Greg Aziz Details the Logistics, Benefits of Selling a Premium Product in a Commoditized Market
In today’s complex global marketplace, companies find it increasingly difficult to stand out from the competition. In some industries, a business can successfully market a product based on its added features and/or superior function. To accomplish this goal, business owners must thoroughly understand their local, regional, or national markets. They must also identify their target customer’s needs and show how their product will meet them. Equipped with this knowledge, the entrepreneur must use the appropriate channels to reach these prospective buyers. Today, digital marketing and social media interactions play a key role in getting the message out. However, these strategies are likely not appropriate for a commoditized market in which every product is essentially the same. The North American railcar industry is a classic example of a commoditized industry — except in the case of railcar company entrepreneur Greg Aziz, who is enjoying enduring success by marketing a premium product tailored to each customer’s needs.
In a commoditized industry, each product is very similar to those offered by competitors. Except for factors such as color or size, the competing products are virtually equal in appearance, features, and function. Because all products are essentially equivalent, a consumer makes their purchasing decision based exclusively on the items’ respective prices.
Three Ways a Premium Product Can Thrive
Companies have found it exceedingly difficult to market a premium product in a commoditized industry. Innovative business owners like Greg Aziz, who think outside the box, have been successful by using one (or more) of these approaches.
Smart leaders start with innovative product design. A product with a decidedly different design has an excellent chance of grabbing the market’s attention. The item’s distinctive appearance, and perhaps its desirable new features, will set it apart from competitors’ offerings.
Superior customer support is another way to stand out from the competition. To achieve this goal, the company should find ways to enhance the customer experience across every touch point. Ideally, this means improving the customer’s position in a meaningful way.
In today’s marketplace, a company’s brand can be a powerful marketing tool. Some brands represent solid core values and a strong customer focus. The business’s product marketing should be consistent with its authenticity-based brand persona. When the two mesh together, the product enjoys added credibility in the marketplace.
Greg Aziz on the Railcar Industry’s Commoditized Approach
Since its inception, the North American railcar industry has viewed its products strictly as commodities. Greg Aziz, CEO of Hamilton, Ontario, Canada-based National Steel Car, describes a railroad’s priority when acquiring more railcars for its fleet.
“The railroads, when they go out to buy a car, they’re basically buying a commodity. Naturally, it has to meet certain criteria, but it doesn’t have the differentiators that an industrial customer would want,” he explained.
The railcar industry includes railcar manufacturers who fabricate their own products for use by freight-hauling customers. Each finished railcar must comply with certain design and engineering parameters.
Greg Aziz said that most of his industry competitors contract out their engineering work rather than maintaining in-house capabilities. A commoditized mindset often dominates their operations.
“Some of our competitors have little or no engineering at all. They use outside engineering firms to design things for them. [But] they don’t maintain that burden from an operating standpoint 365 days a year like we do.
“It’s a culture thing … I know … of a couple of the companies who are no longer in business, not because they went out of business, but they’ve just disappeared through mergers. They had their basic designs on certain types of cars. ‘You can have this car or this car,’” he stated.
Greg Aziz’s Premium Railcar Success Story
Canadian entrepreneur Greg Aziz had no desire to build cookie-cutter railcars. He felt that top-tier engineering and customization could turn a generic, commoditized railcar into a premium product. In the process, the railcar builder would elevate its status in the North American railcar industry.
When Greg Aziz acquired his railcar company in 1994, he immediately implemented this approach. “From the get-go, we emphasized engineering in order to differentiate ourselves from our competitors. We believe that we’re the leading railcar manufacturer in the world from an engineering standpoint.
“We’re not the biggest railcar manufacturer, but all of our designs are cutting-edge designs. Our engineering department is superior, we believe, to our competitors’. We’ve used our position in order to basically maintain ourselves as the top-tier manufacturer,” he remarked.
Today, Greg Aziz’s railcar company designs and builds premium railcars to each customer’s specifications. He’s proud that the business’s talented designers have executed over 350 patented designs. However, he notes that the legacy railcar industry didn’t take kindly to the company’s design patent activities.
“From the standpoint of the equipment, our designs are very unique. We hold over 350 patents. We patented all of our design innovations. We were the first railcar builder in North America to do this. It wasn’t done in the industry when I came in.
“The reason we did that was that I started to notice that our competitors were copying our designs. My question was, ‘Why are we not patenting these applications?’ The answer I was given was, ‘The industry will not tolerate a railcar builder patenting its designs. It’s just not done in the industry.’ We went and did that anyway. It worked out very well for us. We continue to do that,” Aziz emphasized.
In addition to creating an impressive railcar design portfolio, Aziz made the capital equipment investments needed to build those premium railcars. He commissioned the fabrication of additional railcar construction facilities. Next, he outfitted the manufacturing facilities with leading-edge equipment and sophisticated technology.
To illustrate, Aziz explained that the company extensively uses robotic welding technology. Besides its labor-saving benefits, he says the robots deliver exceptional-quality welds. “We use an awful lot of welding robotics … There are several very, very large customers who come in and tell us that when it comes to robotic welding, no human being can weld like a robot can, OK? Correct. That’s kind of an important takeaway.
“But our customers will come in, and … they’ve had the luxury of being able to visit other car builders … We keep being told that there’s nobody in this industry who is even close to our scale of robotics and automated equipment,” Aziz remarked.
Greg Aziz Excels at Marketing His Premium Railcars
Aziz has found success in making premium railcars in a commoditized industry. To market these higher-end products, the company’s sales team tailors its approach to each railcar prospect.
First, a knowledgeable sales professional visits each potential customer’s facility. The sales rep observes the company’s railcar loading operations. Once they’re clear about the business’s needs, the rep can brainstorm ways to help the company operate more efficiently. Commoditized railcar companies don’t find it necessary to engage in this process.
To persuade railroads and freight haulers to buy his premium railcars, Aziz steers clear of a commoditized sales approach. Instead, he believes in building personal relationships and providing exceptional value to each customer. He discussed how demonstrating the company’s engineering excellence and quality commitment won the firm a coveted contract.
“There was a customer a few years ago [who] came out and wanted roughly 3,500 railcars. Our two main competitors both sent in a sales guy to meet with them.
“I think we put three of our marketing people, and about three engineers — and a couple of our manufacturing engineers from our manufacturing operations — on a plane. [We] flew in to this customer and sat down about eight or 10 people in front of them. We got that contract, and that contract was worth about $350,000,000.
“And that’s something that takes a couple of years to build out. I think we got caught in the middle of the COVID thing and all that. So, we had to back off on our ability to manufacture that order. That order took three and a half years or so to build out. But it was a nice base for our manufacturing operation through that time period,” he concluded.
Greg Aziz’s Premium Product Speaks for Itself
Aziz says that responding to each customer’s needs opens the door to premium product design — and sales. “Paying attention to our customer’s needs — that’s what’s enabled us to steer the company into new types of railroad equipment … It steers us to cutting-edge engineering and the ability to produce new car designs that are lighter and shorter, and that’s what’s important.
“It comes down to [the fact that] we build a premium product. Because we build a premium product, it allows us to remain competitive. We’re able to do better from a value standpoint, both for the company and for the customer,” Aziz emphasized.
In the 21st century’s second decade, rail freight transport is expected to continue its solid growth. With this as a backdrop, Greg Aziz’s premium railcar company is projected to further expand production to meet customers’ needs.
