(In this speech of H. W. Keller at the Swiss Sensor Meeting for sensor technology, the concept "Marketing" is being defined and companies acting in the industrial transmitter market are analysed for their marketing strategies.)
Everyone uses this term and nobody knows exactly what it actually means. "How much do you spend for marketing?" we were supposed to specify in an inquiry. You might as well ask me how much I'm spending for my health.
"Marketing is the adjustment of the possibilities of an enterprise to the market needs". A definition that needs to be explained.
According to Oppenheim (Oppenheims Unternehmerbrevier / 36 lessons about management / 1972 Econ Verlag Wien), the enterprise operates in 4 markets carrying out a transformation process in each of these markets (Picture 1).
The Production Process
Raw materials or semi-finished goods are transformed into finished products. This is the product market.
The Sales Volume or the Sales Process
Potential buyers are transformed to customers. This is the sales market.
The Personnel Process
Beginners are transformed to experts. This is the labor market.
The Financial Process
Investments are transformed to enterprises. The value is available as stock. This is the capital market.
These four processes need to agree with each other like the organs in a human being. If one organ is sick, the human being is getting sick; if one of the processes sickens, the enterprise will get sick.
Marketing is the coordination of the four transformation processes, the adjustments of the processes to the changes of the markets. Marketing is the actual management responsibility: The directing of the enterprise through changing markets.
Now, let's analyse the markets for companies producing pressure sensors and pressure transmitters:
The Sales Market
During the 30 years I've been working in this field, the sales market has been subject to many changes. In the beginning, the market was unflexible, meaning that cutting the prices by half would hardly have created a higher demand.
By 1964, pressure transducers have almost exclusively been used for research in the laboratory market. The extremely high transducer prices allowed at the most the use in the military field, in the aviation industry and for medical applications. The industrial use was very rare. A pressure sensor market for consumer goods or automobiles was inconceivable.
But the industrial demand increased. By the mid seventies, new technologies and price reductions started to boost one another, soon leading to applications in cars and consumer goods. This development is shown in picture 2.
The Trend in Prices
In the beginning, established suppliers were trying to follow the trend in prices initiated by the industrial market. Later on, the prices in the laboratory market in creased again. The sales costs arising from small quantity orders have increased drastically and sometimes even exceeded the production costs. Due to the present overcapacity, prices in the industrial market can be expected to hit bottom. After the adjustment of the market, prices are due to increase again affected by inflation.
The sales market for pressure sensors is now as ever imprinted by an established market coverage and by its intransparency. The traditional suppliers are defending their positions with vehemence and sometimes with questionable reasonings.
Initially, the piezoresistive technology was characterized by many flops. Thirty years ago, the thin-film transducers from Statham were really the first stable transducers on the market. Even today, statements like "piezoresiti ve is not stable" still find open ears. That explains why the DIN (German Institut for Standardization) committee, where the old houses used to sit, refuses to even define stability.
The Product Market
Sooner or later, the market positions will depend on the technologies. In a transparent market, we estimate that the gross of industrial applications in the range from 10 mbar to 1 bar will be saturated with the capacitive ceramic sensor. In the range from 1 bar to 1000 bar, the piezoresistive technology will dominate the market. Other technologies will have to operate in niche-markets because, for example, the costs resulting using thin film technology are too high to keep up with large-scale projects.
Also, a selection will take place among the piezoresistive suppliers which is de termined by the their production depth. Manufacturers conducting their own diffusion for IC-chips are unnecessarily burdening themselves and will never be able to keep up with the state of development. Since the beginning of our activities, our suppliers for wafers have changed from 3 to 4, and from 4 to 5 inches; sometimes requiring investments of many millions. The change to 6 inches is already in process. Bearing furthermore in mind that today the chip only makes up 2% to 5% of the transmitter cost is another reason to believe that these companies will not be able to endure the burden in the long run.
Manufacturers that buy chips and install them in insulated housings are very limited in their flexibility. Manufacturers buying chips wrapped in steel, and installing them in transmitter housings are giving away the most important part of the value being added; this happening in a technology which should actually be their strength.
The Labor Market
The labor market is characterized by regional differences. In England and in the USA the industrial hourly rate of pay costs 20% less than in Germany. A higher level of training and usually a better work attitude are facing the rate in the Far East, which is lower by factors.
The Capital Market
Return on investment is being calculated the same way everywhere. In the USA, the readiness for taking risks and the high-tech enthusiasm was much higher for a long time. After many flops and a lack of return, the enthusiasm has calmed down again.
This as a preliminary information to the analysis of the companies that have or want to have any influence on the industrial sensor and transmitter market.
Analysis of the Companies
For that purpose we close the circle and draw a balance of the marketing strategies of the different players. In the sales market we analyse the market coverage and the market shares, in the capital market the financial possibilities, in the product- and labor market the capacity, the technology and the know-how. Also if the employees have the capability and know-how to adjust themselves to the changing needs of the market (see picture 3).
Evaluation of the sensor- and transmitter manufacturers:
IC-Sensor / Sensym / Nova Sensor
These companies all arose as spin offs from the Silicon Valley IC-technology. They all conduct their own diffusion with a great deal of effort and have alltogether the tenfold world capacity for silicon pressure sensors. In spite of many efforts, they have never really gained footage in the industrial market. Their best available technology for an industrial packaging is not sufficient for European demands. They were only able to rise and to survive due to capital transfusions of high-tech despaired industries with mechanical products. This factor influences the capital market through the whole company history.
They have their own diffusion line for other applications (Hall Switch). Them neither have ever been able to produce the mechanical packaging for industrial applications and they have lost significance in the sensor market. Honeywell also stands representatively for manufacturers such as Foxboro, Endress and Hauser which have a basic demand for sensors for their system market. They have developed own technologies with a lot of money and are now trying to get back the costs on the high-volume industrial market. That didn't work for Siemens nor for Philips. A marketing problem that certainly can not be found in the market coverage.
Haenni / Jumo / WIKA / Trafag
They all have entered the market with a very good market coverage due to their experience in mechanical manometers and manometric switches. WIKA and Trafag have let themselves be mislead by the teething troubles of the piezoresistive technology and have concentrated on thin film, partly with huge investments. As well as Haenni, these are companies ruled by financial power and market coverage without adjustment of the internal structure nor a profound analysis of the future of these technologies.
Druck / Hottinger Baldwin / Kistler
Long-established, venerable companies having grown up in the high-price phase of the transducers. Due to their cost structure, they sooner or later gave up the attempt to be major players in the industrial market. They mainly profit from the industrial market's intransparency and the market coverage.
Over the last years, these companies have successfully settled into the instrumentation market. But the high-price policy and the fear of self-competition have caused them to oversleep the most recent developments. The pressure on these companies will increase.
High-tech company without sufficient market coverage. The sensor market is characterized by a very large inertia, long established firms are the ones profiting All newcomers will have to make that experience at first.
This company stands representatively for a completely failed state development policy; a disturbing factor in this field over the last years.
With our tax money, the government promotes envious people and copiers that bring nothing more to the market but an increase in overcapacity, the collapse of the prices, therefore less recources for the development and finally it is promoting the collapse of the entire industry.
STS furthermore operates with arguments such as "The turned chips of KELLER break much faster than etched chips." Two analysis, one of Nova Sensor, the other of Schoppe+Faser have shown that at the point of break, the rounded silicon transitions of KELLER have a 8 to 9 times smaller tension than the etched, sharp-edged of IC Sensors which STS uses.
Just as idiotic is the argumentation of thin-film manufacturers or of Valvo's "metal specialists" (they meanwhile disappeared from the market) that compared to silicon, steel girders don't burst after overload. That's why IMO now has to indicate in his brochure of the "highly accurate" digital transmitter that after some minutes of double load, the zero point could shift about 0.5%. And how big is this shift after 100 hours of full load with highest operating temperature, Mister Imo Transamerica? Do you know the definition "Overload is the range in which transducers don't experience any permanent changes"? And doesn't silicon have the ideal sensor feature that, whatever has happened to the sensor, even after a 5-fold over load, the sensor is either being destroyed or the same as before?
I'm not insinuating any spite, rather a blind optimism. When we had stability problems with our first transducers, Kistler's sales manager (Dipl. Ing. ETH) had the opinion that "we (he meant the piezoelectrical transducers) do not have any zero offset proplems, we don't have a zero point."
Already in La Fontaine's legend says the worm to the ant (which complained about her bad legs): "I never have any problems with my legs, I dont' have any legs."
It's the management's responsibility to study the changes of the markets and to adjust the company to these changes. In this regard, the phrase of a successful manager should be understood, being asked for the secret of his success: "Every morning, coming to my desk, I first ask myself: What's the most important that I'll have to do today?"
The human being who has a sick organ is affected day by day. It's only focusing on the healing of its organ. That explains why today's companies hardly ever think about the biggest danger facing all companies: The collapse of the environment and the splitting tendency of the society into possessing and expelled people, leading sooner or later to the collapse of the society. People with sick organs only think about their illness, they don't care if the world collapses after them.
How much do you spend for your health? Let's have another look at this question.
The health care system is being talked about a lot in every country. According to Oppenheim, the health care system is, in contrary to a company, an institution that is spreading up to social unsociability at the general public's cost.
Japan is said to have a system where the citizen is paying the doctor a monthly fee as long as the citizen is healthy. If he's getting sick, the doctor is obliged to care for him at no charge. If the citizen is unable to work, he doesn't have to pay the doctor. This would be a system where all statutory features of a free market economy are effective. The malingerer pays a much higher premium with a good doctor, or he consults a bad doctor who in turn earns less money. Also, the doctor doesn't make unnecessary therapies just to keep himself busy.
Thanks to the technology, the efficiency in the sensor market has increased by factors. Kistler proudly wrote at their 20th anniversary that they have been producing more than 20'000 pieces of their most popular transducer. This year, KELLER will produce about 60'000 series 21 transmitters.
Within the same time, the number of practising doctors per citizens has in creased by factors in the Swiss cities.
How much do you spend for your health? This figure on the letter of application would relieve the labor market for the entrepreneurs significantly.