Profitability analysis of an innovative product for the railway market

The manufacturer of railway infrastructure elements turned to CIVITTA to compare its newest offering with the competition both quantitatively (modelling lifetime costs) and qualitatively (identifying implementation barriers).

CIVITTA consultants conducted in-depth interviews (IDIs) with various stakeholders and an analysis of public tenders, based on which they developed a product lifetime cost model, qualitative comparison and set procedures used by clients.

Challenges in the railway industry

The railway market is characterized by product life cycles reaching several decades, oligopolistic competition between manufacturers and a small number of customers who are slowly modernizing existing infrastructure. The sales cycle is long, and customers expect the supplier to provide a convincing cost-benefit analysis for their solutions. The profitability analysis carried out by CIVITTA concerned the Polish and the Baltic States markets, and its substantive scope included:

  • analysis of the total cost of purchasing, maintaining and removing failures for competing products throughout their life cycle,
  • comparison of the perception of products by decision-makers and contractors,
  • indication of the impact of trends in railway infrastructure modernization on the attractiveness of individual products.

The aim of the project was to develop a quantitative cost model and identify the key barriers and enablers of innovation implementation.

Interviews with stakeholders, analysis of tenders and desk research

CIVITTA consultants conducted 15 in-depth interviews (IDIs) with a diverse group of stakeholders:

  • producers of infrastructure elements, including competitors,
  • distributors of railway products,
  • railway line operators and subcontractors,
  • railway infrastructure designers,
  • academic experts.

In addition, to consolidate the cost model in historical data, consultants also analysed public tenders and supplemented it with desk research.

The research project resulted in the creation of a product lifetime cost model, qualitative product comparison and review of differences between the current needs of buyers and the long-term effects of using different technologies, that were valued by contractors and infrastructure conservators.

Product and technology positioning through the perspective of the buyer

CIVITTA helped the client see the market through the eyes of its clients with heterogeneous opinions and changing requirements.

The product lifetime cost model of railway infrastructure elements showed long-term differences between offered products and provided objective arguments for the sales process. On the other hand, the conclusions of the interviews allowed the client to thoroughly understand the maintenance and repair procedures used by customers through the prism of which the purchased products are evaluated.

The conclusions of the research also indicated the possible impact of infrastructure modernization trends on the demand for specific technologies.

Launching an innovative product on the market and overcoming market barriers always requires a thorough understanding of the attitudes and beliefs of stakeholders in the market. Objective analyses of profitability and long-term economic effects are equally important in B2B processes. The international team of business analysts at CIVITTA can independently and holistically examine the target market, reducing the risk associated with the implementation of innovation.

Contact us if you need a product implementation profitability analysis. CIVITTA experts will help you to understand the market and develop an adequate strategy.