ECON First believes that business success centers around knowing the economic and demographic characteristics of each unique primary market area. While business experience, insights and intuition are important, they are substantially advanced by hard data.
Economists have long be aware that concentrations of related industries—known as “clusters” – arise in particular locations due to backward and forward linkages among businesses and positive externalities.
A typical backward linkage is the development of a strong IT industry in locations where there is a thriving aerospace industry. Positive externalities arise when there are significant agglomerations of similar businesses with similar demand for external services, e.g. sewing machine repair services near large apparel industry centers.
ECON First uses the Harvard Business School’s U.S. Cluster Mapping data site to identify clusters at the appropriate PMA level. Each cluster represents business to business (B2B) sales opportunities.
The U.S. Cluster Mapping website (http://www.clustermapping.us/region) provides easy access to data on economic and demographic performance and the prominent clusters by county, state, economic area, or user defined region. The data currently extends from 1998 through 2014.
To illustrate with a simple example, on the website’s U.S. map choose the economic area identified as Sioux City, Iowa.
Clicking on the tab “Cluster Portfolio” allows the user to view the current Sioux City-Vermillion traded clusters in terms of employment, wages, job creation and innovation. “Traded” clusters are built around industries whose sales are to customers primarily outside of the subject region.
A major traded cluster for Sioux City is livestock processing. The strongly related industries in this cluster include food processing, leather products, transportation, trailers, industrial machinery, and process equipment and components.
Sales opportunities in the various related industries in the cluster can be measured both by current employment and wage levels and by the growth rate in those levels over time.
Cluster analysis is an excellent first step to be used by businesses in the identification of B2B sales opportunities.
ECON First specializes in providing the hard data that allows business owners to make more informed decisions regarding start-ups. expansion, marketing channels, and pricing strategies. It is inappropriate to apply summary measures taken from nation or state level data and assume they apply to specific primary market areas. A more comprehensive analysis is required for business success.
Let ECON First help you identify B2B sales opportunities using cluster analysis.
Dr. John E. Stapleford