U.S. Residential Water Treatment Equipment Markets

Price Sensitivity among End Users Challenging Manufacturing Margins
The water purification equipment market has long been plagued by high price sensitivity. Price being a very significant factor in the purchase decision especially for the residential consumers, manufacturers are increasingly forced to offer competitive prices at the cost of contracting margins.
Price pressures are further intensified by commoditization of the water purification products. Although consumers are concerned about quality in an industry where products are similar, end users tend to go with the lowest price. This compels manufacturers to either follow the market trends of competitive pricing even if it may be at the cost of product quality or to find ways to differentiate themselves by different approaches to the market. Significant increases in prices are not welcome in the market. Pricing is a strong differentiator in the market compelling manufacturers to contain price growth for remaining competitive in the market.

Ways in which companies may address decreasing profit margins are as follows:

- Increasing Price Points: Price points have been increased by many manufacturers to meet the diverse end-user needs. This necessarily means that manufacturers are increasingly expanding their product portfolio to offer a variety of products priced to suit budgetary needs of different consumers that require water purifiers ranging from the basic unit to very sophisticated multi technology equipment.
- Consolidation: Merging with or buying another company allows manufacturers to achieve economies of scale and gain better market share.Distribution: Moving from distributor and manufacturer's representatives to direct sales is another way in which manufacturers deal with decreasing margins.
- Customized products: Designing and manufacturing customized equipment to address issues such as specific allergies, chemicals, odors, and so on, allows companies to differentiate themselves.
- Customer service: Offering a high level of service is likely to allow companies to be able to enjoy repeat business from customers.Price sensitivity is expected to continue in most water purification equipment segments. This combined with the effects of growing commoditization in the market is likely to push prices lower for some products, or keep them from increasing at a faster rate than inflation. The impact of this challenge is expected to be medium throughout the forecast period.Frost & Sullivan has segmented the market in terms of the major categories of residential water treatment equipment as defined by the industry. These include:

- Point-of-Entry (POE)
- Point-of-Use (POU)

- Counter Top (CT)
- Under-the-Sink (UTS)
- Faucet Mount (FM)

- Distiller Units

- Pitchers

- Residential Water Replacement Filters

Strategic Benefit
“Consumers are becoming more health conscious and are more aware of water-quality issues. This is leading to an increasing consumer awareness of water treatment products, especially with regard to residential water treatment equipment”. Water quality in the United States is continuously deteriorating through both microbiological and anthropogenic means. Microbial outbreaks that occurred across the country have received negative attention among the general American public. In the recent years disease outbreaks due to E.coli and Campylobacter or Cryptospordium have occurred. There have been thousands of cases of illness because of these microbes in drinking water. There is also a fear of bio terrorism, especially at this critical time, post 9/11 when the importance of national security is second to none. Consequently, sales of water purifiers have increased because of this reason.

Industry Goals
The total residential water treatment equipment market in the United States reached revenues of $1.37 billion in 2004. The market for point-of-entry equipment was the largest with revenues of $526.3 million in 2004. In general, growth is expected to be stimulated by an ongoing increasing awareness of water quality and water treatment equipment, caused by advertising and health scares. Additionally, the increasing levels of competition in many market segments have already resulted in an expansion of the range of products available to customers in order to cater for changes in demand, which are expected to persist in the future.

Technology Trends
The rate of technological development in this market is relatively low, because of the fact that the majority of technologies are well established. The only exceptions to this rule are when technologies that have been established in the industrial treatment sector are applied to residential systems. However, product development still remains of utmost importance for manufacturers to keep up with the advancing customer requirements. As a result, developments in the market tend relate to efficiency improvements and the fine-tuning of existing technologies. Furthermore, as a consumer market, the aesthetic characteristics of products are becoming increasingly important, as well as continually changing with current fashions.

Market Trends
A major issue in this market in particular is educating the end-users. This requires an effort and substantial advertising budgets. Smaller competitors are lacking on both fronts and hence, are growing at or below the overall market growth rate. Larger companies that are investing in education of end users and advertising to increase awareness are experiencing better growth.In water purifiers, price, aesthetics, and technology are strong differentiators for products. Intensive marketing efforts by manufacturers are based on these differentiators to drive their products in the market. Aggressive marketing efforts to out-perform competition have not only benefited individual manufacturers but have also elevated the level of awareness about water purifiers among end users. This has increased penetration of the market in the residential water treatment equipment market boasting sales of equipment.

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1 EXECUTIVE SUMMARY

Summary And Overview Of Major Findings

Market Overview and Research Content

Glossary Of Terms

2 TOTAL MARKET

Market Trends

Market Drivers

Market Restraints

Key Industrial Challenges

Market Forecasts

Market Issues

Latest News Articles

Regulatory Analysis

Distribution Channels

Value Chain

Distribution Trends

Analysis By Product Type

Percent Of Revenues By Product Type

Competitive Analysis

Demand Analysis

Competitive Landscape

Frost & Sullivan Awards
Award Category: Market Leadership Award
Award Category: Business Development Strategy Leadership Award
Award Category: Competitive Strategy Leadership Award
3 U.S. POINT-OF-ENTRY EQUIPMENT MARKET

Strategic Analysis of the Total POE Equipment Market

Market Drivers and Restraints

Total Revenue and Forecasts

Competitive Landscape

Trends By Technology Type

Strategic Analysis Of The POE Water Softener Market

Market Drivers and Restraints

Total Revenue and Forecasts

Competitive Landscape

Market Share Analysis

Pricing Trends

Strategic Analysis of the POE UV Water Treatment Market

Market Drivers and Restraints

Total Revenue and Forecasts

Competitive Landscape

Market Share Analysis

Pricing Trends
Strategic Analysis of The POE Carbon/Sediment Market

Market Forecasts

Competitive Landscape

Market Share Analysis

Market Trends
4 U.S. POINT OF USE EQUIPMENT MARKET

Strategic Analysis Of The Total Point Of Use Equipment Market

Market Overview and Definitions

Market Drivers And Restraints

Total Revenue and Forecasts

Competitive Landscape

Trends By Product Type

Pricing Trends

Technology Trends

Strategic Analysis Of the Counter Top Water Treatment Market

Market Drivers and Restraints

Total Revenue and Forecasts

Trends by Technology Type

Competitive Landscape

Market Share Analysis

Strategic Analysis Of Under The Sink Water Treatment Market

Market Drivers And Restraints

Total Revenue and Forecasts

Trends by Technology Type

Competitive Landscape

Market Share Analysis

Strategic Analysis of the Faucet Mount Water Treatment Market

Market Drivers And Restraints

Total Revenue and Forecasts

Competitive Landscape

Market Share Analysis
5 U.S. PITCHER FILTER MARKET

Market Trends

Market Drivers and Restraints Specific to Pitcher Segment

Total Revenue and Forecasts

Competitive Landscape

Market Share Analysis

Pricing Trends
6 U.S. RESIDENTIAL TOTAL REPLACEMENT FILTER MARKET

Total Revenue And Forecasts

Revenue Forecasts

7 MARKET ENGINEERING STRATEGIES

Strategic Recomendations

Strategies and Strategic Recommendations

8 COMPANY PROFILES

Profiles Of Strategically Targeted Companies

Clorox Company

Culligan International Company

Cuno Incorporated

Ecowater Systems LLC

GE Infrastructure Water & Process Technologies

Multi-Pure Drinking Water Systems

Omnipure Filter Company

PUR Water Filtration System

Trojan Technologies Inc

Waterpik Technologies Inc

9 ECONOMETRICS

Decision Support Database

Average Water Prices

Percent of Total Population with Access to Safe Water

Domestic Water Consumption