Why have marketing in manufacturing?
Industrial organizations rely heavily on a direct, distribution or dealer sales force for growth. Many of these companies have built themselves from the ground-up through street smarts, sweat, and hustle. With many sales built upon long-term relationships, why does a manufacturer need marketing? Aside from creating the brochures, maintaining the website and coordinating tradeshows, how can marketing help grow the business? It's a frequent misconception that many manufacturing leaders have a hard time getting their minds around.
The function of marketing has degraded in recent years, with the advent of "do-it-yourself" tools, allowing the tactical nuts-and-bolts of marketing implementation to be done by more junior staff. In addition, many mid-market manufacturers really never had the need to utilize marketing 50, 60 or 70 years ago - having built the business on a unique invention (at the time), penetrating an underserved market, or establishing a contract with a few large OEMs.
The problem today is that things have changed. Most notably:
- There is a massive increase in competition, more specifically, global suppliers
- Large OEMs are now examining not only the quality of a supplier's product but how they can save money and improve transactional efficiencies through technology
- These OEMs are also working to expand their supplier base, instead of having a one-to-one relationship with a single supplier
- OEMs are also being impacted by economic swings that aren't following the patterns of the past - the "downs" are lasting much longer
- OEMs are putting more pressure on their suppliers to help them innovate, differentiate and reduce product costs
While this seems like simply a production optimization and product development challenge, it goes far beyond that. In today's market, it's not just about having the "best quality" product or having that "98 percent on-time delivery" rate or the generic "product performance guarantee". Manufacturers need to go back to their entrepreneurial roots and identify new, innovative ways to serve their markets like their forefathers did.
While many grandfathers and great-grandfathers might have been engineers or designers, first and foremost they were inventors. They were close to the customer. They were hands-on with identifying and creating a new solution to a problem. They looked outside of simply creating a product but serving the customer in a way that put them ahead of the competition. They examined the competition and fought to stay ahead.
Many organizations today have lost that fire - not because their owners don't want to succeed, but because the way to compete and differentiate has changed. It has transformed with the expansion of the service economy, where customer experience, predictive modeling, proactive communications, intelligence sharing, and automated ordering are the proving ground for innovation - nothing that great-grandpa ever imagined, and in turn, couldn't impart to his children and grandchildren.
These changes all live within marketing. Marketing isn't a design and writing function - those are skill sets. Marketing is the catalyst for invention, through customer insight and engagement. Marketing can (and should):
- Use business intelligence and customer behavior to identify and drive new sales opportunities
- Expand the identity and presence of the company in the market, in an impactful, differentiated way
- Identify and create new opportunities to sell products, whether new markets or new applications of the company's skillsets
- Shape the customer experience through all touch points in the organization, and leverage it as a competitive differentiator
- Identify unserved or underserved gaps in the market where the company can design and create new solutions to customer challenges
While many manufacturers continue to focus on simply expanding and pushing sales, they will quickly learn they aren't competing effectively, and regrettably, many will close or be absorbed by a larger company. If you want to stay true to your great grandfather's original vision, go back to designing and developing a true marketing strategy. Otherwise, you may find your company's legacy may not last another generation.
By Andrea Olson, MSC, Speaker and Author of No Disruptions: The New Future for Mid-Market Manufacturing