1. THE PROJECT 2. AIMS 3. DATA & … Toivonen 2005 1 COMPETITIVENESS OF WOOD PRODUCT QUALITY & NEW PRODUCTS: EWP MARKETS & NEW MARKETS: CHINA Metla/PTT project Ritva Toivonen – Erno

Ritva Toivonen 2005 1

COMPETITIVENESS OF WOOD

PRODUCT QUALITY &

NEW PRODUCTS: EWP MARKETS & NEW MARKETS: CHINA

Metla/PTT project

Ritva Toivonen – Erno Järvinen – Raija-Riitta Enroth

1. THE PROJECT

2. AIMS

3. DATA & METHODS

4 RESULTS


1. THE PROJECT • PERCEPTION OF QUALITY OF WOOD PRODUCTS AND

COMPETITIVENESS OF SUPPLIER COUNTRIES ON GERMAN ANDUK MARKETS: CUSTOMER VIEWPOINT

• PERCEPTION OF QUALITY FROM END-CONSUMER VIEWPOINT: END-CONSUMER MARKETS: FINLAND

• FUTURE MARKET PROSPECTS OF EWP PRODUCTS: CASE GERMANY: DELPHI STUDY / QUALITATIVE ANALYSES

• NEW MARKETS: CHINA AS POTENTIAL GROWTH MARKET FOR FINNISH WOOD PRODUCTS


Questions • WHICH PRODUCT/SUPPLIER CHARACTERISTICS

ARE IMPORTANT ON WOOD PRODUCT MARKETS?

• CAN PRODUCT QUALITY BE DESCRIBED WITH SOME GENERAL DIMENSIONS/FACTORS – WHICH?

• ARE THESE CONSISTENT OVER MARKETS AND PRODUCTS?

• WHAT KIND OF CUSTOMER/CONSUMER SEGMENTS EXIST WITH REGARD TO QUALITY?

• HOW FINNISH SUPPLIERS PERFORM ON GERMAN & UK MARKETS?

• ENVIRONMENTAL QUALITY DIMENSIONS & INFORMATION?


TANGIBLE PRODUCT

Technical

Aesthetic/Visual

Environmental/social

characteristics

INTANGIBLE PRODUCT

Product informationincl. brand,image,price

Supplier & related informationincl. image & reputation

Services

PRODUCT – A COMPONENT MODEL

•Total Product Concept: - physical and other characteristics of the product itself- services related to the product- other supplier activities, behaviour and characteristics such as company image

•Background:Product definitions(Lewitt, Kotler..)Quality studies(Garwin…Hansen, Bush, Sinclair…)

Theoretical background


• Building material retailer/wholesaler companies operating in Germany & the UK

• Structured questionnaire

• The purchasing manager/directors

• Data collection: Germany 2000-2001, 76 companies

• The UK: 2003-2004: 40/52 companies

• Finland: private end-users: 2004, 150

• EWP-STUDY 13 experts

2. DATA


3. METHODS

Statistical analyses:

Factor analysis: dimensions

Cluster analysis: market segments

Logit modeling: characteristics of segments

Delphi –method

Expert interviews


0 % 50 % 100 %

Very importantFairly importantSomewhat importantLittle importantNot important at all

Technical quality (1.3)Technical quality (1.3)

SUPPLIER CHARACTERISTICS (1.3)SUPPLIER CHARACTERISTICS (1.3)SERVICE, logistics, information(1.6)SERVICE, logistics, information(1.6)Price (1.7)Price (1.7)

Aesthetics (visual appearance) (2.0)Aesthetics (visual appearance) (2.0)

Usability (2.3)Usability (2.3)

Environmental soundness (2.1)Environmental soundness (2.1)

General choice criteria of productsGeneral General choicechoice criteriacriteria of of productsproductsAll the 7 matters are fairly/very important on average(but some variation between respondents)

4. RESULTS


0 % 50 % 100 %

Very important ImportantIndifferent Not very importantNot at all important

Technical qualityTechnical quality

Supplier characteristicsSupplier characteristics

Services, information and logisticsServices, information and logistics

PricePrice

OutlookOutlook

UsabilityUsability

Environmental friendlinessEnvironmental friendliness

Importance of overall product characteristicsImportance of overall product characteristicsImportance of overall product characteristics


21%22%Total variance explained43%

1.11.3Eigenvalue 2.4

0.60Supplier Characteristics

0.83Service, information & logistics

0.56Environment

0.43Price

0.43Visual/Aesthetics

0.49Technical quality

Factor 2Tangible & Price

Factor 1

Intangible excl. PriceSupplier C, Service & information

Tangible andintangible

- separatedimensions

Price?


0 % 50 % 100 %

Very important ImportantIndifferent Not very importantNot at all important

Product is safeProduct is safe

Wood originates from sustainable managed forests Wood originates from sustainable managed forests

Environmental impacts of production are smallEnvironmental impacts of production are small

Surface treatment is safeSurface treatment is safe

Information about environmental issues availableInformation about environmental issues available

Recyclable packaging materialsRecyclable packaging materials

Possibility to recycle the productsPossibility to recycle the products

Social aspects are respectedSocial aspects are respected

Importance of environmental characteristicsImportance of environmental characteristics


“Green price premium products”““Green price premium productsGreen price premium products””

1. Parquet garden furniture

2. Laminate tropical timber

3. Panels

4. Furniture etc.

1. Parquet garden furniture

2. Laminate tropical timber

3. Panels

4. Furniture etc.

Interior materials/tropical timber/furniture

Interior materials/tropical timber/furniture


1

2

3

4

5

WoodPlasticSteelConcrete

1=very good 2=good 3=moderate 4=bad 5=very bad1=very good 2=good 3=moderate 4=bad 5=very bad

Indi

vidu

alIn

divi

dual

War

m a

nd a

ttrac

tive

War

m a

nd a

ttrac

tive

Plea

sant

from

out

look

Plea

sant

from

out

look

Styl

ish

Styl

ish

Mod

ern

Mod

ern

Old

fash

ione

d

Old

fash

ione

dVa

luab

leVa

luab

leYo

uthf

ulYo

uthf

ulPa

ckag

es a

re c

lean

Pack

ages

are

cle

anG

ener

al im

age

is h

igh

Gen

eral

imag

e is

hig

h

Outlook and StyleOutlook and StyleOutlook and Style


1

2

3

4

5

WoodPlasticSteelConcrete

1=very good 2=good 3=moderate 4=bad 5=very bad1=very good 2=good 3=moderate 4=bad 5=very bad

Envi

ronm

enta

l fri

endl

ines

s

Envi

ronm

enta

l fri

endl

ines

sSo

cial

acc

epta

bilit

y

Soci

al a

ccep

tabi

lity

Prod

ucts

hav

e an

eco

-labe

l

Prod

ucts

hav

e an

eco

-labe

lM

ater

ial i

s sa

fe a

nd

harm

less

for h

ealth

Mat

eria

l is

safe

and

ha

rmle

ss fo

r hea

lth

Ecological and social qualityEcological and social qualityEcological and social quality


0 % 50 % 100 %

Very important Fairly importantSomewhat important Little importantNot at all important

Reliable (1.3)Reliable (1.3)

Price (level & stability) (1.5)Price (level & stability) (1.5)

Fast deliveries (1.6)Fast deliveries (1.6)

High product quality (1.3)High product quality (1.3)

Customer orientation (1.6)Customer orientation (1.6)

Wide product palette (1.9)Wide product palette (1.9)Ease of contact (1.9)Ease of contact (1.9)

Personnel respect customers (1.9)Personnel respect customers (1.9)

Importance of supplier characteristicsImportance of supplier characteristics

E-mail connection (2.0) E-mail connection (2.0) Payment arrangements (2.1)Payment arrangements (2.1)Friendly personnel (2.2)Friendly personnel (2.2)Image & reputation (2.2)Image & reputation (2.2)

Communication & order via Internet (2.8)Communication & order via Internet (2.8)Supplier is well-known (2.9)Supplier is well-known (2.9)Domesticity (2.9)Domesticity (2.9)

Respect for environment (2.4)Respect for environment (2.4)

Country of origin (3.0)Country of origin (3.0)

Supplier

Wood productsuppliers


1. PRODUCT QUALITY (PHYSICAL PRODUCT)(very important)

2. PRICE (very important)

3. GENERAL CUSTOMER ORIENTATION (very important, results in products & service)

4. DELIVERY (fairly important)

5. RELIABILITY + SERVICE +COMMUNICATION(fairly important, reliability very important)

6. BEHAVIOUR & IMAGE (fairly important)

7. FAMILIARITY/ORIGIN (somewhatimportant/DTS)

1. PRODUCT QUALITY (PHYSICAL PRODUCT)(very important)

2. PRICE (very important)

3. GENERAL CUSTOMER ORIENTATION (very important, results in products & service)

4. DELIVERY (fairly important)

5. RELIABILITY + SERVICE +COMMUNICATION(fairly important, reliability very important)

6. BEHAVIOUR & IMAGE (fairly important)

7. FAMILIARITY/ORIGIN (somewhatimportant/DTS)

SUPPLIER CHARACTERISTICS - 5/7 DIMENSIONS

Business transactionsrelated to the product, valued in money

People, sentiments, abstract, no direct valuein money

Finalphysicalproduct

& value in money

17 ORIGINAL =>7 ATTRIBUTES5 SC dimensions


Image & reputation

Well-known

Internet/email ordering

Environment

Friendliness

Paymentarrangements

E-mailconnection

Respect

Ease of contacting

Wide productpalette

Customerorientation

Delivery

Price

Reliability

Productquality

CanadaSwedenFinlandAustriaGermany

Performance?

= The mostimportant sc

Dark blue > 2.5 Fairlygood

Medium Blue 2.5-3.0 Moderate

Light Blue < 3.0Less than moderate


0 % 50 % 100 %

Very effectiveEffectiveModerately effectiveFairly ineffectiveVery ineffective

GermanyGermany

FinlandFinland

AustriaAustria

SwedenSweden

CanadaCanada

Effectiveness of supplier BU’s marketing communicationGerman customer organisations’ perceptionsEffectiveness of supplier BU’s marketing communicationGerman customer organisations’ perceptions

Marketing communication

Developingmarketingcommunicationmay be a possibility to enhancecompetitiveposition!


Conclusions• Tangible – Intangible form separate dimensions

• Fairly similar dimensions from all three data sets => indications of consistency of quality dimensions on different markets

• Environmental quality is important, but not the most important, environment and product information are tied together => availability of information!

• => appearance and health issues important and under utilised in total product concept, technical quality and supplier reliability the most important issues

• Company groups with different requirements exist, characteristics still under investigation

• Finnish companies are performing OK with technocalquality (physical product is no problem) => intangibles require development!


Project continues:

Finalisation of studies

• Analysis of the UK data: 2005

• Comparison of UK/Germany

• Consumer markets: 2005-2006 with pilot data from Finland, possibly continuationcomparisons with organisation’s viewsenvironmental quality

• EWP-study and China are ready

• IT in marketing: the UK markets


INTERNET

• 2001 most companies/BUs analysed hademail (about 90%) home page (about 75 %) in Germany

• Internet was not commonly used so far for actualsellingBut this was expected to increase fast!

• In choosing suppliers was internet/email communiation ranked surprisingly high.

• ”Being in the Internet will be necessary for ourcompetitiveness during the next few years”German respondent BUs

• Internet provides a possibility to create competitiveadvantage for wood suppliers through improvedservice and communication.


INTERNET IN MARKETING OF WOOD PRODUCTS IN GERMANY

Internet home page and email in Germancompanies trading construction materials2000/2001 (71 companies)

No HP, 10 % Under construction,

1.5 %

Shared use within the Co-op 17 %

Home Page 72.5 %Internet home page, % of BUs

No email 10 %

Under construction 1.5 %

Shared use within the co-op 7 %

Email in the company 82.5 %

Email in use, % of BUs

Documents

1. THE PROJECT 2. AIMS 3. DATA & … Toivonen 2005 1 COMPETITIVENESS OF WOOD PRODUCT QUALITY & NEW PRODUCTS: EWP MARKETS & NEW MARKETS: CHINA Metla/PTT project Ritva Toivonen – Erno