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Marketing Matters for Suppliers

In a world of reverse auctions, shrinking bid lists, and sharp competition, it might seem that there is no place for the softer influence that is conferred by marketing on the purchasing process.

In a world of reverse auctions, shrinking bid lists, and sharp competition, it might seem that there is no place for the softer influence that is conferred by marketing on the purchasing process. On the contrary, it is more important than ever for automotive suppliers to present a clear positioning and get the message out.

Performance is Number One

Component suppliers are judged more rigorously today than they were 20 or 30 years ago. For a company seeking to build a sustainable business, the primary concerns are, and should be, cost, quality, and delivery. That is what the buyers are looking at—the unglamorous elements of performance that make a successful vendor. Excelling on these basics means that a company has achieved what Harvard Business School professor Michael E. Porter calls “operational effectiveness,” performing similar activities better than rivals perform them. It is a challenge to do this over a long time period, particularly since companies pursuing continuous improvement tend to increasingly resemble each other in a phenomenon Porter calls “competitive convergence.”

When competition is so intense that the differences between companies get down to hundredths of a cent or 2 PPM, suppliers need to look at every possible avenue that will enhance their efforts to win new business.

Marketing Makes a Point

We are using the term “marketing” in this context to mean being systematic and strategic about the public face that your company presents. The subtle influences that an effective marketing campaign accomplishes include:

•A better starting point with new potential customers: Marketing that demonstrates a company’s awareness of its strengths and commitment to the auto industry projects an aura of success. If a supplier’s promotional material has successfully registered in the consciousness of sales targets, that is a base to build on.

•The gift of time with new prospects: A message that strikes a chord can lead someone to give a company’s representative the time of day, which they are less likely to do if they are completely unfamiliar with the firm.

•An opportunity to shape the impression: The trite expression “first impressions are lasting ones” is true. Getting across the way you want people to view your company can be accomplished with the right marketing materials.

•Reaching more decision influencers: The number of parties involved in sourcing decisions has mushroomed. Marketing efforts can be a multiplier that extends your company’s recognition factor beyond your direct personal contacts.

•Validation for current customers: People like to feel that they made a good purchase decision, and that can be confirmed when they see positive press or other material that supports what they thought they were getting from working with you.

•Drive the business direction: Marketing can be used to foster increased sales of a particular product or capability, or, conversely, to increase awareness of the breadth of product if your customers just think of you for one component.

How many contracts will this win you? Sometimes it is relatively easy to point to a link. One supplier we know whose leading-edge plant safety program was featured in a magazine article received a call from Toyota manufacturing personnel who wanted to come tour the facility. The supplier asked their guests for help with an introduction to Purchasing, and after a lengthy screening period, it won an order from the automaker. The promotion of its image as a progressive manufacturer had an influence on its selection as a new Toyota supplier.

In most instances, there will not be an obvious, direct connection from company promotion to a new order. More typically, the marketing gives a slight edge that can sway the balance or influence the outcome. For example, we did some research for a supplier who was assessing whether to invest in introduction of a new product. It turned out that another company in the same stage of development had done a better job of creating a buzz around their version. The market already linked their name closely with the product, creating one more hurdle for our client to overcome.

A Range of Price Tags

Executing marketing initiatives to support your business does not necessarily demand huge dollars. There are a number of tools that suppliers can use that can be tailored to a range of budgets, at least to some degree.

The first requirement is to develop a clear message for what you are trying to accomplish and make sure that this is conveyed consistently and repeatedly through whatever marketing methods you select.

A corporate capabilities presentation is a relatively inexpensive means of telling the basic story about who you are, what you do and how you want customers or prospects to view you. Company sales and product literature and a corresponding web site are other building blocks of the marketing mission. There are advertising in magazines and participation in trade shows. Press releases and opportunities to appear in the editorial content of trade journals convey more-targeted communication in an economical way.

In this environment, making difficult resource allocation decisions is necessary. Opinions as to what is “nice to have” vs. what is a “must-have” may vary, but when taking a sharp pencil to the expense budget, suppliers should beware if they feel the temptation to view the marketing budget as expendable.

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