Design of a Yacht Market Scan System

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A system to improve market knowledge among decision makers within International Yacht Coatings

Groningen, June 2005

Rijksuniveristeit Groningen

Faculty of Management and Organization Technische Bedrijfswetenschappen

University Supervisors

:Prof. dr. J. J. van der Werf

:Drs. H. Stek

AkzoNobel Supervisor

: Mr. D. Holmberg

Design of a Yacht Market Scan System

The author is responsible for the content of this report; the author holds the copyright of this report

Graduation Thesis T.A. van Hasselt

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Preface

This thesis is the last phase of my study Industrial Engineering and Manufacturing Management. The thesis is based on a research project which has been carried out at the company International Yacht Coatings in Newcastle in the United Kingdom.

During the AkzoNobel International Business Course in February 2004 I got to know the company for the first time. Because of my interest in sailing and boating, my attention for the Sub Business Unit International Yacht Coatings, was drawn immediately. This Sub Business Unit is worldwide market leader in providing paints for pleasure boats.

From September 2004 until March 2005, I worked at the Global Marketing Department of International Yacht Coatings as an internal placement. The company asked me to do a market research concerning a new business opportunity. This research involved the gathering of secondary data on the global new- built yacht industry. I presented my findings to the senior management of the company and in the mean time the new product category has been launched.

During the project it became evident to me little market knowledge was available for senior managers. I developed a market scan system by which improved market knowledge would become available among the decision makers. This report describes the design of this system.

My experiences at International Yacht Coatings in Newcastle gave me the opportunity to learn in an academic as well as social way. I look back with great pleasure at my time spent at International Yacht Coatings. My thanks go to the following persons:

- Mr. Ribbers, the AkzoNobel Corporate Recruitment Officer, who initiated my internship at International Yacht Coatings.

- Mr. D. Holmberg, the former Global Marketing Manager, who supervised me at his department and gave me the opportunity to attend interesting internal as well as external conferences and events.

- My colleagues at my department: Philip Addyman, Ross Ketteridge, Mathew O’Conner, Pat Hopper, Louise Bebbington, Claire Twelves, Simon Ward, Elenor Ekman, Ian Morton and Neil Young.

- The experts that where of utmost importance in the market research: Drew Allen and Len Bennison.

- My university supervisors Prof. dr. J.J. van der Werf, who supported me from the beginning with his supportive abstract point of view and Drs. H.C. Stek for his marketing guidance.

Finally, I want to thank my parents, my brother Benjamin and sister Mariet who have always supported me in my studies.

Thomas van Hasselt

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Management summary

Motive of the research

This research is conducted at the Global Marketing Department of International Yacht Coatings, a sub business unit of AkzoNobel, located in Newcastle in the United Kingdom. In their strategic decision making, decision makers within International Yacht Coatings are dependent on market information from local sales contacts. However, neither the sales contacts, nor the decision makers, have knowledge of the yacht market size.

During a market research for a new product category it became evident that decision makers could perform better if their knowledge of the yacht market would improve.

• Each year International Yacht Coatings introduces many products. Improved market knowledge of market size, market share and market trends will support decision makers in product development decisions.

• International is active all over the world and enters new regional markets almost annually.

Improved market knowledge of regional market sizes, market shares and market trends will support the decision to enter or to withdraw regional markets.

Research question

The lack of market knowledge among senior mangers leads to the following research question:

Design a system X with the properties Y in order to improve the market knowledge among decision makers within International Yacht Coatings.

With X being the identity of the system: a Yacht Market Scan System.

Design process

The properties Y are described according to a conceptual model of the system. This model is based upon a research concept, called the Business Intelligence Cycle (Kahaner, 1997). The conceptual model consists of different elements:

In the Focus Process the information need is identified. In the Internet Search Process the author (the updater and maintainer of the system) searches for appropriate sources. In the system only Internet- based sources are used. During the Update and Maintenance Procedure relevant data, found in the search process, are entered in the system and the operations themselves are expanded or adapted if necessary. In the Operations of the system the actual figures, the Knowledge is produced.

Every element of the Yacht Market Scan System has criteria, according to which the system is designed. These criteria are divided into Knowledge criteria (de Leeuw; 2000) and Design criteria (Applegate; 1999, Robertson; 2002, Turban; 2001). The Knowledge criteria correspond with the knowledge element in the conceptual model. The Design criteria correspond with all the other elements in the conceptual model. Sub questions are formulated per element of the conceptual model in the form of Design questions and Knowledge questions.

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The system is designed per element of the conceptual model, whereby the efficacy of every design decision has been considered first priority.

Three subsystems are created: the Global Yacht Market Scan System, the European Yacht Market Scan System, and the Super Yacht Market Scan System. Every subsystem consists of two tools, a Market Scan Tool and a Market Value Tool. The Yacht Market Scan Tool shows strategic market information in a glance and is updated twice a year. The Market Value Tool is linked to the Scan Tool and can be used to estimate the market size of each product that is offered to the yacht builders.

The Yacht Market Scan System has been implemented and is accessible on the intranet to every decision maker. A copy of the system is to be found on the CD-Rom in Appendix D.

System evaluation

To identify whether the Yacht Market Scan System is designed according to its properties Y, the various elements of the system are evaluated on their criteria. First the Design criteria are evaluated, followed by the Knowledge criteria.

Design evaluation

The first element, The Focus Process, is carried out in close cooperation with one of the main users every year. This way the information needs are identified that are relevant for the strategy of the company. The second element, the Internet Search Process, is easy to carry out and the sources that are found are relevant, up-to-date, easy to use, reliable and not too expensive. The Update and Maintenance Procedure is clear and performed regularly. The Operations of the system itself are secure, expandable, and easily accessible to decision makers. Finally, the system is compatible with the standard systems used within International. As a consequence the system is designed according to its Design criteria.

Knowledge evaluation

The produced knowledge is relevant and produced efficiently. The knowledge is not completely valid in all cases. The validity depends on the type of product for which the system is used.

Limitations

A number of limitations restrict the usefulness of the Yacht Market Scan System. It is can not be used as the only source of market knowledge for decision makers. The knowledge produced by the system is an estimate, and consequently not completely valid. The market knowledge is updated twice a year, while market characteristics change at a faster pace. This makes the knowledge produced by the system not completely up-to-date. Finally, the system does not take other market factors into account than market size.

These limitations imply that the system cannot be used as the only tool in strategic decision making.

However, the system is able to function as a valuable decision support system together with existing types of market information such as market knowledge from sales contacts.

Capabilities

The Yacht Market Scan System improves the knowledge of the yacht market in two ways:

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Estimate market share

On the basis of the existing regional product sales supplemented with the knowledge of the system it is possible to estimate regional market shares of International’s products. The regional market shares are estimated by dividing the total sales per product per region by the estimates of the regional market values produced by the Market Value Tool.

Trends and Changes

Trends and changes in the market size directly influence International’s performance. The Yacht Market Scan System can be used to identify trends and changes in the market size characteristics: production numbers, hull-material, and length of the yachts.

Applications

This improved market knowledge can support decision makers in several ways. The most important decisions supported by the system can be divided in regional decisions and product decisions.

• Estimates from the system on regional market share and regional market growth, plus information form sales contacts, can support regional investment decisions.

• Estimates form the system on product market share and product market growth, plus information from sales contacts can support product investment decisions.

The future

In the future the information need, the sources, and the desired degree of detail of the knowledge may change. In the Focus Process changes in information need are identified and in the Update and Maintenance Procedure various changes are incorporated in the system. The system is easy to adapt and to expand by anyone who has ‘Microsoft Excel’ knowledge. In this way the system is prepared for the future and can easily be supplemented with extended features, explained in chapter nine.

Up till now, decision makers were dependent of local information in strategic decision making. In this research the first steps have been taken to organize market information centrally and to develop a decision support system on a corporate level within International Yacht Coatings.

A system has been designed that improves the market knowledge among the decision makers. The best evidence is that the system is efficacious; the system is implemented at the Global Marketing Department of International Yacht Coatings and is currently in use.

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1. Introduction

This research is conducted within the company International Yacht Coatings. The motive of this research is the lack of yacht market knowledge among the decision makers. Before this motive is explained, first International Yacht Coatings is analyzed. This will be done according to its position within the multinational AkzoNobel, its products, its markets, its organization structure and its strategy.

1.1 International Yacht Coatings

International Yacht Coatings, from now on simply called International, is a sub business unit of AkzoNobel. AkzoNobel is an international company active in the areas of pharmaceuticals, coatings and chemicals. It has operations in over 80 countries and employs about 63,000 people. Sales in 2004 were EUR 12.7 billion, of which 25% in Pharmaceutical products, 41% in Coatings and 34% in Chemicals products.¹

1http://www.akzonobel.com

Fig 1.1

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Marine & Protective Coatings

Akzo Nobel Coatings has leading positions in almost all its businesses. From operational bases in 60 countries, 30,000 employees work to deliver environmentally responsible solutions. AkzoNobel’s business unit Marine & Protective Coatings is world leader in products for the protection and decoration of hulls, interiors, and superstructures for ships and yachts, aerospace coatings, protective coatings and fire retardant products for large plants and off-shore installations. This business unit is further divided into four sub units: International Marine Coatings, International Protective Coatings, Aerospace Coatings and International Yacht Coatings.

International Yacht Coatings

International Yacht Coatings is the world's largest manufacturer of yacht paints for the pleasure boat market. International is dedicated to providing solutions that protect, beautify and reduce boat maintenance. This will be achieved through a balance of making it easy, delivering quality and respecting the environment. International invests more in research than any other yacht paint manufacturer in the world.

1.1.1 Products

International Yacht Coatings is worldwide market leader with the brand names International, Interlux, Epiglass, Sikkens and Awlgrip. They provide the latest and safest antifouling, paint, epoxy resins and associated coating products for the refurbishment and new build of all pleasure boats, from the smallest dinghy to the largest and most luxurious super yacht. The main product lines are discussed here:

- Antifoulings: An antifouling provides protection from three fouling challenges: animal fouling, weed and slime. They can harm the safety, protection, speed and fuel efficiency of the boat. This is why an antifouling should be applied at least once in two years.

Antifoulings are applied under the waterline of the boat and are dependent of the type of undercoat.

- Varnishes: A varnish takes care of all interior and exterior woodwork. It prevents it from UV-light, rot and fungal staining and can give the woodwork a high gloss. The type of Varnish dependent of the type of wood, the placement of the wood and the amount of gloss the boater wants.

- Fillers: Fillers can be used for small scale repairs because of small damages. The type of filler is dependent of the type of material, location of the damage, and the size of the repair.

- Boat care products: The products in this category include cleaners, waxes and oils. The type of product is dependent of the type of material.

- Thinners: The type of thinner is dependent of the product it will be used in.

- Epoxy Resin System products: These products are used for fairing and laminating and are dependent of the type of hull-material.

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- Osmosis Treatment and Protection: Osmosis is caused by a chemical reaction between water and unreacted substances remaining in the manufactured hull. Water breaches the exterior gel coat and reacts with the chemical components creating acidic substances.

These substances create pressure behind the gelcoat which causes blisters and eventually cracking. Once the gelcoat is breached in this manner, the underlying laminate is capable of absorbing water like a sponge. The type of product is mainly dependent of type of the hull-material.

- Finishes: Topsides provide a cosmetic finish to the above waterline part of the boat. It also protects the surface against rain, sea, wind and sun.

- Undercoats: Undercoats are provided before the antifouling and the finishes are applied.

They are dependent of the hull-material of the boat. International has 12 different undercoats.

Various factors influence the specific product that is needed. The main factors that determine the type of products are divided into General factors and Application factors.

General factors:

Location (above the water line, under the water line, inside), temperature of the region, salt or fresh water, the hull-material of the boat, the type of boat (fishing, speed, sailing), the type of wood, and type of protection (UV, rot etc.).

Application factors:

The intended drying time, the intended odour, compatibility with other products, sand time, and application method.

1.1.2 Market segments

International Yacht Coatings provides its products on a global level. It divides its global market into four regions: North-America, Europe, Australasia and South-America. Not only is the market focus regionally divided, International Yacht Coatings focuses also on four core market segments:

- Do it Yourself Boat Owner

- Boat yard Professional, the professional applicator of paint

- Super yacht industry

- Boat builders

There is some overlap between the four core segments, because sometimes a boat builder delivers paint application services as well and a super yacht builder is of course a boat builder. The specific focus on the super yacht industry is because of its great value for International.

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The Boat Building Industry

The biggest market for International is the boat builder segment. This sector including engine-and equipment manufacturers is estimated to be worth at least $25 billion per year. The boat building sector is fragmented between 5,000 – 6,000 companies worldwide, many with product or geographical specialties. While there are a handful of boat builders with annual revenues of over $500 million, the builders in the sector average around $5 million in revenue a year from recreational boating.²

1.1.3 Organization structure

International is the result of various acquisitions worldwide. This has resulted in the following division organization³,

The organization is divided into four regional divisions: North-America, Europe, Australasia and South- America. Because of the increasing importance of Asia an Asian Manager directly reports to the General Manager. He falls within the Australasian division and also reports to the Manager Australasia.

Every Regional Manager has a Marketing Manager, a Technical Manager and a number of Sales Managers reporting. Every Sales Manager is responsible for a sub-region of the world-region and coordinates a number of sales representatives. The Production and the R&D are managed respectively by the Operations Manager and the Technical Manager. The Global Marketing Department is the department in which the writer of this report has been functioning. At this department there is always an internal placement, who is responsible for various small projects within the department. The Financial Controller and his team are based in India. The Global Marketing Department, Production and R&D are all based in Newcastle in the United Kingdom.

2 ICOMIA, Boating Industry Book, 2003

3 H. Mintzberg ‘The structuring of Organizations’, 1979

General Manager Yacht SBU

Manager North America

Manager Europe

Manager Asia

Manager South- America

Manager Australia

Global Marketing

Manager

Financial Controller

Operations Manager

Technical Manager

Global Creative Services Manager

Global Product Manager IP&Sikkens

Global Market Manager

Awlgrip

IT Project Manager

Assistant Marketing Manager

Business Development

Manager

Internal Placement

Designers (3)

Packaging (2)

Manager Antifouling

& Boatcare

Product Specialist

Web Content Manager

Fig 1.2

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Decision makers

The senior managers that make decisions on a corporate level are in this research referred to as decision makers. Decision makers within International are the General SBU Manager, the Global Marketing Manager, the Regional General Managers, the Regional Marketing Managers, and Product Managers. They decide on the strategic direction of the company. They make decisions on for example which products to introduce and which markets to enter or to withdraw.

1.1.4 Strategy [Confidential]

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1.2 Motive of the Research

This paragraph first describes the lack of market knowledge among decision makers, followed by the importance of improving this knowledge. This paragraph ends with describing a way to improve the market knowledge among decision makers.

1.2.1. Lack of market knowledge

In the preparations of implementing the new growth category, the [confidential], the new-built yacht market is evaluated. From now on this market will be simply referred to as the yacht market.

In capturing information of this market segment, it became evident little is known of the yacht market among the decision makers. In their strategic decision making, decision makers are dependent on market information from local Sales Managers and local sales representatives, which will be referred to as sales contacts in the rest of the report. Neither the sales contacts, consequently, nor the decision makers, have knowledge of the yacht market size.

The Product Managers for example, who launch a great amount of products every year, don’t have an estimate of the market share of their products. They do not know what they could potentially sell. Two main reasons can be accounted for this lack of market knowledge among the decision makers:

• International is the result of various regional acquisitions of which most have been realised within the last three years. Because of this, the organization as it is now is very young. Market data from the various companies have not been collected centrally.

• International has a decentralized organization. Local sales contacts are evaluated on their own sales. They obtain market information only for their own use. They are not really interested in activities that do not directly influence their sales, like storing and spreading market information. This is why there is no central data point, where the decision makers higher in the organization have access to market knowledge.

1.2.2 Importance of improving market knowledge

There are various reasons why it is important for International to improve the market knowledge among decision makers

• An increasing speed of business at International calls for up-to date market knowledge among decision makers. There are several reasons (technology, increasing competition, and globalizing economies) why projects are finished sooner than in the past. Product life cycles of the coatings are becoming shorter and decisions have to be made faster. This is why decision makers should be able to obtain reliable and complete market information in a faster manner.

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• Product managers launch a great number of products each year. If they have greater knowledge of the boat building market segment, they will be able to estimate the market share of their new products. For this reason they will be better able to assess the feasibility of new products. This way they can determine their ideal product portfolio for the future more accurately.

• International is active all over the world and enters new markets almost annually. In deciding on which markets to enter or to withdraw, decision makers should have knowledge of the regional yacht markets.

• Often decision makers have to cope with too much irrelevant information to make a good decision. This information overload asks for improved market knowledge.

• Rapid technological changes both within International and in the market also call for improved market knowledge. Because of increasing information technology, like Internet, market information can be obtained easier and faster and can be spread among decision makers faster than in the past.

Also rapid technological changes in the market call for up-to-date market information. For example the hull-materials of the produced boats change enormously over the years. These changes directly impact International’s sales.

1.2.3 A way to improve market knowledge

All these factors above, ask for improved market knowledge among decision makers. An analysis of the situation by interviewing various decision makers within International has resulted in the recognition of a need to improve market knowledge in two ways:

- To identify important trends in the boat building market.

- To estimate the market share of the existing products in existing regions.

Because of this improved market knowledge decision makers could better decide on investing in new products or in new regions. The needs explained result in the research objective and research question explained in the next chapter.

In this chapter International Yacht Coatings is described and the importance of improving market knowledge among decision makers is explained. In the following chapter the design of the research will be explained.

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2. Research Design

This chapter starts with the research objective and the research question. Subsequently the properties of the system, the sub-questions and the research approach are explained. Finally the research conditions are given.

2.1 Objective and Main Research Question

As described in the Introduction, there is a need for improved knowledge of the yacht market among decision makers within International Yacht Coatings. One option to achieve this is with a market research, which will be a snapshot of the yacht market at the moment. Because the characteristics of the yacht market change over time, this market research will not be of much value in the long run.

To improve the knowledge of the yacht market among decision makers in the long run, a system should be developed that shows decision makers strategic market information in a glance. This leads to the following Research Objective and Research Question.

Research Objective

To improve the market knowledge among the decision makers within International Yacht Coatings.

Research Question

Design a system X with the properties Y in order to improve the market knowledge among the decision makers within International Yacht Coatings.

X is the identity of the system. The system will be called the Yacht Market Scan System.

The properties Y are described in the next paragraph.

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2.2 Properties of the system

The system will not be designed according to a fixed scheme, but according to properties which are based on various theories and which are applicable in the current situation at International. These properties are divided into elements and criteria.

This paragraph first describes the main source of the Yacht Market Scan System. Subsequently the elements of the system and the criteria of those elements are explained.

2.2.1 The Internet as the main source

The Yacht Market Scan System can be developed with all kinds of information, obtained from various types of sources. Another, cheaper and more efficient, way to organize such a means is only by Internet-based sources.

With the increased use of the Internet, it is possible to get access to great amounts of market information. The acquisition, availability, and management of knowledge via the Internet are becoming critical issues for the construction and maintenance of knowledge-based systems, particularly because they allow the acquisition and dissemination of large quantities of knowledge in a short time across organizational and physical boundaries.⁴

Sources from the Internet are easy to obtain, and fast to consult. Besides it will be easy to update the system from Internet. This is why all the sources used in the system will be Internet-based. Internet- based sources are defined here as sources that are accessible by the Internet.

2.2.2 The elements of the system

To come to the elements of the Yacht Market Scan System, a conceptual model of the system is designed. This is carried out according to a research concept, called The Business Intelligence Cycle.

This research concept is described next, followed by an explanation of the conceptual model.

4 Turban, E., Aronson, J., Decision Support Systems and Intelligent Systems, 2001

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2.2.2.1 The Business Intelligence Cycle

The design of the model of the Yacht Market Scan System is based on the Business Intelligence Cycle⁵. The Business Intelligence Cycle is the basic model for acquiring and processing intelligence (strategic relevant information⁶) and is used as the main approach in the design of the Yacht Market Scan System.

The cycle has four phases: Focus, Search, Analyse and Spread.

In the Focus phase the strategic relevant information need of the decision makers is determined. First is identified about what they need information. Next is defined which data exactly should be found. The Search phase consists of the preparation and execution of the search process. Identified is which sources are available, which ones should be used, and how they are obtained. In the Analyse phase the actual intelligence is produced. Finally, in the Spread phase the intelligence is made available for the correct users.

In time various things can change, such as the strategy of the company, and the available sources and analyses. This is the reason why this cycle is an ongoing process, in which the updater and maintainer of the system, is in close contact with the users of the system. The interaction between the two is especially necessary in the Focus phase of the cycle, because here the updater and maintainer of the system identifies the specific needs of the output of the system.⁷

The person that performs the focus, search, update and maintenance activities is defined by Turban (2001) as the author of the system⁸. In this research will also be referred to this term.

5 Kahaner, L., Competitive Intelligence, 1997

6 Philips, E., Vriens, D., Business Intelligence, 1999

7Gilad, B., Gilad, T., Nature and wideness of BI activities,1988

8Turban, E., Aronson, J., Decision Support Systems and Intelligent Systems, 2001

Focus

Determine information needs

Search

Organize and execution of search activities

Analyse

Interpretation of data and productionof

intelligence

Spread

Positioning of intelligence within theorganization

Fig. 2.1

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2.2.2.2 Conceptual Model

The research concept discussed in the previous paragraph and the Internet as the main source have resulted in a conceptual model of the Yacht Market Scan System.

The Focus element of the Business Intelligence Cycle corresponds with the Focus Process in the conceptual model. Here the information need is identified. The Search element of the Business Intelligence Cycle corresponds with the Search Process in the conceptual model. Here the author searches for appropriate Internet-based sources. The Analyses element of the Business Intelligence Cycle corresponds with the Update and Maintenance procedure and with the Operations of the system.

During the Update and Maintenance Procedure relevant data that are found in the Search Process are entered in the system as well as the operations themselves are expanded or adapted if necessary.

In the Operations of the System the actual analyses, the Knowledge is produced.

The acquisition and spread of market information is not a one way process. The information need may change over time, which influences every other element of the system. This is why this model of improving market knowledge among decision makers is an ongoing process.

The evaluation criteria of the various elements in the conceptual model will be discussed in the next paragraph.

Fig 2.2

International Yacht: Coatings Internet

Search

Process Update & Knowledge

Maintenance Procedure

Operations of the System

Focus Process

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2.2.3 System criteria

The properties of the Yacht Market Scan System are not only described according to the elements of the conceptual model, but also according to various criteria of those elements. These criteria are divided in Knowledge criteria and Design criteria. The Knowledge criteria correspond with the Knowledge element in the conceptual model. The Design criteria correspond with all the other elements.

2.2.3.1 Knowledge criteria

The system should produce knowledge that can be used by the decision makers within International.

The following definition of knowledge is used in this research:

Data items and/or information organized and processed to convey understanding. Knowledge can be the application of data and information in making a decision⁹

The knowledge produced by the system has different criteria. These Knowledge criteria are defined as follow:

Efficient

The benefits of the knowledge should be higher than the costs of producing the knowledge.

Relevant

The knowledge should be applicable, understandable and available in time for the users.

Valid

The knowledge is valid when the defined knowledge is the intended knowledge. The knowledge should be reliable, correct, controllable, and consistent.

These criteria are based upon the characteristics that business knowledge should have according to De Leeuw (2000).¹⁰

10 De Leeuw, A.C.J., Bedrijfskundig Management, 2000

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2.2.3.2 Design criteria

The relevance, validity and efficiency of the knowledge produced by the system are the result of the Operations of the System, which are again influenced by the Update and Maintenance Procedure, the Search Process and the Focus Process. This is why in order for the knowledge to be relevant, produced efficiently and valid in the long run, various criteria of the other elements can be identified. These criteria are the Design criteria. These Design criteria are based on various theories on content management systems.11, 12, 13,

The Design criteria are described per element of the conceptual model.

Focus Process Extensive

The information need from the users should be understood correctly by the author of the system, who will search for the appropriate information. This is why this process should be profound.

Time

The search time for searching the information to fulfill the information need should be minimal.

Relevance

The types of information should be relevant for strategic decision making.

Search Process.

Relevant

The sources should contain the date on the information elements discussed in the Focus Process.

Ease of use

The sources should be easy and fast to obtain and use.

Costs

The costs of the sources themselves should not be higher than defined by the manager of the system.

Up-to-date

The sources that the system relies on should be up-to-date.

Reliable

The data in the sources used should be reliable.

11 Robertson, J. How to evaluate a content management system, 2002

13 Applegate, L.M., Mc Farlan, F.W., J.L. McKenney, Corporate Information Systems Management, 1999

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Update and Maintenance Procedure Clear

The Update and Maintenance Procedure should be fast to carry out and therefore it should be clear what to execute.

Regular

For the system to be useful in the future as well, the system should be updated and maintained regularly.

Maintenance

During the procedure all the evaluation criteria described in this section should be checked.

Where necessary the sources or the system itself should be adapted.

Operations of the system

Compatible with standard systems

The system should be usable with the standard systems within the organization.

Expandable and adaptable

The sources may change over the years and the strategic relevant information need may change. This is the reason why the system should be easy to adapt and to expand.

Access

The system should be easy of access to people from various locations.

Secure

A virus or an accident may cause the system to crash or even disappear. The cost of losing important information should be minimized.

In this paragraph the properties of the system are described. In the following paragraph the sub questions will be formulated.

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2.3 Sub Questions

In order to design the system, various sub questions are formulated. These questions correspond with every element of the conceptual model. The first four questions relate with the actual design of the system and are therefore called the Design questions. The questions under element 5 are the Knowledge questions.

1. Focus process

What is the best way to organize the Focus Process?

2. Internet Search process

What best way to organize the Internet Search Process?

3. Operations of the system

What is the best way to organize the Yacht Market Scan System internally?

4. Update and Maintenance of the system

What is the best way of keeping the Yacht Market Scan System up-to-date and maintained?

5. Knowledge

a. What is the validity of the knowledge produced?

b. What is the relevance of the knowledge produced?

c. What is the efficiency of the production of the knowledge?

2.4 Research approach

The questions will be answered according to the different criteria mentioned in paragraph 2.2.

In answering the Design questions, the decisions to be taken are dependent on the current situation at International. In making design decisions, often only one option is efficacious. Efficacy checks whether the means chosen actually works in producing the output.¹⁴ Wherever only one logical option is efficacious, no other options are evaluated. Whenever more efficacious options are available, different choices are analyzed and evaluated, prior to the actual design decision is made.

The sub questions are answered in the same order as above. In chapter three until chapter six the different Design questions are answered. In chapter seven insight is given into the produced knowledge, which is evaluated in chapter eight. This report ends with an evaluation of the system as whole and with recommendations for the future in chapter nine.

14Checkland P., Scholes, J. Soft Systems Methodology in Action, 1990

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2.5 Research Conditions

Various conditions influence this research project. The conditions result in restrictions of the research and the research method. Restrictions are predetermined by the external environment and therefore can not be influenced by the researcher. De Leeuw makes a distinction between process and product conditions¹⁵. Process conditions affect the process and methods of the research and product conditions affect the results of the research project.

Process conditions

- The time frame of the creation and implementation of the system is from September the 13^th until March the 13^th.

- The Global Yacht Marketing Manager and the supervisors of the University of Groningen have to be kept up-to-date on the progress of the project regularly.

Product conditions

- The senior management of International Yacht Coatings will receive the results of this research in the form of a system on the intranet and in the form of this essay.

- The results of this research project are confidential.

- The global strategy of International Yacht Coatings will be regarded as a fact in this research.

- The focus is on the boat building market and super yacht market information. The other market segments are not considered in this research.

- The results of this research should be applicable for International Yacht Coatings personnel worldwide.

- The system that will be created is based on Internet-based sources only.

15 De Leeuw, A.C.J., Bedrijfskundig Management, 2000

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Internet

Search Process

3. The Focus Process

3.1 Introduction

The first step in the business intelligence cycle is the process of defining what the strategic relevant information need is. This corresponds with the Focus Process in the conceptual model of the system, the element in grey:

In this chapter the first Design question is answered:

• What is the best way to organize the Focus Process?

From the properties of the system is known that the Focus Process has the following criteria:

- The contact between the users and author of the system should be profound, in order for the author to understand the things he or she should search for.

- The types of information that should be searched for should be easy to find.

- The information need should be relevant for strategic decision making.

Next will be explained what the focus of the system is and what the Focus Process looks like.

3.2 Focus on total market size

The new-built yacht market size for yacht paint, from now no simply called the yacht market size, is simple to estimate. It directly depends on the total length of the produced boats, per length of the boats and per hull-material. In this paragraph is explained why the focus of the system will be on the markets size.

International Yacht: Coatings

Knowledge Update &

Maintenance Procedure

Operation of the System

Focus Process

Fig. 3.1

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In the Introduction the lack of market knowledge among decision makers is mentioned. Although International Yacht Coating operates on a global level, the market knowledge is captured highly de- centrally. The various sales contacts all have market information of their own regional markets, but not on market share. The decision makers higher in the organization know that International is global market leader in yacht paints, but they also do not know their market share.

On the basis of the existing regional product sales supplemented with knowledge of total market size, it is possible to estimate market shares of International’s products. The market shares are estimated by dividing the total sales per product by the estimates of the total market values.

The system could focus on different market aspects, like competition and environmental laws, but a basis should be created by focussing on the total market size. In the future the system might be expanded by other factors. The focus of the system will be on the total market size, because of the following reasons:

- International Yacht Coatings introduces new products on a monthly basis. Decision makers have very little knowledge of the market size and current market share of the existing products. When they would have better knowledge of these things, they could better define their product portfolio for the future.

- International is active all over the world and enters new markets almost annually. Easily accessible market knowledge of market size and market share will support in the decision to enter or to withdraw regional markets.

The information that is to be found should be information that directly influences the total market size, ceteris paribus of all other factors. In other words, the system will focus on explaining the effect of changes in variables on changes in total market size without having to worry about the possible offsetting effects of still other independent variables. This means factors like competition, environmental laws etcetera are not being considered in the system.

3.3 Essential Information Elements

The types of information that can lead to strategic relevant information are called essential information elements. Sammon(1986) divides them into three information domains¹⁶:

- Influence domain. This domain contains the information elements that directly influence the company’s performance.

- The adjacent domain. These are the information elements that indirectly influence a company’s performance.

- The interest domain. These information elements are interesting for the company to know and say something about the opportunities and threats on the long term. They indirectly influence the company’s performance.

16 Sammon, W.L., Assessing the competition; Business Intelligence for strategic management, 1986

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In this chapter the essential information elements that will lead to the total market size are identified. The information elements can be classified according to the three information domains discussed above.

With the help of the managers of International the following table is set up:

Information Domain

Information Elements

Influence Number of yachts produced, Material of the yachts produced, Length of the yachts produced, Location of the production.

Adjacent Trends in the application methods, Price of the paint

Interest Local boat park information, Demographics of the boaters, Boatbuilding methods, local prices, local laws

These elements were in general straightforward and given by the Global Yacht Marketing Manager.

The elements that are important for the system at this moment are the ones that directly influence the market size, and are the once in the ‘Influence domain’. These essential information elements will be described in further detail.

Number of yachts produced

The number of yachts produced worldwide directly influences International’s market size. The larger the yacht production, the more square meters to be painted and consequently the bigger the market size.

Hull-Material

The amount of every coating on a yacht, is dependant on the hull material of the yacht. In general yachts have one of four types of hull material: GRP/Composite, Aluminum, Steel, and Wood.

GRP/Composite

Glass Reinforced Polyester(GRP), also widely known as polyester or fibreglass, is made from GRP resin reinforced with woven or chopped fibres. Composite is a mixture of various resins. The main reasons for the maintenance of yachts in GRP or Composite are a degradation of the gelcoat and osmosis. Most products for GRP or Composite yachts are epoxy based coatings.

Aluminum and Steel

Aluminum and Steel are used in yacht construction because of their strength, workability and water- tightness. Steel and aluminum boats are always protected with paint both to guard against corrosion and to ensure a beauty. The reason of the split up is because in general a steel yacht needs far more coating than an aluminum yacht.

Wood

Wooden boats have the disadvantage of welling when it absorbs water and shrinking when it dries out again. Therefore the coatings or varnishes for wooden boats need to be extra flexible. Most products for wooden boats are varnishes and epoxies.

Length-category

The longer the yacht, the more coatings per square meter is applied. This is because in general the longer the yacht, the more luxurious it is and the more gloss the owner wants on his boat. A super yacht, a yacht above 30 meters, can be recoated 15 times, whereas a small rowing boat is just coated twice.

Design of a Yacht Market Scan System

A system to improve market knowledge among decision makers within International Yacht Coatings

Design of a Yacht Market Scan System

Preface

Management summary

Table of contents

1. Introduction

2. Research Design

3. The Focus Process