Each month we’ll be featuring a blog post from our friends at MAGNET (Manufacturing Advocacy & Growth Network). MAGNET’s mission is to support, educate and champion manufacturing in Ohio with the goal of transforming the region’s economy into a powerful, global player. You can visit MAGNET online at manufacturingsuccess.org.
Market Diversification: What Value Do You Bring? Part 1
Ken Walker, Senior Business Consultant, Program Administrator for Market Diversification
By Ken Walker, Senior Business Consultant, MAGNET
You’ve made “The Decision.”
No, I’m not talking about LeBron leaving Cleveland—I’m talking about the decision to move your company’s products and services into a new market.
Maybe it’s an allied market that uses the same type of products you produce. Or maybe you’re selling the exact same product but to a different kind of customer, for example consumer instead of industrial.
You’ve decided that, for the strategic growth of your company, you are willing to make the investment necessary. You’ve researched this new market’s key customers and key competitors. Your organization is primed, ready and willing to conquer this new territory.
However, before you go charging off, make sure the “new land” is receptive to your invading horde. In other words, in this new market, is anyone willing to buy what you are selling?
Consider: Why Might Customers Choose to Change?
When you decide to enter a new market, unless its an emerging technology market, it is very unlikely that you are the only supplier to the market. In most instances, existing suppliers will have been established for years. Even in markets where the barriers of entry are relatively low, it’s not easy to get customers to change without a compelling reason.
Here are some important reasons why a customer might be willing to change or add to their supplier base:
Not enough suppliers: Some industries have trouble maintaining a vibrant supply chain. The aerospace industry is an example of this, particularly if they are bringing to market a new plane. If you can meet standards or requirements, like AS9100 certification, a me-too product just might be successful.
Dissatisfaction with current supplier: Poor quality. Overpricing. Late deliveries. Poor service. These missteps can sink a supplier with any customer. For example, Motorola created the cell-phone market. But its lack of vision allowed new entrants to invade this exploding market space. The result: Motorola was marginalized in the market it created. Opportunities such as these can be exploited, allowing your company to be successful with a me-too product.
Supplier diversification: Sometimes customers just want to diversify their supply chain. If a customer is not comfortable having just one or two suppliers for a key component, they may be willing to slice up the pie and let you in.
Price: Customers are always looking for lower prices—and high value. If you are willing to compete on price, you may be able to buy market entry in some cases—until someone else is willing to undercut you. And there is always someone else.
Better value: In the end, customers are going to buy your products and services for the value they perceive. In most cases, believe it or not, this value goes beyond price. Yes, you have to be competitive, but if a lower price is all you have to bring, you won’t be at the table long. Someone will undercut you. Or you’ll find out that, in the long run, this market just isn’t worth your effort.
Define Your Company’s Value Proposition
So how do you define your value proposition for a new market or customer?
First, understand your own company’s core competencies. Understand what it is you do better than anyone else in your current industry.
Are you the low-cost manufacturer of widgets? Do you provide just-in-time service? Are you the technology leader? Does your product provide better performance? Lower cost of ownership? Easier to maintain?
Talk to a number of people in your organization to gain consensus on this important point. You’ll find different departments may have different perceptions on the reason for your success in your current marketplace.
Once you really understand your company’s key value proposition attribute, translate it into why customers currently buy from you, why customers keep buying from you and why new customers would want to buy from you.
Here are some examples of major corporations, core competencies and how they translated them into value propositions:
Sherwin-Williams
Core Competency: Manufacturer and Distributor of coatings and related products
Value Proposition: Equipment, supplies and solutions to get the job done.
American Greetings
Core Competency: Creating expressive ideas in words and images
Value Proposition: Enhancing consumers relationships through social expression
3M
Core Competency: Applying technology to real world customer needs
Value Proposition: Harnessing Innovation for your benefit
So what is your company’s core competency? What’s your value proposition?
Once you know and understand these critical attributes, it’s time to effectively communicate them to the new market and go after those new customers.
Each month we’ll be featuring a blog post from our friends at MAGNET (Manufacturing Advocacy & Growth Network). MAGNET’s mission is to support, educate and champion manufacturing in Ohio with the goal of transforming the region’s economy into a powerful, global player. You can visit MAGNET online at manufacturingsuccess.org.
Relative to their competitors, all businesses want to be seen by customers as the go-to provider.
My favorite race car driver, and boyhood hero, the late Mark Donohue was labeled as always having an “Unfair Advantage” by his competitors. However, if you read Donohue’s autobiography, it becomes clear that he was a member of a very innovative Penske team. They were always conceiving ways to go faster, testing them on the track and at times stretching the boundaries of the rule book. But there was also an underlying theme of hard work. They outworked most everyone else. Sweat equity, some might call it.
In industry, success through innovation is the same. Coming up with innovative ideas is hard work, getting them successfully to market is difficult and always risky.
The more innovative the product, the larger the uncertainty of success—but usually the higher the payoff. Managing this risk while fostering an atmosphere of innovation is a tricky balance to achieve.
Many companies have a formal process to achieve this balance. But sometimes these processes end up creating barriers that squelch innovation by requiring too much to be known at the early stages of development. Really innovative ideas are almost always those that we know the least about at the beginning.
Innovation Tip: Consider adapting a tried and true principle introduced by W. Edwards Deming to help overcome the early innovation jitters, the Plan-Do-Study-Act cycle. Assign a point person or small team to address key concerns and report each week. This lowers anxiety and keeps innovation moving.
Having a trained workforce is a major challenge in several of the industries that we work with. I wanted to share some highlights from a blog post by the NAED president (National Association of Electrical Distributors) answering the question: Why is training important?
Tom Naber, president of NAED, writes about training as:
An opportunity to expand your employee’s knowledge base.
An investment that provides benefits to both your company and your employee.
An ongoing activity, not a one-time event.
Many associations, like NAED, provide resources that make having a well-trained workforce attainable and are usually the best place to start your process of training your staff.
Today we have a guest blog post from Lisa Murton Beets director of CMI Books, from the Content Marketing Institute.
The Content Marketing Institute and MarketingProfs recently published research on B2B and B2C Content Marketing in our 2013 Benchmarks, Budgets and Trends reports. While the findings give us insight into how B2B and B2C marketers are managing content marketing, we were still curious about the state of content marketing in specific key industries, and how content efforts in vertical markets were differing from those of their peers in other industries.
We decided to first look at marketers who work for B2B manufacturing organizations in North America. This group has adopted content marketing at a slightly higher rate (94 percent) than their North American B2B peers across all industries (91 percent).
Let’s take a look at some of the similarities and differences:
Manufacturing marketers have similar goals for content marketing
Marketers in the manufacturing industry have the same top three objectives for content marketing as their peers across all B2B industries: brand awareness, lead generation, and customer acquisition. However, manufacturing marketers place less emphasis on thought leadership (47 percent versus 64 percent) and website traffic (47 percent versus 60 percent) as organizational goals, which indicates a disconnect, as they also cite website traffic as the primary way they measure content effectiveness. This fundamental disconnect between goals and measurement was present with B2B manufacturers when CMI surveyed them two years ago, but it has shown some improvement.
Manufacturing marketers use video and print magazines more often
Manufacturing marketers cite video as their top content marketing tactic (it was ranked seventh by this group two years ago). Their overall use of tactics is fairly similar to that of the overall population of marketers; however, they place far less emphasis on blogs (54 percent versus 77 percent), which makes sense considering that this industry does not put strong emphasis on web traffic and thought leadership as objectives for content marketing, two areas where blogs can have significant impact.
Manufacturing marketers use print magazines at nearly twice the rate of their peers (60 percent versus 31 percent). However, only 11 percent of self-reported “best-in-class” B2B manufacturing marketers rank print magazines as “effective” or “very effective,” indicating that traditional media companies still have a stronghold on B2B manufacturers, who have traditionally used paid advertising in trade magazines to reach their audiences.
Manufacturing marketers prefer Facebook and YouTube
While their B2B content marketing peers use an average of five social media platforms, manufacturing industry B2B marketers report an average use of three.
Yet, manufacturing industry marketers use YouTube more frequently than the general population of marketers do. This makes sense, considering they rank video as their top content marketing tactic. Their use of Facebook, LinkedIn, and Twitter has risen over the last two years, yet they are somewhat behind in their adoption of Google+, Pinterest, SlideShare, and other “newer” social media options, so it will be interesting to see if they grow in these areas over the next year.
Manufacturing marketers outsource content more often
Compared with the overall content marketing population, manufacturing marketers outsource content more often: 57 percent versus 43 percent. This could be because they rely more heavily on printed material, which often requires outside assistance. Given their increased usage of video, compared to other marketers, it is likely that they are outsourcing video creation as well.
Manufacturing marketers spend less
When compared with their peers across all B2B industries, marketers in manufacturing dedicate significantly less of their total marketing budgets to content marketing (22 percent versus 33 percent). However, 53 percent of manufacturing marketers say they are going to increase their content marketing spend over the next 12 months (31 percent say they will keep spending at the same level).
Manufacturing marketers struggle with effectiveness
Like their peers, marketers for the manufacturing industry report that producing enough content is their biggest challenge. One challenge they cite more often than their B2B peers is the inability to measure content effectiveness (55 percent versus 33 percent). And they’re not only challenged with measuring content effectiveness, many are not even sure if their overall efforts are effective. We know this because only 21 percent of B2B manufacturers rank their organization as “effective” or “very effective.” On the other hand, 36 percent of B2B marketers across all industries rank themselves as “effective” or “very effective.”
On the flip side, 32 percent of manufacturing marketers rank their organizations as “not very” or “not at all” effective, compared with 17 percent of their B2B peers. This shows a need for content marketing education and improvement in the manufacturing vertical.
A brief look at the manufacturing demographic
While it is noteworthy to understand how marketers in the manufacturing industry are managing content marketing tools and tactics, it’s also important to understand how demographics may play a role in these research findings. Here are a few notes about the demographics of this research:
Out of a total 1,416 B2B North America respondents, 88 respondents identified themselves as working in the B2B manufacturing industry.
About 40 percent of the B2B manufacturing respondents work for companies with 1,000 or more employees (16 percent of that figure is for companies employing more than 10,000, so these results could also reflect what larger companies are doing).
Do you work in manufacturing? Are these trends consistent with what you are seeing?
Each month we’ll be featuring a blog post from our friends at MAGNET (Manufacturing Advocacy & Growth Network). MAGNET’s mission is to support, educate and champion manufacturing in Ohio with the goal of transforming the region’s economy into a powerful, global player. You can visit MAGNET online at manufacturingsuccess.org.
Addressing the Skills Gap and Improving the Bottom Line
The skills gap in the manufacturing workforce continues to be a challenge. Employers constantly bemoan their inability to get qualified workers, educators convene employers to better understand what they are looking for and develop new programs, and job seekers experience frustration when they are not selected due to lack of skills. It is time to start looking more closely at potential solutions, the role that employers can play, and the value to employers.
Recently reports of successful strategies are starting to emerge. The lessons learned from these successes should be explored for replication and duplication. How do you define and measure success in a way that resonates with all the stakeholders? Typically, successful placement in vacant positions is one clear measure. Another is assessing the Economic Impact of the placement on the company and measures that affect its bottom line.
One example of a project that did both, is a training program managed by MAGNET in 2011. The project was designed to determine if the attainment of skill certifications matched to employer requirements would result in a pool of candidates to fill current or projected vacancies in entry–level positions. Four Ohio sites were selected. The local team was headed by an educational provider and partnered with the local One-Stop that assisted with recruitment of participants. Selected employers were involved from the beginning. They committed to providing input in the content and delivery of the program, as well as hiring completers to fill vacancies. Employer involvement included: plant tours, classroom presentations, delivering some of the training, and conducting mock interviews. Program outcomes included attainment of a National Career Readiness Certificate (NCRC) and the Manufacturing Skill Standards Council (MSSC) Certified Production Technician credential.
Participating employers expressed their satisfaction with the project and the majority of completers were placed followed training. Follow up was conducted with the employers to gather not only their perception of the project, but also the Economic Impact on key factors affecting their bottom line. Preliminary data provided by six of the companies, indicated over $2M in retained sales, $ 250,000 in increased sales, and over $ 6M in investment in plant or equipment as a result of hiring skilled workers. Additionally, ten jobs were created. Factors included: reduced OJT (On-the-Job-Training) time, improved retention, and increased production due to more quickly promoting incumbent workers as their positions were filled with the new hires.
Although a small project and a small employer feedback sample, this model holds promise as a way to help companies quantify the value of this approach. If employers are able to clearly identify the required skills, and if the training providers can match those with certifications that validate the skills, job seekers can more successfully be prepared, placed and retained. Employers have to be part of the solution and training providers have to be willing to adapt their delivery content and strategies to meet both employer and job seeker needs.
Measuring the economic impact on the company provides a quantifiable way for employers to determine the ROI of their time and effort at the beginning of the job preparation process.
I can’t believe that 2013 is almost half way done. There are some mixed messages out there on how things are going this year. I’d like to take the pulse of the industry to see how you’re doing. Can you take a quick poll? Results are shown.
