There Are Ways to Increase Market Penetration

November 30, 2000
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How does a company survive in the new economy? It would be wonderful if there was a one-word answer. “Faith” comes to mind, but that will only get you so far.

In short, there is no one thing hvacr businesspeople can do in order to succeed. However, some industry insiders have come up with steps contractors and distributors can take that lead to success.



Contractors, Watch Distribution Trends

Jim Truesdell, president of Brauer Supply Co. in St. Louis, MO, and vice president of the Northamerican Heating, Refriger-ation, and Airconditioning Whole-salers (NHRAW), says that contractors need to pay attention to trends in distribution that can affect their companies’ survival.

Situations affecting wholesale-distribution include:

  • Customer relationships are increasingly critical;

  • Access to customer information, which yields market power;

  • Value-added services expanding in order to meet customer needs;

  • Distribution channels evolving and changing form;

  • Business becoming “North Americanized,” with trade borders between the United States, Mexico, and Canada dissolving;

  • Products being introduced from Europe and Asia that are beginning to influence North America in terms of application and design;

  • Multi-branding becoming more commonplace;

  • Consolidation continuing;

  • Deregulation beginning to open markets;

  • E-commerce enabling 24/7 business;

  • Interest rate volatility; and

  • The consumer becoming more educated, based in part on the availability of information on the Internet.

    The Internet is not the all-powerful problem solver, as it was originally believed to be by many; nor is it the evil technology that others feared take over the world. The truth is that the Internet is somewhere in the middle, and it is important to learn how to deal with it.

    “Strategic visioning identifies the problems and determines how they will be overcome, and also identifies opportunities and determines how the wholesaler will take advantage of them,” said Truesdell.

    “For example, if customer relationships are becoming increasingly critical, then specific customer-by-customer plans will need to be made to protect our most valuable accounts and similar plans developed to target those accounts we wish to capture.

    “If value-added services are expanding to meet customer needs, then we must identify what services we can presently provide, and plan to develop new services to meet the customer’s needs.

    “We are in a race for what may be a shrinking or stagnating pool of product need,” continued Truesdell. “We must find ways of developing market niches, cutting production and process costs so that we can come to the market with a price advantage, and finding ways to create or identify demand for the specific value-added services we bring to our customers.”



    Marketing, Sales

    Sales and marketing consultant John Sedgwick points to the marketing function as a critical component in winning what Truesdell calls “the race.” Sedgwick asserts that there are six steps one can take in order to develop a superior sales force:

    1. The sales force strategy must become an integral part of the overall business strategy.

    Company leaders need to determine such things as which lines of business are to be primary lines, who are the target customers, what are the geographic goals and limits, who are the critical suppliers, and what are the strengths and weaknesses.

    2. Selling and marketing must work together.

    Every customer-contact em-ployee must be part of the marketing effort. In a mature market, the largest and most important target customers will require customized marketing, and this will require a sales organization linked to the rest of the company, and empowered to drive the marketing strategy for the largest accounts.

    3. The sales manager’s primary role is salesforce development.

    S/he must be constantly analyzing the activities of the sales staff and giving corrective direction and feedback to keep the strategy on course.

    4. Eliminate the “route salesperson” role.

    The successful organization moves away from strict geographic territories to a combination of technical support, inside sales staff, counter sales, and a small group of outside contacts highly skilled in relationships and consultative selling.

    5. Compensation systems must match company goals.

    Mature market compensation plans should reward things such as target account results, market share in key product lines, new account development, and growth for targeted products.

    6. Train all salespeople every year.

    Salespeople must be constantly reminded that their primary role is business development and not just becoming product and program information experts.



    Sidebar: Plastic Pipe Group Looks to Increase Market Penetration

    GLEN ELLYN, IL — The Plastic Pipe and Fittings Association (PPFA) is launching a Thermoplastic Industrial Pipe Product Line Committee comprised of manufacturers of thermoplastic industrial piping. The mission of the new committee will be to increase the market for industrial plastic piping systems.

    Five objectives were defined:

    1. Increase the awareness of industrial piping systems among present and future specifiers, installers, and end users.

    2. Establish a forum to obtain and share knowledge.

    3. Educate present and future users about the benefits and proper applications of industrial piping systems.

    4. Monitor and influence legislation and regulation pertaining to piping system.

    5. Address technical issues related to current and future products and applications.

    Contact PPFA at 630-858-6540; 630-790-3095 (fax); www.ppfahome.org (website).

    Publication date: 12/04/2000

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