Recently I was interviewed by New York Times journalist Elizabeth Olson who asked what my thoughts were on “Made in America.” This past week, USA Today published a similar article titled Made in USA Making a Comeback as a marketing tool.
And Barron’s just featured “Made in America” as a cover story for their January 28th issue. Barron’s cites that cheap natural gas in the U.S., paired with increasing competitive labor are bringing manufacturing back to the U.S. So to capitalize on these up-in-coming national competitive advantages, companies must be prepared to spell out, specifically why Made in the USA is better for their customers.
Throughout the country, I am asked whether or not USA-madeproducts should be touted as a competitive advantage in marketing strategies. This is a complicated question to answer due to varying factors that can cause this strategy to tip either way.
Clearly, patriotic Americans want to help our flailing economy by creating more jobs in the United States. But there are other factors. Quality is often perceived as much better when made in the US, even though many appreciate good Italian leather, or German cars, or Spanish clementines…. so the answer is ‘it depends.‘
In trying to gain retail sales for Made in USA products, companies still have to compete with cheaper labor elsewhere and get hammered on pricing. Big-box stores like Costco, Target and Wal-Mart are known for beating up on their vendors for low prices – thus commoditizing their products every day. Their marketing strategies encompass offering the consumer a low price, however they need to maintain their own healthy margins. This effort is daunting and therefore, the lower-labor, lower-cost products from abroad can make Made in the USA a hard sell. But, it is not an impossible sale.
Further research for midsized to large corporations reflects that most marketing strategies don’t include teaching sales people to sell what moves their product away from commodity status – the top buying criteria of their customers. Sometimes it’s obvious while other times not so much: if two companies selling the same product to a customer such as a Costco – Company A’s products areMade in USA, but Company B’s are Made in China, Malaysia, Korea (you name it) and are less expensive – who wins? It’s easy to say the lower cost item wins. But we have proven again and again that if you deliver what your customer wants most, price is not always the tiebreaker.
Sometimes, a more important reason is that USA-produced may provide for better delivery. Years of research reveals that in B2B selling, “on time delivery” is a top buying criteria. If the products are made here, we don’t have to worry about long shipping delays and we can quickly go to the source when there is an issue.
If the Costco buyer said “I‘d like to buy USA made but I need to go with lower price” they will go that way if not given a reason not to. But if research shows that the buyer wants quick sell-through, low return rate and accurate invoices, and Company A can claim the following competitive advantages, then they will win most of the time:
- Our item provides 3 times more sell through turns than competing products
- Our brand has less than 1.3% return rate each quarter for the past 22 quarters
- We issues over 600 invoices last year; only 5 credit memos for invoice errors
If the buyer values these criteria, he/she will be willing to pay more because the benefits on high sell-through and low return rate more than account for the price differential. A top salesperson will assume a strategy that includes working out the math to show the buyer how the slightly higher price provides a much better margin for the buyer’s store.
Few companies take the time to learn what a true value proposition is for their customers and hence don’t deliver accordingly. Clearly there will always be price buyers, but if you close just 20% to 40% more without lowering price, your bottom line will be much stronger.
Reflections:
- What do you measure today – or what should you BEGIN to measure – that might give your sales people a competitive advantage in a commoditized marketplace?
- How closely do your marketing strategies – website, brochures, tradeshow banners and swag, newsletter – align with the selling strategies of your top salespeople?
