Identifying target markets is one of the main challenges faced by businesses. Even those companies with well-established brands can sometimes find themselves questioning their position. “Sometimes I am surprised by what people think their target market is. I try to convince them to readjust, but sometimes that is a difficult process,” says Jean-Claude Bintz of Lakehouse, the new communication and marketing strategy consultancy he founded at the end of 2008. But Bintz, whose previous career involved the creation of two telecommunications companies, Tango and Vox, says he can understand a certain degree of reticence from top managers to outsiders who question the business they have nurtured for years. “Then again, it is always good to have a third opinion. It is not a second opinion, because that usually comes from a sparring partner, so to speak. A third opinion truly comes from outside, and if a decision-maker is open-minded they will consider that advice.”

Retaining an open mind is essential for both sides, says Eric Dickes, managing director of AddedValue. “The most important thing is to really listen to the client,” he says. “Often the client has the answer to their marketing problem, but it is only revealed by analysing their strategy and positioning. Only then can we define the target market together and develop an appropriate campaign.” At one of Luxembourg’s oldest agencies, Mikado, account manager Aurélie Bertrand also emphasises the fundamental importance of thoroughly scrutinising the strengths and weaknesses of the client and the product. “Only then can we redefine their position in the market segment they are targeting – if that is what they want,” she says. “We also watch what is happening abroad and conduct research on foreign markets. This allows us to reinterpret a brief in terms of creativity, and then address the media plan while always remaining within the constraints of the budget.”

Budgets, of course, play a big deal in the Luxembourg market. That is to say the limited size and unique segmentation of the local catchment area provides extra challenges to communications and advertising agencies as well as their clients. For example, many local companies do not have the resources to carry out their own press relations, says Marc Schonckert, director of Comfi in Luxembourg. Indeed, many communication departments are so focussed on internal communications that they only have a few media contacts. “So we can add value to their existing communication department by organising press contacts or conducting market research,” says Schonckert, who heads up the Luxembourg arm of the Belgian company.

Unique segments

One particularity of the Luxembourg market is that as well as the normal class and age segments, the market can be divided into three more target groups – Luxembourgers, foreign residents and frontaliers. That can pose language difficulties, although Aurélie Bertrand does not see a major problem with using French as the language of communication. “Luxembourgers speak French, the majority of frontaliers speak French and much of the resident foreign population is also francophone,” she says. Marc Schonckert, on the other hand, says he has evidence that more and more companies are communicating in English, which poses another sort of problem. “Even if you have a strong network of Anglos-Saxon companies, the majority of their staff is more often than not French or francophone,” he says. “And when you deal with the Luxembourg press you have to think of local specifics – you have to respect the situation and communicate in three languages, or at least get local services to translate communications into French or German.” But translations are not only time-consuming; they are also notoriously difficult to get right. “There are so many subtleties to think about,” says Schonckert.

The different market segments do not just pose linguistic problems. With the number of resident foreigners growing constantly, the problem many local companies face is how to reach the different international communities. “Many foreigners are still more interested in the media in the own country than in Luxembourg, and the Internet allows them to easily access that media,” says Eric Dickes. The problem of reaching the frontaliers adds another dimension. They do some of their shopping in Luxembourg and some in their home country. “We have to use the Luxembourg media to reach them, but also the foreign media in those areas of France, Belgium and Germany. And then companies have to ask themselves if the investment in those markets, which is significant, is worth it.”  The opposite also holds true, of course. Multinational companies targeting the Grand Duchy do not necessarily adapt their campaigns to suit the multi-cultural, multi-lingual demographics of the relatively small Luxembourg market. “A company will not usually use the same message or same tone to address a French customer as they would use for a German customer.” Those that try to target a global market often risk diluting their message and fail to reach their target, says Dickes. “A good example of how specific local markets are targeted is the way banks advertise their deals for the annual Auto Festival. That shows they understand the needs of the local population and the tradition of the event.”

Then again, the influence of foreign media is inescapable in Luxembourg. Even before the days of Internet and mass consumer satellite TV, Luxembourgers would look to Germany and France for much of their entertainment culture. The influence of Luxembourg’s neighbours in the advertising and communication industry is obvious - especially from Germany, says Jean-Claude Bintz. “Luxembourgers watch a lot of German TV. I said at the time when Vox was bought by Mobistar that I knew we would not profit at all from its connection with the Orange brand in France. But if it had been bought by T-Mobile... everyone in Luxembourg knows that T-Mobile tune.” The temptation to compare Luxembourg advertising, branding and communication with what happens abroad is therefore great. But Eric Dickes see that as an advantage. “It means we don’t have to go about reinventing the wheel,” he says. “On the other hand, Luxembourg does have its own style, and communication has to adapt to the local market. It cannot work any other way.”

Creativity and innovation

Luxembourg’s own style is often accused of being afraid to take risks and lacking the avant-garde flair of advertising and communication in other countries. However, it is not a lack of creativity but restricted budgets and a strong sense of focus on the client’s requirements that appears to have shaped the idea that Luxembourg is too conservative. “We offer clients options, some more creative than others,” says Aurélie Bertrand. “Often a client is afraid to take a risk, or they want to communicate without making too many waves. But for smaller clients we can be just as creative and innovative working with a limited budget.” Eric Dickes also refutes the suggestion that Luxembourg agencies and clients are by nature too conservative. “It depends, of course, on what the agency proposes. If they can convince the client that a campaign that is a bit more creative, even provocative, will work, then most clients accept that.” Businesses with limited budgets will also shy away from spending that money on a campaign that may alienate their customer base. “Extravagant campaigns are all well and good for huge international companies, but in Luxembourg you have to focus on the relationship between the client and their customers. Agencies cannot create something just to please themselves or to win a prize; they have to keep the client’s requirements in mind.”

Jean-Claude Bintz agrees that it is first and foremost the clients who must be happy with the campaign. “The majority of people here don’t really like the totally crazy and funny ideas. There have been agencies that have done this type of advertising for years, but you end up talking more about the agency than the product.” Some local companies, especially those whose products and services are targeted towards a younger mass market, can probably get away with a campaign that deviates from the norm. “Creativity and innovation is what counts. If you can combine these two things well, you will be successful,” he admits, but says he can list a number of other local companies, many well-established, for which he is convinced it would not be worth trying to produce something even slightly off-the-wall. Even though that holds true for certain segmented products globally, Bintz seems disappointed that this should still be the state of affairs. “When I was 20 I had different opinions about advertising and products than I do now, because I remained in the business and I observed the trends. I thought the whole population would do that, but that’s not true.”

Nevertheless, Luxembourg agencies have sometimes been allowed to really let their creative juices flow. Aurélie Bertrand cites the example of the anti-prostitution awareness campaign Mikado created for the Ministry of Equal Opportunities, which showed a woman trapped below cellophane and packaged like supermarket meat complete with barcode. “That was a strong visual image, which was slightly disturbing but nevertheless very clear and immediately got the message across.”

Consistent communication

Transmitting a single message is one thing, but Marc Schonckert believes businesses should be more aware of the need for what he calls “consistent and sustainable communication.” He is astonished that many companies still only use the tools of public communications for big events. “They come out of the woods when they have something to say, then retreat back into the woods,” he says. With the average person bombarded by around 2,000 messages a day via various media, it is only the very memorable advertisements that will stand out. “The ones people remember are those with which they feel an attachment to the emotional content. You remember impressions and emotions that are very positive, or very negative, but nothing in between.” Schonckert also advises companies to think of communications as being about building up trust and long-term relationships. “Which is something you cannot buy,” he says. “You have to look at the media as a partner and not an opponent.”

Comfi is active in public relations, print and press but does very little in the way of pure advertising. “We are not here to grab advertising budgets from local companies,” Schonckert insists. One speciality of the company is producing annual reports for businesses. Schonckert says that while in the past such reports would be viewed as a sort of visit card, adding flourishes to the pure financial statements they were legally obliged to publish, nowadays only the requisite information remains. “Because anyone wanting more information on a company will look for it on the internet,” he explains. “But you should not overestimate that. The customer still wants something tangible in his hands. We tell our customers that their annual report should be more than financial reporting, that they can still get some added value and enhance their image.”

At the other end of the spectrum, new technologies and communication strategies, such as viral marketing, have received mixed acceptance in Luxembourg. Jean-Claude Bintz is not exactly a fan of the latter. “Some viral marketing is well done. But most of the campaigns annoy people and can be negative, even if the campaign itself is well-executed and comes from a brilliant idea,” he says.  On the other hand, Bintz clearly loves the idea of web TV and well-executed mini films that get people talking. “It used to be said that you need to spend a lot of money in the classical media to attract people to new media. I don’t think that is true any longer. The world is moving much quicker.” Aurélie Bertrand is also a fan of Internet advertising, and is particularly enthusiastic about French fashion house Dim’s Redécouvrez vos jambes website, with its cult video fashion lessons by Daphne Bürki, which she says is an exciting and fresh way of exploiting viral marketing.  Mikado itself has entered that world in a limited way, posting its comic “combat des chefs” spot for Pizza Hut on the You Make TV site and getting local youngsters to film their own versions and upload them to the site.

Indeed, internet marketing has taken on a growing significance in Luxembourg, and Bertrand reveals that its makes up close to 14% of total advertising budget. “It has been well accepted and is moving along nicely. Viral marketing, on the other hand, is practically non-existent, chiefly because Luxembourg lacks the critical mass of population to make it effective.” But Eric Dickes thinks that Luxembourg has difficulty truly exploiting viral marketing and the Internet. The limited size of the market and traffic volume is too small. In other countries bloggers with influential opinion can spread a message across the Internet very quickly. “It is more difficult in Luxembourg because of the multi-lingual make-up of society and because many foreign residents will visit sites based in their native country.” Furthermore, agencies themselves require large teams who know the market and the Internet really well. “They have to permanently react to changes in the market.”