Cooperative Marketing of value-added wood products from the Northern Forest:

How do markets respond to place-based messages?

Funding support for this project was provided by the Northeastern States Research Cooperative (NSRC), a partnership of Northern Forest states (New Hampshire, Vermont,

Maine, and New York), in coordination with the USDA Forest Service.http://www.nsrcforest.org/

Principal Investigators• Mary Jeanne Packer, Executive Director, VT Wood

Manufacturers Association

• Jane Kolodinsky, Ph.D. Chair UVM Dept. of Community Development & Applied Economics and Co-director Center for Rural Studies

• Lisa Chase, Ph.D. Natural Resources Specialist and UVM Extension Assistant Professor

Email: mjpacker@gwriters.comAddress: PO Box 6004, Rutland, VT 05702

Collaborators

• VT Wood Manufacturers Association • UVM’s Center for Rural Studies• UVM’s Dept. of Community Development & Applied

Economics• UVM Extension• Vermont Tourism Data Center

Projected completion date: December 2006

Take-Home Messages

• Northern Forest Brand: Preference for furniture with a regional brand is strongest in the northeast. Having visited the Northern Forest region is a significant factor in purchasing decisions.

• Vermont Brand: The Vermont brand is stronger than other Northern Forest brands. Vermont’s natural beauty and traditional values influence purchasing decisions. Product quality is the number one motivator for choosing a Vermont labeled wood product; however the Vermont brand also tells a story.

Project SummaryThe study examined how the perceived attributes of Vermont

and the broader Northern Forest influence consumers’purchasing decisions. The objective: to determine if Northern Forest wood products could be branded for profitability. The success of a Northern Forest brand lies in the ability for the brand name to differentiate the product from its competitors. Therefore, this study focuses on how consumers use a brand in purchasing decisions and why they connect with a place-of-origin label. Understanding how different state and regional brands resonate with consumers is vital in developing an effective marketing strategy to create a competitive advantage in a niche retail market.

Summary, continuedInitially, thirteen wood product displays were set up at inns

and/or visitor centers in New Hampshire, Vermont, and Maine. Respondents filled out reply cards regarding product informational cues, such as product quality (cognitive) and place of origin (affective). Two telephone surveys, using two different populations, were conducted to explore the effectiveness of place-based branding of Northern Forest wood products. Finally, interceptive surveys were conducted at trade shows in Vermont and Rhode Island.

Summary, continuedHaving visited New England’s Northern Forest region is a significant factor

in estimating the demand for Northern Forest wood products. Thebrand effect was greatest for people who live in New England’s Northern Forest states, followed by people who have previously visited the region, and weakest for those who haven’t visited. Thus, the place where wood products are made is important to consumers when making informed purchasing decisions.

More individuals reported the Vermont brand as very influential in purchasing decisions compared to other Northern Forest brands. Individuals who have already purchased from the Northern Forest region are 2.5 times more likely to choose a Vermont brand over other Northern Forest origin labels. Thus, previous experience with productsfrom the region is important. Third, respondents’ positive perception of the Northern Forest region translates into more purchases for Vermont labeled wood products compared to other origin labels.

Background and Justification

• During the late 1990s, furniture imports began to outpace exports with 1/3 of US furniture made abroad (1).

• China is the leading low-cost producer, taking market share from US manufacturers.

• Brand awareness is the critical factor in marketing.

From 1990 to 2000, the total amount of furniture imports grew at an alarming rate – a trend expected to continue into the next decade.Source: Dossenbach Associates, LLC Final Report State of Vermont, Secondary Wood Products Industry Study & Strategic Plan.

Furniture Industry Import Vs. Export Trends

Place-based Branding

• Previous empirical studies found that consumers use place of origin labels to evaluate product quality(1).

• Producers should strive for the highest quality products since perceptions of quality have a significant positive impact on purchasing place-based products.

• Research on place-based branding to date has focused on states or countries but never on regions.

Methods

Consumer research…1. with people actively searching for wood products:

In-depth interviews with attendees at two consumer furniture shows.

2. with people who have connection to “place”: Wood products displays and surveys instruments in 13 locations around northern New England.

3. with consumers who have no “place” connection: telephone surveys of a national sample that meet target market criteria.

Consumer Surveys

Visitors to the Northern Forest region completed surveys available at 13 Inns and Visitor Centers.

Consumer Surveys, continued

Researchers conducted 386 surveys from random national population.Researchers conducted intercept surveys

with attendees at the Providence Fine Furnishings Show.

Results/Project outcomes

QUESTION:• How does knowledge of the Northern

Forest’s geography, culture, heritage, and tourism opportunities influence consumers’ evaluation of wood products?

ANSWER:• Having visited the Northern Forest region is

a significant factor in evaluating demand for NF wood products.

Results/Project outcomesQUESTION:• Is there a niche market for branding Northern

Forest wood products?ANSWER:• The state origin label of Vermont, New Hampshire

and Maine was the number one response in influencing purchasing decisions at 45.8%, followed by locally made at 18.5%, made in New England 11.5%, made from native species 10.4% and the fifth most frequent response was made in the Northern Forest 9.2%.

Map 1: Percent of region that prefers a Northern Forest brand

Results/Project outcomes

QUESTION:• Is a state brand more influential than a

regional brand?ANSWER:• Positive perceptions of the Northern Forest

region translate into more purchases for Vermont labeled wood products compared to other origin labels.

Results/Project outcomesQUESTION:• What does the Vermont brand mean to

consumers?ANSWER:• “When I see a “made in Vermont” label I

think of craftsmanship and product quality. I think of the individual woodcrafter working away in his workshop. That is a rare quality today with so many things mass produced. But I think mostly of hand craftsmanship and quality.”-Respondent at Fine Furnishings Show, Providence, R.I.

Results/Project outcomes

QUESTION:• Can a brand command a premium?ANSWER:• Vermont’s reputation for natural beauty and

traditional values may have a greater impact on purchasing decisions; thus Vermont-branded furniture may command up to a 6% premium above other NF origin labels.

Results/Project outcomes

“Craftsmanship” was the number one attribute customers identify with Northern Forest branded wood products. However, respondents identify craftsmanship with “Made in Vermont” (87%) more than with “Made in Northern Forest (38%).

Implications and applicationsin the Northern Forest region

Northeast states where 25% or more of respondents preferred a Vermont label and live in counties with a median income >$50,000

Opening retail stores in urban areas represented in the map will reach a consumer population that has the strongest preference for the Vermont brand and can afford the quality products crafted in Vermont.

•Vermont and Maine = state brand.

•New Hampshire = regional brand.

•6% premium for Vermont brand above other Northern Forest brands.

•Different marketing strategy for those who have an association with the Northern Forest than for those who do not.

Implications and applicationsin the Northern Forest region

Future directionsBuild recognition for the Northern Forest region of New England in other parts of the country through collaborative marketing of wood products at trade and consumer shows.

2,000 square foot Vermont-branded exhibit at Las Vegas Marketplace, 2006.

List of products• Branding Northern Forest Wood Products PowerPoint

Presentation• Branding Northern Forest Wood Products Executive

Summary• Vermont Wood Manufacturers Association membership

newsletters• Fact sheet: Cooperative marketing of value-added wood

products from the Northern Forest• Website of Vermont Wood Manufacturers Association

(www.vermontwood.com)• Website of Vermont Wood Products Marketing Council

(www.vermontwood.org) • Paper submitted to Agricultural and Resource Economics

Review by Charles Kerchner.