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It is fair to say that Asia is very difficult to beat when it comes to cost of manufacturing. There may be regions that offer a lower cost per unit, but problems with infrastructure and civil unrest can create instability and interruptions in supply lines. Even with the shipping costs included, the total cost of a typical consumer or commercial electronic product can easily be 40% to 50% less than if built in Canada or the United States.

The one significant advantage North American-based companies have is their close proximity to customers. This advantage provides three options for marketing that sets local manufacturers apart. These options and methods for implementation are explained in this article.

Option 1: Attract Customers Who Require a Specific Country of Origin

Contrary to much of the data we see in the press, there are certain segments of the market that desire if not demand the products they purchase be produced in North America. There are various reasons for this and some them are:

  • government regulations such as the Buy American Act and MFN
  • patriotism
  • perception of improved quality
  • customer support in local language that improves service and customer satisfaction
  • reduced environmental impact as a result of shorter transportation lines and stricter environmental laws
  • support of local economy and jobs

     

Each one of these reasons provide you, the local manufacturer, an advantage over offshore competition. These topics may not apply to even a majority of your customer base, but they can offer you the opportunity to gain new customers such as the federal government.

Option 2: Convert Selling Products into Selling Services

If you are competing with low-cost countries, selling locally produced products based only on cost is a losing proposition. A significant advantage local producers have over the rest of the world is the level of service they can provide their customers.

These services can be in the form of standard customer services such as local returns and repair service. This offering could also be expanded with relatively little effort to include installation on-site repair. None of these services can be replicated easily by off shore companies.

The next tier of additional value you can provide to your current and prospective customers is customization. Taking a standard product and offering options, custom and standardized, is a very lucrative method for servicing new needs of your customers and for creating new customers. In addition to just creating new revenue, this type of business model should provide a much higher profit margin than your standard, unmodified products. Lastly, the ability to customize some of your products can pull-through sales of standard products as well.

While customization may not work for all products or services, it can attract new customers and be highly profitable.

A Case Study

A projects-based firm I work with has a broad range of standard products to service the needs of its customers. But, even with thousands of SKUs, customization is still required to win some projects.

To address these requests, they’ve develop a process that allows customers to order customizations on the standard product. There is a small processing and management fee per order plus the cost of creating the customized product.

They handle hundreds of these per year, enabling millions of dollars of increased revenue with one or two people managing this as part of their other duties.

Option 3:The Marketing Aspects of Local Production

A large multi-national company I work with uses it factory in the United States of America to great marketing advantage. It regularly offers factory tours, product demonstrations and meetings with key executives at the company headquarters. This personalized touch is available to all current customers and any prospects who are willing to seriously consider the firm for their upcoming projects.

A large multi-national company I work with uses it factory in the United States of America to great marketing advantage. It regularly offers factory tours, product demonstrations and meetings with key executives at the company headquarters. This personalized touch is available to all current customers and any prospects who are willing to seriously consider the firm for their upcoming projects.

These tours offer multiple benefits to both the customers and the firm. Some of these benefits are:

  • The company gets to show-off its state-of-the-art facility to its best customers.
  • Customers get to see where their products will be built and talk to the people who will build them.
  • Company executives give customers personalized meetings aimed at solving their problems.
  • Specialized training is available to customers who’ve purchased the equipment or are considering it.

This high-tech, high-touch methodology has been used for over a decade and has created a highly loyal set of customers who were loyal even when the firm faltered and are even more dedicated now that the firm is righting itself.

Example: A company I know regularly uses its factory as a marketing device. The customers are invited to “HQ” for meetings, product presentations, training, and a tour of the factory. In this firm’s case, “Made in the USA” and the personal touch that it enables matters a great deal to its customers.

Conclusion

I hope I’ve convinced you that your organization has the necessary pieces to be highly profitable against companies producing in lower cost regions of the world. Remaining successful in the face of competition from a “one world” is a challenge being faced by most industries. This is not just a situation faced by manufacturing and products-based companies. Even some of the services physicians and accountants perform can be and have been outsourced to highly qualified professionals in other countries at a fraction of the cost.

To remain relevant to your customers and prospects, you must focus on them and their wants and needs and not just your own. Competing only on cost will “cost” you your business. Focusing on providing a “wow” factor in your delivery, support, service, and other customer interactions that off shore companies cannot, or do not yet provide, will move you far down the road to success.

On final thought–consider Amazon which is thought of by most as a high-tech, aloof, online store. Last week I had a problem with an order, called them, and spoke to a live person based in the United States and never waited on hold. They offer the best service I’ve received in a long time. You can offer this level of service too, and you won’t have to be the lowest priced provider.

Product Development & Marketing Expert
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