We are always pleased and feel responsibility when work with the industry leaders implementing large-scale projects. Galaksi Group is the largest manufacturer of PVC and aluminium profiles and plastic pipes in Kazakhstan. Further plans to build a new plant and work with one of the largest banks to attract investment added significance to the project.
The Agency’s was to assess the investment potential of the new project to expand aluminum profile production capacities. Besides, the investor required examination of the market for both aluminium profile and other products, since radical changes in the power balance on either market can affect success of the new project.
So, we delved into four consumer markets – architectural aluminium profiles, PVC profiles, plastic pipes and radiators – in three countries: Kazakhstan, Kyrgyzstan and Tajikistan. Openness of the Company and drive of employees for result enabled “smooth entry” into the market, identifying key trends and factors influencing its development, which helped with the market segmentation and further determination of each segment trends and dynamics.
PVC Profile Consumption Pattern
ALU Profile Consumers among Developers
Heating Radiators Market Structure by Types
Kazakhstan Polymer Pipes Market Structure
Markets of PVC profile, plastic pipes and radiators are relatively easy to predict since these products are mainly used in construction of new facilities and governmental programs and there are certain trends in private consumption, while aluminum profile is a product purchased for specific projects and its consumption varies on a case by case basis. Therefore, “little by little” we collected data from various, sometimes controversial, sources that ended in establishing of a large database and drawing conclusions on:
- Market volumes in nominal and monetary terms, their dynamics and demand factors;
- Current competition and opportunities for its development through commissioning of new production capacities or use those existing; the company’s market position over time;
- Kazakhstan market risks associated with increasing competition and imports from Russia;
- Development opportunities in sales of aluminum profile on the markets of Kazakhstan, Kyrgyzstan and Tajikistan including import substitution;
- The company’s brands perception, attitude towards them, and areas for improvement.
Analysis of the market situation revealed 2 potential segments for development of aluminum profile sales, which, provided that the company carves out the niche, enable sales growth by more than 20%. All forecasts were made for 5 years and used to justify market attractiveness of the project.
Forecasts are good, but the company needs to work today, so we gave recommendations on how to improve sales, reinforce the brand and enhance consumer communications:
- Despite the product nature and buying frequency, brand image still makes a difference when it comes to purchasing, which is evidenced by performance of Russian products on Kazakhstani market. In the course of discussions with the working group we identified opportunities to promote the product emerging amidst crisis thanks to reduction in advertising costs. It enables active B2B and B2C events with relatively low budget with a large portion of effort aimed at online support.
- Almost every company has cost optimization potential especially in terms of opening and maintenance of branches, staff, and social security, which renders no effect on “formula” itself and consequently the product quality.
- On the whole, all categories of goods and services in Kazakhstan report transition from product to services and, in some industries, even solutions for clients. This approach enables added value creation for customers and accordingly increases their loyalty. There is an obvious need for further build-up of work with developers and manufacturers through introduction of successful experience of Russian companies and our own unique proposals;
- The consumer is well aware of Galwin profile, while other brands of the company are not so popular. Besides, we revealed that Galwin had lost its positioning and UPS over time, so we needed to study consumer insights, strengthen the current positioning of Galwin and develop the idea for all products in the portfolio. It is beyond argument that PVC profile portfolio should include products for different price segments, since economy/standard/premium shares of the market are 40:50:10.
- Detailed study of the customer internal information and data, meetings in working groups;
- Analysis of data from publicly available sources;
- In-depth interviews with employees of the company branches;
- Survey of windows and glazing systems manufacturers (70 interviewees);
- Survey of developers (39 interviewees);
- Survey of retailers, key players on the market of building materials (35 interviewees).
Kazakhstan, Kyrgyzstan, Tajikistan
April –May 2016