Do you want to be a parts manufacturer or a parts marketer?

What's the difference? Money. Lots of money. The more and the faster you change from a pure manufacturer to a marketer, the closer you get to the customer, the more money you will make.

Let's take a brake pad. Let's say you sell it for 50 RMB. If you are lucky and good, you make maybe 5 RMB on every pad. The end customer in Europe or America often pays 500 to 800 RMB for your pad. The workshop that puts your pad in a car often makes a margin of 40% . The workshop keeps 200 to 300 RMB of the 500 to 800 RMB pad . And then he charges another 500 to 800 RMB for the work needed to put the part in the car.

Imagine: For every 50 RMB brake pad set you produce, a small workshop somewhere will gross 1000 to 1600 RMB. I always wonder why so many people want to be car manufacturers. The real money is in fixing cars. In America, the after sales business is the third largest business, behind real estate and health care.

As a pure manufacturer, you are a slave to the people who get rich with what you make. Or even worse, you can be a slave to auto manufacturers with evaporating sales and sinking fortunes. As a marketer, you can take a larger and larger share of the riches that are out there.

"Being close to the customer" is to marketing what Newton's laws are to physics. Ignore this immutable law, and you will fail. The closer you get to your customer, the more money you will make. The PepBoys or AutoZones of this world are masters of this game. If they are smart - and they usually are - they buy the brake pad from you for 50 RMB, probably only for 40, because they are big and buy in volume. They bypass the distributor and wholesaler levels and sell the part and labor straight to the customer.

Just look at the one year chart of Autozone. In November 2008, the Autozone share sold for $84. Last Friday, it sold for $161. Since January 2009, while the whole stock market crashed, Autozone nearly doubled. A share of GM is being given away for $1.69 - do you believe now that you should be in after sales instead of being tied to dying automakers? In market capitalization, Autozone alone is worth more than eight times of all of General Motors.

Of course, it would be a long way from a brake pad manufacturer to owning a large service chain. You need to proceed in steps, and get step by step closer and closer to the customer.

There is another immutable law of marketing. It's called "The Four Ps:"  Product, Price, Placement, Promotion.  Sometimes, a 5th P is added: Positioning.  Which of the Four or Five Ps do you have? I bet you'll say "at least two: product and price."  The reality is different. In the eyes of the customers, you may appear empty-handed.  Each day, our company gets calls and emails from manufacturers who tell us: "We have brake pads (disks, shock absorbers, you name it) at great prices." But where and what are they? I have to ask for a list. The answer is, inevitably: "Tell is what you need, we will give you a great price." In the eyes of the customer, there is nothing. No product. No price. Go down this road, and you will never get closer to the customer. All you do is drive your customer to the competition.

Instead, let's get on the road to success. Let's start with just two Ps out of the four or five: Product and Price.

Imagine an empty shop with a big sign that says in big letters: "Tell us what you need. We'll make it for you." And in small letters underneath it says: "In 60 days or more. Send drawing and sample."

Now, picture a shop with many attractive products on display. Next to the attractive products are attractive prices for everybody to see.

Which of the two shops will be more successful?

How do you turn from a reactive manufacturer to a proactive marketer? How do you fill that attractive shop? As a first step, you need to know what product the market wants. Get close to the customer. Get market data. For most developed markets, it is easy to get exact data for the number and age of the cars on the street. Plug in the average service life of a part, and you can actually predict your market many years ahead. You think only magicians can predict the future? With the proper data and a spreadsheet, you can perform magic.

Let's take Germany as an example. About 41 million passenger cars on the road. They drive an average of 15000 km a year. Assume a service life of 45000 km of a brake pad. 300 sets per thousand cars on the road. 12 million sets per year. Now, with a little extra work and by looking at the current car park and the new cars sold, you can perform magic and closely predict which brake pad will sell the most 3 years down the road.  You can do this for most other parts, car by car, country by country. This gives you time enough to develop the part, have it certified, and have it ready for the market. You are years ahead of the competition that still sits next to the sign that reads  "Tell us what you need. We'll make it for you."

While they wait for miracles, you can now list your Product and Price aggressively and consistently. Give all the technical data for the product. List price breaks for quantity orders. Leave a little room for negotiation, but not too much. Send or present these lists to as many wholesalers as possible. Visit them. Present yourself. Tell them what you have. Don't ask them what they want. (If they want something else, they'll tell you.)

These are the first crucial steps for turning from a manufacturer into a marketer. You have Product and Price. You still need Placement (presence in the channel, not 3 months and half a world away) and Promotion (let your customers know about your great product and your great price.) Once you have those - or maybe even before -  you can think about the fifth P - Positioning: What sets your product apart from the competition, what gives your customer a compelling reason to buy? We'll cover those in the next columns.

Once we have done that, then we'll throw the four or five Ps out, and replace them - time moves on - with something more modern, with the four Cs: Consumer, Cost, Convenience, and Communication. Don't worry, it's nothing else that the five Ps seen from the consumer's perspective. As we said: "Being close to the customer" is to marketing what Newton's laws are to physics.

And you can either be the ball. Or the ball player.

About the author: Bertel Schmitt, Gasgoo's columnist, is CEO of Hong Kong based parts sourcing company Sinamotive. Before founding Sinamotive, with the assistance of U.S. venture capital, Mr. Schmitt was a marketing consultant to Volkswagen AG.