A regional business developer at a one-hundred year old manufacturer of plastics processing equipment in Europe contacted Ground Floor Partners to estimate the North American market size for a particular class of high precision machine presses. European headquarters believed there was a large market for their machines in the United States. Our contact in the United States had been tasked with selling in North America; he believed the market size was much smaller than headquarters’ estimate. Headquarters wanted a professional market assessment so they could better understand the competitive market landscape. Specifically, we were also tasked with uncovering the following:
- Market Size — estimate the number of machines sold per year in Canada, the United States and Mexico
- Pricing Analysis — uncover prices competitors are charging for similar machines
- Purchase Frequency — how often are systems purchased and what triggers such decisions
- Customer Segments — understand what industries use these systems and how purchasers select a supplier
Given the lack of information available through online sources and industry associations, we relied heavily on interviews with industry experts and end-users. We supplemented these interviews with secondary market research compiled through websites, databases, trade magazines, and third party market research reports.
Our research showed that the market was indeed much smaller than expected by European headquarters. A combination of factors contributed to this: slow industry recovery from the recent recession, a general decline in the industry due to mass migration of manufacturing to China and other low-wage countries, the extremely long lifetime of the machines (20-30 years), the development of an active used-equipment market, and equipment sharing among users. Our findings allowed the company to redesign their international marketing and sales strategy to focus on more lucrative markets.