“Other” Factors Influencing What You Think Decreases Sales
| Check out the remaining segments of this six-part series |
|---|
| Part 1: Setting or Following Construction Trends to Build Your Business |
| Part 2: Cutting the B2B Gordian Knot |
| Part 3: Adopting an Anticipate, React, Adapt B2B Strategy |
| Part 4: Et Tu Trends? |
| Part 5: “Other” Factors Influencing What You Think Increases Sales |
| Part 6: “Other” Factors Influencing What You Think Decreases Sales. |
There are many “other” factors that will influence a slide in sales that you must consider in sorting out your fragmented audiences. Things like an economic downturns, rising costs, the supply chain disruption we just talked about in the prior series of articles or competitive pressures will all influence a sales decrease as well as an increase.
For example, there is a general feeling that the American economy has held up well against higher inflation and interest rates. The Wall Street Journal recently noted that while that’s true, “Many individual borrowers haven’t. Predictions for a recession this year have largely faded. Employers have added jobs at a healthy clip month after month. Households have continued to spend. Many locked in ultralow mortgage rates before the Federal Reserve began its campaign to curb inflation in 2022.”[1]
The piece pointed out that costs to borrow for a home, a car or on a credit card were at the highest levels in decades. They noted, “The total amount of interest consumers paid on mortgages in 2023 rose 14% from a year earlier, according to Bureau of Economic Analysis data. It jumped 50% for other types of consumer debt, such as credit cards and auto loans. The costs to borrow for a home, a car or on a credit card are at the highest levels in decades.”[2],
Such debt affects the consumer’s ability to remodel, an owner to expand, a manufacturer to add a new line, and that impacts many business.
This “borrowing trend” suggests an interesting “risk” question: should a manufacturer play a card like “Buy Now Pay Later?” We are not suggesting manufacturers get into the finance business. But, what about building relationships with your own banks? Besides the larger ones, there are plenty of local banks that understand the value of a business relationship when a good customer wants to leverage money.
Everyone in business knows to “follow the money,” and when you follow it, generally, the path always leads to someone underwriting the investment. Because a home remodeling or adding a new line to a manufacturing facility or whatever is just that: an investment.
A Final Comment: Differentiation
According to a 2024 report titled, U.S. Today’s Home Renovation Statistics and Trends: Our 2024 Report kitchens and bathroom remodels were among the top most common consumer remodel projects in 2023. To promote a company’s products, it can help to look for ways to differentiate your particular product. Looking deeper at what key accessories consumers want in a new or remodeled home, may help find ways to differentiate a business and marketing strategy.
In a study we conducted entitled WHAT DO CONSUMERS WANT IN A HOME REALLY?,[3] consumers told us what they wanted in their “dream” homes versus the homes they were living in currently. This “trend” research revealed extraordinary opportunities for product manufacturers. While wine cabinets/racks or cellars was not listed as one of the “top” items consumers were looking for in their dream home, a deeper look indicated it might offer manufacturers of wine cabinets a way to differentiate their product offering.
Even though only 15% of respondents indicated they wanted a wine cellar in their dream home, it was the highest category in terms of the DIFFERENCE between what people want in their dream homes compared to what they have in their current homes. In short, 588% of the people wanted a wine cellar in their dream home! And it wasn’t just the 4,000-sf homeowners who wanted this either. Most people in the group that wanted wine cellars came from the 2,000 sq. ft. to 3,000 sq. ft. group. Gender-wise, 44% were men and 56% were women. What WAS going on here?
Besides realizing people are drinking more wine than every before, the key was to “define” a wine cellar, which is not always a wood-paneled room temperature controlled space. Houzz contains the largest collection of photos of “rooms” probably in existence, and if you go there and look at Wine Cellar Ideas & Designs, you’ll see what we are saying: it’s not just about a “room” per se. You’ll see wine being stored under staircases, along walls in other rooms, in additional pantries, in cabinetry in the kitchen…almost anywhere you can think of. It’s a manufacturer’s dream come true.
But that’s not the only example.
Laundry Rooms
We haven’t heard of a designer or realtor who leads with “wait until you see the laundry room in this house!” But in AIM’s research, laundry rooms (as in the large NAHB report) were the most sought after room (79% of respondents wanted it). How can manufacturers who make products for the laundry room look away from a statistic like that?
Most people want them because of the population of multi-family rooms; more people are living in a single household than in the past. As a result, there’s more laundry! And, homeowners are looking for ways to organize and make life more efficient.
There are many features consumers are looking for in a home which can offer product manufacturers ideas for how to differentiate their product offerings.
Conclusion
Given these factors in this discussion, the specific outlook for a manufacturing company’s sales in 2024 or 2025 compared to the prior year will depend heavily on the interplay of economic conditions, housing market trends, cost fluctuations, supply chain stability, and competitive dynamics. But it will also depends on trends…so your knowledge of which to follow or which to ignore is important. Monitoring the “other” factors closely can help your company anticipate changes and adjust strategies accordingly.
But ultimately, it’s up to you whether you are setting or following trends. And while “which” trend you should create or follow is at the heart of a business strategy, being realistic and looking at RESEARCH as one of your primary weapons to create a successful strategy can’t be neglected.
If you have any questions or comments, or if we can help you in your research, please feel to contact us here at Accountability Information Management, Inc. And thank you for reading this entire six-part series! If you want a convenient single pdf of this entire series, email inquiries@a-i-m.com and request it.
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[1] American Borrowers Are on Shakier Ground. These Charts Show Why by Gina HeebFollow and Kailyn Rhone, July 21, 2024. But now we also know that this is not true (i.e., the job numbers adjustment of inflating 818,000 jobs).
[2] Ibid.
[3] WHAT DO CONSUMERS WANT IN A HOME REALLY? Is a 40-page report and also a AIA, IDCEC and NKBA approved webinar based on AIM research. It is available upon request by emailing inquiries@a-i-m.com.