The most basic building block of quantitative market intelligence is market size. In other words, how many machine tools, accessories, or other items are actually being sold? For some products, this figure is easy to come by, but often clear-cut answers are elusive.
The federal government reports statistics on the production of thousands of different products across the economy every year. Everything from pet food to communications satellites is covered. However, statistical categories are broad and the product of interest often gets rolled up with many other products. While the government might consider two products to be the same thing, companies that make and sell the products usually compete in much more specific niches. That means government data are usually only a starting point for identifying market size.
In addition to poor product segmentation, nearly all official government statistics take a long time to be released. Business decisions depend on information that is relevant and timely, and many vendors are ready to provide that information. While some vendors are generalists that offer slightly more specific production details than the government, others provide detailed information covering a specific type of data or a particular niche product.
Whether the information is from the government, a vendor, or a private survey, you should know the most commonly used statistics for determining market size in your segment. Knowing the information your competitors rely on for market analysis and strategic development helps determine what advantages and disadvantages they have over you.
Once you’ve identified a commonly used source, learn everything you can about the source, including the methodology employed in trusted studies. You may even wish to contact the researcher responsible for preparing the data. This knowledge will help you analyze scenarios should the data change, or properly characterize new data provided by additional sources.
Despite accurate reporting, some elements of market size must be estimated. For instance, perhaps available data are annual, and monthly data have to be extrapolated. Another common occurrence is estimating individual product line market sizes. Even when a total is available, the composition of that total, including percentage derived from various lines, often requires estimation. When it comes to estimates, two heads are better than one. Get feedback from everyone who has something to offer, and don’t worry if someone disagrees with an estimate. A healthy debate guarantees there is as much expert knowledge taken into account as possible.
The landscape for market data changes rapidly, so it might be time to revisit old estimates with new sources or tools. Analyzing huge data sets is easier than ever with business reporting tools (I would recommend AMT’s own manufacturing-specific business intelligence tool, MTInsight). Collecting data automatically from website traffic or app downloads is a low-cost way to bring more context to traditional sources and can improve estimation methods.
Pat McGibbon is vice president of industry intelligence and engagement for AMT – The Association For Manufacturing Technology. Based in McLean, Va., AMT represents and promotes U.S.-based manufacturing technology and its members — those who design, build, sell, and service the continuously evolving technology that lies at the heart of manufacturing. For more, visit AMT’s website at www.amtonline.org.