Assessing Market Opportunity in the Computer Visualization Market

3DV-LS : ASSESSING MARKET OPPORTUNITY

IN THE COMPUTER VISUALIZATION MARKET

Robin Habeger

Iowa State University

Kay M. Palan

Iowa State University

As Pat Patterson, director of the 3DV Litigation Services business unit, was reviewing the second quarter sales numbers, he sighed heavily and rubbed his temples in an attempt to avert an impending migraine blooming behind his eyes. The sales numbers were disappointing, to say the least. In fact, sales had been low over the last four quarters. Sales had dried up on the east and west coasts because of increased competition, resulting in an alarming 16% average sales decline each of the last four quarters. 3DV had recently reorganized several of its business units, closing some and combining others. To avoid a similar fate, it was imperative that Litigation Services post increasing sales and profits. The decline in sales, Pat knew, put the business unit in jeopardy.

Pat sighed again as his mind ran through the available options. He could give the marketing and sales efforts more time to increase sales. A new Web page, giving the unit improved Internet presence, would soon be implemented, which might spark some sales activity. But, as he pondered the situation, Pat believed that it would take more than this to reverse the declining sales trend. When he joined the company in the mid-1990s as a salesman, he shared a cubicle with three other people. He remembered the lean days when it was touch and go as to whether or not he would even get a paycheck. Now, in December 2000, he had his own corner office. He had helped build the Litigation Services unit into the nationwide competitor it now was. Pat was determined to overcome the recent sales decline. He had invested too much of his own time and energy into the business unit to let it fail now.

Just then, Pat heard a knock on his door. Glancing up, he saw Lance Wolffe, one of 3DV-LS's project managers. Lance had an air of excitement about him. "Pat, I've got to show you this magazine article I came across last night!" He tossed the magazine into Pat's hands and continued, "The article discusses how some construction and transportation projects are beginning to use computer-generated models to help clients visualize finished projectsÐ'--that's something we could be doing, only better!"

Pat briefly looked at the civil engineering trade magazine turned to the article Lance had marked. Pat, too, could see that the kind of computer visualization process used by 3DV might be transferable to other industries such as the construction and transportation industries illustrated in the article. But any enthusiasm Pat shared with Lance was tempered by the realization that entering a new market would take time and resources, and, in the end, might not be any more fruitful than improving the unit's marketing efforts.

To Lance, he said, "It certainly does look like there's some potential for us to expand our efforts into other markets, but there's a lot of information we need to know before we make such a decision. Let's make a list of questions we need to answer."

Pat and Lance created a list of questions to answer regarding this new market opportunity. The list addressed issues such as quantifying market potential, determining 3DV-LS's competitive advantage, and identifying threats and weaknesses to market entry.

As the list grew longer, Lance observed, "What we essentially need to do is a cost/benefit analysis."

Pat agreed, but added, "We need to focus our analysis just on the construction and transportation industries, but we also need to compare the results of the cost/benefit analysis to maintaining the status quo. If we can't demonstrate that entry into this new market will be profitable in a reasonable period of time, then we just won't be able to do it."

Lance felt his bubble burst. He really felt in his gut that expanding 3DV-LS's technological capabilities to the construction and transportation industries was the right thing to do. He grew quiet for a few minutes, trying to settle his desire for immediate market entry.

Finally he said, "We do need to go into this with our eyes open and that means finding as much information as we can. Where do you want me to start?"

"At the beginning," Pat replied. "Find out everything you can about the customers and competitors in the construction and transportation industries, the costs and profits, the attractiveness of the market. You should probably ask Sandy to help you. Since she is in charge of marketing she will have some idea where to find the information you need. Let's plan to meet again in a couple of weeks to review the situation."

As Lance turned to leave, Pat allowed himself a momentary glimmer of hopeÐ'--could this be the break 3DV-LS needed to improve sales and profitability?

3DV: HISTORY OF THE COMPANY

3DV, founded in 1988 for the purpose of accurately creating 3-D accident reconstructions, used a revolutionary programming code developed by the founders. Attorneys, representing automobile manufacturers, hired 3DV to construct visual animations of automobile accidents. These visualizations were used in court cases to demonstrate how an automobile accident had most likely occurred.

Although the company's primary focus in the early years was accident reconstruction for automobile manufacturers, by 1999 3DV had several distinct products and services, each targeting a select market. For example, using the basis of the original programming code, 3DV developed several different types of software packages that allowed manufacturing companies to use the Internet for project collaboration and visualization. That is, the software-enabled employees in different locations to view, modify, and work with the same 3-D model simultaneously, while at the same time maintaining secure online access. Another product helped companies in various industries improve the ergonomics of product designs and workplace tasks. Companies could use still other 3DV software to cost-effectively model and view an entire 2-D/3-D manufacturing facility by designing optimal factory floor plans and testing efficiency through virtual simulation. 3DV provided software support and training and implementation services for all of its software products.

3DV's software had revolutionized the visualization industry. Relative to other companies that provided computer visualization,