Market research increases profits.

Market Research Increases Profits

An often overlooked marketing tool in our industry is market research. With the growing emphasis on long-range planning, market research is now playing an increasingly important role in providing key information on potentially profitable new markets and future trends.

Foundries which cannot increase prices because of competitive reasons, have come to the stark realization that production costs are taking an ever-increasing share of profits. Better market research to pinpoint sales opportunities for new facilities, processes and materials are one way out of this profit squeeze dilemma.

The actual mechanics of developing and carrying through both market surveys and market analysis studies are a part of the professional equipment of any competent marketing person and foundry managers need not concern themselves with this phase of the marketing function. However, they should have a general understanding of the types of information good market research studies can uncover and how this data can be applied to increasing casting sales.

A few of the ways in which good market research can be put to work are in: economic and sales forecasting; analyzing market potentials; developing new markets; determining sales territories; and evaluating marketing efforts.

One of your most important sources of information has to be your customers. A definite schedule should be established for one or two president-to-president customer meetings a month, covering all major accounts at least once in the course of a year. In larger accounts, this contact will probably be made at the vice president or general manager level. These personal, high-level calls show the customer that you are really interested in his business and are striving to do the best possible job.

Experience indicates that important information on product obsolescence, competitive factors and key industry developments can be gathered from such meetings, which would not otherwise be available to the sales engineer or agent. Also, good forecast data can be obtained quite easily from top executives, while it is usually not available from middle management people.

Also, have your sales ond service people alerted to the critical need for market research data. Put together a simple form they can use to report information on market trends, technological changes and competitive factors.

Take a good look at casting applications in a variety of industries which you are not currently serving. In-depth interviews with product engineering people in representative companies will provide a wealth of information on casting usage and a good indication if and how your foundry might fit in as a casting supplier. You should not try to rely on direct mail surveys to do this job. It is much too complex a task to expect quick and easy answers.

For forecasting, take a good look at key government data, starting with the annual U.S. Industrial Outlook, which presents historical information, trends and forecasts on most key casting markets. To more closely define specific industry segments review the Current Industrial Reports and Census of Manufacturers annual and five-year summaries, which detail most customer industries to the six-digit SIC code level. Other government data of value will include the monthly Survey of Current Business, Business Conditions Digest, the Conference Board Record and the Federal Reserve Statistical Summary.

Information Sources

Trade associations are another good source of information, as is the business press, comprising more than 2000 magazines and periodicals. Subscribe to the major publications that cover each of your key market areas. Most do original research on their particular industry and often publish information you can't get otherwise. A number of them have year-book issues, which contain summaries of market statistics. Economic newsletters are also valuable, particularly those published by most major banks such as the First National City, Harris Trust and Chase. For an in-depth view of the economy, the Wharton, Evans, Data Resources and Chase Econometrics reports and forecasts are very good.

Sources of marketing information seem almost endless. However, you can get off to a fast start by visiting the nearest field office of the Commerce Department. Generally these people are very knowledgeable and familiar with most government data as well as non-governmental material. If you have a well-organized public library, chances are you can obtain most of your market research data from the business information section. Also, check one of the more than 500 government depository libraries that receive much of the material prepared by the government.

Despite the deficiencies of some government data, it does provide accurate benchmark figures, which only the Bureau of Census can supply. No other source is as comprehensive in geographic detail for so many different types of information. Also, the objectivity with which the information is selected and reported makes it frequently the most reliable data available. Their statistics are continuing and constant, and finally, there is little or no restriction on availability.

One vital element of your market research program should be a continuing evaluation of how your customers perceive your strengths and weaknesses in certain areas: delivery; customer service; sales contact; technical and engineering assistance; quality; etc. A one-page "how are we doing?" questionnaire should be developed for this purpose.

To get an accurate reading, this form should be sent to contacts in both purchasing and engineering. Such survey programs furnish valuable feedback that may provide a quite different reading from what your sales people and agents report regarding a specific account.

Proper collection, interpretation and use of marketing information can have many advantages. The bottom line is increased sales and profits, and reduced marketing costs.

In the final analysis there is nothing mystical, expensive or very complex about basic market research. So, make sure it becomes an integral part of your marketing program.