MarketingProfs' Members Register for B2B Forum 2010 for just $695! (good until 11/30) »

Ask your question ... sign up today! It's FREE!
Strategy     
 
This question has been closed, and points have been awarded.
Spare Parts Business: How To Fight Pirates And Defend Market Share?
Posted By: beat.attinger* on 8/12/2004 3:38 AM (CST) 250 Points
I work for a company operating worldwide in the investment goods sector (textile machinery). The sales of spare parts is a major contributor to the firm's bottom line. We are facing fierce competition against low-cost pirates, especially in Asia.
Question: are there any smart ways to ward off pirates, in order to increase our market shares, and still keep the margins? (we are doing following right now: have a dedicated sales force for spares, organize maintenance seminars with customers to have them use original spares, combine spares with maintenance services to differentiate our value proposition to the customers). Any other ideas?

Posted by: norquest* Member Response
8/12/2004 4:42 AM (CST)
It is human nature and prudent business practice to seek the best value for money one can get. If a lower priced product can deliver better value, you'd buy it wouldn't you?

If you can tangibly demonstrate the superiority of your product and clearly differentiate it, you don’t have a problem. But if this isn’t feasible, perhaps you should think of some method by which you take a position in the new dynamic that is taking place in your marketplace.

Here are some options:
1. Announce an upgrade that is retrofitted free to those who have never used an outside vendor’s parts. It costs the other guys a substantial sum.
2. Maybe you could license your pirates if they conform to your norms and get a royalty form them
3. Maybe even certify their products for a fee. If you can't lick 'em, join 'em!
4. Or if the level of differentiation feasible doesn’t allow even that to happen, consider getting out of a sector that doesn’t have anything left to offer you.
 
Posted by: beat.attinger* Author Response
8/12/2004 9:34 AM (CST)
Dear Rajiv,

thanks for your input. It certainly does add another piece to the puzzle. Thanks again!
 
Posted by: jose04 Accepted Answer
8/12/2004 9:52 AM (CST)
Hello beat.attinger

You seem to be doing the right things!

Here's my bit..

There used to be a time (and still is) when spare parts is the main business for many businesses. THe customers know this and that's why, given a chance they go to the pirates. Everybody values their money. Who has pirated whom? Who owns and idea anyway. It so happens that you stepped on it before the other does. Discoveries are waiting to happen. Its always there. For the hard work and toil to make those discoveries happen, you need a fee. We have patents for that. The pirates are one up on you. THey change the rules in society. They shove the patents to the bin. It hurts..hurts badly. That's why Microsoft has launched an XP Asia version. They don't legally call Linux a pirate, but this is to hit the free OS makers.

My feeling is, goods and services in future will be free. SO if we are in business, we better accept the imminent. THis means that we have to optimise the level of goodies and product enhancements you have to offer the client. You are doing the right thing. Educate the client that getting your licensed product is valuable. Show them (prove it to them) that buying from you will save money in the long run. The computer hardware and software business is running out of breath on this count too. For industrial products, clients value relationships, trouble free services and lesser long term costs. At any cost they wouldn't trade short term profits, to machinery breakdowns. Prove that to them. In case you find it difficult to do so, it means that the pirates make their copy better than the original. THen, either you go with them and learn their trade and do that better or run...Your cash cow is not working anymore, your product is in the last stage of the BCG matrix. Hope thats not the case with you.

THese are some thoughts on your question!!

Hope they help!
 
Posted by: aosterday* Member Response
8/12/2004 10:02 AM (CST)
Why don't you say just what you told us -- that there are pirated parts out there made in other countries, but that your product is conceived, designed, and manufactured in the good 'ol USA by Americans for Americans. When it comes to machinery, a IUSA stamp says quality.
 
Posted by: NuCoPro Accepted Answer
8/12/2004 11:45 AM (CST)
How about playing off the reliability angle? "That pirated part may cost less intially, but how many times will you have to replace it within the life expectancy of our quality parts? What does that down time cost you? Are you really saving money? Plus, what guarantee do you have that the "pirate" will be there when their part breaks?"

People want to feel secure in their purchasing decisions. Those who only operate on a cost basis don't stay in business over the long term.
 
Posted by: thinkmor Accepted Answer
8/12/2004 1:51 PM (CST)
Hi Beat

We had a similar problem in Eastern Europe for an electronics brand with grey imports.

Although similar, you can extend Gary's reliability suggestions to offer a Service Guarantee Certificate for your parts that have extra value for your customers- assuming your parts are reliable - no offense intended.

Use your customer lifetime value to find what additional offers you can incorporate with your value propositions into the equation. Additionally, you can do a sales promotion to incorporate your Service Guarantee Certificates as a double incentive.

Communicate this to your dealers, agents, network and make a campaign out of it.

Hope that helps.
 
Posted by: thinkmor Accepted Answer
8/12/2004 1:55 PM (CST)
Hi again

Sorry forgot to mention -

Consider doing technical branded campaign - why your parts have been so good and incorporate testimonials into them. Identify and highlight why they buy your products.

You want to remind and re-enforce the goodwill you have built up through years of good service with your customers.

That is not so easy to copy. Good luck!
 
Posted by: w.j.macarthur* Accepted Answer
8/12/2004 5:37 PM (CST)
Hi

Remember it is always about the "Perceived Value" not the cost or price that concerns a customer.

Look at adding value to your spare parts with such things as:
a) Just in Time delivery
b) Holding fast moving stock in-country
c) Providing credit facilities if appropriate
d) In-country trained and certified service people offering 24/7 service.
e) Guarantees
f) Provide a costs analysis to your customers showing that although the pirate parts are cheaper, they need replacing more often thereby increasing down-time and costs, and decreasing productivity and service to their clients.
g) Freight free delivery

Final note: We all (including customers) will pay more for service, so explore ways to add service and value to your business.

Wayne
 
Posted by: virago* Accepted Answer
8/12/2004 8:41 PM (CST)
Let me ask you this - how do you market your spare parts? Are they just 'spare parts' or 'genuine spare parts'? By trademarking and branding your spare parts SO pirated companies cannot copy them.

You then develop a marketing strategy & campaign around your now newly branded 'genuine spare parts' with many of the suggestions that are above such as training, excellent machinery service and maintenace etc.

One of the best examples I saw on spare parts was in Australia. Toyota Genuine Parts was marketed to car dealerships and end users to try and reduce the use of pirated products.

It has been running for many years with many of the suggestions that macarthur above mentioned but the difference was if you didn't use the geninue parts you would void your warranty on your vehicle.

Toyota had a strong marketing strategy for their spare parts industry and most importantly trademarked and branded their spare parts SO pirated companies cannot copy. Because it was so successful companies were pirating the 'genuine spare parts' which is illegal under intellectual property laws.

Also you have to determine if you want to keep your margins or keep your business. With the above value added services your margin is going to shrink so do you want them to go to another company to buy losing that customer or buy from you? I would choose the latter as at least I am keeping the customer and have the opportunity to continue the relationship and sell new machines in the future.

Hope this helps.
 
Posted by: jcmedinave Accepted Answer
8/13/2004 9:28 AM (CST)
The best way is to advertise and alert people about the differences between the original parts and copies. Are there differences? Not only in the appearance, but in the functionality and benefits. Advertise the differences in the same product, send them to the current customers, develop alliances with government departments in charge of taxes and interested in consuming legal parts.

Bye,

Juan Carlos
 


Get more answers ... ReTweet this!

Would you like to post a response?
Welcome to Know-How Exchange!
This is a collaborative community. We welcome everyone's participation.
All you need to do is login. Enter your account info in the box above (top right).
Not a member? Not a problem. Register here (it's FREE and EASY).




Know-How Exchange powered by MarketingProfs


Sponsored Links

Buy a Link Now

Just Released ... Download Today!
Just Released ... Download Today!
Look inside
Included with Premium Membership
User Name:
Password:
Remember Me
Forgot your password?

Top 25 KHE Experts
(Strategy)
ASVP/ChrisB (39143)
Jay Hamilton-Roth (36484)
mgoodman (31658)
mbarber (28529)
Frank Hurtte (24822)
W.M.M.A. (24343)
telemoxie (24010)
CarolBlaha (20554)
wnelson (18695)
Peter (henna gaijin) (16342)
NuCoPro (16053)
michael (15775)
stevea (13066)
thinkmor (10820)
SteveByrneBranding (9826)
PhilGrisolia=Results (9649)
Puru Gupta (8760)
Deremiah *CPE (8318)
Wiglaf (8292)
SRyan ;] (7862)
darcy.moen (7712)
Pepper Blue (7080)
Gary Bloomer (6359)
Mikee (6119)
Michele (5978)
Recently Posted Marketing Jobs
Director of Marketing and Communications
Demand Generation Manager
Marketing/Advertising Faculty
Director of Marketing
Market Analyst
Sr. Field Marketing Manager - Business Intell.
Associate Vice President of Marketing and Corporat
Marketing Manager
[more jobs]

Join over 355,000 members ... SIGN UP!

My email address is and I'd like my password to be .

Already a member? Sign In!

My email address is , and my password is .


HACKER SAFE certified sites prevent over 99.9% of hacker crime.