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How consultants do industry research

Consultant's Mind

Management consultants need to be quick learners. Junior analysts are routinely asked to support proposals and projects across different industries. The good ones are fast, and proficient with Excel and PowerPoint. The great ones get up-to-speed quickly on the industry dynamics and can add in industry specifics to the pitch. If you are not proficient at industry research, you will not be a generalist consultant for long.

So what happens if a partner asks you to help on a proposal for something you know  nothing about? For example, how do you get smart on commercials trucks?

1) Start with Standard and Poor’s (S&P) industry surveys

If you have access to these analyst reports through your work or university, start here. It is loaded up with charts, tables and graphs to get you up-to-speed on the major trends, value chain, competitors, key financial drivers and earnings.

2) Download SEC filings and investor presentations

After finding out who the main industry players are at www.finviz.com, go to to the investor relations section of the website. Download the 10-K and annual report. Also, download the presentations made to investors and Wall Street analysts; it is a treasure trove of information on the company’s strategy, and marketing.

Example #1: PACCAR:

From this example (company has since taken down the link) you can see that one manufacturer segments the customer base into six groups: 3 of them by size (large, medium, owner operator), 2 by ownership type (leasing vs. private fleet), and also the vocational segment.

Example #2: Navistar:

In this Q1 2012 earnings presentation, the management team shared their financial forecast, manufacturing strategy and market share by product type. In the slide below, it shows a worsening market share trend, so you probably want to also listen to the webcast, where management answers tough questions from analysts.

<<Flash forward 2019, please find Navistar investor relations presentations here>>

3) Search for industry trade organizations websites

Look at industry trade group websites to get a summary of trends, and regulatory issues. These groups do an excellent job of simplifying the story for non-experts.  In the Google search box, simply add “site:org” to whatever search terms you use.

Here are some of the websites that came up from the search for “trucking” and “site:org”

4) Compare financial metrics

It always helps to compare the financials of different companies to see the 80/20 breakdown of revenue and profits for the industry.  Finviz is a great tool, but so is SmartMoney. As you can see in the graphic below in gray color, Smart Money ranks the different companies by market capitalization, revenues, earnings, profit margin, dividends, ROA, ROE etc. See the example for Navistar (NAV) here.

5) Don’t forget about blogs and forums

If you are looking for more qualitative information, it is useful to spend 15-20 minutes looking at industry blogs.  Just type in “blog” or “forum” with your targeted search term. Then search the specific topic on the blog.  If is much better for you to learn the basics from an online blog community, rather than asking your client a question that shows your ignorance of the industry.

6) Look at Linkedin.com

Go to LinkedIn and see what current or previous employees are putting on their profiles and descriptions of projects. In the past, I did a market sizing from the tidbits that marketing managers mistakenly left on their LinkedIn profiles.

7) Prepare for primary research

There is only so much that you can get online. Think through your questions, then start reaching out to people you know via LinkedIn contacts or undergrad / grad school alumni. Sometimes a 30 min conversation with a subject matter expert is worth 3 days of online research. Potential interviews might be:
  • Suppliers or customers (up and down the value chain)
  • Distributors or dealership owners
  • Former employees
  • Industry researchers or professors

8-100)

There are so many other ways to do industry research, but you gotta start somewhere. Next steps might be: trade magazines, conferences, government and industry data sets, product reviews, surveys, focus groups, interviews. As a consultant, I have bought my fair share of  – – – – for Dummies books.  You will too.

P.S. One of my readers – Mark – suggested these websites for those interested in the trucking industry.  Thanks Mark. 

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