Industrial CAPEX:

Do not forget to invest in

marketing!

Until recently, financial investors in industrial companies where keen to slash first
marketing and communication costs to improve cash flow and short-term profitability.
Geopolitical crises, economic sovereignty policies, the digitalisation of production, and
efforts to reduce CO2 emissions have increased the interest in relocating factories closer
to end markets. A new generation of investors is arriving, with a longer investment horizon
and a stronger awareness of industry specifics. In an ever-changing world, those investors
are more demanding, and pay a close attention to the availability of marketing know-how
in the company.

Today, investing in an industrial site is not enough to ensure commercial success:

marketing skills are also needed to orientate the investment at early stage, and afterwards
to make the most of the investment.

Recruiting a person with consumer marketing experience brings already significant

expertise on board:

• The rigour of quantitative data analysis, the possibility of measuring the

effectiveness of actions carried out in the various sales channels
• The relationship with distributors and traders.
• The identification and exploitation of non-rational purchasing factors.
• The communication about the commercial offer, in accordance with each local
social, regulatory, and economic context.
• The crafting of an action plan to orchestrate the various marketing components:
price, communication, market access, target selection, product.
• The customer focus, creativity, and agility in a context where expectations and
competition are constantly changing.
• A mastery in digital marketing, use of social networks, omnichannel communication.

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This is not enough, mastering three other areas is necessary:

1-Understanding the relationship between the industrial process, the

market, and the product offering.

The commercial success of a manufacturer depends on the harmonious choice

between the manufacturing process, the target market, and the product offering. A
change in one area impacts the other two. Let us give a few examples:

• Impact of the market on the process: the size of the market to be served,
its growth, seasonality, the variability of the demand, help calibrate the
capacity and flexibility of the production site. A manufacturer of
commoditised products, offered by many competitors, but which provides
the best delivery flexibility can become a market winner.

• Impact of the development process on the product: Product lifecycle

management software has facilitated the standardisation of components,
allowing engineers to draw on catalogues of already proven modules. This
paves the way for improved competitiveness.

• Impact of the industrial process on the market: additive manufacturing

makes it possible to deliver parts in incomparably smaller quantities and
timescales than a few years ago. It also makes it possible to propose new
parts, unfeasible with traditional processes, and more efficient. Marketing
must study whether this new process can trigger a new market.

2-Establishing service around the installed base

The manufacturer sells goods that will be used for years or decades. Beyond the
warranty period, it is present for all support needs in terms of repair, maintenance,
supply of parts, advice, and training. The services around the installed base
constitute a business whose profitability is usually significantly higher than that of
the sale of a new good, because the user usually needs to source the spare parts
from the manufacturer. A good after-sales service creates customer loyalty and
puts the manufacturer at the top of the list of preferred suppliers for the next
tender.

This aftermarket business, which is less glamorous than the sale of new products,
is sometimes not very highly regarded. Other companies, on the other hand, have
understood that it is more profitable to push open the dirty door of the repair shop
than the shiny door of the buyer at the head office!

After-sales marketing is a specific metier which requires knowledge of the

customer's use of the products and an acceptance of the long term. An increasingly
needed skill is that of data and digitalisation: updating information on the installed
base, modelling the turnover potential of the installed base from sales of new
products, providing sales staff with information, managing a customer relationship
management (CRM) system that considers the installed base, developing the
website dedicated to after-sales service, defining a pricing policy, etc. These are
work-intensive activities, but they contribute to the company's long-term
performance.

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 The increasing connectivity of devices also creates opportunities to collect and
accumulate usage data, and to generate new activities that solve real customer
problems. Marketing needs to assess the business potential, working closely with
product experts, field service colleagues, and data professionals.

3-Strategically manage key customer accounts

Together with the sales force, the marketing manager ensures that the empirical
knowledge of all those who are facing a customer is gathered, analysed, and used
to carry out a strategic diagnosis. It is based on factual data: strategy, organisation
chart, financial health, roles and responsibilities, priorities, relationship with
competitors, with other market players, purchasing policy, selection of suppliers,
technical approval, integration of the product into the customer's production and
logistics system, functions within the customer that use the product, etc. It features
also qualitative information on real powers, perceptions, allies and enemies, power
games, long memory of past problems, negotiation leverages, gap between
speeches and realities, technical skills, etc.

Even more so in a subcontracting relationship, understanding the client is

fundamental to building a winning strategy. Customer intelligence helps mitigate
risks of bankruptcy: if the company captures early signals that its position is
threatened by competition, it can take risk mitigation actions.

The challenge of growing marketing people

An industrial company that wants to grow sustainably, or simply perpetuate its activity
needs solid marketing skills. A good mastery of the three areas described by the marketing
manager is a necessary condition. This is why it is preferable to choose managers with
experience in the sector, who come from the sales, engineering, or technical-commercial
functions.

Yet taking up the position is like a leap into the unknown because the necessary marketing-
specific soft skills are not always available in the company. These soft skills are curiosity,
the ability to listen and observe, cognitive and emotional empathy, determination in the
face of obstacles, creativity, the ability to create a story, the ability to interact and federate
different teams and professions. Management should make sure the newly promoted
marketing manager goes through a robust onboarding program to learn as quickly as
possible the marketing thought processes, the right mindset, and attitudes.

Geoffroy de Grandmaison
GdeG Consulting

Geoffroy de Grandmaison has dedicated his career to marketing in the industrial and
technological sectors, first in market research and marketing consultancy, then as
marketing director within international industrial groups. In 2023, he founded GdeG
Consulting to help young and medium-sized companies innovate to stay ahead in their
markets.

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