As a manufacturers representative in Florida, it is amazing to me the criteria dealers use to pick the brand they want to design, show and sell in their businesses.  This article is designed to help you choose a brand based on actual marketing and pricing strategies for your business and it's customer profile.  Big, well known name brands have a cost/benefit component to them that all dealers must weigh. Some of the cost/benefit components are: "Local Market Penetration", "Potential Profit Margin Erosion" & "Brand Advertising Positions".

 

Local Market Penetration is what I define by how many other dealers for that brand are in a 75-90 mile radius of your dealership.  Are the display/showroom criteria consistent within your market?  Is a neighbor undermining your brand or enhancing it?  I believe that competition is great and having a couple of dealers strategically placed is better for both the dealers and their prospects.  With more than one or two dealers for your brand in a market area you will have less pressure from the manufacturer and the brand recognition increases.  However, I have seen a couple of brands with as many as 18 dealers in a 125 mile stretch of I-95 in Florida.  I believe that dilutes the brand and the dealers become  a commodity broker; where price is compared easily among shoppers in any given local market.  This puts you  in the cabinet business instead of the service business.  If clients can easily shop for price you become a commodity broker and upselling your service and design become less of a factor in the consumers mind.  Remember, all of your prospects have many friends that "know the perfect kitchen guy" and it often isn't you! 

 

Potential Profit Margin Erosion is a real key factor in the Big Box Store brands.  Major brands that can afford to put their product in the Big Box Stores can cause a natural "cap" in the margins smaller dealers can charge for the same product.  I have heard it over and over again. " I can only upsell my design and service so far because the consumer will not pay more than the big box store prices".  If you  take on a big box brand, my strategy is to have other brands that offer better quality and design options for not much more money. Big Box brands are fine when there are not many dealerships in your local market area, and you "straddle" the brand with others that meet your prospect's design needs and increase your profit. 

Be extra careful when hiring designers with only Big Box experience.  They tend to be "indoctrinated" and will default to these brands more readily because they are familiar and easier.  Higher pay for them, less margin for you the owner!  Training, training, and more training is the key to increased profits for the dealership here.

 

Brand Advertising Positions are a great way to take on a cabinet line.  The more the consumer is aware of the brand, the more the brand conscious consumer will gravitate to your business.  Small businesses with small marketing budgets should consider having these brands because so much of the marketing is done for them.   Luxury brands offer great marketing aids to consumers. These brands advertise heavily in home magazines and shows and then direct consumers to the dealerships via their websites.  Smart dealerships have an equally impressive website when carrying these brands to capture the prospect's attention and maintain their brand's market position.

 

Be authentic with the brand you are taking on. Be aware of the local market penetration for each brand you carry and on the higher end, always have a "less expensive alternative" to offer to your prospects for comparison.  Leverage the brand name, but like the big box brands, "straddle" the cabinet line to fit your market and your customer's needs. 

 

Each dealership is different, as is each market place.  Knowing your "target customer" profile and your business "market & pricing strategy" will direct your choice of brands.  In these challenging economic times it is critical that you look foward and search for new ways to streamline your showroom and business mindset and maximize the profits on each and every sale.  I certainly help my customers and can help you too!

 

Thank you and Have a profitable month!