We have all been enthralled at the events of the last few weeks. Even to the extent that we have actually discussed ‘politics’ in the office. Our office presents a fairly limited political view, purely because of a lack of diversity of the people that work here. However, even considering that we all seem to agree on some points and disagree on others but always come to an agreed consensus on the correct course of action – this is what people do in the real world, you know it, we know it, so why does the idea of a government based on this premise seem so surprising to the media? I thought that the UK prided ourselves on pragmatism and ‘making do’ and that its those uptight Europeans worry too much about crossing t’s and dotting i’s (adding umlauts maybe?)

Anyway we hope that our new government makes the tough decisions quickly and invigorates the manufacturing sector which has been in the doldrums for so long. REO’s interest in renewable generation, electrified rail and electric vehicle applications should see that we are well placed to benefit from the ‘green economy’ that is seen as the UK’s big chance and we welcome the opportunity to work with you to help you realise your business goals.

News of the encumbent UK governments initiative concerning Feed-in tariffs (FiTS) has been long time coming, the Germans raised legislation concerning this in 1990. The legislation basically is a vehicle for suppliers of renewable electricity to get paid for putting energy back into the grid, hopefully making the investment in generation equipment justifiable. I understand that a typical payback period of a properly installed and maintained wind turbine should be approximately 10 years. So with a expected life of 20 years, the investor/user should have 10 years of ‘free’ electricity. News of several large players in this market entering the UK is no surprise when you consider that Germany accounts for approx 35% of the total windpower capacity in Europe, whilst the UK accounts for just 2.1%. Figures from 2008 report (www.ewea.org)

REO is well placed in this market as our manufacturing company in Germany have been supplying into the industry for well over a decade. Moves towards water-cooled inductors and dumping resistors mean that hope to remain involved with new developments and obviously as this industry grows in the UK, REO hope to be able to bring our experience and innovation to this market too. Read our document on the market here http://www.reo.co.uk/power_quality_for_wind_turbines2 and sign up to our newsletter here if you wish to remain informed of new developments http://www.reo.co.uk/register

A trip to the bookshop at the airport recently, reunited me with one of the best stand up comedians of all time, Bill Hicks; or actually a book concerning his comedy to be more precise, Bill died in 1994, aged 32. Incidentally, I have read there is an upcoming film on Bill’s life starring Russell Crowe which should be interesting in itself.

Anyway one of Bill’s more provoking on-stage requests, was that all the members of the crowd who were involved in ‘advertising’ or ‘marketing’ should stop immediately, ideally by killing themselves. Obviously its a humorous statement, but Bill’s underlying message was much more important.

Bill argued that any advertising act or statement could be ‘used’ to manipulate the thoughts and actions of people in order that goods or services may be more easily promoted and sold and that the PR machine was ruining the life experience of many people by preventing independant thought. Its probably a bit harsh, but you have to accept Bill’s opinion.

Happily, marketing messages directed at the individual are really ineffective in industry. PR in industry is more subtle and the more ‘base’ aspects of marketing methods favoured by the mass media are usually ignored. Instead there is concentration on performance benefits, issues of the day, for example energy saving and service aspects. Its seems that industrial procurement based on these points is easier to justify to the budget makers than points which address the individuals grooming habits!

So in the context of ‘industry’ PR I would hope to escape Bill’s wrath, as I am not trying to change peoples’ conceptions but actually trying to inform potential customers of REO and what we do in the most efficient way.

We try and back up our ‘messages’ with scientific facts and engineering knowledge. For example our new 180 kW test system allows us to test all of the components in a typical drive system, from EMC Filter, to DC Link choke through to brake resistor under load. We can produce comprehensive test schedules and results allow our customers to effectively field test without the problems associated with this. Contact us for more information.

Michael Porter listed 4 generic marketing strategies in his 1985 book ‘Competitive Advantage’ (I got my copy for 70 p from a second hand bookshop!) These are namely:-

- Cost leadership, the cheapest in a broad market

- Differentiation, the premium priced differentiator in a broad market

- Cost focus, where particular aspects of cost are addressed, by nature this marginalises the market

- Differentiation focus, where focused differentiation is offered in a niche market, again this reduces the potential market.

Have a look at your own market, you should be able to easily place all your competitors in each of these categories. More interestingly  could you be better served operating in a niche? Or is there an opportunity to become the cost leader?

For your interest REO would generally consider ourselves to offer differentiation focus, able to concentrate on niche markets and with a high technical content.

Porter also argued that for a given market, there could only be one effective user of each individual strategy. Of course in reality this rarely happens, but instead this generally serves to reduce the margin in a given market and increase customer power and choice.

REO have many, better known, competitors who are doing a great job in making mass produced, cost focused products, with little scope for modification or tailoring to suit a customers particular needs. Of course, this is where REO is able to offer our strengths to focus on helping our customers differentiate themselves from their competition by focusing on a market and addressing the needs of the few rather than trying to simply appeal from a low price perspective.

So is price important? of course, and of the utmost importance  if you are trying to be the cost leader, if you are not then market research, focused R & D and a market orientated sales effort is.

and I want it now! Business in our sector seems to be slowly catching up with wider cultural requirements regarding the desire for  information now and product tomorrow (if not sooner!) REO have spent a lot of time, and no little expense, ensuring that our website provides an effective resource for our customers, especially those concerned with legislative issues regarding EMC (actually thats virtually all of them) Coupled with this we are developing our webshop to back this information up with product which is able to be supplied directly. 

Despite efforts to reduce their supplier base, we are finding that more and more buyers are having to develop relationships with more potential suppliers in order that price competition exists and that delivery issues are not something which gives them sleepless nights. Historically buyers were able to rely on the national distributers to provide a safety net if all else failed, but issues regarding inventory and lead times mean that the reliance on next day deliveries can be fraught with problems.

So in addition to being a manufacturer of products for special applications, REO are also working towards being able to provide product for customers looking for instant answers, fast delivery and prices that you would expect from a company that makes its own products. Join our newsletter here if you want to keep updated on our progress towards this goal.

Speaking to a customer this week, led me to an interesting thought. Whilst our turnover is only slightly less this year than last (around 4%) we did both agree that trading had not been straightforward and that we were pleased to see the back of 2009. At the beginning of the year the operating conditions did seem much worse and our expectation of 2009 was not encouraging.

However, at the early part of 2008, we undertook a systematic appraisal of our operations in order that we could increase our capacity for sales, manufacturing and logistics. This in-turn led to many areas where we were able make tangible savings. The conclusion of these exercises have seen us become ‘leaner’ by an encouraging margin.

Without the stimulus of the downturn it is unlikely that we would have instigated this plan and without resorting to cliches, this means that going forward the company is in a better shape to face what the future has in store.

Much of these ’savings’ were done by examining existing suppliers and discussing new ways to work with them and even changing products to suit suppliers better so that they can reduce manufacturing costs. Of course these are all services which we offer our own existing and prospective customers and we welcome the opportunity to discuss how we can help save you money in 2010.

In anycase, all at REO wish you a Merry Christmas and a Happy New Year

Not sure if that it is registered tradename? In any case we are seeing more and more examples of customers who are being very successful in spite of the economic conditions and competitive situation. Seth Godin wrote in his book  ‘The Purple Cow’ that simply being good is not sufficient any more, you have to be truly outstanding to be noteworthy and success should follow. This book is an interesting, reiteration of things we probably already know but maybe chose to forget in favour of more pressing issues.

As an example, there is a UK drives company who make ‘Purple’ variable speed drives which are aesthetically pleasing and easy to use, their success has been considerable over a relatively short period of time. We all know lots of other similar anecdotes and stories which give us the same message; sales gimmicks do not work, but a thoughtful appraisal of your chosen market and subsequent positioning of your product or service does.

Take variable transformers (Variacs) as an example, several years ago,  a UK distributor stated to sell these on a wide scale. Their units were relatively inexpensive  imports, but they do the job for most people.  Rather than stay and directly compete,  REO decided to concentrate solely on using our REOVAR range of variable transformers within a new range of  high quality AC and DC power supplies. These are used by companies who are serious about their testing requirements, from a reliability, operational and safety point of view and our margin and turnover is this sector has increased as a result.

We have a long way to go in order that all of our products and ranges have the mysterious purple factor, but the tradition of the company is built upon quality products for technically demanding applications and this has helped us achieve 85 years of business – will it be good enough for another 85 years?

REO has always been a ‘hands on’ organisation with an emphasis being placed on getting out there and meeting customers and prospects. The REO motto is ‘we follow the customer’ it could equally be  ‘we visit the customer’

New marketing principles concentrate on the minimal amount of actual human contact and with information able to be so easily published on-line there is easy justification for this. However no large contracts are signed on-line and we would all do well to remember that, paradoxically they can be won and lost and so whilst the human element remains key an effective and impressive web presence is the modern substitute for arriving for a meeting on time with your tie straight!