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Marketing can be thought of as an optional extra for manufacturers, but by having an ongoing relationship with customers, innovative manufacturers are finding new ways to add value. Connor Pearce reports.
“We had a desire to improve a number of different things in the marketing area, such as our website, the literature that we were using, and email marketing, but we’d never found the time to do it,” Phil Newman, managing director of Fortress Resistors, a resistor manufacturer based in Melbourne, told Manufacturers’ Monthly.
It’s a story that many manufacturers in Australia may have heard or told themselves; the desire to incorporate marketing to grow a brand and add value to a product, but the lack of manpower to do so.
“We’re a relatively small organisation with 25 people and at that size you can’t always afford to have all of the operations that most bigger companies would expect to have,” said Newman. “There were other competing needs in the organisation that had higher priorities. When you’re comparing bringing in another engineer or sales person to marketing, then most of the time that engineer or that sales person is more critical.”
A way to shift that balance arose when Newman and the company began speaking with Swinburne University of Technology about providing an internship for an engineering student at their Braeside, Victoria, facility.
“While I was talking to them, I saw that they did other types of placements as well and I ended up getting in touch with the department that looked after marketing,” said Newman. “I realised that this could well be a low risk, relatively low-cost way of getting that resource which we’d never been able to justify before.”
Ultimately, this led to Fortress Resistors taking on a student as a marketing intern. The partnership was such a positive one for both that the student was hired once she had finished her placement and continued to work for the company in a part-time capacity.
Taking on marketer role for Fortress Resistors in this manner became cost competitive. “What changed here was the cost to the business. We were no longer comparing $70,000 marketing person to a $70,000 sales person, we were comparing a $38,000 marketing person to a $70,000 sales person,” said Newman.
With that marketing person now established in the business, the attitude within Fortress Resistors has shifted. Marketing is now seen as adding value to the products the business sells, through marketing materials and communications.
“We’ve moved from a point of saying, ‘this isn’t an area that we can justify as a standalone department’ to something that is now embedded in our budget, and we will plan to maintain that over the next few years,” said Newman.
Marketing and manufacturing value
First popularised by Stan Shih, of electronics company Acer, the smiley curve highlights how the activities at the beginning and the end of the production chain, research and development, and marketing and advertising respectively, are where a product derives the greatest share of its value. This has been realised as global value chains allow manufacturers to offshore low-value activities, such as assembly and production to low-cost locations.
A 2018 report prepared by the Australian Office of the Chief Economist, Industry Insights: Globalising Australia, found that from 2006 to 2016, a period where overall employment in manufacturing declined, roles related to research and development and marketing and advertising increase or had more modest declines. In addition, the median earnings of those in these roles was higher than those involved in basic manufacturing.
While noting that these findings did not mean that basic manufacturing should not occur in Australia, the report did highlight that, “there has been greater value added from activities that align with research and development, as well as marketing and advertising, compared to the activities directly related to the production and assembly of goods”.
One manufacturer that has seen how investing in marketing has increased the value of their products is Tradiebot. A spin-off of Plastfix, an automotive plastics repairs company, Tradiebot provides 3D printed plastic parts for automotive repair, along with virtual reality (VR) and augmented reality (AR) tools for the installation and repair of car parts. As Mario Dimovski, managing director of Plastfix and CEO of Tradiebot, outlined to Manufacturers’ Monthly, marketing was something the company embraced from the start.
“From an early stage, we knew that we had to get the message across as we developed our solutions and we knew that we needed the right branding and a simple message to go with each product,” he said.
As a company producing a new technology, Tradiebot’s marketing focussed on proving that their product was of value to their future customer base. Dimovski explained how this was done.
“Our marketing strategy was getting the big industry partners on board as collaboration partners. Tradiebot is a start-up with a new technology, yet people are too busy getting their product out the door, which is repairing cars. So, part of our strategy was getting listened to and getting noticed. Tradiebot is so new that auto repairers could think that the product could be years away, or, if not, it’ll never come, so you have to prepare them that you have something that’s real.”
Part of the job for Tradiebot, in their marketing, was not just to spread the word of their product, but to educate their customer base and industry about what their product was, and this partly determined what marketing they invested in.
“Even today, customers are getting confused between AR and VR,” explained Dimovski. “We’ve turned our marketing more into content-driven marketing where we’re incorporating story around the products that we’re developing and just getting that message home.”
For Fortress Resistors, in contrast, marketing has been a way to maintain a customer relationship that is often spread over a long period of time in- between large orders. Here, Fortress Resistors has leveraged the fact that their resistors are manufactured in Melbourne as a way to increase the value of their products in the eyes of their customers.
“One of the things that we’re looking to do is to have a more structured communication process with people, from the initial inquiry through to the completion of the project,” said Newman. “We can provide that customer with case studies on similar products that we’ve recently supplied to other people. That might happen every few weeks to maintain some contact with that customer through that period of time where they’re assessing the project.”
Another manufacturer that has been finding value in marketing is Furphy Engineering. A fabricator of stainless-steel tanks, Furphy has had a continuous history in Australia of over a century. Now, the company is utilising social media to spread the general awareness of the brand, business development manager, Stephen Lawrence told Manufacturers’ Monthly.
“We’ve learnt that it takes someone six times of seeing a brand for it to lodge in their brand. By the time they’ve seen some content from us half a dozen times, it starts to stick and then we talk to them for the first time and they say, ‘I saw this on Facebook,’ and it’s almost like they feel like they know you a bit more before you met.”
To get the story of Furphy out, the company has utilised short videos that show the human side of the family business and distributed them via social media.
“The videos focus on the people who work at Furphy’s, and the people that our customers are ultimately dealing with if they purchase tanks and services from us. Getting across that they’re in safe hands is really key in what we do,” said Lawrence.
“We work on the fact that we’re growing a legacy. We’re not trying to sell products, it’s about selling relationships and forging long-term partnerships where we can work with people over and over again.”
Connecting the value chain
These kinds of ongoing connections with customers, which can be garnered through marketing activities, have a value beyond the products that are sold, but can develop a relationship between manufacturer and customer that influences product design and lasts for the lifetime of a product.
As the products that Tradiebot offers are still being developed, marketing has been a way for the company to refine their product.
“At each stage of our development process, we’ve run campaigns and that also gave us feedback, positive and negative,” said Dimovski.
One piece of feedback that Dimovski gained when marketing his product at talks and conferences, was a question about whether the new technology that Tradiebot was developing was going to replace jobs that employed people.
The answer that Dimovski gave highlighted how the technology would upskill the existing workforce and encourage new participants into a trade that has a shortage of skilled workers at present.
“That then became a very vital part of our marketing, and we are now constantly talking about upskilling, new skills, and everything to do with that,” said Dimovski.
David Chuter, CEO and managing director of the Innovative Manufacturing Cooperative Research Centre (IMCRC), outlined that connecting with a customer once a product is sold can be an extension of a firm’s marketing practices, and one that allows for value adding as a product ages.
“If a company that manufactures equipment is able to monitor how that equipment is used, they’re going to be able to learn an awful lot about what its maintenance schedules are, what its energy usage is, and all of that data should allow that company to iterate that back into their design processes to improve their machine,” said Chuter to Manufacturers’ Monthly.
This kind of monitoring also allows companies to take ownership of what happens to a product at the end of its life, potentially adding value as the product is re-used or recycled.
“It’s a genuine problem that could be a value proposition, because you’re solving a customer or community problem and therefore you can monetise that as well,” said Chuter.
With these kinds of processes established, it is possible for manufacturers to fully take advantage of where the value lies in the production cycle and lift the edges of the smiley curve. In the first instance, as Tradiebot has found, telling the story of a company in an exciting and engaging way can increase staff retention and engagement.
“We enjoy a retention rate of 90 per cent, purely because we communicate and market internally about what we’re doing,” said Dimovski. “People like to hear that – it doesn’t matter if they’re your customers or your staff – people want to know what’s going on. Gone are the days where people just went to work and came home. Our staff are the core of the business and we need to make sure they are aware of the direction we move in and experience the journey.”
Dimovski has also seen how having a strong brand has led to new opportunities, outside of the manufacture of the product.
“One of the things that marketing so heavily and being active on social media has done is it’s actually allowed collaborators to reach out,” said Dimovski, who cites opportunities to work with the Australian government address audiences in the UK, Vietnam, India, and the US as an outcome of being noticed via his marketing strategy. In addition, Tradiebot is now exploring new industries such as the defence sector.
“We look professional, we’ve got great innovation, our web-mobile site navigates well, and it’s got a story on there that is regularly updated. That all comes down to getting the message right,” said Dimovski. “It doesn’t have to be expensive, but it does take time.”
These kinds of impressions have a value for a company, as Chuter points out, in terms of product differentiation and the attitudes a customer base may have towards a company.
“A company is able to create a strategic division with customers that is based on a much more comprehensive value equation. They’re starting to be seen as experts in their fields, with a level of uniqueness in terms of how they are doing business, separating them from lots of others that may be selling the same product or the same service,” said Chuter.
While much of what is possible with marketing and customer relations is enabled through technology, whether that be tracking social media or email campaigns, or via Industrial Internet of Things (IIoT) sensors that share a machine or component’s status with a manufacturer, Chuter argues that technology is only part of the solution.
Companies need to think about what is the problem that they are solving for the customer first, and how technology can help them do that.
By extending the point of interaction between a business and a customer from the sale of a product, to a service that lasts for a product’s life cycle and subsequent replacement,
a broader shift is occurring in how businesses and customers interact, according to Chuter.
“Companies are recognising that there’s a great opportunity to invent that service model, be it everything from marketing all the way back down to design, research and development and to actually sell that as a business model in addition to the manufacturing model that they’ve grown up around.”
This approach leverages both ends of the smiley curve to grow a business’s value add in the areas where most value is being created, while not forgetting about where they originated.
“What I’ve seen is companies are growing significantly because they’ve changed the way they are going to their customers and adding service models,” said Chuter.
“But they are marketing it in a way that is clear that these are service models enabled by what they make.”