Hearthlist Digest #498 - Friday, September 22, 2000
 
The HNG discussion continues ...
  by "Roger Sanders" <[email protected]>
 

(back)
Subject: The HNG discussion continues ...
From: "Roger Sanders" <[email protected]>
Date: Fri, 22 Sep 2000 09:48:31 -0400
 
Craig,
 
I=92ve been taking some heat from my previous posting because of my
contention that HNG (Heat-N-Glo) is simply a commodity product. A
measure of this is that their marketing program pursues every possible
multiple and overlapping distribution that system possible and that they
promote multiple HVAC distribution over specialty retail. This isn=92t
good or bad, it=92s simply a reality. Commodity products have to have
volume.
 
So, yesterday I checked out the HNG web site referral program for
directing customers to HNG showrooms in our state. The question I wanted
to answer was: Is HNG promoting alternative distribution channels over
specialty retailer distribution in order to maximize volume, or not? The
results are amazing!
 
(As background, HNG forces dealerships into =93Gold=94, =93Silver=94 and
=93Bronze=94categories, based on how many burning models and factory =
trained
personnel are counted. Internet customers logically assume that Gold
showrooms have much more to offer than Bronze or Silver, so customers
are biased to seek out the big Gold showrooms.)
 
Here is what I found out about how HNG promotes on the web in our state
(Oregon):
 
1.  10 of the 14 HNG showrooms promoted in our state are HVACers, one is
the gas utility, one is our big installing distributor and only two of
the 14 are specialty retailers.
 
2.  9 of the 11 HNG =93Gold=94 showrooms are HVACers, one is the gas =
utility
and only one is a specialty retailer.
 
3.  Even our big installing distributor (they distribute primarily to
specialty retailers) is presented as a second rate =93Silver=94showroom.
This distributor has installed many thousands of HNG fireplaces and has
had dozens of burning models and dozens of HNG trained personnel over
the last twelve years, but they only rate a lowly =93Silver=94 to internet
customers. Their only problem appears to be that they do not distribute
enough to the HVAC side.
 
4.  Our state=92s largest specialty retailer for HNG is also listed as a
second rate =93Silver=94 showroom. This store still does a huge HNG
business. They have sold and installed thousands of HNG fireplaces and
have had many HNG trained people and burning models on display over the
last 12 years.  Guess what, this specialty store is at the very bottom
of
the HNG showrooms list  for their area code. They're absolutely buried
by all the "Gold"
HVACer showrooms that are listed for ahead of them.
 
It=92s now very clear that HNG in our state is not just a commodity
fireplace brand with multiple, overlapping distribution, HNG is also
almost exclusively a HVAC commodity fireplace brand. This is in HNG
writing, on the HNG web site.
 
HNG has a very effective marketing program and it's simply the best way
for HNG to get the volume that commodity products need. Specialty
retailers need to know that while HNG builds some of the best commodity
fireplaces available, they should not presume a distribution program and
commitment to specialty retailing that does not exist.
 
Roger Sanders