September 8th, 2022
Innovation – Creating a ‘Must Have’ Mentality in the Marketplace
I landed upon this recent article by Nicole Spector and after reading it, it does appear that the jury is still out as to whether or not we are really in a recession. Some indicators seem to point toward a recession while others are suggesting the economy is still in good shape. Most of my door and window customers are definitely seeing a slowdown when it comes to the new construction part of the market. However, although most are reporting the normal summer slump in replacement-type sales, they expect R&R activity to be on the rise as it normally does when we move into the fall season. But, with inflation and interest rates on the rise, the question remains – how strong will the year finish? One thing is certain: many homeowners have a lesser amount of discretionary funds to spend on home improvement and higher interest rates to deal with if deciding to finance a new project. So where does this leave us?
I think the year will finish strong. Even if new orders fall to a lower level, most door and window fabricators have enough back orders to keep production at a steady level throughout the balance of the year. The big question ahead is what will the first quarter of 2023 look like? Will consumers have the funds to spend on new doors and windows right out of the gate? Or will they wait for the inflation rate to slow down and interest rates to fall?
I have two sons who love videogames and one thing I have noticed about the gaming industry is that no matter how expensive everyday living expenses seem to be, the gamers still find it necessary to buy the latest and greatest new systems that come out every two years, even though their current gaming consoles are still working just fine! Yes, every couple of years, Sony and Microsoft invent new systems that seemingly out-perform their existing consoles. Their marketing departments then generate a huge level of interest well in advance of the launch date. Then on top of it all, when these new consoles are finally launched, they make getting one almost impossible by limiting initial production playing upon the fact that consumers will want something even more if it is harder to get. It is quite clear that the millions of dollars spent on these new gaming systems is not out of necessity, but rather out of a state of desire, which results from innovation. To the serious gamer, these newer systems are a “must have.”
Go to Google and type in the word, “innovation.” Wikipedia says, “The term innovation may refer to both radical and incremental changes in thinking, in things, in processes or in services (Mckeown, 2008).” The description goes on to say, “The goal of innovation is positive change, to make someone or something better. Innovation leading to increased productivity is the fundamental source of increasing wealth in an economy.”
Well, what’s got me thinking about innovation? Feeling the pulse of the industry these last few months, it does feel as though things are beginning to slow down. When growth starts looking like it is coming to a halt, there is nothing like a good dose of innovation to jump start things.
Higher-end windows with special features and benefits enable window manufacturers to differentiate their products from others that all too often seem to stack up rather evenly versus competitive products. It is this “stacking up evenly” factor which leads to downward pricing pressure in a stagnant market, and this is the very reason that many window fabricators feel they must reduce their profit margins to remain competitive. Some, albeit a very small percentage, say they are even selling some products at or below cost. If you are selling at or below cost, it is time to significantly differentiate your product line from others in the pack, or else you might just as well drop out of that particular market segment. After all, why remain in business for zero profit?
In my mind, I feel that the window industry needs something else in addition to improved thermal performance to get additional customers to want to part with their money. To create additional market demand, prospective customers need reasons other than necessity to want to replace their existing doors and windows. Some technological fronts to consider for the future are sound attenuation, harnessing solar technology, security and electronic operation in conjunction with smart phones. These will be explored in future blogs.
If “necessity is the mother of invention,” then perhaps innovation is the father. Now is the time for the engineers, scientists, and business leaders to consider new technologies and design new products which will convince future customers that they “must have” the latest and the greatest that the window industry has to offer!