NEWS RELEASE September 2023
AWE Product Purchases are More Predictable Than Commonly Assumed
Why are sales predictable? Because:
- Less than 1% of air, water, energy product sales are to companies which do not have similar products in operation.
- It is most likely that the product will replace an existing product.
- Unless you have a monopoly, it is likely it is a competitor’s product which will be replaced.
- Product life is predictable.
- Most products are purchased by large companies.
- The number and size of components can be determined for any process.
- Due to government regulations details on each process in each plant routinely appear in permits to operate.
The Most Profitable Market (MPM) program is structured around niche superiority. Each niche is pursued separately. While an analysis to determine the location of each valve or pump in the food industry is not practical, it is possible to determine their locations for chocolate manufacture or desalination.
The market is shaped more by product life than by industry expansion. Since the sales approach differs between the two it is very important to determine the mix.
Sales of new products due to industry expansion are small compared to replacement sales. But it should be noted that the replacement might be a new plant replacing an existing plant. The new plant could be in a separate location with a different company. But plant life is generally quite long. Many municipal sewage treatment plants have been in existence for many decades. There have been expansions and system replacements but at the same location.
In many cases the decision makers for replacement product to an old system or selection for an on-site expansion will be the same, but this is not always true. In large corporations with many plants, the replacement product decision is likely to be made locally. Whereas for an onsite expansion the corporate staff or a systems provider may make the product decision.
The MPM market program dictates pursuing niches where 20% or greater market share can be obtained. But this still means that a large percentage of the projects will be where a competitor has the advantage of bidding to replace one of his products. So, another part of this MPM is to create value propositions which show the superiority over the products in place.
This analysis has dealt with only hardware. Consumables such as filter cartridges and chemicals are sold primarily for existing installations. Dust collector filter bags could represent 30% of a new installation. So, under a medium scenario the annual sales for new units and replacements would be 30% of .21 or 6%.the consumables replacement with a 2-year bag life and 20-year equipment life = 30%. In other words, the replacement bag market is 5 x greater than the bag market for new collectors.
Many equipment companies also sell the consumables. So, their potential is even more predictable than the market just for the hardware.
For more information on the Most Profitable Market click on www.mcilvainecompany.com
Bob Mcilvaine can answer your questions at 847 226 2391 or This email address is being protected from spambots. You need JavaScript enabled to view it.
