“Global Defense Suppliers CXO Business Outlook Survey 2012-2013: Industry Dynamics, Market Trends and Opportunities, Expenditure and Procurement Strategies” is a new report by ICD Research and Strategic Defence Intelligence that analyzes how defense supplier companies’ media spending, marketing, sales strategies, practices, and business planning are set to change in 2012-2013. This report provides the current size of the marketing and advertising budgets of global defense suppliers and how spending by suppliers will change, providing insight into global marketing behavior. In addition, the report identifies future growth of buyers and suppliers, and M&A activity. Furthermore, this report not only grants access to the opinions and strategies of C-level decision makers and competitors, but also examines their actions surrounding business priorities.”
Introduction and Landscape
Why was the report written?
This report is the result of an extensive survey drawn from ICD Research and Strategic Defence Intelligence’s exclusive panel of 68leading global defense industry C-level executives. The report provides data and analysis on global defenseindustry suppliers’ media spending, marketing, sales strategies, practices, and business planning, within the global defenseindustry. This report includes key topics such as media channel spending outlooks, media budgets, marketing agency selection criteria, business challenges, and sales tactics of leading suppliers within the global defense industry. The report also identifies suppliers’ future growth, M&A, and investment expectations.Most secondary research reports are based on general industry drivers and do not understand the industry executives’ attitude and changing behaviours, creating a gap in presenting the business outlook of the industry. In an effort to bridge this gap, ICD Research and Strategic Defence Intelligence created this primaryresearch-based report by gathering the opinions of C-level respondents in the value-chain of the global defenseindustry.
What is the current market landscape and what is changing?
Of C-level respondents across the global defense supplier industry, 44% are 'more optimistic’ about revenue growth for their company over the next 12 months.
What are the key drivers behind recent market changes?
The expected declining growth in the global defense market in 2012 is mainly due to anticipated decreases in military spending, principally in the US and Europe. Although the level of optimism is comparatively less in 2012, the defense industry expects an increase in demand for national security priorities such as cyber security, satellites, missile defense,and nuclear defenseacross the world. Additionally, the top priorities for the global defenseindustry in 2012 are'new products and services’, 'expand in current market and abroad’, and 'expand into new territories’.
What makes this report unique and essential to read?
“Global Defense Suppliers CXO Business Outlook Survey 2012-2013: Industry Dynamics, Market Trends and Opportunities, Expenditure and Procurement Strategies” is a new report by ICD Research and Strategic Defence Intelligence that analyzes how defenseindustry companies’ media spending, marketing, sales strategies, practices, and business planning, are set to change in 2012-2013. This report provides the current size of the marketing and advertising budgets of global defense industry suppliers and how spending by global defenseindustry suppliers will change, providing insight into global marketing behaviour. In addition, the report also identifies future growth of suppliers and M&A activity. This report not only grants access to the opinions and strategies of C-level decision makers and competitors, but also examines their actions surrounding business priorities.”
Key Features and Benefits
Project industry trends and revenue growth expectations in 2012 and understand business confidence to take informed business decisions.
Drive revenues by understanding future product investment areas and key growth regions.
Uncover key challenges and opportunities and identify the key actions required to win and maintain buyer business.
Formulate effective sales and marketing strategies by identifying how suppliers’ marketing budgets are changing and the direction of spending in the future. Better promote your business by aligning your capabilities and business practices with your customer’s changing needs.
Secure stronger customer relationships by understanding the behaviour and changing strategies of industry suppliers.
Key Market Issues
Overall, throughout the global defense supplier industry, 44% of C-level respondents are 'more optimistic’ about revenue growth for their company over the next 12 months relative to the previous 12 months. A further 31% of C-level respondents are 'neutral’ about revenue growth, as compared with 22% who are 'less optimistic’ about their company’s revenue prospects.
C-level executives from the global defense supplier industry expect increased levels of consolidation over the next 12 months. Of all C-level respondents, 57% project either a 'significant increase’ or an 'increase’ in M&A. However, 32% of C-level respondents expect no change in consolidation activities in 2012. The expected levels of consolidation in the industry could be due to new cost or demand pressures, repayment of debt, the potential need to meet new compliance procedures, quick access to new markets, business expansion, and an increase in market share. Additionally, suppliers reveal that they will increase capital expenditure towards'new product development’ and 'machinery and equipment purchase’over the next 12 months.
Global defenseindustry respondents identify the Middle East to be the most important region for growth among emerging markets, followed by India, China, and Brazil. Defense expenditure across the Middle East is expected to grow by 14% in 2011-2016, with Saudi Arabia and the UAE emerging as the key spenders. The majority of the region’s military expenditure is aimed to upgrade existing equipment and augmentingdefense capabilities, and these measures have primarily been adopted to counter the increasing threat from nuclear capable countries, homeland security concerns, and to protect critical infrastructure. On the other hand, according to 44% of C-level respondents, South Korea is expected to project the greatest demand for defense products and services in 2012-2013. Additionally, 40% of C-level respondents chose Singapore, Taiwan and Hong Kong, and 31% chose USA, as their preferred investment destinations.
According to the survey, 53% of supplier companies rated 'political interference’ as an important business concern during 2012-2013, and a further 50% rate 'market uncertainty’ as important.Overall, respondents consider ''innovate product’, 'improve customer service’, and 'work harder to reduce costs’to be the leading actions for suppliers to secure buyers’ business.
ICD Research and Strategic Defence Intelligence’s industry survey 2012 reveals that the marketing budgets of global defense industry supplier C-level respondents are expected to rise by an average of 8.8% over the next 12 months. Noticeably, 33% of C-level respondents expect an increase in marketing expenditure of between 1% to 10% in 2012, while only 5% of C-level respondents expect a decrease of between 1% and 10%.
'Email and newsletters’, 'conferences and events’, and 'corporate and brand websites’are expected to register the highest increase in investment, as noted by 41%, 38%, and 37%of respective C-level respondents. By contrast, traditional media channels such as ''radio’, 'telemarketing’, 'television and video’, and 'newspaper’, are expected to attract the least investment.
'Customer retention’, 'customer acquisition’, and 'brand building or awareness’ are considered the key marketing aims for supplier selection in the global defense supplier industry over the next 12 months. The most significant strategy that suppliers plan to employ in 2012 is to 'focus sales efforts on generating new business’, to 'focus sales efforts on existing markets’, and to 'trial new and innovative products in the market’ as identified by 59%, 54%, and 46% of respondents respectively.
According to 25% of C-level respondents, headcounts in their organizations in 2012 are expected to increase by more than 2%. The introduction of new defense program and strategic focus shifting towards advanced warfare technologies, such as cyber warfare, intelligence, and counter improvised explosive device (IED) systems, surveillance, border-control missions, and situational awareness systems, may force the suppliers to recruit specialized personnel to accelerate the recruitment drive.
'Email promotions’ and 'white paper downloads for lead generation’ are identified as the most popular media channels by 34% and 33% of respective C-level respondents from global defense supplier companies.
Political instability in the Middle East and North Africa (MENA) region, specifically in countries such as Tunisia, Egypt, Baharin, Libya, and Syria, has motivated the respective countries in the region to strengthen their defense capabilities in order to counter any insurgencies from their neighbors, which in turn increases the sales expectation and the optimism in revenue growth for 2012.