\chapter{Market Analysis and Information Gathering} \footnote{Information provided in this chapter are based on Suzanne
Weiner work at MIT}
 
In the design process, it is important to determine if a business opportunity exists for a new product before
 investing time
and money to evolve the product.  Most likely, products will fail when the market analysis only skims the surface.  The
analysis requires a thorough study of the total market. This includes its trend, competition, volume, profit, opportunities,
consumer needs, and some indication of customer feeling for the product.

King \cite{king} defines a market as a group of potential customers who have something in common.  Two
different techniques are employed in market analysis:
\begin{enumerate}
\item Direct search: this involves obtaining information directly from the consumer, manufacturers, sales
people, etc.  The information is collected by interviews and surveys.
\item Indirect search: the information is collected from public sources, such as patents, journal reports,
goverment analysis, newspapers, etc.
\end{enumerate}

The market search should be done in a systematic and objective manner for all information that is relevant to
the product.  It is important to remember that an unbiased oulook is necessary when analyzing the data, in order to
formulate a market analysis report.  Any biases will be will be reflected in the report's view  of the market, and the 
results could be disastrous.

\section{How to Conduct a Market Analysis} 
Thousands of resources, it seems, all present some variation of the same information. However,  it is never presented
in the form you need. 
Before beginning any research project it is important to plan the process. Information collection is
usually one of the first steps, and unfortunately it is often anticipated with the same enthuiasm as a root canal. For the
engineering student, product/market research often requires the use of unfamiliar information sources
and often produces huge quantities of information. It is important that engineering  skills
 be applied when planning and dealing with this deluge. These skills include: 
\begin{itemize}
 \item    critical thinking 
  \item    strategy 
   \item   analysis 
   \item   time management (...it always takes longer than you think.) 
\end{itemize}

 
    In the product development process, market research is conducted initially to assess market potential,
market segments, product opportunities, provide production cost estimates, product cost, sales potential,
industry trends and customer needs and expectations.  The search has the following steps:
\begin{enumerate} 

\item \textbf{Problem definition}

Knowing what to look for is very important before one starts gathering information. This can be accomplished by answering
questions similar to:
\begin{itemize}
 \item    What is your product/idea? 
 \item    Who is your customer, and why would they want/need to buy it? - time saver, utility, unique value. 
  \item   How are you going to go about getting it to them? - development cost, time, manufacturing, production
     investment, etc. 
\end{itemize}

\item \textbf{Develop a strategy}

It is important to set a plan for the search process. Looking through every reference book in a library, merely hoping to find the right piece of information will inevitably lead to an inefficient waste of time. It is helpful to first identify
what pieces of information may be needed, and to preliminarily select where to  
begin the search. Searching can be accomplished by:
\begin{enumerate}

\item \textbf{Identify keywords}

It is also important to have some relevant terms with which to begin the search. 

\item \textbf{Writing a plan}

It is important to realize that the search  process is not linear. For example: While searching 
the business literature for
information on industry trends, one may come across the text of an interview that directly identifies
some customer needs for the product under investigation. This information can be very useful if properly
contextualized, thus it is important to know the framework within which one is working. 
\end{enumerate}
\item \textbf{Information Checklist}


The following list can be used in two ways: as a planning tool for  information collection, or as a
checklist for locating relevant information. 

\begin{enumerate}


 \item  Products 
 \begin{itemize} 
 \item  Product Names 
 \item  Patents 
 \item  Pricing 
 \item  Parts Breakdown 
 \item Product Features 
 \item Development Time 
\end{itemize} 
\item   Companies 
\begin{itemize}
\item  Major Players 
\item  Company Financials for Major Players
 \end{itemize} 
\begin{enumerate}
\item   Annual Reports 
 \item 10K Reports 
\end{enumerate}
\item Industry 
\begin{itemize}
        \item Trends 
        \item  Labour Costs 
        \item  Market Size 
        \item  Industry Facts: pieces of information gained 
        from various sources which help to clarify anything about the
industry. 
\end{itemize}
\item Market Information 
\begin{itemize}
\item Market Reports 
\item Market Share of Major Companies in Industry 
\item Target Markets of Major Competitors 
\item Demographics:
\end{itemize} 
\begin{enumerate}
\item    Age 
\item   Geographic 
 \item  Sex 
\item  Political/Social/Cultural 
\end{enumerate}
\item   Consumer Trends \end{enumerate}
\end{enumerate}

\section{Relevant Information Resources }

There are literally hundreds of resources in which information may be located, but several stand
out due to their superiority of scope, quality and overall usefulness. 

The resources can be divided into three categories: 
\begin{enumerate}
\item Industry; 
\item Company; and 
\item Market Information 
\end{enumerate}

 Most of the journal databases will provide information relevant to all of these areas,
and this should be kept in mind when searching and analyzing. This will also account for the repetition
of some resources in all three areas. 

\subsection{Industry Information }


It is essential to know information about the industry your company is considering entering. Who are the major
players? What are the current trends? How large (\$) are the relevant industries? What materials are used
by the relevant industries? The following resources can provide access to information to answer these
questions: 
\begin{enumerate} 
\item \textbf{Standard Industrial Classification (SIC) Code}\\
Many business information sources are organized by the SIC Codes. The following publications are
guides to these codes: 
\begin{enumerate}

\item Standard Industrial Classification Manual\\

The official U.S. government manual that provides SIC codes at the 2-digit and 4-digit levels. 

\item Web version of the Code\\
This provides access only by SIC category, not subject. 
\end{enumerate}
\item \textbf{Trade Associations}
\begin{enumerate}

\item Encyclopedia of Associations\\

Gives address, telephone, and contact information as well as a brief description of trade and industry
associations and their publications. Descriptions usually include dates/places for conferences and trade
shows. 
\end{enumerate}
\item \textbf{Industry Overview}
\begin{enumerate}
\item Manufacturing U.S.A.: Industry Analyses, Statistics, and Leading Companies\\

This annual publication provides statistical data on 459 manufacturing industries, including ratios and
occupational data. State-level data are included. 

\item Forbes\\

Provides an Annual Report on American Industry in the first January issue of each year. 

\item Standard and Poor's Industry Surveys\\

Provides a textual analysis for 22 broad industry categories which are broken down into more specific
subsets. 

\item Encyclopedia of American Industries\\

This publication is organized by SIC code with a list of related publications for each described industry. 

\item Moody's Industry Review\\

This statistical source contains key financial information, operating data, and ratios on about 3,500
companies. The information is arranged by industry, in 137 industry groups. The companies within an
industry group may be compared with one another, and they may also be measured against certain
averages for that industry. The statistics are updated twice each year.




\item Predicasts Basebook\\


Dewey Library holding begin with 1977, but in the 1983 volume, the statistics go back to 1967, and are
annual since 1970.
This annual statistical source contains about 29,000 time series which are arranged by a proprietary
7-digit SIC code-based system. The data include economic indicators and industry statistics. The
industry statistics usually include production, consumption, exports/imports, wholesale price, plant and
equipment expenditures, and wage rate.

\item Predicasts Forecasts\\

This quarterly statistical source provides short and long-range forecasts for economic indicators as
well as industries and products. The data are arranged by a proprietary 7-digit SIC code-based system.
Each forecast includes the date and page reference of the source from which the data are taken. The front
of each annual cummulation has Composite Forecasts which present historical data for over 500 key
series.
\end{enumerate}

\item \textbf{Statistics}
\begin{enumerate}

\item Annual Survey of Manufacturers\\

This survey supplements the Census of Manufacturers.

\item American Statistics Index (ASI)\\

Indexes and abstracts statistics published by the U.S. Government 

\item Statistical Reference Index(SRI)\\

Indexes and abstracts statistics published by trade and industry organizations and state governments.

\end{enumerate}
\end{enumerate}

\subsubsection{Company Information }


Company sources provide information on the players within an industry. They provide information on the company
financials, products (Primary \& Secondary), brands/trade names, and other "nuggets" which, in context,
can help with the overall market assessment and analysis. 

When searching for company information it is important to determine whether the company is public or
private. Public companies are required to register and file reports with the SEC while private companies
are not. Generally, it is much easier to find information on public companies. 

Directory of Companies Required to File Annual Reports with the Securities and Exchange Commission:
Under the Securities Exchange Act of 1934


Examples of 10K reports on the web: 
\begin{enumerate}
\item      Example \# 1: Allied Products Corporation
 \item     Example \# 2: American United Global, Inc.
                                 
\end{enumerate}

                


These contain information extracted from annual and 10K reports of over 12,000 public
companies. The data is compiled into a standard format which allows for sophisticated manipulation of
data and customized display formats.  



\textbf{Directories}
\begin{enumerate}


\item Hoovers Corporate Directory\\
Provides the company's name, street address, phone number, and fax number; the names of the CEO, CFO, and HR
Director; the most recently available annual sales figure; the percentage change in sales from the
previous year; the number of employees; a description of what the company does; and the company's
status (private or public). 

\item Directory of Corporate Affiliations\\

Lists over 4,000 parent companies with divisions, subsidiaries, and affiliates. Geographic and SIC
indexes. 

\item Duns Million Dollar Disc\\

Lists over 160,000 U.S. businesses with net worth over \$500,000. Can be used to identify companies by
state, industry, or geographic location. Provides thumbnail bios of top executives for public and private
companies and basic company information.

\item Standard \& Poor's Register of Corporations, Directors, and Executives, v.1, Corporations\\

Corporate addresses, telephone numbers, names and titles of officers, SIC codes, products, annual sales,
and number of employees for 55,000 public and private companies. Volume 3 provides an index by SIC
code. 

\item Corporate Technology Directory\\

Directory for High Tech companies with very specific product indexes. Provides basic company
information.

\item Thomas Register of American Manufacturers and Thomas Register Catalog File\\

Volumes 1-8 list companies arranged by products and services. Volumes 9 and 10 provide an alphabetic
list of manufacturers with addresses, subsidiaries, products, asset estimates, and in volume 10 an index of
brand names. Selected company catalogs are reproduced in volumes 11-16. 

\item Nynex Yellow Pages\\ 

\item Ward's Business Directory\\

Ward's is a good source for private companies. It provides information on 142,000 companies, 90 percent of
which are private. Volumes 1 - 4 provide individual company information. Volume 5 ranks companies
by SIC code. 
\end{enumerate}

\textbf{Corporate Reports}

 

Moody's manuals also provide detailed information on company history, subsidiaries, business and
products, comparative balance sheets, stock and bond descriptions and more. Geographic indexes classify
companies by industry and product. The data in Moody's manuals is obtained from Annual \& 10K
reports. 

\subsection{Market Information }


Market information may be found in many places. The search for information should make use of the
related industry, company and product keywords. This is true when using either a paper or an electronic
source. Some buzz words include: market share; target market; demographics; and market potential. 

Market research reports are ready made reports which have been commissioned by companies or
industrial groups. They are compiled by one of several market research companies. 

\textbf{Market Research Reports}
\begin{enumerate}

\item Findex



\item Frost \& Sullivan Reports

\end{enumerate}


\textbf{Market Share and Other Information}

\begin{enumerate} 
\item Market Share Reporter\\

Annual publication providing market share data for companies, products and industries. 

\item World Market Share Reporter\\

Annual publication providing market share information. 

\item Statistical Abstract of the United States\\

Statistics on the industrial, social, political and economic aspects of the United States. A great source for
all types of useful statistical information.

\item Industrial Statistics Yearbook\\

Industrial statistics published by the Dept. of Economic and Social Affairs, Statistical Office of the U.N.

\end{enumerate}

\textbf{Demographic Information}

\begin{enumerate} 
\item American Demographics\\

This journal is searchable on ABI/Inform on FirstSearch. 

\item State and Metropolitan Area Data Book\\

Provides social and economic data for SMSA's, cities, states and census regions. US Bureau of Census. 

\item Demographics USA, county edition.\\

Contains information on purchasing power, consumption rates, economic conditions and population
statistics.
\end{enumerate}
\section{Web Tools}
At this time the Web, by itself, does not provide access to all of the resources one needs to conduct product/market
research.  However, there are some great sites that point you to the resources that are available.  Some of these
lists include:

\begin{enumerate}
\item Business Researcher's Jumpstation at http://www.brint.com/sites.htm
\item Marketing Resource Directory at http://www.ama.org
\item MIT Resource List at http://me.mit.edu/resources/

\end{enumerate}

Web search engines are increasing in sophistication, as well as the Web sites of companies, distributors, industrial
associations, and retailers. Therefore, it is quite valuable to spend some time sifting through some of the information available on the Web,
as it is searched and compiled by one of the search engines.


\section{Example}
Consider the example of the Automatic Can Crusher.  Here is a short summary of the market analysis.
\subsection{Problem Definition}
The client requested a device that is able to crush aluminum cans.  The device
must be fully automatic.  All the operator will need to do is load the cans
into the device.  It will then switch on automatically, crush the can and switch
off automatically.  The device must have a continuous can-feeding mechanism.  Cans must be crushed to one fifth of
their original volume.  The maximum dimensions of the device must not exceed $1.5 \times 1.5 \times 1$ feet. 
Performance will be based on the number of cans crushed in one minute.  Elementary school children must be able
to operate the device safely.  The device must be a stand alone unit.  
\subsection{Potential Customers}
\begin{enumerate}
\item Schools
\item Colleges
\item Hospitals
\item Hotels
\item Resorts
\item Shopping Malls
\item Playgrounds and recreational areas
\item Apartments-Dormitories
\item Sports arenas
\item Office buildings
\item  Residential homes
\end{enumerate}

\subsection{Companies}
\begin{enumerate}
\item Edlund Company, Inc. (159 Industrial Parkway, Burlington, Vermont).  Mr. R. M. Olson (President)
\item Prodeva inc. (http://prodeva.com)
\item Enviro-Care Kruncher Corporation (685 Rupert ST. Waterloo, Ontario N2V1N7, Canada)
\item Recycling Equipment Manufacturer (N 6512 Napa, Spokane, Washington 99207)
\item Kelly Duplex (415 Sliger st. P. O. Box 1266, Springfield, OH 45501) 
\item Waring Commercial (283 Main St., New Hartford, Connecticut 06057)
\item DLS Enterprises (P. O. Box 1382, Alta Loma, California 91701)
\end{enumerate} 

\subsection{SIC Code}

\begin{itemize}
\item food service industry 3556
\item recycling 3599
\end{itemize}

\subsection{Trends}
The Aluminum industry produces 100 billion cans a year.  This number has been flat for the past three years.  In
1997, 66.8 billion of the cans were returned for recycling.  This figure showed an increase of about 6.3 \% over
the 1996 figure.  The industry collected 2.05 billion pounds of aluminum in 1997.
\subsection{Market Information}
Growth opportunities for aluminum beverage cans exist throughout the world.  Global aluminum can shipments are
forecasted to increase 5\% annually to 209 billion by the year 2000. 74\% of U. S. Beverage sales occured in
the convenience stores, drugstores, clubs, mass merchandise, vending machines and grocery markets.  For this product, the initial
market is going to schools. Leon county public schools, at the high school level, have around 48,846 students.
\subsection{Patents}
Around 56 patents are listed for the past 10 years. A Web search using the IBM patent search will show the
details.

\section{Problems}
\subsection{Team Activities}

\begin{enumerate}
\item How is the direct search different from the indirect search?
\item Define the Market analysis and discuss how is it different from information gathering.
\item Develop a strategy for your team to conduct the market analysis task.
\item Write a plan to conduct your market analysis.
\item Estimate the time required for your team to conduct the market analysis assignment.
\end{enumerate}
\subsection{Individual Activities}
\begin{enumerate}
\item Perform a Web search and name three industries that change a product at a
frequency of at least once each year.
\item How many patents were filled in the last 10 years on money sorters?  List
a few and identify their differences.

