Team 31

Megan Birch
Jesus Bustillos
Steven Feeney
Abby Harvey
Lindsay Karpan
Grant May

March 26, 2018

Product Portfolio
Honeywell’s Safety and Productivity Solutions (SPS) segment, NAICS code 339113 according

to The United States Census Bureau, provides a variety of products related to industrial safety. In

Honeywell’s own words, the objective of this portfolio is to advance a business’s “mission of

building enduring safety cultures for their workers.” Honeywell’s SPS product portfolio includes

footwear, eyewear, headwear, and respiratory protection products, which are sold to government

agencies, consumers, and businesses alike. Honeywell employs a differentiation strategy for

products in this portfolio by offering many small variations of one product based on consumer

needs.

Much like Honeywell itself, this industry is currently in its maturity stage due to the slowed

growth, market acceptance, and market saturation within the industry. In the next five years, we

can expect this industry’s revenue to rise at an annualized rate of .5%, generating $4.3 billion

additional industry-wide (Curran, 2017) and resulting in a more profitable product portfolio for

Honeywell. Rising annualized rates is a product of growing construction, agriculture, mining,

and oil sectors. Although growth is expected in the next five years, that amount is fairly low. The

Honeywell SPS product portfolio can therefore be considered a cash cow according to the BCG

growth-share matrix, maintaining low growth and a high market share.

Competitive Landscape

Honeywell’s two primary competitors in the industrial protective equipment manufacturing

industry are 3M Company and MSA Safety Appliances. Both competitors offer similar

protective equipment, encompassing eyewear, headwear, and respiration protection. Honeywell

currently captures 19.3% of the market share for these products, just behind 3M Company who
captures 20%. MSA Safety Appliances trails both companies, capturing just 11.6% of the market

share (Curran, 2017). The two factors most important to distinguishing ourselves from our

competitors and ensuring our portfolio’s success are reputation and research and development.

Since our portfolio consists of safety products, reliability is a brand image we must maintain.

Research and development is important because small innovations allow for a better

strengthened or broadened and therefore more profitable product portfolio. High entry costs and

regulations secure our position and deter potential competitors looking to enter the market

(Curran, 2017).

Over the next five years, 3M is expected to generate an additional $817.3 million in revenue

from industry relevant operations (Figure 4). Honeywell is expected to generate $789.4 million

over that same period (Figure 5). While 3M is seemingly outperforming our company,

Honeywell will have grown at a rate of 5.4% compared to 3M who will have grown only 4%.

The difference in income is therefore explainable by the current market share captured by each

company. Five-year estimations point to Honeywell slowly gaining on their largest competitor

(Curran, 2017). In terms of offerings, 3M has a much more diverse product portfolio. In their

safety equipment section alone, they offer roughly five thousand different industrial safety

products compared to our portfolio of only roughly a thousand products. Our products are very

similar, emphasizing our need to distinguish our brand. MSA Safety Solutions, our second major

competitor, offers even fewer products than us. One advantage Honeywell maintains over MSA

Safety Appliances concerns MSA Safety Appliances’s sole devotion to the sale of industrial

safety equipment. Massive conglomerates like our company, due to economies of scale, can

offset the potential poor performance of our business segment with the success our more
profitable business segments. This means that other conglomerates, like 3M, will likely still be

competitive when the market for safety equipment begins to stagnate.

Target Markets
Our product portfolio has been narrowed down to three primary, secondary, and tertiary target

markets based on segmentation bases. The initial target markets have all been produced based on

product-relevant industry statistics provided by the Bureau of Labor statistics. The industries

themselves shared roughly the same demographics in terms of age, gender, and race.

Respectively, our markets include white males around the age of 47 who work in agriculture,

forestry, fishing, and hunting industries, white males around the age of 45 who work in chemical,

oil, and natural gas industries, and white males around the age of 42 who work in the

construction, mining, and quarrying industries. We have further segmented these markets based

on geographic, income, and education bases. These three target markets offer approximately

683,000 consumers. For more information on the markets, please refer to Figure 3.

SWOTT Expansion

In our earlier SWOTT analysis of Honeywell, we determined that the company’s weaknesses

included Honeywell’s perceived environmental carelessness, the public’s perception of

Honeywell as solely an aviation company, and the obsolescence of Honeywell’s SPS products.

These weaknesses provide challenges in green marketing, brand & market extension, and

repetition in customer buying habits, respectively. Our group has developed these crucial

weaknesses into defined problems with multiple solutions for each. For more information on the

SWOTT analysis, please refer to Figure 2.

Marketing Challenges and Proposed Solutions

Honeywell is currently facing three challenges in the marketing of their product portfolio.

The first challenge is that Honeywell’s environmental controversies have hurt our brand image.

Gallup studies show that 66% of American consumers take a company’s environmental record

into consideration when purchasing products, so rectifying this challenge is important to the

success of the SPS segment. Changing the way American consumers think about our company

should then begin with the environmental impression given by our products. The first solution

we propose to repair our image is green packaging. This way, when a customer sees our product

on the shelf or an order arrives at their home, our first impression is that of a green-friendly

company. Our second solution is advertisements which stress our company’s commitment to

being environmentally conscious. Advertisements should highlight our hard work to correct our

mistakes and give consumers a positive perspective on our company which the media would not

typically report. Our final solution to this problem is becoming involved in social media.

Anything related to environmental consciousness is more likely to trend on platforms like

Twitter, where it is the third most talked about subject. Our own posts have garnered more

attention when they are related to the environment. Our social media team needs to begin

marketing our products as green-friendly.

The second marketing challenge is that Honeywell has a reputation for being an aerospace

company, not a company which produces industrial safety equipment. We must create a SPS

brand identity independent of our aerospace identity. Achieving this can begin with labeling

which emphasizes our SPS business segment. Perhaps something as simple as “Honeywell:

Safety and Productivity Solution” on our products or packaging can begin to help us establish an

identity of our own. Advertisements which highlight our portfolio and the variety of products we
offer within it are another solution. Finally, we propose engaging more with customers through

all communication mediums. Increased communication will help us stand out from other

Honeywell business segments which engage in little-to-no customer communication.

The final marketing challenge that our company faces is that the need to produce a reliable

product means that our products cannot be built with planned obsolescence in mind. This

ultimately results in less repeat purchases. What Honeywell must do is stress the design changes

and innovations over previous products in their marketing. If a consumer currently believes their

product to be inferior, they may upgrade to a newer version of our product. This will hopefully

recoup some of the sales lost by not implementing planned obsolescence. Another solution to

this problem includes taking advantage of current fashion trends to market certain SPS products

(muck boots for example) as fashionable apparel, generating more sales. The final proposed

solution is to market our products in a more differentiated way. As an example, instead of

marketing muck boots for snow, why not market muck boots based on slurry, sleet, and ice.

Conclusion

Honeywell’s product portfolio consists of a variety of industrial safety equipment. This industry

is expected to grow in the next five years and Honeywell currently captures the second largest

market share. Three marketing challenges include distinguishing our identity, appearing more

environmentally-friendly, and negating planned obsolescence. Solutions for these problems

involve rebranding, advertising, social media participation, and identity differentiation. Our

portfolio’s three primary target markets, segmented by demographics, geography, education and

income amount to roughly 700 thousand potential customers. More detailed information

regarding target markets and challenges can be found in Figure 2 and Figure 1, respectively.
Attachments
Figure 1: Problem/Solution chart
Problem(s) Solution 1 Solution 2 Solution 3 Recommended Contingency
Solution Solution

The effect of Green packaging Advertisements which Social media (Will discuss in (Will discuss
environmental which provides highlight our involvement Phase 3) in Phase 3)
controversy on customers with company’s focusing on green-
our ability to sell positive first determination to be friendly products.
products. impressions. green-friendly.

Honeywell’s Labeling which Communication with Advertisements (Will discuss in (Will discuss
Perception as an better customers which which detail our Phase 3) in Phase 3)
Aviation distinguishes the distinguishes our portfolio.
Company SPS business segment.
segment.

Working around Emphasize the Market our products Use current trends (Will discuss in (Will discuss
Planned slight as more differentiated to market certain Phase 3) in Phase 3)
Obsolescence – improvements and based on certain products as
Selling more innovations in environmental fashionable and
products each new product conditions to sell reach more markets.
design. more products.

Figure 2: S.W.O.T.T. Analysis

Strengths: Weaknesses:
 Diverse line of products – eyewear, headwear, footwear,  Reliant on regulations imposed by state
earwear, face wear and federal government (OSHA) to turn a
 Second largest market share in the industry – 19.3% profit
 Variety of customers - B2B, B2G and B2C  Least profitable Honeywell business
 Weaknesses in the SPS segment can be offset by success in segment
our other industry – i.e. fixed costs  Perceived harm towards environment
 Favorable barriers to entry – high market share concentration,  Small brand extension and market
start up costs, and regulatory oversight expansion from aviation products
 Obsolescence of safety products

Opportunities:
 Emerging economies means more industrialization in foreign
countries – inevitable safety and workplace reform in these
countries creates opportunities for our products
 Research and development critical to our success – OSHA
reforms laws and regulations when new products are proven
better prevent injury
Threats:
 Competitors like 3M and MSA Safety
Appliances – 3M currently controls more
market share in this industry
 Emerging foreign economies where
cheaper labor can hurt our ability to
compete – India, China

Trends:
 The Industrial Production Index (IPI) is increasing – mining, manufacturing, and utilities are increasing production
 Research and development employee wages increasing at an annualized rate of .09% per year
 A shift in design focus to comfort and utility
 The value of the construction industry is expected to grow at an annualized rate of 2.5% over the next five years
 Industry imports are expected to outpace export growth by 2.8%.
 Increased cost of material plastics and resin – we depend on these materials
 Local and states government spending expected to increase – potential for great profits
  Wages of workers fell 16.3% over the last five years due to consolidation and automation – potential for cost
savings

Figure 3: Target Markets

Product Portfolio Primary Target Market Secondary Target Market Tertiary Target Market

Target White males roughly 47 years White males roughly 45 White males roughly 42 years of age
Description of age who work in the years of age who work in the who work in the construction, mining,
agriculture, forestry, fishing chemical, oil, and natural gas and quarrying industries.
and hunting industries. industries.

Initial Number of 2,351,000 991,000 322,000

Potential
Customers

Segment Basis #1 States with high rainfall and
(Geographic) thriving farming industries
like Texas, Missouri, Iowa,
Oklahoma, California, and
Kentucky.
States with thriving
petroleum and chemical
production like Texas, North
Dakota, California, Alaska,
and Colorado
States with mining operations and
growth in the construction sector like
Arizona, Idaho, California, West
Virginia, Virginia, Rhode Island, and
New Jersey.

Segment Basis #2 30,000-40,000 60,000-90,000 28,000-90,000

(Average Annual
Income)

Segment Basis #3 At least a high school degree. At least a bachelor’s degree. All levels of education, including no
(Education) high school degree.

Final Number of 542,000 73,000 68,000

Potential
Customers

Figure 4: 3M 5-Year Performance Figure 5: Honeywell 5-Year Performance

Figure 6: MSA Safety and Security Solutions 5-Year Performance

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