The defense industry frequently faces major structural changes. The defense industry is globally over capacitated topping over one fourth, most defense equipment manufacturers are under pressure for having to keep plant utilization rates high, resulting in heavy pressure to sell more vehicles. The price incentives that defense equipment manufacturers rely on to protect market share wreak dilemma with their bottom lines, threatening the possibility of some of the biggest corporations in the world. Alliances and mergers are likely to continue shaping the industry as most key players look for profits and benefits from increased sales but even the added complexity that arises from combining various product lines and aligning different corporation cultures can undercut the benefits of a big merger or acquisition that lacks a strong investment strategy and the right approach to integration.
The most successful players in this industry share a common strategy that is managing to offer the right products to right customers. Inspite, providing a product that fulfills the customer's true needs which is a capability that should be at the core of every defense equipment manufacturer and hence is easier understood than done and difficult to sustain. As and while some niche products make accurate sales, all too often defense equipment manufacturers have invested in vehicles and features that do miss the mark, sometimes by a notable margin.
Therefore the understanding of what target customers want is the right choice and followed by designing a product that clearly fulfills their needs and delivering the brand promise have become make-or-break capabilities for all defense equipment manufacturers that challenge is compounded by the weight on defense equipment manufacturers to continuously improve their cost position by restructuring operations. With broad and expanding product lines, defense equipment manufacturers need to manage the cost of complexity carefully as they build their strategies around vehicle platforms and modular sub-assemblies.
Because of the fact that various defense equipment manufacturers operate with an independent dealer and service networks, delivering a strong, consistent brand experience at these points of contact is challenging hence the benefits are equally large. Using Vanenberg's unique understanding of mergers and acquisitions approach and disciplines for building customer loyalty, we have identified significant opportunities for defense equipment manufacturers to grow by improving the customer experience.
As product quality improves and vehicle features steadily converge, it's becoming harder for defense equipment makers to appeal to customers by offering unique and distinctive products. Increasingly, the big opportunities for differentiation are downstream, along various customer touch-points in sales and services.