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Brand Loyalty

‘Push out low cost unbranded manufacturers’
Alex Davidson, business development manager, Kährs (UK), discusses brand equity in the hardwood flooring industry and what suppliers can do to boost brand loyalty.: 
THE last decade has been a challenging time for hardwood flooring brands operating within the UK. Brand equity has slowly decreased and it’s become more difficult to add brand value, due to the narrowing gap in quality and service offered by Asian and Eastern European low-cost producers.
In the past, quality and service factors promoted by branded hardwood flooring marketeers were sufficient to convince retailers and consumers to pay a premium price for their branded products. This is no longer the case; margins, sales and volumes have fallen and branded manufacturers have lost market share to a new breed of non-branded, quality, efficient and agile producers, who now account for between 60-70% of the UK hardwood flooring market.
So, how do branded producers increase brand equity in this new competitive landscape? It’s widely acknowledged that hardwood flooring brands have weak consumer awareness and brand identity, when compared to other home brands, like say Bosch and Miele. An easy recommendation might be to invest more in consumer marketing but this would cost millions and take many years, with no guarantee of success.
Low margins, global recession, mature markets and the issues surrounding the basic business-to-business route to market for hardwood flooring suppliers are strong enough reasons not to undertake costly consumer marketing initiatives. There are, however, several potential practical and feasible recommendations that could help to increase brand equity and push the low cost unbranded manufacturers out of the UK market.
In terms of marketing, manufacturers need to establish who the customer actually is and tailor the message accordingly. For example, a more emotive approach should be used when targeting consumers, in terms of a product’s lifestyle benefits, as well as practical features and value for money. Generally, consumers place little importance on technical functionality.
As it’s the retailer that owns the last and important route to market, it’s the manufacturers’ responsibility to guide them, in terms of how the brand should be represented. In doing so, retailers may in turn place a higher value on the brand – and increase their own turnover.
The average flooring showroom is over sampled, confusing and uninspiring, with a proliferation of ‘me too’ oak samples. But, if quality suppliers are able to stipulate how they’d like their products sampled – and create a more exclusive environment – retailers can promote much more than the typical commoditised oak floor and add value.
Working closely with manufacturers can also prove beneficial, in terms of the retail shift towards multi-channel offerings. It’s an environment that needs to be positively embraced, before the low cost producers develop a brand strategy of their own!
But the problem is that retailers see no real value in the big brands and are often only willing to pay 10-20% over non-branded products, especially when it comes to commodity one and three strip oaks. Manufacturers need to build brands from the top down and offer a total solution, rather than using these commodity oaks as the ‘door opener.’
And, in order to do this, they need an insight into a typical trading day, so they can offer practical solutions in terms of promoting the brand in-store. No two consumers are the same and retailers have to be flexible; suppliers need to be aware of this, in order to build a good working relationship and make this possible.
Apple is a great case in point. Until the iPhone was launched, we were all quite happy with our standard phones – and that standard phone was much like the commodity oak. The iPhone brought something new to the retailer and consumer; they were prepared to pay a premium, not because of any incremental advancements but because it was ground breaking.
Consumers are pretty uneducated when it comes to hardwood flooring, leaving it to the retailers to guide and educate them – potentially towards a non-branded hardwood floor!
So how can the consumer be steered towards a quality, branded product. Editorials explaining product’s benefits are certainly very useful, as there’s such a lack of knowledge. Retailers and suppliers also need to acknowledge that the many showroom environments aren’t conducive to selling a high-ticket item.
The typical retail value for a branded hardwood floor, including installation, can average around £4,000?£10,000 – as much as a small car – and yet the retail experience can be over in a matter of minutes, leaving no sense of pleasure for the consumer.
If, however, the same floor is promoted and sold within a high end, lifestyle orientated retail environment, considerable value can be added and a premium price achieved.
It’s a big ask but in order to achieve this, suppliers need to gain an element of control over the final route to market; the retailers’ showrooms. Many retailers see no real value or strong business arguments for them to hand over their showroom concessions, for nothing in return – and quite rightly so.
Branded producers, therefore, need to create a collective argument and give solid reasons for the retailers to promote quality brands over non-branded floors, whilst highlighting the considerable financial benefits that could be achieved through mutual trading.
The SAVE model, which dispenses with the traditional four P’s of marketing, is a useful tool that can help steer this change:
Instead of product, focus on solution – define offerings by the needs that they meet, not just by their features or functions.
Instead of place, focus on access – by developing a high end multi-channel showroom that considers customers’ entire purchase journey, based on consistency and brand values.
Instead of price, focus on value – articulate the benefits of each product relative to price, rather than stressing how price relates to production costs, margins or competitors’ prices.
Instead of promotion, focus on education – provide information relative to each customer’s specific needs at each point in the purchase cycle, rather than relying on advertising and blanket selling techniques.
An investment of time and capital will be needed, but these goals are realistic and easily actionable. And, they could completely transform the marketplace, for the better!
www.kahrs.co.uk

This article has been reproduced from the Contract Flooring Journal website. You can find them at www.contractflooringjournal.co.uk.