Saturday, April 30, 2011

MODULAR HOME AD CAMPAIGN TOUGH TO ACCOMPLISH

The one thing that everyone in the modular housing industry agrees on is that we need a way to identify what we offer to the home buyer.  There have been efforts by industry groups and individual factories to come up with a term that readily conveys what we do but none of them seem to work well.  The general population is still confused by what we build.

But who can blame them.  If we are confused by the terms we use, then how can they be expected to understand them.

Let's look at our industry:

There are projections of 350,000 new homes being built this year.  Of that total, modular homes account for about 3% or 10,500.  Let's assume that there are 200 +/- factories turning out these homes.  That means that the average factory will build 53 homes this year or only one per week!  

Let's assume for a minute that the average factory builds a house of 1,600 sq ft and sells that house for $50 a sq ft (each factory and each house is different) with a gross profit margin of 30%.  That means that they are making $24,000 gross profit per home.  With that profit they must pay all their fixed costs including building expenses, taxes, utilities, insurance and numerous other costs.  Then they must pay their variable expenses which include payroll, sales commissions, health insurance, their share of employee taxes, service expenses, etc.  That doesn't leave a lot of dollars for mass advertising.

The factory owners themselves can't seem to get a handle on what they build.  They call their homes everything from "System Built" to "Off Site Construction" to "Modular" to who the hell knows what else.  And even if the factories that build what I consider to be true modular homes agree on a brand name, within minutes the factories that build double wide trailers will adopt it and muddy the waters all over again.

So the real problem is not one of creating a name for what modular factories build, it's how to find a name that new home buyers will recognize and not confuse it with double wides.  And beyond that, where is the money going to come from to pay for national advertising to promote that name?  It certainly can't come from the factories who have been hit hard during the housing crisis.  So who can get finance an ad campaign?


I know who can do it.

Let's ask President Obama to stop financing just one of the wars we're waging for 4 hours and use those millions of dollars to promote an industry that really can help the United States of America get back to being the greatest nation on earth.

7 comments:

Anonymous said...

Coach, a couple of things need pointed out to your readers. First, the factories are the biggest good old boy network in housing making the NFL owners look like rookies. They won't do anything to help the modular industry if it will cost them any money that they can use for other things like helicopters and motorhomes.
And even if they were to come up with a terrific marketing campaign, most of their builders wouldn't know how to use it effectively. Builders are builders, not businessmen.
I don't think we will ever see a united effort to make people aware of what we have to offer them when it comes to housing.

Rich Knowbody said...

It is incredible how many people don't know the difference between a manufactured home and a modular. But then Nevada's law defining a manufactured home uses the word Modular to describe a manufactured home. California, the difference is Manufactured is Federal code and Modular is California building code.

Heywood said...

2 things:
1.As far as the name, in many states the legal name is Industrialized Housing. Why not use that? If Manufactured Home people would not use misrepresent their product if legal risk was involved.
2. Are you serious about using tax dollars to promote the industry???

Anonymous said...

Coach:

Modular is a method of construction and this should be the message. Modular construction builds to same codes as site builders and share more similarities than differences so it is the process and not the 'product' that must be explained. The industry needs a new group of Owners who understand and convey our method of construction and a business model that stresses customization first. If Owners continue to think we are manufacturers and not builders then the industry will continue to stagnate. An OEM converts raw materials to finished product and there is no modular producer that fits that description and therein lies the myth of modular manufacturer versus modular builder. A modular builder assembles material into components off site, installs these partially completed components on site and then completes the finishes to deliver the end product; this is the process of modular construction that any consumer will understand.

Anonymous said...

This shouldn't be that hard. Lessee...stick built: floors sit out in the rain for months, subs don't show or do shoddy work, weather shuts down the whole operation, walls not true after months of getting wet then baking in the sun, cost overruns galore. Modular: built inside with quality materials in a controlled environment, constructed in days not months, can be customized to rival anything you can build on-site, costs are on-budget. We would never build another stick home after experiencing modular. Need more modular homes on HGTV and Discovery Channel to help teach the benefits.

Modular Home Place said...

Coach,

The ENERGY STAR program has the same problem when it comes promoting homes being rated. Although the E-star label is recgnized by most people, most people do not know the benefits of e star for new construction. This includes builders . Promoting estar ratings falls heavily on HERs raters. HERS raters must educate builders who have been building the same crappy inefficient homes for years who have a passion for being right. Who wants to admit they have been building innefficient homes for decades.

The modular home industry is the same - the task of educating home buyers of the benefits of building system built homes falls on those selling mods, the builders.

Another element to promoting modular homes as a viable building system is to identify any and all weaknesses in the modular home buying cycle (system) and fix them so buying a modular home is no different than buying a site built home.

I believe the biggest weakness in the modular home industry is in the front of the house at the factory level. The back of the house where the homes are constructed is in fine order. If the factories made buying homes easier for both builders and future buyers, any reservation of building a mod would fall on price and option.

I went to Signature Building Systems open house and was amazed at what they produced. Classic homes by haven is also going to be offering open factory tours. The factory tour makes it easy to make the decision to build modular. The buying process makes it hard at times to recommend buying modular,

R. Nelson said...

The real issue is that factory built housing has a long history of being poor quality. The only reason this debate exists is because we believe the buying public should reconsider the premise of manufactured housing. In time the technology, the quality of products, and the delivery systems will quell the whole discussion. In the mean time those who have quality products and can deliver immediate equity to the end users will survive and those who cannot will likely be filtered out of the market place. The remaining manufactured housing companies will be a new foundation for the industry. Optimistic? We will see.