Three years ago, builders enjoyed record-setting conditions as an industry. An exception was Denver, where the market slugged behind the rest of the country. That's around the time that Englewood-based Village Homes of Colorado pulled out all the stops on creativity and cleverness to move product.
The regional overachiever responded to the softening market by creating its “Live It Upgrades” program, giving home buyers the option of choosing among three upgrade packages: the Remarkable Kitchen, the Techtouch home, or the Master Bath option. Each package comes with extras designed to appeal to select segments among home buyers. Included in the Master Bath option, for instance, are such brands as Kohler fixtures (sink, tub, and toilet) and Progress lighting. With some tweaks to the packages, Village Homes continues with the program to this day. “It's worked out very well,” says Hope Dunlavey, director of design operations.
Meanwhile, the national housing market itself has gone into deceleration mode. Tactics that proved effective in Denver circa 2003 suddenly seem to have gained cachet. Home builders everywhere are pumping energy into how they can differentiate their brands from their competitors'. Part of the solution may reside in leveraging highly recognizable supplier brands and, in some cases, creating packages.
COOL TO CONNECT Major home builders have made strides in operational areas that touch on branding, such as in quality and customer service. But those are the kinds of intangibles that tend to hurt you more if something goes awry than they're apt to help if things work the way they should. What's more, overall quality has improved across all builders in the last decade, marketing experts observe. Customer service and quality may be an important first step, but they're not exactly touchstones of marketing wizardry, nor will they work to significantly distinguish one builder from another.
One way to do that, some builders are learning, is to leverage the strong branding of suppliers to strengthen their own brand. “People are aware of Whirlpool, but not everyone is aware of Pulte,” Garwood says.
According to a study done for Merillat, “Model Behavior II,” higher-quality materials equate to a loftier perception among home buyers of a builder. It's akin to the “Intel Inside” concept in personal computer marketing, and it can apply to products as mundane as HVAC systems: We, your builder, use Carrier air conditioners. You the home buyer know Carrier. Therefore, you associate quality with us.
“I think it has fabulous opportunities in the industry because the builder brands are so weak,” says Tim Costello, chairman and CEO of Builder Homesite, the home builder consortium that launched the Envision options software platform.
Toll Brothers must use care in maintaining its high-end identity. “When you're buying a $680,000 home, our philosophy is you can't get away from [using recognizable brands] all that easily,” says Michael Smith, vice president of product standards and purchasing. Thus, the builder uses Carrier units (and sometimes Trane), for example. It also offers Viking ranges and GE's Profile dishwashers.
According to John Gibbons, vice president of national accounts at Carrier, KB Home, Ryland Group, M/I Homes, and Drees Co. are a sampling of builders that not only use Carrier products but actually cite the Carrier name in sales literature. Beazer and Hovnanian Enterprises both leverage supplier brands (and maybe create a little supplier good will) by displaying a prominent “business partner” board at the entrance of their design centers.