Archive for the ‘Market Assesment’ Category
Small companies, namely those employing fewer than 50 people, account for over 99% of all businesses in any country. They are run by people who know their trade. Most of them have been in existence for more than 10 years compared to the job hoppers in large companies who switch positions like musical chairs. The owners of small businesses have seen the good times and bad times and they know how to deal with them.
Small businesses are chameleons and able to adjust quickly to change. By their very nature they are optimistic although typically not risk takers. Once their business is up and running, the proprietor will look after it like a baby.
Small businesses rent properties, buy utilities, spend their money at local wholesalers, and require the services of lawyers and accountants. People selling to a small business do not need a purchase order number. The decision-maker who writes the check is very often the person that picks up the phone. Things happen quickly and easily in small businesses compared to larger organizations.
Small businesses tend to drive innovation. Big companies innovate processes rather than products. In a swathing generalization: Large companies can be both slow at adapting and very defensive of their strong positions, whereas small businesses have a greater ability to be nimble and have, in effect, almost nothing to lose by trying out new ideas.
Governments and large corporates do not understand small businesses. Their culture is completely different. Big businesses speak and sell to big customers and do not comprehend the culture and language of small businesses. They are missing a huge opportunity.
Understanding small businesses is the starting point of doing business with them. It is not enough to think about their trade and activity. Knowing whether a company supplies accounting services or makes X-ray machines is not particularly helpful. It is more useful to know if the company has plans for growth or cash flow problems, or if it is traditional or modern in its business methods. This type of segmentation will ensure that communications aimed at small businesses resonate.
To do business with small companies, it is necessary to have a deep understanding of them in terms of their attitudes and what drives them, how they behave and most crucially what their needs are. Small companies are the Cinderellas of the business world; finding a glass slipper to fit them would make them excellent partners.
Contact Caroline Harrison: email@example.com
Gerry Caffrey’s first Thursday Night Insight explains why politics should never be ignored.
At B2B International we conduct many market assessments for companies considering expanding into new countries with their products. Our analysis for these studies routinely examines many market forces. Among these are political and regulatory trends at work in each country. Events over the past few months in places like Egypt underscore how important it is to obtain a firm grasp of the political situation before investing. Companies considering entering the UK, for example, would want to take a hard look at the UK’s new Bribery Act. Likewise, in Brazil you need to understand their Congress’s multi-party alliances. Companies more than ever need to increase their level of analysis towards making a careful evaluation of how these forces impact their ability to meet business goals efficiently.
A few months ago we completed a project for a manufacturer of energy-generating equipment. They needed an assessment of the opportunity in India, China, U.S. and several other economies. As would be expected, each country had its own set of market forces at work. Remarkably, for all the countries we studied, the key control point driving market success was not macroeconomic trends, nor was there any lack of demand for the client’s product in these countries. The most important driver turned out to be each country’s respective government policy on “green energy” – in some cases evolving rapidly – making the difference in the economics of projects involving turbines. Our recommendation to the client going forward was to monitor each country’s shifting policies and laws closely, especially those linked to energy policy and related tax breaks/incentives and, prior to investing in entering a market, to conduct a thorough political analysis.
Coincidentally, at the same time as we were working on the project, the point of this Thursday Night Insight was highlighted in a long Economist magazine article entitled “Businesspeople Need to Think Harder About Political Risk”. The article summarizes things quite succinctly:
The most important advice is to take politics seriously. Oil and mining companies have always done this. Royal Dutch Shell has run a profitable business in Nigeria for more than 50 years despite a dangerous and volatile environment. “New economy” companies have tended to be much more naïve. …. Companies need to go further than just buying advice. They need to put more emphasis on local knowledge … ”
Hot on the heels of the successful opening of its Beijing office in 2006, B2B International took the decision to expand its operations into a further new continent – North America – and its New York office opened in early summer 2008. Not three months later and we had the meltdown on Wall Street, triggering one of the deepest and harshest global recessions in living memory.
One question it might be appropriate to ask in these circumstances is whether we would have done things differently, had we known what was just around the corner? While I’m sure we would have thought long and hard before making the decision, in truth we probably would have gone ahead as planned.
Why is that? It’s because, as many of you will already know, the market research industry has consistently proven itself to be fairly resilient in times of adversity. Perhaps saying market research is “recession-proof” would be going a bit far, but the industry is certainly able to withstand a degree of external pressure.
Conducting market research is, of course, a means of reducing risk in business decision making, and when do companies most need to play it safe? When times are tough. When things are going swimmingly, you can perhaps afford to take the odd chance and risk making the occasional mistake. When the economy is in freefall, there can be no margin for error.
We have to acknowledge that 2009 was a challenging year for many. Budgets in most industries were cut and – while we can argue all day about the logic behind it – market research spend, like expenditure in many other business areas, was reined in for some. Similarly, a number of our clients were forced to delay projects due to the economic uncertainty.
Yet, overall, levels of enquiries and commissions have not altered significantly over the past 18 months. What we did, however, notice during the height of the recession was a change in the type of research we were being asked to conduct. The more ‘aggressive’ market entry and market assessment studies commissioned by companies looking to expand into new markets and find new customers were replaced by more ‘defensive’ projects such as customer satisfaction. It has clearly been more important than ever to protect what business you do have and look after your existing customers to ensure they don’t defect. In recent weeks and months, as increasingly we see optimism re-emerge in North America – as indeed globally – clients are gradually feeling emboldened. As their business strategies become more ‘adventurous’, so too are the types of research they require.
Perhaps a little surprising to us in America has been the high number of clients commissioning product development studies during the recession. However, most of these have not been of the all-out ambitious new product development variety; rather, they have tended to focus more around improvements to existing products or extensions to an existing product range. While we cannot determine precisely the reason for this trend, we believe it has been a measured response to a real or perceived increased threat by competitors’ products and/or decreased market share. Product improvements are a means of establishing differentiation at the same time as demonstrating innovativeness and reinforcing a commitment to better serving clients’ needs. At a time when the economic environment is forcing many competitors to lie low, product development has the added advantage of giving you something to shout about.
The intensifying of the recession also appeared to curb the movement we had been witnessing towards environmentally-friendly products and services. Many of the first market research projects we conducted upon arriving in the United States in 2008 assessed the potential for introducing ‘green’ extensions to existing product lines or launching an already-successful North American energy-saving product in other global markets. This type of project request became noticeably less common throughout 2009 but early indications in 2010 – across all our offices, not just in the U.S., it must be noted – lead us to believe that environmental issues will once again rise to the fore.
A more general observation that can be made about the U.S.A. has been the optimism throughout the hard times. Perhaps being a pessimist Brit and used to constant negative media coverage about the doom and gloom we’re all facing, being in America has, at times, been like a breath of fresh air. In spite of rocketing rates of unemployment (up from 6% in September 2008 to 9.7% at the time of writing), record mortgage foreclosures, horrendous stock-market declines and trillion-dollar Government bailout packages, what has been noticeable has been the positive messages portrayed in the media. People haven’t denied the economic problems but have been very much of the opinion that “things will get better”, “together we’ll pull through” and “America will rule the world once more.” And there I was thinking the British were supposed to be full of Dunkirk spirit!
In part, I think the presidential election of November 2008, which coincided with the start of tough times, generated a lot of positivity. President Barack Obama’s “Change we can believe in” slogan was a beacon for many. His election was seen as a chance for America to change for the better. Eighteen months on and the general public may not be quite so enamoured with what’s being achieved on the political agenda, but negativity has not taken over. Indeed, as we begin to see signs of improvements here on this side of the Atlantic, we are thankful that things have not been worse.
I will conclude by referring to an observation made to me earlier this week by a British colleague, also based here in New York: “Americans are more confident, more willing to take a risk and therefore more likely to succeed”. That, in a nutshell, sums things up nicely.
Marketing departments were often among the first to feel the strain last year as the global recession took hold. Redundancies, reduced budgets and extra pressure to demonstrate ROI were commonplace. But, while marketers were trying to show how their roles made a difference to their company’s bottom line, it would seem that the figures are now speaking for themselves.
According to a new study by VisionEdge and Marketo, Measuring Marketing Performance, marketing is doing a better job of contributing to an organisation’s bottom line. 39% of respondents in the online survey of 423 business executives and marketing professionals this spring, agreed that marketing is doing a good job contributing to the financial condition of the business. This figure is up from only 19% last year. As in last year’s study, 47% of respondents feel the link between marketing activities and business goals is clear.
However, only 27% of respondents said marketing is effective at forecasting its ability to impact business goals. 41% agreed that marketing is good at improving its efficiency.
Colleagues in our White Plains, New York office, spotted the following article in their local newspaper, the Westchester County Business Journal. In something of a ‘Business Agony Aunt’ column, advice is given to a company looking to expand into a new area – and which is basically asking about market assessment studies. We reproduce the article below:
We are expanding services into a new market, similar delivery, but to a different target. This will be the third service we offer. How can we get an idea of what our market share might be for each of the three services we sell?
Market share is defined as that portion of the goods or services provided by one or more companies to a target market. Expand your search to include market profits, growth rates, compensation and analysis of industry leaders to get a well-rounded picture of what your industry is up to. Knowing about your market can help you assess the challenges or opportunities of attempting to grow.
Get the facts
When looking up industries, you’ll find classification codes are useful. Try an Internet search. Start with the SIC (Standard Industrial Classification) code, and its more recent cousin, the NAICS (North American Industry Classification System). NAICS is more reflective of our increasingly service-based, non-manufacturing economy.
The U.S. Census Bureau site provides information about taxable and exempt businesses by category, including numbers of companies, gross revenue, number of employees and annual payroll. Using this information, you can determine where your company sits versus the average firm in your industry.
Analyze the data
Use it to make some decisions. Here are some questions you might want to ask before deciding what to do next.
If the big guns are increasing share, the market may be going to consolidation. Get out fast. If big players are getting out, or if they’re losing share because it’s not a core focus for them, there may be opportunity to jump in and take away a slice. Make sure it’s profitable enough to be worth the effort.
If the next closest competitors are growing faster than the market, watch out, they may be formidable. If they are declining faster than the market, you may be able to step in. Or, the market may be collapsing and it’s time to get out – find out why they’re declining. If any company is over 30 percent of market share, it may be time to look elsewhere for growth. If it’s your company that has 30 percent share, start another niche to become less dependent on one market.
Look for markets with profits at or above what your company earns today. Look for industries with average size, salaries and marketing spend at or below your company’s average. Look through the SIC codes or NAICS for ideas on markets that could be underserved. Ask: How would niche-ing my company in a different way make my company more competitive, give my company more opportunity to grow?
How does my company compare to others in the industry in terms of compensation, annual revenue, marketing spend and year-over-year growth? Am I at, above or below industry performance standards?
Be careful if the compensation or marketing spend is unusually high, that may make it harder to compete and retain clients and employees. If your company is performing below industry standard, figure out how to improve or get out. Use comparative stats to help decide where to focus sales and marketing dollars and efforts. Set growth rates in line with the industry, or clearly and factually define how the company will buck industry trends to accomplish its goals.
Looking for a good book? Try, “How To Hire & Manage Market Research Agencies,” by Kathryn Korostoff.
Article written by Andi Gray of Strategy Leaders Inc.,Chappaqua, New York. www.StrategyLeaders.com