Manufacturing leaders who have seen decreases in sales and revenues are beginning to embrace the idea of diversification. They’re on the road, selling. They’re evaluating their existing assets and the products and services they excel at and selling to new customers. They’re thinking about what makes their companies uniquely different from others.
“Too many area manufacturers don’t have a comprehensive marketing and sales approach,” said Steve Barnhart, an IMEC growth consultant and leadership coach who works with companies to increase sales and revenues. “They’ve never needed it. But it’s also why they are looking for outside help and direction.”
Let’s look at one company, Illinois Valley Plastics (IVP), a composites injection-molder that serves many markets, including diesel engine manufacturers as well as OEMs in the heavy-duty automobile and construction equipment industries. The company has excellent quality and on-time delivery performance and high customer satisfaction. Unique capabilities, such as gas assist technology and thermal riveting and insertion, have made IVP the preferred choice for many large companies. However, the economic downturn in the automobile and construction equipment sectors turned a steady growth situation into a temporary slowdown.
An in-depth market analysis revealed several opportunities for IVP to expand market penetration and pursue new lines of business.
“We’re well known for the quality of our injection molded products,” said Tom Williams, executive vice president. “What we also do well, but haven’t exploited fully from a sales and revenue perspective, is part design, rapid prototyping and laboratory testing capabilities. “We needed formal research to help us see that this is a growing market segment we can get into relatively easily, with minimal capital investment.”
The success of a manufacturer’s market diversification efforts depend on these principles:
- Define a clear and compelling vision for the diversification effort.
- Implement quick, inexpensive cycles of learning while simultaneously learning about the four Ps (Product, Promise, People, Profit).
- Have an empowered leader for the diversification initiative.
- Identify and confront obstacles, or “death threats,” along the path to diversification.
- Define a “Move Forward/Change Path/Stop” decision process.
While each diversification strategy has its own set of challenges and rewards, companies must assess their existing capabilities to identify which will yield the best results. The best approaches involve gathering voice-of-customer feedback, pinpointing high-growth markets, and completing the external research and marketing plans to pursue those markets.
In IVP’s case, company leaders are embarking on strategic and marketing planning to pursue opportunities for prototyping and testing. The company has contracted with resources for lead generation and prospect pre-qualification. New sales literature is being developed.
Complete a short diversification assessment at imec.org to help identify the gaps in your capabilities to move forward. To learn more about diversification strategies and what other area companies are doing to compete today, contact IMEC at [email protected]. iBi