Case Study 1: Rinnai Corporation

Challenge:

Rinnai Corporation is one of the world’s largest gas appliance manufacturers. Rinnai US is a wholly-owned subsidiary of the Japanese-based company whose flagship product in the U.S. market is a tankless water heater technology. A tankless water heater replaces traditional tank-style water heaters and carry numerous benefits to the end user: reduces energy bills up to 70%, eliminates the risk of leaks as the tankless unit holds no water, decreases your homeowners insurance (in some areas), and never runs out of hot water in your house or business. While this technology is the standard for buildings in Europe and Asia, it is an entirely new concept to North America where tradition tank-style water heaters are commonplace. Rinnai’s issue was introducing the tankless water heater technology to the U.S. market and educating American consumers on how the technology works, why it is better and what the ultimate consumer benefits are.

Rinnai’s secondary issue was that the product was not readily available directly to the consumer. A potential buyer could not go to a retail outlet to purchase the product, nor could a consumer install the tankless water heater themselves; a licensed plumber is necessary for installation. The two-step distribution channel required that a consumer locate a plumber/plumbing-type outlet that carried the Rinnai unit and arrange for purchase and installation. This distribution channel was apathetic to change; thus, they were not interested in the necessary training required to sell and install the Rinnai units. Therefore, these retailers would simply encourage the tank-style water heater because it was the path of least resistance. Education of the technology was critical. Additionally, with the lack of retail presence, Rinnai garnered no general interest from point-of-sale to raise awareness of the product’s benefits another barrier to the technology’s acceptance.

Strategy:

Successful introduction of a new technology requires the clear delivery of the following:

  1. The overall benefit to the end user (What’s in it for me? What does it make easier for me?)
  2. The ease of transition from old systems to this new platform (Is it hard to go from what I have to this new thing?)
  3. The reliability factor (How do I know this will work? What guarantee do I have?)
  4. The cost-to-benefit ratio (What will it cost me in terms of time or money to make the switch?)

The strategy we employed for Rinnai was a nation-wide technology education campaign that primarily took the form of a media relations campaign, expert witness campaign, and grass roots public relations and education. In addition to the standard education of what the technology is, all campaign fronts were challenged by a deep-rooted history for the competition (traditional tank water heaters). We finely crafted key messages to answer the above questions for each audience then developed simple, easy-to-understand creative elements that were distributed through a wide variety of media. Outlets included television, print, digital, online, radio, direct mail, channel direct mail/direct response, sports sponsorships, community relations, political events and hands-on grass roots efforts. Lastly, in reviewing their business structure in the U.S. market, we proposed an entire distribution channel change in order to go toward a direct-to-consumer model. This change would increase Rinnai’s bottom line, bypass a hostile distribution channel reluctant to change, increase consumer participation frequency, and drastically expand consumer education initiatives.

Results:

Efforts from the media relations education campaign resulted in the product being featured on over 500 print articles, 38 television appearances and 12 radio spots on the national, regional and local level. Nationally recognized authorities such as Newt Gingrich, Paul Harvey, Bob Vila, The New York Times, and Good Morning America hailed the technology as one of the best new technologies for American homeowners in terms of cutting energy costs and a practical way to go green in American households. As a direct result from our education and brand awareness campaign, Rinnai met not only its standard sales goals (37,000 units) but met its stretch goals (45,000 units) in the first 12 months of the campaign, increasing their annual tankless water heater sales by 50%.

Additionally, the company adopted our gradual sales distribution model change to move toward a direct-to-consumer model over the next five to seven years.