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Do you feel threatened by globalisation? If you are a small / medium enterprise (SME) are you concerned that multi-national companies are only interested in dealing with your multi-national competitors? If so, be not afraid! As Stuart Wetherell, Strategic Marketing Director at Beardow Adams in the UK reports, Beardow Adams is an SME that has learnt to think and sell globally.
If you are selling your products or services in more than one country, you have, in effect, entered the global economy. As the current global economic situation illustrates, even if you are only selling in your home market, you are affected by the global market. In fact, it’s difficult not to be as your supplies may well be coming from all round the world.
And as more and more customers and prospects come under the wings of large multi-national corporations, with their greater centralisation and buyers who often have little knowledge of suppliers and applications, understanding how to deal with them is paramount. These businesses may require different approaches – but approaches should be made, as research shows that global companies grow faster than the general economy. Hopefully, these notes will help you to benefit from this growth.
At Beardow Adams we develop and manufacture hot melt adhesives for industrial applications. We were founded in 1977 and, largely through organic growth, we have grown to become among the top five hot melt companies in Europe. At our Milton Keynes, England, headquarters, we run Europe’s largest hot melt manufacturing plant. We market our hot melts in over forty countries to converters and major producers of industrial and consumer products – including many globally recognised brands. End uses include packaging, labelling, product assembly, woodworking and bookbinding.
As an SME, it would not be appropriate for Beardow Adams to develop direct sales around the world, so outside the UK, our business model is to sell through a distributor network. And this model has been very successful – we are able to tap into the passion and commitment of independent businesses who know their local markets.
Each distributor is a substantial company in its own right with a good working knowledge of adhesives and their markets – through marketing or manufacturing complementary products. They are responsible for sales, distribution, marketing and technical support within a given market or territory and are expected to stock popular products. We consider them as part of our team – there is often frequent daily contact, and we visit the main markets on average every two to three months.
For all the benefits of a distributor model there is one potential disadvantage – the multi-national customer base may not see you as the truly global player you are. In fact, your major competitors may be international – and they will make a strong argument to your prospects that this gives them an advantage over you. How do you address this?
We entitled our 2008 international distributor conference ‘Creating a global network’, for while our distributors only have the right to sell in a specific geographic market, many of their customers are multi-national companies that do not recognise geographical boundaries – and who may demand services outside or beyond the control of a local distributor.
Apart from a product or service, companies are buying relationships and confidence. Large groups in particular are looking for value, service, integrity of the supplier and product performance. Much of this is – or should be – implied in the brand they are buying, for a successful brand equates to trust and confidence.
A brand grows in stature though trust and understanding, often established over many years of experience – several distributors have been selling the Beardow Adams brand for more than 20 years.
We offer distributors first class products, manufacturing, technical knowledge and development capabilities. In return, distributors give us knowledge of their local market, distribution channels and local technical service.
But to leverage success, the distributor and principal must be willing to share all technical, application and contact information – as well as successes and failures.
This will enable both parties to learn from each other, grasp opportunities when they arise and use resources where and when they are most effective.
Above all, everyone must present a coherent picture and a strong brand to build the kind of confidence that, rightly or wrongly, may be taken for granted with an international rival.
So, even though we are not a global company in the sense of being a multi-national, our outlook is global – but, and this is our crucial advantage, we are flexible and fast moving, where traditional international suppliers are not. In addition, our strategic focus is on one product – hot melt adhesives. So, backed by a global network of distributors who offer local service and supply, we can outperform international rivals – and by combining our global knowledge with local market knowledge and skills, we can outperform the local supplier of hot melt adhesives.
In other words, we aim to work as one team by sharing information and experiences to create global connections and confidence. The benefit is that when a multi-national prospect asks our distributor in, say, Turkey, ‘Do you supply any of our other plants?’ he can say ‘Yes – in Iceland, Poland, Spain and the UK’, thus opening the door to a wider discussion of the applications and opportunities.
This won’t necessarily lead to a firm order, but it may well lead to a product trial and customer contact with a wider Beardow Adams audience, which in turn reinforces the brand and boosts the confidence of the purchaser and the distributor.
We had an example of this last year in Australia when the production manager at a plant in Victoria was instantly ‘on-side’ when told that a colleague in Sydney was using the same adhesive our distributor was recommending for a similar application.
It is equally important to be able to show that you can satisfy the needs of different market segments, for while the technical solution may be the same or very similar, the global purchaser may well only feel confident if he or she is sure that other companies in the markets it supplies are using the same product you are selling. In Spain, one multi-national prospect needed assuring that we were already supplying the markets they served, which varied from spices to baby foods and ice cream to hot beverages.
Of course, life isn’t always so easy. Centralised purchasing and group deals can be a real challenge, offering opportunities and threats – opportunities where doors may have been closed and threats where the doors may now close. Here, it is important to understand the culture and habits of the new controlling organisation, the relevant people and what they are looking for from their supplier.
Do they know what is being used in their various plants around the world and what price is being paid? Do they have the co-operation – and interests – of individual plant managers? Almost certainly they will trying to reduce costs – but is this at the expense of quality?
The overriding message is to work with your distributors – even if the customer wants to exclude them from the equation.
An effective distribution channel does not add cost to the process – it is the route through which service is delivered and that includes supply of product. This is made easier when the distributor / principal relationship is open – duel branding of business cards can assist in this ‘one team’ approach.
In one situation, a multi-national customer wanted to centralise purchasing at a regional level with a fixed price for each plant. With discussions co-ordinated through our head office, we ensured liaison and co-operation with our individual distributors. A deal was negotiated that kept distribution and service though the distributors, thus offering the customer local supply and service but at a global price.
If the whole discussion is driven by item cost rather than total cost, should such deals be brokered? When an ‘opportunity’ translates into a customer fixation on price, rather than value – something that usually unfolds though an internet auction when the normal channels of communication and discussion are closed and quality and service are not discussed – how does one proceed?
Each has to be decided on its own merits, but it is equally important to recognise that if an opportunity makes no business sense, one should not be afraid to walk away from it. Long term business value to you relies on having a dialogue with your customer where they are convinced of the value of using a quality product supported by quality service.
Globalisation is not something that one should be frightened of, but rather looked upon as an opportunity. However, it will only turn into business if everyone involved – principals, local offices, distributors and other parts of the chain you can influence – is on side and understands that being open and co-operative is in their interests.
To grow our business, we are encouraging our distributors to become an active part of a global network and thus key players in a global brand that will make the sum of the parts greater than the whole.
As one speaker at our conference commented, “It’s all about selling brands to brands.” |