I read a great blog recently from Brian Dickinson (link) about the impact of the US housing market for the building products industry that got me thinking about other new trends impacting these companies. When I mention “building products” I am using this term to talk about companies that produce lumber, roofing, insulation, windows, doors, flooring (wood and carpet), wall panels, tiles, bathroom fixtures, furniture, nails, screws, ceramics and a long list of other items.
Surprising Moves by the Industry to Survive – and Thrive
In the last few years – during the global economic downturn – I had some interesting conversations with building products companies which were all trying to adopt new business models with the goal to come out of the misery even stronger. Though not a scientific study, I found these discussions thought-provoking as they demonstrate that our traditionally very manufacturing focused customers where thinking about new ways to do business outside their traditional area of focus and expertise. Were those thoughts we exchanged brand new, never thought of before? No, but it was rather uncommon in the building products ecosystem to hear of those plans so often. That’s why I wanted to share my experience with you here.
Branding becomes Focus – to become the Strongest Gorilla
My conversations around transformation spanned many topics, but if I would pick one common theme, it would be Branding. The goal to create a well-recognized brand which makes a company stand out from its competitors and give it the competitive advantage to dominate the industry segment like the strongest Gorillas dominate and lead the troop.
Though of course spelled differently – there is a tie in between companies aspiring to be a Gorilla and the strategies used – sometimes called ‘Guerilla-Marketing’. The name ‘Guerilla Marketing’ (a registered trademark of Jay Levinsion, an author of many marketing books) comes from a form of war that consists of unexpected and low-cost attacks against the establishment. Those attacks are very targeted at reaching a specific goal and have been shown to often have a huge impact. Guerilla marketing tries to adopt these methods to deliver unexpected and viral marketing results without high costs.
Guerilla marketing includes 6 tactics (source: businessdirectory.com). Below are examples of the 6 and how building products companies are starting to think and act in this way.
- Extreme specialization
Many of the building products companies are in a commodity market with very little specialization. To differentiate in the market, building material companies are targeting specific market segments (in most cases high-end niche markets) with products that have specialized and unique features. Though this requires a larger investment in R&D, companies are expecting to be able to offset this by being able to charge more and increase market share with their specialized offerings.
- Aiming every effort at favorably impressing the customer
I am an online shopper. Why? It is not only very convenient; it also allows me to compare product features and study consumer reviews – that have a tremendous impact on what I purchase. Consumer facing companies for years have been tracking reviews and actively supporting customers to submit their impressions so they can immediately be aware of public sentiment and change course as needed. Building products companies are realizing that this is not just a consumer products phenomenon. They are revamping their webpages with the goal of making their customer’s experiences as easy and fulfilling as possible.
- Providing service that goes beyond the customers’ expectations
Don’t restrict your offering to your traditional area of expertise. Companies look at providing complete solutions which often require moving into unknown territory. Just think about providing some design support: How might a final product look like in somebody’s home? This might be done via pictures of design ideas or even interactive (on the web / as mobile app): select a product, adjust colors and so on. Some companies even go as far to enable the generation of a bill of material for a project. To complete the cycle they include a link ‘where to buy’ or placing the items into a shopping basket to request a quote or place an order right away.
Many building products companies have dealers and contractors between themselves and the end customer. There is more focus on getting dealer and contractors onboard more quickly, ensuring up-to-date certification and constant training and information exchange about product innovations, promotions, and so on so they can provide the right services which go beyond customers’ expectations.
- Fast response time
It’s all about getting relevant information to your customer quickly. Creating self-service portal pages is a common way to accomplish this with the positive side effect of reducing the work load in the customer service department. Other companies are mobilizing their sales force to provide fast feedback during customer visits. They are striving to provide via mobile device real-time information about order or shipment status, delivery times, product specification and pricing. Importantly, the dealer or contractor is often an additional entity between manufacturer and end-consumer, so it’s also imperative to ensure information exchange includes them so as not to interrupt the information flow and slow down response.
- Quick turnaround of jobs
Building products companies are looking into building more solid functional distribution networks with the right inventory levels and product mix that can satisfy specific needs in regions and markets. Better forecasting, constant demand sensing and quick adjustment to unexpected events is the focus to quickly turnaround a job. To improve forecasting companies try to include all kind of information – structured and unstructured – into their forecast model. Constant demand sensing means that forecasting is not a one-time activity per month. Instead, the influencing factors are monitored constantly and if necessary adjustments are made between the traditional forecast time patterns.
- Working hours that match the customer’s requirements
Extended customer care hours and online chat options are becoming more and more common specifically when a company is expanding its product offering into a new region with a different time zone. As a dealer or contractor often deals directly with the end-customer the focus is to train them as extended sales force by providing e.g. specially designed webpages or mobile apps to them so they are able to support the end-customer without relying on the manufacturer.
To become a Gorilla within their industry segment, building products companies would do well to follow the Guerrilla Marketing imperatives. I will certainly watch those companies with which I have had the pleasure of discussing how IT can support these new approaches very carefully to see how they transform their business into a Gorilla.