Srg Industry Analysis Primer Web Version
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This document provides an overview of conducting an industry and market analysis. It outlines 7 steps for a general product-market assessment including defining the market/industry, clarifying the industry structure, identifying key players, listing competitive products, identifying new product trends, and defining technology barriers. It also includes charts on industry structure, assessing product placement options, innovation structures, and the marketing mix. The document is intended as a primer on research steps and concepts for analyzing an industry and market.
Srg Industry Analysis Primer Web Version
- 1. Industry and Market Analysis – An SRG Primer Brief All copy rights reserved 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 1
- 2. General Product-Market Assessment Research Steps 1. Define/refine the Market/ Industry; (Source(s): Key Published industry study, DOC State of the Industry Report, Federal Lab Intellectual Property Disclosure) 2. Clarify/Develop Industry Structure: See Exhibit II Source: Published Reports, Expert Summary/overview 3. Review/Identify the key Industrial Players Rules of Commerce (OEM Hurtle Rates(ROI), Performance Barriers, etc. unique to each ) Source (s): Journal Articles(Lexus Nexus, etc.), reports, Experts Interviews,etc. 4. List Commercially Competitive Products Offerings (segments) Source(s): Same as above 5. New Product Trends -- Define Technology Research and Development System Sources: Business Journals, Annual Reports, Trade associations, Third Party Lab Reports (Battelle Memorial Institute, SRI, etc.) 6. Clarify Role of University Sponsored Research for any given Structure (Source(s): Published Articles, WCU Professors, 7. Define Next Generation Technical Barriers (Source(s): Lab Reports, Business Publications Forecasts, Investment House Industry Analyses, Technical Society Reports (IEEE, SAE, etc.) 12/06/2008 2 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina
- 3. Research Manufacturing Development Marketing Institutional Ultimate Customers Consumers Systems Forecast beyond customer knowledge Large engineering Large System producers basic Defined system research: Analysis PRIORITIES parameters Options open and fore- and interface Test and scale A few large casts up to full scale teams ---- Patent screen World’s Detailed Basic research best research in Introduce few well understood explanations; companies selected fields, and tested products Patent interface plus network to universities ---- Dominant market Small scale very selected Small scale Best in world ------------- Personal interaction with a few advanced share companies frontier research technical users manufacturing knowledge of tech. -------------- Supplier design and product Best in breed Risk your company Involve all functions, plus suppliers, customers, post sale services simultaneous design (Taurus Sable example) Corporate leader Best in breed Best in breed or team Innovation Structures (adapted from Quinn et al. 1997) 12/06/2008 3 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina
- 4. What’s In A “Market Assessment” ? Purpose: Create New Venture Product’s Position, Promotions And Pricing Strategy Approach: • Assess (Product-) Markets and Competition • Know Industry Structure and Modes of Competition Through R & D Infrastructure/Arrangements • Assess Trends in Industry’s Critical Success Factors • Assess Technology’s Potential Impact - •-The Products • Manufacturing Production Technologies • Business Models (Generic Organization, Pro Forma Financials) Valuation Models of Choice – Industry Partners, Investment Community, Governmental Sources of Capital 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 4
- 5. Session Exercise: Quick *and dirty* Market Assessment 1. The Product-Market: Key Research Resource? 2. Review Business Information Sources: (objective: Secure Generic Industry Standard Value Chain, and Production function, New Product Development Alliances 3. Search Literature for Published Industry Structure Report 4. Use unique *industry specific* web-based resources: 5. Interview Industry Experts Successful Entrepreneurs in the Product Market 12/06/2008 5 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina
- 6. What’s the Product? What’s it’s Product-Market: Preliminary Considerations 1. Is it a Widget, Gadget, or…. Process Improvement ? What product can be purchased currently that is most like it. Who makes it? Who is the largest Retailer of the product /process? What’s the Market Share story? Over time? (gives you: Major Players, Key Market segments, Production Economies, Barriers to entry) 2. For any given price range, How Large is the current Product-Market (how many units given any given price) have been sold over the past 5 years or closest approximation?) (gives you size of planned commercial or government market opportunity) 3. What is/are the SIC or code(s) for the target product market? Gives you a key for locating Industry analyses (e.g., DOC Industry Studies, Investment Research for indication of Critical trends in Production, and demand, Anticipated technology innovation) 4. What equipment out there will it substitute? Why/how is it better. (gives, Competitive Product Feature landscape, Potential innovative product/process Licensing partners, research consortia) 5. Given your discovered field of competitors, What rate of market penetration does your team expect? Why? (or, On what do you base that expectation?-- the product replacement rate; a New type of Buyer(s)? If so , what are the estimates of that segment’s growth rate over the next 5 years? 6. What is the MAJOR purchase decision factor that has been found to determine why people buy it? 12/06/2008 6 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina
- 7. Primer Back-up Charts 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 7
- 8. Marketing Mix1 The Four (4) P’s Marketing decisions generally fall into the following four controllable categories: • Product -- appearance, functionality, and support or non-tangibles the customer will receive. • Price -- how much you charge for your product or service. Considerations include: whether you’ll charge the same amount all of the time or vary it in some way. Varied pricing could occur according to geography, time frame, or volume. • Place (distribution) -- where and how your product is distributed and sold • Promotion – Choice of approach for advertising and *modes* of selling of product or service 1 Initially coined by Neil Borden, the term "marketing mix" became popularized after Neil H. Borden published his 1964 article, The Concept of the Marketing Mix. E. Jerome McCarthy was later credited with grouping these ingredients into the four categories that today are known as the 4 P's of marketing. Ref URL’s: Google: Four P’s for more on this. Or visit: www.ama.org, 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 8
- 9. Industry Structure: Competitive Landscape 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 9
- 10. Assessing Product Placement Options 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 10
- 11. Assessing Product Placement Options Source: Kotler, (1984) “ Marketing Management”, Prentice Hall, pgs. 324 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 11
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- 15. Recommended Penn Center Market Analysis Summary Table SubTask (s): to Identify baseline market information for the following products. Research will identify potential local, regional, national, global markets/users, average market price, and user requirements for shipping, quantity and product form. (5 days). Draft Model Deliverable Summary Table: Product Product-Market Product-Market Product-Market Shipping Standard Shipping Quantity/Product (Global -Size, Unit (National-Size, Unit (Local -Size, Unit Requirements Units Form Price, Nominal Unit Price, Nominal Unit Price, Nominal Packaging)1 Packaging) Unit Packaging) indigo Global Demand Volume: 350 tons4 Total: Wholesale Retail : TBD $1.00 to 2.00 dollar for Organic $700 organic indigo balls National Market for $15,000 to Bulk transport. million (US) Organic Indigo Plant 3.500.00 annual5 Process Indigo Plant 2 specialty Retail Dye (Balls) into balls (i.e., 1 to 3 ~ $2.00 per ball oz ball) for long term 50 tons world wide Total Sales: in 2003 dollars6 storage or ball $ 6,100,000.00 to development. May be 12,200,000.00 total stored for years if kept wholesale sales dry Total number of units (3 oz ball): 6,010,000.units annually Spanish7 $400 million (US) Total National Total Local Processed Spanish 8 oz prepackaged moss* Sales ~ $90,000,000 Market Sales: TBD8 Moss product bag shipped in 6, 8, 10, National Units $ 75.0 million 25, and 50 lb boxes9 sold: 33 million annually Wholesale Packages: units sold annually Novelty Retail: @ 1.99 per 8 oz bag $65.0 Million Retail volume: 1 Potential local, regional, national, global markets/users please see attached product market segment summaries/descriptions Research to be performed by SRG as subcontractor for BWC as contractor 2 U.S. Industry Surveys (2002 ) “Retailing: Specialty” Standard and Poors August 29, 2002 pg 3 Aggregated total organic pigmentation market : $700 million total organic pigmentation market 25% is dyes of that 4 Along with BASF, major US competitors are in India followed by other countries in Asia and Africa. The total natural pigment and dye market (for all colors) - representing $700 million in sales-is currently 25% of total dye consumption. The trend toward introducing more expensive, high performance pigments is expected to boost the market for natural dyes (Market Share Reporter, 2000). In 1994 documented world trade of natural indigo was approximately 50 tons annually (Food and Agriculture Organization of the United Nations, 1995). 5 Based on equivalent value of Nigerian recorded transactions (Per 3 oz ball $.50 to 1.00 in 1992 reference year) 6 According to a master Nigerian dyer, a 1 to 3 ounce ball exchanged in Nigeria for the equivalent of $.50 to 1.00 (1992 reference) or ~ 2.00 2003 dollars, the process requires 15 to 50 balls and 6 vats to generate active organic dye needed for crafts dying. (phone conversation with Mr. Adesola Falade SRG____________________________________________________________________________________________________________________________________________Greensboro 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 15
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- 18. Source: Quinn (1992) “Intelligent Enterprise”. 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 18
- 19. Key Concepts: Cycle of Technology Development { BASIC RESEARCH APPLIED DEVELOPMENT INTRO MATURITY RESEARCH GROWTH LABORATORY VERIFICATION TECHNICAL AND COMMERCIAL SCIENTIFIC DEMONSTRATION SUGGESTION, DECLINE OF APPLICATION DISCOVERY, AND PRODUCT ENGINEERING RECOGNITION, NEW CONCEPT PREPROTOTYPE RETURN $0 INVESTMENT BREAK EVEN INVESTMENT | | | | | | | | | -16 -14 -12 -6 -2 -1 2 6 YEARS LIFE CYCLE FIGURE 1. Technology Research and Development Process (adapted from Boos 1976;Renault 1996) 12/06/2008 Dr. R.B. Saunders, II SG R Hampton Roads Western Carolina 19
- 20. Elements of Industrial Structure Entry Barriers Rivalry Determinants •Scale Economies New Entrants • Industry Growth •Proprietary Product differences •fixed costs/value added •Brand Switching Costs •Intermittent Overcapacity Threat of •etc. •Switching Costs New Entrants •Concentration and Balance •etc. Bargaining Power of Bargaining Power of Buyers Suppliers Suppliers Buyers Determinants of Supplier Threat of Determinants of Buyer Power •Input Differentiation Substitutes •Bargaining Leverage Power •Supplier concentration •Buyer Concentration viz. •Presence of substitute inputs Substitutes Firm concentration •Forward integration threat •Pull through relative to backward •Buyer Volume integration threat Source: Porter 1985 •etc. 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 20
- 21. The Product-Marketing Function: Marketing Concept “(holds) That the key to Achieving Organizational Goals Consists in Determining the Needs and Wants of Target Markets and Delivering the Desired Satisfaction more Effectively and Efficiently than Competitors “ {emphasis added} Source: Kotler, (1984), “Marketing Management”, pg 22. 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 21
- 22. The Fundamental Enterprise Model FIRM INFRASTRUCTURE (e.g., Finance, Planning) HUMAN RESOURCE MANAGEMENT M Support TECHNOLOGY RESEARCH AND DEVELOPMENT A Activities MARKETING RESEARCH - PUBLIC RELATIONS R OR “STAFF FUNCTIONS” PROCUREMENT G AFTER-SALES I INBOUND OPERATIONS OUTBOUND SALES SERVICE N LOGISITICS (MANUFACTURING, LOGISITICS PRODUCTION) (Customer Service) PRIMARY ACTIVITIES OR “LINE FUNCTIONS’ SOURCE: Porter 1990, pg. 41, 1985,1984 12/06/2008 Dr. R.B. Saunders, II SRG Hampton Roads Western Carolina 22