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Trends Sales Agenda 2014: the manufacturing industry (eng)

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Commoditization challenges sales leaders

Trends to watch for during 2014

Increased sales competition, slow buying demand and political changes that affect investments in manufacturing areas are the main external forces impacting sales organizations’ in the manufacturing industry.

Respondents in the manufacturing industry suggest that the combination of higher energy prices, investment uncertainty, government regulation and hyper competition are converging. This is shaking up and squeezing sales organizations’ margins. Market changes will demand organizations in the manufacturing industry to enhance their service offering to achieve differentiation and to build long-term customer relations.

Sales issues redefining the manufacturing industry

In summary, sales organizations in the manufacturing industry experience the following challenges that impact the daily execution of sales:

Commoditization of products and services

Respondents in the manufacturing industry expressed a concern about the commoditization of jordglobproducts and services. Intensified international and national competition has lead to a hyper competitive market. As a consequence, manufacturing companies are trapped in a differentiation issue. Moreover, commoditization challenges sales organizations to offer unique value to customers.

We have definitely experienced a change among our customers during recent years. They are aware that it is a buyers’ market and utilize it a lot to their advantage. They impose demands on better terms of payment, warranty, and product documentation. And of course all at the lowest possible price point. Customers are trying to reduce our products to mere commodities. It’s only price that matters. Sales Leader, Manufacturing

 

Justify higher/premium prices in a buyer-driven marketplace

Sales leaders made specific remarks that indicate buyers are increasingly driving the negotiation and imposing price pressures. Two clear examples referred to during interviews are e-auctions and electronic RFPs. In both cases, buyers evaluate suppliers mainly on price. These techniques function as barriers to value based selling and premium prices.

Cope with higher knowledge burden and diverse soft skills

jigsawheadFalling revenues and margins due to price pressures have encouraged organizations to widen the range of products and services. Respondents suggest salespeople are required to deal with a diverse customer portfolio. They also need to understand the details of a broader range of products and services. In other words, salespeople in the manufacturing industry have a higher knowledge burden than before. They need to understand business challenges of a more diverse customer base and match them with a broader range of products and services.

”Today my sales organization is more dependent on support from in-house experts because we have such a broad portfolio of offers. This puts higher demands on the amount of information a salesperson needs to cope with, you can not always take in-house experts to customer meetings.”

Sales Leader, Manufacturing

 

SERVICE AND DELIVERY: TOP ACTIVITY ON THE AGENDA

In order to overcome the above-mentioned challenges, sales leaders in the manufacturing industry indicated plans to steer their resources towards four activities:

1.

2.

3.

4.

DEVELOP SERVICE AND DELIVERY OFFERING

STRENGTHEN RELATIONSHIP WITH COSTUMERS

PENETRATE NEW NICHE MARKETS

INCREASE MARGINS BY IMPROVING EFFICIENCY

Beside taking a service-led growth approach, sales leaders plan to improve their services to achieve differentiation as well as to strengthen customers relations. An essential component in improving relationships is investing in areas which have direct contact with customers. Sales leaders indicated resources and efforts will be allocated to understanding customers with the goal to strengthen the relationships with existing customers. This appears to support the need to overcome hyper competition, commoditization and price pressures. Pursue future revenue growth by entering new niche segments was specified as a priority during 2014. This is intended to solve the issue of shrinking margins and decreasing demand. In general, respondents claimed to plan to allocate resources to scan and evaluate niche markets with high growth potential. In this way, sales organizations ensure their ability to sustain future revenue growth and report higher margins. To contend with an uncertain demand and higher energy costs, sales leaders in the manufacturing industry cited to plan to improve the efficiency of the sales process.

 

ProSales Prediction

We predict that the future agenda of B2B sales leaders in the manufacturing industry will likely focus on developing and selling services that support customer’s business goals. This means, sales leaders will be preocupied with understanding customers’ businesses and markets and on matching customer challenges with their own service solutions.

In March we will release the entire research report “Sales Agenda 2014”. Keep a look out!

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