Home Sweet (Propane) Home

July 1, 2004 By    

The propane industry already has made substantial inroads as the choice of
builders and buyers of manufactured housing, but the potential exists for even
greater penetration into a market that is getting stronger on a daily basis.


Today’s manufactured homes often include amenities
– like fireplaces – once found only in on-site built houses.

Ken Cuccinelli, chairman of Quest Four, which is a Pittsburgh-based strategic
marketing company, says the ability of the propane industry to educate the manufactured-housing
market is greatly dependent on what can be accomplished at the grass-roots level.

Quest Four has been working with the Propane Education & Research Council
since 2001 to strategize ways in which to become the dominant energy source
for people who choose manufactured housing. By bringing the two industries together
to leverage resources and pursue shared goals, propane’s market share
in manufactured housing has already grown from 18 to 33 percent, Cuccinelli

“Because of the natural fit and the ease with which we can help each
other reach our respective goals, it makes sense for the propane and manufactured-housing
industries to team up,” says Kate Caskin, PERC’s senior vice president.

Despite those inroads, the grunt work of educating both builders and buyers
still falls to the local propane dealer, who has the most to gain when manufactured-housing
buyers choose propane.

Builders ultimately follow the desires of their customers when choosing an
energy source for their homes. Since many buyers are new to this type of home
choice, they rely on the manufacturer’s recommendations. That’s
why propane industry officials are encouraging dealers to make an extra effort
to reach out to this growing market segment.

“In this instance it is not just the home buyer or home owner who must
be influenced, although their demands remain important,” Cuccinelli says.
“But builders of manufactured housing must also be marketed to, since
they have the most influence in the energy choice of the home buyer.”

The growing trend
More than 20 million Americans live in about 9 million manufactured
homes. Once the sole province of the rural house trailers, today’s manufactured
housing can match the luxury and spaciousness of most any traditional home.

About 70 companies and more than 300 facilities produce manufactured houses
domestically. At least 60 percent of those homes eventually are located in the
same rural areas where propane use is strongest. That means the manufactured-housing
market and propane dealers are targeting the same potential homeowners.

Manufactured housing sales were about $9.5 billion in 2001, with the average
unit price at $50,000. The industry shipped about 190,000 homes from 275 manufacturing
facilities that same year.

The majority of units built are all-electric, but the manufacturers say that
they are willing to install whatever heat source the customer prefers.

Buying a unit equipped for propane will cost the home buyer about $200 more,
but that cost can easily be made up by the savings on the cost of the fuel.

“Propane is a more economical energy option as has been shown several
times in studies,” Cuccinelli says.

Today’s manufactured homes
Over the past 20 years, the quality and appearance of manufactured
homes have changed dramatically. Ever-improving production technologies have
allowed them to be better constructed, roomier, and built to suit any lifestyle.

The main reasons these units have become so popular are are quality of construction
and reduced costs, according to Bruce Savage of the Manufactured Housing Institute.
Construction costs can be as much as 25 percent less when a home is built in
a manufacturing plant.
Shortages of skilled labor such as carpenters also make it a much longer task
to build a home on site than it was in the past. And, when a house is built
on site, it is more difficult to pay attention to quality than what can be accomplished
in a factory.

Manufactured homes are especially attractive to people who might otherwise
not be able to afford a home. The manufactured housing industry primarily targets
those segments of the population that are most price sensitive, even though
the larger homes are the fastest-growing segment in the industry.

“The evolution in this area has been quite interesting,” Cuccinelli

“In the past they might have built even components such as doors and
windows on site, but now more of these components are built in a factory. The
manufacturers’ points of view are that they will do what it takes to satisfy
the customer.”

All manufactured homes have to be built in accordance with federal standards
known as the HUD code. The code regulates design, construction, strength, durability,
fire resistance and energy efficiency.

To meet HUD energy-efficiency standards, manufacturers are offering manufactured
home owners a variety of energy-saving options, including better insulation,
energy-efficient windows, and the choice of fuel source.

If buyers already are sensitive to costs, these prospects should be open to
choose the more economical option of propane.

“It is a versatile and portable source for heat. That concept is a selling
point for people buying manufactured housing and to the people who are selling
the houses to them. Add in the long-term savings, and it is clear that purchasers
of manufactured housing are a strong set of potential customers for propane,”
Cuccinelli says.

“The best way to market the option of propane heating is on the local
level through contact by propane dealers with these builders, and PERC is ready
to help in that effort.”

Stress the values of propane

The Propane Education & Research Council recommends several ways in which
dealers can help sell propane as a viable choice for manufactured housing.

Resistance to propane by home builders often centers around the perception/reality
that the price fluctuates for propane more than it does for electricity.

Educating the builders of manufactured housing and their customers on the
core performance strengths of propane is perhaps more important than any other
selling technique. Dealers should stress propane’s cleanliness, reliability,
safety and value. Electricity has the enviable marketing position of being seen
as being less complicated when it comes to heating.

What to do
“There is strength in the relationship with customers,”
says Ken Cuccinelli, president of Quest Four. “Customers in today’s
economy are always looking for added value in any purchase they make. And propane
dealers are strategically positioned to capitalize on that demand.”

Cuccinelli said propane dealers must show that they will have supportive relationships
with the homeowners and builders.

“Propane marketers must make integrating propane energy as easy as possible
for builders,” he says. “Let them know that we stand by our product,
so that they can convey that message to the home buyer.”

Of course it is also important to continue to educate consumers, who are ultimately
the ones who tell the housing retailers what is wanted in their new homes.

The overriding interest for those who manufacture housing is increasing the
value of the home they put on the market.

“The choice of propane enhances their bottom line,” Cuccinelli
said. “That’s a great selling point.”

Local marketing boosts propane sales
In order to determine how effective marketing tactics can be in increasing
the sale of propane-fueled manufactured home, a pilot program was conducted
for eight weeks in late 2002.
PERC coordinated the program through cooperation with manufactured-housing retailers
and propane marketers in 15 geographic markets.The results:

  • Higher sales of [propane were achieved through increased advertising that
    was coupled with a more active relationship between propane marketers and
    local manufactured home retailers.
  • There were 26 additional homes sold because of actions taken by pilot program
  • Home retailers sold an estimated additional $1.3 million in homes through
    participation in the program.
  • Program participants spent an additional $1,000 to $5,000 on advertising
    during the program. According to PERC, the incremental investment in advertising
    and marketing can be recovered in about 26 months.
  • At pilot program sites, propane market share increased from 18.9 percent
    to 34 percent.

New PERC program adds dollars for advertising

The Propane Education & Research Council recently adopted a program for
propane marketers to build stronger partnerships with the manufactured housing
industry to increase sales of propane to this market.

The Manufactured Housing Partnership Program allows state associations to
use some of their consumer education partnership with states funding to support
a manufactured housing sales initiative. Partnership with states funding is
a monetary match, over and above state rebate dollars, to support advertising
media costs to run PERC-produced advertising materials locally. The new program
offers increased opportunities to use these funds in a manufactured housing
advertising campaign.

The program was modeled after a successful pilot program in 2002 that found
propane home sales grew with an increase in advertising and a strong relationship
between propane marketers and home retailers. The pilot program also confirmed
that the manufactured housing market represents a great potential for untapped
sales and growth for the propane industry.

“The program is designed to meet the business needs of each particular
state, based on specific sales goals and the makeup of the market. Each state
can choose the parts of the program that work best for them, and add elements
over time,” says Kate Caskin, PERC senior vice president.

“It also helps to address the request from states for more ways to use
their partnership funding. This program is the culmination of knowledge gained
from the pilot program that tested marketing tactics in this market, focus group
research, and input from states and the Manufactured Housing Subcommittee of
the Consumer Education Advisory Committee. This program really pushes the relationship
building, and more importantly, the benefits and results, down to the local

The new program is designed to enhance the propane industry’s overall
consumer education advertising campaign, which uses TV, radio, print, and online
advertising to establish propane as the energy of choice among homeowners. The
new ads feature the Energy Guys, who humorously point out the competitive advantages
of propane over electricity. Energy Guys ads specifically targeting this market
have been developed.

State advertising enables state propane organizations to continue the campaign
message in more targeted areas where the potential for propane sales to manufactured
housing customers is highest. They also can place the ads in state manufactured
housing association publications.

State associations also are encouraged to build relationships and develop
stronger ties with their state manufactured housing organizations via speaking
engagements, trade shows and a recently announced Take a Retailer to Lunch campaign.

Additionally, a retail home center support program conducted at the state
level, uses advertising to promote key manufactured home retailers with the
propane message, draw traffic to their home centers, and increase propane home
sales. Ads from the online advertising kit are used and tagged with the home
retailer’s contact information using partnership funds.

To qualify for this advertising support, home retailers must commit to showcasing
a propane home on their sales lot; displaying propane-specific point-of-purchase
material and brochures; participating in training facilitated by local propane
marketers; and providing data and feedback on propane home sales.

At the grassroots level, adding a program of local sales incentives provides
additional sales support material, incentives, and customer rebates from local
propane marketers and/or the state propane association to spur sales.

“All of the marketing layers in the program work to support and enhance
each other. They deliver a consistent and easily-recognized message to consumers
across a variety of channels,” says Caskin.

“Most important, this program has long-term goals due to its emphasis
on promoting relationship building, partnership, and support between propane
marketers and manufactured housing retailers – a formula that we believe
will lead to greater sales for the industry and greater satisfaction among customers
choosing propane as their energy source.”

State organizations and marketers can learn more about this new program by
calling Tracy Burleson, PERC communications manager, at 202-452-8975.

Manufactured housing by the numbers

The manufactured housing industry has grown significantly over the past decade.
Statistics from the Manufactured Housing Institute and The Foremost Insurance
Group of Companies show manufactured homes growing in popularity:

  • About 20 million people (about 8 percent of the U.S. population) now live
    full-time in over 10 million manufactured homes.
  • In 2001, one out of 7.5 new single-family housing starts were manufactured
  • Eight-eight percent of manufactured homeowners report satisfaction with
    the manufactured housing lifestyle.
  • In 2001, the industry shipped about 190,000 homes from 275 manufacturing
  • Multi-section shipments in 2001 outpaced single-section shipments, commanding
    74.7 percent of total shipments. In 2000, multi-section shipments accounted
    for 70.1 percent of the total.
  • Manufactured housing retail sales were estimated at $9.5 billion in 2001.
  • According to the Census Bureau, 2001 figures show that 67 percent of new
    manufactured homes were located on private property, and 33 percent of new
    manufactured homes were located in communities.
  • The average sales price of a manufactured home was about $50,000 in 2001.
  • Single-section homes average about $30,000, while multi-section homes average
    about $55,000.
  • The most popular way to buy a home is new from a dealer-41 percent of people
    surveyed bought their home that way.
  • 49 percent of surveyed homeowners have their homes on their own private
    property. 33 percent are in a park and do not own their lot.

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