Before investing into new markets, any company head or sole proprietor first of all sets a question: how much is it possible to earn in a new market and how quickly will investments pay for themselves . For this purpose, it is necessary to estimate the volume and growth rate of any market. However, under present conditions in Russia, when there is no actual branch data, the estimation can prove totally wrong …
In the days of the Soviet Union the system of obtaining statistical information was on a broad scale. There was an obligatory order of delivering financial documents in branch institutes and ministries which analyzed the statistics data in the respective branches, and then transferred it into the main statistical organization, the State Statistics committee. Presently, this kind of technique is not operating any longer due to the big share of shadow sector in the economy. A previous open plan economy was substituted by a closed market one in which old laws and methods of the information obtaining are not valid any longer.
The data of the international financial institutions show that in the countries with the developed economy the share of shadow sector does not normally exceed 15 %, in the countries with a developing economy this share is about 30-40 %. The Russian economy is on the list of the latter ones. Under the present conditions the State Statistics committee, reoriented its activity into studying a socially-demographic picture of the population. Meanwhile some branch institutes simulate activity, rather than offering the real help to this branch. With the present share of the shadow economy in Russia the Customs committee data prove not trustworthy either. As a result the branch found itself in the information vacuum.
The independent Branch marketing Center О.К.Н.А. Marketing has been obtaining the information in the window market for more than five years. It mainly specializes on the window branch investigation, and the Center provides the branch participants with the statistical information of the market. As the marketing center О.К.Н.А. Marketing does not get any state support it has to some extent to carry out the functions of a branch institute.
With the present shadow sector share in the window market it proves energy consuming to obtain the statistical information using the methods of the branch institutes. Therefore Branch marketing Center О.К.Н.А. Marketing has worked out their own technique of information obtaining, having adapted it to the relevant market conditions. And the first thing they had to start with was to study the existing range of the translucent constructions available in the market. Secondly, they estimated and calculated the market capacity. The following information touches upon the information receiving techniques and estimation methods developed by О.К.Н.А. Marketing.
According to the О.К.Н.А. Marketing calculations, the market capacity of PVC-constructions in 2006 made up 34,7 million in sq. m., meanwhile the growth rate has increased by 50 %.
Just compare: according to the European Association of EuroWindoor manufacturers, the market capacity in Germany in 2005 made about 13 million pieces of PVC-structures or 22 million sq.m., at a rate of 1,7 sq.m. per window in Germany.
In 2005 there was 0,17 sq.m. of PVC-structures per capita in Russia, while in Germany this figure was 0,28 sq.m. With this we it is worth taking into consideration that the German market of PVC-structures is saturated, its growth rate makes about 2 %-3 % a year. In Russia the present market stage can be characterized as intensive growth of 30 %-50 % a year. Though the market capacity in Russian is larger than in Germany the PVC-structure share per capita in the Russian market seems to have a huge growth potential.
It is worth mentioning that the data obtained by the State Statistics committee and Customs committee while estimating the volume of the market were taken into consideration, but were not the basic sources of the information.
From the total market capacity the Russian building sector only takes 34 % (11,8 million sq.m.). 22 % of this is used for installing windows in the apartment buildings that are under construction. The percentage of the PVC-structure demand in the segment of the nonresidential premises under construction makes 12 %. The major preference in this segment is given to other materials - aluminum, steel, structural glazing, etc. While calculating the volume of PVC-structure demand only those objects were considered where PVC-structures were installed. The detailed analysis of the Russian regions has allowed to estimate this figure. Lagging behind of the building segment in relation to the private consumer segment can be explained by the low growth rates of construction within the whole decade. This rate does not exceed 13 %.
PVC-construction market segmentation according to the consumption type Russia, 2006, millions of sq.m., %
The housing problem has always been a problem in Russia and in the course of time the situation only worsened. In the developed countries there is 40 sq.m. per one inhabitant and in Russia there is only 18 sq.m. It turns out that to provide all the citizens of Russia with the necessary habitation, it should be built as much as it has already been built. The building segment has a great potential to increase the demand for PVC-structures.
Population satisfaction with the living conditions
Russia, 2005, %
With the technique of the building segment estimation everything gets clear enough. Knowing the consumption ratio of window designs in the real estate and having the construction figures it is possible to calculate the volume of this segment. There has been done a lot to calculate the segment of the private consumer. To estimate this segment is possible only after the region market capacity has been estimated, after which the building segment is subtracted.
After a long-term information obtaining there has been worked out the database of the companies-manufacturers and suppliers in various segments of the market with their capacity evaluation. Close cooperation with manufacturers and suppliers of raw materials, equipment, PVC-structures, double-glazed windows, window sills, window fittings, sealing components, and other numerous components, as well as data comparison with other segments’ capacities helped a lot. Besides, regional translucent structures manufacturers were analyzed as well. This allowed making final calculations of the market. All work was done with one purpose only – to obtain statistical information of the market and to get consumption and companies’ sales data.
The available data of all the window market capacity and data of a building segment have allowed calculating the private buyer segment in Russia. So, in 2006 this segment had the share of 56 % of all the PVC-structures market (19,6 million sq.m.). In 2006 there have been installed about 20 % of the real estate objects. About 80 % of other objects require window replacement, owing to insufficient isolation from cold and noise. Development of both consumer and mortgage lending, as well as growth of population income by 10 %, affected a rapid market growth in 2006. An abnormally cold winter has become the “last straw” to stimulate potential consumers.
It is hard to speak about 100 % reliability on the data even at the most rigorous calculations. Everywhere and for everything there is always some calculating error, well, that’s the statistics. О.К.Н.А. Marketing has always tried to minimize a calculating error in its researches. As a result each figure obtained by the Center О.К.Н.А. Marketing is checked at least in 3 independent sources. Only after these activities can any figure be used in any calculation data. Making a contribution into the window branch development since 2007 the branch marketing center О.К.Н.А. Marketing publishes the statistical data of the window market on the official site.
Attention! With complete or partial using of materials the link to О.К.Н.А. Marketing web site is necessary!