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Re-prioritizing Which Vertical Markets to Pursue

With deteriorating demand in certain high-volume, vertical market segments, an industrial equipment supplier was concerned about its growth prospects. Management believed that revenues were too concentrated in a few sectors, and that overexposure to declining segments was causing the company to underperform relative to its peers.

The company needed to diversify its business, reducing dependence on cyclical and/or volatile vertical markets. Doing this, however, required answers to critical questions, such as:

  • What are the relative sizes and growth rates of alternative vertical market segments?
  • Which segments might best leverage the Client’s current product offering and channels to market?
  • In which segments are competitive dynamics most favorable for the company?

Before implementing any strategic re-alignment, the Client turned to RSR Marketing Solutions (“RSR”) for assistance in gaining a fact-based assessment of the market and competitive landscape of other key market segments.

Overview of RSR Engagement

Project Goals and Objectives

Objective

To aid the Client in re-prioritizing vertical market segments to pursue based on key criteria.

RSR Approach

Market Analysis

  1. Estimate the market size for each vertical market and segment the markets further to match the Client’s product portfolio.
  2. Estimate market shares and assess the competitive intensity in each of the segments of interest.
  3. Forecast growth rates and understand key growth drivers for each segment.

Customer Analysis

  1. Understand key purchase decision factors for each market segment relative to the Client’s product line.
  2. Assess customer loyalty and determine under what circumstances are customers receptive to evaluating another supplier.
  3. Evaluate how the Client’s value proposition matches with buying behavior in each vertical.

Results

Key Study Findings

  1. Prioritized the vertical market segments of interest for the Client based on their relative size, growth prospects and competitive intensity.
  2. Identified a segment of the market that appeared to have room for another qualified supplier.
  3. Discovered an underserved market segment in which the Client’s share was lower than originally believed.

RSR Recommendations

  1. Recommended that the Client divert business development resources to both the faster-growing segment and the underserved segment.
  2. Identified necessary product and sales channel modifications needed to gain share in the newly targeted market segments.
  3. Recommended a staged implementation plan to focus on the most attractive geographic segments of the newly targeted vertical markets.

 

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