors mean how many companies think that to be at exhibitions is a good investment, fairs are good marketing and sales tools for them. Size of the fairs (square meters) shall show how much money these companies are ready to invest, and how much space they devote to do their marketing and sales procedures there.

Trends in values Trends in physical figures differ by countries PL, H – polarisation and concentration SK – recovery RO, UA, SCG – for the time being up Competition – less between fairs – more between marketing tools Imperative to measure and compare Without going deep into the statistical data I prefer to remain on tendencies of the recent years. We see now that the exhibition industries are getting right – a consolidation can be observed. What is important to understand that the real competition lays not very much between fairs (however in CZ and in PL there always will be some due to capital considerations of Praha and Brno or Poznan and Warszawa). The real is between marketing and sales tools and this includes trade fairs as well. In certain surveys you will see some efforts to measure and prove their merits – and I will also come back to this later. What is essential to all decison makers to get justification about use and values of fairs and other marketing tools as well, first to measure the return on investment in them and then it is possible to compare.

Measuring market values What do we do in CEE – measure the values? What are the real market values and how do we measure them? How can we compare with other values – media values? Methods for ROI To measure trade fairs we use certain statistics – and they must be transparent and comparable. IN CEE we have CENTREX Union which was established in order to lay foundation to very strict and Western standard measuring stick which is applied in 6 countries now. It works and the statistics as fully comparable and compared with West European fairs. They are published also in a pan-European brochure. Beyond statistics we have got a few surveys – individually at fairs and the results you can see in the communication of organisers. What is very important to compare the return on investment with each and every marketing tool and media. Here exhibitions used to be handicapped because: exhibitions were not invented in America secondly fairs have existed well before the word ‘marketing’ was invented. My preception is that in the past 15 years each year there has been new martketing tools introduced and labeled as a marketing genius – be it mail order, direct marketing, billboard, point of purchase advertising, Internet. For some time they were labeled as THE solution for everything. Later it turned out to be of some use, but not THE solution. And continuously the exhibitions, fairs fell back in considerations. The methods to measure ROI at exhibitions depand greatly not on organisers but more on the exhibiting companies and of the visitors themselves. They have to have clear and possibly measurable targets, and to use tools to measure them. Organisers can help but not substitute the company itself. But I know there is going to be some presentation on that here.

Changes in world economy Globalization of production distribution channels marketing Sales strategy / policy / pattern changed Intensive B2B 1-2-1 customer relations in demand We all know the changes in world economy 1. Globalization of production/distribution channels and of marketing gained momentum 2. Sales strategy / policy / pattern has changed 3. More intensive one-to-one customer relations in B2B is needed

Changes in marketing strategy (1) Global players Production, sales, marketing globalised Full attack on consumers Building a “feeling” Tools: mass media + but: No direct feedback requested No exhibitions required As I see the changes in marketing strategy of global and of local players: For the global concept production – sales – heavy drums - ECONOMISE We all see a full attack on consumers with the general practice to build a “feeling” – you will like it, others do like it, be like others, using pretty and familiar faces, starts etc. Tools: mostly mass media but sales outlets, magazines This situation does not ask for real consumer demands/response Lots of products I like disappeared - but nobody asked me what would I prefer to buy. They do not need a place where they can get a feedback Ultimately – under these policies of theirs no need of exhibition

Global players On small markets: Market in the pocket Use existing links company events, presentations, invitations Positive: Have customer service contacts Opportunity to involve partners/joint development process In case of a small market some global companies in B2B also believe they have the market already in their pocket. To introduce/sell new products they do not go public, they use their existing links to potential customers through company events, prezentations, invitations (eg. in IT sector) It is positive that they may really know what the buyer wants or would need – having customer service contacts, joint project development and implementation processes. But even in such cases they may propose/sell over the real demands – to sell more complicated, more costly solutions

Changes in marketing strategy (2) Local / Regional SMEs to produce, sell what their customers really want !!! Need a low cost place for 1-2-1 meeting Exhibitions - concentrated marketplace Visitor: when buy, need full picture exhibitions – low cost, time-effective Local / regional concept (opportunity) For SMEs if willing to survive, they need to produce, sell what their customers really want !!! To find out what they want the SMEs need a place for one-to-one meeting, exchange of info + to get to know what they want – and these exchange must happen at low cost. For this exhibitions/fairs are the concentrated marketplace. On visitor side: when you buy, you need full picture – to justify your decision. To get this full picture they can go to exhibitions – it is low cost, time-effective. (If the exhibitors find necessary to exhibit.)

Controversy Exhibitors do not like sales / marketing transparency Visitors prefer to see as much as possible I feel a natural controversy: Exhibitors do not really like transparent place to sell, at exhibitions they do not have their own playground to use, they can not influence their customers at full when competitors are also present. But they are cheaper than salesmen visits. Visitors on the other hand they would prefer to see as much as possible, at lowest costs, at reasonable time consumption. The controversy becomes reality when the manufacturers, traders become very strong, too strong and they feel like being able to do power marketing.

CENTREX visitor surveys Why focus on visitors? Why do visitors attend ? How do they consider fairs? Across CEE survey 27 fairs in 5 countries Nearly 6,000 visitors interviewed Preliminary results of surveys CENTREX has started to check out why do visitors attend and how do they consider exhibitions/fairs in their decision taking process. The first such pan-Central East European visitor survey has partly been processed and a few preliminary findings can be mentioned:

Preliminary results of surveys Over 55% visit 2 or 3 fairs a year Share this experience with 4-6 persons Over 90 p.c. consider exhibitions and fairs as useful for their business decisions About 90 p.c. visitors believe that exhibitions and fairs shall remain efficient in the next 5-6 years for business success. Most of the visitors visit many events a year. Over 55% sees 2-3 fairs and only 19 p.c. visits one fair a year. When checking how much contact they establish – you may definitely multiply the reach of information well beyond the statistical number of visitors: in most of the cases visitors say they pass over their exhibition/fair experiences, information to at least 6 more persons. Thus the real number of visitors or the target reached is much higher than the statistics could present. Thirdly, since these experiences are personal, the value of the transmitted information, opinion, impression is much higher in its impact. Over 90 p.c. of the visitors consider exhibitions and fairs as useful for their business decisions. Also about 90 p.c. of the visitors believe that exhibitions and fairs shall remain efficient in the next 5-6 years for busines success.

Exhibitions rank No. 1. In relationship to other marketing tools in the following business objectives: getting objective view of the market finding new products, services finding new suppliers, sources active leasure / live entertainment meeting existing suppliers preparing decisions We have gor some clear indications what exhibitions are good for on the visitor side: In relationship to other marketing tools exhibitions rank No. 1. In the following business objectives:

Globals towards visits Do not let their professionals to visit Claim: time shortage Disprefer in CEE clever, thinking, technically creative people Should not see how other companies are different Growing time shortage for visitors (life has speeded up) global players are hard hearted to let their professionals go to exhibitions to visit. They usually disprefer – at least in CEE – clever, thinking, technically creative people. They try to avoid their employees to see how different other companies are.

Local market For SMEs Even global comes close Most immediate, natural ’Base Camp’ at home Lasting personal relationships Even global comes close Local marketing where your most immediate, natural market is SMEs have to put up their ’camp’ at home – to have at least one business base, a fixed point Usually it is their home ground, a baker does not deliver too far Locally better face-to-face contacts can be made and they are more binding (you commit yourself to quality and lasting personal relationships) Even a global network company comes close (e.g. electrical works E-ON)

Local marketing Different marketing strategy Local entrepreneur must know what their customers want Need a direct, open yet transparent line Exhibitions / fairs fall into place This need completely different marketing strategy. This is the biggest challenge: they are much more specific and general at the same time as that of a global player A local entrepreneur must know what their customers want: today, tomorrow and day after. For this they they need a direct, open line, yet transparent - to reflect the trust in the relationship It is here where exhibitions/fairs fall into place

Diversifying trends Global marketing and alieniation Local marketing strategy with face-to-face opportunity Exhibitions also can add the ’pleasure’ feeling of the personal encounter: “He asked me what he can do for me. And he means it. He is my real supplier.” Thus we can see diversifying trends of global marketing and alieniation as well as local marketing strategy with local face-to-face touch.

What do we have here in CEE? General impact of global strategies Little experience with local strategies No cross-border strategies Language barrier Is there a need for CEE strategy? Is there a CEE entity at all? What do we have here in CEE? We all feel the general impact of global strategies and practice. There is little experience with local strategies – and even much less which consider CEE as a midway – I do not see too many cross-border local strategies We even have – in my perception of CEE a serious language barrier or only we Hungarians feel so? It remains a question how much CEE based medium sized companies develop CEE marketing strategies? Is there a need for CEE strategy? Is there a CEE as a business identity at all?

Challenges for us in CEE Let’s grow own global companies Many small & medium scale companies Need to develop new marketing strategies Do we know enough of each other? Do we know the consumers, customer preferences across the border? What is going to happen to us from next week? We do not have many global companies which face a completely free global competition. We have many small and medium scale companies which should have by now developed new marketing strategies for a free activity cross the border. Do we know how to operate in our countries? A few examples of past experiences, problematic situation – crossing the border with goods, renting sales outlets, shops, bureoucracy, corruption