NEWS RELEASE March 2019
Forecasting of Most Profitable Markets for CFT Products and Services
A strong case can be made that market forecasting should be the foundation of a business program and not a peripheral tool. In order to become the foundation of the business model it is necessary to generate the most reliable Most Profitable Market forecast (MPM). This forecast needs to include projected unit sales, price, unit margins and gross profit. How can anyone argue against Utopia? These forecasts will determine where R&D, sales, and marketing efforts need to be made and at what investment. The salient argument against this approach is that it is impossible or impossibly expensive.
While perfection may not be possible a very high value MPM forecast can be achieved because of
- the huge amount of digital information available
- the rapid development of process management software and data analytics
- McIlvaine can help organize all of this data for you for any CFT product or service
The Total Available Market includes all sales of the product whether the supplier has the specific design needed or the geographical infrastructure to serve the market.
The Serviceable Obtainable Market is the market which can be served with the lowest priced product. The MPM market is one for which the supplier can most profitably supply its products and services given its capital and knowledge resources.
Every company should strive to maximize the sales of higher performance products and services. Its R&D should be oriented to increasing the number of products with high margins due to their lowest total cost of ownership ( LTCO). It should also be striving to increase the amount by which it does have the LTCO over competitive products. This will result in higher gross profit. The opposite side of this coin is that the competition will be striving to do the same. So the LTCO is always a function of the differential to all of the competitors.
MPM forecasting needs to be pursued robustly and continuously. It starts with top management setting gross profit goals.
Market forecasts should be prepared in such detail that they shape the specific initiatives relative to products, processes, industries and even individual large owners. Most combust, flow, and treat products and services are purchased by less than 20,000 companies around the world. More than half the coal fired power plant, refinery, oil and gas, mining, and steel purchases are made by a very small number of companies.
The forecast should determine the gross profit which is achievable with the TCO of present products. This should be prepared for all the major purchasers.
These forecasts should be prepared for each product for a company such as BASF and then for the individual plants. R&D and engineering design decisions should be made on the basis of potential gross margin and profit and not just on the total market. If the gross profit forecast is reduced because of a better competitors design, then the magnitude of the problem should be quantified. Decisions can then be made as to whether the investment in a new design is warranted. The knowledge of the LTCO for each process in chemical plants such as operated by BASF also needs to be taken into account. BASF is in a number of industries. It makes chlorine increasingly with the membrane processes but is phasing out its mercury process based chlor alkali facilities. Valve requirements are different for each process.
Services available from McIlvaine.
The starting point is the Total Available Market. McIlvaine already has forecasts for TAM for many thousands of CFT products and services in many industries and in each individual country. The background information needed to determine unit margins and gross profit has been systematically gathered by McIlvaine over the last 45 years. Some of this data appears in the many market reports and databases. Other information has not been published but is available to McIlvaine consultants.
One course of action is to purchase the report or reports with TAM and then add the MPM on a continuing basis with McIlvaine support
Information on the markets is shown at http://home.mcilvainecompany.com/index.php/markets
Information on the databases is shown at http://home.mcilvainecompany.com/index.php/databases
Information on other relevant services is shown at http://home.mcilvainecompany.com/index.php/other-services