While the United States still leads world in innovation, American manufacturers are faced with doing more with less to compete in the global economy. They must achieve higher productivity with fewer people and lower profits. What can manufacturers do to survive, succeed and thrive in the intense global economy?
There are hundreds of books and articles with recommendations on how manufacturers can succeed and grow in the global economy. Innovative strategies are key to success. Let’s focus on the following three strategies: purpose, process, and promotion.
Purpose – a clear vision of the reason for the existence of your company, an understanding of the need you are looking to fulfill and the solution, the Distinct Competitive Advantage (DCA) of company’s products or services, the target audience you are serving, and the internal business model and guiding principles of the company.
Process – adoption of Lean Manufacturing and Six Sigma principles that seek to eliminate waste through all aspects of the organization and process and focus on the production and delivery of products directly associated with customer orders.
Promotion – use of most cost-effective and productive marketing and sales methods and channels to market
According to Michael Treacy’s book, “The Discipline of Market Leaders,” best in class companies must choose one of the three following types in order to be able to fully optimize key company support systems:
- Process Excellence Company – companies like McDonalds make their processes very efficient and consistent to survive or thrive.
- Innovative Leader Company (product leadership) – companies like Apple create innovative products like the iPhone and iPOD at a much faster rate than their competition in order to survive or thrive
- Customer Intimacy Company – companies that focus on being flexible to cultivate long time relationships with customers
How well a company performs, or even survives, depends upon how that company focuses on meeting the markets to which it is trying to sell. As a manufacturers’ sales representative for over 25 years, I know how important marketing is to the growth and success of a company. Businesses cannot succeed if they don’t meet the needs of the market. Manufacturers often fail because they embrace a product-driven strategy instead of a market-driven strategy. There’s an old story that if you build a better mousetrap, the world will beat a path to your door. This isn’t true! You first have to let the world know you have built a better mousetrap through marketing, and you have to make the product easily available to them through the right sales channels.
Most small to medium-sized manufacturers don’t put enough emphasis on marketing because they don’t really understand what marketing is and don’t have any marketing experience. Most small to medium-sized companies can’t afford to have a marketing or sales manager. The owner of the company tries to do sales at the same time he/she is managing the day-to-day activities of the company.
So what is marketing? It is everything a business does to create customers for their product/services. Everyone in the company is part of marketing, and marketing begins in the mind of customer. A business should never stop marketing. What’s in it For Me (WIFM) is a universal law of marketing. There are no marketing rules that apply to every type of company, and there are no quick fixes or “magic pill” that will work for every company. All marketing is a gamble – you can’t accurately predict the results. There are three basic steps to effective marketing
- Know your market
- Know each possible way to reach market with persuasive message
- Use methods that provide maximum results with minimum effort
Every company needs to address these three areas in some way, but any given company will need to focus on one or more of these methods in order to survive or thrive. As Brian Tracy’s said in his book “The Discipline of Market Leaders” “No company can succeed today by trying to be all things to all people.”
You and your sales team need to be able to describe what it is about your product or service that is unique or different. This is called your Differential or Unique Competitive Advantage (DCA). In other words, the reasons why customers would want to buy or use your products or service.
You need to be able to describe your “business identity” in 25 words or less (called an “Elevator speech”). For example, my business is ElectroFab Sales, a manufacturers’ sales rep agency, and my business identity elevator speech is: “We help companies select the right manufacturing processes to make parts for their products from the companies we represent.” The key is to find a market in which your product and/or service can be a leader.
An effective DCA always develops out of an under filled or unfulfilled market need. Examples of DCA thrusts are:
- Cutting edge technology
- Fills wide range of needs
- Specialized know-how
- Wide selection
- Exclusive selection
- Speed (of service or product delivery)
- On-going customer education
- Service follow-up
If you are having trouble determining the DCA for your business, ask your customers questions about what they like best about you company’s products and/or services. Ask them what they look for in a vendor/supplier and how they decide which company to choose. Compare your products or services with those of your major competitors. It would be helpful to have a consultant or someone outside of your company do a comparative matrix of your products or services.
If you still can’t determine your company’s DCA, you would be wise to hire a marketing consultant to help you identify what is unique about your company and its products and/or services. You may even need help restructuring your company or redesigning your products to create a competitive advantage. If you do not have a competitive advantage your sales people can easily describe, you are dead.
Once you have an accurate understanding of your target markets and have determined your DCA, then you can choose the best marketing methods to use. The following are some of the best low-cost marketing methods:
- Direct Mail Marketing – flyers, letters, brochures, catalogs, CDs/DVDs
- Internet Marketing (website, e brochures, e newsletters, videos, webinars)
- Sales Representatives
- Strategic Partnerships – non-competing companies promote each other for percent of the action
- Social networking (Linkedin, Facebook, Twitter)
- Trade Shows
The direct mail marketing methods of flyers, letters, brochures, and catalogs don’t work as well as they once did, and people don’t often take the time to view the newer CDs and DVDs. A two to four minute video on a website has become more effective.
An Internet presence via a website has become crucial way to establish credibility as a company. I am surprised I still meet entrepreneurs that don’t have a website and have a gmail mail or yahoo email address instead of one connected to a company website. It’s well worth the money to have a website, even for very small companies or professional consultants. Electronic brochures and newsletters can become effective tools to use if they are concise, easy to read, and contain useful information. Even though attendance at trade shows has dropped in the last few years, there is no substitute for the opportunity to meet face-to-face with a prospective customer and have them see and touch your products or even see a live demonstration of how it works. Telemarketing is most effective when it is used to make “warm” calls to follow up on show leads or keep in regular contact with regular customers and key prospects. If you don’t have any idea how to utilize social networking for your company, there is an abundance of training available now to fit everyone’s schedule.
Today’s manufacturers must utilize innovative strategies to succeed and grow. The days are gone when manufacturers could have equipment and people sitting idle. American companies who provide the level of delivery, or quality, or customer service that got them by in the past will not survive, because customers can get that from Chinese vendors for a far lower price. American manufactures are now in a struggle for their very survival. The strategies covered in this article are based on an excerpt of the chapter in my book, Can American Manufacturing be Saved? Why we should and how we can, on what manufacturers can do to not only “save themselves,” but also prosper and grow in the competitive global economy.
Michele Nash-Hoff is President of ElectroFab Sales and can be reached at firstname.lastname@example.org