Where Manufacturing Matters

How Can NAICS Codes Help You Diversify Your Sales?

Posted by Timothy Nevin on Mar 13, 2017 4:45:00 PM

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Adopted in the late 1990s, the North American Industry Classification System (NAICS) consists of codes set up by the U.S. Census Bureau to separate manufacturers by sectors, subsectors, and industries. Most companies are familiar with this system at a high level, as it’s used by the government to collect, assess, and distribute data about manufacturing in 5-6 year cycles.

However, if analyzed properly, NAICS codes can be far more important than simple identifiers used for federal purposes – in fact, they can play an active role in your company’s long-term strategy.

If you’re looking to diversify your sales into new and growing markets, it’s important to analyze what competitors are already doing, and NAICS codes offer insight into some goods, services, and capabilities your competition is currently offering to their clients. The NAICS structure assigns two different sets of codes: a primary code based on the single manufacturing process that generates the largest sales for your company, and multiple secondary codes for your other (if applicable) major sales generating services. The majority of competing manufacturers – sometimes clients, even – are assigned the same codes, and targeted market research enables a company to compare and contrast what services they offer to what their competition may or may not be offering.

But how can you use this information to stay ahead of the pack?

First, if you don’t know your primary or secondary NAICS codes off hand, you can try to identify them via the U.S. Census website or by reaching out to MAGNET and utilizing our resources. Next, spend some time researching how your codes compare that those of your top competitors: How much overlap is there? Do gaps exist?

Second, brainstorm ways to differentiate your company from others in your industry. What processes and products do you offer that they don’t (and vice versa)? Are you marketing your top service offerings in a way that is consistent with your brand and value proposition?

Third, investigate options for further, more detailed competitor analysis. When applied appropriately, the NAICS system can lead to vetted customer prospects that would allow your company to penetrate new markets, thus diversifying your current offerings and generating additional revenue in the long term.


If you want to know more about how you can create top-line growth by harnessing the power of your NAICS codes, contact Tim Nevin at MAGNET timothy.nevin@magnetwork.org or Ed Weston at WIRE-Net Ed@wire-net.org.

Download our case study,

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Thanks to generous funding from the Cleveland Foundation, the Accelerate Cleveland Manufacturing (ACM) initiative combines the proven assets of MAGNET and WIRE-Net to address the needs of Cleveland Manufacturing companies by delivering customized, tailored solutions to help medium to small manufacturing firms grow. In the past 24 months the ACM team, working with WIRE-Net's CIRI team, has identified and worked on 48 growth projects in the City of Cleveland affecting 66 job positions (17 new jobs created, 49 retained jobs) and generating $12.5 million in revenue impact (increased sales or cost savings).

For ideas on how to overcome a growth-limiting problem in your business, contact Ed Weston at 216.920.1965.

Topics: Accelerate Cleveland Manufacturing, MAGNET, Market Diversification

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