Marketing as a key differentiator for manufacturers

Posted on 13 Jun 2011 by The Manufacturer

It was Peter Drucker who once famously stated, that great business is made up of only marketing and innovation. Yet many SME’s think of marketing as superfluous. Viewed as the ‘make-up’ department, marketing is the first cost to disappear when times are tough. Yet marketing holds the key to success says Justin Levine of marketing firm Futurestech.

In many other business segments, marketing is a discipline that is embedded in the core of the business, yet in manufacturing, far less so.

Ask yourself, how many manufacturers do you know who have a Chief Marketing Officer on the Board? Marketing is a much-maligned concept within manufacturing, particularly within the SME. Yet there is a hidden part to marketing that is often completely overlooked. And that is upstream marketing.

Upstream marketing?
This is the part of marketing that explores the big questions. Which markets do we wish to participate in? How much of the market would be available to us? Which products does the market need or want? What features will people buy? What price would they pay? What experience do we wish our customers to have? How do we create real competitive advantage? Upstream marketing is the part of marketing that facilitates the creation of new products and services.

It is both creative and analytical. It is a process that prepares a strategic foundation for a business as well as providing the underlying data and analysis to support informed decision-making. It should be a continuous process, not a one-off event. Upstream marketing is one definable function that is found in some of the world’s most respected manufacturers, the function and processes exist to align the whole business. It is an inside-out process, as opposed to something that is simply ‘bolted-on’.

Ultimately, upstream marketing is probably the one definable difference between achieving sustainable, profitable growth, and mediocrity.

In an economy that is stumbling on the path to grow, it could be argued that creating competitive advantage should be the number one Boardroom discussion.

Embedding marketing in the DNA of the organisation is the key to potentially solving this dilemma.

And of course, there is the question of resource.

Times are tough. Budgets are squeezed. How much should be spent on marketing? As a comparison, the retail industry typically spends between 2%-5% of revenue on marketing, car manufacturers between 2%-3.5%, packaged goods 4%-10% and professional service firms leading the way spending upwards of 15%. Faced with a challenging economy, many manufacturing SMEs struggle to register 1%, forsaking long-term growth for short-term profitability. This relative lack of investment stifles both the ability to create competitive advantage as well as leaving the door open for more enlightened competitors to grow.

Adoption of the Internet and the growth of social media are the trends that are driving these fundamental shifts in the way manufacturers connect with their audience. Smart industrial marketers have moved from the classic 4 P’s (product, price, place and promotion) to the more appropriate 4 C’s (content, connection, communication and conversion – see graphic).

Is this a compelling narrative to invest in marketing? SMEs will undoubtedly want to know, what is the return on investment? The answer of course, depends. It depends on the commitment to integrating marketing and of course the skill to which it is utilised and deployed.

But the most insightful question is this: what will be your competitive position in 5 years time if you simply treat marketing as the ‘make-up’ department? History is littered with manufacturers who didn’t keep one step ahead of the market.

Don’t be one of them.