The Development of Markets for a New Plastic - ACS Publications

The Development of Markets for a New Plastic M . J . ROEDEL

Downloaded by TEXAS STATE UNIV SAN MARCOS on December 26, 2017 | http://pubs.acs.org Publication Date: June 17, 1959 | doi: 10.1021/ba-1959-0024.ch017

Polychemicals Department, Ε. I. du Pont de Nemours & Co., Inc., Wilmington, Del.

After management has decided to manufacture and sell a new plastic, a market must be developed, based on the necessary knowledge of its qualities and commercial possibilities. Market opportunity studies are made available to the market develop ment manager, and from this base he organizes his effort. One can start with four broad end-use mar ket categories: component parts, packaging, con struction, and consumer, each of which may be subdivided. A development man is then assigned to study each end-use industry, with the first part of the study defining the structure, calling points, sales potential, development goal forecast, devel opment manpower requirements, and total budget. The next step is approval by sales management. Once that decision is made, development tools come into play. The area of actual operations is where the work gets done, and success here, with good liaison among the various functional groups, will bring success to the venture.

T o set the stage, we are a s s u m i n g t h a t m a n a g e m e n t has m a d e the affirmative decision to m a n u f a c t u r e a n d sell t h i s new p l a s t i c after h a v i n g been c o n v i n c e d b y research t h a t the p r o d u c t is u n i q u e a n d u s e f u l , b y p r o d u c t i o n t h a t t h e m a n u f a c t u r i n g process is feasible a n d specifications c a n be m e t , b y c o n t r o l t h a t the new i n v e s t m e n t w i l l e a r n adequate r e t u r n at p r o j e c t e d costs a n d sales v o l u m e , a n d b y sales t h a t t h e y c a n meet t h e p r i c e - v o l u m e - t i m e forecast e s t a b lished b y t h e i r m a r k e t research, d e v e l o p m e n t , a n d d i r e c t sales personnel. T h u s the die has been cast. A m u l t i m i l l i o n d o l l a r c o m m i t m e n t i n p e r m a n e n t i n v e s t m e n t has been m a d e . T h e new p l a n t w i l l be o n s t r e a m t w o y e a r s hence. Y o u w i l l r e c a l l we h a v e defined o u r p l a s t i c p r o d u c t as a new m a t e r i a l . O u r p r o b l e m is not one of e n t e r i n g a n established m a r k e t w i t h a k n o w n p r o d u c t new to us a n d g a i n i n g a n a p p r e c i a b l e share of established business b y d o i n g a n o u t s t a n d i n g sales d e v e l o p m e n t j o b . B e c a u s e o u r p r o d u c t is u n i q u e , i t s place i n the s u n has to be established s t a r t i n g f r o m s c r a t c h , u s i n g m a r k e t d e v e l o p m e n t techniques a i m e d a t d i s p l a c i n g d i s s i m i l a r m a t e r i a l s i n established end uses 124

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a n d i n d e v e l o p i n g new end uses s a t i s f y i n g u n f u l f i l l e d needs. T h i s means t h a t a n end user w i l l r e q u i r e o u r new m a t e r i a l i n t h e f o r m of a shape m a n u f a c t u r e d b y a p l a s t i c processor f r o m our r a w m a t e r i a l . P r i o r t o m a n a g e m e n t d e c i s i o n t o i n v e s t considerable new m o n e y i n a c o m m e r c i a l p l a n t i t was essential to h a v e the new p l a s t i c c h a r a c t e r i z e d u n d e r a host of end-use e n v i r o n m e n t a l c o n d i t i o n s t o c h a r a c t e r i z e t h e u t i l i t y of t h e new p r o d u c t . F o r a v e r s a t i l e p l a s t i c t h i s t a s k is n e v e r finished. E s t a b l i s h i n g a n d defining processing c h a r a c t e r i s t i c s a n d d e v e l o p i n g new processing techniques are also a c o n t i n u i n g t a s k . L i k e w i s e , a p p r e c i a b l e i n - c o m p a n y p r o d u c t k n o w l edge is necessary a t the s t a r t t o e s t a b l i s h w h e r e a n d w h y t h e new p l a s t i c w i l l do a better j o b a t e q u i v a l e n t or l o w e r cost. T h i s means r e a d y access t o a p Table I.

End-Use Markets for New Plastic

End-Use Market

Sales Potential, X Lb.

196 X Sales Forecast, X Lb.

Development Manpower Requirements, Man-Years

50X 10X 10 X

10 X IX IX

3.0 0.7 0.3

30 X 10 X 15X

3X IX IX

1.0 0.3 0.7

20 X 10 X 10 X 20X

0.5 0.5 0.5 0.5 8.0

Component parts Transportation Automotive Aircraft and missile Marine Industrial machinery Office machines Vending Food processing Appliances Refrigerators Washing machines Plumbing Hardware Total

185 X

2X 2X IX IX 23 X

Packaging Food and beverage Drug and cosmetic Industrial Total

100 X 10 X 20 X 130X

8X IX 3X 12 X

1.0 0.5 0.5 2.0

50X 10 X 20 X 80X

2X 2X 2X 6X

1.0 1.0 1.0 3.0

10X 5X 5X 2X 4X 26 X

2X IX IX IX IX 6X

0.5 0.5 0.3 0.4 0.3 2.0 3.0 18.0

Construction Housing Wire and cable Pipe Total Consumer Housewares Sporting goods Toys Apparel Accessories Total Supervision Total direct development manpower Supporting sales services Design and costing Prototyping and testing Field sales assistance Market analysis Overhead Total indirect Total Development

6.0 4.0 3.0 1.0 2.0 16.0 421X

47 X


34.0


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ADVANCES IN CHEMISTRY SERIES

p r e c i a b l e b a c k g r o u n d d a t a o n m a r k e t o p p o r t u n i t i e s i n v a r i o u s m a j o r end-use i n d u s t r i e s as w e l l as r e a s o n a b l y a c c u r a t e cost d a t a to e s t a b l i s h v a l u e - i n - u s e p o t e n t i a l s . F r o m these studies, a n d the k n o w l e d g e a n d o p i n i o n s of v a r i o u s experienced p e r s o n n e l , a r e a s o n a b l y good s t a r t e r a n a l y s i s evolves o n where v a r i o u s m a r k e t o p p o r t u n i t i e s are l o c a t e d , a n d on a p r i c e - v o l u m e basis. F r o m these analyses a n d process d a t a , the p l a n size a n d i n t r o d u c t o r y p r i c e are es t a b l i s h e d a n d sales a n d p r o f i t objectives are set for a c e r t a i n p e r i o d a f t e r p l a n t s t a r t - u p , a t w h i c h p o i n t 9 0 % c a p a c i t y s h o u l d be a c h i e v e d at t h e a p p r o p r i a t e o p e r a t i v e r e t u r n o n r o l l e d - u p i n v e s t m e n t . T h e s e m a r k e t o p p o r t u n i t y studies w h i c h l e d t o the decision to c o m m e r c i a l i z e the p r o d u c t are a v a i l a b l e t o the m a r k e t d e v e l o p m e n t m a n a g e r . F r o m t h i s base he organizes t h e m a r k e t d e v e l o p m e n t effort. O n e c a n s t a r t out w i t h four b r o a d end-use m a r k e t categories: component p a r t s , p a c k a g i n g , c o n s t r u c t i o n , a n d the consumer, w h i c h are s u b d i v i d e d f u r t h e r i n t o the specific end-use i n d u s t r i e s of concern for the p a r t i c u l a r p r o d u c t , as shown i n T a b l e I . T h e d e v e l o p m e n t m a n p o w e r r e q u i r e m e n t s l i s t e d i n T a b l e I are designed t o meet t h e sales forecast for five succeeding y e a r s after the p l a n t s t a r t - u p of 4 X , 1 0 χ , 1 8 X , 3 0 X , a n d 4 5 X p o u n d s , a t w h i c h p o i n t the i n i t i a l p l a n t is o p e r a t i n g a t 9 0 % of design c a p a c i t y a n d the i n t r o d u c t o r y p r i c e has been decreased s u b s t a n t i a l l y as sales v o l u m e has increased t o the p r o f i t a b l e stage. A s soon as p l a n t project a p p r o v a l has been o b t a i n e d , the m a r k e t d e v e l o p m e n t p l a n is a c t i v a t e d on a c o m m e r c i a l scale w i t h t e c h n i c a l personnel r e c r u i t e d b y m a t c h i n g q u a l i f i c a t i o n s a n d experience a g a i n s t t h e j o b assignment. E a c h development m a n t h e n receives i n t e n s i v e t r a i n i n g o n p r o d u c t p r o p e r t i e s , p r o c essing c h a r a c t e r i s t i c s , design methods, c o s t i n g d a t a , m a r k e t i n f o r m a t i o n , a n d his specific d e v e l o p m e n t goals i n p o u n d s vs. t i m e for his assigned end-use i n d u s t r y . W e n o w h a v e a d e v e l o p m e n t m a n assigned to a specific end-use i n d u s t r y . W h a t is t h e best w a y to m a x i m i z e his efforts? F i r s t , w h a t are w e t r y i n g t o a c c o m p l i s h i n t h i s i n d u s t r y ? W e k n o w f r o m our m a r k e t a n a l y s i s studies t h a t there are n u m e r o u s specific a p p l i c a t i o n s where the new p l a s t i c w i l l do the e n d use j o b better a t e q u i v a l e n t o r lower cost. D o e s t h i s m e a n t h a t our m a n s h o u l d t a k e on a host of end-use a p p l i c a t i o n s , s e l l i n g each i n t u r n w i t h p r i o r i t y d e pendent u p o n p o t e n t i a l v o l u m e a n d p r o b a b i l i t y of success? T h i s is one w a y to do the d e v e l o p m e n t j o b . H o w e v e r , our experience i n d i c a t e s t h a t more business is developed i n the l o n g r u n b y m a r k e t d e v e l o p m e n t a c t i v i t y t h a n b y end-use a p p l i c a t i o n a c t i v i t y . I t is i m p o r t a n t t o u n d e r s t a n d the difference between these t w o sales a c t i v i t i e s . E n d - u s e a p p l i c a t i o n a c t i v i t y is sales a c t i v i t y a i m e d a t c o m m e r c i a l i z i n g a specific new use. M a r k e t d e v e l o p m e n t a c t i v i t y is l o n g - r a n g e m i s s i o n a r y a c t i v i t y a i m e d a t e d u c a t i n g i n d u s t r y on how t o design, f a b r i c a t e , a n d use o u r m a t e r i a l s . T h e purpose of t h e l a t t e r sales a c t i v i t y is t o get t h e m a n y h a n d s of i n d u s t r y d o i n g end-use a p p l i c a t i o n w o r k w i t h o u r m a t e r i a l , t h u s m u l t i p l y i n g o u r t o t a l d e v e l o p m e n t effort m a n i f o l d . H o w do w e go a b o u t e d u c a t i n g a n i n d u s t r y where our m a t e r i a l has c o n siderable sales p o t e n t i a l ? T o assure t h e success of the i n d u s t r y a p p r o a c h i t is essential to develop i n d u s t r y experts w h o , w i t h the passage of t i m e , become c o m p l e t e l y f a m i l i a r w i t h the m a k e - u p , operations, a n d p r o b l e m s of t h e i r a s signed i n d u s t r y a n d p a r t i c u l a r l y w i t h the k e y personnel t h e r e i n . O n c e these experts h a v e g a i n e d the t e c h n i c a l a n d economic b a c k g r o u n d a n d the close CHEMICAL MARKETING IN THE COMPETITIVE SIXTIES Advances in Chemistry; American Chemical Society: Washington, DC, 1959.

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NEW PLASTIC

p e r s o n a l c o n t a c t , the d e v e l o p m e n t effort c a n be a i m e d i n i n t e l l i g e n t f a s h i o n

to

a c h i e v e m a x i m u m benefits a t m i n i m u m d e v e l o p m e n t cost i n d o l l a r s a n d

in

manpower. Table II

covers the

industry approach.

The

first

s p e c i a l i s t is t o c a r r y out a s t u d y of h i s a s s i g n e d i n d u s t r y .

t a s k of

the

industry

H e defines t h e s t r u c -

t u r e of the i n d u s t r y a n d h o w i t c a n be l o g i c a l l y segmented i n t o m a t e r i a l selec-

Table II.


I.

II.

The

Industry Approach

The industry study Structure of the industry B y function and/or end-use product Major accounts Location of material selectors Sales potential Major opportunity areas Penetration rates in various segments Development goals vs. time Manpower requirements Whom do we see and how often Required man-years Budget Man-years direct Man-years supporting services Advertising, sales promotion, publicity Market development plan and recommendations Management decision Is this a major opportunity area? Are the probabilities of success high? Is the market development plan technically and economically sound? Can we afford it? Are there better opportunities elsewhere?

III.

Development tools Scheduled calling Product, processing, application, and design information Design, prototyping, and testing facilities Functional experts Advertising, promotion, and publicity

IV.

Operations Assignment, training, and location of personnel Calling schedules and development goals Call reports and action points Weekly and/or monthly progress reports Control reports Laboratory and product group requests Allocation of effort Monthly cost sheets and expense reports vs. budget New sales forecasts

V·

Liaison Direct sales Product manager Sales technical services Marketing analysis Advertising, sales promotion, publicity Research and development

t i o n p o i n t s b a s e d o n f u n c t i o n or e n d - u s e p r o d u c t .

T h i s step a l s o i n v o l v e s

t a b l i s h i n g w h a t p e r s o n n e l a t these l o c a t i o n s s h o u l d be c a l l e d on. the d e s i g n engineers are the m a t e r i a l selectors w h o N e x t the

industry

specialist looks at

the

data

es-

general,

have an assignment i n

of these g r o u p s to d e s i g n a f u n c t i o n a l p a r t t o do a s a t i s f a c t o r y j o b cost.

In

one

at m i n i m u m

provided


by

market

128

ADVANCES IN CHEMISTRY SERIES


a n a l y s i s on sales p o t e n t i a l cost considered a n d w h e r e i n these o p p o r t u n i t i e s l i e i n the v a r i o u s segments. H e establishes a d e v e l o p m e n t g o a l forecast i n p o u n d s vs. t i m e . T h e n he establishes w h o s h o u l d be seen a n d h o w o f t e n , w h i c h gives the necessary m a n p o w e r r e q u i r e m e n t s to c o n t a c t t h i s i n d u s t r y o n a n o r g a n i z e d basis w i t h our p r o d u c t a n d design k n o w l e d g e . H e also is responsible f o r e s t a b l i s h i n g the need for p r o d u c t m o d i f i c a t i o n s a n d l o n g - r a n g e needs t o guide research effort as w e l l as a l e r t i n g us o n new c o m p e t i t i v e developments. T h i s m a n p o w e r assignment a n d r e l a t e d budget has t o be j u s t i f i e d b y d e v e l o p m e n t goals w h i c h c a n i n t u r n j u s t i f y the e x p e n d i t u r e i n t e r m s of f u t u r e profits. T h e first p a r t of the i n d u s t r y s t u d y defines the s t r u c t u r e , c a l l i n g p o i n t s , sales p o t e n t i a l , d e v e l o p m e n t g o a l forecast, development m a n p o w e r r e q u i r e m e n t , a n d t o t a l budget. T h e next step is a p p r o v a l b y sales m a n a g e m e n t . T h e m a r k e t d e v e l o p m e n t p l a n for a specific i n d u s t r y has t o be s o l d . I t t a k e s 3 t o 4 y e a r s of o r g a n i z e d i n d u s t r y d e v e l o p m e n t effort before specific a p p l i c a t i o n s are b e i n g created i n large enough v o l u m e t o m a k e the effort self-sufficient, w i t h a d d e d profits i n a n n u a l new business b e i n g i n excess of the a d d e d a n n u a l d e v e l o p m e n t costs. T h i s effort, l i k e research effort, cannot be t u r n e d on a n d off d e p e n d i n g u p o n c u r r e n t business c o n d i t i o n s . H e n c e , the c o m m i t m e n t to proceed is a l o n g - r a n g e c o m m i t m e n t , a n d a n expensive d e c i s i o n a m o u n t i n g t o a r o u n d $140,000 per t e c h n i c a l m a n over t h i s s p a n of t i m e before success is assured. T h e m a n a g e m e n t quest i o n s l i s t e d i n T a b l e I I are n o t a l l i n c l u s i v e b u t i n d i c a t e the general tenor of e s t a b l i s h i n g w h e t h e r or not t h i s is the p l a c e to spend y o u r budgeted m o n e y . I n T a b l e I I is a condensed l i s t of the tools needed t o do the d e v e l o p m e n t j o b . T h e i r purpose is to create i n i t i a l a n d s u s t a i n e d interest i n o u r p r o d u c t l i n e a n d to get our m a t e r i a l s accepted as s t a n d a r d engineering m a t e r i a l s so t h a t we h a v e to p r o v i d e o n l y m i n i m u m d e v e l o p m e n t assistance on specific e n d use a p p l i c a t i o n s . B y c a l l i n g o n a scheduled basis we keep the design engineer u p - d a t e d on o u r p r o d u c t i n f o r m a t i o n , speed u p specific developments, e x p l a i n f a i l u r e s , help on redesign, weed out m i s a p p l i c a t i o n s , help e s t a b l i s h end-use specifications, a n d are i n a p o s i t i o n t o a l e r t l i n e sales on developments t h a t are n e a r i n g c o m m e r c i a l r e a l i t y so t h a t t h e y e a n a l e r t a n d assist o u r p l a s t i c processor customers i n m o l d design a n d processing c o n d i t i o n s . T h e a r e a of operations is, of course, where the w o r k gets done. T o do i t efficiently after p r o p e r p l a n n i n g i t is i m p o r t a n t t o i n s t i t u t e adequate c o n t r o l procedures t o m a k e c e r t a i n t h a t costs are b e i n g k e p t i n l i n e w i t h budget a n d t h a t the effort is b e i n g d i r e c t e d p r o p e r l y . M a j o r p i t f a l l s for the sales m a n a g e r to a v o i d are (1) o v e r c o n t r o l o n r e p o r t i n g , r e s u l t i n g i n too m u c h desk w o r k a n d k e e p i n g m a n a g e m e n t i n f o r m e d i n greater d e t a i l t h a n necessary, (2) the v e r y h u m a n t e n d e n c y to t r y t o o u t - e x p e r t y o u r specific experts o n h o w the j o b s h o u l d be done i n t h e i r a r e a of r e s p o n s i b i l i t y , a n d (3) the d i v e r s i o n of m a r k e t development a c t i v i t y i n t o end-use a p p l i c a t i o n w o r k w h e n p r o m i s i n g new uses develop. M o s t sales o r g a n i z a t i o n s are set u p o n a f u n c t i o n a l basis a n d adequate l i a i s o n between sales sections is a m u s t for the w o r k to proceed p r o m p t l y a n d effectively. I n m o s t instances our i n d u s t r i a l specialists d e a l d i r e c t l y w i t h the personnel concerned i n another sales section r a t h e r t h a n going t h r o u g h the l i n e o r g a n i z a t i o n . T h a t i s , we depend u p o n t h e i r c o m m o n sense a n d good j u d g m e n t to go t o the l i n e o r g a n i z a t i o n w h e n t h e y deem i t necessary for a d v i c e , for a c t i o n , because of established p o l i c i e s , or w h e n s i g n i f i c a n t c o m m i t m e n t s i n m o n e y or m a n p o w e r are i n v o l v e d . CHEMICAL MARKETING IN THE COMPETITIVE SIXTIES Advances in Chemistry; American Chemical Society: Washington, DC, 1959.


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T h e m o s t c r i t i c a l area i s l i a i s o n w i t h t h e d i r e c t sales section. T h e m o s t i m p o r t a n t step i n t h e w h o l e process i s g e t t i n g t h e order a n d e x p a n d i n g t h e business a t t h e customer l e v e l b y end-use extension. T h i s r e s p o n s i b i l i t y of d i r e c t sales c a n be m e t o n l y w h e n t h e y are k e p t p r o p e r l y i n f o r m e d a n d i t i s u p t o t h e t w o managers i n v o l v e d t o see t o i t t h a t t h i s is so. L i k e w i s e , t h e p r o d u c t m a n a g e r m u s t be k e p t f u l l y i n f o r m e d o n p r o d u c t deficiencies, r e q u i r e d p r o d u c t m o d i f i c a t i o n s , r e q u i r e d p r o d u c t a n d process d a t a a n d b u l l e t i n s , a n d c o m p e t i t i v e developments. T h e w h o l e effort of i s a t e a m effort; no single m a n c a n get t h e business b u t a single m a n c a n lose i t . C o o r d i n a t i o n a n d m i n i m u m f r i c t i o n are essential i n a f u n c t i o n a l o r g a n i z a t i o n . W i t h t h e passage of t i m e , p e r f o r m a n c e a g a i n s t goals c a n be m e a s u r e d , goals are r e v i s e d w i t h a d d e d s o p h i s t i c a t i o n , u n p r o f i t a b l e endeavors are h a l t e d , a n d new o p p o r t u n i t i e s are explored. I f the t o t a l j o b has been done w e l l b y t h e t o t a l t e a m , t h e r e s u l t s are b o u n d t o be s a t i s f a c t o r y as l o n g as i n i t i a l j u d g m e n t s a n d decisions were s o u n d l y b a s e d — t h a t i s , forecast sales goals are m e t o n schedule. A t t h i s p o i n t i n o u r discussion w e hope we h a v e p o i n t e d o u t t h e v a l u e of o r g a n i z i n g m a r k e t d e v e l o p m e n t effort o n a n i n d u s t r i a l basis a n d m i s s i o n a r y i n scope. O b v i o u s l y one c a n fit more t h a n one p r o d u c t i n t o such a n i n d u s t r y - o r iented o p e r a t i o n a n d i t i s a l m o s t necessary because of t h e expense i n v o l v e d i n s e t t i n g u p s p e c i a l i z e d experts. T h i s of course i s n o t necessarily so i f t h e p r o d u c t c o m m a n d s a p r e m i u m p r i c e or sufficient v o l u m e exists t o generate a m p l e s e l l i n g expense funds. U n d e r these l a t t e r c o n d i t i o n s a p r o d u c t m a r k e t i n g sales sect i o n m a y be preferable where d i r e c t sales, m a r k e t development, a n d p r o d u c t processing a c t i v i t i e s a r e a l l c a r r i e d o u t u n d e r the d i r e c t r e s p o n s i b i l i t y of a single sales m a n a g e r m i n i m i z i n g a m a j o r sales problem—effective c o m m u n i c a t i o n s .


The Development of Markets for a New Plastic - ACS Publications

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