Initiative

Identify the competitive landscape for a leading outdoor tool manufacturer.

Business Problem

Leatherman, a leading outdoor tool manufacturer headquartered in the USA considered expanding into the Chinese market and wanted a clear picture of the competitive landscape, as well as the market size and its opportunity within it.

The company approached WPIC Marketing + Technologies with a number of questions, including:

  • What sort of sales could Leatherman expect in its first year in China?
  • What marketing channels would be best to drive awareness and, ultimately, conversions? 
  • What were their competitors selling, how much were they selling it for and which platforms were they leveraging?

DETAILS

Solution

WPIC conducted extensive research, at a category, sub-category and individual SKU level, using Discripto, WPIC’s custom-developed big data tool. 

The data revealed that the combined in-market yearly e-commerce revenue for the category was in the neighbourhood of $50 million USD, with Tmall, JD, and YHD contributing $35M to the market and general web sales contributing $15M.

Most importantly, WPIC’s data identified that the market was dominated by competitors with much lower prices. One competitor in particular held 80 per cent market share on Tmall and 95 per cent on JD . Most sales occurred in the range of $40 USD or less – sales of items priced over $40 were very minimal. By contrast, the average price of Leatherman’s tool was over $100 USD. 

Furthermore, lower-priced competitors maintained an active digital presence, which meant that to effectively compete and win market share, the brand would need to invest heavily in ad spend.

Result

WPIC’s analysis revealed little room for Leatherman to grow profitably inside China. The market for their products was dominated by a competitor with not only much lower prices but also a savvy, well-established digital presence that would demand significant ad spend to overtake. With a future not looking overly profitable, Leatherman decided to halt its China expansion plans. 

What did that mean for them, ultimately? 

Aside from production and shipping costs, Leatherman also avoided the uphill battle of trying to create demand for a product amongst an audience that largely perceived it as too expensive. Thanks to Discripto, spending hundreds of thousands of dollars on marketing, import fees, licenses, as well as countless months and likely frustrating efforts were avoided.

While timing was certainly not on the brand’s side, the strategic use of data to accurately forecast the market and Leatherman’s place within it helped them to avoid a costly error.

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