Market Analysis Summary
Analysis has shown that the annual global revenue from the sales of measuring wheels is roughly $100M, spread among four major competitors, with the average price about $50 (U.S. dollars). This implies that approximately two million distance wheels are sold annually worldwide. Bottlieb Innovations conservatively estimates that within this market, one-third of the demand is generated due to customer need to calculate area and distance versus distance measurement only. If this estimate is reasonable, there is potential demand for 600,000+ units per year in the area measurement segment.
If Bottlieb Innovations can capture 1% of this segment, the company will sell 6,000 units per year. As long as the market recognizes and values the superiority of the Digital Geographer and customer buying habits can be changed, the market potential is very strong.
4.1 Market Segmentation
There are three basic market segments in the current distance-wheel market:
- Construction, including appraising, engineering, and small-scale surveying.
- Agricultural, including large-scale surveying.
TSM offers the Model 100 Measuring Wheel and is an excellent example of a company that fills a local niche market. The TSM wheel is specifically designed for cable TV strand mappers, to be primarily operated from a vehicle, and claims superior wheel bearing durability and life over competitors. TSM’s primary customer currently appears to be its own TSM Cable TV business.
Dandy focuses on professionals in the agriculture and land management industries, with minimal emphasis on other industries such as construction. Dandy’s customers generally need to calculate distance and area of large sites one acre plus, and are not a major factor in the market in comparison to the other four. Dandy hesitantly related that their sales per year in the professional agricultural and land management segment was “under 2,000 units.”
Rollertape, Measure Man, TruMeasure, and Rollersure all focus primarily on professionals in construction, engineering/surveying, and assessment industries (real estate, insurance, etc.). The greatest customer demand is in the professional market segment and probably accounts for over 90% of distance-wheel sales. Rollertape quoted a surprising yearly revenue from measuring wheel sales at $20-25M nationally (U.S. dollars) and another $20-25M internationally.
Since Bottlieb’s product represents a leap in technology, there are no direct competitors for the Digital Geographer product. However, Bottlieb expects to sell the Digital Geographer to a significant portion of the current distance wheel market. The current distance wheel market: Rollertape, Measure Man, TruMeasure, and Rollersure can be considered Bottlieb’s competitors.
Current distance wheels are a largely homogeneous product, so Bottlieb’s competitors do not enjoy much differentiation based upon individual product uniqueness. Each competitor offers a product line of several wheels with different diameters and tire treads designed for use over various surfaces and distances. The competitors do, however, seek to differentiate their products based on superior accuracy, reliability, and service.
The small-diameter (4″-10″) distance wheels are typically designed for measurement of shorter distances over paved ground. They offer excellent precision and are easy to carry because of their small size. For added convenience and portability, Meter-Man sells hard carrying cases for their small diameter distance wheels. Competing distance-wheel manufacturers have designed and positioned their small-diameter wheels for use by decorators, appraisers, painters, realtors, insurance agents, and other related professions in mind.
The large-diameter (18″-25″) wheels are better-suited to uneven terrain and longer distances. They do not have the pinpoint accuracy of the smaller wheels, but they typically do not need it. Typically, they have tires designed for traction over rough terrain or mud. Competing manufacturers position the large-diameter wheels for use by big contractors, fencing companies, irrigation contractors, and anyone else who needs to take large-scale outdoor measurements. “Tractor pull operators” is one of the more amusing specific professional applications listed on one manufacturer’s large-distance wheel information Web page.
In addition to the small and large-diameter wheels, competing distance wheel manufacturers offer a more flexible line of wheels with diameters between 10″ and 18″. These wheels are a good compromise between the small and large diameter wheels and cover a very wide range of applications, including general construction, athletic fields, and landscapers. The mid-range diameter wheels represent the broadest range of applications and, consequently, the largest number of sales for distance wheel manufacturers.
Wheels with simple analog distance counters are typically priced between $30-70 (U.S. dollars). A large portion of wheels are sold through tool distributors. Wheels are also available at retail stores such as Home Depot, HomeBase, etc. Wheels with digital liquid crystal displays (LCDs) are less common than analog wheels, but they may be purchased for between $55-75 (U.S. dollars). The digital wheels offer the added functionality of standard and metric measurements and usually have a hold function to store more than one measured value.
Comparing the functionality of any distance wheel to that of the Digital Geographer is unfair. For applications that currently use distance wheels to compute area, the Digital Geographer offers superior accuracy and simplicity. However, current distance wheel products do have manufacturing benefits brought about by years of evolution, a lower retail price, and an established customer base.
|Year 1||Year 2||Year 3||Year 4||Year 5|
|Real Estate Appraisers||0%||10,000||10,000||10,000||10,000||10,000||0.00%|
|Pest Control Specialists||0%||200||200||200||200||200||0.00%|
4.2 Target Market Segment Strategy
Bottlieb Innovations will target current buyers of 10″ to 18″ distance wheels in the construction, appraising, small-scale surveying industries. More specifically, the Digital Geographer is targeted specifically at buyers who use their distance wheels to measure area.
Although the Digital Geographer has the ability to measure distance, it is not cost-competitive with other distance wheels on the market. The Digital Geographer must be marketed as an area-measurement wheel as opposed to a mere distance wheel. Bottlieb’s expected customer base is shown in the following chart.
4.2.1 Market Needs
Bottlieb’s customers are those currently using measuring wheels to calculate area. Small and large businesses alike can rapidly reduce surveying and appraising costs, while increasing accuracy, with the Digital Geographer. Bottlieb hopes to build solid local product reputation through direct marketing and exposure in retail home improvement stores. Superior capability, cost benefits, and local reputation will provide the Digital Geographer the foothold it needs for further expansion.
4.2.2 Market Growth
Current measuring wheel industry growth is difficult to forecast because of the large number of privately-owned companies that operate in the industry. The wheels themselves are simple, mechanical devices which do not need to be replaced often and so have a long, useful life. Although worldwide growth in construction is a strong indicator that the market is growing, Bottlieb Innovations does not necessarily anticipate a unit sales growth in the measuring wheel industry over the next few years because it expects to gain market share from the existing market.
Bottlieb’s Digital Geographer product represents a leap in technology, essentially creating a new product for an established market. Bottlieb’s growth is not as dependent upon the entire market size growing as it is upon generating interest, awareness, and excitement for the Digital Geographer product, which has yet to be released.
4.3 Industry Analysis
E. S. “Dandy” Gandrud invented and patented an improved land-measuring wheel and founded Dandy Co. in 1936. His motivation was to produce a measuring wheel accurate enough for New Deal farm programs. Previous to this, measuring wheels were custom-made devices. Today, Dandy Co. produces measuring wheels, lawn, and nursery equipment with annual sales of about $3M. Dandy died in 1988 at age 85.
Rollertape Corp. today claims to be the industry leader in measuring wheels and the inventor and pioneer of the “Modern Measuring Wheel industry,” setting “the standards for the industry for over 50 years.” Rollertape claims to have “reinvented the wheel” in 1950 and to be the industry benchmark for measuring wheels.
Distance measurement has always been critical, especially in construction and agriculture. Since the invention of the modern measuring wheel in this century, demand has grown swiftly due to booms and constant overall growth in population and construction. Although recently the number of small farms has been declining, the need for precision application of new soil and chemical technologies has increased. As populations grow and the urban sprawl continues, the demand for distance and area measurement is estimated to at least exceed the growth rate to compensate for replacement demand and new demand.
Advances in technology, however, such as Global Positioning Satellite (GPS) systems, could threaten the measuring wheel market as GPS systems become increasingly more accurate and less expensive. Theoretically, GPS technology could allow an individual to simply walk a perimeter carrying a small GPS device, calculating distance and/or area automatically.
Overall sales of measuring wheels worldwide are unknown. A local San Diego HomeBase store sold 88 measuring wheels during a six month period. There are hundreds of HomeBase stores nationwide, and thousands of similar retailers (e.g. Home Depot, Lowe’s) nationwide.
Measuring wheels are the sole products of several companies in the industry. Rollertape, Measure Man, and Rollersure are focused almost exclusively on the production of measuring wheels for the professional market. A large portion of TruMeasure’s revenue also comes from the sale of measuring wheels.
4.3.1 Main Competitors
Although the Digital Geographer has no direct competition, sales of the device may impact the sales revenues of other companies. Therefore, these companies may view Bottlieb Innovations as a competitor with a replacement, not a substitute, product.
The companies most likely to be impacted by Bottlieb Innovations will be the previously discussed distance measuring wheel manufacturers, namely:
- Measure Man
4.3.2 Industry Participants
The following table shows a breakdown of major distance wheel manufacturers, their market share, and their target markets.
|Company||Approx. Mkt. Share||Est. Sales*||Target Market Customer Profile|
|Rollertape||45%||$45,000||Construction, Engineering, and Appraising|
|Measure Man||25%||$25,000||Construction, Appraising and Agricultural|
|TruMeasure||20%||$20,000||Transportation, Construction, Appraising|
|Rollersure||9%||$9,000||Surveyors, Construction, Appraising|
|Other (TSM)||0.1%||$100||Local, Niche, Specialized|
* Estimated Sales reported annually, worldwide and in thousands of U.S. dollars.
All of the above named companies are privately owned, well-established companies. It is difficult to estimate their financial strength, although sales revenue data received from Rollertape indicated that yearly revenue is very strong ($20-25M within the U.S. and another $20-25M globally). It is probably safe to assume that other competitor’s financial posture is solid due to their established positions in the measuring-wheel industry and their distribution throughout the world.
4.3.3 Distribution Patterns
Competitors in the distance wheel market typically sell through tool distributors. Some of the larger wheels are sold through agricultural supply distributors. Distributors handle the burden of product placement issues as well as the issues encountered in dealing with individual customers. Distance wheels are also sold at large retail home improvement chains (e.g. Home Depot). Despite the volume of customers in retail outlets, overall demand from this segment is relatively low in comparison to the professional customer base.
Distributors typically receive discounts based upon volume orders, and add markups to wholesale prices to set the retail prices. Some distributors have opened online stores (e.g. “MyToolStore.com”). Foreign manufacturers such as TruMeasure (UK) and Rollersure (S. Africa) depend heavily on worldwide distributors, since international sales represent such a large part of their revenues. Domestic manufacturers such as Meter-Man and Rollertape depend more on domestic and local distribution networks.
Retail stores represent another substantial portion of domestic distance wheel company sales. Since large chains like Home Depot typically have their own professional buyers, and since they purchase such large quantities, distance wheel companies can effectively sell directly to retail stores.
4.3.4 Competition and Buying Patterns
Distance wheels have a wide range of applications, and as such, a very wide range of promotional options. However, distance wheels are tools for professionals, not novelty or luxury items targeted at the general public. Competing distance-wheel manufacturers promote their products through the same channels as other tool manufacturers. Rollertape has indicated that it only “dabbles” in the home improvement market segment, fully realizing that the greatest potential for sales lies among industry professionals and business owners. This strategy certainly does not bar the “non-professional” from acquiring distance wheels readily available through retail chains and on the Internet, although it does little to stimulate any potential demand in this segment.
Each manufacturer has a professionally-designed company website with detailed product specifications. The Measure Man website offers a video file download–the content is essentially a television commercial for Measure Man. Most websites offer links to distributors’ websites or at least distributor phone numbers and addresses.
Since the market for distance wheels is not universal, competitive distance-wheel manufacturers do not promote products through primetime television advertisements. That would be a waste of resources. The majority of the population has no practical use for a distance wheel. Distance-wheel manufacturers target professional markets by using tool distributors and by attending trade shows. Some examples of such trade shows in the U.S. include the annual “World of Concrete” show, and the “International Hardware Show.” The companies typically rent floor space at these shows for direct contact with customers and interactive demonstrations of products.
Distance-wheel manufacturers use promotional strategies very similar to other professional industries that use distributors to advertise to a defined customer base. A professional user of measuring wheels will probably base his buying decisions on personal preference, prior use, reputation within his industry, and exposure at industry trade shows. Once the decision is made, the customer will work through a distributor. If a retail home improvement or hardware store stocks distance wheels, a customer will not find all five major brands lined up, as might be the case with other products.
Although it is difficult to determine useful information regarding internal allocations to product development and R&D, it is apparent that Bottlieb’s competitors actively seek to improve their products. Advertised improvements in durability and accuracy are common, not to mention minor changes relating to ease of use and style.
Allocations to selling and promotion appear to be minimal and focused on professions within various industries. With the exception of Rollertape, mass advertising to the general public or within its retail distributors is not common probably due to cost constraints and low “non-professional” demand in the population overall. Rollertape recently used a national magazine advertising campaign, with ads appearing in “Home Center News,” “Do-It-Yourself,” and “Equipment Today.” The ads appeared four times in each publication, and reached a combined total subscriber population of 330,000. Rollertape, however, still relies primarily on the professional market. Its most cost-effective advertising is still done at trade shows and in industry journals.
Most of the Digital Geographer’s competition offers excellent customer service. The professional user who buys his measuring wheel through a distributor can easily return his wheel to the distributor or manufacturer for repair. Retail purchasers may experience slight delays as they must work through the retail chain. Although not every one of the four major distance-wheel makers manufacture every single component in their measuring wheels, they generally can quickly replace any defective component under warranty and turn the product around fairly quickly.
All products from Rollertape of Spokane, Washington, have a three-year warranty. Rollertape also offers a seven-day return from the time they receive a product for repair. Rollertape is very concerned with customer service and standing behind their fifty-year reputation. Meter-Man offers a lifetime warranty–the best in the industry. TruMeasure, of Manchester, England, offers online support for their products. Customers may email the company with any questions or concerns regarding their product. The TruMeasure website advertises the company’s concern for after-sales service. Rollersure, a South African measuring wheel manufacturer, backs their products with a two year warranty. Customers must go through the Rollersure distributor for warranty claims. The company then reimburses the distributor. If the customer is unable to make a warranty claim through the distributor, they may then contact the company directly.
Types of service organizations consist of online support, answering questions about products and providing information about repair. Rollertape maintains its own repair shop at its Spokane, Washington factory. Customers simply send their product back to the factory, and Rollertape will have it back to them within seven days.
Since Bottlieb Innovations has yet to launch the Digital Geographer product line, all competitors have a significant advantage in the customer service department. Both Rollertape and TruMeasure have been in business for over fifty years, which gives them a significant edge in customer service. Bottlieb Innovations must first focus on the technology and retail aspects of the Digital Geographer before answering the customer service question. However, once the product line is operational, Bottlieb Innovations must focus on the customer service aspects.