ABSTRACT
The results of a 2000 survey of United States window manufacturers on the subject of switchable glass are discussed. The areas covered in this paper include awareness of the overall product category of switchable glass and various types of switchable glass, attitudes toward specific features of switchable glass, expectations for manufacturer production of such products, expectations for market penetration rates among end-product consumers, levels of price sensitivity among window manufacturers regarding switchable glass, and expectations for the pace of new product development within the window industry over the next five years.
Keywords: Switchable glass, smart windows, electrochromic (EC), liquid crystal (LC), suspended particle devices (SPD), marketing research.
1. INTRODUCTION
During the summer of 2000, Research Frontiers Incorporated, a patent-protected developer and licensor of suspended particle devices using switchable glass technology, commissioned the Townsend Research Group LLC, an independent marketing research firm, to conduct a survey research project of U.S.-based window manufacturers on the subject of switchable glass. It is believed that this marketing research study is the first of its kind to examine marketing issues relevant to the larger-scale commercialization of switchable glass.
From a marketing perspective, successful commercialization of a product involves a wide range of factors that are influenced by variety of players (e.g. suppliers, manufacturers, distributors and end-users) who comprise the value-creation chain Fundamentally, product availability, product awareness and product knowledge are critical, particularly for break-through technologies as opposed to product line extensions of a pre-existing product. This research initiative (and the focus of this paper) is centered on the attitudes and perceptions of United States window manufacturers toward switchable glass and windows with switchable glass, a product category in the early stages of its life cycle. Only a very limited number of window manufacturers have explored the use of switchable glass for products such as skylights and interior partitions. However, the findings from this study indicate that awareness levels are fairly strong toward switchable glass, attitudes regarding the technology and the features deemed important to end-users are somewhat refined, and near-term expectations for its future are encouraging.
2. METHODOLOGY
A standard methodology was used to achieve a random sampling of window manufacturers and to maximize the validity and reliability of the study. Initially, a contact list of 493 U.S. based window manufacturers was developed (Standard Industrial Classification 344202). This was the largest assemblage of unduplicated window manufacturers available, although the researchers are aware that this list may not be fully exhaustive due to a variety of factors such as mergers and acquisitions, business closings or other issues. All data collection occurred by telephone during the months of July and August, 2000. A screening system was used prior to asking potential respondents any questions related to switchable glass. Specifically, upon initial contact with the window manufacturer, the interviewer asked to speak with someone within the company who was involved in new product development or product planning. This screening system connected the interviewer with an individual whose job function involved the management or development of commercialized window products. In so doing, the research team believed it was effectively identifying and procuring information from the locus of product and market knowledge within the window manufacturer’s organization. Respondents were informed that the study was being conducted on behalf of Research Frontiers Incorporated.
In total, 174 randomly chosen window manufacturers were contacted. The sampling procedure involved the use of multiple callbacks to those manufacturers whose identified contact was unavailable or unable to be interviewed at a particular time. This effort resulted in completed interviews from fifty individuals (n=50) involved in new product development or product planning at U.S. window manufacturers. The sample size yielded a margin of error (" = 0.05) of +/- 13.9%. The titles of those interviewed include the following: Manager of Engineering and Quality, Vice President of Marketing and Planning, Manager of New Product Development, R&D Manager, Owner and General Manager, VP of Research and Development, and Sales Manager. The overall responses rate was 28.7%, and the average completed interview lasted approximately 25 minutes.
3. FINDINGS
Awareness of the overall product category of switchable glass technology for windows (also known as "smart window" technology) is fairly strong among respondents at U.S. window manufacturers. Fully 71.7% reported having heard of switchable glass technology that can electrically control the transmission of light through windows. Respondents who expressed some awareness of the technology were asked if they were aware of any of several types of smart window technology. The three types presented to respondents were electrochromic, liquid crystal and suspended particle devices. Of those aware of switchable glass technology in general, 44.4% claimed they were aware of EC switchable glass, 63.9% were aware of LC switchable glass and 33.3% were aware of SPD switchable glass. Applying these awareness levels to the entire base of respondents (including those who not aware of switchable glass technology), incidence rates of awareness for can be determined. These rates are summarized in Figure 1.
Respondents who were aware of switchable glass technology also were asked to provide some insight into their existing level of knowledge of switchable glass for windows. This was an open-ended, qualitative-style question that allowed for the maximum degree of breadth and depth regarding the technology. A verbatim sample of comments to this question reveals that individuals at window manufacturers who are involved in new product development and product planning have only a limited degree of knowledge regarding the technology. Specifically, their knowledge base appears to be centered around the notion that switchable glass is a technology where the tint of a window or other glass product can be changed via the introduction of an electrical current to the media. Perhaps even more informative is the exceptionally limited number of respondents who volunteer some knowledge that switchable glass products can offer varying degrees of light transmission levels based on the amount of electrical voltage applied. The researchers are not surprised by this result. Market development initiatives to promote switchable glass using advertising and public relations have been sporadic over the years and have comprised only a small percentage of total market development initiatives by glass and window manufacturers. Thus, while awareness levels are relatively strong, it is not surprising to see that the level of knowledge regarding switchable glass for windows is limited. Table 1 presents a sample of the verbatim comments from those respondents who are aware of switchable glass technology. The table provides a directional indication of the level of existing knowledge possessed by respondents.
Table 1. Sample of Verbatim Comments: Existing Level of Knowledge Regarding Switchable Glass
"What I know is that it's clear and when you apply an electrical current to a film, it gets darker. Variations in the current influence the darkness of the window."
"You can apply an electrical charge to it and switch the charge to give you a clear effect or total blackout."
"You apply an electrical current to it and you can see through it. In its off state it is opaque."
"It's a great product if you really can control light from an electrical switch. This allows people to create shade whenever they want it without window coverings. It will give people a lot of privacy."
"From what I know, it's controlled by a switch, and it's photoreactive like some eyeglasses can be. Other than that, I'm not sure. The glass has something in it and when you apply an electrical current, it goes to a clear state. If you take it away, it goes to an opaque state, which I think is its natural state."
Respondents were asked to comment on the perceived level of importance various attributes of switchable glass would have to end-users. Prior to this, all respondents were read a brief paragraph summarizing switchable glass for windows. This paragraph described the ability of switchable glass to electrically change tint in addition to other end-benefits like enhanced privacy, the reduction of glare and heat, and the potential elimination of window coverings. Figure 2 summarizes the results.
Figure 2 indicates that individuals involved in new product development and product planning at window manufacturers believe that the durability of switchable glass windows will be the most important attribute to end-users. Also of notable importance are the reduction of glare and heat, the ability of switchable glass to be used with low-e glass, and the ability to control daylight without blocking one’s view. Of least importance is the ability to have two ways of adjusting light transmission (manually and automatically). Aesthetic benefits and increased security follow as the next least important perceived features.
Window manufacturers’ interest in offering smart window products to the market of residential homeowners is fairly strong. Among window manufacturers offering products to the residential market (96% of the entire sample), 51.1% reported that companies like theirs would be "very interested" or "somewhat interested" in offering windows with switchable glass to residential homeowners within the next three years. The researchers view this distribution as highly positive for the future of windows with switchable glass, particularly when one notes that just 9.6% reported being "very disinterested" in offering such products to the residential market. Figure 3 summarizes the actual distribution of responses to this question.
Two-thirds (66%) of the sample said they provide window products to commercial developers. Like those serving residential customers, this subset of respondents were very upbeat about the interest level their company would have in offering switchable glass products to this market over the next three years. As Figure 4 shows, 57.0% claimed some degree of interest and only 12.4% said they were "very disinterested."
Respondents who provide products to residential homeowners were asked to give their projected percentage of all windows (installed or retrofitted) in residential homes (U.S.) with switchable glass by 2005. The median forecast of market penetration provided by this group was 3.6%. Similarly, window manufacturers offering products to the commercial market had a median projected market penetration rate of 6.2% by 2005. The magnitude of these aggregate estimates from industry professionals signals growing and substantive interest for switchable glass products in both markets.
Variations in the speed with which a switchable glass product (i.e. a window) can change tint exist depending upon the class of switchable glass technology and its composition. Survey respondents were asked how important a tint change that is almost instantaneous would be to residential homeowners and to commercial developers. Once again, only those who produced products for the residential market were asked to give their opinion of the residential market. Likewise, only those who produced products for the commercial market were asked to comment on that market. Figure 5 summarizes the results to this question.
The distribution indicates that U.S. window manufacturers expect that a tint change that is almost instantaneous will be more important to residential homeowners than it will be to commercial developers. In fact, 63.4% of manufacturers serving the residential market claim that a tint change that is almost instantaneous will be important (very or somewhat) to their residential customers. Conversely, just 35.2% of manufacturers serving the commercial market claim that commercial customers will view such a rapid tint change as important. Reviewing the data, one can conclude that an almost instantaneous tint change does have at least some perceived value to all segments. This is evidenced by the fact that just 15.3% of manufacturers serving the commercial market and 7.2% of those serving the residential market expect that an almost instantaneous tint change will be "very unimportant" to these end-product customer groups.
The adoption of switchable glass products by window manufacturers will mark a significant event in the historical timeline of this class of technologies. The individuals who participated in the survey acknowledged the linkage between a new product technology and the business case for offering that product technology. Several respondents noted that the window industry, even in strong economic conditions, is highly competitive. Thus, any consideration of a new product launch must support internal strategic objectives. When respondents were asked to choose the most important business objective their company would consider when making the decision of whether or not their company would introduce a new product or technology in general, the top two objectives were "gaining a competitive advantage" (42.0%) followed by "expanding the product line" (33.3%). The entire distribution of responses to this question is presented in Figure 6.
In an effort to focus on the business case for switchable glass products specifically, respondents were asked to provide their company’s primary motivation for offering switchable glass products in the future. Table 2 below is a partial summary of these open-ended responses. The results expand upon the more broadly addressed motivations summarized above.
Table 2. Sample of Verbatim Comments: Primary Motivation for Offering Switchable Glass Products
"Our primary motivation is (focusing on) what customers need. We also need good margins and low cost as far as getting started in the production process. And it has to be a pretty good sell. The forecast is going to have to justify the sell. You've got to payback your investment as quickly as possible."
"Getting a competitive advantage is important. It also has to be cost-effective and its needs to realize some actual value at the customer level."
"The fact that it's something different to talk about with customers. The sales guys could say that they are the only kids on the block with this technology. That's very important."
"A major reason is that it would be a unique addition to the product line. Differentiation creates customer attention. If we had products with switchable glass, we would get more attention and use it to sell our other products. We would use it to get people talking and increase our inquiries."
"I think to expand the number of product offerings and generate some interest in the entire product line."
"Increasing the market and being the first in the block with that technology. It also increases a homeowner's flexibility because he or she can control the light. This product will fit well in upper scale homes, and it probably would do well out west."
"Offering a product that your competition doesn't have and offering a product that customers want and that benefits them."
"There are other factors that are important besides market share. I would see a switchable glass product as a marketing tool. It could help you bring in sales of other types of window because it gives the impression that this company offers advanced products. That can be an important impression to give to buyers."
"The major motivation is in selling the benefits of darkened or tinted glass. We do a lot of low-e glass, and many of our products are standardized thermal efficiency. It's a selling point. The benefit is that buyers get straight up energy savings, and that's important in the sales process. Gaining a competitive advantage is important. I don’t want to have to buy an enormous amount of it to offer it. Keeping inventory to manageable levels is important. I think there is a niche here. I think this is what the next generation of homeowners is looking for."
"Well, it’s a good product to offer a customer that's looking at something different. Custom homebuilders are looking for "no drapes" environments."
A natural level of uncertainty exists among window manufacturers regarding the pricing of switchable glass products. Respondents were asked how likely a company like theirs would be to offer smart window products if the added cost to the manufacturer for adding the technology were at various levels (specified on a "per square foot" basis). Using a survey technique called "laddering", respondents were first asked to rate their likelihood at the highest price range (in this case, >$50/ft2). If a respondent said "likely", then no additional (lower) prices ranges were asked, thus making the assumption that a likelihood level at a higher price also would lead to a likelihood level at a lower price. If a respondent said "unlikely", then the next lowest price range was asked. This process continued until all price ranges were asked or a "likely" response was given. Figure 7 summarizes the distribution of responses.
Note: Cumulative distributions are presented in Figure 7.
The cumulative distribution indicates that while just 13.5% claim their company would be likely to offer windows with switchable glass if the cost to manufacturers were in the range of $26 to $50 per square foot or higher, fully 47.4% say their firms would be likely to offer products with the technology if the added cost were in the range of $11 to $25 per square foot or higher. Further, just more than eighty percent (80.6%) believe their company likely would offer window products if the added cost to manufacturers were in the range of $5 to $10 per square foot or higher. These results suggest that price may be a near-term obstacle regarding the adoption of switchable glass technology among this group. However, as Figure 7 highlights, apparent interest in the technology increases markedly as input costs decline. This condition of price sensitivity among window manufacturers should benefit those firms supplying window manufacturers with switchable glass inputs who can offer these inputs at attractive prices.
Finally, individuals involved in new product development and product planning at window manufacturers were asked to indicate their expectation for the pace of new product launches by window manufacturers over the next five years. Overall, respondents expect a reasonably strong level of product launches during this time period. In fact, 61.2% believe this pace will be "very strong" or "strong", while just 0.6% expects the pace of new product launches will be "very weak." This distribution is summarized in Figure 8 on the next page.
4. CONCLUSIONS
The 2000 survey of United States window manufacturers on the subject of switchable glass was a breakthrough study in many respects. Foremost, it provided a "first of its kind" set of essential marketing-related benchmarks against which future attitudinal assessments can be compared. The researchers believe that awareness, knowledge and interest in switchable glass technologies will grow significantly among end-user markets and the companies supplying those markets as the technology advances through the product life cycle and communications-related initiatives increase. Perhaps most importantly, the study highlights the set of attitudes currently possessed by U.S. window manufacturers. It is this set of attitudes that identifies many of the major opportunities and challenges faced by developers and suppliers of switchable glass products.
5. ACKNOWLEDGEMENTS
The authors wish to thank the SPIE for their sponsorship of this conference and for providing the research team with a forum through which the study’s findings can be shared. |
