A client was recently the target of negative advertising by one of his competitors. The two-page ad depicted a cartoon image of a shark in business attire wearing a Rolex watch with the caption “Some Suppliers need a Vice President of Service because they depend on Parts and Service Dollars…” The second page described how the advertisers’ product engineers are measured on customers use of their parts and services including a 5-year warranty,
From my perspective, these types of claims are troubling for several reasons:
- These type of advertisements “trash the competition”. Sales and marketing professionals understand that going negative is not good for business. Most manufacturers would not use this approach when it comes to selling their equipment in their primary market. Yet some believe anything is fair game in the Aftermarket.
- It demonstrates negativity on the advertiser’s part with respect to the role and value of service to the customer. Their claim overlooks the importance of service to KPIs like First Time Fix rate or Customer Satisfaction. This implies that service is not necessarily needed and not strategic to the customer or the manufacturer. This is just flat out misleading.
I have also seen negative advertisements and claims made against Third Party Maintainers (TPMs) and generic parts manufacturers, and I don’t like it either. Trashing the competition is just wrong. The quality and reliability of products and services from these third party suppliers can be just as good or better as those form the OEM. Furthermore, many OEMs also market and sell 3rd party services of their own.
The bigger issue is not about whether OEMs are better than TPMs, or if genuine parts are better than generic, or even if creating a VP of Service and/or operating service as a profit center is good for business. Rather, the issue is competition is good for both business and in the Aftermarket for several reasons:
- Legitimizes the market– Markets are defined by the presence of competition. To win business, competitors must actively market their products and services. As a result, customers are aware of options available to them.
- Creates choice– Competition offers customers the freedom of choice. The theories of capitalism and free trade are built on this basic premise.
- Improves quality & efficiency– Competition in the Aftermarket forces third parties and OEMs to continue to find ways of improving the quality of products and services offered while at the same time finding ways to cut costs and improve efficiency. In other words, competition raises the bar and results in better prices for customers.
- Leads to innovation– In addition to raising quality and improving costs, competition drives service providers to become innovative. Without competition, it is hard to know whether service providers would focus on finding ways to add value. Would service providers be just as compelled to invest in new systems and technology like SaaS, Mobility, and IoT if not for the impact that competition has on innovation?
- Leads to greater cooperation– OEMs have the choice to subcontract service to TPMs/ISOs. This helps them improve their cost structure, service delivery and obtain capabilities that they may not otherwise be able to build themselves. Under this scenario, OEMs and ISOs can gain knowledge from each other and use this towards driving innovation, reducing costs, and improving quality
In summary, competition provides benefits for the customers, OEMs and third-party providers. Technology vendors can also benefit from competition in the Aftermarket. Based on my perspective, if a company resorts to trashing their competition, they are probably troubled in some way. On the other hand, if a company is concerned about their competition, they should probably focus within their organization to find ways to leverage forces to their strategic advantage and develop a higher value proposition.