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

Mohawk Adds New Soil Protection to SmartStrand   Full Article
Calhoun, GA, Dec. 5, 2014 -- Mohawk said it is enhancing its flagship SmartStrand carpet by adding a new soil protection system called Forever Clean.

Factory Orders Decline in October   Full Article
Washington, DC, Dec. 5, 2014 -- New orders to U.S. factories fell for a third straight month in October, according to the Commerce Department.

Jobs Increase Most in Nearly Three Years   Full Article
Washington, DC, Dec. 5, 2014 -- Employers added 321,000 jobs in November and the unemployment rate remained at 5.8%, according to the Labor Department.

Interior Design Names Products of Year   Full Article
New York, NY, Dec. 5, 2014 -- Interior Design Magazine hosted its 9th annual Best of Year Awards Thursday.

Mortage Rates Lowest in More Than a Year   Full Article
Washington, DC, Dec. 5, 2014 -- Long-term mortgage rates have fallen to their lowest level since May 2013, according to Freddie Mac.

QEP Names Kura Executive Vice President   Full Article
Boca Raton, FL, Dec. 4, 2014 –- Q.E.P. Co. said it has named Brian Kura as its new executive vice president.

Initial Unemployment Claims Fall Last Week   Full Article
Washington, DC, Dec. 4, 2014 -- Initial claims for unemployment benefits fell last week, according to the Labor Department.

Planned Layoffs Plunge in November   Full Article
Chicago, IL, Dec. 4, 2014 -- The number of planned layoffs by U.S. employers declined 30% in November from October, according to outplacement firm Challenger, Gray & Christmas.

TISE Says Education Program Space Filling Fast   Full Article
Dallas, TX, Dec. 4, 2014 -- The International Surface Event said that space is filling up fast for the TISE 2015 education program.

Stone & Pewter Accents Rebrands as Lunada Bay   Full Article
Torrance, CA, Dec. 4, 2014 -- Stone & Pewter Accents, a manufacturer of stone and pewter tile, said it has rebranded as Lunada Bay Tile.

Pantone Names Marsala 2015 Color of Year   Full Article
Dalton, GA, Dec. 4, 2014 -- Pantone said that its Color of the Year 2015 is Marsala 18-1438.

Services Sector Expands at Faster Pace   Full Article
Tempe, AZ, Dec. 3, 2014 -- The services sector of the economy grew faster than expected in November, according to the Institute for Supply Management.

Private Sector Jobs Increase by 208K in November   Full Article
Roseland, NJ, Dec. 3, 2014 -- The private sector added 208,000 jobs in November, according to the monthly ADP Employment Report.

Propex Rebrands ISIS Carpet Tile Backing   Full Article
Chattanooga, TN, Dec. 3, 2014 -- Propex said it is replacing the brand name “ISIS” with “ARTIS” for its woven post-consumer recycled PET primary backing for modular tile.

Home Purchase Mortgage Applications Rise   Full Article
Washington, DC, Dec. 3, 2014 -- Mortgage application volume fell last week as refinancing applications declined, according to the Mortgage Bankers Association.

Nora Sheet Flooring Wins Award   Full Article
Salem, NH, Dec. 3, 2014 -- Nora said that its Noraplan nTx has been awarded a 2014 Record Product Award from Architectural Record magazine.

WFCA Lobbies for Internet Sales Taxes   Full Article
Anaheim, CA, Dec. 2, 2014 -- World Floor Covering Association officials recently met with the staffs of top members of Congress about proposed Internet sales taxes and and other issues of importance to flooring industry retailers.

Construction Spending Edges Higher in October   Full Article
Washington, DC, Dec. 2, 2014 -- Construction spending in October was estimated at a seasonally adjusted annual rate of $971.0 billion, 1.1% above the revised September estimate of $960.3 billion, according to the Commerce Department.

Distributor Belknap White Expands Armstrong Line   Full Article
Lancaster, PA, Dec. 2, 2014 -- Armstrong Floor Products said that distributor Belknap White (Patriot) will handle Armstrong residential products in Southern Connecticut, Metro New York and Northern New Jersey effective January.

Easy Turf Signs Tomlinson as Spokesperson   Full Article
Vista, CA, Dec. 2, 2014 -- EasyTurf has re-signed NFL Most Valuable Player LaDanian Tomlinson as a spokesperson.