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An industrial equipment supplier recently reorganized to align itself with specific market segments. Two segments of potential interest were largely unfamiliar to the Client. Thus, the Client was unsure how to approach these two new vertical markets.

In the past management operated under the hypothesis that the two segments of interest would be difficult to penetrate given the entrenched position of two key suppliers. However, some changes recently occurred in the market causing the Client to question its assumptions. Given this uncertainty, the Client needed an unbiased third party evaluation of the market potential in these new segments.

Overview of RSR Engagement

Project Goals and Objectives

Objective

To provide a fact-based assessment of the market potential in two key vertical segments, to enable the Client to properly allocate resources to pursue the markets.

RSR Approach

Market Analysis

  1. Quantify the current and future market opportunity using supply-side (bottoms up) and top down techniques.
  2. Identify growth opportunities and barriers to profitable growth that would likely arise from pursuing these market segments.
  3. Benchmark leading competitors currently serving the segments of interest, examining market share, strengths, weaknesses, selling methods, value proposition, etc.

Customer Analysis

  1. Understand customer buying behavior, including supplier selection criteria, preferred suppliers, and potential unmet needs.
  2. Assess the receptiveness of customers to evaluating another supplier, including switching costs, alliances, etc.
  3. Identify segments and accounts where the Client could best achieve profitable growth, as well as those that should be avoided.

Results

Key Study Findings

  1. Found one of the vertical markets was actually three distinct segments with different buying influences, suppliers, and forces of competition.
  2. Discovered product differences in the key segments, which explained the different supplier base.
  3. Found significant, unexpected, upside market potential in one of the segments, due to technological changes and management problems with one of the suppliers.

RSR Recommendations

  1. Recommended the Client pursue one of the vertical markets with a new product offering well suited to that segment.
  2. Recommended the Client avoid many of the market segments due to entrenched competition, low profit margins, and declining growth.

 

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