With the population of Australia just pushing past 24 Million, the need for housing and urban growth in all major cities has increased exponentially.
With that, the need to lock up more parcels of land to allow for this growth has seen a large push into areas of land that would not of normally been looked at a decade ago. Parcels of reclaimed farm land and areas that are classed as “low-lying ” whereby they are close to sea level are getting built on in multitudes.
And this is where the problem starts.
One major builder in Melbourne has been ordered to rebuild a home for their clients, due to major structural issues, caused by what is known as “Soil Heave”, due to reactive soils. This has an effect on the building as a whole, and also has major repercussions on the plumbing systems as these offer an added element , with the introduction of more moisture, through the ingress of water.
What are Reactive Soils?
So lets look at a category of products that are helping solve these issues.
For plumbing in all new homes, there has always been a requirement to use specialist products, based on the soil classification.
These products allow for ‘lateral and horizontal’ movement in areas other than stable ground. This is across all the states and territories, but has not been enforced correctly.
One supplier to the plumbing industry, PLASTEC, has created a market for these items with the use of multiple metrics. As a predominantly B2B company, they don’t always see where they can evaluate on their marketing plans, as many of their products are supplied through “Intensity of Distribution”. They are items that are low in value, high in turn over, and are often a “me too” product that is widely available.
With the introduction of the Swivel and Expansion category (SWEX), they managed to change this product offering over to an “Exclusive Distribution”, where the product was high in value, and technical knowledge was needed to create a “push/pull” effect for their customers.
When (Ambler & Roberts, 2008), spoke about the “Return on Customer” they made mention that when looking at customer equity, the problem is to know who all the future customers will be!
Sales for the category showed great growth over a 3 year period. The “Return on Investment” looked very healthy, but what costs need to be factored in, (marketing mix activity) within the conceptual model (Mintz & Currim, 2013) helps to get a true indication of how the marketing metrics performed. (Ambler & Roberts, 2008) argues that financial measures are inadequate for explaining marketing performance, but a review of the figures do offer a quantitative indication on how the product, through the brand has performed over time. This would also fall under the “Environmental Characteristics” within the conceptual model given by (Mintz & Currim, 2013).
|D-SWEX||2014 FY||2015 FY||2016 FY|
|VIC||82 ( $3000)||88119 ($2,000,000)||118750 ($3 Million +)|
Table 1. Sales by approx Qty and approx value sold for VIC.
ROI is a fraction, the numerator of which is “net gain” (return, profit, benefit) earned as a result of the project (activity, system operations), while the denominator is the “cost” (investment) spent to achieve the result.
This is where behavioural metrics play a key role.
For PLASTEC, they knew who their customers were. They just needed to get their customers, customers involved.
Through the logical extension of planning and budget forecasting, the marketing measures should show an increase of knowledge and awareness based around marketing the building and plumbing codes requirements, they actively targeted stores in new growth areas, provided specification data sheets for staff, stores and customers and offered up “on site” support for both the plumbing trades and also the home builders. It wasn’t long before the Victorian Building Authority (Formally the Plumbing Industry Commission) started to enforce these behavioural changes through inspections of drainage systems, to ensure that compliance was being followed.
Large commercial builders such as Metricon, JG King, Cavalier Homes also started enforcing the need for these products, because of the pull effect PLASTEC created with a 3rd party provider Spec-Rep, through actively targeting the hydraulic design consultants that provided the plans and drawings for the home builders.
When you view the financial data from Table 1 above, and then compare it to the data exhibit’s below, the ROI is definitely well supported after the cost of goods and all the associated marketing mix expenditure has been deducted from the projects performance.
ROI = Growth difference 2014 – 2016 (2.9 Mill) – Investment Costs ( Print Media + Marketing Expenditure + Sales Force Hours + Consultancy Costs + Trade Events + COGS). (as per exhibit’s below)
On the back of this growth, comes the Brand Equity.
PLASTEC are now seen as the fore runner in “Reactive Soils” products across an industry that has very few competitors.
The price is at a premium, their knowledge is recognized by industry professionals, and the planning and evaluation they use to ensure they keep market share, is a working model.
Consumers behaviours have changed because of this.
(Mintz & Currim, 2013)
(Ambler & Roberts, 2008)