Type of Project
Hardwood Floor Manufacturers in the United States
David Strader, Sr. Consultant
**** Special Notice****
This is a sample report is the data and analysis from an actual market research project conducted during the period listed above. Due to confidentiality, and the proprietary interests of the company for which the research was conducted this sample report has been modified and, in some cases, entire sections are heavily
edited or not available. The target market and specific companies analyzed in this report have not been changed (the client’s name has been changed) so that we can best illustrate how we conduct market research to meet the specific requirements of our clients.
Case Study Background Information: The EPA has just approved a newly formulated adhesive product manufactured by Advanced Products, Inc. (Fictitious Name). In addition to recent EPA and EU approval, this new formula’s characteristics include the ability to withstand prolonged exposure to moisture, temperature variation and very high foot traffic. Based on competitive research the new adhesive has characteristics1 that are not available from current products on the market.
The new formula is “Formaldehyde Free” and meets all current standards as well as all announced federal standards through 2016. Current pricing targets include a 25% margin and 12% – 15% price advantage over current market leader 3M. They now sell limited quantities of the new product line to current customers who also have wood and laminate floor manufacturing operations.
Products made with this new formula may be exported to European Union Countries even after the new EU requirements become effective on January 1st of next year. This new formula is a significant advancement developed using their experience and chemistry of the adhesives they now provide furniture, plywood and paneling manufactures (used in both residential and commercial construction.)
They have 30 years’ experience in the Wood Industry with environmentally friendly lubricants and adhesives. API’s annual revenue last year was $10 Million with very steady growth over the last 5 years. Currently there are only two other widely available products on the market that meet the new standard (3M and CP Adhesives).
The market is dominated now by 3M with CP Adhesives filling the low-cost alternative niche. Production and delivery problems have plagued 3M. This is a relatively small market for 3M. Availability of this specific product is inconsistent especially when production schedules are tight at 3M. The primary disadvantage with 3M is product availability. The 3M product line has experienced a significant price increase and is now considered too expensive by the companies we interviewed.
It does meet or exceed all regulatory requirements today (EPA & EU). It is unknown if the current formula meets future standards. CPA’s primary market is in the wood working and consumer markets. They manufacture a product line that marginally maintains commercial wood floor manufacturing specs. CP offers a low-cost product with no
1 Faster cure rate, no residual odors once fully cured, greater moisture resistance and the product meets both current and all announced future EPA standards.
other advantages over other formulas on the market. Their featured products are all in consumer size packaging, only three of their products are available in commercial size packages Advanced Products, Inc. is well known in the wood products market place and has a strong presence in the hardwood, plywood and paneling manufacturing markets.
It has maintained a highly visible market presence through trade advertising including publications, web portals and editorial contribution to trade associations. Due to poor attendance, they do not currently attend trade association meetings as an exhibitor but do attend as associate members participating in the event.
Trade shows have become a primary venue to wine and dine current clients and build rapport within the industry. They typically host elaborate dinner parties for their customers at trade shows. Pre 9/11 trade shows were a very important source of new accounts. To make up for the lost business opportunities they have increased both direct mail and e-commerce efforts.
API’s primary markets are small high-end sawmills, veneer, and plywood manufacturers located both in the US and eastern Canada. They have no consumer products and package 75% of their adhesives and lubricants in tubes designed for automatic delivery and 1-gallon units primarily sold by the case.
All but four of their adhesive formulas and all lubricants are available in 55-gallon drums. Only very large manufacturers can take advantage of the new adhesive product via bulk orders as once exposed to air the adhesives begin a chemical bonding reaction quickly. Once tapped a 55-gallon drum of adhesive must be used within 24 hours (12 hours w/o vacuum seals in place).
Current Sales force includes 6 captive sales representatives strategically located throughout the US and Canada. Reps are compensated through a base plus bonus formula. Compensation has been designed to allow reps to fully service existing accounts without fear of significant loss of income. They do not now sell through independent distributors or wholesalers but are open to that option with the new product line if it can open new markets (EU as an example).
III. Current Adhesive Customer Profile
VII. Market Risk vs. Reward Analysis
VIII. Preliminary Recommendations (Confidential – NOT AVAILABLE)
Research Objectives Primary:
1) Determine the market potential and the concentration of the wood floor manufacturing market segment
2) Find the best avenues for access to the wood floor manufacturing
market segment for the newly EPA approved adhesive line.
3) Evaluate Advanced Products, Inc (API) ability to meet the production, marketing and sales requirements to be successful in this market segment.
4) Identify high potential prospects that current sales reps may call on while conducting sales calls on current markets.
Questions to be answered by the research. Operational Questions
1) Will current production capacity of 4,000 units per month adequately satisfy potential US demand? Alternatives?
2) Are our current sales reps prepared for this market? 3) Will additional sales reps be necessary? Alternatives? 4) How does the market now buy adhesives?
1) What Associations and Trade Groups have influence in the market? 2) Are there publications and / or web portals with high market
segment readership? 3) How do other products “go to market” within the segment? 4) Level of market sophistication? 5) Is there seasonality to the business as well as the buy/sell cycle?
The Prospect Catalog
1) Identify and profile “A” prospects for the new line 2) Provide a directory of all manufacturers with more than $1,000,000
in sales of wood products requiring adhesives in the manufacturing process
© 2008 David Strader, SMG – No reproduction without written authorization 6
Methodology This research was conducted over a 90-day period in the first quarter of 2XXX by our Research Team. The information is of a proprietary nature and upon final payment becomes the property of the research sponsors. The information contained in this report will not be made available to others without the express permission of the research sponsor. Sources of information include:
Public information via Annual Reports to Shareholders as well as other Government Reports which are available for public review
Company marketing information, advertising, company press releases, and state and local news sources
Subscription based information (i.e., D&B, Business Credit Reports, Thomas, Info USA, etc.)
On-Line research including third party references
Trade Associations, Directories and Publications
One on one telephone interviews with both current customers and prospects
Various private industry sources
Every effort is made to provide accurate information. The information provided is “best available” on the day the data was gathered. Changes in personnel, company products and operations change daily. Previous projects indicate the most volatile information will be found with changes in personnel and company operations reported in the Prospect Directory.
The Strategic Marketing Group
(Modified for Confidentiality)
Current Customer Profile API currently provides adhesives and environmentally safe lubrication products for the wood manufacturing industry. The primary product line for API has focused in the plywood, veneer and all wood paneling manufacturing markets. You currently have twelve current customers that are also manufacturers of wood flooring and use the new adhesive formula. Based on the research of the entire Wood Flooring Manufacturing sector current customers fall into a cross section of manufacturers with more than $1 Million in sales from the manufacture of solid, veneered and laminate flooring products.
Adhesive Usage Estimate: Rule of thumb adhesive usage is 100 units for every 1 million board feet of flooring manufactured. (Hard Wood vs. Soft Wood and stabilizing sub stratus will also impact usage.)
Your Current Sales Profile: The adhesive has been sold as second sale through your sales reps while servicing existing accounts. Re-supply has primarily been accommodated through fax and phone calls to your service center. The typical order is two unbroken cartons (4 units per carton). Shipments are fulfilled via UPS. Primary reason for trying… “Your other products work so well…” Reason for continuing to order “It works so well…”
Customers tell us that your new adhesive is an improvement over the other brands they have used and that they intend to continue to use the product until something better [Researchers Comment “Cheaper that works as well”]
OBSERVATION: Based on telephone interviews 75% of current customers stated the primary considerations for ordering a one- or two-weeks supply 1) Shelf-Life Concerns, 2) No Price Break for larger quantities. The average order is for 2 cartons. Average Monthly use is almost 4.5 cartons. Evaluate the benefits of a more aggressive pricing structure for larger orders.
If you can move your customers to order one month’s supply instead of one- or two-weeks inventory it should reduce administration and handling cost by 50% or more. This will be more critical as demand for your product grows.
[Statistical Report of customer interviews unavailable]
A telephone interview was conducted with your contact person at each company that now uses your new formula (For a sample of the interview guide see Appendix). A summary of the data we collected and few highlights of quotes from our interviews follow.
“The first time we used the adhesive the guys on the line thought it wasn’t any good because it did not smell like anything else we have ever used… the problem really was that it did not smell at all!”
“It works very well. We won’t ship anything that would give us a bad name so we made up a few boards and put it on the shop floor and worked it over pretty well. You name it we spilled it on the test floor… we even drove a truck or two over it multiple times to make sure. This new stuff holds up.”
“We ordered 1 gallon to test it out. The first time we used it we applied the adhesive by hand and ran the flooring through the cold press. Just to see how fast it would grab we started pulling it apart., the adhesive held almost right away. After a couple minutes we could not pull apart the layers. We have to be more careful now when we set up machines because there are no “start over’s” if set up is bad, it sets to fast to salvage the wood and the cores.”
Production Floor Manager:
“The service is great. We knew it would be we have been using their other products for years and have been very satisfied. If we get into a bind and need more adhesive, they can get it delivered by the next morning. Can’t beat the product or the service….”
“We have one problem with the new adhesive. You cannot forget to put the cap back on if you don’t use a full bottle. It only takes an hour and the top skims over and you cannot get anything usable after that. The fast set is great for production, but the operators have to be on the ball or we end up throwing away half a bottle with every startup.”
“The biggest concern we have is shelf life. We had a problem right away with forgetting to cap the bottles and ended up throwing away a lot of spoiled products. Our machines take 1 and ½ gallons at start up and that will do an entire shift of normal production. That half gallon left behind gets thrown away a lot.
I love the product, Steve and Ron on the floor love they don’t have to gag anymore from the smell. If I could make one suggestion could you put it in either ½ gallon or 1 ½ gallon jugs so we don’t have to remember to cap the adhesive before we finish set up?”
The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.
The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.
With titles for each slide as well as bulleted sections to group relevant information as required, the content is well-organized. Excellent use of typeface, color, images, effects, and so on to improve readability and presenting content. The minimum length criterion of 10 slides/pages is reached.
More depth/information is required for the context and importance, otherwise the study detail will be unclear. There is no search history information supplied.
There is a review of important theoretical literature, however there is limited integration of research into problem-related ideas. The review is just partly focused and arranged. There is research that both supports and opposes. A summary of the material given is provided. The conclusion may or may not include a biblical integration.
The content is somewhat ordered, but there is no discernible organization. The use of typeface, color, graphics, effects, and so on may sometimes distract from the presenting substance. It is possible that the length criteria will not be reached.
The context and/or importance are lacking. There is no search history information supplied.
There has been an examination of relevant theoretical literature, but still no research concerning problem-related concepts has been synthesized. The review is just somewhat focused and organized. The provided overview of content does not include any supporting or opposing research. The conclusion has no scriptural references.
There is no logical or apparent organizational structure. There is no discernible logical sequence. The use of typeface, color, graphics, effects, and so on often detracts from the presenting substance. It is possible that the length criteria will not be reached.