Marketing Home Products

We both know what memories can bring – they bring diamonds and rust . . .”

- Joan Baez

We’ve all heard the adage about time: there’s never enough of it. We counter that time’s not the issue, but what we do with our available time that makes a difference in client/agency relationships. We’re talking about evolution. Change or die. That means being aware of our industry and being able to forecast not just react to changes. The times they are a changin’. See what we mean …

Time, Inc. decided to shut down the iconic LIFE magazine after 70 years (and a few resurrections). Two generations of Americans relied on the high quality photojournalism to help them understand their world in a different perspective. Images such as Neil Armstrong on the moon or Marilyn Monroe really was worth a thousand words and solidified Time as an American icon. According to Chief Executive, Ann Moore, “the market has moved dramatically since October 2004, and it is no longer appropriate to continue publication of Life as a newspaper supplement. The death knell tolls on April 20 for the last print issue, but the brand name will survive on the internet. No surprise here. The physical glossy mag will be missed throughout bathrooms all across America.

A catalyst, set years ago by Sir John “Tim” Berners-Lee, the founding father of the world wide web, continues to send tremors throughout our industry. It has redefined “time” and “fresh and new” by giving marketers a whole new set of creative tools and metrics within a popular new media. Both clients and agencies are enamored with its speed and unknown power as a marketing tool. Web technology presents a challenge for some agencies and a chance for others to strut their stuff. It has been the great equalizer, allowing smaller agencies like Kleber, to compete with clear eyes and a fast and flat organizational chart to meet internet time head on.

Also this week, Nike announced that it was putting its running shoe account up for review. Wieden+Kennedy have been Nike’s primary agency for 24 years. A spokesperson for Nike said “Nike has always looked to a variety of partners in various areas to keep things fresh and on the cutting edge.”Wieden+Kennedy helped to build the Nike brand, but obviously, the handwriting is on the wall – change or die because the client is looking for an edge that the new playing field allows.

At Kleber & Associates we will remember the fallen icons like Life, whose impact, with their great photos, had on every one of us, but we’re celebrating the new opportunities that internet time has created like word of mouth marketing, product placement, microsites, video and e-mail blasts. We welcome and are engaging in this new technology. We’re sussing the future for our clients and we understand how to keep their brands fresh – we don’t have time for rust.

Funny thing about human nature. . . When times are good, we think they’ll last forever as we put our due diligence on cruise control. When changes in the markets occur we’re still running around in the toga wondering where the party went. By now, most everybody in the housing market has sobered up, and if they study the economic data carefully, they may, like us, take Alfred E. Newman’s advice – “What? Me Worry?”

The short-term housing data, while not entirely accurate, still paints glimmers of a stabilizing picture despite the sub-mortgage woes this past week. It also paints an opportunity, but you have to look at the numbers to get the clearer picture. Building permits are slow to rebound because we’re just coming out of winter weather and still working through the new home inventory in the market. Interest rates were not lowered this week due to caution towards the inflation bogeyman that seems to be hanging around. But at the same time, the Fed is leaving the door open to lower rates when the threat passes. Not much a homebuilder can do about that, so let’s look at some of things that call our attention.

Stay away from the sub-prime stuff: It might go without saying, but it is just bad business to do business in any realm of the sub mortgage market – that goes for builders, lenders and brokers. This falls within the first-time buyers market, and builders, like Lennar Corp. and KB Homes, should probably evaluate their business plans since they have the most exposure to lower credit score buyers. JP Morgan analyst Michael Rehaut says “this is going to be the critical area of discipline for the industry this year.” Duh . . .

Look at the demographics: Looking at the consumer spending life cycle is like looking at the profile of a mountain. On the upslope, couples and singles buy their first starter home in their late 20s or early 30s and generally go into debt furnishing those homes. Then, many will trade-up at around the age of 44 and fully furnish them by the age of 47 – these are the peak spending years. A review of Census data by Survey Sampling International notes that 78 million baby boomers will turn 50 over the next ten years increasing the size of the 50 plus demographic (the down slope) from 89.3 million in 2006 to 111.3 million in 2016. Looking at the consumer life spending cycle, this represents a big chunk of change that will not be in the housing market, excluding some vacation home buying for retirees.

In contrast, the 18 to 49 year-old demographic, while still larger overall, will see a tiny one percent increase in size from 135.1 million in 2006 to 135.9 million in 2016. This is a stable market, but can it fill the spending vacuum left by the boomer group? The immigrant market might be the shift to watch. It is expected that the Asian and Hispanic demand for new homes will be three times the size it is now, and the African-American market demand is expected to double. What does this mean?

America needs affordable homes now: Not everybody can be in the luxury home business. It just makes sense to match the product with the market–the reality is that most people will never be able to afford a luxury home. Architects recognizing the opportunity are designing smaller homes and some are focusing on modular home design with the potential for future add-ons for older parents and/or extended families.

The Fed signaled that inflation is still in check by not raising interest rates so we still have very attractive rates for doing business. Remember, these are historically low rates. Liquidity has not “dried up” as reported this week – it remains available for those with good credit records and proof of income statements. The sub-prime fallout will cause a few ripples in the profits and possibly extend the time that inventory sits on the market, but these are spec-houses that don’t make up the majority of the inventory. In the upscale market, buyers are currently getting deals including $10,000 kitchen upgrades and luxury car rentals to push the excess and it appears to be effective – houses are moving. Some of the housing industry stocks that have fallen in the past week may just be a good buy going into the spring building season with the associated decrease in inventories.

All in all, we see this housing economy operating just the way it is supposed to. It seems clear that any fallout will be an opportunity to operate smarter and more efficiently. Providing more affordable houses for more Americans is one way the industry can fill a substantial need and profit in the process.

What can happen when a product is differentiated solely on its color? Owens Corning produced its now famous fiberglass insulation in 1956 with the idea of making it a very visible color, red. They had trouble getting the red color they wanted in the dying process, so they had to settle on pink. They followed this up with their “Think Pink” marketing, which was brilliantly conveyed by their use of the cartoon celebrity, the Pink Panther. They were successful getting a trademark for the term PINK ™ which made OC, a household name and according to their research, made their fiberglass insulation the preferred brand 7 to 1 over their competitors.

One company has an opportunity to successfully emulate OC’s color marketing success strategy but they had a big problem right from the beginning. Based in Boca RatonFla., WoodSmart Solutions, Inc. has a proprietary two-product technology called “The Perfect Barrier System” that protects housing wood products from rot, fungal, and termite damage. They call this trademarked product BLUEWOOD ™.

If you want to get the neighbors talking, build that new addition on your house using this treated lumber – it’s dyed a non-toxic teal blue color. They could have used any color, but according to the company, blue readily associated with water, making it an easy connection for consumers. The dye serves as visible proof that the manufacturer has successfully treated every square inch of the product, making it very visible when viewed from a distance. Since this color is unique, it helps consumers easily make the connection between the color and the company.

Why is this important? Consumers buy the brand not the company. However, company name recognition in relation to its brand creates the company’s brand equity. Woodsmart Solutions, Inc. has a problem though. WoodSmart ™.has been trademarked by mega stain, paint and varnish company, Behr. The best thing Woodsmart Solutions, Inc. can do at this point is to change their company name to BLUEWOOD, Inc. to alleviate consumer confusion and ensure that any market success with BLUEWOOD builds company equity.

Color can be a strong product differentiator in the market, but you’ve got to have the other branding bases covered if you want your products, and therefore your company to succeed. This is something that must be considered before you bring your product to market.