What is your market IQ?

Jan. 1, 2009
We are in a market-driven economy. And in a market-driven economy, market intelligence is what matters most. Whoever has the best market intelligence

We are in a market-driven economy. And in a market-driven economy, market intelligence is what matters most.

“Whoever has the best market intelligence wins,” said Stephen Latin-Kasper, market data and research director of the National Truck Equipment Association (NTEA), in his Market Research Seminar. “It's that simple. If you're out there running around with no information and your competition has lots of information that they built into a plan, who wins? The people with information organized in a way that makes sense to use.”

He said that to use the data, you have to define what you want to know about the market. Is the product new or used? Domestic or global?

“Define the size, not just in dollars but in units,” he said. “Dollars are not always comparable or easily comparable. You can get currency-exchange information, but you have to constantly think about what currency units you will put the market share in terms of. Units are much easier to work with. But in share, you usually want to work in terms of dollars, especially when you're putting it in terms of sales for a particular application market. You can't just do one or another. You have to do both.”

To determine the trend, he said, forecast not just how you expect your sales will go, but what's happening in terms of acquisitions, technology, and individual segments by size.

“Obviously you are more concerned about forecasting application markets that account for a larger percentage of your total sales,” he said. “If 50% of your product gets sold into the construction industry, that's something you need to develop a separate forecast for — a construction industry forecast. And that's going to be 50% of your total sales forecast.”

Latin-Kasper gave these tips:

  • Segmentation.

    “What's the problem with defining your market share? You have to know everyone else's. Some of you are in a position where you have a small number of competitors in a niche market, where it could be relatively easy to determine your share, but most of you are not dealing with a situation like that.”

  • Market-share calculations.

    “Identify your data sources. Don't let ownership or management not believe you. If you're responsible for bringing that market plan, you don't have time for guys who are supposed to be helping move that plan through the company argue about the numbers in that plan. Make sure everybody who is using that information understands the data source so there is no argument. And you need to understand the limitations of your sources. There is no such thing as a perfect database, but there are owners out there who think there is.

    “Move beyond market share. Believe it or not, there are companies that don't care about market share. You do have to move beyond that in terms of market planning. Don't get stressed out over it.”

  • Identify indicators.

    “You want to know what's going on with the heavy-duty segment in North America? You should be paying attention to average primary vendors. If you're trying to explain to other people in your company how your performance compares to a larger industry you are a part of, you need some indicator to make a comparison of your sales to.”

  • Index your sales to those indicators.

    “Make a graph. On a monthly basis, you will update what's going on in terms of your sales. Whatever industry you choose to compare your sales to is going to be there on the same graph. You take that graph and post it somewhere so relevant personnel can see a visual representation of what they're a part of. So everybody in the company is on board. It gives a monthly indicator of how we're doing. Which in the individual case is, ‘How am I doing? I play a role in making sales happen, from ordering materials to shipping out the back door.’ That answers the question, ‘Are we growing faster than the markets we serve?’ That question is way easier to answer than, ‘What is my market share?’ Relative to the rest of the industry, are we growing faster? If the answer is no, then you do have to start asking yourself, ‘What needs to change?’ If you don't even know where you are relative to the rest of the industry, you can't even answer the question.

    “You want to know as best you can where you rank in each segment in terms of application and product line. If you're not even in the top four, one of the questions you should ask is, ‘Should this company continue to produce this product?’ Ask yourself, if what you're doing in terms of trying to increase sales at a price that allows you to be profitable at a price ownership likes, are you knocking your head against the wall? Should I keep producing product? If the answer is no, you can put a greater degree of emphasis on product lines where you are not 1-2-3-4 and where you do have some pricing power, which means you do have better profit margins. The goal for all of us ultimately is that concept of profit. You don't have to be number four in the industry. You have to be number four in your segment for your product line of a particular application market. To do all of that, you have to rank all of your competitors.”

  • Establish a file of all competitors.

    “Start with a blank yellow pad and start with the first product line you care about. For each product line, add a separate page. List a competitor and develop a file of all of your competitors. You have to keep up to date with what's going on with all of them to maintain the validity of those files. For a public corporation, this is very easy. For a private corporation, it's not. If there is no information available, do you scratch your head and say, ‘I can't do anything about it?’ You can always do something about it.

“Competitive intelligence doesn't have to be nasty, mean stuff. It can be something as simple as knowing that for every county government in the US — and it's probably true for provincial governments in Canada — when a company puts a plant somewhere, it has to file a certain amount of information with the local government: size of plant, amount of water, and electricity they expect to use. Those are some pretty interesting numbers.

“For example, in the Federal Reserve indexes, part of what they use to determine what the heavy-duty product is on a monthly basis is an accounting of total hours generated and total hours used by those plants that produce those heavy-duty trucks. You can do the same thing with publicly available information at the local/county government where your competitors have their plants located. How big is that plant? How many employees? How much electricity do they use? Compare that to yours and you can make a pretty darned good estimate of how much product is coming out of that plant.”

Latin-Kasper said that you can't do market planning without segmenting the markets — and that's done by product line, application market, and geography.

“Why would you go through all of that?” he said. “If for no other reason than you only need one to make it worth it. You want to put those sales resources where they can provide the biggest bang they can for the buck. You need the support of the corporate culture. Your plan has to fit the culture. You're providing management with tools they need to describe the company to outsiders. Who are the outsiders you care most about? The customer. The application market. When ownership and management get involved in sales, it's not just the sales guys. Especially people at the top need to understand what's going on with the market plan. They have to understand why.”

He said that positioning the company's products is important, and it's done through advertising and networking.

“You build a plan that facilitates a market-oriented decision regarding your new products and competition,” he said. “Sometimes the best way to grow your own company is to buy someone else's. Sometimes that's the best way to move from number four in terms of your ranking. Have cash on hand. Don't spend money just because you have it. Set it aside for that rainy day — especially when a recession occurs and there are good sales prices on companies.

“Develop tactics for selling. There are two ways to look at it: New products in established markets or established products in new markets. Which niche do I want to play in? Do that for each product.”

Latin-Kasper said one of the best sources of data for this research is the NTEA. He listed these seven data sources:

  • Work Truck and Vocational Data Source (registration units.) This includes straight truck by body type, GVWR, and state, tractor by trailer body type, GVWR, and state, and fleet size by application market and state. CD ROMs of the entire database can be ordered at NTEA's online store.

  • Annual Manufacturers Shipments Survey. This offers truck equipment sales numbers and units for 160 product lines. He said it's the only source of data that gives product-level information, so if you want to find out how many liftgates sold in 2005, participate in the survey.

  • Application Market by State and Metropolitan Area Report. This details potential sales of truck equipment and can be modified to reflect individual product lines.

    “For 99 different application markets — the truck users — this tells the total value of truck equipment that application market bought,” he said. “For 50 states and 315 metropolitan areas, you can find out the sales potential of truck equipment in those 99 application markets. It's an amazingly powerful econometric model. It's a model because it's not just one set of data. If you manufacture cranes or liftgates, you can modify the model so that it represents your product segment — not the entire industry.”

  • OEM/Body Manufacturers Monthly Statistics. This offers retail sales and factory shipments of commercial truck chassis and bodies by GVWR in units. He said it's for OEMs and manufacturers of bodies. Anybody who produces bodies and is a member of NTEA can participate in the program.

  • Affiliate Division Quarterly Statistics Program. This details programs specifically for manufacturers of ambulance, van and service bodies, buses, and truck-mounted crane.

  • Economic Outlook Conference (annual update of industry performance and forecasts, held the first week of October in Chicago).

  • Work Truck and Trailer Industry Outlook. This is published in the NTEA News quarterly, providing industry and application market data along with a forecast based on analysis of leading indicators.

He said the Vehicle Inventory and Use Survey lists data for straight trucks registered in the United States in all eight classes — pickup, light van other than minivan, armored, beverage, concrete mixer, concrete pumper, crane, curtainside, dump, flatbed, stake, platform, low boy, pole, logging, pulpwood or pipe, service (utility), street sweeper, tank (dry bulk), tank (liquids or gases), tow/wrecker, trash, garbage, or recycling, vacuum, and van (basic enclosed).

It also will list an application description and the number of trucks registered in fleets of one, and fleets of two to six.

He said the Annual Manufacturers Shipments Sales Survey deals with 160 different product lines, and is “the only source of data that gives you product-level segmentation on an annual basis and provides you with dollar values to go along with unit values. Others are strictly units or strictly dollars. The only way to get it is to be an NTEA member and participate in the survey.”

He said all the formulas are built into the CD ROM, and “if you only care about liftgates or cranes or whatever, you can modify this model so it represents your product line.”

He also offered the following non-NTEA data sources:

  • Economic Census.


    Census of Manufacturers (industry, product class, and product line data dollars) and Census of Wholesale Trade (industry, kind of business, and commodity line data dollars).

    “The Census of Wholesale Trade is conducted every five years, and it provides benchmark data for market size and share, plus data available nowhere else, such as employee totals, capital expenditures, costs of materials, energy expenditures, establishment counts and more,” he said. “It's the Holy Grail of US economic information.”

    Go to “economic census,” “guide,” “schedule,” “industry series and manufacturing,” then click on “transportation equipment manufacturing.”

    “You can pull up a file and get information you can use as performance benchmarks: for example, for van bodies for sale separately, there are 29 establishments in the US, 2410 employees, and they spent a total of $6.4 million on capital expenditures. Take that number and divide by the number of employees, and do that same ratio for your company and find out how much investment you put in per employee compared to the rest of the industry. Ask yourself, ‘Am I keeping up? Or am I not keeping up?’ If you're falling behind the rest of the industry in terms of the technology you're using inside the plant, that's not a good thing. You should have some basic level of understanding of how much the rest of the industry is investing in technology. This is the benchmark information that any market-planning process would start with. It's especially good because every company in the US is required to respond to this survey every five years. It's mandatory. You don't get to choose. Because it's too important.”

  • Annual Survey of Manufacturers. This is industry and product class totals only, in dollars.

  • Vehicle Inventory and Use Survey. This is truck and tractor registrations by state, including a large number of variables such as body and equipment types and number of lift and drive axles, all of which can be related to each other.

  • Foreign Trade Data. This details exports and imports published separately on DVD monthly, in dollars and units by country.

He said the following are available at www.federalreserve.gov/releases:

  • Industrial Production and Capacity Utilization.

    This is published monthly, including index for light-, medium-, and heavy-duty trucks and trailers, slowing for cyclical analysis of production and calculation of percent change. Table 2 is the preferred area.

  • Selected Interest Rates. These are daily and monthly short- and long-term rates, which can be used as a leading indicator for forecasting.

“Why care about that?” he asked. “Because they're a leading indicator of what's going to happen in this industry. One of the best ways to predict future sales of trucks is to look at the cycle in interest rates.”

About the Author

Rick Weber | Associate Editor

Rick Weber has been an associate editor for Trailer/Body Builders since February 2000. A national award-winning sportswriter, he covered the Miami Dolphins for the Fort Myers News-Press following service with publications in California and Australia. He is a graduate of Penn State University.