Studies on the competitiveness of wood : - market segmentation and customer need assessments

Abstract: Over the last decades, wood has encountered increasing competition from other building materials. Hence, it is relevant to study the underlying factors of material substitution. The market for repair and remodelling (R&R) is growing in importance. The end-consumer´s, or the household?s, assessments as to material selection are generally more crucial in R&R than in construction of new houses, a circumstance highlighting the importance of the end-consumer. Consequently, this thesis deals with material substitution within an end-consumer context. Proper market segmentation and targeting presuppose an understanding of why households differ as to material preferences. Prioritising customer needs in quality improvement and/or product development requires information as to the importance of different customer requirements or needs as well as the performance of wood, relative substitutes, in providing for these needs. The thesis proposes a coherent approach for market segmentation and for prioritising customer needs: (i) how to provide a basis for market segmentation and targeting, i.e., to extract the distinguishing features of different material preferences; (ii) how to extract information enabling the prioritising of customer needs, i.e., importance and performance information.Identifying prominent discriminating factors of building application material preference, in order to subsequently explain why households differ within and between samples/cultures as to material preferences, and finally assessing customer requirements or needs as to the importance and the performance of wood relative substitutes in fulfilling them, presuppose an approach for data collection and analysis, which in turn requires a theoretical frame of reference. Hence, in the thesis a theoretical framework and different methods, for extracting decisive preferential predictors and assessing customer needs respectively, are suggested and evaluated. A pronounced design profile and distinct material alternatives make floorcovering a good illustrative example.The results indicate that material substitution with an end-consumer focus should be studied within a contextual framework. Hence, the usage context, the type of room refloored and whether the dwelling is owned or not, seems to define the types of materials actively considered. Further, households obviously differ in how they perceive the concept of floorcovering in a given usage context, depending on the general life situation and individual experience. Data collection, with the aim of identifying distinguishing factors of building application material preferences, must thus handle the collection of data related to usage context as well as the general life situation and individual experience. To obtain a deeper understanding of the underlying motives open-ended questions are called for. Performance benchmarking as to customer requirements or needs should be relative competitors in the same market segment, i.e., close substitutes. The assessment of customer needs should allow analysis on benefit levels, as alternatives in material substitution most readily can be compared in terms of the more abstract benefits/consequences they provide rather than concrete attributes.The apparent causal complexity, resulting from contextual influences, severely limits the usefulness and adequacy of traditional, additive, statistical analysis. Multivariate projection methods like partial least square discriminant analysis (PLS-DA); in coping with collinear variables, as well as the Boolean approach of qualitative comparative analysis (QCA); enabling data reduction in a theoretically guided manner, have potential for handling multiple conjunctural causation when analysing material preferences. Furthermore, both methods are able to handle binary variables resulting from open-ended questions, dependent as well as independent. PLS-DA can, however, more readily than Boolean algebra capture contextual influences. Analysis by means of PLS-DA thus seem to provide the information necessary for market segmentation and targeting, i.e., the causes of preferential differences both between and within cultures: evaluative criteria and variables related to the context. The output from the analysis of material preferences serve as input to the subsequent assessment of customer needs, as to the make-up of customer needs and as to which materials constitute close substitutes, i.e., share usage context. Customer satisfaction modelling (CSM) using partial least squares (PLS) seems well adapted for extracting the information necessary for prioritising customer needs: the impact on customer satisfaction of the fulfilment of different customer requirements or needs, and the performance of wood, relative substitutes, in providing for these needs. A valuable asset of CSM is the ability to allow analysis on customer benefit as well as attribute level.Usage context and data connected with the life situation provide instruments for market segmentation and targeting. For example: according to the present results, users of wooden flooring in the Netherlands are house owners to a greater extent and generally have a higher household income than users of laminated flooring. One of the apparently salient reasons for choosing wood, the natural material property, is part of the intrinsic nature, character, of the material. This quality of wood could provide an edge on the close substitute, laminated flooring. The results presented in the thesis further indicate that practical, functional, benefits exert the greatest impact on customer satisfaction, for wooden flooring as well as its closest substitutes laminate and carpet. This is noteworthy, as the salient evaluative criteria for choosing wooden flooring, unlike the other materials studied, were of a non-practical nature. This circumstance highlights the necessity of considering substitutes to identify latent needs. A low cost over the life cycle and hygiene are apparently the most important benefits to improve for wooden flooring manufacturers, as importance is high and performance relatively low.