Revamping Marketing Strategies in Additive Manufacturing
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The Shift in Marketing Approach for Additive Manufacturing
It’s clear that traditional marketing strategies in the additive manufacturing (AM) sector are no longer effective.
For years, many leading companies in the AM field concentrated on crafting long-term visions and securing funding from private investors. However, this method has become increasingly challenging and is far less viable than it once was.
When establishing an AM business, the initial step typically involved securing funding, as this technology was regarded as revolutionary and destined for greatness. But as funding rounds continued, growth metrics improved without translating into actual revenue. This trend has been extensively discussed in previous analyses.
Now, the landscape has drastically changed. The optimism that once surrounded 3D printing appears to have waned, and the industry is facing significant challenges.
In my previous work, I discussed the Three Market Laws of Additive Manufacturing, particularly the third law:
An increase in the overall 3D printing market does not guarantee a corresponding increase in the valuation of individual companies.
This principle has become painfully evident, especially in light of recent market collapses and subsequent bankruptcies. Current stock prices have plummeted by 80-90%, and the market valuations of companies are significantly undervalued.
Consider the fact that the market valuation of China's BLT and Farsoon surpasses the combined valuation of all U.S. and European firms. BLT alone is valued at more than three times Stratasys and nearly five times 3D Systems.
This situation is alarming.
Investors are now focused solely on companies that can demonstrate actual accounting profits. The era of funding based on "vision" and "potential" is over.
Many investors have suffered substantial losses in the 3D printing sector, leaving few who see long-term value in this industry. The focus has shifted to achieving quick returns on investments.
The 3D printing sector is littered with companies whose stock is now considered junk. For businesses that relied solely on investments for survival, losing that funding signals a potential end or necessitates significant restructuring. Companies are now pushed to revise their sales approaches and enhance profitability based on current sales levels.
This leads us to the pressing need for a reassessment of marketing strategies.
Current Marketing Methods Require Overhaul
The AM market continues to expand, which logically suggests that businesses within it should also thrive.
Historically, if a company reported an operational loss during a period of revenue growth, it was assumed that profitability would follow in line with market expansion.
However, this assumption has proven incorrect. According to the aforementioned third law, market growth does not equate to the growth of individual companies. Moreover, it’s important to note that other industries are also experiencing growth, often at higher absolute values than the AM sector.
Consequently, the strategy of relying on future growth projections is increasingly flawed.
As a result, marketing efforts centered around futuristic innovations are losing their effectiveness. The reality is that the market is now populated by customers who demand immediate results, not long-term promises.
If a 3D printer requires extensive training and familiarity with its operation, convincing potential customers to invest in it becomes a daunting task.
Recall the second law of the AM market:
A successful company in the 3D printing realm will typically be smaller and less profitable than a successful firm in another industrial sector.
This leads to the question: when do companies choose to invest in 3D printers, and what are their motivations? The answers include:
- When they need to produce a part quickly and cost-effectively.
- When the part is highly specialized and challenging to manufacture due to its shape.
- When quality is not the primary concern.
- When the part size is relatively small, and only a few pieces are required.
In essence, customers prioritize speed, cost, and uniqueness, regardless of quality.
If these are the expectations from customers, manufacturers cannot anticipate them spending months mastering the machinery.
Marketing Messaging for Additive Manufacturing
Given that AM technology is often the most cost-effective option compared to other manufacturing methods, marketing communications should emphasize the following key points:
- It's more affordable than existing solutions.
- It's user-friendly: simply set it up, power it on, and start producing.
- From the moment it’s operational, it begins generating parts at a lower cost.
While the ability of AM to create complex geometries or reduce part counts is an added benefit, it should not be overstated. Customers will not pay a premium for unique designs unless they are coupled with cost and time efficiencies.
In conclusion:
- Relying solely on investor funding is no longer viable.
- Attracting new investments is a significant challenge and often fruitless.
- The path to growth lies in operational efficiency and profitable sales of products or services.
- Marketing must focus on end customers, prioritizing low costs, rapid production, and optimization potential.
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