Vol. 2 No. 1

The Times Challenge Us All

We all face many of the same challenges, especially today in this industry. We all need some fresh perspectives and real-world solutions. The goal of BMG's Idea File is to help further challenge your thinking, advance the dialog within your company and help you reach those solutions.

BMG has lived and breathed the global and North American construction, mining/aggregate, recycle/demolition and related market segments for almost 20 years. During this time, BMG has worked with 70+ industry manufacturers based all over the world. We are a hands-on team that either drives or helps execute our ideas and recommendations, so we live in the trenches just as you do. Enjoy the March 2009 Idea File.

WOW! It Passed. Now What?
Brian Barlow, President/CEO
bbarlow@growwithbmg.com

We know firsthand that many, if not all, domestic and international equipment manufacturers are already knee deep in dissecting the four major areas of U.S. infrastructure development funding within the American Recovery & Reinvestment Act. We are too. The dollar amounts are huge in total. Even more critical, management is trying to determine where the more immediate, strongest opportunities lie for their company and how to get there with less capital, financing, budgets and employees.

Despite the challenge, hope and optimism is slowly beginning to return—especially within the quarry and road building sectors as evidenced by the recent joint World of Asphalt/AGG1 trade shows in Orlando. They are the first two industry-related shows of the year that had considerable activity, especially given their market sizes.

It's quite clear that quarry producers and road builders are returning to work first given the massive Federal money allocated to major infrastructure projects being released as you read this. Fortunately, most industry segments will benefit eventually.

BMG can offer a few approaches to consider:

1. For all equipment, begin analyzing the dollars allocated by each state for the categories that fit your equipment. It's a lot of work since one state can have thousands of projects (large and small) ready to be funded. Employ a mapping software program and you can quickly develop a visual of where the concentrations of the work right for your equipment will be. Target your local and corporate resources there. The more sales you capture here, the more sales you will be able to fund later.
   
   Tips:
   
   
   • States must have their plan certified by the government to receive the money and only about two-thirds are certified as of this writing. Start there.
   • Target states with the best representation and population of your equipment to capture the largest percentage of sales possible. Tie it as closely as possible to the equipment segments as they are needed in the process.
   • Target product promotion and sales incentives for your various product lines based on the stages they fit within each stage of major projects. Employ street-level marketing where the business is and tie in your local sales channels.
   • Be sure to take the emotion out of your product selection and prioritization of territories.
     
     
2. Track parts sales in each market segment closely. When you see a serious spike, business will begin taking off and new equipment needs will follow. Manufacturers in both the quarry and road building segments are experiencing that now.
   
   
3. For rental equipment, check frequently with your primary rental houses to determine what is renting. Most rental store owners we've talked to recently are not planning to purchase a lot of new equipment until demand is firmly established. They will purchase new equipment to keep up with demand or replace existing equipment.
   
   
4. For heavy equipment, don't just talk with your dealers as usual, target 20 or more progressive dealers and seriously interview each of their better field salespeople and/or those more successful in the past with your product lines. Stay focused and follow a clear line of questioning that drills down until you arrive at each salesperson's most innovative and proactive customers—who will typically benefit the most during the early stages of the infrastructure projects that require your equipment. Approach that list jointly with each dealer, providing the incentive program to purchase equipment now or as soon as the projects are let.
   
   
5. For all equipment, push your ROI and value-added benefits while promoting specific equipment information. Develop this approach based on the premise of 3 strong reasons why to choose my equipment over another. Corporate and general sales support and marketing approaches will be far less effective today since it comes down to your equipment's specific value and performance versus another.

This is BMG's 3rd recession since starting in 1991 and many of us lived through previous recessions working directly for manufacturers as well. So we have developed a long list of proven recession-driven approaches to help manufacturers find the answers. These solutions presented here might help you and your management team stretch beyond tradition and help answer the question "Now What?" If you wish to discuss your challenges, e-mail Brian Barlow at bbarlow@growwithbmg.com.

Find Profitable Success Inside Niche Markets
Troy Scroggins, Marketing/Research Director
tscroggins@growwithbmg.com

Relationships are far more critical in niche markets where price is typically not the major driving force behind a buying decision, but one of three or four major factors. This allows for many smaller and mid-size manufacturers to compete head-on with larger more entrenched players.

In fact, many larger companies can't be as focused, flexible and responsive as the smaller more nimble manufacturers who often offer more advanced technology as well. In addition, many niche markets are favorable to national and regional supplier agreements that, if developed and executed well, can be a huge win for all.

If you research and analyze many niche markets, you quickly realize that they are well served by hundreds of small- to mid-size companies with sales in the $10 million to $100 million range—many specific to that market. It's also easier for smaller manufacturers to appear far larger than they truly are because they tend to bring a more extensive relationship-building process to the customer. Their value-added proposition and genuine interest in and focus on the end user drive the relationship more, even if they use independent sales channels.

Larger manufacturers can also gain entry and flourish if they are willing to truly focus their capabilities on the sales channels and end users simultaneously. To rush in because there is an opportunity without investing the time, expertise, product, resources and tools results most often in failure and a quick return to mass markets. This sounds obvious but we continue to see this occur frequently. Niche market customers work with dependable suppliers who help them achieve ongoing success. It's markets like these that have a far lower percentage of price buyers when compared to mass markets.

As the Asians—and to a lesser extent eastern European manufacturers—succeed in establishing themselves in major global mass markets with the lowest-cost equipment, there will be no way for most, if not all, manufacturers to compete on price even if they manufacture in the lowest labor-rate countries. This will leave far less middle ground to stand on as a manufacturer and all the opportunity in the world to target the top 40% of the customer base in each market, especially in niche markets that require a level of care inconsistent with the goals of Asian manufacturers.

Research, analyze and do your homework well and you can find those niche markets that your company can succeed in. It just might not be overnight.