Marketing's evolving role.

Nearly 10 years ago, when I was introduced as the American Cast Metals Assn.'s new marketing manager, the seasoned foundry owner I met my first day commented that "Business is pretty good, so why do we need more marketing?"

About four months ago, when I was introduced as the new chairman of AFS Div. 14 (Marketing and Management Services), the group of industry executives I was meeting with were quick to support "marketing," which they defined for me in terms of advertisements, brochures, videos and other direct selling and sales promotion tools.

The Marketing Evolution

In the late 1970s, the metalcasting industry was booming. Foundries were turning away business, extending lead times and having the time of their lives with the biggest seller's market of all time. These were the days when all that mattered was for foundries to make castings. Quantity was king, quality was only theory, selling and new sales development were unnecessary and the concept of marketing as we know it today was all but unknown.

In this kind of environment, a comment made by that first seasoned foundry executive to a green "marketing guy" would make perfect sense. But the comment was made in the mid-1980s, not the '70s. By the time I heard it, the industry's need for selling and new sales development--the roots of modern marketing--was well established. The market had changed, customer requirements had changed and the role of "marketing" had changed. But he hadn't gotten the message.

In addition to that telling conversation, the metalcasting industry of the '80s was characterized by a number of well known and fundamental events including a catastrophic drop in demand, a corresponding shakeout of capacity and a 180-degree shift in manufacturing focus from production quantity to product quality. Also during the '80s, metalcasting was transformed from a seller's market to a buyer's market. On the heels of these changes came vendor consolidation programs--initiatives where customers "partner" with a much reduced number of certified suppliers.

As the balance of power shifted from foundries to their customers, and as those customers began to flex their newly found muscles, the rules for foundry marketing changed. Marketing's priority shifted from developing sales with new customers to maintaining and expanding profitable relationships with existing customers. As a result, and before the '90s began, the best foundries developed marketing functions that provided not only the traditional sales and selling effort, but also high level customer service and support both before and after the sale. In other words, "marketing" was no longer just selling, but grew in its definition to become "customer management."

By the start of the '90s, the industry's need for marketing as "customer management"--what we now accept as the definition of modern marketing--was well established. Today, marketing means:

Relationship Management. As relationships between foundries and their customers broaden to include ongoing contact at many levels, the marketing function provides the planning and coordination needed to make it all work smoothly. This has been especially true for customer quality certification programs.

Customer Service. As customer organizations were reengineered and their needs changed, service quality became a key competitive requirement. As a result, the best foundries began to provide support both before and after the sale in areas such as design assistance, fast quotation development, quality assurance, logistics assistance, new project management and more.

Vendor Management. Another result of those reengineering programs was a focus on core competencies and the off-loading of nonessential operations on to the supplier base. Combine this trend with a shift to purchasing finished parts instead of raw castings, and foundries found themselves managing a host of new vendors who provided machining, heat treating and related services. In many cases, it was the marketing function that planned and coordinated these relationships and continued to ensure customer satisfaction in a changed competitive environment.

New Business Development. Yes, marketing still includes the new sales development function, but this has grown to be a secondary part of the job. Priority one remains with customer retention.

Market Planning. By the early '90s, many foundry CEOs had shifted their focus from "making castings" to "making money." Market research and sound marketing planning became key elements of the new thinking, and continue to be used to determine who the foundry's customers should be, what their specific requirements are and what it will take to win and retain them as profitable customers.

1990s Marketing

Given this kind of environment, imagine my surprise when I was confronted in June by that group of foundry executives who, though they professed to be marketing advocates, continue steadfast in the belief that marketing means sales and selling. Once again, the market has changed, customer requirements have changed and the role of foundry marketing has changed. But many of these executives haven't gotten the message.

Of course these executives and CEOs throughout the industry need to get that message, and hopefully this column will help. More importantly though, all of us need to recognize that the rules of foundry marketing are being rewritten again. What has evolved from basic selling to modern customer management is now on the threshold of a new phase in which "connectivity" will play a central role. The industry is moving inexorably toward a quasi Kaizen relationship with its customers and vendors, the Internet will play an important role in that process, and you can read more about it in the next installment of "CEO Journal."