Hearthlist Digest #500 - Tuesday, September 26, 2000 RE: commodity fireplaces and distrubution chaos by "Tim Nissen" <[email protected]> Re: Gas logs without logs by "by way of Craig Issod" <[email protected]>
(back) Subject: RE: commodity fireplaces and distrubution chaos From: "Tim Nissen" <[email protected]> Date: Tue, 26 Sep 2000 12:04:40 -0400 I have to quibble a bit with the recent posts by my friend Roger Sanders railing against commodity fireplaces and chaotic distribution policies in general and Heat N Glo in particular. First, builders of all types have always been an important part of the overall hearth products market, particularly manufactured fireplaces. The less expensive and more speculative the house, the less expensive and more commodity-like the fireplace. In many cases, the more commodity-like the fireplace, the skinnier the margin. If you want to compete for this business you need to recognize this reality. For our business commodity fireplaces are still very profitable, and an important part of our overall business mix. Second, I agree that tin fireplaces are commodities, but commodities can = be differentiated. Two of the ultimate commodities are money and water but consider the many ways that banks and other financial institutions differentiate money and think of how many ways water now comes to market. We differentiate our fireplace offerings with brands (mostly Heat N Glo, also FPX and Heatilator), service, displays, price, promotion, personal selling and other parts of the marketing mix. Price is always important = and it would be nice to have brand exclusives, but the low-end spec builder = game is still winnable without an exclusive territory. Third, Heat N Glo (via Fireside Distributors of Oregon) has been a remarkably good supplier for us. The constant innovation and flow of new product, much of it clearly differentiated in dozens of small ways from = the "me, too" or low-end guys has been impressive. So have their promotional efforts, service, customer support, and all of the other things we need = and expect from a manufacturer (in fact they do a lot better than some of our high end exclusive suppliers). Two good examples would be their display = at the National Home Builders Show each year and the very efficient way that they get us current leads via an attached e-mail file that we can then follow up on. Product, service, price, promotion are all first rate. The new model 7000 with the brushed stainless steel face in our showroom is gorgeous and very sellable. I expect that the new Designer line will do well also. Fourth, there is that last troubling part of the marketing mix: distribution; and most of the tin fireplace lines are available through multiple channels making them readily available to anyone in the general trade. There are problems with excessive discounting, and HVACers sending customers in to see product in our showroom, but we try and keep our focus on putting together a great package deal for the customer and we continue = to profitably sell a large number of commodity fireplaces. We even get some = of those HVAC "referrals" away from those scoundrels because we can do it cheaper, or better, or offer more selection, or offer a more complete package or any number of things. Fifth, I see our business as a bit like the hearth products Safeway supermarket. Even though Costco sells many of the same products as = Safeway, and at a significant discount, I don't think you want to concede those commodity sales, especially if you have a legitimate shot at them. You still want to have the brand name toilet paper and batteries and tortilla chips and beer to go with the many other high margin items that Costco has never heard of. You're going to live off the mix, and you know that many customers are willing to pay a much higher price for those commodities in return for convenience and service and "shopping experience" and because they like doing business with you. I suppose that another strategy would = be to ignore those products and operate a little high margin deli or wine and cheese specialty store, but those businesses tend to be smaller and less profitable. I need the builder business and the volume and the spring and summer activity and I think Heat N Glo, while less than perfect, gives me = a better chance to succeed than their many competitors-even though I am a crummy "silver" dealer and all of those nefarious HVAC'ers Roger mentions are "gold." Tim Nissen Home Fire Stove Salem, Oregon [email protected]
(back) Subject: Re: Gas logs without logs From: "by way of Craig Issod" <[email protected]> Date: Tue, 26 Sep 2000 12:05:17 -0400 Heidi Call Mike at Sure Heat Atlanta, GA. I think he made them in the 70's Larry Hammonds www.shore-lines.com