Bigger does not mean better

Having more product offerings than the next guy is fine—but only if the value of all those products is communicated

By Michael Crotty -- Industrial Distribution, 10/1/2006

In today’s society of Wal-Mart and Home Depot, most thoughts lead to “bigger is better.” When we look at the way manufacturers or distributors approach the market, in many cases they are saying pretty much the same thing: “We have more than them. Buy from us.”

In recent mergers, you read of the “symmetry in product,” “more product to market” and “round out the offering.” But is bigger better? Does bringing more to the party make you first in line?

We look to the success of businesses like Wal-Mart and Home Depot and can jump to that conclusion. However, the element we overlook is the value of the bigger—the most important factor.

Bigger is not better if there is no value to the size. If a manufacturer brings more lines, but none of the additional items are what their customers need, they have lost sight of the point of size.

One value that successful box stores offer to their customers is the value of time. Ninety-five percent of the items that these stores offer are items that their customers need and want—items they would have to travel from store to store to procure if Sam Walton had not put them in one place. The value of the products and services you offer to the trade is like that plastic thing on a six-pack: it holds it all together.

One way to determine the importance or value of your product offering is its effect on the “total cost of ownership.” In other words, will purchasing more products and services from you help control the total cost of the end user’s business?

If the answer is yes, then you are creating the kind of business model that will strengthen your relationship and move you up the value ladder as a supplier. If the answer is no, you may want to rethink what you are trying to offer.

In addition to what you have, it is just as important to train your sales force on how it fits together. If the best they can do is say that your company offers “a whole lot more,” what they are suggesting is that the customer should have to go looking for how your company meets his needs. And when he does, he may discover that there are others out there who can also fill those needs.

Instead, have your sales team weave the story of all you offer and how it fits together so your customer does not have to guess at your value and is led right to it.

Make sure it passes the “so what” test. This is where the customer, after hearing what you have to offer, says…”So what does that do for me?” Your team needs to have the right product offering to say, “This is what it does for you.”

Remember to use your entire arsenal—product, service, training, logistics— and whatever allows your customers to do what they do best, and do it for the best total cost.

So is bigger better? It all comes down to value. I imagine the owner of the store that offered everything one could ever possibly want in buggy whips was feeling pretty smug—right up to the advent of the automobile.

Then how did he feel about what he offered?