Future-Proof Your B2B Marketing Strategy

Episode 85

May 26, 2020

More than most industries, manufacturers know that innovation is key to survival. But what value is placed on marketing efforts during this transition? James Soto, Founder & CEO of Industrial Strength Marketing, talks to Jeff and Carman about how B2B industrial marketers are leading the digital transformation charge and why they need to bring executive leadership on side to foster innovation and explore different brand positions in order to evolve legacy businesses.

Future-Proof Your B2B Marketing Strategy Transcript:

Announcer: You’re listening to The Kula Ring, a podcast made for manufacturing marketers. Here are Carman Pirie and Jeff White. 

Jeff White: Welcome to The Kula Ring, a podcast for manufacturing marketers brought to you by Kula Partners. My name is Jeff White and joining me today is Carman Pirie. Carman, how are you doing? 

Carman Pirie: I’m doing fantastic, sir. I hope you are well, as well. 

Jeff White: I am doing great. Thank you. 

Carman Pirie: Nice. You know, I think today’s show is one of those times, I think probably when people listening to it, they may end up thinking that our guest maybe is even a competitor to our agency. I don’t know. We’ve never encountered each other in that regard. I think we just have encountered each other through the lens of just manufacturing marketing and just kind of connected around that and best practices, and I’m really excited to have him on the show. 

Jeff White: Yeah, I think so. I do believe it’s the first time we’ve ever spoken with… Oh, not necessarily. We did have Ross Simmonds in here, but he is not necessarily a manufacturing marketer in the same way that Kula is. 

Carman Pirie: Yeah. He’s more of a rock star than any of us, so we can’t-

Jeff White: True. Yeah. I mean, how many of us have spoken at Moz? I mean, maybe our guest has. I don’t know. 

Carman Pirie: Let’s find out. We could ask. 

Jeff White: Yeah, we could. We could. So, joining us today is James Soto. James is the founder and CEO of Industrial Strength Marketing. Welcome to The Kula Ring, James. 

James Soto: Hey, thanks for having me on the show, guys. Happy to be here. 

Carman Pirie: Really great to be chatting with you, James, and good to have you joining from one of my favorite cities in America, Nashville. 

James Soto: Yes. Yeah. I feel like I get to come home to Nashville every day. You know, it’s like happy to get back on the plane. 

Carman Pirie: It’s a nice place to be based out of, that’s for sure. 

James Soto: Yeah. 

Carman Pirie: James, why don’t you start by giving our audience a bit of an introduction to you and your firm, please? 

James Soto: Yeah. Happy to do that. And by the way, you guys are witnessing something very magical, which are two sets of industrial marketers meeting in the magical forest, so we’re a rare breed, and I think to your point, guys, manufacturers need a lot of help. They’re counting on us. And it’s always great to meet a fellow industrial marketer, so we all work for our families and let’s help each other, because there’s… At least in the United States, there’s 258,000 manufacturers of all shapes and sizes on the US side of things, so yeah, I think there’s a lot of help needed, and not a lot of us to do it. 

Carman Pirie: I couldn’t agree more. 

James Soto: Yeah, so real quick, I’m founder/CEO of Industrial Strength Marketing. Our friends call us Industrial. Founded in 2003. I am truly an industrial. I was born into an industrial family. My father was in manufacturing for 42 years. I worked my way through college on the plant floor. My sister did, as well, and went on to graduate from Penn State and become an industrial engineer. I have had more of a digital leaning ever since day one, from Pong, to Atari, to PCjr, to coding. Came out of college and really went into the technology and information industry for about 10 years, and that was the nineties, and really saw the convergence and transition from analog to digital, conversions of devices, services, funny numbers that became something we call Bluetooth standards. LEO. Orbit satellites that became satellite TV and services. In ’94, Yahoo. ’98, Google. 

And I was just there through that magical time, and I absolutely had a different leaning instead of DNA. I was recruited by one of the largest industrial search sites for directive advertising, Thomas Publishing. They were looking for folks for DNA, folks to help them really transition that base of manufacturing to really focus more on digital sourcing and really start to transition from print to digital. So, I came on board, ran their biggest geographic segment of their business, and in that time I saw that there was a massive gap, an underserved marketplace in manufacturing distribution, industrial services, and technology. And I created Industrial Strength Marketing with the focus to help industrials make marketing the strength of their business. And we’ve evolved since then to work with iconic industrial brands I was aspiring to be, and we even did what I feel is an epitaph initiative, being part of the founding co-producers of Manufacturing Day, which is the largest coordinated event in manufacturing history centered on changing and creating perceptions of manufacturing careers. 

So, that brings me to today, and we’re very blessed and happy to be here. 

Carman Pirie: Well, thank you for that thorough and impressive introduction. 

Jeff White: Could spend half the podcast just talking about things we’ve seen from the nineties to today and never get to anything about manufacturing or industrial marketing. 

Carman Pirie: Yeah. Nobody wants to listen to three old white guys do that, though. 

Jeff White: No. 

James Soto: Yeah. Yeah. 

Carman Pirie: I mean, they barely want to listen to us talk about marketing. Let’s be honest. 

James Soto: Yeah. Yeah. That’s actually the problem. That’s the problem. You know, I think for the most part, marketing in the industrial sector is either missing, mismanaged, or misunderstood, and if you do first principles thinking, it is our experience and belief that it’s a leadership issue. That they literally don’t believe in it. Or they have a bad relationship, or they’ve been burnt. They left, they were stood up at the altar, and a lot of I think us guys are getting around and talking, I’m hoping to reach your manufacturing leaders, because I don’t know about you, but in the US, you see… You go into Industry Week, 500 Top Industrials, pull out the Apples and get the true industrials in there who have strong industrial brands in their portfolio, and they don’t even have CMOs. So, that just tells you where the function is. So, yeah, they may not want to listen to guys like us talking together, but I think they need to, because it’s a game changer in terms of growth when you really have a strong practice, and it starts with the leader. 

Carman Pirie: Let’s kind of go further into that. Because it’s certainly something that we’ve experienced in our work, as well, that it’s very frequent that you do see that. You see that it just seems like there’s a disconnect in terms of what the understanding, appreciating, and embracing the value of marketing, particularly in the industrial space. What have you found to be… What do you think the root causes of that are? 

James Soto: I think it begins with… So, we happen to be the best industry, period, out there. And let’s just own it. The technology industry is manufacturing. We created the middle class. We led in automation. We’re leveraging the benefits of the next generation of industry 4.0. So, we’ve always been a technology industry, but what I think we’ve done too much, because so much of manufacturing is still small business, right? 90% of it’s still small business. You know, 258,000 in the US, 3,900 are over 500 employees or more. So, when you really think about it, why are we here today, it’s not only because of the leader, it’s because of the way we built the industrial sector and the way we marketed and sold is not the way we’re going to move forward. It’s like the Covey thing, Stephen Covey. If we keep doing the things that got us to where we are today, it will actually cause us to fail, and I think we actually have a generational issue when it comes to how we built businesses.

Our reputation, relationship and referrals, we call those the three Rs. That’s one bucket, but they’re sorely not looking at how technology businesses use SDRs, and outbound, and social selling. They’re not leveraging that to segment the buying-selling process into building and working pipeline, and then letting the sales engineer be the closer, let’s say. And obviously that’s out of the outbound, and the three R’s, there’s the inbound component. And so, they’re not used to that methodology of thinking about their business, and I think we have to change perceptions and belief systems, because quite frankly, why don’t they believe? It’s I think primarily because it’s misunderstood by the leader, and they need help, and I think this is the moment in time in our history as marketers, if you’re a mid-level marketer and you want to be a CMO one day, go help them. Say, “Hire me. I’m here to help change your business trajectory. I care about this business.” 

“This is what the data’s telling me about the percentage of our workforce, their sourcing habits, the move to digital. We need to move this. Can I help you? Can I make the case? Can I give you insights that help us take these small steps to get there?” This is the essential conversation in one way, shape, or form we are having every single time we consider a relationship. 

Jeff White: And I think James, you know, when you talk about that and you talk about the importance of marketing to these manufacturing businesses, these largely smaller businesses that drive the economy in both the US and Canada and throughout the world, you’ve said before that B2B industrial businesses have one of the greatest potentials as marketers, more so than almost any other kind of business. And what do you think the reason is behind that and why is that the case? 

James Soto: Yeah, so there’s a number of reasons, so I think my belief system that I formed during the nineties when I saw the transition from analog to digital, like firsthand, I was at the Cellular Telecommunications Industry Association event, CTIA, when the networks were being built. The technology, it was like lots of buzz. It’s like, think about it back to the early-2000s, when Twitter came on board and social exploded. It was that kind of buzz. 

And for me, it came down to… I think it just came down to, for the most part, looking at where we are in the moment of time, and being able to grasp it, and my philosophy was formed in the nineties around this thing I’ve heard. Actually, it was a quote from an AT&T executive, and what he basically said is, “We have to make our way of doing business obsolete before the competition does.” And when I think, like when we look at the core root problem here that we’re kind of dancing around, is that I personally believe that generational… We gotta make our way of living life and doing business and marketing obsolete before new generational forces, technology, market forces, or the competition does. 

And so, I think that is the fundamental basis upon which, when we’re looking at where business is and where’s the sentiment of the marketing function, is there that willingness? And then further, at this moment in time, what really gives us that huge advantage as industrials is that we are on the cusp of one of the greatest economic expansions that’s going to happen as you consider that next step, and that’s the advent of AI. That’s the advent and application of the power of industry 4.0, the trillion sensor movement. The fact that we can do predictive and preventative maintenance. We have whole new business models. People won’t be buying machine tools anymore, they’ll be buying them like Spotify. Machine tools as a service. And these companies are going to turn into service bureaus, and they’re going to say, “Our job is to provide you the equipment, give you the training, give you all of the components and inserts and all that stuff you need, and help you with efficiency, reducing full-time people that you need, lights-out manufacturing. We’ll have maintenance programs and we’re gonna put you in the modern machine shop success business.” 

So, manufacturing, and then when we look at electrification and we look at the fact that vehicles have such low utilization, they’re typically looking for parking, in parking lots or in traffic most often than they are driving. So, as you look at the impact of manufacturers and innovators like Tesla, and where they’re disrupting the model of the status quo in terms of the fact that you will not own a car one day, I believe those days are coming. The question is how quickly. So, when we look at the impact of the Industrial Revolution and the fourth Industrial Revolution if you look at the World Economic Forum or otherwise, it’s a multi-trillion dollar opportunity in the world. It’s amongst the biggest. 

So, manufacturers who choose to manufacture the business of the future are going to be best placed to leverage it, and that requires, like the farmers did back… If you think about when 97% our economy was agricultural, well, the ones that survived were like the ADMs of the world that leveraged the automation, and the mechanical, electrical benefits, and abilities of the industrial age, and they applied it to the farm. And that’s what we have to do now. This is the opportunity now. We have to leverage the power and the impact and potential of automation, technology, intelligence, this next wave of the Industrial Revolution, and those are the best folks to make it. 

Yes, you can be in software, and yes, you can be in data, and those are all going to be parts of it, and the companies that figure out that reconciliation to the current business model… Let me tell you, if you’re in industrial distribution, and if you think you’re gonna survive on selling stuff and MRO, I think those people are gonna be in the business of uptime as a service. And you get paid based on uptime and how much you can be lights-out manufacturing. That’s the scary stuff that doesn’t sound possible now, but go back 30 years, it’s amazing how far we’ve come. 

Carman Pirie: I just wonder what… It’s funny, because we started this by talking about how maybe manufacturing leadership didn’t value the marketing function, and then as we shift in our conversation to discussing the incredible opportunity with industry 4.0, it’s interesting to me how very few manufacturers often include anything marketing-related in their… They don’t have that in their mind as they say the words industry 4.0. 

Jeff White: Or digital transformation. 

James Soto: Yeah. I think the issue there is they’re going with their comfort area, so when you think about the functions of the business, where is industry 4.0 being applied, it’s being applied towards the operational productivity and rigor, like they put the rigor in their effort around operations, right? And maybe to some extent R&D, right? And so, they’re applying 4.0. They’re looking for those efficiencies. They’re looking for those benefits in productivity. They’re looking for that benefit to quite frankly, leverage automation to reduce overhead, and the reliance and friction of humans when something else can do it better. Freeing us up, hopefully, humanity, to do things that require high cognitive skills. 

So, what’s also really interesting is keep in mind, there’s industrials that… I really call it across the spectrum. You have industrial age folks, old school industrial, just mark it old school. Then you have those folks that are trending digital. And then you have industrials that are true digital pace setters. True innovators. And they’re leveraging, and they’re using predictive marketing. They’re doing account-based marketing like you guys do, right? They’re firmographic, demographic, psychographic. They’re able to do trigger response, intent-based marketing, all these freaking buzzwords, shiny objects and lights, and I think that the thing that we have to realize is that this is a spectrum of transformation. And marketers, believe it or not, for the most part have been using most of the promise of industry 4.0 before the operational side is. We are doing predictive and prescriptive marketing. We are using intelligence. We are using AI for more and more applications that we do. 

And what’s really the shit kicker is the fact that the thing about marketing and communications is it’s integrating with operational, because if you think about it, you buy a car from someone, all of a sudden it breaks down, boom, or it’s about it to break down preferably, or not at all, but let’s say it’s breaking down, and all of a sudden the driver, consumer, gets an alert that says, “Oh, by the way. You need to replace this. Here’s the part. It’s on the way. Can we order it for you?” That was a market decision. That was [predictive]. The customer journey and the ability to deliver value as you do on-screen updates, those things will start to be charged for. This hope, the convergence of the customer journey looking at the problem in the market your product or service solves, or opportunity, or want, and needs, it’s all going to be interrelated and there’s gonna be market opportunities, because still, it’s five to seven times less expensive to grow your business through your existing customers to get more new business than it is to acquire a new customer. 

So, I think we’re in the age where because marketing, at least the trending digital or pace setters have been adopting this, the destination is it’s all coming together. When we make the product, the marketing is part of the buyer journey and the value proposition as we look at the product lifecycle. Whether it’s a car as a service, it’s access versus ownership, you name it. So, get ready. It’s only gonna get more integrated. And at the center of that, it’s the customer. If they get what they want, the manufacturer’s gonna get what they deserve, and profit should be the reward for that. 

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Carman Pirie: So, I’m picking up what you’re putting down. Largely agreeing with what you’re saying. I wonder, how much of a manufacturer’s future success is predicated on their willingness to adopt and embrace these emerging technologies and embrace this new world? How much if it’s dependent on that versus a willingness to actually reimagine their business in a fundamentally different way, and actually shift and alter their position? And the thing that leads me to that question, really, was your comment around Tesla and bringing them up as an example. 

You know, there are a lot of other automobile companies that could have been Tesla, but they weren’t. They could not reach out and claim that position in the way that Tesla did, because they were not willing to make that wholesale shift. They had to keep one foot on the other side of it for so long, and I think so many manufacturers feel that way, probably. Hard for them to imagine those wholesale shifts in positioning that can lead them to be number one in that new emerging category in the way that Tesla has become number one in that category. 

James Soto: Yeah. Okay, so the way I wrestled with that, right? The way I view what you’re saying, it’s kind of two things in one, is that one, there’s two types of innovation. There’s sustaining innovation and there’s disruptive innovation. And one of the things when you study the CEO, so one of our key focuses is obviously speaking to the CEO and really having some pretty challenging conversations with them, and stress testing them about the marketing function. Same thing with the CMO. But specifically the CEO, the CEO really worries about, amongst the top things, outside of talent and having the right talent on their team, is they worry about the black swan. And in any business, the revenue source that it has, it’s just a matter of time. It’s almost like high-90s, almost like 98%. I forget what the stats were, but the revenue source that you have, that you generate your business with, cease to become that revenue source. 

And that’s just an absolute thing. Think about IBM. What do they actually make now? And you look at any business and you can actually see, “Oh my gosh. They don’t make what they started making.” So, I think that black swan is that little miracle of all white swans, there’s that black swan moment that’s born that changes everything. And what CEOs don’t want to… They don’t want to miss the black swan. They don’t want to miss that market opportunity. And they have to place their bets, right? And they have to know when to do it and when to go win that trend. Electrification is a perfect case for that. 

And if you have a culture that’s built around sustaining innovation, well, we just need to grow incrementally and do that stuff, a lot of reasons why these initiatives fail, it’s because it’s a cultural issue. If you try to have a center of innovation with all the expectations of what you value, well, this only did… We’re a $5 billion company, this only did $150,000, half a million. Well, if it is a new, disruptive model, you have to be willing to accept those early-stage rewards, because we tend to underestimate. We put too much demand on things in the short-term, but we underestimate the impacts in the long-term versus the short-term expectations. The cultures in big companies are structurally… They’re structured to kill stuff like that. All the time. And so, that’s why you see so many companies now taking these off and creating separate, sequestered businesses, because a lot of times not only do they need to be sequestered from that debt, that cultural debt, they need to bring in a whole new set of people with new DNA. 

So, I think that’s what we run into. It’s picking the battles and does the organization really have the DNA or the culture to even allow it to survive? 

Carman Pirie: Yeah. We’ve interviewed some great examples of organizations. Honeywell comes to mind as one that’s spun out a bit of a startup within Honeywell that does essentially a marketplace for used aerospace parts. And it is an interesting way to both foster innovation and explore different positions. I do wonder, however, part of my thinking is that most poor marketing performance fundamentally is rooted in a failure to position, and to even have a position, and I just… I wonder. I wonder how we can make that shift. So, I’m asking you now for a magic bullet that doesn’t exist, James. See what’s happened?

James Soto: Yeah, so positioning in terms of brand positioning? What do you mean? 

Carman Pirie: Yeah. Exactly. For instance, if we go back to the kind of godfathers of positioning, and think it through what is a position, it’s the category in the mind of a buyer, and in Tesla’s case, their category isn’t cars. Their category is electric cars, and they’re number one. And there’s probably only place in your head for maybe two brands in that electric car category, just like when there’s only room in your head for probably two, maybe three brands of toothpaste, if I asked you to tell me the different toothpastes, you’d probably say Colgate and Crest, and maybe like an Aquafresh or something. And then if I said, “Well, but what about sensitive teeth?” Oh, well then Sensodyne, because that’s the position they’ve been in. That’s the category that they’re in. 

And I find that Tesla had the courage to say, “We’re taking electric cars. That’s our category.” Whereas, Chevy said, “Eh, we’re going to kind of do some electric stuff.” And Toyota. “We’re gonna kind of do some electric stuff, but we’re also gonna do this, and we’re also gonna do that.” And therefore they failed to own that future state. 

James Soto: Yeah. There’s a bridge there. Okay, so when we talk about positioning, that’s the assumption that okay, we have a niche, right? Let’s position ourselves. Let’s nail a niche. That’s one thing. Let’s say we take the sustaining organization, that’s who we are, and how do we position ourselves better, how do we kind of nail a niche? And I think there’s that, and a lot of us as marketers have that sensibility to work on brand positioning strategy, things like that. 

But I think too, dealing with the executive level, which I think is the root source of the opportunity and the problem, is sometimes it comes back to business model generation. If it’s a time or it’s a moment where you’re considering electrification, I don’t think Tesla was saying, “We want to find a niche in the automotive market.” I truly believe that they were looking at the root cause problem and opportunity of automotive, of the internal combustion engine, the ability to transition the world to sustainable transport, and so what they were looking at was the actual insanity of the implications of humanity scaling in population using internal combustion engines. 

So, when you look at it from a brand position standpoint to a business model, what does a business model start with? What’s the problem in the market? It’s basically at the executive level of strategic marketing, industrial marketing management, what leadership should be focused on is what business are we in? What business should we be in? And yes, knowing what you’re in, should be in, are we in the right business now? Is this long tail, short tail? And so, I think the one thing I’m finding with a lot of industrial marketers out there is they’re not looking at the fact that, “Man, we need to go grab a strategizer book, really get down and work through our business model generation.” And what does that start with? What’s the problem? The real problem. The root cause of the problem. First principles thinking. That’s Elon Musk. He’s right in his thinking. More people will do well to look at first principles thinking. 

And so, what I think that we need to do as marketers is we need to move from doing crap to providing strategic authoritative value, and that’s stuff like, “Yeah, we’re happy to do that brand positioning strategy when you’re ready for it.” And I think that’s where we say, “Okay, problem with the market. Okay, what’s the customer segments that need that? Okay, now let’s start talking about the value proposition.” And that there’s lots of other things that go into a business model generation, and that’s to my point. The things that got you to where you are today, if you keep doing, may actually cause you to fail. The way you generate your revenue now, given marketing, market forces, technology, generational forces, all that stuff. If you don’t evolve and consider all those forces on your legacy business, you’re really screwed. 

So, I think that, for me, is why we’re finding ourselves just more in that “What business should we be in?” conversation. And our first job is to get them. 

Carman Pirie: Yeah, or almost what problem are we solving for in some way. 

James Soto: Exactly. You know, and I think for me, that sounds a hell of a lot more interesting than doing marketing crap, and stuff, and tactics, and like really, really going… Are we NASA? Is our mission, is our inspiration to explore the heavens? What is the true, true essential, first truth, big principles, fundamental problem in the market we’re solving? And for me, it’s marketing’s mismanaged, misunderstood, or even missing, and it’s happening because there’s a lack of belief and understanding at the executive level of strategic marketing management in the business needs to wrestle with the role of the function of marketing in their business, and if it’s there, great. If it’s not, why the hell not? And how they think they’re going to win. Especially since the marketing function now serves HR for recruitment, it serves the product development cycle, it serves crisis management, it serves sales, marketing. It serves so many things, and there’s no wonder why marketing companies, strong marketing functions in the manufacturing segment are outperforming the ones who don’t have one. 

And when times get bad in the economy, let me tell you, the ones who are marketers and they market through it will outperform the ones who don’t. And you just have to look at the last four recessions to see that there’s a pattern. So, get out, take your losses, it’s like pulling out completely on the market on the low. That’s what you’re doing by not marketing. And just look at the last four recessions to show you. This is the hard stuff conversation that I’d love to see more industrial marketers have with their internal teams and manufacturing companies. It’s not about the stuff. 

Carman Pirie: James, I think it’s a great place to leave the episode. You’ve reminded me of an old mentor that owned an agency for… I think he’s probably now in year 50 of agency ownership, and when asked about the importance of marketing, he just says that, “Well, nothing. Nothing happens in this world without communication.” So, it just goes to that very fundamental level, and you just in about three sentences articulated all the aspects of the manufacturing enterprise that marketing actually touches and impacts, and why they ought to be putting a greater level of import on it. I thank you for sharing your experience and expertise with us today on The Kula Ring. 

James Soto: Hey, I’m glad to be with a fellow unicorn and industrial marketer. Marketers, plural. And happy to help, and they’re counting on us, guys. Manufacturers really need us. Seriously. They gotta make some changes. 

Carman Pirie: Well, we look forward to helping them make them along with you. 

Jeff White: Yeah, being a part of that. 

Carman Pirie: All the best, sir. 

James Soto: All right, thank you guys. 

Jeff White: Thank you. 

Announcer: Thanks for listening to The Kula Ring, with Carman Pirie and Jeff White. Don’t miss a single manufacturing marketing insight. Subscribe now at kulapartners.com/thekularing. That’s K-U-L-Apartners.com/thekularing.

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James Soto

Founder & CEO, Industrial Strength Marketing

James is a three-time Inc. 5000 Fastest Growing Company leader, keynote speaker, and recognized contributor to Fabtech, HubSpot, Modern Machine Shop, Mashable, and LinkedIn events, as well as the host of Industrial Strength Marketing on YouTube, where he shares marketing insights that help industrials make marketing the strength of their business. As Founder and CEO of INDUSTRIAL, one of North America’s top marketing agencies, James has worked with major B2B and industrial brands such as Motion Industries, Schneider Electric, ABB Baldor, SKF, Coats, Hunter Fan, NIST, PAM Transport, ASME, and Manufacturing USA. James is also a prolific visionary, responsible for branding and co-producing Manufacturing Day, the largest industrial sector promotion in US history; and now he is co-founder of Nashville Made, a community focused on making way for makers and manufacturers to thrive in Nashville’s urban core. Born industrial. Raised digital. James shares his point of view as to why leaders, marketers, and sellers must make their way of living and marketing obsolete before generational, technology, market forces or the competition does.

The Kula Ring is a podcast for manufacturing marketers who care about evolving their strategy to gain a competitive edge.

Listen to conversations with North America’s top manufacturing marketing executives and get actionable advice for success in a rapidly transforming industry.

About Kula

Kula Partners is an agency that specializes in maximizing revenue potential for B2B manufacturers.

Our clients sell within complex, technical environments and we help them take a more targeted, account-focused approach to drive revenue growth within niche markets.


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