The Price You Pay

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There are sounds we hear that enable us to recognize where we are without having to see anything - a ticking clock, air blowing through vents, trees rustling.

January 01, 2003

 

Dean Horowitz, Publisher

There are sounds we hear that enable us to recognize where we are without having to see anything - a ticking clock, air blowing through vents, trees rustling. For building product manufacturers' national sales teams, the most familiar sound of late has been their customers' voices saying, "Less means more." For the manufacturer, this is a stressful atmosphere based on a few isolated sensory activities rather than a complete view of all the facts. But still, it is the sound that echoes.

The atmosphere for suppliers has been filled with concern as their customers seek to create value in their own brands. Increasingly, this search for brand equity supercedes the individual product brands in selling the home. Maybe a local builder’s advertising, customer satisfaction ratings and word of mouth are paying off. Whatever the reason, the builder is the brand leader in its market. The branded builder is the one the home buyer desires; the branded products inside the home are only components and not sellable features.

This is not a new atmosphere in other industries. Computer makers have long questioned if shoppers buy computers because there is "Intel Inside" or because of the dependability, customer service and assured performance of the computer maker.

The Home Depot's notorious negotiation strategy and purchasing power have set a path many builders follow. The "beat up your suppliers for better prices" approach has been the subject of many communications as builders move to increase profitability in today's competitive landscape. In response, suppliers look for ways to cut costs so they can meet their customers’ requests.

The message from many builders is: "This is what I need and the price I'm willing to pay. Will you provide it?"

This atmosphere is not sustainable. Suppliers that are forced to cut costs eventually must make hard, long-term decisions about their company, the clients they serve and the business they are in. They understand efficiency but also want credit for the knowledge they bring to the process and the value - the brand - they've provided the builder as it has advanced in the market.

As a builder, what do you do when others match your offering? When competitors become equals, you sell on either brand or price. This is the position in which you've placed your suppliers.

From this position, what do you do? Do you turn to the building product manufacturers that have branded their products and services to consumers and helped create more astute home buyers? Are these the same manufacturers that tried in days gone by to establish a business partnership with you? What’s your response when you find that one of your vendors cannot offer this type of relationship any longer because of the price?

Professional Builder advertisers have stepped up to tell builders and their architects about the advantages they offer your business. Product quality, design versatility, technology solutions, labor savings, dissolved warranty concerns, consumer acceptance and so much more are the focus of their advertising and marketing strategies. They are committed to this industry and its sustainability in relationship and product. The International Builders' Show has hundreds of booths filled with individuals committed to their products and the industry. They pay to exhibit as a means to establish the relationships that keep winning for both vendor and customer.

While you definitely should recognize your own leadership position in the market you serve, you also should ensure that the suppliers you work with are right there with you. Doing so means looking beyond just price and at the total value a manufacturer offers to you, your business and your customers.

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