Large builders view brands through different lenses, depending on their marketing strategy and the home buyer segment that they're targeting. They also view brands differently than smaller builders. While the largest builders' own brand names are not yet on par with the larger manufacturers' brands, large builders have only been hefty and national enough for true brand-building activities for the past several years. In the next few years, big builders will continue to build their own brand names. As they enhance their images among consumers, they'll also probably exert greater independence, becoming less reliant on manufacturer brands for perceived quality. Some of the large builders already view supplier brands as a nice elective but not core to the way they drive value through their operation. Smaller builders, on the other hand, enjoy the use of supplier brands for the quality “rub off” value those brands can convey to the consumer (see previous article).
So when we explore the supply side of the equation for brands, we need to look not only at the type of builder but at the home buyer segment that type of builder targets. There's a correct and an incorrect brand strategy in each segment. Looking at the opportunities in this manner, the purchasing group for the builder and the sales and marketing group for the manufacturer can have a clear discussion to develop a joint strategy. For both partners to win, it is necessary that both derive long-term value from the relationship. This means each group must help the other evaluate what extra value the consumer will receive by using a well-known brand and how each of the supply chain partners will be paid for their efforts in marketing the brand.
First, the team of the builder and manufacturer must make certain that there is extra value in the equation for the consumer, and that the consumer will pay a premium for the extra value. This can be done by buying market research generally available to manufacturers and manufacturers' custom studies. Also helpful would be the builders' experience with those types of brands in their region or even joint custom research in the specific market or product arena. Any of these methods will work. The most accurate, and most expensive, method is custom research that reveals measures of value for a group of brands or an individual brand in specific builders' marketing and geographic mix.
Once we learn how to measure the value consumers associate with a brand, then we have to negotiate the split of the value among the team members. The team might consist of a builder and manufacturer, or it could include a distributor or an installer. It is important, at this point, to include the whole team and energize the team to sell the brand for the highest possible value. If, for example, the brand is a high-value option, it is imperative that the team design a plan that includes samples, displays, sales training, appropriate model home designs, and all other options available to drive as many consumers as possible to the upgrade option.
Great brands are one of the most important profit drivers in the new construction business. Make sure you measure their true value to consumers; put together a team from the manufacturer, builder, and other supply chain members; share profits appropriately; and develop a joint sales and marketing plan to drive the profits through the supply chain.