RBSC Saves Client $200,000

September 29, 2011 |  by

Mosaic TilesI thrive on challenges…the opportunity to solve the unsolvable. My client wanted 5-year and 10-year projections of global demand for a key component (similar to a small electric motor) used in many kinds of consumer electronics and industrial devices. Although it was clear that 100s of millions of units were being shipped annually, my client was not satisfied with the  methodologies that produced top-down market sizing and growth estimates. Content services and analyst houses sell reports and forecasts for each device type, but my client sought an original methodology with more credibility than a top-down prognostication. So, buying canned analyst reports and fee-based database content was not an option.

The approach I used was to develop a bottom-up market forecast for each of the twenty major device types aggregated into a data-driven forecast for the component’s total addressable market.

Besides working liking a demon, how did I do it?  Over the years, I’ve developed a flexible analytical framework for bottom-up market studies. I have used it to size the total addressable market for software, consumer electronics, petrochemicals and medical devices, among others. So, adapting this for the component market was straightforward. I created 20 instances of the model — one for each device type market. Using only publicly available information and interviews with key industry players, I created a data mosaic reaching back ten years in each segment. This gave me a trend line that I extrapolated to generate forecasts, segment by segment. Additional analyses of industry trends and drivers were used to tweak the model. Any growth assumption that was not substantiated with data was documented and parameterized so the client could review the results and conduct their own what-ifs.

The result? The report was delivered on time and in budget. The client was thrilled with the findings. I saved them at least $200,000 in market research costs (20 devices, 5 data points for each device, average $3,000 – $5,000 per report written by market research houses like Forrester, Gartner, In-Stat, iSuppli, IDC, IMS Research, plus costs for synthesis and analysis of same).

After the smoke cleared, I decided to compare notes with some peers. They said this project couldn’t be done and told me to turn down the assignment. They said I was crazy to take it on. Crazy?  I responded: Right Answers, Right Time.®

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