Lighting the Way to Demand Creation

Most distributors are perceived as demand fulfillers, waiting for a customer to generate an order, be it from a contractor or an MRO opportunity. Few have mastered the skill of creating demand while also fulfilling customer needs. Typically these few have added sales specialists (automation, lighting or vertical market focused).  These companies are considered the innovators and entities that can drive profitable growth for themselves.

The lighting market represents an opportunity for more to differentiate and generate demand … at least through proactively marketing and selling LEDs.

Some industry “talk points” to consider:

BriteSwitch, a lighting rebate management company, in their recent newsletter said “2015 is shaping up to be another great year for rebates and incentives in North America. Over the past few months, rebate organizations have been busy updating their offerings and preparing their 2015 programs. While some programs ended at the end of 2014, others programs have received new funding and started providing rebates again. Right now, 72% of the country is covered by an active commercial lighting rebate program (Click here to see a map).

If you’re in a rebate state you should be marketing the opportunity, using the information in your audits, helping customers file rebate paperwork (or using BriteSwitch) and identifying types of markets that can most effectively use the rebates and to others where the savings are so strong that the increased awareness of lighting efficiency helps your sales process.

Eaton recently announced their quarterly financials.  Some takeaways regarding Cooper Lighting …

• Sales were up 13%
• about 50% of lighting sales is LED
• they see recessed lighting as a key market and emphasize that this is a retrofit market.
• the new construction outdoor lighting market is almost all LED now

Sounds like there is the opportunity to create demand in the recessed market (commercial environments).  Partnering with contractors, marketing, having staff call on targeted end-users, vertical marketing are all viable opportunities.

Acuity shared it’s Q1 performance last month. Some highlights from them:

• Net sales were up 13% and total sales volume was up 14% (difference is lower pricing and currency issues)
• 42% of sales are LEDs (although they think they are outpacing competition – note … see above)
• They believe that the North American lighting market was up mid single digits during their Q1 (meaning they think they are taking share from someone). They feel that the lighting market will be mid to upper single digits in 2015.
• Their Q1 LED sales were up about 75% vs prior year (to be expected given the growth and focus on LEDs)
• The outdoor market for new construction has converted to LEDs, however, the “opportunity is the installed base” (meaning retrofits)

Similar feedback to Cooper Lighting … new construction goes LED, retrofit is a large opportunity.  Since lighting agents like to focus on new construction / large retrofits or renovations, it seems like the smaller to mid-sized retrofit opportunities could be a sweet spot for distributors.

Cree was recently in the news with an announcement that it now has a $500 million credit line. It is expected that the money will be used for “working capital and acquisitions.”  According to Chuck Swoboda, CEO, “As far as future acquisitions, what we would focus on, obviously we’re going to look at all the elements but right now it’s about helping Cree drive adoption and really gain brand and share of mind that what we do in LED lighting is really the best way to solve a lighting problem and it’s more about how to continue to compete against this idea that it’s still okay to buy the conventional technologies,”

• Their further investing, hence indicating greater opportunities within the LED segment.
• As a distributor, whom would you like to see Cree buy? Or what would you like to see them do with the money?
• How could Cree help distributors accelerate adoption for the retrofit market?

Distributors and manufacturer reps seeking to create demand have a unique opportunity with LEDs. While new construction may be more of a fulfillment opportunity for most distributors (as architects are specing in the products), retrofits represent an opportunity to create demand, driving profitable business. The above highlights the opportunity, the question becomes, what are you doing to capitalize upon it? Can your sales organization effectively target and execute?

Need ideas? We can help.