Industrial Marketing Research & Competitive Technical Intelligence

Just came across an interesting article published by Manufacturing Business Technology. See some excerpts below:

by Mike Collins, Author, Saving American Manufacturing

Of all the strategies that American manufacturers could use today to grow their businesses, industrial marketing is perhaps the most important, yet least understood strategy.

One of the reasons industrial marketing is not very well understood is that it is not taught in most universities. Of the 2,500 business schools in the U.S., I found 26 (on the internet) who offer industrial marketing or industrial selling courses. I am really not sure why more schools don’t teach these courses, but some professors have told me that their students are only interested in consumer products. Other professors believe that the principles of consumer marketing can be applied to any kind of products and industrial marketing is not needed. But I think the real reason is that academics know very little about industrial products and services and that marketing them requires very product-specific strategies. The strategies must be customized to the products and general strategies that can be applied to consumers won’t work.

Knowledge Gap

“Most students who graduate from university marketing courses are not ready to go to work in industrial companies,” says Jack McNally, Dealer Sales Manager of a midsize casting company. “The methods for marketing industrial products are substantially different from consumer marketing. Our industry has to invest considerable time in on-the-job training to teach these people industrial sales and marketing. It would be helpful if college professors went out into the manufacturing sectors to see for themselves how industrial products are bought and sold.”

Mr. McNally’s experience is much like my own experience training salespeople to sell industrial equipment. For years we had to take technical people who were very familiar with the equipment (like engineers and technicians) and try to make them salespeople. This only worked part of the time and the on-the-job training was very extensive because these people had never had any education or training in industrial sales or marketing. I would much rather have had non-engineering college graduates who were people-oriented, and had some education in industrial marketing and industrial sales—and train them to understand the technical products.
...

Consumer vs Industrial

This problem has been around for years and costs industrial manufacturers a great deal of time and money relative to training. And even after they have become good salespeople, they still don’t know anything about industrial marketing. We need to develop college courses that teach industrial marketing as well as industrial sales. Let me explain some of the differences between consumer marketing and industrial marketing and why this is a problem that needs a solution:

Product complexity
First and foremost, industrial products are very complicated and require a lot of technical knowledge to sell. Industrial and technical products range from off-the-shelf bearings to custom-engineered machines of incredible complexity. The more custom the product, the more custom the marketing strategy. All salespeople must learn all technical aspects of the product to be able to sell it.

Industrial buyers...

Bids and quotations...

Advertising and promotion
It is relatively straightforward to develop a newspaper ad for impulsive shoe buyers, but it is very difficult to even identify the buying influences of dragline machines or material-handling robots. Inquiries produced by industrial advertising are only the beginning of a long, expensive selling process, sometimes lasting years before the sale occurs.

Market information
There is a lot of database information available on consumer products and an enormous amount of consumer demographic information that can identify the customer profile and market segment. On the other hand, information on industrial market niches is very difficult to acquire and is generally qualitative and requires considerable industrial experience to gather. For instance, if you are a manufacturer of a machine that stacks 50lb sacks of cheese whey, you will have to identify the market niches to succeed. The food industry has 23,000 plants in the U.S., but the buyers who would be interested in your machine are a niche of a niche, of a niche, of a niche. How you find these buyers is totally different then selling cell phones to young adults using television.

Industrial market research
Consumer market research methods generally do not work for industrial products, because the samples are too small and the buyers are not a homogeneous group that can be considered a valid sample. Because of these two problems, statistical techniques for projecting the sample cannot be used as a representative of a larger market. Because of these issues, questions on market share and market size must be found using qualitative techniques requiring field research and personal interviewing. Suffice it to say, this can only be done by an interviewer who has a strong background in technical and industrial products and knows how to get invited into the prospect’s plant. 

Product range
First and foremost, industrial products are very complicated and require a lot of technical knowledge to sell. Industrial and technical products range from off-the-shelf bearings to custom-engineered machines of incredible complexity. The more custom the product, the more custom the marketing strategy. All salespeople must learn all technical aspects of the product to be able to sell it.

Summary

Manufacturers of industrial products, large and small, need help with industrial marketing. Therefore, large companies have to train new employees on the job and small companies hope to hire people with industrial marketing experience. There is definitely a need for college courses, seminars, and training on industrial marketing and industrial selling.

Full article: http://www.mbtmag.com/Content.aspx?id=2778

Link to Mike Collins website: http://www.mpcmgt.com

Social media has been a great tool for market research and competitive intelligence in the past several years and its importance is growing for the industrial marketing world – the proof is in the new study released today by the Manufacturers Alliance / MAPI. Personally, I find this report the most trustworthy compared to the ones I have seen so far from the industrial marketing stand point – it is based on a survey within an industrial community and it is done not by the social media “gurus” but by the people who closely work with manufacturers and whose core business is outside of the Internet.

Below are some excerpts from this publication.

“The Manufacturers Alliance / MAPI has surveyed its members several times about the impact social media is having on how they communicate externally, especially to current and prospective customers. When compared, the results from 2009 and 2011 surveys of the Marketing Council (with 35 and 38 respondents, respectively) show a number of trends emerged. Members are realizing more value in using social media to gather voice of the customer (44 percent saw value in 2011 compared to 28 percent in 2009) and to position their company as a thought leader (63 percent in 2011 compared to 33 percent in 2009). One constant remains between the 2009 and 2011 surveys, however: the greatest value that members derive from social media is building brand awareness. Members generally still do not see line of sight connections between social media and increased sales, although there are exceptions.”

Members Currently Using or Planning to Use Each Social Media Tool in Six Months—2011 versus 2009

“Not surprisingly, another trend has been the increased adoption rates of major social media vehicles, such YouTube, LinkedIn, Facebook, and Twitter for B2B marketing purposes.”

“There is no one-size-fits-all social media tool. Ninety-two percent of respondents said that YouTube is effective for branding and awareness. Generally speaking, members find the most value in using YouTube to share training or product demo videos. According to one member, "We use YouTube to share our expertise with customers and end-users, and to build enthusiasm."

“Members told us that they find Twitter the most effective vehicle for two purposes: connecting with current and potential customers, and addressing service issues. Common uses include keeping customers informed of relevant company and product information, events and promotional offers.”

“Despite early doubts about the value of Facebook (in our fall 2009 survey a full 65 percent of respondents had no plans to use Facebook), nearly two-thirds of respondents' companies currently use the tool (or plan to use it in the next six months). Furthermore, 78 percent find it effective for branding and awareness, and 61 percent find it effective for connecting with current and potential customers. Overall, members use Facebook for reputation management, building enthusiasm, and engaging diverse audiences. Having contests in which fans submit photos of the company's products in action is a popular tactic to build engagement.”

“For many companies, worrying too much about being able to tie social media efforts to increased sales misses the point. When starting out with social media, focus on listening and building an engaged audience. Next, share content with them that will drive them towards your website to learn more. Only then can you use social media to drive sales and resolve service issues.”

“Most respondents allocate headcount to social media on a part-time basis (for many members, no more than 10 percent of an employee's time). Very few B2B companies (even large ones) have headcount dedicated full time to social media. Although most respondents (nearly 80 percent) have some corporate coordination around social media, the legwork is done at the business-unit level. Over half of respondents' companies using social media do not currently have a dedicated social media policy in place, although many are in the process of creating such a policy.”

Lessons Learned

Members offered a variety of advice on convincing a skeptical senior management team about the value of social media. Key points include:

• Many customers, competitors, and future employees expect companies to use social media.
• It can help companies shape and respond to (but not control) opinion.
• It is changing the buying process in some industries.
• It can play a valuable role in crisis communications.
• It is a valuable tool but not a panacea.
• It is in the zeitgeist; participate or risk being passed by.

For a full text with graphs and tables please refer to http://www.mapi.net/MediaCenter/news/Lists/Posts/Post.aspx?List=833d2c2b-15c0-4864-8617-cbb41d4ca3a5&ID=268

Two days ago while browsing the Web I came across an interesting post with a very thought provoking beginning: “Insanity is repeatedly doing the same thing and expecting different results.” How true! It caught my attention because it was talking about industrial marketing. First I thought that it would talk about the hot topics like social media and how the old ways a transformed into the new ways, but I was wrong…

The author goes on: “While most businesses can improve operational and administrative efficiency with relative ease it seems improving marketing effectiveness is a much more daunting task. In my experience, the single biggest challenge faced by manufacturers (besides fighting ridiculous offshore pricing) is how to better their industrial marketing effectiveness.”

I must agree here as well despite the challenges that organizations frequently face with running engineering departments - it often seems that the marketing department "always" needs fixing...

Reading further: “The solution to radically improving industrial marketing efforts is to innovate, test, and refine every aspect of your industrial marketing. Before you cast a cold eye on your industrial marketing practices you need to know a couple of things.

Firstly, you must be mentally prepared to change the way things are being done in your business.

Secondly, don’t bother waiting for the great eureka moment to transform your industrial marketing performance as successful marketing innovations often are the result of incremental change.”

And the finale: “Nothing can be sadder than seeing a company that refuses to recognize change in the marketplace. It’s like visiting the manufacturer of the world’s best buggy whip company in his derelict factory. There’s no doubt that the heart is there, but it seems to have become separated from the mind.” That is powerful and it is true, because many of us did see it in their career, don’t you agree?

In the end author calls to revisit your practices, look outside your industry, test new things, refine your strategy – basically do not go into stagnation mode. If you are unhappy with your results then do something else. So without saying it he actually does motivate you to think about new ways like online or social media marketing. Overall it is a great post which calls you never to give up.

However this whole approach has a bit of a danger in it. Some could interpret it in a wrong way like “Fire. Aim. Ready” – and I have seen quite a few marketing executives in the manufacturing field who shoot from the hip like that. The key to success in my opinion would be to do first things first, like “Ready. Aim. Fire” – and not to forget that some marketing initiatives take up to 18 months or more before they bring revenue into the company. If you are focused on how to make your sales quota in the next quarter (like many public companies do) – then changing your marketing strategy every month will not do you any good. In fact, it will cause more damage to your company, would create tension between different departments, and cause confusion in your channels.

Therefore, before changing anything in your industrial marketing strategy, please do a thorough market research, voice of the customer (VOC) research, etc. and only then do the change. But you have to be ready to commit to the chosen strategy and think in 12-24 months terms in order to achieve a big impact on your market. And only after that measure the results and re-invent your company value proposition if needed.

Came across this post / interview by a software solution company for companies willing to create their own online research platform. Although this interview is highly promotional rather than informative, it does have some good points worth mentioning. 

Several quotes from there:

"...A lot of manufacturers, have a mindset that a survey is just a series of questions. They use the online survey tools to ask those questions and get answers, but the bigger issue is – are the answers useful? Will the answers you get help you make a good decision? And often times, the answer is no..."

"...When I review these surveys I often see questions that are entirely too general. A basic example is something like “How satisfied were you with our service?” Let’s say the results came back and the average score was 6 out of 10. Now, you have a busy management team sitting at the meeting or maybe a work team that’s assigned to improve on this score. Specifically, what would you do to improve this score? You don’t know — the question is too general. A better question is more specific such as “How satisfied were you with the speed with which your issue was handled?” This question targets speed and service, so you know where to improve..."

And finally my favorite:

"...The biggest mistake businesses make is gathering research to get information instead of gathering information to make a decision. First decide what you need to know to make a decision..."

The author goes on with mentioning some tools which companies can use: like interviews, crowdsourcing, online surveys, etc. - although in very general terms and on a high level with no details. For example, he mentions SurveyMonkey but fails to remember that just by using Google Forms you can create good surveys with great features and capabilities - and absolutely FREE.

The author also talks about crowdsourcing solution from their company - when people can share their ideas in some repository and discuss them - I have registered and tried it out. The free version mentioned in this interview greatly lacks flexibility and you have to pay for almost every feature you want to add to make it a useful solution. Having a previous experience inside a manufacturing company where I conducted VOC (voice-of-the-customer) research, I must say that this solution did not have the answers for my needs (may be some people find it useful).

To sum up - this is an interesting interview, interesting point of view, and a very general overview good for a general reference. It is said to be for an industrial marketing magazine, so beware if you come across it.

My take on a subject is that you can expect results from the DIY market research similar to the results when doing your own car repairs - yes, you can fix few things but it's better to bring it to the professional. Therefore, companies which base multi-million dollar decisions on the research intelligence should hire their own or outsource a market research expert...