Radical Value Chain Innovations in the Sanitary Industry

RADICAL VALUE CHAIN INNOVATIONS IN THE SANITARY INDUSTRY: HOW TO CAPTURE MORE VALUE BY INTEGRATION AND UPGRADING OF DISTRIBUTION STEPS


Dipl.-Wi.-Ing. Matthias Kant, University of Karlsruhe (TH),
Institut für Entscheidungstheorie und Unternehmensforschung
Managing Partner of KMC Marketing Consultants

ABSTRACT

The European sanitary industry is in a dead end road since years: the traditional value chain with a four-step distribution model is increasingly aggressed by more innovative forms of distribution, cutting out the wholesalers and installers by direct distribution or DIY chains. Business science is covering value chain models in a very limited way only. We draft a new perspective on market success with radical marketing innovations in the value chain, using a new value chain to market model.
This paper is divided into 5 chapters:
1. Theory on value chain analysis and integration as driver for marketing innovations
2. Short introduction into the European sanitary industry
3. Application of the value chain analysis on the sanitary industry
4. Model of five radically innovative marketing concepts for the sanitary industry
5. Examples for application of these new marketing concepts

Ad 1) Value chains as a subject, are currently intensively discussed in a very superficial way in business newspapers, but business and marketing science are so far only discussing theoretic concepts like transaction models without practical applications, and are not linking practical marketing tasks to value chain topics. This paper shows how to fill the gap between value chain theory and marketing and distribution innovations with a new model on “Value chains to market”.
Ad 2) Current market situation demands a European consolidation process. Alternative distribution models in the sanitary industry, going from manufacturers, wholesalers, installers, DIY to professional and private end users. Successful benchmarks and critical success factors are drawn.
Ad 3) The application of the “Value chain to market” model on the sanitary industry shows four possible strategic directions for market players: vertical integration, horizontal integration, multi-channel management and vertical migration.
Ad 4) Five radically new marketing concepts are drafted: a) 3-step category management between manufacturers, wholesalers and installers; b) franchise installation services; c) licensing brands; d) wholesale service integration; e) complete bathroom concepts.
Ad 5) Examples for a practical implementation of these five innovative marketing models are given, explaining the advantages and necessary conditions for market winners.

Keywords: Value chain to market, innovative marketing concepts, sanitary industry