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2 Outline www.us.kohler.com
History Communication Financials Past acquisitions Current and planned industrial presence The product ranges Kohler and it’s competitors SWOT Strategy

3 Outline History Communication Financials Past acquisitions
Current and planned industrial presence The product ranges Kohler and it’s competitors SWOT Strategy

4 Kohler history in detail: industry + product development
Toilets wash- basins of vitreous china Enters electric generator market Kohler foundet First enamel bath tub One-piece built-in bath-tub Brass faucets Starts manufact. faucets + brass accessories Electric kitchen sink Complete bathroom sets with matching colours 1873 1883 1911 1920 1925 1926 1927 1870 1880 1900 1920 1930

5 Kohler history in detail: industry + product development
100 anni- versary Sales by 1 m $ Sales by 2 m $ rapid expansion Acqui. of 1st Furnit. Comp. Vitreous china plant opens in MEX Acqui. of Sterling Faucets Joint Venture in China New colours for plumbing fixtures „Bold look of Kohler“ ad theme Investm. in cast iron product. facilities The 1990ties Master suite concept Product design Innov. toilet and showers Luxury whirlpool bath 1965 1965 1971 1973 1984 1986 1987 1991 1995 1996 60 70 80 90 00

6 Communication

7 The four seasons of Kohler´s brand awakening
Introduction of functional and technical innovations (bath, kitchen) Establishing Kohler as a full-line manufacturer of bath products Concern for aesthetics and manufacturing improvement The Bold Look of Kohler Art, Inno- vation, Life Internal and external growth Form and Function 1960´s 1990´s

8 The four seasons of Kohler´s brand awakening
Launch of exciting, new plumbing products in vivid accent colors with significant advertising campaign titled „THE BOLD LOOK OF KOHLER“ Campaign also solidifies Kohler´s culture and attitude (inside company) Further lines followed: - Whirlpool baths in an array of shapes and sizes - Big kitchen sinks for big homes, and compact models for small apartments - Lightweight, easy to clean fiberglass shower modules - Faucets with interchangeable handle inserts The Bold Look of Kohler Art, Inno- vation, Life Internal and external growth Form and Function 1960´s 1990´s

9 The Bold Look of Kohler adv campaign

10 The four seasons of Kohler´s brand awakening
As consumers spend more quality time at home, Kohler continues to meet these needs with a fresh design approach Kohler answers the trend towards increased luxury with it´s Master Suite Concept answers trend towards increased luxury (console tables + bath vanities + bedroom furnishings) Electronics and other technological improvement as for example: - stylish toilets - faucets - water saving shower heads - innovative showering products and luxury whirlpools Decorative fixtures, textured surfaces and expressive colors The Bold Look of Kohler Art, Inno- vation, Life Internal and external growth Form and Function 1960´s 1990´s

11 The four seasons of Kohler´s brand awakening
In 1984, Kohler starts an expansion program based on: - internal growth with new materials, products and markets - synergistic manufacturing facilities - direct access to new markets. Currently Kohler encompasses an extensive business worldwide in the field of - plumbing products, cabinetry and tile - under a variety of brands The Bold Look of Kohler Art, Inno- vation, Life Internal and external growth Form and Function 1960´s 1990´s

12 products and services.“
Mission Kohler „Improving the level of gracious living for each person who is touched by our products and services.“

13 Communication Conclusions
Kohler focus on design: improving the level of gracious living Stylish, lifestyle-oriented Kohler point out a high standard of quality and manufacturing know-how that promotes to be innovative in terms of product design (colours, materials) and aspects of comfort in the bathroom. Kohler looks back at great advertising campaings The Bold Look of Kohler

14 Outline Financials History Past acquisitions
Current and planned industrial presence The product ranges Kohler and it’s competitors SWOT Strategy

15 Turnover & Income statement
Estimated turnover 2005 : 3.1 Billion $ Estimated number of employees

16 Turnover 1997 by Group

17 Structure of Business Families

18 Outline Past acquisitions History Financials
Current and planned industrial presence The product ranges Kohler and it’s competitors SWOT Strategy

19 Acquisitions France UK Marocco US Mexiko New Zealand Thailand China * India 1985 1993 1994 1995 1996 1998 1999 2000 2001 2002 2004 2005 2006 cws taps bathfurniture wellness csw baths furniture tiles taps enclosure showers plumbing fixtures kitchen factory tiles * faucets, baths, whirlpools, lavatories, toilets,showers

20 Outline Current and planned industrial presence History Financials
Past acquisitions Current and planned industrial presence The product ranges Kohler and it’s competitors SWOT Strategy

21 CSW production located all around the world
CSW production located all around the world. Weakness in Europe will be remedy with the new Russian factory

22 CSW production located in such a way, that allows a locally presence in our (future) markets, and at the same time assure an access to low-cost sourcing 14 production locations for CSW Total capacities: Europe: 1,9 mln pcs World: 19,0 mln pcs (New plants planned: MX, RU, IN=> >5 mpc)

23 Non CSW production covers all the product categories that are part of our strategy Industrial restructuration of non profitable operations in Europe already planned

24 Outline The product ranges History Financials Past acquisitions
Current and planned industrial presence The product ranges Kohler and it’s competitors SWOT Strategy

25 Overview Brands / Product fields
1989 1984 1985 2000 2002 2001 1873 1987 67% Taps & Mixers CSW Bathtubs Shower T Furnitures Tiles Info about Karat uncompleted Core business

26 Overview Brands / Price positioning
Prof. middle US - Canada Europe / middle east Asia / pacific Price Karat upper High end Each brand is available through the regional Kohler sales manager

27 Brand architecture Core brand Regional brand Specialist brand Kohler
Main brand for worldwide use; covers entire spectrum Regional brand Jacob Delafon (F,E)* Englefield (AUS) Karat (THAI) Kallista* (US) Sterling* (US) Ann Sacks* (US) *Regional brands with complete offer Specialist brand Sanijura (F) Mira (UK) Daryl (UK) Robern (US) Local brands with special offer

28 Kohler has long encouraged an ongoing dialogue with the art community
Kohler has long encouraged an ongoing dialogue with the art community. Kohler works with international designers and architects for: product development (2006, launch of 3 Artists Editions ‘Top Art Collection’) bathrooms arrangement, to show customers how a dream Bath from Kohler could appear (www.kohler.com). in the Kohler Design Center in east central Wisconsin, where they offer educational seminar series, design services, showroms with current range and a museum

29 Kohler wants to be state-of-the-art.
Acquisitions of innovative companies (hightec, mira, etc.), Launch of innovative products, that combine state-of-the-art design with innovative technologies and take care to save water (performance flush technology, urist mirror with faucet, C3 Toilet Seats) Kohler offers end consumers many ideas and services to arrange their bathroom to a dream space for a higher level of gracious living.

30 - complete bath offer

31 - Product Overview Offers complete bathrooms -15 bath collections with a clear focus on classic lifestyle, with the exeption of purist (2003) and the novelties 2006 Wide range of single lavatories and customizable products (51 decorated washbasins, modern washbasins, etc.), toilets, bidets, faucets, baths, furniture, kitchen sinks (171 models) etc. Materials: vitreous china & fireclay, cast iron, glass, marble, stainless steel Wide range of colours - up to 50 colours (depending on the material) Price level: focus on mainstream and premium

32 - complete bath offer

33 - Product Overview Designer products, 8 collections in 3 Lifestyles (city life, country life, retro) for different target groups. Wide but not deep product range: whirlpools/baths, lavatories, furniture, toilets, bidets, accessories, kitchen sinks. Materials: ceramic, copper, etc. Colours: 1 to 3 colours for a product, hand painted designs Price level: premium to high ( USD per Lavatory)

34 - core business tiles & stones

35 - Product Overview Assortment: focus on tiles, offers also stones, mosaics, plumbing, lighting and designer collections (like Kallista) Materials: tiles from ceramic, glass, metal, leather, wood & concrete; basins from art glass, cast bronze, copper, stone, concrete, spun metal, vitreous china Very wide colour range (depending on the material) Price level: premium too high

36 - complete bath offer Premium: 3 to maxi 13 models, mainstream: models, profi >40 models, each with international models as BTW close coupled WC-Suites Furniture WB: 12 UC-BI WB in synthetics Botticelli vessel lavatory in carrara marble (2211€), Spun Glas (1713€), Timpani in Inox (750€) Specials for projects: sinks, Handylav, children fountain und tube, etc. Kitchen sinks: 10 in ceramic, 7 in ‚cristogranit‘, 18 in ‚metaquarz‘ and 12 in inox Prices in F: WB from (botticelli in carrara marble) to 34 € (60 cm Brive), Premium > €, Mainstream (530 to 1.100), Profi (320 to 530€), Eco (<320€) usage of material is depending on the bath concept or the material characteristics / advantages. Each material is used for ist own material, if iron, synthetic, ceramic or else is used for

37 - Product Overview 15 bath collections in 4 lifestyles, mostly as complete offer (CSW, tube, shower tray, furniture, taps, accessories and front-wall elements) as well as a wide range of furniture washbasins, many specials for projects, 3 of the Kohler high end vessel lavatories and 47 kitchen sinks Product ranges are made of the key models for European needs (product types, sizes) and offer in total a wide assortment of standard functions and standard shapes. Wide range of offered materials pro productfield. Wide range of colours (CSW 8 colours, tubes: from 18 to 37 colours, depending on material) Price range from high end to professional Premium: 3 to maxi 13 models, mainstream: models, profi >40 models, each with international models as BTW close coupled WC-Suites Furniture WB: 12 UC-BI WB in synthetics Botticelli vessel lavatory in carrara marble (2211€), Spun Glas (1713€), Timpani in Inox (750€) Specials for projects: sinks, Handylav, children fountain und tube, etc. Kitchen sinks: 10 in ceramic, 7 in ‚cristogranit‘, 18 in ‚metaquarz‘ and 12 in inox Prices in F: WB from (botticelli in carrara marble) to 34 € (60 cm Brive), Premium > €, Mainstream (530 to 1.100), Profi (320 to 530€), Eco (<320€) usage of material is depending on the bath concept or the material characteristics / advantages. Each material is used for ist own material, if iron, synthetic, ceramic or else is used for

38 - Showers, enclosures, trays, brassware
Mixing valves, accessories, pumps

39 - Product Overview Deep shower systems range (electric, mixer, power, contract showers), shower enclosures and trays, brassware Rada Controls offers the most extensive product range available, for hand washing, showering, bathing, urinal and industrial/commercial applications, including the widest range of UK Healthcare approved

40 - Bathtubs and Showers Hydrolux® Air jet Systems Hydrolux® Whirlpools

41 - Product Overview Small assortment: only showers, baths, receptors tilewalls Material: acrylic and gelcoat 17 Colours Options: knockdown system, whirlpool, air jets, crab bar options, kits, fold-up seat, stainless steel curtain rod, removable headrest, extra reinforcement

42 - Product Overview Toilet suites / Showers / Plain baths / SPA baths / Vanities

43 - Product Overview Englefield - one of the two brands manufactured by Kohler Co. Australasia for both the Australian & New Zealand markets Relative small assortment: no collections, single toilets (only pan - close - coupled), washbasins from vitreous china, plain baths, spa baths and vanities Price level : low* * assumption

44 - Product Overview Bath / Shower moduls and doors / wirlpools, sinks, toilets * < 100 USD / lavatory

45 - Product Overview No collections, single brands for the different product lines 27 bath sinks from stainless steel, vikrell or vitreous china, 52 kitchen sinks 30 toilets (only pan - close - coupled) discontinues faucet brands and recommends Kohler faucets Focus on bath & shower modules / doors / receptors / kits : innovations for integrated storage shelves, quick install technology small colour diversity Price level: low* (lavatories for below 100 USD) * < 100 USD / lavatory

46 Outline Kohler and it’s competitors History Financials
Past acquisitions Current and planned industrial presence The product ranges Kohler and it’s competitors SWOT Strategy

47 As Kohler itself, most of our international competitors cover almost the entire spectrum of bathroom products Legend: X = minor weight in sales of company XX = medium weight in sales of company XXX = great weight in sales of company Source: Kohler research

48 Global presence of the main competitors in CSW (2004)
Kohler : Good presence in America, limited presence in Europe 100 200 300 400 500 Europe Asia America DE FR UK/IE IT BNL Sca ES/PT RU Oth EUR JP CN IN Rest S+OA US CA MX S-Am Size (m€) 278 320 378 350 102 165 253 173 372 475 702 186 >700 1.209 124 >240 Villeroy & Boch American Standard Duravit Eczacibasi Grohe Inax Jacuzzi brands Kludi Kohler Masco Roca Sanitec Toto Legend: Market share (volume): > 15% Market share (volume): >2% - <5% Market share (volume): >5% - <15% Market share (volume): <2% Ceramics (incl. sinks and showers)

49 On the world ranking list, we estimate that we rank #2
Total value as basis: 5,2 billion Euro (ASP) Cisa AR 2003: 104 m$ = 92 m€ => BSRIA 1,8% correct Crane: no data => BSRIA 2,9% Inax: no data split => BSRIA (but with doubt: too low?) => 2,9% Jacuzzi: competition file comes to 145 m€ => 3% is good hypothesis V&B figures: total sales ceramics 2003 = 269,1 m€ => 5,2% Toto: no data split => BSRIA (but with doubt: too low?) => 8,3% Kohler: competition file comes to 350 m€ => BSRIA 460 m€ could account for upside USA + sales S-Am, Karat and China => 8,8% Roca: competition file comes to 345 m€ for EU only => 8,7% would give 450 m€. With some m pcs outside Europe, this would give an ASP of only 10 € => sales of 500 m€ is more likely . Roca makes 50% of m€ in Bathroom. 500 m€ would give give share of 65% in total bathroom sales => 9,6% Sanitec: competition file comes to 522 m€ plus 5% export => 550 m€ which would match sales from AR minus 10% for seats, etc => 10,6% ASD: presentation indicates 1,4 mld$ = 1,25 mld€ for fixtures => 13% would give only 675 m€ for ceramics, or some 55%. With relative strength on ceramics 800 m€ or some 65% is more likely => 15,4% World-wide shares of main suppliers of CSW* - year 2003; coverage ca. 80% of total world market * V&B incl. Vitromex, Roca incl. acquisitions 2006 * Due to lacking data inclusive ceramic shower trays and kitchen sinks Source: BSRIA - Consult - Kohler research

50 In Europe however we are still relatively weak at #6
Total value as basis: 2,2 billion Euro (ASP) All data are present in reworked competition file. Although slight changes would be justified, the original data were close enough and were left in order to avoid confusion Shares of the main supliers of CSW* in Europe - year * Inclusive acquisitions of Roca 2006 *Ceramic Sanitaryware exclusive ceramic shower trays and kitchen sinks Source: Consult and Kohler research

51 Outline SWOT (only Kohler team) History Financials Past acquisitions
Current and planned industrial presence The product ranges Kohler and it’s competitors SWOT (only Kohler team) Strategy

52 Strengths and Weaknesses
Internationality Industrial and market presence in 3 continents Strong presence in the US market in several bathroom product categories Complete offer for the bathroom (and Interior Design competence) including material diversification WEAKNESSES Limited international presence of core brand Weak presence in Europe Failure to enter the German market No success in transferring ranges from one country to another (Delafon/F vs Kohler/D) Specialist brands have only local presence (Mira, Sanijura)

53 Strengths and Weaknesses
Family owned company (long term objectives and outlook, less short term pressure) Experience with acquisitions and investment minded WEAKNESSES Complexity of organisation factories brands countries

54 Opportunities and Threats
Fast growth of the Asian market will benefit to the Kohler local presence Ceramic acquisition or alliance in Europe THREATS Concentration in industry & trade

55 Outline Strategy (Current) History Financials Past acquisitions
Current and planned industrial presence The product ranges Kohler and it’s competitors SWOT Strategy (Current)

56 Current strategy Expansion of all kinds
Geographically (Markets and production facilities) Asia : China, India, Thailand America : Mexico and US By product and material categories for sourcing reasons

57 Current strategy Reinforcing of the core Brand and establishing sub-brands to cover all market segments Enlarge/improve the core brand Kohler by taking control of the quality of our distribution in the US (Showroom programs . The Kohler Store) (US) Art’s involvement (Product, communication) Other brands: Creation of Kallista and Ann Sacks as a luxury brand (US) Be present in the lower segment with Sterling (US) Use specialist brands (Europe/US)


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