Potential Benefits Of Market Research

Plastics chemist Graham West thought marketing was an expensive exercise in woolly thinking.

He is the managing director of Belgrade Insulations, a plastics and vacuum-forming company based in Wellingborough. In 1991 a Department of Trade and Industry official called to talk about the department's Marketing Initiative to help smaller businesses write a marketing plan. As a result of changes partly inspired by the programme, West says: 'I realised I had been lacking direction for years. We had been simply unable to look for markets where we could apply the company's skills.' A recent study by the Marketing Council and Warwick Business School looked at companies, including Belgrade Insulations, that had taken part in the DTI scheme. It found that some simple marketing tasks had fostered significant sales growth.

John Stubbs, chief executive of the Marketing Council, thinks the findings should encourage personal business advisers at Business Links, the government-led support service, to think hard about how to help sharpen marketing skills.

West had been running his own company for 20 years without a thought of marketing. In 1991 the building industry, to which he supplied a variety of products including lids for cold water tanks, 'stopped dead'. Worse, Belgrade Insulations was dependent for at least 60% of its sales - and 'far more' of its profits - on a single customer. The company had a healthy balance sheet, with no borrowing, but turnover seemed to have plateaued at about £3m - producing pre-tax profits of about £230,000.

West hired a sales development manager. But he already had a sales executive. 'All I had done was put another man in the field with a scattergun approach. We had to look outside the building industry, but we did not know where.'

So West was receptive when he heard about the DTI scheme. A marketing consultant was allocated to him and spent part of two or three weeks producing a report. The government paid half the consultant's fee. 'He was very sharp. He could see our problems and didn't talk down to us. But he probably went too far. There was such an enormous list of things to do.' More pertinently, the report assumed marketing knowledge. 'It didn't quite get us off the ground.'

Shortly after, attracted by cheap training, he took part in the Investors in People scheme, one of whose consultants had a marketing background. Building on the DTI report, West says: 'We sat down and identified the company's strengths and weaknesses and what we could bring to the table that our competitors could not -which was actually very little.'

The car components industry looked relatively promising - and, unlike the building trade, was still ticking over, in spite of the recession. A telephone survey was conducted, and West followed up every inquiry, however small - 'odds and ends, orders no one else wanted'.

At the same time, West decided that he needed to bolster research and development capabilities and hired a pattern maker who could concentrate on developing prototypes from the new customers' requests. Some sizeable orders materialised.

Divisions of marketing research

'I have to say we lost money on the majority, but we had gone up a very steep learning curve. The ideas were tumbling out.' Now the company could produce a prototype in a week or less - rather than the month or two it had previously taken.

Eighteen months ago West brought in a full-time marketing man with a brief to hunt out growth industries where the company's skills - including its sharper research and development capabilities - could be used. In addition to car components, Belgrade Insulations is now selling to the leisure industry, to heating and ventilation companies and to the general engineering sector. It has recently focused on waste disposal as another growth area where it is working with customers to fashion new products. 'We can charge whatever is the going rate, we are not beholden to one customer.' The company to which West was once selling 60% of his goods now accounts for less than 25% of sales, and he hopes that will reduce further as expansion continues elsewhere.

In the year to August 1996 pre-tax profits rose to about £500,000 on sales of £4.8m and he is aiming for sales of £7m by 1999. Belgrade Insulation's financial strength, its R&D skills and, as West puts it, the 'team effort' have played a crucial role in its development. But it was some simple marketing, he reckons, that really awoke the business.

Source: Campbell12 (reprinted with permission)

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