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.
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.
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:
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.
Remember that your value doesn’t begin and end with the extent of your facilities or the money you save customers; it's the unique value your services represent to your audience: the gains you offer and the pains you take away from them.
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 can lie in alleviating stress, making your customers look good in front of their bosses, or exciting them about the future. These are the benefits and feelings that can differentiate you in the marketplace.
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.
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 market and embed that perception in your customers' 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 price-cutting.
In a digital world, you can manage this positioning by carefully orchestrating image, message and experience.
Developing a strong brand identity is crucial to supporting your brand positioning and ensuring 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:
In Dentsu 2024’s research into reasons for choosing a B2B partner, a brand's status as a ‘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 need to be confident in your vision, expertise and leadership -
And chasing competitor pricing won't help convince them of that.
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. You create value beyond your products and services by offering insightful, relevant content tailored to your customers' specific challenges. 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:
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:
You can read more about adopting a RevOps approach to customer experience here.
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 - and won't continually fall prey to competitor-led pricing.