Profiting from Market Research

1
Profiting from Market Research
2
Presentation Agenda

• Why Market Research?
• Case Studies
• Acme Construction Products
• Beta Enterprises
• Gamma Ray
• Conclusions

3
Market research adds the dimension of factual
customer data to internal company metrics
A commitment to market research creates better
understanding of customers, markets, and true
business performance
Why Market Research?
4
The fiber-based pkg. industry has focused
historically on internal performance metrics
Most Companies measure their overall performance
by Operational/Financial Metrics Sales
Metrics - Safety - New accounts - Units
produced - Sales calls/frequency - Cost per
unit - Average /unit - Price/Margin per
unit - Sales costs - Contribution per
hour - Backlog - Gross sales - Cold calls -
Net profit - Performance to budget - Scrap
rate - Performance to prior year - Relative
size - Units sold - Capacity - Client
loyalty - Innovative technology -
EBITDA - Earnings per share - Debt to
equity
Why Market Research?
5
Market Research is defined by a set of
competencies that lead to actionable results

• Good market research leads to beneficial results
  through
• 1. Gathering information from the marketplace
• 2. Applying proven statistical methods and other
• analytic techniques to
• 3. Deriving actionable conclusions
• 4. Facilitating continuous process improvement

Why Market Research?
6
Customers have excellent answers to many key,
strategic business questions

• Customer survey
• Perceived value
• Competitive position
• Opportunities for improvement

Why Market Research?
7
Growth begins with a thorough understanding of
the size of the opportunity and service
requirements

• Market assessment
• Growth opportunities
• Competitive vulnerabilities
• Required competencies

Why Market Research?
8
An accurate picture of market share can pre-empt
competitive inroads

• Market share
• Accurate market share information
• Competitive position
• Viability of substitute products and new
• market entrants

Why Market Research?
9
Presentation Agenda

• Why Market Research?
• Case Studies
• Acme Construction Products
• Beta Enterprises
• Gamma Ray
• Conclusions

10
Acme Construction Products is a leading
manufacturer of commonly-used (commodity)
construction products

• Leading producer of residential and commercial
  construction products
• Strong brand name
• Number two in industry
• Strategically focused on customer service
• Corporate commitment to market research
• Strategically focused on customer service
• Centralized customer service function
• Customer Voice (survey) is strategic management
  tool
• Conducted every two-three years
• Key component of strategic planning process
• Element of management compensation

Case Study Acme Construction Products
11
Acme has created the perfect storm where
performance and price exceed competition
Attribute 1 Attribute 2 Attribute 3 Attribute
4 Attribute 5 Attribute 6 Attribute 7 Attribute
8 Attribute 9 Attribute 10 Attribute 11 Attribute
12 Attribute 13 Attribute 14 Attribute
15 Attribute 16 Attribute 17 Attribute
18 Attribute 19 Attribute 20 Attribute
21 Attribute 22 Attribute 23 Attribute
24 Attribute 25 Competitive Price Attribute
27 Value Overall Satisfaction
Product Quality
Resolving Quality Issues
Sales Rep.
Deliveries Shipments
Customer Service
Company Commitment
Case Study Acme Construction Products
12
Acmes perceived performance has steadily
improved over the past ten years
Average Ratings
Average Net Scores
n232
n195
n199
n341
n225
n232
n384
n250
Case Study Acme Construction Products
13
Acmes recent performance gains have come from
areas of particular competitive strengthcustomer
service
Average Ratings
2006 Average 6.25 n250








2003 Average 6.05 n225
statistically significant difference (95
confidence)
Case Study Acme Construction Products
14
Beta Enterprises is the leading manufacturer of
high-end outdoor products

• Leading producer of high-end outdoor products
• Strong corporate and product brand names
• Number one in industry
• Premium price
• Corporate commitment to marketing
• Distributor support
• Heavy advertising pull
• Spends heavily on industry advancement (primary
  demand)
• Customer survey is strategic management tool
• Conducted every two-three years
• Key component of strategic planning process
• Identifies areas for investment - competitive
  strengths/weakness and
• potential acquisitions

Case Study Beta Enterprises
15
Beta enjoys a superior competitive position and a
premium price in spite of sporadic product
quality problems
n125
Attribute1 Attribute2 Attribute3 Attribute4 Attrib
ute5 Attribute6 Attribute7 Attribute8 Attribute9 A
ttribute10 Attribute11 Attribute12 Attribute13 Att
ribute14 Attribute15 Attribute16 Attribute17 Attri
bute18 Attribute19 Attribute20 Attribute21 Attribu
te22 Competitive Price Attribute24 Attribute25 Att
ribute26 Perceived Value Overall Satisfaction
Product Performance
Product Dev./Design
Deliveries Shipments
Sales Customer Support
Marketing Support Act.
Case Study Beta Enterprises
16
The competitive position of Beta places them
among the top 25 of companies
Survey Average 0.57
Case Study Beta Enterprises
17
Beta regularly seeks out customers who have
experienced performance below expectations
Average Ratings
Average Net Scores
n125
n19
n38
n35
n33
n264
n66
n66
n66
n66
Case Study Beta Enterprises
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Betas performance among the lowest quartile
demonstrates opportunities for improvement in
several key areas
n33
Attribute1 Attribute2 Attribute3 Attribute4 Attrib
ute5 Attribute6 Attribute7 Attribute8 Attribute9 A
ttribute10 Attribute11 Attribute12 Attribute13 Att
ribute14 Attribute15 Attribute16 Attribute17 Attri
bute18 Attribute19 Attribute20 Attribute21 Attribu
te22 Competitive Price Attribute24 Attribute25 Att
ribute26 Perceived Value Overall Satisfaction
Product Performance
Product Dev./Design
Deliveries Shipments
Sales Customer Support
Marketing Support Act.
Case Study Beta Enterprises
19
Names of customers in the lowest quartile are
identified for specific, targeted improvement
actions
Steering Linkage Rold Kreie Stitch in
Time L.J. Brinson, Sr. Summer Aide Bew
White Sunstate Design Reagan Laird T C
Boutiques Inc. Dennis/Rebecca Hillan TCTA
Inc. Kevin Yonce The Austin Companies Al
Bojar Wayne Smith Theater Supplies Allan
Bass Washington Distributors Greg Buckingham  
Paradise Products John Dryden Pasade David
Lopez Peterson Products James Myersl Queen
City Manufacturing Pete Weingartner Redrum
Widgets Fred Robida Regal Industries Inc. Tony
Martens Reliatate, Inc. Don Miller Rex Fabrics
Inc. Scooter Scott Rothman Co. Richard
Dudley Sharp's Custom Chris Sharp
Boid Co. Tom Daegling Joule Bros. Felix
Kerr Laurel Ltd. Greg Schmieler Liberty
Products Melanie Randolph Maine
Enterprises Ron Lehr Marine Industries Mary
Markon Mister Kool Charles Kees North
Country Carol Ruzicka Ottumwa Products Michael
Swallow PGA Wayne Brechtel
Case Study Beta Enterprises
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Gamma Ray is a manufacturer and marketer of
specialty industrial products in North America

• Small, niche market
• Used both directly and by OEMs
• Petroleum-based raw material
• Strong push to commodity product status,
  especially in one sector
• Historically, Gamma is market leader
• Able to raise prices
• Strong brand name
• Leading market share
• Need for share assessment driven by recent and
  unexplained shift
• In environment of rising raw material prices
• Imported product from Canada and Far East
• Small, closely-held companies - sharing of
  information, toll manufacturing

Case Study Gamma Ray
21
Gammas strength in the Inverted sector is
mirrored by NK in the Octangular sector
North American Market Value, 2006
49
127
100
Anomite - 18
PK Ind - 7
80
TM Mexico - 5
NK Ltd - 31
Anomite - 1
60
NK Ltd - 27
40
Gamma - 78
20
Dovoco - 1
Gamma - 8
0
Inverted
Octangular
Total 176 Million
Case Study Gamma Ray
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Much of Gammas share shift is explained by
differential shifts in sector positions
North American Inverted Market Value Growth 2004
2006
North American Octangular Market Value Growth
2004 2006
6 CAGR
-2 CAGR
Million
2006 127 Million
2004 113 Million
2006 49 Million
2004 51 Million
Case Study Gamma Ray
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In addition to sector differences, other factors
were also discovered that were driving Gammas
change in share

• Small, overlooked competitors have gained share
• Distribution strength in different channel
• Haughty attitude toward small operations
• Raw material price increase have changed the
  landscape
• Leaders able to pass on price increases, smaller
  firms less successful
• Smaller firms become more aggressive as margins
  shrink
• Foreign competitors (China and Middle East) have
  grown
• Importing through Mexico (less visible)
• Aggressive pricing and surprisingly high quality

Case Study Gamma Ray
24
Presentation Agenda

• Why Market Research?
• Case Studies
• Acme Construction Products
• Beta Enterprises
• Gamma Ray
• Conclusions

25
Market Research is an essential management tool
to help companies gain competitive advantage

• Market Research works
• Market Research is a key management tool along
  side financial and operational metrics
• Thoughtful, targeted Market Research can help
  companies gain competitive advantage
• premium price
• higher share and/or increased profitability

Conclusions