Diversity, Manufacturing, and Spaghetti Sauce

Prego

Back in the 1980’s a guy called Howard Moskowitz revolutionized consumer choice. He figured out that there was no one perfect formula, recipe or product that suited everyone. Instead, the secret to success, so he said, was to provide a variety of options to customers.

Campbell’s—owner of the Prego brand—was one of the first to hire Moskowitz. At the time Campbell’s was in a bitter spaghetti sauce war with Ragu, and Ragu was winning. After some market research, Moskowitz discovered that what consumers really craved was choice, the option of buying, for instance, chunky or spicy spaghetti sauce as opposed to the traditional thin and often bland Italian sauce.

Based on Moskowitz’s advice, Campbell’s came out with its first extra chunky spaghetti sauce, which was an instant success, and over the next 10 years it made 600 million dollars selling the new chunky recipe.

Maskowitz understood 30 years ago what many manufacturers are only now realizing. Diversity is a key component to success. And it’s not just about products – it’s about diversifying the customer base, target markets, services offerings, and revenue streams too.

Here are seven ways manufacturers can diversify for success:

Diversify how you listen. When it comes to consumer products, customers rule. They may not always articulate exactly what they need, but listen to them hard enough at the right time and in the right places and it should become obvious what your product is lacking or where the gaps in the market are.

Diversify your understanding of the market. This doesn’t mean surveying a few customers from your current base. Truly competitive companies deploy aggressive techniques to monitor customer wants and needs, market trends, and competitor products. They think big to understand opportunities that could arise in the future.

Cisco Systems is a savvy company, but it was no surprise when the Flip Cam fizzled. Cisco failed to understand the market in crucial ways. The Flip Cam was hot for a short time, but was soon overshadowed by a flood of mobile devices that could take both still photos and video. And Cisco (crazily) forgot to wire up the Flip Cam for real-time internet connectivity, thus alienating a whole generation of social media gurus who like to document their lives instantly as they unfold.

Diversify the connectivity, reach, and impact of your products. Consumer electronics manufacturers are inundating us with connected, multi-purpose products. In a world where we can capture video, play games, and bank with our smart phones, find restaurants with our cars, and turn our tables into gaming consoles, single purpose, non-connected products seem archaic. Smart manufacturers understand the growing need for their products to be connected and versatile enough to perform multiple life tasks for us.

Diversify product lines to appeal to a broad audience. The Rolex’s and Bentley’s of this world survive by appealing to a narrow segment of the population, but most manufacturers can benefit from a diversity of products and a variety of price options. Why does Toyota consistently out sell other car manufacturers in the United States? Because it offers a wide variety of options to a broad set of customers. While Toyota might not be the flashiest, safest, greenest, most family friendly or economical auto brand when taken as a whole, it does offer a range of models that can compete in any one of these categories, and therefore Toyota appeals to a multitude of consumers.

Manufactures wishing to compete in overseas markets have to embrace diversity and become nimble, reacting quickly to new markets and trends.

Diversify your customer base. Most manufacturers have a core base of customers they like to keep happy. It’s not unusual to find that 20 percent or less of the customer base accounts for 80 percent of sales revenue. But putting all your eggs in one basket is suicide, especially in a down economy when customers are looking to cut costs. Manufacturers that find their traditional customer base is bleeding them dry should shift to finding new customers in existing markets or break out into entirely new markets.

Diversify your markets. American manufacturers should seek out opportunities aboard. Not by outsourcing supply chain and labor, but by opening U.S. companies (with U.S. workers) both abroad and at home and selling products to the international market. Europe and Asia have been doing this for years – establishing themselves in America and selling their products to the U.S. consumer. American manufacturers seem less inclined to compete in international markets, yet this is where the greatest opportunity lies.

Diversify your business strategy to include services. During the down economy of the last few years auto makers discovered something interesting. Consumers waiting for brighter days were holding onto their cars longer. Car sales revenue went down, but service revenue increased as consumers attempted to breathe life into their old vehicles, buying spare parts and checking into the repair shop more often.

The automotive aftermarket business is booming, and diligent manufacturers are focusing on developing and meeting new service needs. The possibilities are endless, especially as products become more wired. Manufacturers can offer new services in maintenance, repair and emergency, training and education, financing, trade-in, dismantling, and consignment, to name just a few.

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