Volume 38, Issue 12, December 2003
We Have Met the Enemy—And It’s Still US
Growing the Market Versus Growing Market Share
An Innovative Look at Growing the Glass Business
by Steve Lipscombe
I may be about to state the blindingly obvious, but it has occurred to me that in today’s increasingly over-intellectualized and specialized world of business, it does no harm to remind ourselves occasionally of what we are supposed to be doing—building value, not destroying it—and why.
The Case for the Prosecution
Eavesdropping on a young couple in a car showroom some time ago, as a building glass industry marketer, I was interested to hear their conversation getting around to the glass in the vehicle under consideration. Was it security glass? Did it stop the car from heating up too quickly? Were all the electronics for the radio and mobile telephones included within the glass? Did it have an “anti-glare” coating and could they get it in a colored tint? Then on to the myriad of other components important when making the second largest consumer purchase most people ever make.
A thought occurred to me: a house is the largest purchase a consumer makes. Do people question the component factors of their proposed dwelling and its glazing to the same degree as they do a car? A few calls to some estate agents and designers during the next days led to a horrifying discovery regarding our product. Apart from opening and shutting the windows and inquiring on the security features of the locks, the vast majority of homebuyers interested in the glass was precisely zero, nada, nothing, nil. It did not even cross their minds.
I then had a quick peek at the raft of legislative and regulatory requirements for commercial buildings—energy saving, solar control, safety, security, fire protection—the list of requirements is almost endless and grows every year. I also rediscovered a fact that is almost buried: approximately 70 percent of all the glass produced for buildings ends its journey from production to installation in residential establishments not in the gleaming glass and steel edifices we are accustomed to seeing in city centers, shopping malls and elsewhere.
So a thought began to form in my mind. We travel to work in a vehicle that contains 25 percent more glass than it did 20 years ago, and we are familiar with the performance attributes of the glass component as consumers. We arrive at our place of work, which is environmentally controlled due in great part to the diligence of the designers and the performance of glass as a major component of the building envelope. We are also aware of the building owner’s need to provide such an
Then we go home to the modern equivalent of the cave. The place in which we have spent most of our income, where we spend most of our time, our own little piece of heaven, and we do not give the windows a second thought—that is unless they are about to fall out of the frames or the glass has been smashed. It seems to me that we, as individuals, have got our priorities wrong somewhere.
Harmonization of standards, global companies, integrated trading, legislation on energy efficiency and solar heat gain, regulations on fire protection, safety and security—will the list never end?
Well, the list is never ending, and most of the list seems to apply predominantly to commercial buildings. When was the last time you heard a homeowner insist on a glass, fire-resistant door for the kitchen or ask a sales assistant if the new French doors included energy-efficient and safety glass?
Fact: we cannot depend on legislation solely to drive further growth in glass consumption in that tempting 70 percent area of potential growth within residential construction.
Conclusion to the Prosecution Argument
We spend too much of our time in the glass industry being frightfully clever at presenting our expertise to each other. Our sales and marketing effort is being wasted because the message is not getting through to our largest potential audience—the end consumer.
Window company salespeople do not sell glass; they sell windows of which glass is just one component. We need to convince the window company salespeople that there is a good closing argument contained within our glass products. If we can do this then the window company sales person might just give our product 30 to 60 seconds in his one-hour presentation on the window system.
I draw this conclusion because the automotive industry has been able to increase the use of glass in vehicles by better than 20 percent through value and volume in complexity and development without losing sight of the fact that the consumer needs to understand and appreciate the value the glass product brings to the vehicle. This is promoted by the automotive industry salesperson who personally understands and is confident enough in his knowledge of the product, to explain the product features and benefits to the prospective purchaser. Think hydrophilic, anti-reflective, anti-glare, acoustic, electrochromics, electronic accessories, fashion colors.
I Plead Guilty, Your Honor!
It’s a fair cop, I give in. As a building products glass marketer I have not, until recently, focused on the consumer interface (i.e., the window company salesperson), as a viable audience. Neither have I given sufficient thought to developing the understanding of the young architectural designer and structural engineer to consider glass as anything more than just another product. After all, if I wish to capitalize on the residential market potential (remember that 70 percent), I need to convince these people not to put another brick in the wall, but include a little more glass.
The Salesman’s Evidence
The consumption of glass grows faster than the Gross Domestic Product across a 20-year average. (See chart below). So, I am in a growth market and I don’t need to worry. If things get a little tight I will just steal a few customers from the competition by dropping my price for a while, OK? I will apologize to my professional sales colleagues around the world for such a gross over-simplification but, appreciating the immediate pressure they are often under, this is frequently the first step on the long road to value destruction and they (the sales force) are not to blame.
Modern wisdom has it that a growth curve dictates a requirement for approximately one new float plant in Europe every nine months. Thus, we plan to introduce into our perfect world another 250,000 tons of capacity. Unfortunately, as we all know, economic growth and corresponding commercial activity are subject to the vagaries of everything from the governor of the Bank of England getting cold feet to idiots with a grievance wanting to make a point!
Although the industry is frequently in a short-term, surplus-capacity situation, we are often stretched on certain product types at high points in each year’s trading cycle. Most often these products also happen to be the basic commodity glasses based on clear float in various thicknesses, which also just happen to be the products that have been most heavily discounted earlier in the year. The surplus capacity has filled the warehouses, an expensive piece of floor area if you care to investigate the cost, preventing the campaign runs of the coated, value-added products being completed on time.
Oh, what a lovely mess we get ourselves into as we try to explain to contract and architectural communities why we cannot supply their performance products to complete the latest landmark building. Then, explain to the commodity end of the market why they cannot have the glass for the basic sealed units to fill in the holes in Mrs. Smith’s new sunroom or patio addition.
In the meantime, as our colleagues in customer services are approaching their 19th nervous breakdown, Mr. and Mrs. Sales Professional are being backed into another corner by company management. Why? Because their forecasts on product requirements are somewhat in error and because customers are demanding even more discount/penalty payments, etc., since we are not servicing their needs to the standards required.
But nevermind, we can always go and bash the competition and re-establish our market share, by acquiring one of the competition’s customers to make up for our lost volume in the short term, can’t we?
This is normally about the point at which I spontaneously explode! Oops—there I went and did it again (with apologies to Britney!).
Why should we spend so much time and energy stealing business from each other? I accept that competition is a necessary and healthy part of business life, but when any community appears to focus almost exclusively on itself I detect a hint of cannibalism in the air.
Opportunity to Cross Examine
Competition is healthy, but you should not compete. Isn’t that a paradox, and won’t you be accused of lacking the guts to fight your corner?
Well, actually, no. You may have noticed that I said, “when any community appears to focus almost exclusively …” I believe in competition, but also that we in the glass industry should decide right now as to whether we are competing against the right rivals.
Every time I see a blank wall, brick, concrete, steel, aluminum, wood (the material really doesn’t matter), I see a missed opportunity for glass. Two questions now arise:
Who has the responsibility to do something about this missed opportunity—the strategic planners, the sales force, the marketing team?
On which target groups should we focus—the specifier, the contractor, the glazier, the window or glazing systems salesperson?
To go back to an earlier point, the sales team is under pressure to produce immediate results. Naturally, they welcome potential business creation, but as teams or individuals they frequently do not have the luxury of time to develop these concepts. There’s an old adage that springs to mind: “When you are up to your backside in alligators it is difficult to remember where the drain plug for the swamp is located.” Remember, the field sales professional is likely to be more focused on an immediate volume/revenue purchasing decision maker than groups influencing the future, which is distant to them.
The strategic planners? This vital group is looking at product development and mass market trends, often deeply focused in demographics, economics, product and manufacturing investment and development. They know they need new markets to absorb the capacity and the new products that are under development, but they might just be a little busy at the moment justifying that next CAPEX.
That appears to leave the marketing and technical communications team. Why? Because they are interfacing each and everyday with the audiences listed in question two. A mass of data focusing on who asked for what, why they wanted it (information that is), for what are they using it, how often do they ask the same question, is this a trend or a “flash in the pan” due to some new gimmick or fashion?
Conclusion of Evidence and Cross Examination
We know we need to grow the market as well as market share. We have identifiable opportunities and target audiences and we have a group of professionals, (marketing and technical communicators), who can, and must, bend their talents and energies to develop a method of communication, information and education that will break the cycle of dog eat dog for short-term gain.
We must provide the method for a greater understanding of our glass products that, in turn, will generate more opportunities for applications on which our sales colleagues can capitalize.
We must increase the knowledge of the groups, listed in point two, to understand the new high-performance characteristics of glass products, in the same manner that the automotive designer has understood and embraced them. It will then be easier to motivate a designer, architect or engineer to move his pencil on the drawing board or cursor on the CAD system a ew millimeters and grow the volume of glass used in residential buildings.
This in turn will gradually increase the requirement for building glass products in all its forms. We calculated, based on year 2000 new residential building starts across a dozen European countries, that this small movement in design would have created demand for at least 6 million square meters more of glass in that year alone.
Arguably, this method of increasing market growth and providing opportunity for increased market share, through healthier competition on the grounds of product performance and service, is the more profitable and sustainable method. As opposed to what? I hear you ask. Better than asking our sales professionals to increase purely their own company volumes by 25 percent (and less wearing on the nerves).
Remember our view that the growth of glass use at 4.5 percent pa over GDP growth of 3.6 percent pa dictates one new float plant required in Europe every nine months? It would be interesting to speculate what effect a 25-percent increase in the use of glass in residential buildings would have on float production. Perhaps we would be too busy building float plants and servicing our customers with the next generation of high-performing glass products to worry too much about constant price wars, etc.
We said we are guilty; we have missed opportunity when it came knocking and ignored commonsense. We are guilty of destroying value within our industry and ignoring the needs of our customers. We are guilty of arrogance and an almost fetishist preoccupation with our cleverness amongst ourselves. By rights we should all resign gracefully or, as we British do, “take the loaded revolver into the garden old boy and do the decent thing.”
Redemption is Possible; You will Fix This
You will remain in the industry and focus on the young architects and structural designers of tomorrow.
You will listen to the needs of the salespeople incorporating your product as a component of their window and glazing systems. You will design programs and communication campaigns based on what they tell you they need. You will assist the architectural and engineering colleges and professors to expand the amount of time taken on the product called glass. You will give up your preconceived notions of what these young people are, and what they need, and pay them the courtesy of including them in your next market research.
You will humbly acknowledge that the word expert is made up of two parts: “Ex,” which is a has been, and “Spert,” which, when spoken, sounds like “Spurt,” a drip under pressure, and resolve not to promote yourself in this manner again.
And lastly, remember this, there are four prime requirements for life on our planet:
• Air to breathe;
• Water to drink;
• Food to nourish and sustain; and
• Light, without which there is emptiness. We in the glass industry get to provide people, in all manner of ways, this precious 25 percent of the prime requirement.
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