An Eigis Consulting Group Case Study
An established local fibre cement board manufacturing company is faced with the challenge of expanding its market share in Malaysia. Growth has plateaued in recent years, with the top two big players tussling and edging each other out for the slight majority share of the market from year-to-year.
Both the head of marketing and the head of sales were tasked to find a solution to the market expansion challenge. Despite the various initiatives that have been implemented in the past, a consensus could not be reached on what the appropriate next steps should be. Based on his gut feel of the market, accumulated through years of experience, the head of sales believed that the company will need to aggressively penetrate the ceiling market for new market share—a steep uphill battle given the large cost advantages (and contractor preferences) enjoyed by plaster ceilings. To complicate the discourse, the regional sales managers each believed that their own markets have been saturated and were suggesting that other internal and external factors were limiting sales growth.
The head of marketing was cautious of jumping to conclusions. While the company has years of accumulated experience and know-how, he was also aware of the potential pitfalls of making business-shifting decisions without hard data, particularly in relation to the market—if the company did not know where they stood with more certainty, what the potential market size for fibre cement boards was, and what other barriers of growth they have yet to discover, the strategic planning process that would ensue may just very well take a wrong turn.
Given its limited internal research capabilities, the head of marketing decided to engage a team of external business consultants, in order to obtain crucial data on the fibre cement board market that would serve to guide the ensuing strategic planning process. The following approach was adopted. At the end of the 3-month study, the findings challenged some of the long-held assumptions within the company and provided the necessary insights to guide the company’s journey back to growth.
(I) Situational Analysis
A situational analysis was carried out at the outset of the study, in order to determine existing assumptions about the market and the company’s position in the market, as-is, such as production capacity, utilization rate, market share, and size of the customer base. This was conducted via a series of internal interviews with key persons from both sales and marketing. Hypotheses were built from the situational analysis, which served as guiding posts for the study to be carried out.
(II) Macroeconomic Analysis
As one of the objectives of the study was to determine the potential market size for fibre cement boards, macroeconomic analysis was first carried out in order to determine the future growth prospects of the market. The analysis was conducted across the following indicators, repeated at both the national and regional levels, followed by a drivers and barriers analysis to assimilate the disparate findings into a useful framework:
- Economic vibrancy (GDP and GDP growth)
- Performance of the construction industry (GDP and GDP growth)
- Intensity of construction activities
- Population size and growth
- National policy drivers
- Technology drivers
(III) Market Sizing
The market sizing model for fibre cement boards was constructed using a two-tier information structure. The first tier involved the estimation of the apparent fibre cement board consumption in Malaysia. This was built using secondary data from established sources involving import, export, and local production data.
The second tier, which involved the subsequent dissection of the apparent consumption of fibre cement boards into greater granularity, were used to establish the market size of fibre cement boards in the following cross-sections.
- By region (North, Central, South, East Coast, Sabah, and Sarawak)
- By main product applications (ceiling, wall, floor/tiling, fascia, etc.)
- By broad substitute product categories (fibre cement board, plasterboard, plaster ceiling, bricks, tiles, wood, etc.)
- By product-cross-application
The second tier information was built using primary data gathered from a business research component which was part of the study. Large wholesalers and distributors controlling the lion’s share of the market were approached for in-depth interviews, in order to obtain the missing pieces of the market sizing model.
(IV) Regional Market Share Analysis
The second objective of the study was to ascertain and benchmark the regional strengths of the company against its main competitors. This was achieved via a regional market share analysis based on primary data gathered from regional wholesalers and distributors. To ensure that the data was not skewed towards the company, both wholesalers and distributors of the company as well as the competitors were approached for in-depth interviews. Market share positions were further refined among interviewees using an adapted form of the Delphi method.
(V) Customer Intelligence
In order to achieve the last objective of the study, customer intelligence spanning the buying journey—awareness, interest, decision, purchase, and usage—was obtained. As is typical of the construction industry, end-users such as homeowners may not necessarily be the ultimate decision makers when it comes to material purchasing. Influencers such as architects, civil engineers, and contractors, often play a role in suggesting and promoting particular construction materials. A targeted list of these influencers were identified and then approached for in-depth interviews, allowing qualitative insights in terms of fibre cement board usage and adoption enablers/disablers to be captured along the entire buying journey.