Potential assessment to start a new venture in a highly technical and niche product segment

Potential assessment to start a new venture in a highly technical and niche product segment

Ma Foi’s structured approach to assess on feasibility to enter/not enter in a new venture in highly technical and niche product segment in Construction Materials space

Situation

As a part of large infrastructure group of South India, the management had aspirations to venture in B2C space in the real estate and construction industry. In the process they identified a very niche but a highly technical product category to offer as a product proposition for the market.

Ma Foi was mandated to conduct a study to assess the feasibility of starting this new venture in this technical and specialized construction chemical material product category in the identifies few key markets.

Corrective Action

Ma Foi adopted a multidimensional approach by validating the key hypotheses aligned to the potential embedded in the construction chemical material industry. A comprehensive assessment was done by understanding the key factors of Industry, Economy, Product Characteristics, Key Technical Enablers, International industry trends, allied industry growth impacting the growth of this segment, Government Regulations and policies to name a few.

Ma Foi also reflected upon the key drivers in reference to the R&D, Technical capabilities required for producing such niche category products and the sales and distribution capabilities required to penetrate in the market and reach the stakeholders.

A deep analysis of the competition landscape was done to understand the key factors driving the growth for the incumbent companies, where lion’s share of the market was controlled by handful of Indian and MNC players with deep pockets, knowhow and technical experience.

Ma Foi also conducted diagnosis of the organizational readiness and capabilities to enter into this product segment

Result

Ma Foi’s recommendation to the client was two fold based on the understanding of the outer macro scenarios, industry requirement and organizational internal capabilities –

• The construction chemical market is at a nascent stage, but will require significant commitment from the company in terms on technology investments, product offerings, sales and distribution and strong R&D capabilities
• The company first needs to develop and strengthen its foothold in other B2C construction material products, have a strong market reputation, sales and distribution capabilities and then venture into construction chemical product category, as will then get significant results and achievement for all the investment made

The management has accepted Ma Foi’s recommendations and has not entered into the new venture.