Marketing Home Products

There is nothing like a dip in the home building market to magnify your brand – both the good and the bad. We repeat: there is nothing that shows your company’s strengths and/or weaknesses like a time when demand for your product drops. Some company’s brands continue to shine and even stand out from the competition in spite of the economic cycle, which translates into more sales.

Consider this: The PR wheels are in motion this week as several award announcements in the home building and home products categories have been made. Shaw carpeting won two Addy awards for their graphic presentation of the company’s 20-year environmental journey. They were on the “green” road before it was built—not a bad thing when you consider the growing popularity of the green building trend. You can bet that prospective buyers will be looking at Shaw’s products more closely.

BOWA Builders (from McLean, Va.) won the 2006 Remodeler of the Year award, which sponsored by Professional Remodeler. CEO Larry Weinberg pointed out that one of their goals as a company is “never to peak as a business,” and to continue its focus on strategic planning and exciting growth. BOWA Builders Director of Marketing, Kathy Kelly noted that they would not have achieved 19 years of continued growth without “employee buy-in.” It is safe to assume that BOWA Builders will get more phone calls because of this hard-earned recognition.

What do awards have to do with surviving a business downturn? It’s what they represent. Look at the adjectives and nouns that describe these and other award-winning companies. Some of these would include the usual, such as: exceptional product quality, innovation, professional service, and superior operations, but we also noted terms like “commitment,” “visionary,” “contribution,” “pioneers,” and “leader.”

Do these terms describe your company? What positive tags have your customers applied to your brand, considering that they always vote with their pocketbooks? Better yet, given your customer tagged brand attributes (hopefully positive!), how well are you leveraging this with your current marketing?

We have seen several companies weather the housing downturn, by concentrating on the consumer market within the large home products retail channel. Building products manufacturers that depend on new home building and remodeling activity may not be able to use the same strategy; therefore, they would be wise to concentrate on the business facets they can control until the new homes sales market picks up.
Here are a few questions that can help guide your company towards creating and maintaining a strong brand, even during tough times:

1. Look at the above list of words, add to them and choose several to help strengthen or clarify your current company strategy – with your current operations, will customers let you “own” those terms?
2. Do your employees have a flag to rally under and do they know what they are “fighting” for?
3. Have you tightened up your customer service operations so that your sellers find it a pleasure doing business with you? Will you be able to ramp up smoothly when the market returns?
4. Do you know if your message is strong, clear and effective? Are you reaching your customers within the right medium and are your expectations real?

Award-winning companies that have their marketing machine well oiled share one thing in common – increased chances of profitability. You may not be able to do much about the current market demand for your products, but if you have your employee bases covered, your operations streamlined, your manufacturing efficient, and lastly, a good, strong message (used consistently in the right targeted medium), you will be a standout in a market downturn and be even more profitable when the market returns. That’s award-winning brand magnification!

At K&A, we represent clients that are exclusively selling their products in the building and home products channels; therefore, it is no secret that experiencing a depressed housing market makes everyone cautious. Sometimes it’s not easy to gage the depths of the ripple effect until it hits, usually expressing itself in slow sales and increasing inventories. There are certain barometers that can help us anticipate trends such as looking at housing starts and resales, but, at times it can be a matter of placing our trust in particular reports and using our gut feelings—which to some people, may be just short of consulting the Ouiji board.

This week, new data showed the housing slump continued in January and a major retailer doesn’t expect the sector to improve until later this year at the earliest. As a matter of fact, new-home sales fell 17 percent in January from the previous month, making this the biggest percent decline since 1994! Also, the median price of a new home rose from $239,400 to $239, 800, so even though there has been an inventory glut (which initially depressing prices) the increase means that the market might be slower to absorb inventory.

Sounds like an opportunity for our home building and products clients! Before you think we have lost our marbles, read on:

Daniel Oppenheim, a Bank of America Securities analyst, said “the 17% decline is in contrast with the improving trends seen in our January survey of real estate agents and comments from both public and private builders.” He gave several reasons why the Census Bureau data may be skewed in the wrong direction and added “the Census Bureau’s estimates of new home sales seem more a function of their statistical methodology than actual sales activity.”

As a matter of fact, the National Association of Realtors reported sales of existing homes rose in January by 3 percent, the largest amount in two years! On top of that, median prices of existing homes fell for a sixth straight month!

The take-a-way: We all know that what goes down must come up. We agree with Robert Toll, the CEO of Toll Brothers who said “we continue to believe that buyer confidence is the key to a turn around in the new home market.” It appears that the media’s sentiment toward the housing market is becoming more balanced and their messages are making customers aware that in the current climate of attractive interest rates, motivated sellers, and a generally healthy economy, now is a good time to buy a home.

The consumer index, reported this week, is the highest it’s been in five and half years.