As a consultant in the dental industry, I am frequently faced with the challenge of helping small to mid-sized companies compete against increasingly larger competitors. In the dental market, consolidation has taken place not only on the manufacturing side but on the distribution side as well. As a result, small to mid-sized dental product manufacturers are finding themselves in an increasingly tough position.
On the manufacturing side, consolidation has created larger, more diversified, competitors. A noteworthy example of this is Danaher Corporation, a name known to virtually no one in the dental market as recently as five years ago. Danaher swooped into the market, systematically picking off the number one or two brand in key product categories, and is now a formidable force in the dental industry.
On the distribution side, ongoing acquisition of small dealers and regional dealer networks has increased the control the two large national distributors have in the marketplace. In addition, these distributors have begun to forge strong, sometimes exclusive, relationships with key manufacturers.
What this means for the smaller manufacturer is that their competitors often have a broader product offering and stronger dealer support as well as deeper pockets. This Davy and Goliath scenario is certainly not unique to the dental industry.
There are a variety of ways in which small companies can deal with increasing consolidation. These include taking advantage of their ability to respond more quickly, maximizing goodwill and customer loyalty, providing value added, utilizing “guerilla” marketing tactics and cost effective communication vehicles, and even positioning their company to maximize acquisition value. In upcoming posts I will offer some ideas and examples for how companies can compete in a consolidating market.
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