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Article - Jan 2001
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Little or No Discussion Between Specifiers and Manufacturers with Dehydrate the Humidity Controls Market



Nelly Anderson, 
HVAC Analyst, Frost & Sullivan 
http://www.frost.com

Humidifiers and dehumidifiers over the last five years have begun to receive more attention as issues with indoor air quality arise. One of the major challenges manufacturers have been attempting to overcome is the fact that most engineers usually substitute the humidifier/dehumidifier with more rudimentary and less expensive methods in order to cut costs. There are applications that require the use of these products in order to maintain an appropriate level of humidity. However, in those areas, such as high rise buildings, where the control of humidity has not been deemed crucial, demand has been lagging and penetration into those segments has been slow. 

Reliable Controls During the specification process of a building, if the project goes over budget the tendency has been to substitute the appropriate humidifier/dehumidifier system with products already available in the HVAC system. The engineer specifying the project assumes that the results obtained from humidifying/dehumidifying the building through the use of an HVAC system are the same as if a humidity control system was in place. 

This type of reaction from the market has been limiting an aggressive expansion of the market's overall potential. In 1999, the humidity control market was estimated at $348.5 million, with 72 percent coming from dehumidifying control systems. The problem with these markets is that for many years they have been limited to niche applications. Another issue that has been limiting expansion for many manufacturers has been the lack of penetration into engineers' specifying lists. 

Manufacturers usually sell humidity control systems through a project specified by an engineering firm. The design engineer specifies the type of system needed for the project. When a bid is put out for the project, only a few manufacturers that meet the criteria for what is needed are chosen. Although other manufacturers may have a better quality product or even a better price, the specification and the engineer's decision on which manufacturers bid is usually binding. Engineers often choose only two or three different manufacturers to bid on projects, the rest are left out. 

The key for manufacturers in this type of competitive environment is to create brand penetration within the specifying engineering community. There are many products out there that engineers do not specify because they do not know about them or do not know enough about them. A factor that has been restraining effective penetration for many manufacturers has been the lack of an effective sales force. 

The distribution channel employed by manufacturers, predominantly independent representatives, is very important to the expansion of the customer base. Unfortunately, manufacturers are finding it difficult to employ representatives that are knowledgeable, reliable and willing to devote time for the benefit of the manufacturer. New manufacturers entering the humidity control industry are having a difficult time finding reliable independent representatives. Though some new entrants manage to attract representatives from other manufacturers, the challenge still exists for many manufacturers. Further exacerbating the challenge is the need for two different types of representatives: one for industrial end users and another for commercial end users. This is especially true for dehumidifier manufacturers entering new markets. 

In the desiccant market, for example, manufacturers are trying to enter the commercial end-user market. However, most employed independent representatives are more familiar with the industrial market. Manufacturers must find representatives who know, understand and have contacts in the commercial market. The impact of this challenge is expected to remain high throughout the forecast period since employing competent representatives is expected to remain a challenge, particularly for new manufacturers.

These type of markets rely heavily on past experiences and word-of-mouth when obtaining information about certain products. Quality and performance are usually important criteria when selecting a humidity control system, coupled with price. 

In order for manufacturers to expand their market potential, these various issues must be addressed. The brand penetration chain in this market begins with the independent representative who is the primary communication link with the specifying engineer. In many cases, information that is critical for the design and marketing of the product is not relayed back to the manufacturer. Therefore, manufacturers must develop a system that creates a direct communication link with those specifying these products. This link will identify areas of concern as well as key topics that must be addressed when providing training for the independent representative. It will also allow manufacturers to address design issues that might be preventing them from being specified more regularly. 

This communication link can be achieved through simple, effective market research programs that ask specifying engineers what they look for in humidity control systems; obtaining their feedback on the worst and best systems, and why they are considered the best and worst. This information will give the manufacturer a benchmark point, again to develop an effective design and create a better marketing plan that communicates all of the features. 

(For a comprehensive view of the North American Commercial and Industrial Humidity Markets please contact Rolf Gatlin rgatlin@frost.com and reference Frost & Sullivan report #7501-19) 


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