Move Over Baby Boomers

February 27, 2006
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Manufacturer, distributor, contractor, end user. Someone's missing - the builder. The new construction builder is becoming an increasingly more significant player in the HVAC industry.

In the new 13 SEER world, carving out market share can be difficult. With specific marketing to the builders strategies, contractors could find themselves on top of a profit wave with few others around. High efficiency SEER units aren't the only new products available that need to be marketed to the builder.

Indoor air quality (IAQ) products and new technology should also be marketed as HVAC keeps up with current home comfort trends. Unfortunately, many contractor companies don't have the time, the money, or both to market to the consumer, let alone the builder. What is the contractor to do?

According to the Consumer Expenditure Survey, Generation X outspends the average consumer in several categories, including eating out, clothing, transportation, entertainment, audio/visual equipment and housing.

JUST THE FACTS

First things first, HVAC contractors are often marketing to the same people that builders are marketing to. Find out what builders want by finding out what their customers want. Examining trends and research from the building industry can yield a raw marketing strategy for HVAC contractors to develop.

According to the National Association of Home Builders (NAHB), total new single-family home sales for 2005 hit a record 1.28 million, up 6.6 percent from the previous annual record of 1.2 million in 2004. Unfortunately, the forecast for 2006 isn't as bright, with a 7 percent decrease in new single-family home sales predicted to total 1.19 million. Enter Generation X (Gen-X).

"If you don't understand the way Gen-Xers shop, the way they buy, the way they can influence their younger siblings, then you're not understanding the new-style American market," said Ann Fishman, president of Generational-Targeted Marketing, New Orleans.

For some time, the baby boomers had been the ones to dominate the housing market. "A new generation is now viewing the housing market from an entirely different perspective than the baby boomers who've traditionally dominated industry trends," said NAHB executive vice president and CEO Jerry Howard. "They're techno-savvy and are more likely to be house-shopping on the Internet. They have a strong awareness of all their options."

"Boomers have been the engine driving business for so long," said Fishman. "Businesses get lazy, and boomers are having a hard time admitting there's been a generational shift."

Gen-Xers, those currently age 27-40, were responsible for 49 percent of new-home purchases in 2003, as reported by American Housing Survey (AHS) data from the U.S. Commerce Department. NAHB research indicates that 37 percent of Gen-Xers intend to buy homes in the next two years, compared to just 13 percent of baby boomers. How is this good news to the HVAC contractor?

"Previously there was speculation that younger buyers would be more thrifty than their parents with respect to their housing choices, but our research shows just the opposite is true," said NAHB director of research Gopal Ahluwalia.

"In all, we find that the preferences of younger buyers trend toward greater space and more sophisticated amenities than those of their forebearers," said Howard.

Gen-X wants what they want, and they have the money to spend. Working directly with the builder to provide home comfort amenities over and above the basic HVAC system installation should boost profits benefiting the contractor, builder, and the buyer.

BUILD YOUR RELATIONSHIPS

Once armed with knowledge, contractors have to get out there and use it. Some contractors deal with builders who have little to no clue about 13 SEER, R-410A, IAQ, etc.

Others, like contractor Russ Donnici of Mechanical Air Service Inc., San Jose, Calif., works with builders who will only use R-410A and high-efficiency equipment as per his recommendations. According to Donnici, the 13 SEER mandate was never an issue for Mechanical Air Services Inc. and its local builders.

Beyond that, the company currently is marketing electronic air cleaners, UV lights, zone systems, and duct testing specifically to builders. California's Title 24 laws, though cumbersome, and at times confusing, have given Donnici another marketing advantage with builders. He currently has two certified HERS raters on staff.

"Contractors have to build value into what they are selling," said Donnici. "Unfortunately, many are just remove-and-replace contractors who will continue to provide no value to the consumer."

Contractor Scott Getzschman of Getzschman Heating & Sheet Metal, Freemont, Neb., deals with different builder issues in his region. At the end of 2005, the company began sending letters to inform its builders of upcoming changes, namely the 13 SEER minimum mandate.

Getzschman continued his marketing strategy with plans to attend home shows and participate in direct mail campaigns during the company's winter replacement promotion. Currently Getzschman Heating & Sheet Metal is marketing whole-house dehumidification as well as energy-efficiency education to builders. "Continuing the communication process is important," said Getzschman. "Invite them [builders] to your office, show new products, and validate upcoming changes."

Publication date: 02/27/2006

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