Key Words: Switchable glass Marketing research
| ABSTRACT Over the past several years, a growing amount of scientific data has been collected to examine various performance characteristics of switchable glass technologies. However, very little marketing-related information has been assembled to assist business managers in the development of new product strategies pertaining to switchable glass. This paper focuses on the results of a set of interviews of executives and managers involved in new product planning or product development at United States window manufacturers. The survey examined attitudes and expectations for switchable glass window products. Having obtained these measurements, business managers and strategists can more accurately understand and plan for the needs and desires of a key segment of firms involved in the delivery of switchable products to the market. This paper initially describes the methodology used to collect the data. Following that, it examines awareness and knowledge levels of switchable glass technology, the perceived importance of various product attributes to endusers, expectations for the adoption of the technology by window manufacturers and end-users, and estimates of price sensitivity amo ng window manufacturers. The paper concludes with an assessment of the pace of new product launches among window manufacturers and a discussion of the implications for managers interested in furthering the development of the market for switchable glass. INTRODUCTION Switchable glass is a class of technologies that uses electrical voltage to control the amount of light passing through glass. The technology can be used in numerous applications, including windows and interiors partitions, automotive mirrors and sunvisors, eyewear, flat panel displays and advertising signage. Various types of switchable glass technology exist, including electrochromic (EC), liquid crystal (LC) and suspended particle device (SPD). As a whole, this class of technologies has received substantial attention recently due | to many factors, including consumers’ growing needs for energy efficient products, products that provide greater privacy and security, and products that are technologyenabled. Windows that include switchable glass, often described as “smart” windows, can serve each of these needs. In an effort to identify and benchmark important attitudes related to switchable glass technology for windows, a marketing research study of United States window manufacturers was commissioned by Research Frontiers Incorporated (Woodbury, NY) during the summer of 2000. Research Frontiers is a developer and licensor of suspended particle device technology. Using a probability sampling procedure followed by statistical analyses of the data, various attitudinal measures were developed and are presented. Segmentation of the respondents into selected independent groups is subsequently conducted and hypothesis tests are performed to highlight commonalities and differences based on the nature of the responding companies. Finally, a predictive model is developed to forecast manufacturers’ interest in offering smart window products with switchable glass in the future. METHODOLOGY The research methodology included a series of stages designed to optimize the study’s validity and reliability. A structured survey instrument was designed using input from several sources including industry professionals and trade publications. The instrument was pre-tested prior to formal data collection. A contact list of 493 unduplicated window manufacturers in the United States was assembled (SIC 344202). Although this was the largest compilation practically available at the time of the study, the list may not have been totally exhaustive due to a variety of factors such as mergers, divestitures and other issues inherent to the due course of business. Data were collected by telephone, and survey respondents were screened to include only those involved in new product development |
| or product planning at their respective companies. Respondents were most likely to include those serving in engineering, research and development, and marketing positions. Representative titles include: Manager of Engineering and Quality, R&D Manager, and Vice President of Marketing and Planning. From the master list of 493 window manufacturers, calls were made to 174 different companies. Fifty interviews averaging 25 minutes in length were completed. This yielded an overall response rate of 28.7%, and a margin of error (a=0.05) of +/- 13.9%. DESCRIPTIVE RESULTS Awareness and Knowledge Awareness of switchable glass technology for windows is strong, with 71.7% of those surveyed claiming some level of awareness of the technology. As Table 1 indicates, awareness of specific types of switchable glass technology is notably lower. [1] Table 1. Total Awareness and Awareness of Specific Switchable Glass Technologies Category % Aware* Switchable Glass 71.7% Liquid crystal (LC) 45.2% Electrochromic (EC) 32.6% Suspended particle device (SPD) 24.6% * Aided awareness obtained using the category term as a prompt. It is likely that awareness of at least one of these technologies, suspended particle device (SPD) technology, has increased since this study was conducted. Research Frontiers has licensed this technology to various companies including Hankuk Glass Industries, Korea’s largest glass manufacturer. In January 2001, Hankuk established a separate subsidiary, SPD Inc., devoted exclusively to the production of SPD film and endproducts. Mass production of SPD products at SPD Inc.’s plant in Inchon, Korea began in February 2002. This major series of events in the history of switchable glass technology has attracted significant press coverage in the United States, Asia and other parts of the world. The associated publicity likely has heightened the awareness level of SPD technology particularly and switchable glass technology as whole. Knowledge of the properties inherent to switchable glass technology is very limited. For most respondents, the level | of knowledge in this area is restricted to two items: 1.) switchable glass products control the amount of light transmitted through glass, and 2.) the actual control function is accomplished through the integration of an electrical interface into the product. Very few respondents were able to share any technological or performance information about either LC, EC or SPD switchable glass specifically. End-users’ Interest in Switchable Glass Products Respondents were asked to rate the expected level of interest in switchable glass products among residential and commercial end-users within the next three years. To obtain this information, respondents were first asked to identify whether their company offered window products to the residential market or to the commercial market. Fully 96% reported that their company offers window products to residential homes, while 66% said their company offers products to commercial buildings. Among those whose companies serve the residential market, 17.2% believe that residential homeowners will be “very interested” in switchable glass products over the next three years, while 45.2% claim that residential homeowners will be “very interested” or “somewhat interested” in such products over the next three years. Only 8.3% claim that homeowners will be “very disinterested” in these products over the next 3 years. Among individuals whose companies serve the commercial market, 34.2% believe commercial developers will be “very interested” in switchable glass products within the next three years. Almost seventy percent (69.4%) feel that commercial developers will be “very interested” or “somewhat interested” in switchable glass products within this time period. Just 9.1% believe that commercial developers will be “very disinterested” in switchable glass products over the next 3 years. Importance of Various Attributes to End-Users The individuals interviewed for the study were asked to rate the level of importance that various attributes of switchable glass technology would have to end-users (i.e. prospective window buyers). These attitudes reflect an impression that the needs of potential consumers are highly functional in nature, with durability, the reduction of glare and heat, the ability to be used with low-e glass and the control of daylight as the most important product attributes. Respondents were asked to rate each item using a 1 to 4 scale, where 4 was “very important” and 1 “very unimportant.” The average importance scores for each of the attributes examined are presented in descending order |
| Table 2. Perceived Importance of Various Switchable Glass Attributes to End-Users Rank Attribute Mean 1 Durable 3.8 2 Reduce glare and heat 3.5 3 Ability to be used with low-e 3.4 4 Control of daylight 3.4 5 UV protection 3.3 6 Offer range of light transmission 3.3 7 Eliminate need for window coverings 2.9 8 Increase security 2.8 9 Aesthetic benefits 2.8 10 Manual & automatic adjustment 2.5 Importance of an Almost Instantaneous Tint Change to End-Users Scientific research indicates that switchable glass technologies vary in terms of the speed of their tint change. Some technologies change almost instantly, while others are significantly slower to change tint. Further variation exists in terms of the range of light transmission available, with some technologies offering just “clear” and “light scattering” (but not light blocking) states, and others offering, in effect, an unlimited number of transmission levels. Respondents were asked to rate the importance of an almost instantaneous tint change to end-users. Respondents whose companies serve the residential market were asked to assess the attitude of residential window customers, while those serving the commercial market were asked to assess the commercial window market. As the data in Table 3 demonstrate, the perceived importance of an almost instantaneous tint change is far greater for the residential market than it is for the commercial market. In fact, 63.4% of those serving the residential market believe that an almost instantaneous tint change will be “very important” or “somewhat important” to end-users. Comparatively, 35.2% of those serving the commercial market believe commercial developers will feel that an almost instantaneous tint change is “very important” or “somewhat important.” Notably, the “top box” (“very important”) scores for this measure show somewhat dramatic differences in opinion. While 36.6% of respondents who serve the residential market claim that residential homeowners believe that an almost instantaneous tint change will be “very important”, just 16.6% of those whose companies serve the commercial market believe that commercial developers will feel this way. [1] | Table 3. Importance of a Tint Change That is Almost Instantaneous (Residential vs. Commercial End-Users) Category Residential Commercial Very Important 36.6% 16.6% Somewhat Important 26.8% 18.6% Somewhat Unimportant 29.4% 44.3% Very Unimportant 7.2% 15.3% Unsure/Don’t know 0.0% 5.2% Manufacturers’ Interest in Offering Switchable Glass Products Window manufacturers’ interest in offering switchable glass products to either residential or commercial markets is fairly strong. Respondents whose companies offer window products to the residential market were asked to rate their firm’s interest in offering switchable glass products to that market over the next three years. Impressively, 31.0% said their company would be “very interested”, while 51.1% said their company will be “very interested” or “somewhat interested.” Just 9.6% of this group claimed their company will be “very disinterested.” Among those individuals whose companies serve the commercial market, 29.0% reported that their company will be “very interested” to offer switchable glass products to commercial developers over the next three years. Fully 57.0% said their company will be “very interested” or “somewhat interested”, while 12.4% of this group said their company will be “very disinterested.” [1] Price Sensitivity A perception exists that switchable glass for windows is a high-priced technology. Yet, interest levels are highly sensitive to incremental manufacturing costs. The study found that a firm’s likelihood of offering switchable glass technology increases as the incremental cost needed to produce the technology decreases. Hence, one can conclude that a classic downward sloping demand curve exists for switchable glass technology, with the slope of that curve reflecting price elasticity. Using a survey technique known as “laddering,” respondents were asked to indicate the likelihood of their company offering switchable glass windows if the incremental manufacturing cost (per square foot) were in various ranges. Question presentation began with the highest price given first. For respondents who claimed their company would offer switchable glass windows at that incremental price, it was assumed that the company also would offer windows with switchable glass at lower incremental prices as well. For those who would not offer switchable glass at the highest price, the next highest price was asked and the process continued. Cumulative “likelihood” totals are |
