Craig Fitzgerald, partner at Plante & Moran, a certified public accounting and business advisory firm, has spent the past 25 years providing strategy services to the company's automotive supplier clients. Before joining Plante & Moran, Fitzgerald worked at Volkswagen of America, Ford Motor Co. and General Motors Corp. Fitzgerald recently spoke to BtoB about the challenges and opportunities facing automotive suppliers.
BtoB: What must suppliers keep in mind when marketing to automakers?
Fitzgerald: The OEMs [original equipment manufacturers] are burdened by lack of profitability. They're burdened by complexity. They're burdened by the head-count reductions that they've implemented. So they just don't have the staffs to do things today that they would have five or 10 years ago. That has placed a premium on suppliers that are able to do original consumer research, understand what the consumer really wants on a factual, data basis, and then design high-value products and features that align exactly with customer wants that the OEM may not even be aware of.
There's almost nothing better than for a supplier to have done market research, identified an opportunity, developed a product, tested the product, benchmarked the product [and] clearly brought it to a state where it can be reviewed and tested by the customer. Instead of going to the customer, and saying, “What do you think of a heated windshield washer bottle? Is that of interest to you?” you deliver them five of their vehicles ... with the system already installed ... very much the way you'd envision it'd be installed if they bought the system from you. You let them keep these products for 30 days and give them time to think about it. Understanding consumer needs is something that successful tier one and tier two companies will do better than they have historically, developing more quickly and more cost-effectively products that address the needs identified in the consumer research.
BtoB: What media and messaging are most effective in reaching this audience
Fitzgerald: They clearly are very subject to cost-reduction ideas. So, if I've got a better way to manufacturer a part that reduces their cost by 20%, 30%, 40% or 50%—and that's not uncommon; that's very doable—they're generally quite receptive to that. They're generally receptive to revenue-enhancement ideas. So the heated windshield washer example is a product that's been strongly embraced by General Motors. It's a product that has a fairly modest cost and has a fairly high consumer perceived value, and therefore it's an opportunity for the OEM to make a substantial margin on that. That would be an area they're open to—messaging around product features. Also, [they're receptive to] messaging about enhancing the image, clarity and value of the [OEM's] brand. So if you can bring products that support the brand really strongly, they're very interested in that. M