Wednesday, June 20, 2012

Modular Home Factories Need to Go after Niche Markets

Modular home factories direct their sales efforts at acquiring the low hanging fruit such as the builder that called them for a price, the developer that wants to know if modular homes are a cost effective alternative to stick building or the commercial project that management read about in the Dodge Report.

But there is another way to get sales called “niche marketing.”  I know, these are two words rarely heard in the halls of the modular home factory…niche and marketing.  To hear them in the same sentence could be considered treason.
Niche marketing can be extremely cost-effective.  For instance, imagine the factory offering a modular structure that’s designed a select demographic market such as ADA or nursing homes.  A factory could put on a marketing and sales effort in a tight geographic area that is underserved by modular builders by going after the “new to modular” builder.

Taking on a new niche market can be a low-risk way to grow sales, as long as you keep in mind several important rules:

1. Meet their unique goals.  The benefits you have identified and promised must have special appeal to the market niche.  What can your factory provide that’s new and compelling?  Identify the unique needs of your potential niche and look for ways to tailor your modules to meet them.  Consider all the modular variations you might offer.

2.  Say the right thing.  When you’ve identified a niche market it’s imperative that you speak their language and understand the niche’s “hot buttons” and be prepared to communicate with them as an understanding partner, not as an outsider.

3.  Always test-market.  Before going full steam ahead, take a second and third look at the niche market you’ve identified to make sure that is one that really needs your modular home product.  All you need to do is look at some of the lines of new modular homes that were designed and thrust upon the builders who had absolutely no need for them.  Also look to see if any of your competitors is actively and effectively serving the niche and entering may not be in your best interests.

But what if there is no existing competition? Believe it or not, this isn't always a good sign. True, it may mean that other companies haven't found the key to providing a product or service this niche will want to buy. However, it's also possible that many companies have tried and failed to penetrate this group.

4.  Make sure you have buy-in.  Launching a new product line into a niche without every sales rep and department head buying into the idea that a niche market has been identified and test-marketed and made to feel that the niche’s success depends on a team effort will fail and usually miserably.  Just because the modular factory owners and management think this niche is going to save the company, it will not get past first base if sales doesn’t care if it succeeds or not.

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