Saturday, 31 October 2020

Strategic Sales and Marketing in Plastics Industry: My 2x3 Matrix Approach

 


In this blog post, we discuss what I call the 2x3 matrix for sales and marketing in the plastics industry (from material suppliers over machine manufacturers to part producers). 

This is a merger of two approaches introduced by Victor Antonio and Jeffrey J. Fox:

3 reasons why people buy from you

Victor Antonio addressed in one of his keynotes and books the only three reasons why prospects and customers buy from you: 

1. Your product or solution increases revenue at the client

2. Your product or solution reduces costs at the client 

3. Your product or solution increases the market share of your customer

Dollarization of benefits

Jeffrey J. Fox together with Richard Gregory coined the expression “dollarization”. They defined dollarization as “the translation of the benefits a product or service delivers to a customer into the dollars-and-cents financial impact to that customer [2]”. We often hear about value-added or value based selling. Dollarization turns value into a precise dollar number. 

In my first job at a global material supplier, the healthcare business development manager always reminded us that value needs to be quantified, in a technical way with numbers as well as in a commercial way with dollars. This was already the concept of dollarization just differently packed. 

The process of dollarization includes several steps and in my view the most important ones are: 

1. Stating the product / service benefit: this is the “why” customers should do business with you

2. Quantifying the benefit: presenting the benefit in numerical terms

3. Dollarization of the benefit: calculating the dollar value of the benefit for the customer

The 2x3 Matrix

Combining the two concepts results in an efficient tool which should be part of each marketing approach (Figure 1):

Figure 1: the 2x3 matrix for effective marketing in plastics industry

Now, how is this to be translated into plastics industry? 

Let us consider the following example:

Example of metal replacement with engineering thermoplastics

First we explore the why the customer should be interested in a metal replacement, which is the first part of the 2x3 matrix. Metal replacement by using engineering and high performance plastics leads to a cost and weight reduction at the customer application, which allows him to be more competitive. Weight reduction is especially interesting for automotive electrification applications. 

In the second part, we quantify and dollarize the cost reduction. 

Metal to engineering plastic conversion 

We start by stating the benefits of metal replacement: cost reduction, weight reduction and with this less fuel consumption for passenger cars, function integration, longer mould life times; 

Quantification of the benefits starts by presenting the property comparisons.

- Metal vs. plastics: the specific strength of high performance polymers is higher up to two to three times compared to metals such as brass, zinc, and magnesium (Figure 2).

Figure 2: tensile strength and specific strength of metals and high performance polymers

-Metal vs. plastics: longer mould life times can be realized with plastic parts (1,000,000 shots vs. 120,000 shots for aluminum parts; Figure 3).

Figure 3: mould life times (plastic vs. metal parts)


- Metal vs. plastics: overall processing times of injection moulded parts are 58% lower (Figure 4).



Figure 4: processing times of injection moulding long glass fiber parts vs. aluminium parts

Dollarization of the benefits: 

In the third step, we dollarize the above shown technical comparisons. Important to keep in mind is that plastics are sold by kilograms, however for moulding a plastic part you always need to fill a volume. Therefore, comparing the prices per kilogram and price per liter is essential here (Figure 5).



Figure 5: comparison price per kilogram and price per liter of metals and engineering thermoplastics

In our case of metal replacement, several benefits can be dollarized. One example is the tool service life time. 

Interesting for the customer is to know how much they can save per produced plastic part compared to their current metal die casting process. 

For this, we compare the aluminum die-casting manufacturing costs to the costs of the same part made out of a high performance polyamide (Figure 6). A major differentiator is the post-treatment cost. Injection moulded parts are ready to use after the moulding process is done. On the other hand, aluminum die-casting needs a post processing operation such as removing the flashes. Since there is not a post-treatment phase in injection moulding we can expect a cost saving of 35% due to having more parts per time unit. 

To summarize: “You’re not selling plastics – you’re selling 35% in cost savings!”

Figure 6: comparison manufacturing costs of aluminum die-casting vs. injection moulding of high performance polyamide 

Key take-aways: 

The 2x3 matrix is an effective marketing tool to properly guide you showing the value proposition of your product or service to satisfy one or several of the three purchasing reasons. It is based on the principle that value needs to be quantified, in technical terms as well as in dollar terms (“Dollarization”). This tool should be in every plastic marketer’s toolbox. 

I want to close the post with a quote from John Ruskin who stated in The Common Law of Business Balance [3], “There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money — that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot — it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.” 

Thank you for reading and #findoutaboutplastics

Greetings, 
Herwig Juster

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Literature
[1] Victor Antonio - Sales Influence: Finding the Why in (How People) Buy
[2] Jeffrey J. Fox and  Richard C. Gregory - The Dollarization Discipline: How Smart Companies Create Customer Value...and Profit from It
[3] https://www.assemblymag.com/articles/94912-metal-vs-plastic






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