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1. INTRODUCTION

The client was a long-established industrial company, with a subsidiary operation involved in catalogue-based engineering supplies, with the operation accounting for a small, but growing, share of turnover.

The vast majority of engineering supplies sales are to a specific customer sector, offering a '1-stop shop' service, but the company wish to expand their range of customers to achieve further growth in sales and profitability. The current database is very fragmented and includes around 10,000 contractors and corporate accounts, but 80% of business is within a narrow customer end-use base. Current knowledge of potential customer segments is relatively low and the company wanted to initiate some research into identifying sectors that offer the best opportunities for profitable expansion in the short to medium term.

2. OBJECTIVES

The overall objective of the project was to identify key customer sectors that offer the greatest potential to expand their catalogue-based sales of supplies and accessories.

Specifically, the research would review the following:-

• Identify the major end-use sectors for key product categories within the current range of supplies and equipment.

   

• Review key market trends within the major product and customer sectors - growth/declining sectors, longer term prospects etc.

   

• Review structure of key customer sectors - contractors/companies, fragmented/concentrated structure etc.

   

• Assess current alternative distribution methods for supplies and accessories and determine potential for the client within the major sectors.

   

• Review of major competitors for catalogue - based sales, e.g. Major Catalogue Suppliers, Tool Hire, Merchants, Distributors, Specialist Catalogues etc, in terms of product ranges, customer base, regional strengths, service and support levels, strengths & weaknesses etc.

   

The range of product sectors and potential customer segments is wide. Research, therefore, involved a combination of both primary and secondary sources to determine key potential customer sectors and their relative strengths and weaknesses in terms of prospects for the client.

Prior to commencing the research, AMA carried out a more detailed analysis of the client's current sales and customer mix to identify current strengths and weaknesses.

AMA have a background understanding of the markets for many of these sectors, so research was focused on a more detailed analysis of the structure of the end-use sectors and distribution of tools and accessories.

A range of telephone interviews was conducted with companies in identified end-use sectors to determine purchasing sources, service and support requirements, current satisfaction levels, pricing, delivery performance etc. As a result, we were able to provide an analysis of the performance of key competitors, as well as identifying potential customer segments for expanding the current operation.

On completion of the research, AMA analysed the findings and submitted a report to the client in line with the survey objectives, outlining key potential sectors offering the greatest opportunities for long-term growth.

4. LOGISTICS

The timescales for completing this survey was around 5/6 weeks from the date of agreement to proceed with the project.

The typical fees for undertaking this type of survey would be £6-9K, and these fees would include all telephone, travel and administration expenses associated with the project. This project was relatively broad in terms of scope, but met the company's overall objective of identifying key potential customer segments to expand the current operation.

5. OUTCOMES

As indicated above, the project was relatively broad in scope and provided an initial screening of a range of potential alternative market sectors, which required further investigation.

Several potential sectors were eliminated at a relatively early stage, primarily due to either product range requirements or strengths of current suppliers. However, several key sectors were identified which offered greater levels of synergy with the existing catalogue range and where the current supply structure was more fragmented, offering better longer-term opportunities.

The client was able to expand the customer base in a measured way, by focusing its marketing activity on key sectors