How to market to government

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On the federal, state and local level, governments within the U.S. spent an estimated $2.234 trillion on goods and services in 2004, according to Global Insight, a Waltham, Mass.-based economic and financial data provider. Of that, the federal government purchased $834 billion, while state and local governments purchased $1.4 trillion.

The government is such an enormous opportunity for marketers that they are often overwhelmed with where to start. "Companies usually don't define the government as a marketplace per se; they instead identify and sell to very specific niches, such as public safety or national defense, that are good matches for their products or services," said Vaughn Rockhold, group publisher of GovPro Media for Penton Media, which publishes Government Procurement and Government Product News.

The government is an entire marketplace unto itself but one that comes with some very specific rules on how it can make purchases.

At the federal level, a great deal of the purchasing is handled by the U.S. General Services Administration (GSA). To be a federal supplier, most companies find it easiest to register with the GSA and follow its bidding procedures. In addition, the GSA offers several free services, including the Federal Procurement Data Systems and FedBizOpps Web sites, to help connect marketers with appropriate federal agencies and their purchasing personnel.

"Marketing to the federal government can be a long, complicated process," said Ron Dixon, manager of federal sales for General Motors Corp. "But it can ultimately be a very lucrative one. In addition, it can build your company's reputation quickly and keep your marketing targets centralized."

Targeting local and state government business might guarantee an easier, faster bidding process, but it is obviously more fragmented and regionalized than the federal sector.

"On the local level, we identify on average five to 10 different departments that need to weigh in on everything from making the decision to purchase to setting the minimum product specifications for the purchase," Rockhold said. On the state level, the purchasing decisions are more centralized and parallel to federal standards, but each state has it own unique processes.

what works best?

"Everyone thinks you have to offer the lowest prices, but that simply isn't the case," Rockhold said. "Governments are getting more sophisticated about specifying bids for the lowest total cost of ownership through the product's life cycle, so such things as maintenance and repair costs are major factors."

Establishing brand awareness and brand value is also crucial because once you've convinced a government entity that it wants a product like yours, a request for bids opens the door for your competitors.

GM's Dixon said he sees marketers of all kinds repeating the same mistakes over and over when trying to win government business, such as not taking the time to build relationships with government representatives. Dixon also said marketers too often assume the government knows what it wants. "That's why all your traditional marketing efforts-your advertising, branding, direct mail, etc.-are still valuable," he said.

One major group of products and services for government at all levels is technology. "There are many new entrants trying to capitalize on the $100 billion-a-year-and-growing government IT industry," said Jeff Calore, group manager of sales and marketing for Federal Computer Week.

Calore said the most successful marketers do two important things to stand out from the crowd. "Instead of using a product-based selling proposition, they sell solutions that help agencies achieve their missions or objectives," he said. "They also work hard on building long-term relationships and on understanding their government customers' business."

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