Thursday, July 24, 2014

Down in The Weeds: Researching Commodity Like Products in SIC/NAICS



So you are researching  a product that's almost a commodity. That is, the technology has been around, anybody can make it, and it's not patented. In addition the kind of machines used to manufacture this product could be used to make other kinds of products. So if you search SIC or NAICS for all the companies that make your product, you're likely to get a result of zero to only a handful of companies. How could that be?  

Think alarm clocks, key chains, or even a more sophisticated product like a tachometer. Because I got this question about researching all the companies that make tachometers. I found the official codes for tachometer manufacturing and received almost no responses.

Here is what I think has happened.  Due to the ubiquity of manufacturing equipment and the ease of manufacturing tachometers, there are few companies completely devoted to making tachometers.  Depending on economies of scale, vertical integration, and other factors, you'll find that almost no companies are exclusively devoted to manufacturing commonplace products. So very few companies would only make tachometers and get listed under that SIC/NAICS code (Yes, they should get listed, but the very often don't) . Of course this raises questions about the accuracy and usefulness of these codes, but the question is for another time.

So here's what you do.  Do a keyword search for your product.  You're hoping that it catches your word in the company description abstract. You might get a few false positives, but it's a good method.

When confronted with this problem, you probably need to approach in a different way.  Forget about who is already making your product.  The bottom line is almost anybody can.  You're looking to make it at a lower cost or differentiate yourself. 

In the screen capture below, almost any company with that code could make thousands of different products.


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