market analysis toolkit
DESCRIPTION
Strategy consultants are often engaged to analyze the market for a product line, business unit or entire company. Charts play a critical role in communicating market size, growth and segmentation. Marimekko charts are especially helpful for resenting information on differences in market segmentation by region by competitor and by product line. This toolkit presents a set of charts that map markets by competitor, product line, and geography, assess the full potential of a market, and provide an overview of market segmentation, growth and profitability.TRANSCRIPT
2
Introduction• Strategy consultants are often engaged to analyze the market for a company or business unit.
• This slide deck (presentation) contains data-driven charts that help to explain a market, focusing on the market’s segments, its competition, its growth potential and its profitability.
• The slides in this solution toolkit will provide charting and data presentation ideas you can adopt for your own work.
• Each chart is presented on two slides• The first contains an example of how the chart is used• The second contains an explanation of the chart and information
on how to create it
• All charts are created using Mekko Graphics; and you can copy, edit, and reuse them in your own presentations.
3
Market Maps• The first few slides in this deck contain market maps.• These are Marimekko charts that examine the market along
two dimensions.• These charts answer questions about market
fragmentation, market competition, and regional differences in market penetration.
• The market maps can be a powerful tool.• They capture in one slide some key market dynamics.• Using colors to highlight key segments, action titles and
tag lines help focus your audience on the most important insights to be gained from these charts.
• At first glance, these maps can be confusing, but with some guidance they can add significant value to your analyses.
4
Market Map Shows Segment Sizeand Degree of FragmentationOur market is highly fragmented. None of the large players compete across multiple segments.
0
20
40
60
80
100%
Percent of revenues
Segment1
Single1
Single2
Single3
Multi1
Single4
Single5
Single6
Other
$5B
Segment2
Our Company
Single7
Single8
Single9
Single10
Other
$3B
Segment3
Multi2
Single11
Single12
Single13
Single14
Other
$5B
Segment4
Single15
Multi1
Single16
Single17
Single18
Single19Single20Single21Single22Single23Single24
Multi3Single25
Other
$9B
Segment5
Single26
Multi1
Multi3
Single27Multi2Multi4
Other
$9B
Single28
Single29
Single30
Multi4Single31
Other
$2B
Other Segments
Single32
Single33
Multi2
Multi1
Single34
Single35
Other
$2B Total = $34.8B
Segment6
5
Market Map by Competitor and Segment
0
20
40
60
80
100%
Percent of revenues
Segment1
Single1
Single2
Single3
Multi1
Single4
Single5
Single6
Other
$5B
Segment2
Our Company
Single7
Single8
Single9
Single10
Other
$3B
Segment3
Multi2
Single11
Single12
Single13
Single14
Other
$5B
Segment4
Single15
Multi1
Single16
Single17
Single18
Single19Single20Single21Single22Single23Single24
Multi3Single25
Other
$9B
Segment5
Single26
Multi1
Multi3
Single27Multi2Multi4
Other
$9B
Single28
Single29
Single30
Multi4Single31
Other
$2B
Other Segments
Single32
Single33
Multi2
Multi1
Single34
Single35
Other
$2B Total = $34.8B
Segment6
• The market map can provide an overall picture of the segments in which you compete and who competes against you in each.
• You can determine how fragmented each segment and the overall market is.
• The data needed for the chart is revenue for each competitor in each segment.
• Use colors to highlight key competitors and group smaller competitors in each segment into an ‘other’ category.
6
Regional Market Map HighlightsNew OpportunitiesWe compete in only three European markets. Each market has a different set of competitors, with some overlap in competition between Spain and France.
0
20
40
60
80
100%
Spain
My C
om
pany
Mult
i1M
ult
i2M
ult
i3
$15M
France
Multi1
Fr1
Fr2
Multi2
Fr3
Fr4Fr5$37M
Italy
Others
It1
$58M
UK
My Company
UK1
UK2
UK3
UK5
UK6UK7
$61M
Germany
Multi3
Others
Gr1
$83M
North America
NA1
NA2
NA3
NA4
NA5
NA6
NA7NA8NA9
Others
$253MTotal = $507M
Others
7
Market Map by Competitor and Region
• The market map by region shows the degree of market fragmentation in each region and the mix of competitors that are in one and multiple regions.
• Use the analysis to consider regional expansion or regional acquisitions.• Combine this analysis with a chart that shows growth of the market by
region or add regional growth as a data row to this chart.
Sp
ain
My C
om
pany
Mult
i1M
ult
i2M
ult
i3
$15M
Multi1
Fr1
Fr5$37M
Italy
Others
It1
$58M
UK
My Company
UK1
UK2
UK5UK6UK7
$61M
Germany
Multi3
Others
$83M
North America
NA1
NA2
NA3
NA4
NA5NA6NA7NA8NA9
Others
$253MTotal = $507M
Others
8
Map of Regional Differences inProduct Penetration Product use varies significantly by region with Product Line 2 dominating Europe and Product Line 1 accounting for a large share of other regions.
0
20
40
60
80
100%
Europe
Product Line1
Product Line2
Product Line3
Product Line4
Product Line5
$3.8B
Asia Pacific
Product Line1
Product Line2
Product Line4
Product Line5
Product Line6
$2.6B
North America
Product Line1
Product Line2
Product Line3
Product Line4
Product Line5
Product Line6
$1.6B
Rest of World
Product Line1
Product Line2
Product Line3
Product Line4
$0.8BTotal = $8.8B
9
Market Map by Product Line and Region
0
20
40
60
80
100%
Europe
Product Line1
Product Line2
Product Line3
Product Line4
Product Line5
$3.8B
Asia Pacific
Product Line1
Product Line2
Product Line4
Product Line5
Product Line6
$2.6B
North America
Product Line1
Product Line2
Product Line3
Product Line4
Product Line5
Product Line6
$1.6B
Rest of World
Product Line1
Product Line2
Product Line3
Product Line4
$0.8BTotal = $8.8B
• The market map by product line and region shows the relative product penetration in different parts of the world (or country).
• They could be accounted for by regional differences in customer product preferences or by regional differences in competition.
• Regional variations could point out growth opportunities to introduce your product into other regions or could highlight potential competitive threats in different regions.
10
Assessing the Market’s Full Potential• The next few slides illustrate a full potential market analysis.• This is a top-down approach to assess the size of the
overall market.• Use it to estimate the potential for market growth and to
break down this growth potential by market segment.
• Contrast this approach to the bottom-up or as-is analysis in the preceding market maps.
11
Assessing the Market’s Full PotentialTaking a top-down approach, the market’s full potential is about $5B with the majority of potential revenue coming from smaller companies.
0
20
40
60
80
100%
Percent of Total
Number of Companies
$0-$50MM Companies
~198K
Total Company Revenue
$1B+
$50MM-1B
$0-$50MM Companies
~$2.6T
Spend per Company
0.025%
0.225%
Total Market
$1B+
$50MM-1B
$0-$50MM Companies
~$5B
0.5%
12
100% Stacked Bar to Estimate the Market’s Full Potential
• Take a top-down approach to estimate overall market size by splitting the potential market into segments and estimating the potential of each.
• The 100% stacked bar outlines the size of each segment in terms of number of customers and total revenue.
• Based on an estimation of spend per company per segment, calculate the market potential of each segment and place it in the last bar.
0
20
40
60
80
100%
Percent of Total
Number of Companies
$0-$50MM Companies
~198K
Total Company Revenue
$1B+
$50MM-1B
$0-$50MM Companies
~$2.6T
Spend per Company
0.025%
0.225%
Total Market
$1B+
$50MM-1B
$0-$50MM Companies
~$5B
0.5%
13
Market Potential by Industry Verticaland Customer Size Between 60 and 70% of the potential of each vertical is in smaller customers with under $50MM in revenue
0
20
40
60
80
100%
Percent of Total
Auto
$0-50MM Companies
$50MM-1B
$1B+
~$900MM
Industrial Machinery
~$600MM
Medical
~$600MM
Other
~$2.9B Total = ~$5B
14
Marimekko Chart for Market Size by Industry Vertical and Company Size
0
20
40
60
80
100%
Percent of Total
Auto
$0-50MM Companies
$50MM-1B
$1B+
~$900MM
Industrial Machinery
~$600MM
Medical
~$600MM
Other
~$2.9B Total = ~$5B
• Drill down into the potential market by showing the potential market by both industry vertical and customer size.
• Marimekko shows the two dimensions on a single chart, allowing you to compare opportunities within each industry vertical and to determine which size companies in which vertical to target.
15
Market Penetration by Industry VerticalThe largest competitor has under 20% of the potential market and all competitors have only 45%. The automotive segment has the highest penetration.
0
10
20
30
40
50
60
100%
Percent of Total
Current Market Penetration: 45%
Auto
Primary Player Share
Competitors' Share
~$900MM
Industrial Machinery
~$600MM
Medical
~$600MM
Other
~$2.9B
Current Market Penetration: 45%
Unpenetrated Market
Total = ~$5B
16
Marimekko Chart for Market Penetration for Competitors by Industry Vertical
• Examine the market opportunity by industry vertical by combining the current competitors’ market share with the unpenetrated market.
• Use an average line to show the overall level of market penetration and an axis break to reduce the size of the unpenetrated segments, if needed.
• Choose the number of competitors to show on the chart to focus the message.
0
10
20
30
40
50
60
100%
Percent of Total
Current Market Penetration: 45%
Auto
Primary Player Share
Competitors' Share
~$900MM
Industrial Machinery
~$600MM
Medical
~$600MM
Other
~$2.9B
Current Market Penetration: 45%
Unpenetrated Market
Total = ~$5B
17
Market Overview• The last set of slides provide approaches to give your
audience an overview of the market.• They contain:
• A market segmentation breakdown• An analysis of market growth by segment• A market profitability analysis
Market Segmentation OverviewOur software sells into 6 major verticals. Manufacturing can be divided into 4 key markets, with high tech as a small but significant market.
0
20
40
60
80
100%
Revenue by Vertical
Vertical Markets
Financial Services $730M
Public Sector $651M
Manufacturing $617M
Communications $292M
Retail $303MServices $248M
Other Verticals $464M
$3,304M
Manufacturing Market Breakdown
Aeronautics $212M
Automotive $147M
High Tech $98M
Machinery $72M
Other Manufacturing $88M
$617M
19
100% Stacked Bar Charts Segment the Market
• If your audience is not familiar with the key market segments, use a 100% stacked bar as an alternative to a pie chart to divide a market into mutually exclusive and completely exhaustive (MECE) segments.
• The relative segment sizes are related to segment height, making it easier to compare them.
• Use a second bar to ‘explode’ a key market into its sub-markets and color to highlight a key market (or sub-market).
0
20
40
60
80
100%
Revenue by Vertical
Vertical Markets
Financial Services $730M
Public Sector $651M
Manufacturing $617M
Communications $292M
Retail $303M
Services $248M
Other Verticals $464M
$3,304M
Manufacturing Market Breakdown
Aeronautics $212M
Automotive $147M
High Tech $98M
Machinery $72M
Other Manufacturing $88M
$617M
20
Market Segment GrowthOverall market growth was 4.7% with the medical segment seeing significantly higher growth than the other segments.
0.0
1.0
2.0
3.0
4.0
$5.0B
Total Market Size ($B)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
+4.7%
5%
8%
14%
3%
Auto
Industrial Machinery
Medical
Other
+4.7%
2003-2013
CAGR
21
Stacked Bar Chart Show Growth by Market Segment
• Tracking segment growth helps to identify those segments that you might consider targeting.
• Use a stacked bar to show growth for a relatively small number of time periods (under 12) and an area chart for a greater number of time periods.
• Add a CAGR column and a growth line to show segment and overall growth, respectively.
• Add multiple CAGR columns to show past and projected growth.
0.0
1.0
2.0
3.0
4.0
$5.0B
Total Market Size ($B)
2003
$3.2B
2004
$3.3B
2005
$3.4B
2006
$3.6B
2007
$3.8B
2008
$3.9B
2009
$4.1B
2010
$4.3B
2011
$4.5B
2012
$4.8B
2013
$5.0B+4.7%
5%
8%
14%
3%
Auto
Industrial Machinery
Medical
Other
+4.7%
2003-2013
CAGR
22
Market Segment ProfitabilityAutomotive is lagging with respect to contribution, while medical is above average.
0
50
55
60
65
70
75
80%
Total Company Profitability: 65%
Air, Lan
d an
d W
ater
Tran
spor
tatio
nMed
ical
Elec
troni
cs a
nd E
lect
rical
Indu
stria
l Mac
hine
ry
and
Equi
pmen
tHar
dwar
e
Hydra
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, Pne
umat
ic
and
Flui
d Han
dlin
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Fabr
icate
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rodu
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Rubb
er, P
aper
&
Misc
Plast
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oduc
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Applia
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and
Hou
sewar
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Autom
otive
Spor
ting
Goods
, Toy
s &
Recr
eatio
nal E
quip
men
t
Contribution Margin (%)
Total Company Profitability: 65%
23
Bar Mekko for Segment Profit Contribution
0
50
55
60
65
70
75
80%
(%)Contribution Margin
Total Company : 65%Profitability
,
Air
Land
and
Wat
er
Tran
spor
tatio
n Med
ical
Elec
troni
csan
dEl
ectrical
Indu
stria
l Mac
hine
ry
an
dEq
uipm
ent
Hardw
are
,
Hydra
ulics
Pneu
mat
ic
and
Flui
dHan
dlin
g
Fabr
icat
edMet
alPr
oduc
ts
,
Rubb
erPa
per &
Misc
Plas
ticPr
oduc
ts
Appl
ianc
esan
dHou
sewar
es
Auto
mot
ive
,
Spor
tingGoo
dsTo
ys&
Recr
eatio
nal E
quip
men
t
Total Company : 65%Profitability
• This Bar Mekko summarizes profit margin for each market segment in which you compete.
• The width of the segment is proportional to segment size and the height to profit margin.
• Use colors to highlight key segments.• Use a similar bar-mekko to compare segment size versus segment growth.