Industrial-Strength Marketing: Getting Serious About Competing

May 23, 2008
Companies that fail to get marketing right will not only lose market share but will find it difficult to attract marketing talent.

Bringing the full value of marketing to bear in companies traditionally driven by manufacturing can pay big dividends in market share -- and in share of marketing talent. That's especially true for companies facing crowded markets where competitors fight fiercely for every inch of ground.

For example, an integrated marketing program, conducted by the company of one of the co-authors, doubled market share, growing sales by over 20% in six months for a piece of construction equipment in a market that was down over 20%.

Industrial companies that fail to get marketing right will not only lose market share and revenue to savvier competitors, but they will find it increasingly difficult to attract the marketing talent required to turn it around.

It's All in Your Mindset

Tapping the full potential of marketing in industrial companies is easier said than done. Certainly, more and more industrial companies in recent years have created the role of Chief Marketing Officer (CMO). They have vowed to elevate marketing to a strategic role. They have brought in marketing talent from non-industrial companies renowned for marketing prowess. But such good intentions aren't enough. Even in the best of circumstances, industrial CMOs and their teams face formidable cultural and organizational obstacles to unleashing the power of marketing.

The culture in many industrial companies might best be described as a "Field of Dreams" mindset: build it and they will come. It's a classic "push" model. To increase market share you simply build a factory and then assume customers will purchase the product because it exists. The "move-the-metal" ethos that dominated Detroit for so long provides a vivid example of this approach.

Further, manufacturing companies are usually engineering-driven cultures. When it comes to products, engineering-driven cultures tend to value features and innovation -- the bells and whistles and advanced technology that brilliant engineers create -- over the benefits that buyers seek. Buyers of cordless phones don't care about the number of gigahertz the phone features, but how far away from the base the phone will work clearly. They don't care about the space-age alloy casing of a power tool; they want something that drills holes cleanly or sands surfaces efficiently. A marketing mindset seeks to find out first what customers want or to identify an unmet need of customers and then provide the features to deliver on those needs. In other words, it's the time-honored marketing mantra: benefits before features.

Even in companies where a CMO has been installed, the full power of marketing can be inhibited by a kind of organizational anemia. Despite the visibility of the CMO, the marketing may be regarded as a cost center, staffs remain small, and insufficient resources make it impossible for marketing to make a measurable difference to company performance. Real commitment to marketing is lacking, and after a few quarters or inconclusive results it's all too easy for the skeptics to say "I told you so" and lapse comfortably into the familiar mindset.

Overcoming the Obstacles

Companies that have successfully overcome cultural and organizational obstacles to marketing do at least three things:

  • Emphasize CEO support: Unless the CEO fully supports the elevation of marketing, other members of the top executive team are unlikely to give their wholehearted backing. Further, the CEO must also walk the talk by making sure that resources commensurate with marketing's new role are made available. Although there has been widespread intellectual acceptance of the idea of the role of Chief Marketing Officer and a more strategic role for marketing, just having the CMO be a proponent for marketing is simply not enough to make a real difference.
  • Create an adaptive culture: Moving from a culture dominated by an engineering mindset to a culture that is more marketing-friendly requires an environment in which people are encouraged to learn and to adapt to a customer-first approach. People throughout business units and functions have to learn how to make it part of their daily behavior. Consider, for example, product development. Industrial products are more difficult to change than consumer products. In general, they require longer lead-times, more expensive tooling, and enormous capital investments. A marketing mindset that is able to understand and predict customer needs over a longer time-frame could help the company more accurately and cost-effectively accommodate the lead-times, engineering hours, and the size of the required investment as well as position the company to win greater market share and increase profits.
  • Win the war for marketing talent: Top marketing talent is in short supply. Companies across industries, recognizing its value, are competing relentlessly to attract it. To succeed in this competition, industrial companies will have to convince top marketers that their companies do in fact regard marketing as strategic and that they can make the requisite cultural changes -- including the building of an industrial-strength marketing infrastructure.

Making Marketing Work: "-er Power"

Marketing departments must also change from a tactical focus to a strategic focus that is thoroughly integrated with the objectives of the business and puts customer benefits at the center. For the marketing effort cited above -- focused on a backhoe in a down market -- the Terex marketing team was deployed to create and execute a fully integrated marketing program that touched everyone concerned: employees (including and beyond sales) dealer management, dealers' parts and service departments, end customers and after-market sales and service.

To succeed at strategic marketing efforts, you should focus on at least three key factors:

  • Voice of the Customer: Undertake significant marketing research in order to take into account not only what customers say they want but also their unmet needs, including those they may not even be able to articulate. Remember, also, that B2B customers are humans, too -- making decisions on both a rational and an emotional basis. Collaborative relationships and trust may be more important to them than lower prices or features and benefits.
  • Differentiation: This includes your brand as well as differentiation from competing products. Because buying decisions are often based on brand, it is critical to understand the value of your brand from the customer's point of view, which again requires customer research. In the case of products, it's essential to be sure that you're competing on the basis of a difference that really is different.
  • Distribution Strategy: You must be able to deliver the entire value proposition to the marketplace in a way that customers want. Different lines of business and different geographies may require differing distribution strategies, but all of them will be driven by customer needs.

What these factors add up to is what might be called the "Er Power" of successful marketing -- uniquely providing customers with real, customer-demanded benefits that are better, faster, cheaper, smarter, or any of dozens of other comparatives identified through customers themselves. Industrial companies that take these concrete steps can turn good intentions to great execution, win the hearts and minds of customers, and attract the marketing talent that will be needed for the long term.

Katia Facchetti is the Senior Vice President and Chief Marketing Officer of Terex Corporation, a global manufacturer of construction and mining equipment.

Sanjay Gupta is a partner and leads the NA Industrial Practice of Egon Zehnder International, a global executive search firm.

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