Can US Precision Machine Manufacturing Survive? – Part 7

business developmentMarketing Value
Value as it turns out is a figure of merit that is owned by the customer. It has different metrics and means different things to different people. This means that a PMPI company desirous of  adding or creating value for a customer must really understand the customer.

Understanding the customer doesn’t mean prospecting harder for sales opportunities, or having more RFQs come in over the fax. Understanding your customer means knowing their problems, their objectives, and how your product or service helps reach them.

All viable customers have four essential characteristics:
1.   They understand and accept their own need
2.  They have decision making, and purchasing power capabilities
3.  They know about and understand your product or services, and its benefits
4.  They have easy access to obtaining your product or services

Based on these characteristics, the PMPI Company must answer the following questions:
1.  What needs do my product or service satisfy, and for what type of customer?
2.  Which customers need and can afford my products or services?
3.  Who within an organization can say “yes” to the product or service I am offering?
4.  How accessible is my product or service to my potential customers?
Answers to these questions form the foundation of what a PMPI Company needs to form a viable marketing strategy.

Having gained answers to the above, a PMPI company should segment its market. Segmentation means that you consider pieces of the market that are made up of groups of companies who all behave the same way in reaction to your “Marketing Mix.” The term Marketing Mix is best described as Product, Price, Promotion, and Place (channels of distribution), the four ‘Ps’. The marketing mix is a way to put headlines on your strategies; it overlaps directly with your Business Model.

A good first segmentation would be “customers who are eminently profitable”, their numbers and the total estimated sales potential. Profitable customers are more likely to buy from you. A second level of segmentation might be to segment customers by industry, e.g. aerospace, automotive, semiconductors, etc. Thirdly you need to map your strengths and capabilities against the segments to find best matches. Segmentation should be started by examining and segmenting your historical customer list.

Hopefully you have been using CRM best practices, and have lots of data about your customers therein. If not, this would be a good time to start using tools like, Microsoft Dynamics CRM, etc. These software systems provide great ways to log, catalog and to search for information about your customers. The more extensive their use in your organization, the more data you will be able to “Data-Mine” when you need specific information.

Some market variables are easier to identify objectively than others (i.e., demographics, population statistics, etc.). While others are subjective (i.e. benefit needs, purchasing attitudes, etc.) both objective (quantitative) and subjective (qualitative) information about customers in a potential segment should be included in your marketing strategy.

Direct sales is a component of your promotional mix (which is part of marketing mix), just implementing a direct sales approach to finding customers is pretty much a random walk. The random walk will be limited by the territory any one salesperson can cover. Direct sales is known as “Push Marketing” which can severely limit the ‘Marketing Reach’ of your program.

A successful marketing program will consist of the following four factors:
1. Segmentation
2. Specialization
3. Differentiation
4. Focus

We have just talked about segmentation; the next factor is Specialization, which is the act of marshaling your strengths and capabilities to match the special needs of customers within your Segmentation scheme. The third factor is Differentiation; “why your offering is uniquely better than that of the competition.” Which tells you that you had best understand your competitors (and their strategies) as well as your customers.

Adding more value in an area of specialization, could be one way to positively differentiate your company from the competition. Uniquely differentiating your company from the competition can also (and maybe better) be achieved by innovation; doing something uniquely different and better to solve the customers problems.

Factor number four is implemented by taking all of the capabilities that you have defined, that are matched to the first three factors, and concentrating them (with as many resources as possible) in satisfying the needs of customers in the target market segment with most potential, or even a few significant customers within that segment that would provide the most potential.

Establishing meaningful focus could be the most important thing a PMPI company can do for itself, it would get it completely away from having to job-shop to stay alive.