ACHRNEWS

Retail Contractor Coalition Forms for Private Labeling

October 27, 2008

A new organization has been formed to give HVACR contractors more of a say in their own success by promoting private label brand equipment. The Retail Contractor Coalition (RCC) was established earlier this year and is now accepting contractor members.

RCC’s goal is to strengthen its alliance of independent contractors who want to promote their own brand rather than a manufacturer’s brand. “RCC is contractor- driven, with the focus on the contractor’s brand,” said David Heimer, RCC executive director and COO of the Service Roundtable.

“Industry research is clear. By far, homeowners look for a good contractor before they consider the equipment brand. The RCC helps contractors keep the focus on their brand by providing a means to self-brand products.” The organization provides support for contractor branding, contractorcentric sales and marketing material, and training on self-branding.

He added that for many contractors, self-branding has remained an unachievable ideal. “Sure, they would like to do it, but how?” he asked. “What are the steps? What is required? Where do you start? The Retail Contractor Coalition was started when a group of contractors got together to pool resources to make this simple.”



THE ROOTS OF RCC

Heimer noted that self-branding has been a concept that has existed for several years, most notably when the traditional distribution channel of manufacturer-distributor-contractor began to take a different form when HVAC equipment began to be marketed and sold directly to consumers (through distributor stores and Internet retailers). But he added that consumers have traditionally viewed the contractor as the brand rather than the equipment they sold.

“Every few years a marketing research firm conducts an omnibus study of the replacement process,” he said. “Consistently, the results show the contractor matters most. People seek a good contractor and accept any brand the contractor recommends. Anyone who has sold replacements for any time knows this to be an obvious truth. It’s not the brand on the box that matters, but the name on the proposal.”

It was this type of consumer attitude that helped fuel the formation of self-branding, which Heimer said was led by some very successful contractors. “A few large, progressive contractors began self-branding equipment to reduce price competition, boost the bottom line, provide one point of responsibility for their customers, and to build equity in their brands,” he said. “As they succeeded beyond all expectations, others followed.”



CHANGING MARKET DICTATES RETOOLING

As the normal distribution channel has changed, several dynamics of the HVACR market have changed, too. Heimer noted that in the past, an implicit contract existed between manufacturers, distributors, and contractors. They aligned together and won or lost together. “For example, during this time a leading manufacturer refused to sell through a utility that dominated its market with its own sales force selling HVACR directly to homeowners,” he said. “The manufacturer refused because acceptance would have adversely affected its dealer network.

“Today, things are different. The same manufacturer competes with its customers. Others allow their brands to be sold through retailers, big box stores, and so on. This doesn’t make the manufacturers wrong. It’s just a reflection of a changing world, pressures on manufacturers from the financial community, and a competitive market.”

Heimer added that when an implicit contract aligning manufacturers with the contractor channel “shattered, it only made sense for contractors to protect their own interests, to refrain from building equity in a brand they don’t own, that could be offered to a competitor with the stroke of a pen, and that could be removed from the contractor for virtually any reason.”

However, Heimer does not see any reason for contractors and distributors to change the way they interact with each other, despite the change in the brand name equipment that is sold.

“The real question is whether contractors are happy with the support they receive from distributors, or not,” he said. “Frankly, most contractors are quite happy with the support they receive. If not, they change suppliers. It’s a free market with lots of suppliers vying for sales. Why do business with someone you don’t like?

“The Retail Contractor Coalition is not about manufacturer or distributor support; it is about contractor branding. While almost all manufacturers will grudgingly accept the concept of contractor-branded equipment, they do little to aid the progressive contractor who seeks to position his brand first. The Retail Contractor Coalition fills this void.”

But self-branding equipment is not going to automatically ensure success.

“Contractors must also put forth a concerted effort to market their brand,” he said. “Of course, they should be doing this already. After all, what’s the alternative, marketing someone else’s brand?

“When a contractor sells a product backed by quasi co-op advertising (“quasi” due to re- strictive rules), incentive trips, and so on, he or she is paying for a lot of overhead that does little for the bottom line. Self-branded contractors strip the fluff and spend money directly on their company and brand promotion.”

Is RCC and private label branding right for today’s tough economic market? According to Heimer, any time is right for contractors to sell themselves as the brand. “Promoting your own brand is right for any economic time, but is especially apt when the market tightens,” he said.

For more information, e-mail info@contractorcoalition.com, visit www.contractorcoalition.com, or call 877-262-3341.

Publication date: 10/27/2008