New way to Market for Manufacturing
Written By: Bruce McDuffee-Founder and Executive Director of Manufacturing Marketing Institute (MMI)
Chapter 4 Overview
Globalization and the Internet
“Some would perceive globalization as forcing U.S. manufactures to cut labor costs, cut profit margins, raise prices, or go out of business. Then there is the Internet, which seems to further erode profit margins by commoditizing nearly every product on the face of the Earth. “
It may seem like U.S. manufactures have no choice but to either join in and offshore production or buckle down and slowly go out of business. Looking at it another way, the Internet and globalization have created a great opportunity for manufactures that embrace the new way to go to market. Although very large corporations with a global footprint may seem to have an instant advantage because of their global infrastructure, the real potential is for small and medium-sized companies that can now compete for the very same customers served by the big guys. Yes, that is correct, if your firm is a small or medium sized manufacturing company, you can now compete around the globe and gain market share the new way.
Regardless of the purchase, we now expect to have easy access and transparent insight into the purchasing process, even if we are purchasing a multi-million dollar piece of machinery for our factory. We expect to be able to log on to a convenient and intuitive website to monitor the delivery date of the product once we plunk down the money. We do not want to have to call, press a series of numbers, and leave a voice mail then an email to learn the status of our order. We expect to have instant easy access to the shipping route and timeline. We expect to be able to have access to payment options, reordering information, current stock, and above all, instant price comparison. This is the Amazon Effect and, like it or not, this effect is driving our expectations, even in the B2B manufacturing realm. The winners in your particular market space will be easy to do business with as benchmarked against the Amazon Effect.
The opportunity lies in the fact that your competition is playing the globalization game by competing on the features of the product, the company size, and/or the charisma of the CEO. This is a losing proposition because, as I stated in Chapter 2, nobody cares about your product, your company, or your CEO. They care about WIIFM (What’s In It For ME). You can exploit WIIFM with the Internet, the great equalizer. No matter what you are manufacturing, ultimately a person is making the decision about what to purchase. It has been proven over and over that people make purchasing decisions based on emotion first, and they support the emotion decision with logic. The new way increases engagement well before a person starts to engage with your sales team. The new way exploits the Internet around the globe by creating, virtual relationships before the other guys get the call.
What about Price?
Yes, pricing is important, but in all market research conducted over the past forty years, when buyers are asked to rank the top ten items that influence their purchase, price is never, I repeat never, the number one influence. If price is not the number one influence, then you may wonder what is at the top of the list. Usually it’s people’s trust or belief that their purchase will be safe. Once again, people purchase based on emotion and justify the decision with logic.
*** Remember, you do not start a conversation with a prospective customer by talking about your product; you start by talking about their pain and freely sharing your expertise to relieve that pain. While your competitors are beginning their engagement by talking about product features and ending up taking lowest price, you are winning the business by creating top-of-mind (TOMA).