Increasing value potential in industrial technology

Entering a new market

Our client is a leading global provider of process and motion control technology. It was considering entering the precision conveyor modules (PCM) market inorganically due to attractive market dynamics and synergies with its existing business.

Our client’s hypothesis was that the PCM market presented an attractive opportunity for several reasons:

PCMs would broaden its exposure to structurally attractive underlying consumer sectors,
Attractive lifecycle buying dynamics (e.g., frequent upgrades, maintenance, and replacement), and
Significant barriers to entry created by a complex value chain, buying behaviour and channels to market.

Key questions

Would entering this market be strategically attractive based on market dynamics, ability to drive value with customers and synergies with the existing business, and where is the value?
Were there market entry points which would provide them with a sustainable leading position in attractive segments?
How do PCMs fit into the broader conveying technology opportunity within relevant end markets?

Research

Our approach was underpinned by a mixture of primary research with key industry players, extensive secondary research on the market and key manufacturers, and a bottom-up demand and supply side total addressable market (TAM) model

Needs-based Segmentation

To assess the strategic attractiveness of entering the PCM market and where to play, Plural developed a customer needs-based segmentation. This allowed us to identify four higher value segments and two relatively commoditized segments underpinned by distinct use-cases and customer behaviour

Market Model

The segmentation provided the foundation for Plural to build a supply-side market model and competitive analysis that identified market share and attractive entry points

Impact

The new segmentation was effective in challenging the way the client initially viewed the PCM market, effectively shifting away from product-led thinking to customer-led thinking. This allowed the client to understand the true structure of the market, why customers buy and the decision-making factors involved, and which parts of the market offered the most value potential.

Even though the dominant market leader had recently been acquired, the segmentation was key in identifying potential cross-sell synergies between segments therefore revealing attractive roll-up opportunities with strong and growing challengers to carve out a leading position.