Mock Research and Analysis Report

Mock Research and Analysis Report Market Research Report for Piano Adhesive Products, Inc. (PAP’) l.

Research Objectives 1) Determine the market potential and the concentration of the wood floor manufacturing market segment. 2) Find the best avenues for access to the wood floor manufacturing market segment for the newly EPA (United States Environmental Protection Agency) 3) Evaluate Piano Adhesive Products, Inc (PAP’) ability to meet the production, marketing and sales requirements to be successful in this market segment. ) Identify high potential prospects that current sales reps may call on while conducting sales calls on current markets. II. Methodology This research was conducted over a 90 day period in the first quarter of 2013 by our Research Team. The information is of a proprietary nature and upon final payment becomes the property of the research sponsors.

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The information contained in this report will not be made available to others without the express permission of the research sponsor.

Sources of information include: 1) Public information via annual reports to shareholders as well as other Government reports which are available for public review 2) Company marketing information, advertising, company press releases, and state and local news sources 3) Online research including third party references 4) Trade associations, directories and publications 5) One on one telephone interviews with both current customers and prospects 6) Various private industry sources Every effort is made to provide accurate information.

The information provided is “best available” on the day the data was gathered. Ill. Relevant Data from Secondary and Primary sources Current Customer Profile API currently provides adhesives and environmentally safe lubrication products for the wood manufacturing industry. The primary product line for API has focused in the plywood, veneer and all wood paneling manufacturing markets.

You currently have twelve current customers that are also manufacturers of wood flooring and use the new adhesive formula.

Based on the research of the entire Wood Flooring Manufacturing sector current customers fall into a cross section of manufacturers with more than $1 Million in sales from the manufacture of solid, veneered and laminate flooring products. Rule of thumb adhesive usage is 100 units for every 1 Million board feet of flooring manufactured. (Hard Wood vs..

Soft Wood and stabilizing sub stratus will also impact sage. ) Your Current Sales Profile: The adhesive has been sold as second sale through your sales reps while servicing existing accounts. Re-supply has primarily been accommodated through fax and phone calls to your service center.

The typical order is two unbroken cartons (4 units per carton). Shipments are fulfilled via UPS. Primary reason for trying.

.. Inform other products work so well… ” Reason for continuing to order “It works so well.

.. ” Customers tell us that your new adhesive is an improvement over the other brands they have used and that they intend to continue to use the product until something utter [Researchers Comment "Cheaper that works as well”] Customer Comments: A telephone interview was conducted with your contact person at each company that now uses your new formula.

A summary of the data we collected and few highlights of quotes from our interviews follow. Plant Manager: “The first time we used the adhesive the guys on the line thought it wasn’t any good because it did not smell like anything else we have ever used.

.. The problem really was that it did not smell at all! ” “It works very well. We won’t ship anything that would give us a bad name so we made up a few boards and put it on the shop floor and irked it over pretty good. You name it we spilled it on the test floor..

. We even drove a truck or two over it multiple times to make sure. This new stuff holds up. Mill Owner: “We ordered 1 gallon to test it out. The first time we used it we applied the adhesive by hand and ran the flooring through the cold press. Just to see how fast it would grab we started pulling it apart.

. , the adhesive held almost right away. After a couple minutes we could not pull apart the layers. We have to be more careful now when we set up machines because there are no “start over’s” if set up is bad, it sets too fast to salvage the wood and the cores. Production Floor Manager: “The service is great. We knew it would be we have been using their other products for years and have been very satisfied.

If we get into a bind and need more adhesive they can get it delivered by the next morning. Can’t beat the product or the service…. ” Plant Manager: “We have one problem with the new adhesive.

You cannot forget to put the cap back on if you don’t use a full bottle. It only takes an hour and the top skims over and you cannot get anything usable after that. The fast set is great for production, but the operators have to be on the ball or we end up throwing away half a bottle with every tartar. ” Production Manager: “The biggest concern we have is shelf life.

We had a problem right away with forgetting to cap the bottles and ended up throwing away a lot of spoiled product. Our machines take 1 and h gallons at start up and that will do an entire shift of normal production.

That half gallon left behind gets thrown away a lot. I love the product, Steve and Ron on the floor love they don’t have to gag anymore from the IV. Analysis a) Based on telephone interviews 75% of current customers stated the primary considerations for ordering a one or two weeks supply. ) Shelf Life Concerns, 2) No Price Break for larger quantities. The average order is for 2 cartons. Average Monthly use is almost 4.

5 cartons.

Evaluate the benefits of a more aggressive pricing structure for larger orders. If you can move your customers to order one month’s supply instead of one or two weeks inventory it should reduce administration and handling cost by 50% or more. This will be more critical as demand for your product grows. B) Current customers of the new adhesive can be easily serviced through your current sales reps. The members of your sale staff assigned to these accounts have negotiating relationships with both purchasing and production staff at each facility.

C) It is important to note that your customers consistently give very high marks to your sales team. 00% of respondents during our telephone interviews praised the personal service and quick response they now receive from your sales reps. V. Market Summary Perspectives from the National Wood Flooring Association (Condensation of Reports) The $2. 6 billion (retail dollars) U. S.

Wood flooring market has made significant inroads in the domestic floor coverings industry over the past two decades. The inroads were dimidiated by growing consumer acceptance of high-end hard surface flooring, as well as more diverse offerings by wood flooring manufacturers. Manufacturers now offer a wide range of species, colors, and custom-type designs.

The industry has also stimulated demand with easier and less costly to install products such as personified, engineered, and glue less wood floors. These new products and technologies have increased competitive pressures, especially from foreign-based manufacturers.

This has led to a sluggish industry bottom line performance. (http:// www. NFW. Org/) a) Industry experts predict a strong future for wood floor products. Consumer demand fueled by improvements in the durability of finish, moisture resistant characteristics and product stability is driving this continued strong outlook.

) In addition to the domestic business there is a growing worldwide demand for wood flooring. The export market is strong and continues to grow especially for exotic woods and European spec. Ready to install flooring. The one common element in floor manufacture today is a need for high durability adhesives and or other bonding techniques that meet both European and US EPA standards. C) U. S.

Shipments, exports, and price trends for hardwood and softwood flooring reduces continue to rise. Even in a slowing housing market the outlook for hardwood construction market segments.

Market trends are especially strong for personified and engineered wood products, and for exotics, rustics, and other hardwood products. D) Globally manufacturing capacity for wood flooring is significant. This could be troublesome for US manufacturers, especially noting the increased demand for more exotic woods that cannot be grown domestically. As of the end of 2006 international suppliers of finished product accounted for 10% of the US and Canadian markets.

An n depth analysis of international competition paints a much brighter picture for North American Manufacturers.

International Conditions Industry and independent research has noted that even though international manufacturing has a large capacity to produce product, the raw timber required for flooring is in very short supply. Several factors have influenced the availability of timber. 1) Growing environmental pressure to preserve standing timber 2) Protectionism of foreign governments attempting to maintain large timber reserves for rapidly growing internal demand (China has limited export to 5% of domestically rowan timber products). 3) US competition for exotic raw timber.

Environmental Movement The growing pressures from international groups like Green Peace and Save the Forest have begun to make inroads in developing nations. The impact is especially noted in Southeast Asia and the Pacific Rim with the shutdown of many logging operations in the Philippines, Viet Name and other smaller lumber producing nations. Flooring and wood product Manufacturers in Japan, Taiwan, and even in mainland China have changed over to other non timber related manufacturing succumbing to the shortage of #1 grade raw hardwoods. Protectionism

India began preserving its limited timber resources more than a decade ago, others are now following suit. The most notable change has been China.

As vast areas of timber have been lost never to recover due to poor management has lead to an abrupt shift away from using domestically grown lumber for export. As noted earlier the Chinese have now quietly limit export of wood products to 5% of all domestic timber harvested. The primary source of timber for China is now Viet Name, Burma and Thailand. Other sources include South America and Eastern Africa, area’s where competition for raw timber has driven the price to all time highs.

Timber Supply As the American market continues to trend for more exotic looks US and Canadian manufactures have taken to importing raw timber to meet demand.

As the North American market has shown a willingness to pay the increased costs related to exotic lumber products North American timber buyers have had no reluctance to outbid others for raw timber. The import of raw timber followed by the manufacturing and strength. North American Production efficiencies along with an effective marketing and distribution structure place foreign competitors at a distinct disadvantage in the North American market.