IT IS AN OBVIOUS TRUTH, Doyle Sumrall noted, that the Application Market Data by State and Metropolitan Area Report was not named by slick marketing and sales gurus, but instead by National Truck Equipment Association market data and research director Stephen Latin-Kasper.
It is a less obvious truth that the report — at a cost of $100, plus $50 for survey results and weights — is a stone-cold steal.
Sumrall, the NTEA's director of business development, and Latin-Kasper believe that any truck and truck equipment executives who don't have it should have it. Get past the cumbersome name and you've got a tool that could markedly improve profit.
“It's going to settle down in the truck equipment industry,” Sumrall said in a presentation at the NTEA's Business & Market Planning Summit. “When that happens, you get your game hat on: ‘OK, what are we going to do?’ You want to start thinking about it now, not two months into the next year's sales plan, when things are going on.
“You have to evaluate your company's market position. When I had to put sales plans together, I started thinking about, ‘Gee, where's that going to come from? What are we going to do?’ Being an engineer, I wanted data and facts — something more tangible. You have to think about geographic elements or a market segment. It's all about growing your business.”
Latin-Kasper built the report from an application market survey done by the NTEA and from county business trends as released by the Bureau of the Census.
“Its value to you is that it can determine if there are market segments locally that you can sell more equipment or service into,” Sumrall said. “It can determine the percent of the local market you now have and what your opportunity is for growth. If you're already doing well in whatever segment you're playing in, there's probably another place to look and opportunity for growth. This report also identifies nearby geographic markets that present opportunities for new sales.”
The report is not just a report. It is also a model, and can be modified to represent different segments of the work truck and trailer industry, or even the product mix of an individual company.
Users of the report have to change two aspects of the model to make it represent the segment of the industry their company is part of: the application market weights and the size of the relevant industry segment.
“What products do you make?” Latin-Kasper said. “What products are you thinking about maybe making that you don't now? There are two things to look at: How are you going to set priorities? How do you want to increase sales? Do you want to sell more in areas where you're selling or expand into an area where you're not selling? You need to look into the database that provides you with geographic information, but also the application market information. That's what this product does. You can estimate your national and local sales potential, and you can do it market by market.
“For example, if you were to break down the market for trucks and truck equipment in the US, you'd find that 50% of all dump bodies are sold in construction markets. If you break down all the truck equipment, you'd find that 25% of all truck equipment gets sold into construction industries.”
The report includes 54 application markets, and each state has three categories that match each application market: total dollars (the potential sales of all truck equipment), percentage of the US total (the total of truck equipment sales to that industry), and the number of establishments in that state (an official number given by the US Department of Commerce).
Fro example, Alabama has $13.4 million of the potential sales of truck equipment, 7.61% of all truck equipment sales to the logging industry, and 827 businesses in the logging industry in Alabama. At the bottom of the chart are the totals for all truck equipment of all types sold to all truck equipment application markets in each state.
In Alabama, the sales potential is $415 million.
“So if you sold every type of truck equipment there was to sell and put everybody out of business, you could sell $415 million worth of business,” Latin-Kasper said.
The total truck equipment sales in the US in 2001 was $25.16 billion.
Modify the model
Companies interested in using the model would first estimate the national sales volume of the products they sell. For example, $300 million in tool boxes, $320 million in dump bodies, $85 million in stake/platform bodies, and $240 million in liftgates, for a total of $945 million.
Then the model must be modified for your company by going to cell A120 and changing the $25.16 billion entry to the national sales total for the product mix.
Each of the listings in cells C19 to C117 identifies the percentage of total industry sales accounted for by the application markets described in Column A. Cells C19 to C117 need to be modified so that they represent your company's sales mix, not the entire industry. When the company finishes making changes in Column C, the percentages should add up to 100% in Cell C118. The changes made in Column C and in Cell A120 will cause the entire spreadsheet to recalculate. If your spreadsheet doesn't recalculate automatically, press the F9 key.
Then move to the bottom half of the spreadsheet (Row 125) and find the total dollar value of your company's products sold in that state, its percentage of the US total dollars, and the number of establishments (customers) in each application market.
“Say that you find out that the state of Washington, where you don't happen to have a distributor, is No 2 in the logging industry,” Latin-Kasper said. “If you have a product you want to sell into the logging application and you're not selling anything in Washington, you start asking yourself questions like: ‘Should I have a fulltime sales person there? Should I just look for a couple of distributors? Should I get a manufacturer's rep? What sort of cost can be justified in terms of trying to expand in that area?’ Sometimes you have to spend a little in the right place on the right type of people to start earning a little more money.”
After the dollar total in Cell A120 and the weights in Column C have been changed, the total dollars and percent of US total will change to reflect your company's view of the market.
In the Alabama example, the coal mining industry buys $1.646 million worth of toolboxes, dump bodies, stake/platform bodies, and liftgates. If your company sells $500,000 worth of those products to coal mining companies in Alabama, your share of the market there is .5/1.646, or 30.4% of the market. You can also make that calculation for each application market in each metropolitan area by repeating those steps for each of the seven metropolitan area files.
He said that with the release of 2004 data last November, users now are able to calculate growth over time.
“Let's say you're selling dump bodies into the heavy and street contractor market across the US and you have one distributor in all 50 states,” he said. “This product gives you an idea of the size of your market in that application in all 50 states. You can see when you talk to your distributors what the actual market size is, and you know what your share is based on what they're telling you about how much of their product they sold in that market.
“So if you know that between 2001 and 2004, the growth of your product sales in that application market in that area was 10% and your distributor or internal sales guys got 5% in that period of time in that market in that place, then you know it wasn't enough. If it was 15%, then things are going pretty well.
“So you can utilize it as a performance measure: ‘Are we ahead of our objectives or behind? Are we behind the industry average or ahead?’ It gives you a gut check on how you're actually performing from one year to the next.”