One of the most enjoyable things to do in the manufacturing industry is to make market explorations. In the past few years, for instance, dozens have been made in a wide variety of markets. As an "explorer", you are dropped into unknown territory, so to speak.
This could, for example, be an industry or application new to the customer. Or one wants to start with existing products in a new geographical market. You then map the new market, looking for instance at size and growth, trends and relevant legislation. And, of course, you then encounter competitors and potential customers.
Of course, it is a bit more complex than I briefly outline here, but with a structured approach and the right sources of information, you can arrive at a good picture of a new market. In this blog, we discuss the importance, content and approach of a good market survey for the manufacturing industry.
The importance of good market research
Why is good market exploration so important for companies in the manufacturing industry? Of course, we will always have to deal with uncertainties in life; this also applies to manufacturing companies which, after all, are also part of the economy, markets and many social developments.
At the same time, introducing new products and entering new markets are still two very important growth scenarios for the Dutch manufacturing industry, as recently confirmed again in Berenschot's "Strategy Trends Survey 2023". This is precisely why it is crucial to properly map out a new market before actually entering it.
Such market exploration is important for manufacturing companies for several reasons:
- Identification of opportunities: a market reconnaissance enables manufacturing companies to identify potential opportunities and market segments. It helps to understand what products or services are in demand and where there are opportunities for growth and expansion of activities.
- Better customer insight: through in-depth market exploration, manufacturing companies can gain a deep understanding of customers' needs, wants and preferences. They can understand what customers care about when choosing products, what problems they are trying to solve and what trends and changes are taking place in the market. This insight enables you to develop products that better match customer demand and to develop appropriate marketing and sales strategies.
- Competitive analysis: a good market exploration allows manufacturing companies to analyse and understand the competition. And also to identify competitors' strengths and weaknesses and evaluate their market position. By understanding your competitors, you can better position yourself and remain competitive.
- Mitigate risks: a thorough market exploration also helps manufacturing companies identify potential risks and threats in the market. You can examine economic trends, changing regulations, technological developments and other factors that may affect business operations. This also helps prepare for potential challenges and manage risks.
- Strategic decision-making: market surveys provide valuable information that manufacturing companies can use in strategic decisions. It enables you to make informed choices regarding product development, market segmentation, pricing, distribution channels and marketing strategies. A good market survey helps you focus resources and efforts effectively on the right markets and target groups.
In short, with good market research, as a manufacturing company you are able to identify opportunities, gain customer insight, analyse competitors, manage risks and make strategic decisions.
The five crucial components of a market exploration
In a market reconnaissance, you map out new territory. But what then are the 5 crucial components of a good market exploration? As far as I am concerned, they are:
- Customer analysis: who are the potential customers for your products and expertise? And what are their needs, preferences and buying behaviour?
- Competitive analysis: Who are your direct and indirect competitors in the market? Map them out and analyse their product range, strengths and weaknesses, pricing and distribution, etc. What differentiates them?
- Technology trends: in the manufacturing industry, there are constant technological developments. But which ones are relevant to you? And what opportunities or threats do they bring?
- Supplier and distribution analysis: what does the value chain look like for your market? Who are potential suppliers of raw materials, components or other supplies for your production process. And what are the available distribution channels for your products?
- Regulations and policies: What are relevant laws and regulations in the market? And what technical standards and certifications do you need to comply with with your products?
Besides these five crucial components, there are often other relevant factors that may be important. However, these depend heavily on the market you want to map, but also on your own market position and product offering. Therefore, this also makes every market survey always unique.
Common mistakes in a market exploration
Entering a new market requires steerage and good market exploration. But what then are the three main mistakes often made in such a market exploration in the manufacturing industry?
- market research is not thorough and in-depth enough, so you miss important insights into market dynamics, trends, customer needs and competition
- misidentifying or segmenting the target market. If you do not properly understand the needs, characteristics and buying behaviour of the target group, you risk approaching the wrong market and missing out on customers.
- overestimating market demand. Of course you are enthusiastic about your product or service. But without objective data, you run the risk of overestimating the demand for it.
- As a result of these mistakes, wrong choices can be made for strategy and investment needed. In my view, these are the three most crucial ones, but of course there are more possible mistakes.
Good sources of information are essential for a market exploration
In a market reconnaissance, as mentioned above, you map out new territory, so to speak. But what then are good sources of information?
As far as I am concerned, these are some of the most useful sources of information for good market research for the manufacturing industry:
- Major banks' industry reports: ING and Rabobank, among others, regularly publish updates on developments in certain industries.
- Industry associations and trade magazines: the websites of industry associations and trade magazines often provide valuable information on trends, technological developments, market statistics, and interviews with experts and leaders from their sector.
- Annual reports, presentations for investors, etc. of the major players in a given market. Besides their insights into market developments, these often provide good insight into their own strategies, objectives and market positions. Usually, this information can be found on their websites.
These online sources of information often provide enough information for a good first impression of a new market. Using interviews with e.g. industry experts and of course (potential) customers, you can then get a more accurate picture.
The crux of a good market exploration, however, lies in translating the general market information into your own products and services: what then is the market potential for you? What is needed in terms of product development? What strategic choices need to be made?
In recent years, we have carried out dozens of market reconnaissance studies for clients in the manufacturing industry who wanted to map out a new market. For this, we always work with our own structured approach with practical formats and tools.
Want to know more about our approach? Then feel free to get in touch!
