14

CHAPTER II

MARKET AND INDUSTRY ANALYSIS

2.1 Market and Industry Analysis

2.1.1 Macro Environment

The analysis about external factors that affect the new start-up business plan,

we use the PESTEL analysis. PESTEL analysis is a framework or tool used

by marketers to analyze and monitor the macro-environmental (external

marketing environment) factors that have an impact on an organization. This

analysis includes Political, Economic, Social, Technological, Environmental,

and Legal (Academy, 2012). Here is the analysis for business ideas about

Indonesian sanitary ware industry.

Political

The concern issues in sanitary and hygiene issues in Indonesia are not just

started this lately. The government had made the actions for doing the water

conservations. It supports by the government regulation about the sanitation

and hygiene issues. Along with the quality of life which being concerned by

government, the simplifying of sanitation process is become one of the

supporting factors for making the better quality of life increasing. The

efficiency process, which is supported by appropriate technology and target

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market as the pioneer, make companies who have doing their business follow

the lead to do the beneficial things for users.

Local consumers show strong needs for ceramic sanitary ware, especially the

needs of local product to boost creativity of Indonesian people.

Economical

Economic condition in Indonesia grows significantly. The GDP result in 2013

was worth 868.35 billion US dollars. It shows the significant result since few

years. It also impact the productivity and growth development of business in

Indonesia. It is a sign that national economy may be boosted by capital

investing or by the technological changing, such as infrastructure utilities. The

sectors such as transportation, manufacturing, financial services, and

communication, has shown the result for being compared with the last year

result.

Social

As the growing up of the productivity, the business also grows. The

relationship within required for running business making people have to be

connected each other to fulfill those needs. That is why in this era, where

media, especially media social is booming. The good sanitary ware utilities

reflect the hygienic management that will affect the company’s performance

and brand image among the users.

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Technological

Technology support is one of the factors for a company to compete in the

large wide competition, domestic and internationally. Technology

improvement is being used for making the better international airport in

Indonesia, which is recognized local and internationally.

The good sanitary ware utilities use the good watering technology.

Technology utilities affect the efficiency of its using that is why upgrading

technology is required for enhancing the efficiency performance of company

also.

Environmental

The relevance in sanitary ware industry for its environment could be seen

from the amount of water using in daily routine activities and also the

materials using for the factory, since the raw materials till the finished good. It

is also important to keep the healthy life among users, starting with the public

facilities, such as toilet. It uses the water to flush up the sink and urinal of

sanitary ware of toilet using. The saving of water used is one of environmental

action to support the earth concern issues. The amount that saved could be

used for the other important allocation.

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Legal

Indonesia laws become operative following issuance of Implementing

Regulations, and can be subsequently stipulated in Ministerial and

Presidential Regulations and decrees. A significant period of time can elapse

between new laws being announced, drafted and passes by parliament and

final regulations. It is also happen in the industry of service in airport. Since

being regulated in the Keputusan Menteri Kesehatan Nomor 1405 Tahun 2002

about the Health Regulations, the concern about health itself arises in

Indonesia, especially for the implementation in public space.

2.1.2 Porter’s five forces analysis

Figure 2.1. Porter’s Five Forces Analysis

(Source: Thompson, Peteraf, Gamble, & Strickland, 2012 )

The Porter’s five forces analysis consists of the five factors, which will be

explained bellow:
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Bargaining power of suppliers

Suppliers in the sanitary ware industry are from various manufacturers, such

as porcelain, plumbing, odor sealant, and so on. Hytairs is an eco-friendly

product. The process assembly which will be fabricated in the workshop of

Hytairs, it makes the bargaining power of supplier could be controlled. The

company orders the specific materials, which will be created into the finished

Hytairs.

Bargaining power of customers

The company’s main targeted customer is the contractors. There are people

who will help the installation process. The bargaining power of customers

considers as high because of their capacities to determine about the brands’

usage overall depend on the agreement with the contractors.

Threat of new entrants

The business of sanitary ware and its complementary is growing well in

Indonesia. This is supported with the growing of the ceramic and porcelain

industry in Indonesia also. There are some of the well-known brands, such as

Toto, Kohler, and American Standard, who already existed and still compete

to expand the market. The opportunity for new competitors to entrance is

widely open from seeing the market potential.

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Threat of substitute products

Threat of substitute products in this industry is quite large. It affects by the

competitors who also offer the similar product with the slight differences in

pricing, types, and quality. It makes Hytairs have to distinguish the point of

difference to compete with other sanitary ware’s brands.

Competitive rivalry within an industry

The competitors played in sanitary ware industry already have the big

reputation in Indonesian market. There are such Toto, Kohler, and American

Standard, are kind of example of famous sanitary ware companies which

already growth and being known with their products wide mass. It is being

considered as tight competition and It is influenced by the loyal customers

factor as one of the enhancing matter.

2.1.3 Market Profile and Opportunity

Market Profile - The Growth of Sanitaryware Industry

Sanitaryware is a compulsory need for every facility that relates to

human activity, such as residential dwellings, office buildings, hotels,

apartments and many other facilities. The growth of sanitaryware industry in

Indonesia is parallel with the property industry explosion, as each one of those

properties must have need sanitaryware product.

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In the Global House Price Index released by Knight Frank, Indonesia

experienced two digits growth, 11.5% in the fourth quarter of 2013 compare

to the previous year period. Indonesia’s position is far ahead from Malaysia

(10.1%) and Singapore (1.9%). According to Ishak Chandra, Managing

Director Corporate Strategy and Services Sinar Mas Land, the most

significant growth will happen on the office spaces building demand. Investor

who just gets into the property business in Indonesia will consider the

commercial building like office building. 1 This number shows that

sanitaryware industry in Indonesia will keep on growing as the property

demand is rising.

Water Conservation Concern and Operational Cost Reduction

As people nowadays are more aware to the environment especially in

water conservation, sanitaryware company came up with the product to fulfill

the demand of water efficiency. The boom aroused in the early 2008 and

sanitary product manufacturers are competing to make product with water

saving feature.

Customers were enthusiast with this innovation since most of water

consumptions were produced from the sanitary products. Saving water means

saving money. The first breakthrough in Indonesia’s sanitary market was

TOTO with the “Eco-Flush 4.5 : 3” toilet. The dual flush system offers water

1http://www.beritasatu.com/forum-bisnis/170506-industri-properti-masih-akan-tumbuh-pada-
2014.html
 21

saving flush, 4.5 litre per flush for more water needed, and 3 litre per flush for

less water needed. The “Eco-Flush” system also applied in urinal, where it

used to require 3 gallons per flush and now only require 1.6 gallons (around 6

litre per flush). 2 According to Green Council Building Indonesia, shifting

from the conventional toilet to the eco flush toilet is one of the requirements

to become Green Council Building member. This eco flush toilet is not only

help to conserve clean water up to 25%, but it will help to reduce building’s

operational cost significantly. 3

Indonesia’s sanitaryware market players

In Indonesia’s sanitaryware industry, the level of competition is still

quite low due to the small number of company that plays in this industry.

Within the local market, there are 8 big sanitaryware product producers with

the overall capacity up to 4.36 million units per year. The 8 big players are

PT. Surya Toto Indonesia, Tbk, PT. Indo American Ceramic (American

Standard Indonesia), PT.Radian Caramika, PT.Phoenix Sanitair, PT. Inax

International, PT.Pearl, dan PT. Sarana Purna Cipta. 4 The biggest market

share owns by PT. Surya Toto Indonesia, Tbk, 55.4% from overall
5
sanitaryware company market share.

2 http://www.greenlifestyle.or.id/products/detail/25
3 www.gbcindonesia.org/.../doc.../129-eco-office.html
4 www.republika.co.id
5 Euromonitor International, September 2013, PT. Surya Toto, Tbk.
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Market Opportunity

The growing up market for sanitary ware industry is still considered as high

opportunity to grow. It is a big potential for the manufacturer to invest and

grow up the business in this industry. Indonesia Investment (2014) quoted that

the capacity and utilization of the country’s tableware production is currently

at 95% and has therefore many rooms to grow. The ceramic sanitary ware

production is also growth at 6.39%

• According to International Water Works Association, sanitary products

consume most of water in the household, 35% for showers and baths and

30% for toilet flushing. This huge number of water required by these

sanitary products awaken many sanitaryware producer to create more water

efficient product in order to lessen the number of clean water usage.

Nowadays, most of sanitaryware companies are competing to produce the

water efficient product to help preserve clean water and also to provide

customer with lower water cost. In reality, the amount of water used for

this “Eco” sanitaryware is still very large. Therefore, there is many room of

improvement for product innovation towards sustainable water solution.

• Indonesia Toilet Association present annual award as a form of public

acknowledgement for public toilet that set the most convenient and

hygienic sanitary facilities based on certain criteria. This attempt

encourages operator of public places to keep on maintaining the cleanliness

and hygiene. Hytairs present to facilitate public places toilet operators to

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effortlessly keep the toilet clean and hygienic. In addition, Hytairs’

innovative design and features can be an added value to be competent for

winning the award.

• The exceptional growth of property industry in Indonesia is going stronger

due to the high demand of office spaces, hotels, houses and apartments.

The overall property sales in Indonesia increased by 26.7% in the fourth

quarter of 2012. 6 Therefore, the

• Opportunity of Hytairs to be the part of the building development is also

huge.

• People who are living in urban areas focusing in Jakarta are more adaptable

to new technology as many companies introduce their new innovative

products more frequently. Therefore, people will not have any difficulties

in using innovative products such as Hytairs.

• Sanitaryware products in Indonesia are dominated by big names such as

Toto, American Standard, and Kohler. These companies manufacture

similar products with no significant innovation. Hytairs will enter the

market by offering more advance technology, design innovation and

integrated service.

6 http://www.globalpropertyguide.com/Asia/indonesia/Price-History
 24

2.2 TOWS Analysis

Here is the TOWS analysis of sanitary ware industry in Indonesia:

Table 2.1. TOWS Analysis

(Source : Internal Report, 2014)

Strengths Weaknesses
1. The company manufactures
innovative product and the first 1. Specialization in one type of
in the market product
2. The company's products are 2. New entrance in the sanitary
distributed in major cities across market
TOWS Analysis Indonesia 3. Brand recognition and brand
reputation
3. Up to date innovation for
environmental responsibility
4. The company's clients consist of
major hospitality companies.
5. Customers focus
6. Customer based service team
Opportunities
1. Brand management and
marketing which leverage on SO WO
further innovation, sustainable 1. Innovation to widen the high- 1. Product quality and
and environmental friendly tech sanitary products range customers satisfaction
product. 2. Product and customers supported by brand
2. The company can expand its satisfaction warrantee that will management and marketing
product portfolio into other leads to a larger market share strategy lead to a good brand
range of high-tech sanitaryware recognition and reputation
3. The company can increase the 2. Launch one type of product
number of its manufacturing to get customer’s attention
units to capture a better market first, when already settled,
share. expands the product range.
Threats
1. New product and new market ST WT
that needs to create a customers 1. Create innovative sanitary 1. Create customers base by
base product with a good customer creating customer’s
2. Big names in the industry will service system satisfaction and trust of this
create a similar product 2. Keep on producing innovative one product
3. The company is dependent on product protected by patent 2. New entrance in sanitary
the construction of modern 3. Broaden customers base market
buildings and any delay in their
construction will affect its
profitability.
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2.3 Sanitaryware Current Business Model Canvas

2.3.1 Overall Business Model and Theory

2.3.1.1 Marketing
Marketing is understood in general as the ability by marketers to

provide customers sufficient information about a certain product and

create a successful long-term profitable relationship between the

company and the customers, and generate high levels of customer

satisfaction.

According to Amstrong and Kotler (2010), marketing is

understanding the market place, and from this, a customer-driven

marketing strategy should be designed, and an integrated marketing

program that delivers superior value should be constructed, and

profitable relationships will be built that create customer delight,

capturing the value from customer to generate profits and customer

equity.

2.3.1.2 Integrated Marketing Mix

In planning and implementing strategies, marketing managers develop

the four basic components of four P’s (product, pricing, place and

promotion)

1. Product

Good, service, or ideas that are created and offered to the

market to fulfill customer needs and wants. Fulfilling consumer needs

can be defined as changing existing products to keep in competition

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with emerging market and competitors. How the consumer perceives

the product as satisfying a need is more important than how the seller

sees the product. More customers are also far more interested in

benefits than they are in features. According to Mullins & Walker

(2006) elements of product are quality, features, style, options, brand

name, packaging, guarantees or warranties, and services.

Product development can be accomplished in various stages.

Stages that are usually followed in a product development is the

existence of an idea, the filtering of ideas, development of ideas,

experiment setup, business analysis, market sales experiment. The

objectives of product development is to meet consumer demand, to

compete in the industry with the highest market share, increase the

number of sales, maximize the usage of production resources, and

prevent consumer monotony.

2. Pricing

Price is the amount of money charged for a product or service,

the total value of the exchanged consumers to the benefits gained by

using the product or uses the services (Kotler and Armstrong, 2008).

Price plays a very important part in the marketing mix of services,

due to pricing provide income for businesses (Payne, 2000). The

company will perform the full consideration as pricing will have a

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direct impact on total revenues and costs. Price is a major factor

determining the position; it should be decided in accordance with the

selected target market, product mix, variety, and service, as well as

competition (Kotler and Armstrong, 2008).

Selecting the best price at which to sell it is an essential

element in marketing mix, clear and strong planning is required to all

costs by all means covers variety of cost such as operating,

administrative and research costs as well as marketing costs. Prices

must be reasonable to prevent customers turn to other competitors.

High prices tend to limit the market size but increase more profits per

product as well as attracting customer about the high quality product

offers.

3. Place (Distribution)

Placement strategy places emphasis on the aspect of

product distribution channels that serve to deliver products to target

users. It refers to placing a specific product in the proper store.

Basically referring to any concerned with getting the product from the

producer to consumer. According to Kotler and Armstrong (2008),

place, is another marketing mix tools, including the activities of the

company to make products can be obtained and made available to

target customers.
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According to Payne (2000), location with respect to the

company's decision about where the operation and his staff will be

placed. The importance of location for the service depending on the

type and level of interaction involved. Strategic location is beneficial

for the company because it is easily accessible to the consumer, but it

also would make more cost for rental or higher investment cost.

Offering the right product at the right place or location at the right

time is an essential strategy.

4. Promotion

High levels of brand awareness and a positive image increase

the probability of a product being chosen. This refers to techniques for

communicating and promoting information to raise awareness and

knowledge about the existing product. Essentials promotion tools

includes advertising, personal selling, sales promotions, publicity and

public relations. To build consumer awareness, promotion of a new

product is essential. Consumers must receive enough information

about the Hydroponic vegetable product and what kind of promotion

tools has reached consumers.

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Figure 2.2. Integrated Marketing Mix (4P’s)

Source: Kotler and Armstrong, 2008

2.3.1.3 Service Marketing Mix

This part specified more to the service part as integrated marketing

mix (4P’s) focus more into physical product. To discern the

differences between services and physical products, Booms and Bitner

(1981) suggested the extension of 4P’s framework with three

additional factors including people, physical process and process.

1. People

People refer to all human factors who take part in service

delivery directly or indirectly, include firms personnel employee and

customers. The quality of all personnel must be maintained and

monitored well knowing that in services industry, this element hold

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crucial point and direct impact on how the product is perceived.

Employee or personnel tend to be variable in their performance

which resulting in variable quality as well. Considering the

knowledge, skills, motivation, attitude, and behaviour of the

employees must be done accordingly. Recruiting and training the

right staff is required to create a competitive advantage. People

concept also includes costumers who perceive and purchase the

product. Therefore, managing costumer action is as important as

managing service provider and seller action.

2. Physical Evidence

Physical evidence refers to the environment in which the

service is delivered and any tangible goods that facilitate the

performance and communication of the service. (Booms and Bitner,

1981)

“Physical evidence is important because customers use tangible clues

to assess the quality of service provided. Thus, the more intangible-

dominant a service is, the greater the need to make the service tangible

(Shostack, 1977). Credit cards are an example of the use of tangible

evidence that facilitates the provision of (intangible) credit facilities by

banks and credit card companies. The physical environment itself (i.e.

the buildings, decor, furnishings, layout, etc.) is instrumental in

 31

customers’ assessment of the quality and level of service they can

expect, for example in restaurants, hotels, retailing and many other

services. In fact, the physical environment is part of the product itself”

(Journal by Mohammed Rafiq and Pervaiz K. Ahmed)

Attention to the interior, building equipment, including lighting

systems, and spacious layout, product and good arrangement is

important because it give significant affect to visitors’ mood.

3. Process

Process refers to all procedures, system, mechanisms, and flow

of activities within the place where the service is delivered. All of the

activities above will be evaluated by customer, which means an

important point in service. The process of creating and delivering

services to customers is a major factor in the marketing mix,

because customer service will look at the service delivery system as

part of the service itself (Payne, 2000). In any service provided place,

the process of queuing for the delivery and obtaining the goods usually

occurs. Therefore, managers have to ensure that customers

understand the process of acquiring a service and that the queuing and

delivery times is acceptable to customers (Booms and Bitner, 1981).

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2.3.1.4 B2B Marketing

The product and services of HYTAIRS is bought by businesses which

have different kind of marketplace compare to consumer “B2C”

market. B2B purchasing decisions are driven not by wants but by

needs, where a technological application exists triggers more demand

rather than adapting to the changing trends. B2B has special

characteristics according to Minet (2002, p.2):

• Comes with typically bigger value or bigger unit purchases

• More technically complex product

• Higher buyer risk

• Longer buy times

• More complex decision-making units

• Professional purchasers

• Closer buyer-seller relationships

• Derived demand

• Reciprocity
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2.3.1.5 PESTEL and SWOT analysis

PESTEL Analysis

PESTEL analysis of any industry sector investigates the important

factors that are affecting the industry and also give impact to the

company that operate its business in the sectors.

PESTEL stands for political, economic, social, technology,

environmental, and legal analysis.

Based on Research and Market Offers (2012), the PESTEL analysis

is a perfect tool for managers and policy makers, that helping them in

analyzing the forces that are driving their industry and how these

factors will influence their businesses and the whole industry in

general.

SWOT Analysis

The SWOT analysis, which stands for Strength, Weaknesses,

Opportunities, and Threats, is a simple yet powerful tool used to

evaluate the company’s capability for success and to have a

sustainable future (Thompson, Peteraf, Gamble, & Strickland, 2012).

2.3.1.6 Porter’s Five Forces Analysis

The competitive forces in an industry are different in terms of

character and asset. The model of Five-Forces Model of Competition

is a tool widely used to assess the competitive pressure in a market.

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This tool considers that pressure to compete does not only come from

main rivals, but also from other coexisting sources.

2.3.1.7 Blue Ocean Strategy

Blue Ocean is a strategy that used to create an irrelevant competition by creating a

product or services in an untapped market, demand creation, and the opportunity for

high profitable growth. According to W. Chan Kim and Renée Mauborgne (2005),

Some blue oceans are created in a totally new from existing industry boundaries, and

some other is created within the red ocean by expanding the current existing industry

boundaries

The differences between blue ocean Strategy and Red-Ocean Strategy are stated in the

table below:

Table 2.2. The differences of Red Ocean versus Blue Ocean Strategy
Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space. Create uncontested market space.

Beat the Competition. Make the Competition irrelevant.

Exploit existing demand. Create and capture new demand.

Make the value-cost trade-off. Break the value-cost trade-off.

Align the whole system of a firm’s Align the whole system of a firm’s
activities with its strategic choice activities in pursuit of
of differentiation or low cost differentiation and low cost.

Source: W. Chan Kim and Renée Mauborgne, Blue-Ocean Strategy: How to Create Uncontested Market
Space and Make the Competition Irrelevant, 2005, p.18
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In Blue Ocean there are four action framework canvas of blue ocean strategy is

implemented to analyze, understand and create difference factors in the existing

industry. The key activities into four action framework as follows:

• Eliminate  which factors should be eliminated within the industry that has long

competed?

• Reduce  which factor should be reduced well below the industry’s standard?

• Raise  which factor should be raised well above the industry’s standard?

• Create  which factor should be created that the industry has never offered?

Figure 2.3 The 4 Action Framework

(Source: www.blueoceanstrategy.com)
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Figure 2.4. The Implementation of 4 Action Framework

(Source: www.blueoceanstrategy.com)

2.3.1.8 Consumer Behavior

Consumer is any person or user of goods and services that are

available in the community and not for sale. If the purpose of

purchasing products is to resale and get profit, this action would be

defined as the retailer or distributor. As Schiffman and Kanuk (1994)

defined consumer behavior as the behavior of the consumer reflects in

the search, exchange, use, evaluate, and organize goods or services

they think will satisfy their needs.

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2.3.1.9 Consumer Buyer Characteristics which Cover Cultural, Social, Personal,

and Psychological.

Cultural

Social
Personal
Culture
Psychological
Reference
Age and life-cycle
groups
stage
Motivation
Occupation Buyer
Perception

Figure 2.5 Buyers Characteristics Influencing Consumer Behavior

Source: Principles of Marketing - Chapter 5 page 123 , Philip Kotler & Garry Armstrong, 2008

1. Psychological Influences include the motivation of an individual

perceptions, ability to learn, and attitudes.

2. Personal Influences include lifestyle, personality, and economic

status.

3. Social Influences include family, all surroundings friends, colleagues,

group or individual and also opinion leaders (those who are heard by

others).

4. Cultural Influences include any culture that distinguish one from

another, subculture that comes in smaller group with shared values,

and social class that distinguish the level of groups based on

background, occupation, and income.

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2.4.1.10. Behavior towards Innovative Sanitary Product

A study describes by Shintawardani (2007) about toilets in urban areas

in Indonesia emphasize on the importance to evaluate people’s habitual and

economic capacity regarding their adaptability to alternative toilet technology.

According to journal “Behavior Intention towards the Adoption of Innovative

Household” by Akbar Adhiutama1 SBM, ITB Bandung, Indonesia (2011), the

new middle and upper-class urban population in Indonesia easily adopts new

innovative products that they believe is able to enhance and enrich value in

their daily lives since these urban populations have already adopted many

innovative electronic products. His finding indicates the behavior intention

factors related to adopt the innovative bidet toilet seats in the urban

households indicate findings of intention, voluntariness, observability, water

usage and age are positively influence the adoption of the seats in urban

households in Jakarta.

2.4.1.11. Market Survey and Analysis

Market Survey

Market survey is distributed to support market analysis and gain useful

information from end-users. Using Google Form online survey, the market

survey is designed comprises of 24 questions based on theoretical based of

market segmentation, level of awareness, preferences including daily process,

consumer behavior, 4ps marketing mix and conceptual test.

 39

The survey is distributed in Bahasa language to minimize lack of

understanding and bias feed-backs with total 150 male respondents. Market

survey is distributed online from 26th -

29th November 2014 with aspects

measured as follow:

Questions Aspects to be measured Theoritical Based

1 Age
2 Occupa ti on Demographic

3 Educa ti on Ba ckground Geographic

4 Monthl y Expens es Psychographic

5 Mos t Frequent Vi s i ted Area

6 Importa nce of Innova ti ve

7 Importa nce of Da i l y Innova ti ve Preferences

8 Importa nce of Innova ti ve Publ i c Toi l et

9 Publ i c Toi l et Us a ge Urination Daily Process

10 Awa renes of Ha ndwa s hi ng
11 Ha ndwa s hi ng Ha bi t Level of Awareness &
12 Ha ndwa s hi ng Ha bi t Handwashing Habit
13 Ps ychol ogy Infl uences
14 Ps ychol ogy Infl uences
15 Ps ychol ogy Infl uences
16 Pers ona l Infl uences
17 Pers ona l Infl uences Consumer Behavior
18 Pers ona l Infl uences
19 Soci a l Infl uences
20 Cul tura l Infl uences
21 Cul tura l Infl uences
22 Product Us a ge Effecti venes s
23 Product Us a ge Effecti venes s Conceptual Test
24 Product Us a ge Effecti venes s

Figure 2.6 Aspect Measured in the Survey

Source: Internal Report, 2014

Based on the aspect measured above, a total of 25 questions are formulated into the

market survey with each responding answer presented with percentage result as

followed:
 40

Survey Questions # 1,2,3,4 and 5

 41

Survey Questions # 6, 7, 8, 9, and 10

 42

Survey Questions # 11, 12, 13, 14, and 15

 43

Survey Questions # 16,17, 18,19, 20 and 21

 44

Survey Questions # 22,23 and 24

Survey Summary Result:

• Analysis on Demographic, Psychographic and Geographic Aspect

The respondent’s age is mostly 22-35 years old (86%) with 61% of their

occupation is working as employee. With high percentage of well education

background up to 87% with only 35% of the respondent have monthly

expenses between IDR 2.5mio – 5mio, an equal percentage of 25% monthly

expenditure of these respondents are spending higher amount from IDR 5mio

– 7.5mio and IDR 7.5mio above. The most frequent visited area of Jakarta is

South Jakarta with 58% while the second most visited area is West Jakarta

(36%) and Central Jakarta (31%). This result shows the respondent are
 45

considered as well educated people with productive age whom are career

oriented and with frequent mobilization in all Central Business District of

South Jakarta (SCBD, Mega Kuningan and Simatupang), West Jakarta (Puri

Indah) and Central Jakarta (SCBD and Thamrin).

• Analysis on Preferences

95% of respondents are interested in modern and innovative product. In terms

of the preference whether daily product using innovative and modern concept

is important, 79% agreed while the other 21% think it is unnecessary. While

being asked about urinoir as one the public installation product to be

integrated into an innovative, high tech product, 75% of the respondents

agreed while remaining 25% justified that it is unnecessary. This data shown

that the respondents are familiar with modern and innovative product which

becoming integral part of their interest. Assumption on this analysis define

that they give high attentiveness towards innovative daily product and would

eager to see differentiation or uniqueness of an innovative urinoir product.

• Analysis on Urination Daily Process, Level of Awareness & Hand

washing Habit:

46% of respondents use the urinoir facilities in public toilet for about 3-5

times in a day while 21% uses more than 7 times each day. High level of

awareness towards the importance of washing hands indicate up to 67%

 46

respondents are very aware of it while 31% aware of the importance. Based

on the respondents perception, 97% of them highly agree towards the

importance of washing hands after urinate process. In daily fact, 57% of these

respondents always wash their hands after urinating with remaining 41%

almost always wash their hands as well. The market analysis on these aspects

concludes that the respondents functions urinoir in public toilet as part of their

daily activities because they work in the offices or visit commercial buildings

or public venue for they daily necessities. Washing hands is very important

and mostly wash their hands after urinating process which indicates high hand

washing habit.

• Analysis on Consumer Behavior

59% of the respondents agreed that existing urinoir in public places are

convenient while 29% disagreed towards this. The idea of designing a new

creation and experience for urinoir product is strongly agreed in relations with

customer satisfaction and convenient urinating process according to the

respondents based on 61% respondent choices and 32% of remaining

respondent agreed as well. 51% respondents strongly agree about hygienic,

convenient and innovative public toilet plays important role in creating a good

image and impression of the building while following 43% respondents

agreed with this.

 47

The cleanliness and convenient of public toilet is considered as a strong

important factor when visiting a commercial building or places for 53% while

following 42% consider this as important. 49% strongly agree of privacy is

considered as a strong important factor while urinating process while 45%

agrees on this as well. It is efficient if hand washing after urinating process

can be facilitated at once according to 48% of the respondent while 28%

consider this as strongly efficient, remaining 19% disagree with this. Hand

washing habit after urinating process is strongly encouraged since early age to

47% of the respondent while 45% also has been encouraged since early age.

The high-tech trend and development is an important factor for commercial

building and places to create modern toilet facilities with 61% agree and 29%

respondents strongly agreed. 61 % respondents agrees of environmental issues

such as water usage in Indonesia especially in major cities should be one of

the main concern to be considered by commercial buildings and public places,

the remaining 35% strongly agrees on this matter.

This analysis shows positive feedback from consumer behavior theory

towards several of aspects. Respondents are enthusiastic about innovative

product and the concept of modern urinoir adapting to the development of

modern technology era. An innovative and modern public toilet plays also

defined as important keys in elevating the image and impression of the

commercial building and public places. Based on the result analysis, these
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well-educated respondents has been adapting the importance of hand washing

since early age and therefore implementing it in daily routine is necessary.

This shows a good habit and behavior towards hand washing in general.

• Analysis on Conceptual Test

After given brief paragraph of Hytairs as a conceptual test, 58% respondents

agree with the hygienic experience given by Hytairs while the other 25%

strongly agree about this. Factor of efficiency is also measured to justify this

conceptual test with the result of 60% agrees, while 20% also agree and

remaining 15% disagree. The respondent also measures the privacy while

urinating is highly convenient using Hytairs with 57% agrees and 22%

strongly agrees, remaining 17% disagree with this matter.

Based on the compilation of result survey, Hytairs is believed to become an

innovative and integrated santitary product and services solution for public

toilet in urban, high mobility city of Jakarta especially in its Central Business

District area.
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2.3.2 Business Model Canvas

According to Osterwalder and Pigneur (2009, p.15), a business model

can best be described through nine basic building blocks that shows

the logic of how a company intends to make money. The nine building

blocks cover four main areas of a business: customers, offer,

infrastructure, and financial viability.

F
i
g
u
r
e

2
.

T
h
e

F
F
i
F
Figure 2.7. Business Model Canvas
(Source: Osterwalder and Pigneur (2009, p.44))

• Customer Segments

The customer segments of building block define the different

groups of people of organization an enterprise aims to reach

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and serve. Osterwalder and Pigneur (2009, p.20-21) define

several types of customer segments:

• Mass market: The value proposition, distribution

channels, and customer relationships all focus on one

large group of customers with broadly similar needs

and problems.

• Niche market: Targeting to specific, specialized

customer segments.

• Segmented: Targeting to several customer segments

with slightly different needs and problems.

• Diversified: Serving two unrelated customer segments

with a very different needs or problems.

• Multi-sided: Serving two or more interdependent

customer segments.

Besides that, there is also definition of customers

based on Kotler & Keller’s major segmentation

variables – geographic, demographic, psychographic,

and behavioral segmentation (Kotler & Keller, 2012,

p. 214-229).

• Geographic segmentation
 51

Geographic segmentation divides the market into

geographical units such as nations, states, regions,

countries, cities, or neighborhood.

• Demographic segmentation

Demographic segmentation divides the markets on

variables such as age, family size, family life cycle,

gender, income, occupation, education, religion, race,

generation, nationality, and social class.

• Psychographic segmentation

Psychographic segmentation is the science of using

psychology and demographics to better understand

customers. In this segmentation, buyers are divided

into different group on the basis of psychological or

personal traits, lifestyle, or values.

• Behavioral segmentation

This segment divides the market into groups on the

basis of their knowledge of, attitude toward, use of, or

response to a product.

• Value Proposition

The value proposition of building block describes the bundle

of products and services that create value for a specific

 52

customer segments through a distinct mix of elements catering

to that segment’s needs, that can be quantitative (e.g. price) or

qualitative (e.g. customer experience) (Osterwalder and

Pigneur, 2009, p.22).

There are elements in value propositions that can contribute to

customer value creation:

1. Newness: satisfy an entirely new set of needs that

customers previously did not perceive because there was no

similar offering.

2. Performance: improving the performance or quality.

3. Customization: creating products or services to the specific

needs of individual customer or customer segments.

4. “Getting the job done”: helping customers to finish certain

jobs.

5. Design: creating a stand out product through a design or

style.

6. Brand/ status: create a strong brand to gran the customer

segment.

7. Price: offering a competitive price to satisfy the need of

price-sensitive customer segments.

8. Cost reduction: helping customers to reduce the costs.

9. Risk reduction: give a guarantee for the customers so that

they can reduce risk while purchasing products or services.

 53

10. Accessibility: making products or services available and

easily accessible by customers.

11. Usability: making things more convenient or easier to use.

• Channels

Osterwalder and Pigneur (2009, p. 26) says channels are

customer touch points that play an important role in the

customer experience. It describes how a company

communicates with and reaches its customer segments to

deliver a value proposition.

Here is the channel types and phases:

F
F
F
Figure 2.8. Channel Types & Phases
(Source: Osterwalder & Pigneur (2009, p. 27))

• Customer Relationships

The customer relationships block describes types of

relationships a company establishes with specific customer

segments (Osterwalder & Pigneur, 2009, p.26). They describe

the relationships that may exists with a particular customer

segment:
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• Personal assistance

The customer will be assisted by a customer

representative to help during the sales process or after

the purchase is complete.

• Dedicated personal assistance

It represents the deepest and most intimate type of

relationship normally develops over a long period of

time.

• Self-service

Company will provide all tools or necessary means to

serve the customers.

• Automated service

This type of relationship mixes a more sophisticated

form of customer self-service with automated

processes.

• Communities

Utilizing user communities to become more involved

with customers or prospects and to facilitate

connections between community members.

• Co-creation

Engaging the customers to get their direct input and

create value for others or public.

 55

Customer relationships also maintains through the Customer

Relationship Management (CRM), which means a

management process which uses database technology and call

centers to maintain customer relationship. (John Egan, 2007,

p. 299)

According to Kelly (2000), key analytical of CRM

Applications include:

• Sales analysis: offering the organization an integrated

perspective on sales and enabling the sales function to

understand the underlying trends and patterns in the

sales data.

• Customer profile analysis: allowing the organization to

distinguish, from the mass of customer data, the

individuals as well as the micro-segments.

• Campaign analysis: providing the ability to measure

the effectiveness of individual campaign and different

media.

• Loyalty analysis: measuring customer loyalty with

reference to the duration of the customer relationship.

• Customer contact analysis: analyze customer contact

history of any individual.

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• Profitability analysis: measuring and analyzing the

many different dimensions of profitability.

• Revenue Stream

This building block represents the cash a company generates

from each customer segment (cost must be subtracted from

revenues create earnings) (Osterwalder & Pigneur, 2009,

p.30). there are several ways to generate revenue stream:

• Asset sale: the revenue stream derives from selling

ownership rights to a physical good.

• Usage fee: depends on the number of length service or

product used.

• Subscription fee: the revenue stream generated by

selling a continuous access to a service.

• Lending/ renting/ leasing: created by temporarily

granting someone the exclusive right to use a

particular asset for a fix period in return for a fee.

• Licensing: giving customer permission to use

protected intellectual property in exchange for

licensing fees.

• Brokerage fee: generated from an intermediation

service performed on behalf of two or more parties.

 57

• Advertising: generated from the fees for advertising a

particular product, service, or brand.

Figure 2.9 The Pricing Mechanism

(Source: Osterwalder & Pigneur (2009, p. 27))

• Key Resources

Key Resources building block describes the most important

assets require to make a business model work (Osterwalder &

Pigneur, 2009, p. 34).

Key resources are categorized as follows:

 Physical assets: building, manufacturer, machines, etc.

 Intellectual: brands, patents, copyrights, customer

databases.

 Human: human resources, expertise.

 Financial: cash, stock option, credit.

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• Key Activities

The key activities building block describes the most important

things a company must do to make its business model work

(Osterwalder & Pigneur, 2009, p. 36). It is categorized by

production, problem solving, and platform/ network.

 Production, related to design, make, and deliver a

product in a substansial qualities and/ or of superior

quality.

 Problem solving, related to coming up with a new

solution to individual customer problems.

 Platform/ network, business model designed with a

platform as a key resource is dominted by platform

network-related key activities.

• Key Partnership

The key partnership building block describes the network of

suppliers and partners that make the business model work

(Osterwalder & Pigneur, 2009, p. 38).

There are four types of partnerships:

 Strategic alliances between non-competitors

 Coo petition (strategic partnerships between

competitors)

 Joint venture to develop new business, and

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 Buyer-supplier relationship to assure reliable supplies.

• Cost Structure

Cost structure describes the most important monetary

consequences while operating under different business

models. According to Osterwalder and Pigneur (2009, p.41),

the cost structure describes all costs incurred to operate a

business model.

There are two board classes of Business Model Cost

Structures: Cost- Driven and Value driven (Osterwalder &

Pigneur, 2009, p. 41).

• Cost-Driven: it focuses on minimizing all costs

wherever possible. This approach aims at creating and

maintaining the leanest possible cost structure, using

low price value propositions, maximum automation,

and extensive outsourcing.

• Value-Driven: focuses on creating value for their

products or services.

2.3.3 Current Business Model Canvas

The Business Model canvas is an effective tool that outlines several

elements, which form the building blocks for the activities. It was proposed by

Alexander Osterwalder in 2008 and became highly use ever since. The
 60

Business Model Canvas allows both new and existing businesses to focus on

both operational, strategic management and marketing plan.

Figure 2.10 Business Model Canvas

(Source: Internal Report, 2014)

There are 8 big players in the sanitary ware industry in Indonesia that

operate a quite similar business operation and strategic management. The

Business Model Canvas below illustrates the summary of the industry and

strategies offered to fulfilled the market demands.