Strategic Marketing Helps Manufacturers Steer Sales

by Gary Giallonardo

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Faced with supplier consolidation, rapidly shifting technologies, and increased competition from overseas companies, U.S. manufacturers are searching for ways to sustain their current market share while securing new business. This is an even greater challenge for small manufacturers with limited resources, which, according to Dun & Bradstreet, account for more than 90 percent of Michigan's industrial base. Strategic marketing and a new tool for troubled companies - Turnaround Marketing^TM - are providing a secure route to strong sales, profitability and market penetration.

Turnaround Marketing is a highly targeted strategic marketing process for reviving a company's sales. Similar to turnaround management, it involves a company in crisis, but unlike the former, Turnaround Marketing does not involve a management overhaul. Instead it helps a company's current management take control of their future by providing a compass for change. Turnaround Marketing involves a research-based approach to market diversification that quickly and effectively focuses sales efforts for maximum returns at the lowest cost.

The Road to Diversification

Consider the dire situation of a contract manufacturer specializing in precision-machined engine parts for the aviation/aerospace industry. About to lose 50 percent of its largest customer's business to a competitor in China, the manufacturer's problem was twofold: one customer accounted for 85 percent of the company's sales, and nearly 100 percent of the company's sales were in one industry. The remedy, in turn, required a twofold approach: One, diversification to new customers in the same market, and two, diversification into new markets.

Supply/Specifier Chain Mapping

The first approach required thoroughly understanding both the supply chain and specifier change. This is the cornerstone of any successful, strategic marketing plan. It involves understanding the needs and buying influences of, not only your customers, but also the needs and influences of your customer's customer, and those of your customer's customer's customer - all the way up the food chain. Working down the food chain is just as important. You need to understand your supplier's capabilities and those of their suppliers in order to have a complete map of potential opportunities (See Figure 1.)

After extensive research and detailed analysis, I often find that a company's perception of its market is dramatically different from what the research reveals. In the case of the aerospace manufacturer, the company considered its lifeline to be aircraft engine manufacturers. Yet, the strategic marketing process uncovered two new groups of previously untapped prospects in a completely different channel.

This revelation marked a turning point in the manufacturer's business. In an economy plagued by recession and an industry ravaged by consolidation, the once crisis-stricken manufacturer secured five new customers in the first year of the turnaround process. The first new customer came aboard only two months after the Turnaround Marketing strategies were developed. While understanding all of the components in the supplier/specifier chain is one of the more important steps in the strategic marketing process, it's not the most critical and it's only one step among several.

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