Fuld + Company Provides Global Consumer Products Company Precise Market Sizing & Opportunity Assessment to Inform a Strategic Investment
Posted September 23, 2019| Fuld + Company
Background + Challenge
An international consumer goods company engaged Fuld + Company to determine the market size and assess marketplace dynamics in a large European country in support of a potential investment by leveraging unique methodology including on the ground field research. The client was unable to use syndicated research for their product in this particular country because the product is sold through traditional trade outlets like corner stores and small shops as opposed to modern trade stores like large supermarkets and is therefore not well-covered. Despite internal efforts to estimate the market size internally via sales volumes and import/export data, it was critical that the client has a precise market size because of the significance of the potential investment. The client then determined it was imperative to look to a third party for a more thorough and rigorous analysis.
Fuld + Company developed an approach leveraging multiple analytical methodologies includingqualitative and quantitative field research to size the product’s total market by both value and volume as well as provide context and insights on key stakeholders and competitors, pricing structures, and the other roles/perceptions that exist up and down the product’s value chain. Beyond supporting the investment decision, Fuld + Co’s research and resulting market analysis can inform future supply chain, pricing and marketing decisions.
To size the entirety of the market, Fuld exercised three methodologies;
- a demand-side estimate developed through retail sales: market volume estimate calculated by narrowing retail universe to relevant retail channels and multiplying by average monthly sales for each channel. To reach value, each channel’s volume was multiplied by the channel-weighted average price point and summed;
- a supply-side estimate; calculated by summing known sales figures and extrapolating market size based on market share, and cross-referencing with import data;
- and a trade-based estimate: market volume estimate calculated by collecting data on imports that will not be re-exported and combining the figure with local production data to determine apparent consumption of the product.
These estimates were triangulated with one another as well as with any available proxies to eventually reach a conclusion on the overall size of the market for this product. Fuld’s estimate was also broken down by individual brands and by retail channel.
While most market sizing activities rely on secondary sources of information, Fuld + Company collected primary source information via field research, conducting 150 retail audits. These audits spanned 5 different regions in the country, from small rural areas to the country’s largest metropolitan areas, each with its own unique landscape and cultural differences. To supplement these retail audits, Fuld also conducted thorough, in-person interviews with competitors, distributors, and retailers.
A traditional market sizing activity is beneficial in producing a statistical analysis and detailed estimate, these interviews were crucial to our findings because the information brings context to the analysis that informs an understanding of the market dynamic rather than simply supplying a number. There is also a fair amount of detail that can only be observed in-person rather than absorbed by reading a report. For instance, Fuld endeavors to answer questions such as:
- What is the flow of customers in a particular store, how many come through in a 5-minute period, is there fluctuation by time of day? What part of city is it (business district, residential, tourism)?
- How are the products being displayed and how does this compare to the other options?
- What kind of people are shopping in each establishment?
- What are they buying? Are they buying the client’s product, and if so, what else are they buying along with it? Which brands are they buying? What product models and designs are they choosing?
- How much are they spending?
Through these insights Fuld not only adds another layer of data to the market size estimates, but also helps emphasize and understand the unique aspects of selling the product in that specific country.
Result + Benefits
Fuld’s market sizing efforts revealed that the client’s previous assumptions about the market’s size were inaccurate. In fact, Fuld’s estimates were nearly double what the client had considered the market size to be prior to the engagement. The model Fuld provided indicated that the market was in decline overall, but there were still opportunities available for the client to increase their market share by leveraging untapped retail outlets. Fuld’s research generated insights on competitor strategies’ and showed the relative strengths of each competitor within the market, and more specifically, their respective strengths within each retail channel. The importance of revealing the competitive landscape within each retail channel allowed the client to understand which competing products their consumers are buying as substitutes, depending on the location of purchase. With the unbiased analysis of their own market share, compared to their competitors they became more confident and informed related to their potential investment in this country and this information was later included in their financial model to determine the amount of investment they want to make.