Are You Struggling to Stand Out To Your Customer?

Do ever struggle to differentiate yourself from competitorsDo ever struggle to differentiate yourself from competitors?

My guess is that this is a constant struggle but one that is not addressed often by your marketing team. That’s because it’s not on their radar.

Perhaps it’s because they are too focused on the new product development processes you have in place and not listening to the critical input from customers.

When you listen to customers, you sometimes get an earful

When you listen to customers, you sometimes get an earfulThe commercial interiors business at Owens Corning struggled to differentiate itself from competitors. Sales were architecturally specified and product driven. The product was designed to absorb echoes in school gyms and classrooms.

In making calls with the sales team, customers emphasized that schools demanded a high level of performance. And also that many architects were becoming increasingly sensitive to being as green as possible in their designs.

Turning a black art into a differentiator

be differentAcoustics, however, was considered a bit of a black art.

Specialists were needed to figure out how much absorption a space needed. Surprisingly, we discovered that no one guaranteed the acoustical performance of their products, let alone have an independent third party determine their performance level.

This led us to successfully seek UL certification for all of our commercial interior products, a first for both the industry and UL.

Because Owens Corning was also the manufacturer of the base fiberglass boards the products were made from, we knew that those boards had a minimum of a 35% recycled content. This was enough to earn the product line a third-party certification (SCS), which would allow Owens Corning products to qualify for green projects.

Not all innovation is new product innovation

product_innovationWe combined these elements together with the standard 3-year warranty Owens Corning offered to create a program called Performance Marketing.

For the first time, our sales team had the ability to clearly position and differentiate our product line from the competition.

This  not only increased sales but also allowed us to create a significant trade PR program around our efforts to demystify acoustical performance.

Innovation can come from anywhere in the company. It can be product innovation, process innovation or, in this case, program innovation.

All of which will help you be more successful in launching impactful products and programs to grow sales and profits.

Good Selling!

Advertisements

10 Tools to Focus Your Funnel

Great insights on effectively managing the fuzzy front end for clarity and results.

INSIGHTOVATION®

Is focusing your front end frustrating?

Thinking out-of-the-box puts fun into your funnel! It is interesting and creative.  It may be a useful way to approach problem solving and spark innovation.   But is your team drunk on divergent thinking?  At some point brainstorming becomes unproductive.  It alone doesn’t generate profit and it may leave you with a long list of unfocused, disconnected concepts.   convergent-vs-divergent2Eventually your product development team has to converge and focus on a product concept and business model that generates growth and profit.

Where to focus?  How to bring clarity?  The front end of product development does not have to be fuzzy and unfocused.  Get the fuzzy out of your front end with 10 steps and 10 tools that will help you bring clarity.

Get the fuzzy out.

Here are 10 tools to help focus your new product development funnel.

10 Steps

10 Tools

1.  Know…

View original post 185 more words

Are Your Product Margins Caught Between a Rock and a Hard Place?

"Rock, Hard Place" Road Sign with dramatic clouds and sky.Accomplishing a growth agenda often requires a significant paradigm shift.  You can no longer afford to simply “market what we make.”

Your perspective needs to shift from one that is internally focused to one that is customer driven.  The shift places an increasing emphasis on customer need assessment as the means to extend current your core competencies.  As a result, the imperative for growth becomes to “make (or source) what we can market”.

Develop the Equation and Discover the Opportunity

A Matter of Perspective

For a brand position to be compelling, it must contain more than a communications and/or merchandising program although it includes those components.  It must be, first and foremost, a business proposition.

The Key

The key to understanding the channel is to adopt their business perspective.  And for the channel, the business equation is fairly simple:

Selling Price = Costs + Profit

The goal is to keep selling price and profits up, and costs down.  But in an increasingly competitive market, there is constant downward pressure on selling price which, in the absence of a corresponding decline in costs, only serves to lower your profit.  To rely upon increased volume to offset declining margins is a much riskier bet.

The Business Equation

Assessing the Opportunities

Develop the Equation and Discover the OpportunityBased upon that simple business equation, there are a limited number of opportunities for building materials manufacturers to have a positive impact on their channel partner’s business.  “Profit,” for example, is determined by your customer and the level of profitability will vary from customer to customer if not even job by job.  “Selling Price” is controlled by the market.

The Point of Impact

From the customer’s perspective, the only variable element in the equation is “Cost.”

“Cost,” for your customer, is comprised of four elements:  marketing and administration, materials, labor and the cost of money (interest or carrying costs).  As the market place puts more and more pressure on your customer’s selling price and margin, more and more of your customer’s costs are pushed up the channel toward you as the manufacturer.

Therefore, the real opportunity for you lies in the channel partner’s cost structure.

The Elements of Customer Cost or Opportunities for Your Brand Position

Marketing and Administration

These, not insignificant expenses, can and are likely being addressed by you with extensive marketing tools such as merchandising, POS, identity programs, and other communication initiatives.  This is the easiest to way to cut your customer’s cost and, consequently, every other major manufacturer has developed their own dealer merchandising programs, builder programs and contractor identity programs.  By themselves, these types of initiatives are not compelling points of competitive differentiation for a building materials manufacturer.  They are table stakes and have become the cost of participating in the channel.

A Material Difference

Historically building materials manufacturers have focused on the materials component of the equation.

A materials focus offers a manufacturer three basic positions:

Products Promoted As:                              Opportunity for Manufacturers:

1. Lower cost                                                 Viable for only the lowest cost producer

2. Better performance at same cost             Advantages created through technological                                                                                                                                                                                                                                                    innovation erode over time

3. Better performance at higher cost             Profitable margins but limited volume

Labor Savings as Part of The Building Products Selling Equation

For both dealers and builders, labor is a significant cost.  In fact, as much as 30% of the cost of a new home is tied up in labor.  Some of the more aggressive manufacturers attempt to lower this cost burden by making labor more efficient through, for example, training programs.  But the effort at reducing the cost of labor has, to date, been tangential to the manufacturer’s offering which is primarily materials focused.  But with a new building products brand position . . .

 . . . labor savings doesn’t have to be tangential. 

One of the greatest challenges faced by dealers is labor productivity.  For the pro, it’s the shrinking pool of skilled subcontractors.  The goal for both is to manage material and labor costs effectively with as few headaches as possible.  Ideally, labor savings as well as product performance are key benefits.

Churn and Turn

For dealers and builders, in particular, it’s the cost of money which poses a particularly thorny problem.  With low inventory turn, both dealers and “spec” builders can watch their profit erode through monthly interest payments.  On average, 6% of the total cost of a new home is financing cost (a builder’s total profit margin on the home averages only 11-12%).  Regardless of how many projects the pro can churn, it’s the speed with which they turn that can spell the difference between a profitable year and a disaster.

For the channel, the relationship with the homeowner offers the “promise” of quicker inventory turns, particularly where that relationship is used by the channel partner as a point of competitive differentiation.  But to be truly valuable to the channel, your brand must be an assurance of quality for the prospective buyer.  The quality perception generated by your brand can then be transferred to the dealers who stock our systems and the pros who use them.

Addressing the Opportunities

Given that the opportunity for building product manufacturers lies in the cost structure of their customers, where’s the “meat” in a new program?  There are several approaches that you can develop around the four key elements of “Cost:”

1.  Marketing and Administration

2.  Materials

3.  Labor

4.  Turn

Marketing and Administration

Think about how compelling and customer-specific merchandising and communications programs can become through “mass customization.”

It means turn-key and off-the-shelf promotions to supplement national programs and to generate traffic and sales on a schedule determined by the channel partner.

Material

Since this is the historical basis of how a building materials manufacturer works to differentiate themselves, this type of innovation is more common to an organization’s branding efforts.

Labor

It means a “delivery system” that makes the pro more efficient through online design help, visualization and other tools that drive builder, contractor and dealer lead referrals.  And you can also provide online training videos and other tools to help the pro’s subcontractors become more knowledgeable and efficient.  Your product managers can also help this out by focusing on creating products that are easier and quicker to install.

Turn

For the pro, this kind of approach provides a brand in which the homeowner has confidence and which the pro can use as an effective point of differentiation.

In summary, the cost structure of your channel customers provides you ample opportunity for the development of a brand that extends beyond product alone.  Ultimately, this approach provides the bridge to the dealer, builder, contractor, remodeler and installer across which will flow an ever-increasing stream of products, services and solutions.  It’s a path that ensures long-term, profitable sales growth.