Nailing Down Target Markets

Maybe the popularity of those home makeover shows has something to do with it, but home sales are strong and the remodeling market is growing. Yet while home centers have avoided some of the doldrums that other retail segments have suffered recently, it doesn't mean the retailers have become a slam-dunk sale for category marketers.Instead, they are finding they must fine-tune their messages to better target a more diversified audience and meet ever-more restrictive requirements from the big players before even getting a sign in the door.The Home Improvement Research Institute (HIRI), Tampa, Fla., reported in December that home-improvement product sales were expected to reach a record level of $212 billion in 2003. This total is 3.9% higher than estimates made back in June, it noted. That total is expected to rise to $265.1 billion by 2008 and represents an overall annual growth rate of 4.6%. In this five-year period, HIRI added, sales to consumers were forecast to grow 2.5 times faster than contractor sales (5.5% to 2.2%). This continual growth makes the need to reach the consumer in the aisle even more important -- and the trend is to focus on target markets."Marketers who simply generalize these markets, even to specific demographics within them, often miss the mark," says Fred Miller, managing director of HIRI. "You've got all kinds of customers involved in all kinds of ways in these purchases. It's like peeling an onion and finding a lot of different layers. Smart marketers understand who their target market is and how to approach them, not just the general market."That's a point that's been driven home at The Stanley Works, New Britain, Conn. The company supplies a variety of SKUs to the big home centers in a range of categories, including hand tools, pneumatic power tools, hardware, steel entry doors and storage equipment."We've learned that addressing each individual shopper in each category can be far different," says Scott Bannell, director of corporate marketing services. "Today, we do a far better job of understanding how someone shops for every category and whether they rely on in-store talent or self-serve items." Ironically, the company tries to provide more P-O-P support when in-store help is available. "We need to guide the salespeople and provide selling information that customers don't want to read," he explains. "Customers don't want to pick up binders and brochures to read in the aisle, so the displays have to be content-rich in those cases," Bannell says. That's particularly true with doors, he adds. They represent a more complicated purchase, are less familiar to customers and don't receive the amount of advertising garnered by hand tools and other products.Targeted MarketsSome demographics that are driving up sales are gaining attention in the market. Certainly the rise in size and buying power of the Hispanic market has been noted, especially in the Sun Belt and large cities. Marketers and retailers are trying to tap into that power on a targeted basis -- but not all Spanish-speaking consumers are similar, either in preferences or country of origin. This, along with drawbacks in research methods, make it difficult to gain insight and differentiate products, notes HIRI's Miller. One study HIRI recently conducted was targeted to Spanish-speaking consumers but was written in English. "It essentially studied assimilated Hispanics -- those who are comfortable with English, which is a different market," he says. Those who speak only Spanish, however, might be suspicious of filling out questionnaires.Virtually all manufacturers now have bilingual or trilingual packaging, and in many cases application photos and pricing information will attract Spanish-speaking customers to a display, where they can read Spanish feature-and-benefit copy, just as English-speaking customers do. But in some markets, particularly in southern California, Florida and Texas, retailers mandate that Spanish-language signage be provided. "The need for Spanish signage is regional, but the regions are getting bigger," says Karen Hager, director of national accounts at Senco Products Inc., Cincinnati. Senco provides all of its brochures in Spanish and also has produced two-sided signage, with one side in each language. "It can be difficult to put both languages onto one P-O-P sign," she explains. "We've found it can be better to do a two-sided piece and let the store decide."Those efforts can pay off, says Frank Owens, vice president of sales for The Quikrete Cos., Atlanta. Six years ago, the company began producing bilingual packaging for four of its key concrete SKUs. "We saw a nice jump in sales on those products." Female Market GrowingThe female market also is growing for home centers, but tracking it can be just as difficult, says HIRI's Miller. "The female role in a home-improvement project is becoming more important, but it varies by category," he says. It can include roles as the project initiator, brand selector, purchaser or installer. Typically, reaching female buyers who select paint from take-home samples but send their husbands to the store to buy it requires a complicated message. "They're also not afraid to pick up a power tool today," says Miller. He notes, though, that if the handle is so large it makes her hand uncomfortable, she won't be happy with the purchase.Stanley's Bannell estimates that at least 10% of the company's product sales are driven by females, including 20% of hand-tool sales. Some products, such as glue guns, tend to skew higher. "We show women to be the end-users in applications and talk about attributes such as being easy to squeeze." In doors, he notes, sales are split evenly between contractors and consumers. Women tend to focus on shape and style, while men want to know installation techniques. Meeting all these needs requires balance.Rust-Oleum Corp. has faced similar challenges as its SKU line has expanded to target particular markets, says Brian Hedges, director of trade marketing for the Vernon Hills, Ill.-based paint company. Its American Accents line is aimed at female buyers, and its Professional line at contractors. "We're trying to communicate to a lot of different people in the paint aisle," he says. That results in an effort to incorporate more lifestyle and application photos in prominent places on P-O-P and packaging, with features and benefits in less prominent positions.Marketers at Wagner Spray Tech Corp., Plymouth, Minn., began targeting the female market specifically in 2001 with wallpaper steamers and a new line of indoor paint sprayers by using application photos that emphasized women and the products' ease of use. Both products have registered double-digit growth since those changes were implemented, says Shelley Knop, the company's director of marketing for interior products. "We've definitely seen growth in this demographic, but it's difficult to track," Knop says. Wagner has tried to define it through returned warranty cards, but that doesn't necessarily report who bought the product and, even more important, who made the decision to buy it, she explains. According to Knop, finishing products in general tend to be aimed at women, although many interior products are gender-neutral. "We look at what the product is used for and who tends to do those projects," she says.Diversified Contractor Market Contractors also don't represent a monolithic group, notes HIRI's Miller. Purchase decisions may be made by the homeowner, the contractor in the store or his superiors at the home office. "You have to determine what type of contractor you are marketing to and how he buys his products." Quikrete recently introduced a new company logo and revamped its product line, bringing more products into its Commercial Grade program to better communicate its message to that market. But even that reorganization does not entirely pinpoint the buyer. "We realize there are many, many sophisticated do-it-yourselfers interested in these products, too," says Owens.With that in mind, the company implemented a total packaging redesign. A key objective of that plan, Owens says, was to ensure consumers find the exact product to simplify their project while offering sell-up points for retailers. The company also has introduced squeeze-tube containers to extend its lines into nontraditional channels such as paint specialty stores and to help consumers become comfortable with concrete products on an initially smaller scale.Data to the RescueMeeting the needs of these more targeted markets creates challenges for marketers, but it's also become easier thanks to more refined data analysis. "We have much better data on our successes, divided by day, by week and by store," says Stanley's Bannell. "If we have an endcap, we can see what lift we've gotten and use that information to fight for more space or tweak the mix on the shelf. We've become a lot smarter and learned what will work. And we have category-management people who analyze this stuff to death. It's beautiful." Stanley then shares the measurement data with each individual retailer carrying the display, he notes. The analysis can make materials and entire programs more efficient.A recent analysis, for instance, indicated that the company was gaining sales lift from a promotional sweepstakes -- but the lift was coming from the added location, not the sweepstakes itself. The company has since switched to free product offers instead. "Now we're getting both location lift and promotion lift," he says. "At that point, two plus two can equal five."Such analysis can refine presentations and create a better in-product mix, adds Rust-Oleum's Hedges. "Retailers always are trying to create tight SKU rationalizations and display the most popular SKUs -- and we want that, too. We want to make that real estate as valuable as possible." To that end, Rust-Oleum's marketers work closely with category managers at retail operations. "If a slow mover gets into your mix, you want to make sure it doesn't get added to the display program, because the retailer will be overstocked," Hedges says.Such tight partnerships can ensure that the vendor has the retailer's best interests at heart, which can be reciprocated, notes Suzy Mitchell, a spokeswoman for Owens Corning Co., Toledo, Ohio. "Analysis of product assortments and stocking quantities can ensure placements," she says.Restrictions GrowAs home center retailers exploit the data at their fingertips, they are becoming more restrictive about what materials they allow in their stores. In part, this push derives from the clean-floor policies that are becoming even more prevalent in many retail channels. A clean floor has been a long-standing goal for Lowe's, which is emphasizing it more than ever, and The Home Depot also is moving more in this direction, marketers say. Both chains have told suppliers that studies show clear aisles boost sales. But clutter can provide advantages, notes Stanley's Bannell. "If you get in the way of the consumer, you'll sell him more than if you tuck your products away somewhere." Impulse sales driven by the project that caused the store visit can boost sales significantly, he says, especially when it comes to hand tools. "There is a lot of volume in latent demand, so we have to ensure customers see our products."The Home Depot and Lowe's also are trying to make their display presentations more consistent and less distracting, marketers say. Such programs began in late 2001 with new regulations on material specifications, and those are continuing to be implemented and updated. "Retailers are beginning to demand a consistent 'look' to their categories," says Owens Cornings' Mitchell. "We are becoming more collaborative with our customers in both the design and implementation stages." Once customers become familiar with a store's presentation concept, the standardization can benefit both consumer and supplier, says Wagner's Knop. "We have three seconds to gain the customer's attention in the aisle," she explains. "If they learn the store's format for presentations and know where to look for the information they need, it benefits the category. It helps them understand the products better than having to shift gears with every manufacturer's set, which communicates differently." Senco's Hager agrees. "The goal is to eliminate the NASCAR look [a cluttered billboard of company logos] to stores and simplify it for the customer." But the restrictions add steps to the P-O-P approval process, she adds. "First you have to sell the program to the buyer, then you have to sell it to the person who regulates P-O-P to ensure it meets their format and targets their key customers." Dictating MaterialsRetailers also are requesting specific materials and substrates, Hager notes, including styrene, which can cost three times what materials used in former campaigns have cost. However, the increase is offset by producing fewer "approved" pieces, making a more efficient P-O-P production process. There are no wasted displays. A marketer produces fewer displays, but they are approved by Lowe's and The Home Depot and are more likely to be placed. Adds Rust-Oleum's Hedges, "In prior years, you could create a solution where one size fit all. Today, you have to get the pieces approved by operations and merchandising people, and they have strict parameters. You've got to trust that they know their customers very well."Cross-merchandising has become more targeted thanks to the data available, says Stanley's Bannell. "Display sizes are getting smaller, with fewer pieces in the display, but we can get them into more locations in the store because of precise cross-merchandising. We're a little smarter and have a little more common-sense in our approach to placing product in the right aisles."The jostling for brand dominance between the giant chains also is leading to more requests for exclusive products and promotions. Husqvarna, Charlotte, N.C., has benefited from that approach, with a store-within-a-store concept introduced to Lowe's in 2001. This year, the program was revamped from an endcap and two bays in one aisle to an endcap flanked by one bay in each of two aisles. The display features the company's trimmers on one side, and leaf blowers and chain saws on the other. The Husqvarna products on each side were then followed in succeeding bays by lower-priced products in that specific category. The approach offered a good-better-best layout that better emphasized Lowe's sell-up strategy, explains Sam Catalano, Husqvarna's marketing manager. Accessory hooks are built into the bays to highlight these high-margin products. Catalano notes that this year's program was in every Lowe's store, compared to last year's 60% penetration. Home Depot counters Lowe's Husqvarna aisles with similar products from John Deere.The desire for exclusivity extends to promotions and P-O-P as well, says Senco's Hager. "Stores really want their P-O-P to be different in look and format, even if it essentially says the same thing." Her company also has begun offering special promotional packs, such as two tools together or a tool with a gift card. These programs are worked out with buyers, with give-and-take until the final program is reached. "They result in a lot of advertising support and off-shelf displays," she says."The possibilities for what you can do with P-O-P in these stores really is limitless. It's just a matter of time, priorities and money," says Stanley's Bannell. "Retailers have been terrific in support of our brand and innovations, but they give us the space because it works."

Nailing Down Target Markets

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