Presented to October 10, 2012 About The Presenter Jim Robisch, - - PowerPoint PPT Presentation

Understanding and Communicating to Today’s Builders and Remodelers

October 10, 2012

Presented to

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About The Presenter

Jim Robisch, Senior Partner

The Farnsworth Group

Director of Retail Market Research and Strategy Consulting.

The Farnsworth Group is a leading market research and strategy consulting firm serving and specializing in the hardware, home improvement, lumber and building supply market. For over thirty years we have studied the market and helped the industry’s leading companies develop a market information based competitive edge. Serving a wide range of clients that includes:

• Lumber and Building Supply Dealers
• Home Improvement Retailers
• Hardware Stores
• Farm and Home Supply Stores
• Wholesalers and Distributors
• Manufacturers
• Agencies
• Publications
• Investment Community

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About the Study

Study Background and Session Overview

• Significant changes have taken over the past four years place in the

home building and remodeling markets. The Farnsworth Group recognized the importance of better understanding changing contractor attitudes and buying behavior.

• Of special importance was to explore how lumber and building supply

dealers can best communicate to building and remodeling contractors.

• The Farnsworth Group conducted a an on-line survey of 253

contractors and remodelers utilizing Specpan, the internet panel subsidiary of The Farnsworth Group. (Specpan is a proprietary online panel of 18,000 high quality, opt-in construction professionals.)

• The respondents included 101 builders and 153 remodelers
• The survey averaged 16 minutes to complete.

Note of Caution: The results of this nationwide, industry research may not accurately depict specific local market condition. Similar information should be obtained at the local market level in order to develop an

• ptimal, contractor communication strategy.

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Respondent Profile

70% 37% 92% 30% 63% 8%

0% 100% Total Builder Remodeler New Construction Remodeling/ Repair

Respondent Profile

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MEAN PERCENTAGE BY TYPE OF WORK AVERAGE SIZE OF HOMES BUILT OR REMODELED

Total Builder Remodeler

1500 square feet or less 14% 13% 15% 1600 to 2000 sq. ft. 27% 17% 34% 2100 to 2500 sq. ft 23% 24% 22% 2600 to 3000 sq. ft 15% 19% 13% 3100 to 4000 sq. ft 12% 17% 8% More than 4000 sq. ft 8% 11% 7% MEAN 2,712 sq. ft. 3,161 sq. ft. 2,408 sq. ft.

9% 11% 9% 62% 60% 63% 29% 29% 28%

0% 100% Total Builder Remodeler Luxury home Move up home Starter home

Respondent Profile

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NUMBER OF EMPLOYEES

Total Builder Remodeler 1 24% 11% 33% 2 16% 13% 18% 3 13% 13% 13% 4 11% 16% 8% 5 11% 11% 11% 6 to 10 15% 16% 14% 11 to 30 5% 9% 2% 31 or more 6% 12% 3% MEAN 23.3 51.3 4.7

TYPES OF HOME BUILT OR REMODELED

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Builder and Remodeler Attitudes and Behavior

Supplier Selection Criteria Shopping and Buying Patterns

Supplier Selection Drivers: Builders

5 10 15 20 25 30 35

Availability Price Customer Service Quality Products Convenient Location

2011 2010 2008 2005

ALLOCATE 100 POINTS AMONG THE FOLLOWING ATTRIBUTES THAT MIGHT BE IMPORTANT TO YOU WHEN SELECTING A PRIMARY SUPPLIER.

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Supplier Selection Drivers: Remodelers

5 10 15 20 25 30 35

Availability Price Customer Service Quality Products Convenient Location

2011 2010 2008 2005

ALLOCATE 100 POINTS AMONG THE FOLLOWING ATTRIBUTES THAT MIGHT BE IMPORTANT TO YOU WHEN SELECTING A PRIMARY SUPPLIER.

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20 40 60 80 100

Direct from Manufacturer Specialty Wholesalers/ Distributors Warehouse Home Centers Lumber/ Building Materials Dealers

2011 2010 2008 2005

Competitive Shopping Trends: Builders

FROM WHICH OF THE FOLLOWING DO YOU PURCHASE YOUR PRODUCTS?

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20 40 60 80 100

Direct from Manufacturer Specialty Wholesalers/ Distributors Warehouse Home Centers Lumber/ Building Materials Dealers

2011 2010 2008 2005

Competitive Shopping Trends: Remodelers

FROM WHICH OF THE FOLLOWING DO YOU PURCHASE YOUR PRODUCTS?

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Switching Suppliers

In the past five years, have you switched your primary supplier?

35% 65%

Yes No

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Switching Suppliers

*Note: Unaided responses. Includes top responses only.

Other than price, what single factor would cause you

to switch suppliers?

.

52% 27% 17% 15% 12% 8% 3% 0% 55%

Customer service issues Product availability issues Product quality Order accuracy issues Delivery time issues Supplier out of business Oownership change

l

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What Types of Communication and Advertising are Contractors Using?

Advertising

15 Which of the following advertising do you use when shopping for products and materials?*

65% 64% 53% 42% 40% 30% 17% 16% 14% 10% 7% 6% 0% 100%

Websites/

• nline

Product catalogs Magazines Supplier newsletters Email Flyers/ circulars inserted into local paper Postcards or flyers in the mail Print ad in my local newspaper T.V. Yellowpages ads Radio Free shopper newspapers

Response

Total Builders Remodelers Websites/online 65% 63% 66% Product catalogs 64% 58% 68% Magazines 53% 50% 56% Supplier newsletters 42% 38% 44% Email 40% 37% 41% Flyers/circulars inserted into my local paper 30% 26% 33% Postcards or flyers/ circulars arriving in the mail 17% 17% 17% Print ad in my local newspaper 16% 16% 16% T.V. 14% 17% 13% Yellow pages advertisements 10% 10% 10% Radio 7% 5% 8% Free shopper newspapers/magazines 6% 7% 5%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

Advertising

16 Which one do you look at MOST when shopping for products and materials?*

36% 22% 12% 8% 4% 4% 2% 2% 0% 50%

Websites/

• nline

Product catalogs Flyers/circulars inserted into my local paper Magazines Supplier newsletters Email Print ad in my local newspaper Postcards or flyers/ circulars arriving in the mail

Response

Total Builders Remodelers Websites/online 36% 38% 35% Product catalogs 22% 17% 26% Flyers/circulars inserted into my local paper 12% 8% 14% Magazines 8% 8% 7% Supplier newsletters 4% 6% 3% Email 4% 5% 4% Print ad in my local newspaper 2% 2% 1% Postcards or flyers/ circulars arriving in the mail 2% 0% 3%

*Note: Includes top mentions only.

Frequency of Advertising Use

17 How frequently do you use advertising when deciding which building supply products and materials to purchase?

4% 18% 46% 28% 4% 0% 50% Every time I shop More than half of the time I shop Less than half of the time I shop Rarely I do not use advertising

Response

Total Builders Remodelers Every time I shop 4% 6% 3% More than half of the time I shop 18% 18% 18% Less than half of the time I shop 46% 47% 45% Rarely 28% 24% 31% I do not use advertising 4% 6% 3%

What is looked for in advertising?

18 What are you looking for in ads?

68% 66% 64% 62% 60% 57% 26% 17% 0% 70% Products on sale Products for a project you are working on Product description/ information Sale or discounted prices Products for a project you are bidding General prices Coupons Store information

Response

Total Builders Remodelers Products on sale 68% 65% 70% Products for a project you are working on 66% 62% 69% Product description/ information 64% 65% 63% Sale or discounted prices 62% 55% 66% Products for a project you are bidding/ considering starting 60% 52% 65% General prices 57% 58% 57% Coupons 26% 17% 32% Store information 17% 19% 15%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

Changes in Advertising Use

19 Are you now looking at advertising more frequently, less frequently or about the same as you have in the past 5 years?

16% 6% 57% 9% 8% 4% 0% 60%

Much more frequently Slightly more frequently About the same amount Slightly less frequently Much less frequently Have never looked at advertising

Response

Total Builders Remodelers Much more frequently 16% 14% 18% Slightly more frequently 6% 7% 6% About the same amount 57% 52% 61% Slightly less frequently 9% 13% 6% Much less frequently 8% 10% 7% Have never looked at advertising 4% 5% 3%

20

How Are Building and Remodelers Contractors Using Technology?

Technology Use

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How are you using technology to shop for or purchase materials and supplies?* UNAIDED

38% 30% 15% 10% 7% 6% 0% 40%

Researching products Purchase/order products Cost comparing/checking

• ut prices

Email orders/special

• rders online

Internet Get installation/product specs and data

Response

Total Builders Remodelers Researching products 38% 44% 35% Purchase/order products 30% 30% 30% Cost comparing/checking out prices 15% 18% 13% Email orders/special orders online 10% 7% 12% Internet 7% 7% 7% Get installation/product specs and data 6% 9% 5%

*Note: Unaided responses. Totals may exceed 100% due to multiple responses. Includes top mentions only.

Technology Use

22

How are you using technology to shop for or purchase materials and supplies?* AIDED

76% 73% 65% 52% 50% 31% 25% 22% 0% 80% Researching new vendors Purchasing materials Collaborating with customers Electronic invoicing Collecting and tracking bids Automatic or bid template software Customer relations management tools (CRMs) Tracking inter-

• ffice

communications

Response

Total Builders Remodelers Researching new vendors 76% 78% 74% Purchasing materials 73% 75% 71% Collaborating with customers 65% 64% 66% Electronic invoicing 52% 56% 49% Collecting and tracking bids 50% 59% 44% Automatic or bid template software 31% 40% 26% Customer relations management tools (CRMs) 25% 33% 20% Tracking inter-office communications 22% 33% 15%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

Internet Access

23

How do you access the internet for business purposes?*

75% 61% 38% 15% 2% 0% 80%

Computer at your business Home computer Smart phone Tablet computer Laptop

Response

Total Builders Remodelers Computer at your business 75% 81% 70% Home computer 61% 56% 63% Smart phone 38% 45% 33% Tablet computer 15% 21% 11% Laptop 2% 3% 2%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

Frequency of Web Research

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How often do you use the internet to LOOK FOR

INFORMATION on products and materials?

36% 41% 10% 8% 2% 2% 1% 0% 45% Daily 2 to 3 times per week Once a week 2 to 3 times per month Once a month Less often than

• nce a month

Not at all

Response

Total Builders Remodelers Daily 36% 47% 30% 2 to 3 times per week 41% 34% 46% Once a week 10% 9% 10% 2 to 3 times per month 8% 8% 7% Once a month 2% 1% 3% Less often than once a month 2% 2% 3% Not at all 1% 0% 1%

Frequency of Web Purchases

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How often do you use the internet to PURCHASE

products and materials?

4% 13% 11% 23% 17% 23% 10% 0% 25% Daily 2 to 3 times per week Once a week 2 to 3 times per month Once a month Less often than

• nce a month

Not at all

Response

Total Builders Remodelers Daily 4% 8% 1% 2 to 3 times per week 13% 21% 7% Once a week 11% 13% 10% 2 to 3 times per month 23% 20% 25% Once a month 17% 16% 18% Less often than once a month 23% 17% 26% Not at all 10% 6% 13%

Websites For Researching Information

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Which type of websites do you visit when LOOKING FOR INFORMATION

91% 88% 65% 34% 21% 8% 0% 100% Search engines Manufacturer's website Home improvement store website Trade specific forum Consumer review website Social networking or blog website

Response

Total Builders Remodelers Search engines (such as Google or Bing.com) 91% 92% 90% Manufacturer's website (such as DeltaFaucet.com or JamesHardie.com) 88% 86% 90% Home improvement store website (such as HomeDepot.com or Lowes.com) 65% 65% 64% Trade specific forum 34% 30% 37% Consumer review website (such as ConsumerReports.org or AngiesList.com) 21% 21% 21% Social networking or blog website (such as Facebook or Twitter) 8% 12% 5%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

Websites For Purchases

27

Which type of websites do you visit to PURCHASE?*

73% 61% 59% 10% 6% 0% 100%

Manufacturer's website Search engines Home improvement store website Trade specific forum Consumer review website

Response

Total Builders Remodelers Manufacturer's website (such as DeltaFaucet.com or JamesHardie.com) 73% 70% 75% Search engines (such as Google or Bing.com) 61% 60% 62% Home improvement store website (such as HomeDepot.com or Lowes.com) 59% 62% 56% Trade specific forum 10% 12% 8% Consumer review website (such as ConsumerReports.org or AngiesList.com) 6% 10% 3%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

Website Services Used

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Do you use any of the following services on websites?*

89% 74% 66% 59% 46% 42% 39% 27% 2% 0% 100%

Research information on products Look up products carried by supplier Look up/ compare product pricing Search for new vendor of products Purchase/ order new materials Get quotes on new material

• rders

Contact account rep/salesperson See bills or invoices I do not use any

• nline services

Response

Total Builders Remodelers Research information on products 89% 90% 88% Look up products carried by supplier 74% 74% 74% Look up/compare product pricing 66% 63% 68% Search for new vendor of products 59% 61% 57% Purchase/order new materials 46% 47% 46% Get quotes on new material orders 42% 51% 37% Contact account representative/salesperson 39% 51% 32% See bills or invoices 27% 31% 25% I do not use any online services 2% 0% 3%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

LBM Dealer Websites: “Most” Important Features

29 What is the MOST important feature or function

• f building suppliers’ websites

(Unaided)

19% 15% 12% 11% 10% 7% 4% 4% 0% 40%

Ease of use Product catalog/ selection Cost/price Clear/ detailed product information Availability Search features Ability to find a local vendor Information/ informative Response

Total Builders Remodelers Ease of use 19% 26% 14% Product catalog/selection 15% 9% 19% Cost/price 12% 13% 11% Clear/detailed product information 11% 9% 13% Availability 10% 6% 12% Search features 7% 6% 8% Ability to find a local vendor 4% 6% 3% Information/informative 4% 4% 4%

*Note: Unaided responses. Includes top mentions only.

LBM Websites: “Top Three” Important Features

30 What are the THREE most important features or functions of building

materials suppliers’ Websites?*

(Unaided)

61% 33% 30% 25% 20% 13% 11% 10% 7% 0% 70%

Cost/ price denoted clearly Availability Clear/ detailed product information Ease of use Product catalog/ selection Search features Ability to find a local vendor Information/ informative Placing orders Response

Total Builders Remodelers Cost/price denoted clearly 61% 54% 65% Availability 33% 24% 38% Clear/detailed product information 30% 23% 35% Ease of use 25% 29% 23% Product catalog/selection 20% 14% 24% Search features 13% 10% 15% Ability to find a local vendor 11% 14% 9% Information/informative 10% 13% 8% Placing orders 7% 11% 5%

*Note: Unaided responses. Totals may exceed 100% due to multiple responses. Includes top mentions only.

LBM Websites Use

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Are you now using building material supplier websites more frequently?

37% 26% 26% 2% 1% 7% 0% 40% Much more frequently Slightly less frequently About the same amount Slightly less frequently Much less frequently Don’t know/ Do not use supplier websites

Response

Total Builders Remodelers Much more frequently 37% 41% 35% Slightly less frequently 26% 19% 31% About the same amount 26% 29% 24% Slightly less frequently 2% 1% 3% Much less frequently 1% 0% 2% Don’t know/Do not use supplier websites 7% 10% 6%

LBM Websites Features

8.9 8.0 8.0 7.9 7.8 7.6 6.7 8.9 8.3 8.2 8.1 7.9 7.9 7.3 8.9 7.9 7.9 7.8 7.7 7.4 6.4 1 10

Lists technical aspects

• f products and

product features Advertises sales, special offers and discounts Lists changes in lead time Lists information about product shortages Highlights new products and new product information Advertises in-store special events or promotions Has directions to different store locations

Total Builder Remodeler 32

Using a scale of 1 to 10, how important are the following features

• f building materials supplier websites to you?

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LBM

Do you usually order or purchase materials online from a supplier website or do you go to a local location?

Go local to purchase 46% Both 43% Purchase/order products online from a supplier website 4% Don’t know/Do not purchase from supplier websites 7%

Response

Total Builders Remodelers Go to a local location to purchase 46% 36% 52% Both 43% 49% 39% Purchase/order products

• nline from a supplier

website 4% 6% 3% Don’t know/Do not purchase from supplier websites 7% 10% 6%

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Email Communication?

35

Current Email Use

Do you currently receive email messages that have product information, updates, sales, or special events ?*

Response

Total Builders Remodelers Receive email from my supplier 63% 67% 61% Receive email from manufacturer(s) 56% 67% 49% Do not receive mail 20% 14% 24%

*Note: Totals may exceed 100% due to multiple responses.

63% 56% 20% 0% 70% Receive email from my supplier Receive email from manufacturer(s) Do not receive mail

36

Interest in Receiving Supplier Emails

How interested are you in signing up for or continuing to receive email messages with new product information, product updates, sales or special events from your BUILDING MATERIALS SUPPLIER?

20% 38% 19% 12% 12% 0% 40%

Extremely interested Somewhat interested Neither interested or uninterested Somewhat uninterested Extremely uninterested

Response

Total Builders Remodelers Extremely interested 20% 26% 16% Somewhat interested 38% 33% 42% Neither interested or uninterested 19% 20% 18% Somewhat uninterested 12% 10% 13% Extremely uninterested 12% 12% 11%

37

Email Frequency Preferences

If you were to sign up for or continue to receive emails from a SUPPLIER, how often would you most prefer to be contacted by email?

3% 9% 48% 16% 20% 4% 0% 50%

Daily 2 to 3 times per week Once a week 2 to 3 times per month Once a month Less often than once a month

Response

Total Builders Remodelers Daily 3% 5% 2% 2 to 3 times per week 9% 12% 7% Once a week 48% 47% 49% 2 to 3 times per month 16% 13% 19% Once a month 20% 20% 20% Less often than once a month 4% 4% 4%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

38

Email Content

What type of information or content would you like to receive in email?*

90% 81% 53% 42% 35% 29% 0% 100%

New product information Sales/special offers/ discounts Technical specs on products Industry information Product shortages Changes in lead time

Response

Total Builders Remodelers New product information 90% 85% 94% Sales/special offers/discounts 81% 75% 85% Technical specs on products 53% 54% 53% Industry information 42% 42% 42% Product shortages 35% 33% 37% Changes in lead time 29% 27% 30%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

39

Direct Mail?

Receive postcards 31% Receive flyers or circulars 57% Receive product catalogs 49% Do not receive any of these 29%

40

Direct Mail Use

Do you receive postcards, flyers/circulars or product catalogs from your supplier mailed to your place of business?

Response

Total Builders Remodelers Receive postcards 31% 31% 31% Receive flyers or circulars 57% 53% 59% Receive product catalogs 49% 53% 46% Do not receive any of these 29% 30% 28%

Yes 92% No 8% If you receive them, do you read or look over these items mailed to you from your supplier?

93% 84% 59% 44% 19% 16% 0% 100%

New product information Sales/special offers/ discounts Technical specs on products Industry information Product shortages Changes in lead time

41

Direct Mail Content

What do you look for?*

Response

Total Builders Remodelers New product information 93% 94% 93% Sales/special offers/ discounts 84% 79% 87% Technical specs on products 59% 64% 56% Industry information 44% 44% 44% Product shortages 19% 15% 21% Changes in lead time 16% 17% 15%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

42

Social Networks?

Follow suppliers 6% Follow manufacturers 6% Do not follow any suppliers or manufacturers 92%

43

Social Network Use

Do you currently follow any suppliers or product manufacturers on Facebook, Twitter or other social networks?

Response

Total Builders Remodelers Follow suppliers 6% 6% 5% Follow manufacturers 6% 9% 4% Do not follow any suppliers or manufacturers 92% 89% 94%

44

Likelihood to Use a Social Network

How likely are you to "follow" or continue to "follow" a supplier or manufacturer on Facebook or Twitter?

4% 8% 15% 13% 61% 0% 70%

Extremely likely Somewhat likely Neither likely or unlikely Somewhat unlikely Extremely unlikely

Response

Total Builders Remodelers Extremely likely 4% 5% 3% Somewhat likely 8% 11% 7% Neither likely or unlikely 15% 19% 12% Somewhat unlikely 13% 10% 15% Extremely unlikely 61% 55% 64%

*Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

Yes 31% No 69%

45

Online Blog Use

Do you regularly read any online blogs related to your trade?

Response

Total Builders Remodelers Yes 31% 29% 33% No 69% 71% 67%

Response

Total Builders Remodelers

Remodeler Magazine 13% 3% 18% Builders Association 11% 28% 2% JLC 10% 3% 14% Fine home building 9% 14% 6% Linkedin 6% 10% 4% Tools of the Trade 6% 3% 8% Daily 5 Remodel 5% 0% 8% NAHB 5% 3% 6% Hanley wood 4% 3% 4%

Which ones?*

*Note: Unaided responses. Totals may exceed 100% due to multiple responses. Includes top mentions only.

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The Farnsworth Group

Information, Insight, and Answers!

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Who We Are

The Farnsworth Group is the leading market research and strategy consulting firm serving the hardware, home improvement, lumber and building supply market. For over thirty years we have studied the market and helped the industry’s leading companies develop a market information based competitive edge. The Farnsworth Group specializes in the hardware, home improvement, lumber and building supply market. Our success has been built around our core capabilities of Industry Knowledge, Project Experience, and Market Research Expertise that are unavailable from any other source.

48

Who We Serve

The Farnsworth Group serves a wide range of industry leaders.

• Lumber and Building Supply Dealers
• Home Improvement Retailers
• Hardware Stores
• Farm and Home Supply Stores
• Wholesalers and Distributors
• Manufacturers
• Agencies
• Publications
• Investment Community

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What We Do

The Farnsworth Group helps you improve your performance with market

• information. We help you grow your business.

Our unmatchable industry experience enables us to help you develop strategies to achieve superior performance, specific to your markets, your size

• r your type of operation. This experience has taught us that no situation is

exactly the same. While needs may be similar, individual client situations are unique. The Farnsworth Group approach is simple. Understand your needs first. We listen and learn. We provide information, insights and answers that are focused on our your needs. This approach and experience separates us from

• ther market research and consulting companies.

We know what questions to ask. We know how to get accurate answers. We know how to interpret the results and make them your competitive advantage.

The Farnsworth Group: We help you grow!

Market Assessment Studies

– Competitive Landscape Analysis – Market Share by Category – Store Selection Criteria Identification – Shopper Needs Analysis – Image Evaluation – Share of Shop Analysis

Customer Satisfaction Studies

– Identification and Prioritization of Customer Satisfaction Issues – Current Customer Satisfaction – Lost Customer Analysis – Non-Customer Analysis

Advertising Effectiveness Studies

– Advertising Awareness and Usage – Advertising Effectiveness and Recall – Communication Concept Testing

Merchandising Assessment

– Category Management – In-store Merchandising Assessment

Location Strategy Studies

– New Store Analysis – Site Location Surveys

Contact: Jim Robisch , 800-394-5755 ext 109, jrobisch@thefarnsworthgroup.com 50

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Thank You ! The Farnsworth Group We help you grow!