Ideas + Insights
The coronavirus pandemic has forced many manufacturers to re-think production, and it has elevated the discussion around buying Australian made once more. Some are looking to invest in new technologies to innovate, but have you considered how your manufacturing story can increase bottom-line revenue?
When organisational budgets are being closely monitored and assessed, choosing the right approach to growing business has never been more important. The feasibility of manufacturing locally is a complex issue, with many influencing factors to consider, so I don’t intend to oversimplify it. What I instead challenge companies to think about before investing in new technology is – why should a consumer buy your locally made product knowing that it may cost them more?
The low-down on branding
There are many takes on branding. This includes the level of importance to a business, and what branding actually is. Depending on what perspective you are coming from, for example, a designer, marketer or salesperson, each will likely give you a different view. As a business person, I look at branding as the way your business is portrayed and perceived by your current and prospective customers. This is the whole package of what people see and experience, both online and offline. There are many layers to this, but the foundation of branding is your story.
Your story is what someone thinks of in relation to your business and what they believe to know about it. Do they know who founded the company and why? Do they understand what benefits your products and services offer? Do they know what makes your company different from all the other companies offering similar products and services? It doesn’t matter if you have the best product in the world if no one knows this – by understanding your story.
Quality and function before price
Throughout my career working with both manufacturers and retailers, I have often heard comments like: ‘It’s just too expensive to manufacture in Australia – people won’t pay what we need to charge to cover the costs, and make a profit.”
Since well before the coronavirus, and the GFC, Australian manufacturers have been competing with those who outsource their production overseas, for example, China or Thailand, to reduce costs. This isn’t a new dilemma. Companies that choose not to compete on price, rather compete on value, however, often in my experience come out on top.
Every purchase decision involves the consideration of a series of questions or a checklist against criteria. Why do we as consumers pay more for one product over another? People invest in design and function. Advancements and accessibility to new technologies have played a huge part in this. The truth is though, to many, it’s irrelevant where a product is manufactured. The level of quality needs to suit the intended purpose or function. Price comes after this.
To give you an example: the purchase of new shoes. If I shop at Kmart it’s a fair assumption long-lasting quality is not high on my criteria. I want something functional, and I will sacrifice quality and design at a lower price. I know that these shoes are likely to be manufactured in China, India or Thailand and may not be particularly bothered by it. Upon purchase, I hope they will last me a season. Anything more than this is a bonus. They are probably not going to be the most comfortable pair of shoes I’ve ever owned, and if they break, I will be annoyed, but not surprised.
On the other hand, if we consider the brand ECCO. I know these shoes will cost much more than the Kmart comparison, but I have come to understand through the way they communicate their brand that all their shoes are Danish designed. The reputation of Danish design (across multiple product categories) is functional, often simple, and quality. ECCO has created a trust that if I buy their shoes, I can wear them every day and know they are going to be comfortable, and last. Function and design is more important to me than price.
Frankie4 is an excellent example of an Australian shoe brand where their brand story has also developed trust among consumers which motivates them to pay more for perceived higher quality. They offer great looking, functional shoes that are designed by podiatrists. Their customers do not necessarily have a higher disposable income.
If none of these brands was effectively telling their story, consumers would be unable to distinguish between them. The purchase decision would be made on what they see at face value – price and cosmetic differences. Consumers have been trained to look at these two variables, in the absence of having access to other value-enhancing information.
Upholding trust to retains and attract customers
Where some companies have come unstuck, is when holes appear in their story. Consumers are savvy and often sceptical because they have learnt that brands – manufacturers and retailers – sometimes break their trust. Not only is it illegal to mislead and deceive your customers, it undoubtedly backfires and hurts your bottom line – sooner or later.
The Made in Australia brand used to hold superior standing. If your product had the Made in Australia logo on it, consumers believed they were buying a product that was made, manufactured, produced – in Australia. It was then uncovered that only a small percentage of the entire manufacturing process needed to be ‘made’ in Australia. For many companies wearing this badge of honour, a large majority of their ‘making’ process was done offshore. This destroyed consumer trust, making the perceived value of that brand lower, impacting what people were prepared to pay.
The use of technology can become a key part of your story
There are many wonderful local brands with manufacturing stories that are simply not being told, and consequently not understood by consumers. The story of why a particular product is superior to competitor products may be well understood by the manufacturers – but is this being communicated to those selling the product?
Is technology being used to enhance your manufacturing process, connect with customers or train employees? Do retailers selling your products (talking directly to prospective customers) understand how your manufacturing process contributes to your products being superior quality? Is what makes your product great being told on your website or communicated online? For example, quality of materials, ethical and sustainable production, an entirely Australian supply-chain, and so on.
By all means, perfect your product and processes and invest in technology. But to translate these efforts into impacting your bottom line, you need to let prospective customers into the know. Tell them your story.
Need assistance uncovering and telling your story? Reach out to Tara James, the author of this article who is a digital, business marketing and communications professional with experience and expertise working with local and international companies.
