Tuesday, November 21, 2017 | Today's Vending Industry News
UPFRONT: In A Fiercely Competitive Environment, How Do We Gain Market Share While Retaining Our Integrity?

Posted On: 4/10/2006

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Whether you are an operator, a manufacturer, distributor, supplier -- or publisher, as the industry continues to consolidate it has become more difficult to secure existing accounts and generate new sources of revenue. In a fiercely competitive environment, how do we gain market share and keep our companies healthy while retaining our integrity, not burning our bridges behind us, and preserving a business environment in which we all can thrive?

If a vending or music/games operator raises commissions to a level at which the choice must be made between quality and profitability, or if a coffee service operator lowers prices and confronts the same dilemma, they may get new business. However, unless they've gone in with a plan that will allow them to adjust commissions and pricing within a reasonable time, they face a bleak future.

We've all known companies that sell inferior products at unsustainably low prices or with excessive commission rates, and bash their competitors as part of their sales pitch. This practice, often described as "muddying the stream," does get short-term results. In the long run, though, the polluter injures his competitors, goes out of business, and leaves those competitors to undo the damage that he has inflicted on everyone. This kind of thing hurts all of us by degrading the image of the industry.

Similarly, buying counterfeit games or inferior vending and brewing equipment may save money up front, but the long-term cost is excessive, when you consider how detrimental the practice is. And, while discounting certainly is a legitimate sales tactic, it cannot be done short sightedly. You may need to accept a low profit temporarily, to quickly gain market share (as in the classic OCS "blitz") or unload excess inventory. What's important is to design the marketing program to rebuild profitability in a reasonable amount of time. It also is essential to avoid promising more than you can deliver. We must never lose sight of the long-term objective: staying in business!

Cost everything out; make the necessary pro forma profit-and-loss calculations. Above all, believe in the value that your product or service provides to your customers. Don't be afraid to walk away. Some business isn't worth the time and expense of getting and keeping it. There are clients that you really want your competitors to have...

The question of competition and/or cooperation deserves attention. We've all known successful operators who go out of their way to help others just getting into the business. When less farsighted colleagues ask them why they deliberately encourage new competition, they reply that they'd much rather compete against people who know what they're doing.

And we've all known successful operators who know the smaller companies in their markets and, when they receive requests for a proposal from a location that would be marginal for a large company, refer the caller to a startup or "mom-and-pop" operation that does a good job and that can make money in a smaller account. Those who do this explain that those marginal accounts may get larger and, if they've received courteous treatment and been referred to a good service provider when they were small, they'll remember it when they can justify fuller service and need a larger operator.

Similarly, a growing number of operators who choose to specialize in vending or coffee service or water work together with other specialists when a client requires something that the primary contractor is not prepared to provide. Those who do this point out that it calls for careful judgement about the trustworthiness of a prospective collaborator. With trustworthy partners, it enables them to concentrate on their own company's strengths while meeting the demand of today's customers for single-sourcing.

 We've known operators who will warn a competitor when one of the competitor's clients calls them because of dissatisfaction with the service it's receiving. Again, this is good business. Ideally, it encourages the competitor to offer the same courtesy; at a minimum, it builds the image of the industry as a profession that plays fair and is not populated by cut-throat bottom feeders.

In fact, everyone in the same line of work competes and cooperates all the time. The only question is whether the cooperation is voluntary and intelligent, thus heightening respect for the industry among its clients and the public, or whether it's a sham motivated by vicious and short-sighted sales practices, or even purely accidental.

This is why one of the oldest maxims in marketing is: don't knock the competition! If A tells a prospect that B is a thief, and B tells the same prospect that A is a liar, neither should be surprised if the prospect concludes that the industry is peopled by liars and thieves. The fear that this will happen should be enough reason to be fair and professional. If we all do this, it will make all of us look better, and so lend credibility to our businesses and to the industry.

We're not all on the same team, but we all play in the same league. A company that competes with you today might be a valuable acquisition for you, next year, or might be prepared to acquire your company when you're ready to sell. It might even become a customer, or a collaborator in a purchasing cooperative. It certainly can be a valuable ally if a legislative or regulatory threat raises its ugly head.

So let's all agree to preserve and nurture the industry that has sustained us for so long, by building respect for it. The best way we can demonstrate respect is to maintain our own sense of pride and dignity -- and, when we see a competitor having a problem, to recognize that there, but for the grace of God, go we. Empathy can be contagious!

Trade associations always have played a vital part in this process. Talking with your colleagues at state and local association events can create valuable opportunities. And the associations are doing their part to invest in our future with a host of top-notch educational programs and trade shows. We need to hold up our end by joining and contributing, and by maintaining our own high standards. This can be difficult during  tough times, but those times are when it's most important. Failure to do the right thing can blight the future for all of us. Let's resolve not to be the bad apples that spoil the bunch.