Picking a winning emerging technology can maximize profitability.

It seems that we are always racing around in search of the “hot” new customer, one who is a “good fit” and eager to buy. And sometimes we fall into the trap of looking so hard for that elusive customer that we overlook what could be a perfect lead.

Many of us spend hours pouring over marketing reports and data on industries that we already know well and have had some level of success selling to in the past. While this is not necessarily a bad way to increase the customer base, it may not be the best way to create a sustainable business plan.

Such a revelation unexpectedly hit me earlier this year when I was stuck in an airplane on the tarmac waiting for the weather to clear. I began chatting with a guy who is a “market technician” for a major investment firm. I will be the first to admit that I have no clue what a market technician does, nor do I have the skill, understanding or even dumb luck in anything to do with markets or investments, but this guy seemed to know his stuff.

Our conversation began with the normal small talk about airlines, service and the forgotten passenger (read: customer). This led us into a discussion about service, customer satisfaction and the financial opportunities that providing excellent service and customer satisfaction can offer. At this point our conversation took a sharp turn. I made some comment about how providing the best service was the best way to attract and develop customers. To that, my travel mate responded this doesn’t always result in success. Sometimes it’s better to choose a customer or niche where you can be first, and get out ahead of the customer’s requirements.

OK, I am thinking, if I can’t run fast enough to catch a “hot” customer, then how in the world am I going to get there before he does? When I posed this question my travel mate, he just smiled and said, “that is the challenge” and then laughed.

This is where the conversation got interesting. This market technician spends a lot of his time looking at trends, which, he explained, means understanding where future investments will be made on the macro scale (e.g. industries/markets/technologies) and on the micro scale (specific companies). Financial growth, he continued, never comes from the status-quo, because what exists there is already a mature market. Growth always comes from what is new, such as an emerging technology area. It is understood that the risks are higher, but success is also more highly rewarded. If you spend your time and money on the “safe bet” you will have less return from lower margins. If you make the effort and take the risk to anticipate the future direction, and you get on-board early, there is a greater chance for significant financial return.

Sounds simple enough – except if you pick the wrong trend! Not being from the world of finance and investments, I asked if he could relate his theory to the mundane world of electronics manufacturing, and specifically printed circuit boards. He paused and then explained it this way.

He said safe bet might be to try to sell circuit boards to a company who makes plasma TV’s – which seems like a high growth market. However, while sales are growing, all the real profit has already been made, because at this point in the market cycle, the only way for plasma TV makers to grow their top line sales is to reduce prices. This price reduction immediately falls on the suppliers, who are squeezed for price reductions too, so you make less selling more. OK, but what does that have to do with getting there first? He continued to say that the companies who really made money were the first companies to supply all the plasma TV producers, and they are the ones who are now phasing out as a supplier, focusing instead on the next great technology trend. In short, they made their money and are getting out to redeploy resources as others jump in and make less profit as they compete on price.

I had to agree with him on that one. So the next logical question was, where should I be focusing my time and my sales staff’s efforts, so that I can lead the customer and make some money? It seems like the last thing you would want to do is keep going after the same markets and customers as your competition.
It was suggested that a good place to look would be the world’s current problems and technological challenges. The high price of gas will drive alternative energy. The Asian building boom will support infrastructure and construction technologies. And today’s environmental issues call for improvements in pollution control and waste management technologies.

The PCB industry is a tough one, and making a profit has always been a challenge, but it seems like I have the basis for a marketing plan. Commit to the emerging technologies were you could create markets by solving problems. Align with companies who are looking for innovation, and get involved with one on the ground floor so that you are able to take the profitable upward ride. Help the customer develop the technology, provide service, even help with commercialization, and you will be in the best position to maximize your profitability by selling your product at better margins before the herd comes in and beats the pricing down to unsustainable levels.

So, it’s amazing what being stuck on a plane can teach you about business and marketing. Maybe to some, seeking out those cutting edge start-ups seems like a daunting challenge, but developing your innovation niche can’t be harder than slugging it out with everyone else on price. PCD&F

Peter Bigelow is president and CEO of IMI (imipcb.com); This email address is being protected from spambots. You need JavaScript enabled to view it..