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Manufacturer of Precision Sheet Metal
Components
Background
The firm is a manufacturer of precision sheet metal components and
assemblies. Major customers are large OEMs who supply products in communication
equipment, office equipment, instrumentation and electronic equipment. Annual
sales range from $1.1 to $1.3 million. The firm was certified, due in
large part, to increased foreign competition mainly from Brazil and Mexico.
American OEMs have, in large numbers, turned to these two foreign markets to
award metal enclosures contracts. Evolving technology is also having a great
effect on the business, as plastic injection molds are creating less opportunity
for metal components.
The firm has established healthy and effective relationships with major
OEMs and has a proven ability to produce a high quality product that withstands
the test of time. Management of the operation is a strength as the owners have
extensive experience, spending their entire professional careers in this
particular industry. Products are considered cost effective and competitive
within the industry.
The problem: one customer accounts for over 60 percent of total sales. The NYS
TAAC presented the idea of formal marketing plan development to help nurture and grow the present
customer base so the firm would not be reliant on only a few customers.
Assistance Provided
The strategy for short- and long-term viability articulated the
need for a formal structured, comprehensive marketing plan that would include
the following elements: mission statement, evaluation of current market focus,
development of characteristics of potential new customers, establishment of
short- and long-range sales goals and alternative strategies, if needed. The
marketing plan would also include information from past and present customers
and a random sample of non-customers.
Project Results
The final marketing report gave the firm information and power that had
never been part of the decision making process. The random
information learned from past and present customers was enlightening and
transformational for the firm. Pricing, an area thought to be well within
industry guidelines, appeared to be the number one issue with the firm's present
and past customers as well. Armed with this information, a new emphasis was
placed on pricing and the different components of this aspect of the business.
The project additionally established a key account marketing strategy, including
customer communications, sales and marketing aids and material, and a new
organizational structure to support this approach. All of this has been
implemented with initial results giving much enthusiasm to the owners as several
new accounts have been secured and sold. Based on some of this preliminary
information, the firm is now projecting a five-year marketing strategy that
targets a 35 percent gain, annually, in gross sales. If this model is achieved,
gross sales will be approximately 4.5 times higher than current gross sales
after five years.
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