If you are not on track with this philosophy, ask yourself these two questions:
1. What can we do to position our brand to make the customer want to buy our product?
2. What should we do to continuously improve our productivity?
Why are these questions so critical? Well, if you have fallen into a commodity mentality or have become a “me-too” company line-selling only on price, you’ll die, because there’s always someone out there with a sharper pencil.
Lest we forget, being in business dictates making a profit.
To profit in the hardwood flooring business, you have to have a reasonable level of sales volume and the ability to run your plant efficiently. Accomplishing that takes a reputation for good, consistent product quality and a sound marketing strategy.
There are only a handful of very large manufacturers in this business, meaning the vast majority are small-to-medium-size producers. So for you to be successful, it is imperative that you create a niche for your product line and do it well. Your message needs to be consistent to position your brand such that when it comes to your niche, the customer will recognize your brand as, at the very least, one of the better choices in that category.
Here are some proven strategies that, when employed consistently over time, will ensure your success.
Determine Your Unique Selling Advantage
Take a hard look at what makes your product unique. Ask yourself, “What sets me apart from the rest?” It may be your breadth of line; your regionalized species; finish technology; warranty; green initiatives; installation system; wear layer thickness; corporate history/years in the business; long lengths or wide widths of plank; long history of satisfied customers; precise machining capability; tightness of grading, or a combination of items.
Above all, be sure that what you do to position your product as being unique is true to form.
In your marketing materials, strive to create a look that is yours and yours alone. Focus on what makes your products unique, and make bold statements that others will find hard to match. One of my college marketing professors once said, “The best advertisement is when you cover up your name or logo at the bottom; the ad must be strong enough that it can only be your message or statement and no one else’s.” Sounds tough, but a good brand positioning strategy will lead to just the right way to promote your great products.
Be a Low-cost Producer
Given the extremely competitive nature of our industry, the most successful companies always seem to find ways to cut costs to stay both competitive and profitable. And I don’t mean by sacrificing quality or being cheap. The single biggest cost of manufacturing is your raw materials, so the first place to look for ways of lowering cost is to maximize your yield.
I have found that breaking down old paradigms about yield is very doable. If there’s a mentality on your production floor that “this is the way we’ve always done things around here,” well, it just doesn’t cut the mustard in my book. Good production people always seem to find new ways, many of them very simple ways, to keep pushing the envelope to increase yields.
Your team should religiously monitor raw material prices, production yields, waste factors, percentage of seconds or cabin grade produced, daily molder throughput, and every other factor that impacts the cost of producing every square foot of material. And you have to be relentless in this pursuit!
Know What You Do Best and Do It Better
If you want to be successful in your niche, you just can’t be all things to all people. I see companies still making too many different products that tie up too many assets with very little return.
New products are added over time to keep pace with changes in the market, but “old” products, colors, and sizes that used to be the big sellers that keep dwindling in sales are not dropped from the line. It’s far better to be very good at developing a smaller number of strong-selling products than to be marginal with a litany of slow-moving items.
Look at the amount of material, space, machinery, and inventory you have committed to these slow movers. I know it’s hard to say goodbye to old friends, but if you need the capital to market and merchandise your newer, faster-selling products, it’s time to clean house. Re-deploying those assets by investing in the latest and most productive machinery, backed up by inventory that turns quicker, will help you realize a dramatic impact on your bottom line.
It’s Leapfrog, Not Follow the Leader
After you create a successful niche, more likely than not you will attract new competition. You worked so hard to establish a foothold in that niche market, and then a Johnny-come-lately arrives on the scene with a similar product at a lower price.
So what do you do?
Well, dropping your price is not the answer, especially for the long run. It’s hard to recognize that you are most vulnerable when you are ahead of the pack. That’s when everyone wants to take pot shots at you.
To avoid being shot down by a cheaper version of your quality product, you need a leapfrog strategy aimed directly at new product development. You leapfrog the competition with a new and improved version. It might be a better finish, a new T&G design, or some other creative advancement, but it has to be new and different. This is achieved by being aggressive with an ongoing product development initiative, because you understand that every product has a shelf life.
You must develop and introduce the next generation just about the time your competition comes out with their copycat version of your niche product. Play with your bat in your ballpark by your rules, and you won’t get caught up in the “lower-your-price” game. 3M Corporation maintains a product strategy dictating that 50 % of the products they sell every yearmust be from products that did not exist in their product line 5 years ago. It may sound hard to do, but when it becomes the compelling corporate philosophy, it happens year after year.
The keys to being successful in your niche over the long haul are to constantly find new ways to be the low-cost producer in your best category, pound away at your unique selling proposition, and stay the course with new product innovation. It’s a guaranteed strategic recipe to distance your niche product from the pack and grow your bottom line.