Market  Research  

 

 

SAMPLE  CASE  STUDY  

 

 

 February,  2014  

Presented by

   

 

  M A R K E T   R E S E A R CH   2    

 

Business  Intelligence  Case  Study  In this mock up case study, we provide an illustration of how research could be used for fact-based decision making. Our clients may ask us to analyze market potential within a strategic planning process or contract us on a project basis. By combining various approaches and data-points, clients can gain access to information that positions them for competitive advantage.

In this case study, our client (Z Vitamin) is a manufacturer of vitamin supplements who competes in 4 channels and wants to better understand their upside potential and sales productivity.

Market  Analysis  As part of a market analysis, we provide snapshots of industry size, annual growth and market drivers within an industry.

The value of a well thought out market analysis is that it frames the company’s growth strategy. From the market analysis, management can make decisions on whether it should grow within its core business, explore growth in adjacent markets or diversify into new markets. Having a specific pulse for industry growth in an existing market is a vital assumption in the formation of strategy.

It is also critical to understand market drivers; the key predictors of industry growth and profitability. Such drivers provide context on which factors may drive future demand. Also, the market analysis provides an important framework to evaluate competitors and their potential future behavior. It is not adequate to consider current competition; management must also consider new potential entrants into the market.

Key  Statistics  Snapshot    

 

 

 

 

 

NOTE  

THIS  SECTION  DOES  NOT  CONSTITUTE  A  COMPLETE  MARKET  ANALYSIS  BUT  REFLECTS  SOME  OF  THE  DATA  THAT  MAY  BE  INCLUDED  IN  SUCH  A  STUDY.  

IBISWORLD  INDUSTRY  REPORT:  VITAMIN  &  SUPPLEMENT  MANUFACTURING  IN  THE  US,  OCTOBER  2013  

  M A R K E T   R E S E A R CH   3    

 

Example  of  a  Key  Driver  to  Industry  Growth  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IBISWORLD  INDUSTRY  REPORT:  VITAMIN  &  SUPPLEMENT  MANUFACTURING  IN  THE  US,  OCTOBER  2013  

  M A R K E T   R E S E A R CH   4    

 

Market  Share  Analysis  (5  Year  Potential)  Z Vitamin's existing market segmentation is as follows:

 

Revenu

e  

Indu

stry  Size  

Pene

tration  

Growth  Rate  

4  Yr.  Ind

ustry  

Size  (P

roj)  

Best-­‐in

-­‐Class  

Margin  

Potential  

Target  

Pene

tration  

Target  

Revenu

e  

Drug  Retailers   $4,500,000    $95,000,000     5%   2%   $102,600,000     Hi   Low   10%   $10,260,000    

Big  Box  Retailers   $4,250,000   $125,000,000     3%   3%   $141,250,000     Low   Very  Low   7%    $9,887,500    

Nutrition  Retailers   $4,200,000    $85,000,000     5%   2%    $91,800,000     Hi   High   7%    $6,426,000    

Consumer  Direct   $2,250,000   $100,000,000     2%   10%   $146,000,000     Hi   High   12%   $16,790,000    

Other   $750,000    $15,000,000     5%   0%    $15,000,000     Low   Low   8%    $400,000    

Totals   $15,950,000                

$43,763,500    

One of Z Vitamin’s channels is “Nutritional Retailers.” Based on the client’s criteria, Optimize can calculate penetration, market share and market potential by channel and by geography (usually by state, or metro area). In this example, only nutritional centers with more than $1,000,000 in annual revenue were used in the sample.

 Locations   Ave.  Rev/Store   Industry  Rev   Category  Size   Existing  Rev   Share   Potential  

Northeast         140   $1,400,000.0   $196,000,000     $19,600,000     $577,121   3%   $794,879    

Southeast       134   $1,200,000.0   $160,800,000     $16,080,000     $940,349   6%   $185,251    

Midwest   97   $1,000,000.0   $97,000,000     $9,700,000     $498,078   5%   $180,922    

Southwest   104   $1,400,000.0   $145,600,000     $14,560,000     $755,961   5%   $263,239    

West   155   $1,600,000.0   $248,000,000     $24,800,000     $1,450,001   6%   $285,999    

     $847,400,000     $84,740,000     $4,221,510       $1,710,290  

 

Based on such data, a client can make informed choices. For example, if Z-Vitamin were looking to make decisions on sales coverage, such an analysis may inform on hiring regional sales managers. In this case, the West is the largest sales region, but in terms of potential, the Northeast may warrant additional sales coverage in the Nutrition Retailer channel.

  M A R K E T   R E S E A R CH   5    

 

Optimize can also provide a study of penetration and specific client targets:

 

Company  Name   Location   Location  Type  

Sales    ($  Mil)   Employees   SIC   Phone  

Number  Vision  Direct,  LLC  D-­‐U-­‐N-­‐S#  078807627  

Portland  ME  United  States  

Single  Location  

28.00M   3   54990100  Health  and  dietetic  food  stores  

+1-­‐207-­‐409-­‐8002  

NUTRITION  SYSTEMS,  INC  D-­‐U-­‐N-­‐S#  932830367  

North  Brunswick  NJ  United  States  

Single  Location  

6.50M   102   54990100  Health  and  dietetic  food  stores  

+1-­‐732-­‐545-­‐5669  

Morrison  Senior  Dining  D-­‐U-­‐N-­‐S#  073971413  

Buffalo  NY  United  States  

Single  Location  

5.60M   120   54990100  Health  and  dietetic  food  stores  

+1-­‐716-­‐898-­‐3541  

BEYOND  GENETICS  SUPPLEMENTS  LLC  D-­‐U-­‐N-­‐S#  032695246  

Jersey  City  NJ  United  States  

Single  Location   5.00M   17  

54990103  Vitamin  food  stores  

+1-­‐732-­‐682-­‐4166  

WESTERLY  HEALTH  FOOD,  INC.  D-­‐U-­‐N-­‐S#  064940679  

New  York  NY  United  States  

Single  Location   4.80M   100  

54990102  Health  foods  

+1-­‐212-­‐586-­‐5262  

TOTAL  HEALTH  NETWORK  CORPORATION  D-­‐U-­‐N-­‐S#  780398145  

Farmingdale  NY  United  States  

Single  Location  

4.00M   30   54990102  Health  foods  

+1-­‐631-­‐293-­‐3001  

THE  NUTRITION  HOUSE  INC  D-­‐U-­‐N-­‐S#  066746728  

Manchester  NH  United  States  

Single  Location   4.00M   65  

54990102  Health  foods  

+1-­‐603-­‐668-­‐2650  

British  Delights,  Ltd.  D-­‐U-­‐N-­‐S#  126252902  

Westford  MA  United  States  

Single  Location  

3.50M   10   54990100  Health  and  dietetic  food  stores  

+1-­‐978-­‐392-­‐0077  

NE  +  $794,  879    West  

+  $285,999    

Midwest  +  $180,922  

 

Southwest  +  $263,239  

 

Southeast  +  $185,251  

 

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And even useful information about prospects, including contact information for key executives:

 

 

 

   

  M A R K E T   R E S E A R CH   7    

 

Sales  &  Marketing  Productivity  Ratio        (TIME  SHIFTED)  In order to understand the return on sales and marketing investment, we often calculate sales and marketing productivity ratio. Assuming a sales cycle (in this case 9 months) we calculate a time shifted productivity ratio as follows:

Selling  Expense  Productivity  Index  

 

 

 

 

 

 Benchmarks  Clients also use benchmarking information to compare various expenses within their industry. Selling expenses might be a one of the variables for comparison. If Z-Vitamin is below par for selling expenses, the company may make the decision to hire a Regional Manager for the Northeast.

Benchmarks are generally available by industry code and by company size. With such an analysis, clients can compare profitability vs. the competition and understand the volume at which economies of scale come into play (in this example, above $50 Million).

 Company   >100M   $50-­‐$100M   <$50  M  

Revenue   100%   100%   100%   100%  Gross  Margin   40%   38%   39%   37%  Selling  Expenses   15%   13%   14%   16%  Operating  Expenses   15%   13%   14%   15%  Net  Profit   10%   12%   11%   6%    

 2013   2012   2011  

Revenue   $21,090,000   $18,000,000   $15,300,000  New  Margin  Dollars   $3,200,000   $3,400,000   $2,500,000  Time  Shifted  %  Selling  Expenses   13%   11%   14%  Prior  Year  Selling  Expenses  (in  dollars)   $2,700,000   $1,989,000   $1,680,000  

1.18  1.71   1.49  

0  

0.5  

1  

1.5  

2  

2013   2012   2011