How to Use EW's 2011 Market Planning Guide

Nov. 1, 2010
There's a ton of information here. Here are some ideas on how distributors, reps and manufacturers can use EW's Market Planning Guide

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The market-planning data is divided into nine regions of the United States. For each region and state, you'll find sales forecasts for this year and next year, along with the three prior years' sales. In addition to the sales forecasts, which are prepared by Electrical Wholesaling's research department, you'll also find an economic snapshot of the region and employment statistics for four of electrical wholesalers' major customer groups: electrical contractors, the commercial market, the industrial market and government.

The employment numbers help develop forecasts for customer buying potential. There's a slight change to the way this year's numbers are reported. In the past, we used employee estimates for electrical contractors from the U.S. Census Bureau's County Business Patterns, but the most recent data for individual Metropolitan Statistical Areas (MSAs) was several years old and Electrical Wholesaling's editors found more current data available for employment of electricians on the Bureau of Labor Statistics' website. If you're looking for sales breakdowns for full-line distributors' key customer and market segments, take a look at the Market Mix and Customer Mix. The Market Mix data was updated this year.

The Product Mix data gives valuable insight into the product areas that have the most mind share with electrical distributors. This data was updated this year, and some of the product categories have been consolidated or eliminated because their contribution to electrical distributor sales were consistently less than one percent over the years. See the text accompanying the chart for a full explanation of the changes.

Getting the full picture on a market area isn't that difficult. When developing any market forecast, gathering some basic data on the size and makeup of the market is the first step. Let's take a look at some of the ways you can crunch the numbers we've provided to tailor them to your specific business and market.

Sales estimates

One of the most common uses of this resource is for developing a business plan, whether it be for internal use as your guide for next year or for a presentation to an investor or banker. You will need something that states the size of the local market, and these sales figures are a documented source you can use “as is.”

These data will also be helpful in establishing a sales forecast for your company and your region, comparing nearby or far-flung markets with an eye to opening or closing a branch, and evaluating promising areas of new business. One question distributors should ask themselves — and suppliers will be asking — is: “Are our sales into the market at the level they should be?” Look at the estimate of the overall sales in your market in comparison with your company's sales.

Employment in major customer markets

In addition to sales forecasts, employment numbers make up a large part of the regional profiles. The number of people employed by a company or in an industry tends to rise and fall with the volume of business it's doing. Employment figures, therefore, act as a gauge to business prospects and conditions in end-user markets.

  • With the employee counts from each market, you can compare the relative sizes of various end-user groups in your area.

  • You can also compare the makeup of one market area to another, and consider new customer markets or ones that you could be serving better.

  • If you track the employment figures for each market over time, you'll see broad economic trends unfolding in your market.

  • You can also use these employment figures to make your own multipliers or you can use the national multipliers we've already calculated.

There's a ton of information here. Here are some ideas on how distributors, reps and manufacturers can use EW's Market Planning Guide.

  • Assess market size.

  • Determine market share.

  • Document market penetration.

  • Identify market boundaries.

  • Justify new branches.

  • Determine areas with the greatest sales potential so you can concentrate your salespeople's efforts in the most productive directions.

  • Keep on top of changes in the market area (customer make-up, business volume, product needs).

  • Direct advertising and promotion to the places where it will have the most impact.

  • Target untapped customer types or industries.

  • Identify new accounts.

  • Spot new opportunities in products or technologies.

  • Determine necessary product line additions.

  • Estimate the rate of purchase or usage of a product over the next year to anticipate inventory requirements.

  • Document to suppliers or potential suppliers why they should do business with you.

  • Explain to suppliers what they can expect from you in the way of market coverage.

  • Verify or challenge what suppliers expect from you in sales.

  • Set sales quotas for salespeople, territories or product lines.

  • Calculate the number of salespeople needed to cover an area.

  • Compare how well salespeople in different territories are doing with the same product on the basis of market potential.

  • Evaluate salespeople.

  • Set up a call pattern to contact customers productively.

  • Back up intuition.

NEXT: National Multipliers and Summary

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