Campaign lays foundation for connecting with builders

February 1, 2008 By    

For seven years propane has steadily gained strength in the minds of consumers throughout the United States. Once a fuel virtually unknown outside rural America, 73 percent of people now say they are aware of propane, according to national survey results supplied by the Propane Education & Research Council.

Importantly, propane holds about the same appeal as electricity and outpaces geothermal energy in the minds of “future decision makers” who might be in a position to build a home in the near future, the surveys say.

After spending about $100 million since 2001 in a broad effort that reached 81.3 million consumers, PERC is shifting gears to target its message toward a segment it thinks could hold the key to growing the market – homebuilders and members of the manufactured housing industry (see brochure between pages 8 and 9).

PERC’s Consumer Education Advisory Committee (CEAC) decided in December to decrease the amount of money it spends to reach general homeowners in favor of increasing the amount spent on what it calls “channel marketing” directed at builders and the manufactured housing industry. “Builder channel” spending will increase by 67 percent over last year’s budget, while homeowner spending will decrease by 22 percent.

Of a total $18.2 million CEAC budget for 2008, 65 percent – or $8.8 million – will remain devoted to the general homeowner audience. Meanwhile 26 percent – or $4.7 million – will be devoted to the builder and manufactured housing trades to accelerate field marketing, sales training and enter into trade partnerships. That compares with $11.2 million spent for consumers and $2.9 million for builders in 2007.

PERC Vice President Kate Caskin says the move – which began slowly in 2006 – meshes well with the council’s strategic plan for 2008 to 2012, which seeks to commercialize products under development and move propane technology from the purely theoretical to something more practical. And with the downturn in the residential housing market – the Commerce Department reported in January that new housing construction is at a 16-year low – general consumers are less inclined to build and builders are looking for any benefit to distinguish their product. Despite all-time high LPG prices, PERC is hoping to show them that propane heating fuel and appliances are their ticket.

“Builders are looking for ways to outshine the competition in a tough market,” Caskin says. “We want to be there to help them figure out how they can outshine the competition when they look at their energy choices and show them ways that propane can increase the long-term value of the home and why they should consider propane in their new building projects or renovations.

“It’s definitely a strategy we’re pursuing in a down market to talk to builders when they have more time to talk with us and to meet with us.”

To accomplish this, PERC has developed materials to help retailers talk with builders. It’s encouraging retailers to reach out to their local homebuilder associations, attend their meetings, talk one-on-one with builders and explain the many benefits of propane.

These kinds of meetings could help build the propane market. For example, 4 million customers with propane water heaters use 1.36 billion gallons of propane each year. However, if another 5 million current customers could be persuaded to purchase propane water heaters, along with 6 million off-the-main households and 100,000 new homes built each year off the main, PERC estimates, 4.69 billion gallons could be sold just to fuel water heaters.

To play up this greater interest in the builders’ market, PERC – which has long attended the International Builders’ Association trade show each February – this year will showcase the propane-fueled Roush F-150 Ford pickup truck it helped to develop. The truck, filled with propane appliances, will be given away to some lucky builder at the show.

“We’re taking it to the show because we know builders drive pickup trucks,” Caskin says. “It’s another way to show how propane is used not only throughout the home but it’s a very important fuel in the motor fuel market and for fleets.”

PERC’s Tracy L. Burleson says builders are particularly interested in energy-efficient fuel sources in an era of skyrocketing gas prices and a greater emphasis on environmentally friendly building methods.

“We do see the builders are very interested in learning more about energy sources and the great emphasis on energy efficiency now, and consumers are interested in energy efficiency,” says Burleson, the council’s director, residential trade outreach and partnership. “So we do see a strong interest from builders coming to our booth to learn more about propane and the energy-efficient products for the home.”

In addition, PERC is working with the National Association of Home Builders, whose first certified “green” home – what it’s calling the New American Home – this year will feature propane products, including five fireplaces, a kitchen stove, outdoor kitchen grill, outdoor kitchen two-burner unit, two firepots next to the pool and three tankless water heaters.

“We’re very excited about that,” Burleson says.

PERC is attempting to find ways to reach builders on a national level while setting the stage for local retailers to reach out to builders in their areas. For example, the propane industry will be represented at the Hearth, Patio and Barbeque EXPO, the NAHB Green Building Conference, Custom Builders Symposium and the Remodeling Show.

And it’s invested $150,000 to be the energy sponsor of NAHB’s “20 Club,” which is composed of 67 clubs of 20 non-competing builders and remodelers whose CEOs meet regionally to discuss issues and share successful business practices. The sponsorship means propane is the only energy source represented at these meetings this year.

“We’ll have quite a few opportunities to get in front of this group and learn from them, use them as a focus group to test our materials and see what it is they need from us to help us sell our homes,” Burleson says.

But it will be up to individual retailers to take these leads and implement them in their own regions if they want to develop this market. Burleson encourages retailers to join local homebuilder associations and network with builders at their meetings. Joining the association gives retailers access to that mailing list, which can be a great resource, she notes.

“We would like to see more propane retailers involved,” Burleson says.

With materials available through PERC’s marketing resources program, retailers can tap into professional tools to develop their own packets for builders and potential homeowners, Caskin says.

Retailers must earn the trust and respect of builders now while they have the time to listen, says Daryl F. McClendon, chairman of PERC’s Consumer Education Advisory Committee and director of propane acquisitions for Ferrellgas. He says retailers – who are discouraged by the amount of work they must put into maintaining their business’ status quo – should look to builders as an avenue for growth.

“Our industry is not seeing the growth that (retailers would) like,” he says. “We’re gaining customers, but our volume’s going down. What’s happening is they have to spend money on tanks to get more customers just to maintain their volume because people are conserving, their appliances are more efficient and they’re turning their thermostats down. The (retailers are) seeing that they’re spending more money – particularly given the cost of steel and trucks – and they’re making fewer drops for less volume.”

The picture isn’t rosy at the moment for builders in most areas of the country, but that cycle will change, McClendon says. And when it does, the propane industry should be in place to help make sure builders choose propane.

“We want to get the builders so that when the market does turn around, we have their support and have developed credibility with them, and when they do start building some more, they use propane,” McClendon says. “I’m very supportive. I feel like this is a very good change.”

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