Domain 7: Marketing and Sales Management in Engineering Organizations

30 Aug 2018 9:00 AM | Tricia Simo Kush (Administrator)

By Patrick Sweet, P.Eng., MBA
(Blog #8 EMBOK series)

Photo credit: https://stocksnap.io/author/rawpixel

In this month’s installment on The Business-Savvy Engineer, I tackle Domain 7 of the Engineering Management Body of Knowledge (EMBoK): Marketing and Sales Management in Engineering Organizations.

For many, marketing and sales seems like it would be far outside the scope of what an engineer would care about – even an engineering manager. However, that’s not really the case. Engineers everywhere are involved in activities traditionally reserved for marketing and sales people. Figuring out how to meet a customer’s needs, helping convince a prospective customer to choose a product or service, and developing spec sheets for a conference are all marketing and sales activities that engineers are routinely involved in.

When you consider the link between engineers, customers, and the development of winning products, it’s easy to see how knowledge of marketing and sales could be of significant benefit to engineering managers.

The rest of this post will touch on some of the most important elements from Domain 7 in the EMBoK.

Sales and Advertising Practices

Sales is the act of motivating a potential customer to make a decision to purchase a product or service. Advertising is communicating to a target audience in an effort to make that audience aware of products and services that exist. Both advertising and sales are critical to helping get the products and services that engineers create into the hands of the right people.

It’s important to understand that, when advertising and selling internationally, differences in culture and language need to be taken into account in order to be successful. One example of this was shared by Blackberry co-founder, Mike Lazaridis, at an engineering conference I went to while in engineering school. He shared with the audience that they had hired a marketing firm to help them come up with the name “Blackberry” to ensure it translated well in several languages and wouldn’t be awkward in other cultures. The name Blackberry was the last of over 100 names that the company had come up with.  Contrast this with the Chevy “Nova”, which roughly translated to the Chevy “No Go” in Latin American markets.

Customer satisfaction strategies

Customer satisfaction is important for any organization to measure and manage. Engineering managers are not exempt from this. Customers are well-informed, intelligent, and able to chose different providers if they aren’t satisfied with your products or services. This counts as much for internal customers as it does for external customers. I’ve experienced situations where my company paid external service providers to do work that an internal division were capable of because the internal division was too difficult to deal with. This is a clear example of poor customer satisfaction.

In order to improve customer satisfaction, it must first be measured. Traditional techniques for measuring customer satisfaction include surveys, focus groups, and interviews (see ASEM’s current membership survey here). It is very important to design these tools carefully, as poor design can obfuscate results, and even lead to drawing incorrect conclusions. Managers may consider hiring outside experts for launching new customer satisfaction initiatives.

Marketing and branding techniques

Marketing is the act of determining what a given market needs and how to satisfy that need given what the organization’s capabilities are and what competitors are doing. Marketing involves four primary elements, commonly known as the “Four Ps” of marketing:

  •          Product – what it is you sell
  •          Price – What customers will pay
  •          Place – How you will get the product to customers
  •          Promotion – Advertising and sales

Engineers play a key role in developing an organization’s products and services, establishing cost structures (which informs price), setting up distribution channels, and developing product specifications and trade show materials.

Branding is about giving products an identity that acts as shorthand for the attributes of a given product. BMW’s brand stands for luxury and performance. Walmart’s brand stands for value and convenience. Both brands say very different things, but are equally powerful. Engineers play an important role in giving brands credibility through their design decisions.

Product-Portfolio Analysis

Products progress through lifecycles. After a product is launched, it will process through a period of growth, reach maturity, hit market saturation, and eventually decline. It is important for organizations to have an array of products at various phases in their lifecycles so that the risk of a product falling out of favour in the market and leaving the company stranded is reduced.

Another important way to look at products is through the “Boston Matrix”, which plots products on a chart with relative market share on one axis and industry sales growth rate on the other. The matrix can be split up into four categories, as shown in the table below:

Relative Market Share Position

Industry Growth Rate

Category

High

High

Stars

High

Low

Cash cows

Low

High

Question marks

Low

Low

Dogs

 

Understanding where products fall on the Boston Matrix can help organizations understand what to do with each product in their portfolio and where to invest product development dollars.

Global Trade and International Operations

With globalization, companies in every industry will be faced with at least one of the following: competition from abroad, needing to source materials or talent from abroad, or trying to enter overseas markets. As was discussed in the section on advertising in foreign markets, it is important to bear in mind that values and management practices differ throughout the world. Managers cannot assume that business as usual will work in any other market.

Given that operating in markets outside your home can necessitate different practices, it is important to be aware of the various options that are available for doing business abroad. Domestic companies can import or export goods, invest directly in foreign entities, license their products or services to others, set up franchises, or use management contracts to profit from outside markets.

Pricing Strategies

A product’s price is what the customer pays for a given product. Pricing is something of an art and must take into account the customer’s ability to pay, the organization’s goals and targets, the product’s cost, and how the competition prices alternative products. Pricing should not be driven by cost alone and needs to reflect the value conferred by the product. For example, books generally cost pennies to produce, but are priced orders of magnitude higher. This is because they provide much more value than the sum of their physical parts.

Engineers can be heavily involved in product pricing, especially with respect to controlling product costs and understanding how competitors’ products are positioned.

Conclusion

At first glance, this domain may seem out of place in an engineering management book. In reality, marketing and sales management is tightly coupled with engineering and engineering management. An understanding of the business side of product development, marketing, advertising and sales on the part of engineering managers can be of enormous benefit to both managers and the companies that employ them.

About Patrick Sweet

Patrick Sweet, P.Eng., MBA, ASEP is a recognized expert in engineering management and leadership with expertise in systems engineering, project management and product management. You can read more from Pat at the Engineering & Leadership blog.

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