Product improvement is the key to success in global flowmeter markets

Citation

(1998), "Product improvement is the key to success in global flowmeter markets", Sensor Review, Vol. 18 No. 4. https://doi.org/10.1108/sr.1998.08718dab.007

Product improvement is the key to success in global flowmeter markets

Product improvement is the key to success in global flowmeter markets

Keywords Flow (market survey)

Product improvements and superior technical advice are the major reasons for supplier switching in global flowmeter markets, according to a new report series from MarketLine International.

The report also reveals that magnetic, vortex and coriolis flowmeters are the fastest growing flow measurement markets across the world, with the coriolis sector performing particularly strongly in the mature markets of North America and Europe, where coriolis volumes grew at an average annual rate of over 10 per cent between 1994 and 1997.

According to MarketLine's report series, Global Flow Measurement Instruments:

1. 1.

   Product improvements are central to gaining share of global flowmeter markets.

2. 2.

   The Asian crisis will not lead to an export boom to western markets.

Product improvements are central to gaining share of global flowmeter markets

MarketLine conducted a major end-user survey of flowmeter customer opinion in all global markets, but predominantly those in Europe and North America, where the bulk of the market still lies. Key decision makers in the buying process, such as production directors, technical purchase managers, technical controllers, engineering directors and maintenance managers, were interviewed. The results laid heavy emphasis on technical features and benefits, rather than price falls, as the key factor in increasing market share.

Cost savings on initial purchase price only came third in the list of factors that would make flowmeter customers switch suppliers, behind an improved product and better technical advice (see Figure 1).

The results of the survey are surprising, in that an analysis of market volume and value trends globally demonstrates that there have been significant price falls in flowmeter markets over the last five years. The survey suggests that although manufacturers world-wide are cutting prices in order to attract greater volumes and market share, this has limited impact on market share ­ although is certainly serving to grow the unit number of flowmeter sales.

Figure 1 End-user responses to the question: "what factors would make you switch flowmeter supplier?"

The Asian crisis will not lead to an export boom to western markets

The main exception to price reductions across-the-board is Asia, which differs because of the peculiar dynamics of its currency fluctuations. The prices of flowmeters imported into Asia are actually rising because of the effects of local devaluations. A fall in market volumes for imported products, such as coriolis flowmeters, is in part related to the higher prices; customers are finding the product harder to afford, especially as they themselves may be adversely affected by the recent economic difficulties.

MarketLine believes a second driver of the fall in volume is the hesitation by some major investors in local process industries (see Table I). Many of these are waiting to see how local markets develop. India and Indonesia, which both have significantly large, state-run companies in their process industries, are also affected by the political uncertainty of their respective countries.

However, according to MarketLine, technologies which are produced locally, such as magnetic flowmeters, should see a different pattern. Imports will be made far more expensive by the devaluation of local currencies against those of North America and Europe, so companies that import from these regions may be expected to lose out. Local manufacturers will correspondingly find their products made cheaper in foreign markets.

Theoretically, this could lead to an export boom from Asia to Europe and North America. However, MarketLine expects that this will not materialise for two main reasons:

1. 1.

   Local manufacturers tend not to have much experience of exporting flowmeters, at least outside the Asian region.

2. 2.

   Local manufacturers seldom have the technical certification and expertise necessary to penetrate previously unexploited markets.

The most obvious possible exceptions to this model may be found in Asian subsidiaries which manufacture for European or US parents, like Krohne Marshall of India. This is made less likely, however, by the inevitable competition with the parents' existing manufacturing facilities in the developed countries.

The Global Flow Measurement Instruments series consists of three reports which cover the Asian, European and North and South American regions. Each report is available at a cost of £1,495. The full series is priced at £3,795.

For further information contact Russ Milburn. Tel: +44 (0)171 316 0001; Fax: +44 (0)171 316 0002; E-mail: rmilburn@datamonitor.com