Market Assessment and Product Analysis

Situation:

A leading Tier 1 Supplier is focused on expanding its product base, augmenting its current Driveline portfolio with components in the Powertrain segment. However, the Company was unclear which products were the best fit synergistically, which products were the most attractive (e.g., growth and margin) and once prioritized, what entry options were available for their company to get into these product segments. For the assignment, they narrowed an 80-product field to eight component categories. For clarity, the Tier 1 Supplier was approaching entry into any of the component areas primarily through acquisition as they did not have the internal knowledge/capabilities currently.

DuckerFrontier’s Approach:

DuckerFrontier completed eight Market Assessments for each of the product categories that they identified with the additional request of mapping Entry Options as well. For each product category, we completed the following:

• Review of the trends and dynamics affecting the design, manufacture and current and expected use of the components within the vehicle. Answering questions such as what does the component do, what benefit is the component to automakers, how are the designs and technology of the product changing and to what benefit are these changes
• Forecasted the market value and unit demand over the next five years for each of the products with North America, Europe and China, with segmentation if appropriate by current and expected technologies (e.g., adoption over forecast period)
• Analysis of the value-drivers/profit pools within each of the components, answering questions of how are these components are manufactured, what sub-components are critical to the end product, who has control of the sub-components and would the client have an ability to vertically manufacture any of these to gain a competitive advantage
• Reviewed the competitor landscape and identified the Key Success Factors to attain a leadership position as a supplier of these components and generate notable market share in the segment.  We also reviewed the strategies of these competitors and if they had completed any strategic M&A to better their capabilities or customer relationships
• Assisted client in reviewing, augmenting and applying their internal Market Assessment Model to each of the products based on DuckerFrontier’s activities, thereby prioritizing the eight segments from most to least attractive
• For each product area, mapped entry options and resulting share/revenue gains for the client.

Outcome:

DuckerFrontier presented the report to a sub-segment of the Executive Leadership team at the Company’s annual strategy summit. The project was successful because the supplier provided access to a number of individuals internally that had technical expertise, were client facing and were genuinely interested in adding the products to the portfolio. They wanted DuckerFrontier’s opinion to provide better perspectives on market growth, the point of leverage in the component build process and review the participants in the market. In the end, each product category had a viable entry point, but two in particular are being pursued aggressively by this client.