Advertising & Branding - July 2013

Advertising & Branding From July 2013

By Santo Torcivia

 

Upon examining the most recent figures from Kantar Media on consumer advertising, I am struck by how quickly the investment in brand equity among producer flooring brands has fallen. Each year over the last five years, the total amount spent in support of flooring brands by producers has declined to the point where spending in 2012 was 20% of what it was in 2008. This does not bode well for manufacturers and their efforts to gain a stronger position in the product channels, considering that the same trend is not true for consumer advertising spending by major retailers. 



It cannot be said strongly enough that, in the product channels, brand equity—that is, the communication of a brand’s image, perception and benefits to the trade and consumers—is as important as product development, product quality and price. In fact, brand equity is why an automobile company like Toyota or Honda can get a higher price (and higher sales volumes) for its products, which are perceived to have higher quality and better values than its competitors. But producers sometimes think it a simple matter to cheat their brand equity and “save” these funds to freshen-up the bottom line. They do not realize that cheating brand equity today undermines margins down the road. This sort of shortsightedness breeds long-term margin struggles and sales declines. There are plenty of examples. Just consider Stainmaster fiber by DuPont, which held a vaunted position in the late 1980s. Stainmaster cheated on its brand equity before making some other crucial marketing errors, was sold by DuPont, and is now is trying to resurrect itself. It is difficult to regain esteem once a brand has slipped from the consumer’s mind. 



Fortunately, flooring retailers across the U.S. do not suffer the shortsightedness of flooring producers. Empire Today has reportedly spent half a billion dollars over the last five years on consumer advertising, increasing its expenditure each year. Lumber Liquidators spent over $100 million in consumer advertising over the same period, also increasing its expenditure each year. Additionally, Lumber Liquidators has spent over $7 million in consumer advertising since 2008 in support of its Bellawood wood flooring brand. Overall, retailers have expended $849 million in consumer advertising over the last five years versus $297 million by flooring and carpet fiber producers. These figures include an estimated spending by the top three home centers (Home Depot, Lowe’s and Menards) of $140 million combined over the last five years, just for flooring.



Let me leave you with this thought. All the major retailers have store brands. Some, like Bellawood, Trafficmaster and SwiftLock, have varying degrees of equity. Flooring producers are reducing their advertising (communications with consumers) at a time when retailers are not following suit, diminishing flooring producers’ brand equity and pushing themselves evermore closely to commodity status. What will happen to product margins for producers? What other expenditures will producers be forced to cut when margins fall—product development, research and development, or something else? What will this then lead to?

It is not too late for flooring producers to assess their market positions and redeem their brand positions and, therefore, their margins. The question is whether flooring producers can see behind the next quarter’s income statement and invest in the future. Where would you put your long-term bet?

Copyright 2013 Floor Focus 



Other Archived Articles

Unemployment Falls but August Job Gains Muted   Full Article
Washington, DC, Sept. 5, 2014 -- Employers in the U.S. added 142,000 jobs in August, the lowest monthly total of the year, according to the Labor Department.

Horizon Floors Signs Denver Hardwoods   Full Article
New York, NY, Sept. 5, 2014 -- Horizon Floors has a distribution agreement with Denver Hardwoods.

Invista Surfaces Makes Executive Promotions   Full Article
Kennesaw, GA, Sept. 5, 2014 -- Invista Surfaces has promoted Maggie Bidlingmaier to vice president of its residential business.

Gerflor Becomes Starnet Approved Vendor   Full Article
Chicago, IL, Sept. 5, 2014 -- Resilient flooring firm Gerflor said it has attained approved vendor status in Starnet.

USG Signs Private Label Agreement With Powerhold   Full Article
Chicago, IL, Sept. 5, 2014 -- USG Corporation said it has entered a private-label agreement with Powerhold, the largest flooring accessories distributor network in the country.

Shaw Ranked Fourth on E-learning List   Full Article
Dalton, GA. Sept. 5, 2014 -- Shaw Industries ranked fourth on E-learning! magazine’s Learning! 100.

H.B. Fuller Acquires ProSpec Construction Products   Full Article
St. Paul, MN, Sept. 4, 2014 -- H.B. Fuller Company said it has acquired ProSpec Construction Products, a provider of tile and stone installation products.

Builder Hovnanian Says Income Doubled   Full Article
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Services Sector Expands at Faster Pace in August   Full Article
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Initial Jobless Claims Still Near Eight-Year Low   Full Article
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Private Sector Job Growth Remains Steady   Full Article
Roseland, NJ, Sept. 4, 2014 -- Private sector employment increased by 204,000 jobs from July to August, according to the August ADP National Employment Report.

CRI's Mendez Named SGAC Board President   Full Article
Dalton, GA, Sept. 4, 2014 -- Carpet and Rug Institute vice president for government relations Jennifer Mendez was named president of the board of directors of the State Government Affairs Council.

Royal Adhesives Acquires Toronto-Based Chemque   Full Article
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Domotex Bringing Back Innovations Event   Full Article
Hannover, Germany, Sept. 3, 2014 -- Domotex is bringing back its Innovations@Domotex for a second season next year.

Factory Orders Increase by Record Amount   Full Article
Washington, DC, Sept. 3, 2014 -- Factory orders rose by a record amount in July, mostly on the strength of commercial aircraft.

Shaw Moves Up on Selling Power List   Full Article
Dalton, GA, Sept. 3, 2014 -- Shaw Industries said it has been ranked no. 13 and is the only flooring manufacturer on the latest Selling Power 50 Best Companies to Sell For list.

Floor Focus Plans to Honor Young Professionals   Full Article
Chattanooga, TN, Sept. 3, 2014 -- Floor Focus Magazine plans to recognize young professionals in the flooring industry who are under 40 years old.

Bona AB Wins Swedish Export Award   Full Article
Aurora, CO, Sept. 3, 2014 -- Bona AB said it has received the Export Hermes 2014 Award.

Rug Market Schedules Set Through 2018   Full Article
Atlanta, GA, Sept. 3, 2014 -- AmericasMart has set the dates for its January and July markets, including its rug markets, through 2018.

Toll Brothers' Profit, Revenue Surge   Full Article
Horsham, PA, Sept. 3, 2014 -- Luxury homebuilder Toll Brothers Inc. reported third quarter net income of $97.7 million, or $0.53 a share, up from $46.6 million, or $0.26 a share, a year ago.