When are MARKET Structure Studies Needed?

A company that has a core business with declining sales and/or market shares can often benefit from a MARKET Structure Study. As quality expert Dr. Deming noted, a system cannot repair itself on its own. Thus, the advantages of an independent investigation are that it can more readily:

1. Identify reasons for declining sales and/or market share.

2. Find profitable niches that represent opportunities for company.

3. Help company develop and position new offerings to marketplaces.

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In fact, Premier Business Experts’ Capabilities have been the Key to performing ALL three of these tasks with excellence on behalf of companies ranging from manufacturers to service providers and petrochemical engineering enterprises to retailers. Two examples from CPG (Consumer Packaged Goods) industries, where the teams at Premier Business Experts helped to reverse declines are below.

Two Examples of MARKET Structure Studies that Premier Business Experts Conducted and the Beneficial Results Yielded

Problem: Market share of Kraft Salad Dressings went from 42% to 34% and annual profits were off by close to $50 million.

Solution: The team at Premier Business Experts performed a MARKET Structure Study. In so doing, it was found that salad dressings fit into an eighteen-cell matrix. They are in small (8 ounces or less), medium (above 8 but below 18 ounces) or large (18 ounces or more) bottles. The second dimension is that they are either healthy or regular. Lastly, salad dressings are patriotic. In other words, they are red, white and oily. ☺ Most of Hidden Valley’s products are white, while most of Wishbone’s are oily. However, while Kraft is the strongest player in the red dressing category, neither it nor any other company was making red-healthy-large grocery store salad dressing products according to sales data collected from one out of every ten grocery stores. By putting Kraft into the red-healthy-large category Kraft more than regained its lost market share and increased annual bottom-line salad dressing profits by over $60 million, which allowed some of its middle managers to climb higher on the corporate ladder!

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Problem: A major OTC (Over-the-Counter) drug manufacturer had a headache remedy with lackluster sales and a declining analgesic market share.

Solution: The team at Premier Business Experts performed a Market Structure Study and found that the analgesic market has several segments. The major reason for analgesic usage is arthritis. However, there are also segments that cater to those with problems like headaches (e.g., Excedrin), soreness from working out (e.g., Nuprin) and backaches (e.g., Doan’s). As the average age of the population was rising and as more people were taking an aspirin a day to prevent heart attacks, analgesic usage was increasing. Similarly, products like Bufferin that catered to elderly needs for an arthritis remedy that is gentle on the stomach (i.e., because the gastrointestinal tract’s ability to handle acidic products decreases with age) were doing well. When the professionals at Premier Business Experts analyzed the analgesic market, it was discovered that there are two major types of headaches. The first is migraine headaches, which generally start during the teenage years and typically decrease in both severity and frequency as one gets older. Secondly, there are stress headaches that normally begin in the middle age years (i.e., about the time that one’s children begin dating, driving, and heading off to college) and they normally increase in severity and frequency as individuals get older. (While it is conceded that you may know an exception to these patterns, the medical literature supported what the advanced, multivariate statistical tools were revealing from panel, movement, and survey data.) By using spokespersons in their thirties, the company was missing the prime market for migraine headaches (i.e., teenagers), as well as for stress headaches (i.e., elderly). The solution was to reposition the original product for migraine usage and to introduce a stress headache formula that had the secondary benefits of being gentle on the stomach and handling arthritis concerns. For the original product, younger spokespersons were used and the emphasis was on its being a migraine headache remedy. Yet, for the new product, older couples were used. Specifically, an advertisement featuring a daughter on her first date and missing her curfew was designed. Likewise, another ad for the new product featured grandparents in their fifties having to take care of the grandkids when their single parent daughter dropped them off at their house. The results from these simple changes were that (1) the original product’s sales and market shares increased, and (2) a new, highly successful product line was introduced.

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