Limited Scope Sample

Home ImprovementMarketing Research

© 2007 Edge Media

National Research Who is the Customer?

• Age - A 2005 study by Scarborough Research determined that homeowners in their 30s are 19% more likely than all homeowners to have completed some sort of remodeling project the last year, while homeowners in their 40s are 14% more likely and those in the 18-29 age bracket are 12% more likely.Scarborough Research, 2005

• Gender - According to a 2006 online survey conducted by ServiceMagic, only 8% of female homeowners saw men as the primary decisionmaker regarding home improvement projects, while 30% of male homeowners saw themselves as the primary decisionmaker. In contrast, 25% of females cited women as the primary decisionmaker, compared to 8% of men who saw women as the person responsible for home improvement decisions. Sixty-five percent of the homeowners said they make home improvement decisions in conjunction with their significant other. Among contractors who responded to the same question, just 28% agreed that couples make decisions as a team. Fifty-five percent of the contractors believe the female head of the household is the primary decisionmaker, while only 17% cited men. Home Channel News, 2006

• Home Ownership - According to a report by the Joint Center for Housing Studies of Harvard University, the share of home improvement expenditures based on how long consumers have lived in their current homes: 0-2 years, 14%; 3-5 years, 21%; 6-10 years, 25%; more than 10 years, 40%.Harvard University, 2005

• Home Value – A study by the Joint Center for Housing Studies of Harvard University calculated the share of remodeling expenditures in the U.S., based on the value of the country’s homes: Under $150,000 49%; $150-250,000, 29%; $250 - $400,000, 14%; $400,000+, 8%

National Research Why Does the Customer Buy?

• Recent national surveys commissioned by Minwax and Ace Hardware found that up to 83% of homeowners say they remodel at least in part to enhance their property values.USA Today, 2005

• Most important influences in making a decision when hiring a remodeling professional (multiple answers): Trustworthiness, 79%; service and dependability, 75%; capabilities, 73%; schedule accommodation, 72%; best size for the type of job, 71%.National Association of the Remodeling Industry, 2004

• According to a survey by the National Association of the Remodeling Industry, primary reasons that people remodel their homes (more than one answer possible): Update their homes to their taste or the latest trends, 79%; address the changing needs of their family, 62%; increase their home's market value, 47%; address the needs of a home business or one's professional work, 10%.NARI, 2004

• Sources for consumers' home improvement ideas (more than one answer possible): Personal ideas, 53%; newspapers and magazines, 49%; catalogs mailed to their homes, 24%; sales help in home improvement stores, 22%.American Express Retail Index, 2003

National Research Customer Spending Patterns

• Based on a survey by Scarborough Research, types of home improvement projects undertaken by homeowners in 2004 (multiple answers): Interior paint or wallpaper, 35%; landscaping, 30%; carpeting or floor covering, 18%; exterior paint or siding, 15%; remodeled bathroom, 14%; remodeled kitchen, 10%; heating or air conditioning, 9%; replaced windows, 8%; any addition, 4%; installed home security system, 2%; installed pool or spa, 2%.Scarborough Research, 2005

• Types of home improvements made to owner-occupied properties that accounted for the most spending in 2003 (totals in billions): Room additions, $12.342; bathroom remodeling, $11.048; interior restructuring, $8.862; painting and papering, $7.167; kitchen remodeling, $6.609; finishing space, $5.060; heating/cooling replacement, $5.684; roofing replacement, $4.446; window replacement, $4.227; patio additions/alterations, $3.083; deck and porch additions, $2.798; driveway/walkway additions/alterations, $2.757; roofing maintenance/repairs, $2.662; plumbing replacements, $2.286; detached building additions/alterations, $2.269; fence additions/alterations, $2.203.U.S. Census Bureau, 2004

• Sunroom additions rank in the top 7 home improvement projects, according to a recent Remodeler Council report. It adds more space to the home and increases the homes’ curb appeal on resale, helping the sunroom to return what realtors estimate as 70-100% of its original investment value, depending on location and other factors.

Business Trends

• According to research by the National Association of Home Builders, Americans spent an estimated $210 billion on home remodeling projects in 2005, 5.8% higher than the previous year. The NAHB forecasts a 13.2% jump in spending on remodeling for 2006, which would be the largest increase in more than 10 years. Home Channel News, 2006

• The Home Improvement Research Institute estimates sales of home improvement products reached $271.4 billion in 2004, a 12.8% increase over the 2003 figure of $240.6 billion. Between 2005 and 2009, the HIRI projects an annual growth rate for the industry at 3.9%. Home improvement spending is predicted to rise to $280.9 billion in 2005, and reach $329.1 billion by 2009.Home Improvement Research Institute, 2005

• According to a 2004 survey of recent homebuyers, commissioned by the Home Improvement Research Institute, contractors are involved in about one-third of projects done to newly-purchased homes, and nearly one-half of the projects completed in previous homes prior to sale.HIRI, 2004

• Based on a survey commissioned by the National Association of the Remodeling Industry, consumers are much more likely to hire a professional remodeler for certain types of jobs, including new additions, roofs or siding projects. On the other hand, decks, bathrooms and basements are more likely to be tackled by do-it-yourselfers.NARI, 2004

Summary of National Research

• Primary age cells: 30–50 years of age 33% more likely to remodel

• Gender: Female is the decision-maker

• Home ownership: 86% of remodeling is done by people who have lived in their homes 3 or more years

• 51% of all remodeling is done on homes with a value of $150,000 or more.

• Home improvement category is projected to experience significant, continuous growth.

• Contractors are valued for their trustworthiness and ability.

• Primary reasons for home improvement include increasing the value of the home and accommodating family needs/lifestyle.

Phoenix Market Research Age Demographics

Customer by Age Cells

17%

21%

13%

20%

22%25-3435-4445-5455-6465+

All local research sourced to Scarborough

Phoenix Market ResearchIncome of Customer

Customer by Income Level

32%

19%

13%

8% 1%

$50-74.9K$75-99.9K$100-$149.9k$150-249.9K$250K+

Phoenix Market Research

Customer by Home Value

16%1%

9%

6%14%

11%

11% $150-199.9K$200-249.9K$250-299.9K$300-349K$350-499.9K$500-999K$1M+

Phoenix Market ResearchCross Tabulation of Customer by Age/Home Value

Qualified Customer Home Value $150K+

13862

9163

15220

2843

18068

0

5000

10000

15000

20000

25-3435-4445-5455-6465+

Phoenix Market ResearchGender of Decision Maker

Customer by Gender

57% 43%

0

0.2

0.4

0.6

MaleFemale

Phoenix Market Research SummaryDefining Target Demographics

Gender: Male 57% & Female 43% added rooms or remodeled last year

Age: Two primary cells – 25-34, 35-64

Household income: 41% of all who added a room last year had a household income of $75,000 or more.

Home value: 68% of all who added a room last year had a home value of $150,000 or more

T1 Target = Adults 25-54, HHI $75K+, Home value $150K+

Media Usage Habits for Target Qualified by $75K+ HHI, $150K+ Home Value

0

0.1

0.2

0.3

0.4

0.5

0.6

Radio TV Print

25-3435-64

Internet Usage by Age

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

25-3435-4445-5455-6465+

The Necessity of Using the Web in the Marketing Mix

• Pew Internet reports that 38 million Americans use search engines every day to research goods and services.

• One fifth of internet users will use a search engine four times or more per day.

• 67% of U.S. adults who research online before making a purchase decision use search engines as a research tool.

• 40% of those conducting online research go to search engines first. Nearly equal percentages of respondents who use search engines to research products online use them to find a web site from which to buy (54%) or investigate where to purchase their desired product (53%).

• Metro Phoenix ranks 11th in the U.S. for internet access, with 1.8 million adults online.

Marketing Overview

• Strategy & execution• Begin with 35-64 age cell for conservative approach in line with historical track record of company.

• Media usage shows radio at 50%, television at 57%, and print media at 30% for this demo

• Internet usage is at 71.5% average for this age demographic, and increases as household income increases.

• Recommendation: The nature of the product lends itself to visual appeal. Television and internet should be the first marketing tools used, with radio following and then print.

Media Comparison Chart

Internet Marketing

• Natural Search– Search engine optimization is necessary to increase the number of visitors to the site that come as a result of search engines

– Initial optimization of site while being built

– Ongoing optimization of site per month• Paid Internet Advertising

– Google PPC local campaign – AZ Central online advertising

• AZ’s most visited local website• 44% have HHI $75K+, 60% are age 35+• Can target by age/zip code• $22 per 1,000 impressions