ODM and EMS providers are poor when it comes to brand marketing. Differentiation comes from identifying that short list of relevant attributes your organization does exceptionally well in comparison to other alternatives also available to buyers in industry.
How many readers can say they work for (or with) a multi-billion dollar global technology company that almost no one has heard of? If you work in the electronics manufacturing services (EMS) industry, you’re likely to be one of those people.
In comparison to other multi-national technology giants, EMS providers and original design manufacturer (ODM) appear to be in a continuous state of stealth mode.
I’ve worked in the top tier of the EMS Industry for nearly two decades and I can’t tell you the number of times I’ve confused friends, family members, and airplane seatmates countless times by trying to explain who I worked for and what my company does.
So why is it that as large and impacting as ODM and EMS providers are to virtually everyone who comes in contact with a TV, cell phone, (or virtually anything sold by Apple) nobody knows who they are?
ODMs and EMS providers are poor at brand marketing
I have two hypotheses, past and present, to explain this phenomenon.
Hypothesis #1: Fear of upsetting OEM customers
In the early days of contract electronics manufacturing there were many OEMs who took great pains to hide the fact their product manufacturing was outsourced. OEMS believed, perhaps correctly at the time that there was stigma attached to letting their customers know they’d outsourced their manufacturing to CMs or using the more pejorative term, ‘job shops’.
An example that comes to mind is Compaq Computer. In the 1990’s Compaq’s motherboards were manufactured by EMS providers Solectron, Avex, Bull Electronics and others under a strict non-disclosure policy prohibited contract manufacturers from confirming they were producing for Compaq.
It’s interesting to note all four companies above have since been acquired by larger and more savvy marketing and brand-aware organizations. (HP, Flextronics, Benchmark, and Celestica respectively)
Even today many OEMs seek to avoid disclosure their products are produced by ODM / EMS provider organizations, typically in low-labor cost offshore factories.
One well-recognized marketing powerhouse (Apple) even goes out of its way to promote its products as ‘Designed in the USA’…while 100% of the production is performed in offshore factories.
Whether it be by contractual agreement (rare these days) or subtle preferences expressed by some OEM clients, (not so rare) many ODM and EMS providers seem reluctant to promote themselves for fear of upsetting key customers.
Hypothesis #2: EMS leaders have poor understanding of marketing and branding power
Let’s face it, one could make a good case that not since Michael Marks left the helm of Flextronics more than five years ago has a major EMS company had a marketing savvy CEO at the helm.
By EMS’ very nature of being low on the visibility scale bright marketing executives on the move tend to find far sexier places to apply their skills than EMS.
A large percentage of ODM and EMS chief executives are home grown operations guys, engineers or supply chain executives.
Not exactly the ideal pedigrees to focus on marketing messages, branding, and demand creation strategies.
In your search results you can further target other Industries and/or Services plus, you can add more geographies to your search.
Marketing and good branding = awareness and positive perceptions
So, why should the EMS industry behave like Coke; Microsoft, IBM, Google, Apple, GE, Intel, Nokia and HP? (Eight of the Top 10 Global Brands in 2010 as ranked by Interbrand, and all major consumers of ODM/EMS)
The answer: For the same reason their customers do…to drive long-term growth, profitability and customer loyalty. As anyone who has had any involvement with the ODM / EMS sectors knows, these industry business models are very challenging. Low, single-digit margins, high capital intensity, and volatile and unpredictable demand profiles combine to make these sectors a tough place to prosper. (Suggested read: Defining a new value proposition for EMS providers and industry)
A colleague once said to me early in my career: “Marketing is to sales, as the Air Force is to the infantry”. In today’s technology-driven world no army could succeed without the benefit of a competent air presence.
Likewise, ODMs and EMS providers, (or any type of product or service provider) who neglect to invest in marketing and branding do so at substantial risk to their long-term existence. (Note: EMS / ODM companies can submit their company to the EMS Resources Directory on VentureOutsource.com)
Creating credibility and differentiation
From a credibility perspective, electronics industry corporate purchasing folks perceive safety and value in companies they recognize and associate with quality, value and stability.
We’ve all seen examples where more recognizable, but oftentimes less competent products or services, are selected simply because of the recognition factor.
In your search results, you will be able to further target provider options by choosing End Markets and/or other Services.
Differentiation comes from identifying that short list of relevant attributes your organization does exceptionally well in comparison to other alternatives available to buyers in industry.
Clearly defining what differentiates your products or services, articulating this in easy to understand terms for buyers, and associating those messages with attention-capturing logos or symbols is critical to any company’s success. Below are a few low / no cost ways to increase awareness amongst potential customers.
Seek well-suited venues, vehicles to promote your brand / key messages
There are nearly limitless opportunities to expose potential customers to your unique products and services. A well designed, search engine optimized (SEO) Website; regular press releases, email marketing, and an active presence on popular social media outlets such as LinkedIn, Twitter, Facebook, are each low cost ways to create positive differentiation and brand awareness.
Displaying your brand and key messages on Web domains attracting a niche audience where your targeted buyers (read: OEMs) spend their time can prove beneficial. So can leveraging your company Web presence to generate high quality inbound leads. (These are both also cost effective ways of growing revenues)
Invest in promotions and sponsorships emphasizing your strengths that also convey key messages to prospective clients
If your organization is adept at serving the needs of a specific end-market, for example medical devices, make a reasonable investment in those venues where buyers of these services are likely to gather.
Context specific trade shows, symposiums, university events are all high ROI opportunities to promote your key marketing messages and create brand awareness.
Encourage members in your leadership team (not just your sales and marketing executives) to participate and speak at these venues.
There is no better ambassador for your marketing message than an enthusiastic operations or engineering professional.
Never underestimate the value of satisfied customers and employees
Few facts are more powerful in the mind of someone considering you as a strategic provider than the satisfaction and endorsement of an analogous company. Likewise, prospective customers are more and more frequently looking at the reputations of their providers from the perspective of the provider’s employees.
Toxic EMS cultures and inept management resulting in miserable employee and high turnover rates won’t be tolerated by responsible OEMs.
Despite industry reality, ODMs and EMS providers with very few exceptions do a poor job highlighting their most satisfied stakeholders.
EMS providers that employ a formal, well-designed customer satisfaction (CSAT) management process have untapped nuggets of gold in the form of testimonials that are rarely put to use.
The intangibles of marketing and brand perception make the difference in an OEM’s evaluation of prospective EMS or ODM strategic partners.
Written by James Di Burro, founder at Round Rock Consulting and EMS industry consultant expert in marketing contract electronics services for EMS providers.
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