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

Understanding and Communicating to Today’s Builders and Remodelers Presented to October 10, 2012

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 • Manufacturers • Home Improvement Retailers • Agencies • Hardware Stores • Publications • Farm and Home Supply Stores • Investment Community • Wholesalers and Distributors 2

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 optimal, contractor communication strategy. 3

Respondent Profile 4

Respondent Profile MEAN PERCENTAGE AVERAGE SIZE OF HOMES BY TYPE OF WORK BUILT OR REMODELED 100% 8% Total Builder Remodeler 30% 1500 square feet or less 14% 13% 15% 1600 to 2000 sq. ft. 27% 17% 34% 63% 2100 to 2500 sq. ft 23% 24% 22% 2600 to 3000 sq. ft 15% 19% 13% 92% 3100 to 4000 sq. ft 12% 17% 8% 70% More than 4000 sq. ft 8% 11% 7% 37% MEAN 2,712 sq. ft. 3,161 sq. ft. 2,408 sq. ft. 0% Total Builder Remodeler New Construction Remodeling/ Repair 5

Respondent Profile TYPES OF HOME BUILT OR REMODELED NUMBER OF EMPLOYEES 100% Total Builder Remodeler 28% 29% 29% 1 24% 11% 33% 2 16% 13% 18% 3 13% 13% 13% 4 11% 16% 8% 5 11% 11% 11% 60% 63% 62% 6 to 10 15% 16% 14% 11 to 30 5% 9% 2% 31 or more 6% 12% 3% 11% 9% 9% MEAN 23.3 51.3 4.7 0% Total Builder Remodeler Luxury home Move up home Starter home 6

Builder and Remodeler Attitudes and Behavior Supplier Selection Criteria Shopping and Buying Patterns 7

Supplier Selection Drivers: Builders ALLOCATE 100 POINTS AMONG THE FOLLOWING ATTRIBUTES THAT MIGHT BE IMPORTANT TO YOU WHEN SELECTING A PRIMARY SUPPLIER. 35 2011 2010 2008 2005 30 25 20 15 10 5 0 Availability Price Customer Service Quality Products Convenient Location 8

Supplier Selection Drivers: Remodelers ALLOCATE 100 POINTS AMONG THE FOLLOWING ATTRIBUTES THAT MIGHT BE IMPORTANT TO YOU WHEN SELECTING A PRIMARY SUPPLIER. 35 2011 2010 30 2008 2005 25 20 15 10 5 0 Availability Price Customer Service Quality Products Convenient Location 9

Competitive Shopping Trends: Builders FROM WHICH OF THE FOLLOWING DO YOU PURCHASE YOUR PRODUCTS? Lumber/ Building Materials Dealers Warehouse Home Centers Specialty Wholesalers/ Distributors Direct from Manufacturer 2011 2010 2008 2005 0 20 40 60 80 100 10

Competitive Shopping Trends: Remodelers FROM WHICH OF THE FOLLOWING DO YOU PURCHASE YOUR PRODUCTS? Lumber/ Building Materials Dealers Warehouse Home Centers Specialty Wholesalers/ Distributors Direct from Manufacturer 2011 2010 2008 2005 0 20 40 60 80 100 11

Switching Suppliers In the past five years, have you switched your primary supplier? Yes 65% No 35% 12

Switching Suppliers Other than price , what single factor would cause you to switch suppliers? l 55% 52% 27% 17% 15% 12% 8% 3% 0% Customer service Product Product quality Order accuracy Delivery time Supplier out of Oownership issues availability issues issues issues business change . *Note: Unaided responses. Includes top responses only. 13

What Types of Communication and Advertising are Contractors Using? 14

Advertising Which of the following advertising do you use when shopping for products and materials?* 100% 65% 64% 53% 42% 40% 30% 17% 16% 14% 10% 7% 6% 0% Websites/ Product Magazines Supplier Email Flyers/ Postcards or Print ad in my T.V. Yellowpages Radio Free shopper online catalogs newsletters circulars flyers in the local ads newspapers inserted into mail newspaper local paper Total Builders Remodelers Response 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% 15 *Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

Advertising Which one do you look at MOST when shopping for products and materials?* 50% 36% 22% 12% 8% 4% 4% 2% 2% 0% Websites/ Product Flyers/circulars Magazines Supplier Email Print ad in my Postcards or online catalogs inserted into my newsletters local newspaper flyers/ circulars local paper arriving in the mail Total Builders Remodelers Response 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% 16 *Note: Includes top mentions only.

Frequency of Advertising Use How frequently do you use advertising when deciding which building supply products and materials to purchase? 46% 50% 28% 18% 4% 4% 0% Every time I shop More than half of the Less than half of the Rarely I do not use advertising time I shop time I shop Total Builders Remodelers Response 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% 17

What is looked for in advertising? What are you looking for in ads? 68% 66% 64% 70% 62% 60% 57% 26% 17% 0% Products on Products for a Product Sale or Products for a General prices Coupons Store sale project you are description/ discounted project you are information working on information prices bidding Total Builders Remodelers Response 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/ 60% 52% 65% considering starting General prices 57% 58% 57% Coupons 26% 17% 32% Store information 17% 19% 15% 18 *Note: Totals may exceed 100% due to multiple responses. Includes top mentions only.

Changes in Advertising Use Are you now looking at advertising more frequently, less frequently or about the same as you have in the past 5 years? 57% 60% 16% 9% 8% 6% 4% 0% Much more Slightly more About the same Slightly less Much less frequently Have never looked at frequently frequently amount frequently advertising Total Builders Remodelers Response 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% 19

How Are Building and Remodelers Contractors Using Technology? 20

Technology Use How are you using technology to shop for or purchase materials and supplies?* UNAIDED 38% 40% 30% 15% 10% 7% 6% 0% Researching products Purchase/order Cost Email orders/special Internet Get products comparing/checking orders online installation/product out prices specs and data Total Builders Remodelers Response 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% 21 *Note: Unaided responses. Totals may exceed 100% due to multiple responses. Includes top mentions only.