In the past couple of years, the home improvement, building products and lawn & garden industries have witnessed high demand and steady growth. Within that environment, it has been relatively simple for brands to simultaneously expand and increase their profits.
As the market becomes flat, however, companies can’t expect to grow by default. You must implement targeted strategies to seize a larger share of the existing market by improving your brand awareness, introducing the right features for the right price through the right channels–this being suppliers, retailers, and distributors–to become the preferred option, and edge out other brands in the hearts and minds of customers.
What is the State of the Building and Home Improvement Market?
The building and home improvement industry is experiencing robust competition vying for a wide range of consumers via different distribution channels. What we’re seeing is that certain demographics are going to be more profitable over the next several years than others, and therefore, more worth pursuing.
Namely, contractors and trade professionals make bigger purchases more frequently because they’re working on multiple projects, which are more likely to be larger scale than DIY. Additionally, as home sales begin to plateau in the second and third quarters of 2022, DIY spend is also leveling off compared to 2020 and 2021 spending. In short they’ve done what they can do, for the time being. Acquiring the business and long-term loyalty of trade professionals is increasingly critical for building product and home improvement brands.
Without a significant number of new customers entering the market or growing market demand, the main goal is to capture the loyalty of existing buyers or to motivate them to switch over to your brand for the products they typically purchase. Fortunately for some, brand loyalty is at the lowest levels we have seen in decades, which presents an opportunity for brand share to shuffle.
You Need to Understand Your Brand Equity
Numerous factors contribute to a brand’s ability to secure a certain share of the market. These include geographical distribution, channel distribution, pricing, marketing solutions, customer management, product quality, and the offering of innovative technology.
To grow sales in a flat market, you must first figure out your brand equity and how you can help it reach its full potential. Brand equity is composed of four measures:
- Brand awareness
- Brand usage
- Brand perceptions
- Brand consideration
You need data to create and monitor a successful strategy to steal market share. That means tracking your own brand’s performance and potential.
- What brand factors are most important to the customer?
- Is there awareness and positive perception surrounding your brand?
- Where does your brand win, where does it lose?
- Have your product and marketing efforts impacted key brand metrics?
In conjunction with tracking your own brand health, put the information in context by assessing the competition, evaluating market opportunities, and watching industry forecasts.
For example, you need to understand
- Who is the leading brand in your particular product category and why?
- Are they being challenged?
- Which companies are currently seizing brand share from others?
- Is the market consolidated or fragmented?
Finding the answers to these questions will enable you to more effectively seek growth opportunities strategically, rather than trying something and hoping for the best. That tactic worked fine in 2020 and 2021, but it will not work in the latter parts of 2022 and into 2023.
Once you’ve identified your brand equity and how you measure up against the competition, you can create strategies for seizing a larger share of the market.
How to Increase Brand Share
Here are a few ways to increase brand share within the home improvement market based on the current competitive landscape:
1. Tailor Your Brand Marketing Efforts
Since building supply, home improvement centers and other distributors expect future sales growth to come from trade professionals—rather than DIYers and homeowners—tailor your marketing and messaging to this demographic. Additionally, you’ll want to work with and through retailers (online and in-store) to capture the attention of this demographic.
- Provide them with the resources and knowledge they need to sell your brand or to make it the easy choice for customers.
- Really invest into your contractor enablement efforts and align your processes and systems with the ways they work.
- Help them become better business people so that they can thrive even through market downturns.
2. Pursue Innovations
If you’re hoping to lure customers away from the brands they currently select, you have to understand their usage, behaviors and perceptions.
- Why do they select the brands that they do?
- What kinds of projects are they using various products for?
- Where are they researching both project and product options?
- Does their purchase have to do with the products themselves or how they’re marketed and convenience in how they are distributed?
Again, taking stock of the competition enables you to get innovative and add tangible value to your building products to boost your brand’s performance. You also may need to get more creative with production methods and technology to increase your market share.
3. Focus on Retention and Customer Loyalty
While you’re looking to capture a larger market share, don’t forget about cultivating additional revenue from the customers you’ve already gained. You can aid customer retention by determining why customers are purchasing your building materials and equipment.
You don’t want to lose them to your competitors, especially as the home improvement market flattens. Plus, happy customers, especially trade professionals, are more likely to recommend your brand and product lines to others, and thus, their referrals can boost your brand awareness and help you steal market share from other brands.
Use information about your current customers’ behaviors and preferences to target similar buyers who may be buying from a different brand at the moment.
4. Follow Your Most Promising Leads
Again, using data, determine which of your current marketing efforts are driving new leads for your brand. Analytics for your digital strategies come in handy. You also can reach out with an inquiry at some point along the client journey to hear from customers themselves. You may be getting more or less leads from certain sources than you realize, which shows you where to invest time and effort and also where to cut back.
5. Consider New Acquisitions and Partnerships
Another way to capture a larger brand share in a flat market is to acquire other smaller home improvement brands or even develop strategic partnerships. While this may not be possible or desirable for all companies, mergers and acquisitions are among the fastest and most effective ways to access new customers and increase your market share. Custom Market Sizing Research enables your executive team to understand what brands or product categories may be ripe for acquisition and growth. It will also define brand share and channel share.
Strategic partnerships are another option. Especially as smart home technology collides with the home improvement industry, look for partnerships and systems integrators that will open the doors to opportunities for bolstering your product offerings, brand perception, and marketing strategies.
Getting Better Data for Strategic Decision-Making
Having the right data and deeper insights is critical to making strategic decisions about your brand. By researching your brand equity, product analytics and the competitive landscape, you can identify opportunities for expanding your brand share, even in a stagnant market.
Our primary research team at The Farnsworth Group has spent the last 30+ years conducting market research for the home improvement, building products, and lawn and garden industries exclusively.
You can leverage our resources to conduct valuable market sizing and brand health research to better understand your competitive position and where there is opportunity for stealing brand share to keep your company growing, even in a flat market.