Chris Shipway, Country Director at Avnet Memec UK, talks to Michelle Winny, Editor of Electronics about the effects of implementing Vertical Marketing within a demand creation distributor

Why make the change to this model?

The amount of production for businesses that have left these shores over the last 5 to 10 years is ­staggering. However, due to the ­continued development and world-renowned skills set of the British ­engineering community, “Demand Creation” activity within the UK in particular, continues to be extremely high. There are dozens of examples of extraordinary entrepreneurial talent that continues to push the development of the high technology electronics sector. As a business that is at the forefront of Electronic Component Distribution, it’s essential we remain ahead of our competition – and we believe this approach allows exactly that.

What is a Vertical Market?

A vertical market is a market that meets the need of a particular industry – an illustration of this could be a particular piece of equipment used only by the semiconductor industry. Vertical markets are typically defined by the type of industry or customer, rather than the types of product produced and are very often referred to as Niche Markets.

What is Vertical Marketing?

Sometimes referred to as a “Vertical”, the true definition of a Vertical Market is a group of identical businesses or customers that design, develop and produce a product or service that is specific to a particular market. Like-minded organisations within a Vertical Market often limit their scope to smaller more specialised fields or “niche” areas of a much larger industry. An example of this would be a manufacturer of missiles and missile control systems, this is a very niche area of the Military/Aeronautical Vertical Market. To witness Vertical Marketing in action first hand, an excellent place to start is with specific Trade Shows – here, like-minded organisations gather to promote their products and services. The DSEI (Defence and Security Equipment International) show is a good example of a Vertical Market trade show – specific businesses promoting and selling their products to a niche industry.

What are the main benefits of a Vertical Market approach?

Businesses that adopt a Vertical Market approach within their own organisation encourage specialisation, leading to a better, more detailed understanding of a customer’s requirements. This of course leads to a more holistic view of a potential customer’s needs, which in turn helps differentiate your own products and services, something that hopefully leads to an increase in revenue and growth.

What is Demand Creation?

Demand Creation is a considered, but defined process of cultivating and enhancing new business opportunities for a particular product or service, rather than fulfilling a requirement for an existing need. When trying to expand and advance revenue growth, Demand Creation is an essential process that can help to transform, not only a business’s sales culture, but if implemented correctly can be key to reducing the sales cycle time by decreasing the amount of time it takes for organisations to get their products to market.

What are Avnet Memec’s identified European Vertical Markets?

Avnet Memec has identified and coded into our systems 19 Vertical Markets we believe will cover 99% of all potential customers within the European market, as shown in table 1.

From July 1st 2011 our systems will allow us to monitor our success within specific Verticals, which in turn means we can manage, develop and reward individuals against growth in specific Vertical Markets, something that we had not previously been able to achieve.

What is involved in the implementation of a Vertical approach?

The key to making a success of the implementation of the Vertical approach, once the particular Vertical Markets have been identified, is to ensure the correct calibre of people are employed. An excellent technical background is a pre-requisite of the Avnet Memec Business Development Manager (BDM) – someone who has the ability to research and familiarise themselves with the required technologies within a specific Vertical and converse at senior levels within the engineering team of potential customers.

The addition of a comprehensive and fully integrated CRM (Customer Relationship Management) tool is also essential, it allows for the tracking of both new and existing customer details and project data, this is especially important with customers that cross a number of countries. It also means we are in possession of a continuously up to date customer contact list.

Has implementation been successful?

Avnet Memec UK began the process of change approximately 12 months ago, and although we are still very much on the learning curve, we have concluded that the change to a more specific and specialised approach is now paying dividends. We are experiencing a record number of new business opportunities in the UK. The specialisation that is required and the detailed market knowledge we have gained has and will continue to be a major advantage for us over the next couple of years or so.

The continued consolidation of the Electronic Component Distribution Industry means large global organisations will continue to dominate the market. If a customer is to be satisfied it’s imperative to offer the best design and logistics support functions available and the adoption of the Vertical Marketing approach goes a long way to ensuring that happens.