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CAPITAL EQUIPMENT MARKETING

PRACTICES GUIDE

Modern Marketing PartnersCapital Equipment Marketing

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Capital equipment is typically defined as an asset with an

acquisition cost of at least $5000, but also includes assets that

can cost millions of dollars. Capital equipment encompasses

thousands of products and industries, from desktop computers

to mainframes, trucks and airplanes, agriculture, medical and

military, machine tools to entire plants. The greater the investment,

the more likely the purchase requires numerous related services

including finance (leases or loans), installation and training, system

integration, parts and supplies, maintenance and more.

Because of the cost involved, the capital equipment purchasing

process is complex for several reasons: the number and type of

decision makers, the need to carefully evaluate and compare multiple

options using financial analysis, the economic environment and

changing tax laws. As a result of these complexities, the capital

equipment purchasing process is often protracted, sometimes

taking years to complete.

Not surprisingly, the marketing of capital equipment requires some

different approaches and techniques. Certainly much different

marketing approaches than consumer products or low cost business

products or services. This guide details four aspects of capital

equipment purchasing, along with three considerations of capital

equipment marketing, followed by a capital equipment marketing

checklist and best practices detail, a capital equipment marketing

info-graphic, and some relevant resources.

A Closer Look at Capital Equipment PurchasingLets examine some of the aspects of capital equipment purchasing,

beginning with the decision-making process. As stated, capital

equipment purchasing typically involves multiple decision-makers

and influencers including executive and financial managers, technical

experts and consultants, project and procurement managers.

Shown here: float glass manufacturing equipment

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Typically, committees or multiple-functional teams are formed for

specific capital equipment projects. The larger the investment, the

more decision makers.

Second, decision-making is based on the opportunity to generate

income or save costs. For capital equipment purchases, extensive

and detailed financial analysis is employed. Multiple options are

considered and compared via such analysis. Common financial

analysis techniques include Return on Investment (ROI), Payback

analysis, Net Present Value and total cost of ownership or TCO.

Because of the level of investment, alternative financing options

are often considered, including lease versus own. Obviously, tax

considerations are important.

Third, the economic environment has a huge effect on capital

equipment purchasing activity, and therefore, marketing. Capital

equipment is without question, the most cyclical of all categories.

When recessions occur, capital spending is often reduced, postponed or

cancelled. Likewise, when the economy is recovering from recession,

capital spending is often a leading indicator. Related to economics

are country-specific tax laws, or changes to the tax law. While

economics cannot be controlled by marketing, the economy must

be considered when forecasting and budgeting.

Not surprisingly, all these aspects of capital equipment purchasing

result in an extended procurement process. Depending on the level

of investment, timing of capital equipment purchasing can be

months or years.

Capital Equipment Marketing ConsiderationsOk, so that’s a closer look at the purchasing process, now let’s focus

on some marketing considerations before getting to best practices.

There are at least three (3) factors that can have profound

implications for downstream marketing. First, reputation is critical.

$

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Second, the number of customers is limited. Third, many capital

equipment brands tend to be so technical, that engineering

involvement and information must be part of both buying and

selling, including marketing.

Regarding reputation, when investing huge sums of money, while

the aforementioned decision makers evaluate multiple options,

the lowest price is rarely the most important criterion, certainly

in comparison to brand reputation. Risk avoidance is paramount.

This is further reinforced by the fact that larger capital equipment

purchases require so much more than the equipment itself. The

implications for marketing are profound.

One of great things about capital equipment marketing is that

the target market is relatively small, certainly in comparison to

consumer markets. There is no mass market. For the most complex

and expensive capital equipment there might be only hundreds of

potential customers, worldwide. International marketing is often a

requirement. No question, the marketing mix for targeting a small

number of very important prospects is unique.

One last point of marketing more complex or technical capital

equipment is the need for engineering for both buying and selling,

and yes, marketing. There may be a need for joint development

projects, or requirements for extensive testing or evaluation

of performance specifications. For these scenarios, effective

marketing-engineering processes are critical.

How to Market Capital EquipmentNow that we have identified several dynamics of both purchasing

and marketing, what are the most effective capital equipment

marketing strategies and tactics? Following is a capital equipment

marketing checklist, followed by best practices detail, and

an info-graphic.

Modern Marketing PartnersCapital Equipment Marketing

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CAPITAL EQUIPMENT MARKETING CHECKLIST

1. Analysis and Research

2. Planning

3. Brand Image

4. Brand Awareness

5. Website Improvement and SEO

6. Event marketing

7. Thought Leadership Content

8. Blogging

9. Social Media

10. Direct marketing

CAPITAL EQUIPMENT MARKETING BEST PRACTICES DETAIL

1. Analysis and Research - Because of the limited number of

customers, market and competitor intelligence is more critical

in capital equipment than any other category. Start with market

segmentation to understand which "verticals" drive sales and

profit. Use secondary or published research including the

Internet, trade publications, and associations to identify and

analyze customers and competitors. For some capital equipment

categories, syndicated (or fee-based) research might be available.

Search www.marketresearch.com. Another resource, Equipment

Data Associates sells a database of equipment lease and loan

information (www.edadata.com). If secondary or syndicated

research is not available, consider primary research including

surveys, customer interviews, or focus groups.

2. Planning – Strategic, tactical, and project planning are each

important to managing an effective capital equipment marketing

program. Strategic plans are long-term in nature and include

research and financial projections. Tactical plans are required

for managing media advertising, trade show or event calendars,

and related marketing programs. Project plans are required for

larger marketing initiatives like a new website. Budgeting is an

important part of planning that ensures financial resources are

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approved and available for ongoing marketing. The time, effort

and formality of planning and budgeting will vary with the scale

of the program.

3. Brand Image – As mentioned, brand reputation is critical in

capital equipment markets. Prospects generally focus on a short

list or consideration set of 3-4 vendors, with the perceived leader

having a distinct advantage. Brand image is each customer’s

perception, and the sum total of all exposures to your brand.

When investing large sums, risk aversion is the customer

mindset. Therefore, brand image must exude leadership and

professionalism. Messaging must resonate with customer needs

and be clearly differentiated from competitors. Continuity of

brand elements and messaging across all marketing channels

and media is important. Without continuity, brand confusion

can result.

4. Brand Awareness – Prospects must be aware of your brand to

be considered. Sure, Internet search results can overcome lack of

awareness to some extent (the subject of the next best practice).

But, having a high profile in a vertical market or industry

supports brand reputation and making that short list. Advertising

and publicity are two marketing initiatives that can build brand

awareness. Advertising capital equipment most often uses trade

magazines or journals to reach specialized vertical markets.

In addition, there are associations, trade shows, and industry

websites for such verticals.

Publicity can be even more effective than advertising, as

customers perceive higher credibility from trusted news sources.

Publicity tactics include news announcements, article writing and

placements, speeches, and press events. Publicity often focuses

on the same publications as advertising, along with added news

outlets including wire distribution services like PRweb. Media

Shown here: computer data center

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relations is the ongoing publicity efforts to achieve placements

and mentions.

5. Website Improvement and Search Engine Optimization (SEO) –

The company or brand website is the foundation of your marketing

program. It is likely one of the first impressions of your brand.

Is your website brand image stellar? Does the website content

address customer needs, problems or requirements? Importantly,

is lead generation maximized with offers and registration pages?

No question, prospects use search engines to identify capital

equipment options. Does the site rank in the top 3 search results

for keywords? Search authority is driven by multiple search engine

optimization (SEO) techniques. Run search engine optimization

diagnostics like SEOmoz to identify issues and problems. For more

SEO tips, check out our whitepaper on Search Engine Optimization

Best Practices (see resources at end).

What are your website traffic statistics? Check Google Analytics.

Consider paid search (Pay-Per-Click) if organic search cannot

achieve top positions in search engine results pages (SERPs).

6. Event Marketing – Many capital equipment vertical markets

have industry trade shows that are important to participate in.

Oftentimes, capital equipment is demonstrated and purchased

at key industry events. If trade shows are a key tactic, be sure

to leverage opportunities for pre-show communication, at-show

promotions and meetings, press events or speaking opportunities,

and post-show follow-up. Besides trade shows, other types of

event marketing include webcasts on a variety of topics, training

programs or demonstrations, and user groups.

Shown here: mining dump truck

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7. Thought Leadership Content – Be the subject matter expert

(SME) or thought leader for your niche. How? Develop case

studies, white papers, surveys and industry studies, eBooks,

videos, and more. Use and repurpose the content for your

website, blogging, and social media. Use content for your

credentials kit when submitting proposals. Search and curate

(use with credit) content from other publishers, bloggers, and

editors. Educational and technical content is needed for many

marketing tactics.

Other content types include brochures and catalogs, Powerpoint

decks, specification worksheets, installation and training

manuals, performance specifications, and more.

8. Blogging – An effective tool for distributing content is a blog.

Blogging has many benefits to a marketing program including

excellent search engine optimization (SEO). Blogs integrate

with your website and social media to build indexed pages, and

distribute content through bookmarking and social sharing.

Blog software like WordPress has powerful search optimization

features, widgets, and plug-ins. Blogrolls are essentially link

directories, that encourage reciprocal links and support

link-building, a major determinant of search authority.

9. Social Media – Social media is the hottest topic in marketing.

Why? Because it can build search authority and generate leads!

How? Build-out LinkedIn personal profiles and LinkedIn company

pages, a Facebook business page, Twitter profile, YouTube

channel, and Google+. Be sure to add social profile icons and

links to your website and blog. Add social share tools to both

your website and blog (Facebook Like, Twitter Retweet, Google+,

Bookmarks). YouTube has a few features for meta-coding that

deliver high search authority for keywords.

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10. Direct Marketing – The purpose of all marketing is lead

generation. So manage it with a customer database, contact

manager, or marketing automation software. Code, track, and

report leads. Integrate the database with website registration

pages, and email campaigns. Conduct ongoing research into

relevant prospects and contacts. Procure prospect lists from

publishers or associations. Use telemarketing qualification

to identify decision makers and contact information at each

prospect location.

With capital equipment’s extended sales cycle, email is an

excellent medium to stay in front of prospects over time. Monthly

email newsletters can be effective in keeping your brand top-of-

mind. Consider micro-targeting emails based on vertical and/or

role (example: engineering vs. finance).

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2011 U.S. CAPITAL EQUIPMENT EXPENDITURES (MILLIONS)

TOP CAPITAL EQUIPMENT MARKETS (2011 EXPENDITURES MILLIONS) *

MARKETING SPEND BY CAPITAL EQUIPMENT VERTICAL (% SALES) **

U.S. ANNUAL CAPITAL EQUIPMENT EXPENDITURES

(MILLIONS)

$40,966 (Used)

- Multiple Decision Makers - Reputation

- Financial Analysis (ROI, TCO) - Small Number of Customers

- Economy - Engineering Roles

- Extended Procurement Process

$

ASPECTS OF PURCHASING MARKETING NUANCES4 3

CAPITAL EQUIPMENTMARKETING CHECKLIST

Analysis and Research

Event Marketing (trade shows)Planning

Thought Leadership ContentBrand Image

Blogging

Brand Awareness (Ads, PR)

Social Media (YT, LI, TW, FB)

Website Improvement and SEO

Direct Marketing (email)

$770,900 (Total)

$729,934 (New)

LEAD GENERATION MEASUREMENT/REPORTING

www.ModernMarketingPartners.com©Copyright 2013. Modern Marketing Partners. All Rights Reserved. *Source: U.S. Census Annual Capital Expenditures Survey, www.Census.gov

**Source: Schonfeld & Associates Report, MMP Surveys

CAPITAL EQUIPMENT MARKETING - INFOGRAPHIC

Manufacturing Mfg. Equip.

IT/Computers

Utility Equip.

Mining Equip.

Healthcare Equip.

Transport/ Warehouse Equip.

Automotive/Rental/Leasing

Financial Services

Durable Goods

IT/Computers

Healthcare

Utilites

Mining

Non-Durable Goods

Transportation/Warehousing

Automotive/Rental/Leasing

0 500000 100000 150000 2000000 0 2 4 6 8 10

$156,760

$95,059

$93,192

$79,357

$63,568

$51,319

$44,053

$42,213

$40,216

$38,064

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

800000

600000

400000

200000

639,

410

743,

130

630,

373

673,

353

821,

238

829,

455

641,

149

676,

112

811,

779

770,

900

0

Direct Costs

Overhead/Salaries/Admin

6.4%

8.4%

.92%

1.2%

.74%

1.7% 4.2% 5.9%

1.9% 2.6%

3% 4.2%

1.8%

.64%

2.1% 6.3%

1.6% 2.24%

4.6%

4.3% 5.2% (Total)

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Modern Marketing Partners is a full-service, strategic marketing and communications agency with a capital equipment and component marketing practice. Clients include Algus Packaging, Auto Truck Group, Balemaster, Deublin, D&K Laminating, Gammerler, ITW, Knuth Machine Tools, Ko-Pack, Label-Aire, OMRON Electronics, Panasonic, Sonoco Alloyd, Swenson Chemical Processing, Trine Labeling, Tuthill Pump, Tyco Electronics, Wittenstein Motion Control, Woodworking Machinery Industry Association (WMIA) and others. For more information visit www.ModernMarketingPartners.com

Effective Marketing Drives Sales SuccessMarketing capital equipment can be as complex as the equipment

itself. With multiple decision-makers, extensive financial analysis,

economic and tax considerations, the procurement process can

stretch over long time periods. Capital equipment marketers must

build a professional brand image, and attain a thought leadership

position. Websites must rank high in keyword search results.

Prospects must be identified and nurtured over an extended sales

cycle. Every sale is critical as the life of the capital equipment,

along with add on sales are significant. Employing these marketing

best practices can help capital equipment brands achieve success.

Additional Resources:

Search Engine Optimization: Top Priority for Modern Marketers (MMP)

Marketing Planning and Budgeting Best Practices (MMP)

Glossary of Modern Marketing Definitions (MMP)

© Copyright 2013. Modern Marketing Partners. All Rights Reserved.