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1. INTRODUCTION

The client company was a subsidiary of a major building products company involved in material processing and distribution. The company operated on a regional basis and was seeking to expand distribution in other regions through a combination of organic development or acquisition of an existing operation.

A potential opportunity arose for an acquisition of a well-established distribution and processing company, which could provide the client with the opportunity to expand into the West Midlands, an area where current business levels are low.

AMA Research were asked to undertake an independent review of the market in the West Midlands, to determine market size, structure, price, service levels, current suppliers and customer attitudes.

2. OBJECTIVES

The overall objectives of the project were as follows:-

 

• To provide an independent assessment of the total market size and structure for the product within a 50 mile radius of Birmingham.

   

• To determine the key strengths and weaknesses of current suppliers particularly with regard to product range, price and service levels.

   

• To assess the overall market position of the potential acquisition and possible future development for the client.

  Given the above primary objectives, the project involved:-

   

Average weekly usage, overall demand levels, weekly/seasonal variations, recent and forecast trends etc.

Mix between product usage,range of products, volume mix, trends etc.

Current source of supply, single/multiple sourcing.

Reasons for using current suppliers, service, price, product range, loyalty/inertia, product innovation etc.

Service levels, standard/emergency deliveries, reliability of deliveries, sales administration, technical support etc.

Overall satisfaction levels with current suppliers, quantitative assessment of leading suppliers, review of key strengths and weaknesses.

Key factors influencing the decision to change supplier.

Current price levels within the different product sectors.

2.2 Independent assessment of the overall market potential within the region, particularly with reference to trends in end-use markets.

2.3 Overall review of the product distribution structure for domestic building applications within the West Midlands region.

3. METHODOLOGY

The core of this project involved a telephone survey of approximately 100 material users in the region to assess the above issues.

A questionnaire was designed by AMA to cover the above issues and a random sample base was also developed. Full client confidentiality was maintained throughout the survey, given the sensitivity of the issues involved.

Field research was supported by desk research into the major competitors to providing additional information on company size, structure, market positioning etc.

On completion of the investigation, AMA produced a detailed report outlining findings and recommendations.

4. LOGISTICS

A project of this nature would be relatively short in terms of timescales and would take approximately 6 weeks to undertake.

The typical cost of this type of project would be around £5-7k, which would include all travel, telephone and administrative expenses associated with the project.

The key factor influencing costs would be the number of interviews required to obtain a reasonable sample basis and provide meaningful results. Surveys of this nature typically range from around 50-150 interviews, with the number of interviews influenced by the number of target sectors to be covered.

5. OUTCOMES

On completion of the research, AMA provided a detailed analysis of the market structure in the region outlining market size estimates, trends, key suppliers, shares, strengths & weaknesses of the major suppliers, pricing levels and overall customer satisfaction levels with the target acquisition company and their major competitors.

The client was able to develop an independent and cost-effective assessment of the market in the region, together with views on the relative strengths and weaknesses of the target company.

Ultimately, the acquisition did not proceed due to an inability to achieve a financial agreement, though within a year the client entered the region via an alternative acquisition.