How to avoid competitor-based pricing in the squeezed middle

In the contract manufacturing sector, where companies have historically operated ‘unseen’, differentiation can be a struggle, and loyalty can be in short supply. In markets like these, too often pricing becomes the main lever for winning and retaining business. How can you avoid running in a race to the bottom?

It’s no secret that many EMS providers are experiencing pricing pressure from hyperscale competitors. And without the niche capabilities to justify higher price tags for their services, they often feel they've nowhere to go but down.

Many EMS now find themselves part of a squeezed middle, an undifferentiated pack of suppliers with similar offerings, undercutting each other to win new business.

How did that happen?

In an era of cheap corporate money, many EMS companies increased their reach through mergers and acquisitions rather than natural, organic growth.

Interestingly, the Boston Consulting Group explores the vicious cycle of price pressure that can take place in a mature market like this. As competition intensifies and companies consolidate, offerings become less distinctive and pricing becomes the principal lever for winning business. 

Companies wielding massive economies of scale can always win on price, but others risk everything in following their lead.

Many EMS, anxious about losing long-standing business or looking to meet stiff revenue targets, move their focus from adding value for customers - to matching and beating competitor pricing. And that’s a dangerous game to play.

Forget the race to the bottom

Before you continue to race to the bottom, there’s more you can do to raise your voice in the market and your value in the eyes of your customers. 

Building a more personal and lasting connection with your buyers is the key to long-term revenue growth. 

“Recognising the full range of both rational and emotional factors behind business purchases—and tailoring the value proposition accordingly—is critical to avoiding the commodity trap.” 

Bain, The B2B Elements of Value

And as marketing expert David van Schaick points out:

“It is marketing more than any other function that can protect and create future revenue streams.”

Here are five powerful levers for building your profile and revenue with the right brand marketing strategy: 

Five ways brand marketing helps you avoid competitor-based pricing

1. Realising your value proposition 

What do you do for your customers that no one else can? 

Understanding your unique value in the eyes of your customers can help you justify your price tag to them and ensure you keep growing the size and depth of your reach with their business.

A clear value proposition defines what sets your brand apart from competitors and communicates the benefits customers will receive from using your brand's services. 

A strong value proposition defines your unique appeal in the marketplace - how you solve your customers’ most pressing pain points in a value-adding way. 

Don’t forget, your value doesn’t begin and end with the extent of your facilities or the money you save cusomters, it’s the unique value your services represent to your audience.  The gains you offer and the pains you take away.

What you bring in terms of strategic insight, supply chain management and customer service can mean more to customers than a series of ticks in boxes. Your value lies in how you alleviate stress, make your customers look good in front of their bosses, or excite them about the future. These are the benefits and feelings that can differentiate you in the marketplace.

The perception of these benefits can be the fundamental reason you will attract new customers and retain existing ones. 

The value proposition canvas (invented by Strategyzer) is a simple but powerful tool to help you define your VP. It starts with mapping your services to the gains and pains that your customers are looking to win and avoid, which you can then transform into compelling brand messaging. 

You can read more about the value proposition canvas in our free brand positioning guide.

2. Consolidating your brand positioning

It’s not enough for you to understand your unique, value proposition. 

Your job now is influencing how customers and prospects perceive the value of your brand in comparison to others.

It’s about how you position your brand in the the market- and embed that perception in their consciousness.

As brand experts Rice and Trout say: 

“Positioning is not what you do to the product; it's what you do to the mind of the prospect.”

Positioning is the strategic act of occupying a distinct space in the mental landscape of your customer, ensuring the recognition, trust, and loyalty that will help you escape a world of continual cost-cutting.

In a digital world, you can manage this positioning through the careful orchestration of image, message and experience.

3. Building a solid brand identity

Developing a strong brand identity is crucial to supporting your brand positioning and ensuring that your intended message resonates with your audience. Brand identity encapsulates the values, voice and visuals that define your company. 

Key steps in building your brand identity include:

• Define Your Brand Values: Transform your value proposition into a set of enduring values and a mission that drives and defines your brand. 
• Craft a Unique Visual Identity: Elements like your logo, colour palette, and typography contribute to how your brand is perceived at a glance. Consistent visuals across all platforms reinforce brand recall.
• Establish a Distinct Brand Voice: Whether your brand voice is professional, approachable, or innovative, it should be consistent and authentic across all communications. Your tone should reflect the personality that aligns with your target audience’s expectations and preferences.
• Communicate Consistently: Ensure every customer touchpoint aligns with your brand identity, from your website to customer service and social media. Consistent messaging reinforces trust and brand recognition over time

4. Making your brand a trusted guide in your customer’s world

In Dentsu 2024’s research into reasons for choosing a B2B partner - a brand's status as ‘thought leader’ in their sector was the third biggest influencing decision (up from 10th position the previous year). 

This is a clear message that your customers want to be confident in your vision, expertise and leadership - chasing competitor pricing won't.

In the contract manufacturing industry, where trust and reliability are paramount, content can be a powerful tool for positioning your brand as a trusted guide and industry authority. By offering insightful, relevant content tailored to your customers' specific challenges, you create value beyond your products and services. This approach fosters long-term loyalty and establishes your brand as the go-to resource clients rely on.

Here’s how to build trust and guide your customers with strategic content:

• Address Customer Needs at Every Stage: Develop content that resonates with customers at each stage of their journey—from initial research to post-contract support. Regularly publishing whitepapers, guides, and blogs that address key topics and trends demonstrates your expertise and shows clients that you understand the issues impacting their business.
• Diversify Content Formats: Use various formats—such as videos, infographics, and webinars—to engage clients with different preferences and provide a richer experience. Videos, for instance, can make complex topics more accessible, while webinars offer real-time insights and Q&A opportunities, fostering deeper engagement.
• Thought Leadership: In a world flooded with generic content, it’s more crucial than ever to produce original, uniquely helpful content. Consider commissioning industry research or conducting in-depth analyses to provide fresh, credible insights. Being a thought leader who offers new perspectives or proprietary data will set your brand apart and make it an indispensable resource.
• Practical, Solution-Focused Content: Go beyond general industry knowledge to deliver actionable insights tailored to your customer's specific needs. Share case studies, best practices, and strategic insights that demonstrate how your expertise can help them tackle operational hurdles—whether that’s improving product design, optimising supply chains, or breaking into new markets.

5. Focusing on customer experience

In contract manufacturing, where relationships often feel transactional or remote, there’s a prime opportunity to differentiate through a seamless, personalised buyer experience. Many competitors may focus solely on cost and efficiency, but by prioritising a value-added customer experience, you can foster loyalty, strengthen long-term partnerships, and gain a competitive edge.

Key steps to enhance the customer experience in contract manufacturing include:

• Personalisation at Every Stage: Tailor your interactions to the unique needs of each client. This can mean customising reporting, adapting communication styles, or even creating specific project teams to address their exact requirements. With contract manufacturing clients often having varied needs, a personalised approach can make a real difference in client satisfaction and retention.
• Streamlined Project Communication: Ensure that clients receive regular, transparent updates on project timelines, potential bottlenecks, and production milestones. Establishing an online portal for real-time updates or integrating project management software gives clients visibility, easing concerns and reinforcing trust.
• Proactive Support and Partnership Mindset: Rather than waiting for clients to reach out, proactively offer insights on optimising costs, lead times, or product design improvements. This consultative approach, where you become a strategic partner rather than just a vendor, adds significant value and fosters long-term relationships.
• Structured Feedback Loops: Regularly collect and act on client feedback to improve processes and services. Showing clients that their input drives real changes builds trust and positions your business as adaptable and client-focused—an essential advantage in a competitive industry.

You can read more about adopting a RevOps approach to customer experience here.

Realising the power of your brand

Even if you are in the squeezed middle, there is always the opportunity to differentiate your offering and create a distinctive brand that resonates with your target market.

In fact, without this kind of brand building, it seems, you are at continual risk of losing your visibility and competitive edge in the market-place.

"B2B companies need to realise that the perception of value is not just based on rational cost-benefit analysis but also on how their brand makes customers feel."

Rory Sutherland, Vice Chairman, Ogilvy & Mather

Effective brand positioning means you recongise the power of these feelings - won't continually fall prey to competitor-led pricing.