Sample of a LocalizedMarketing Strategyfor the Home

ImprovementCategory

©Edge Media 2007

Not to be reproduced or utilized without

permission.

National Research Who is the Customer?

• Age - A 2005 study by Scarborough Research determined that homeowners in their 30s are 19% more likely than all homeowners to have completed some sort of remodeling project the last year, while homeowners in their 40s are 14% more likely and those in the 18-29 age bracket are 12% more likely.Scarborough Research, 2005

• Gender - According to a 2006 online survey conducted by ServiceMagic, only 8% of female homeowners saw men as the primary decisionmaker regarding home improvement projects, while 30% of male homeowners saw themselves as the primary decisionmaker. In contrast, 25% of females cited women as the primary decisionmaker, compared to 8% of men who saw women as the person responsible for home improvement decisions. Sixty-five percent of the homeowners said they make home improvement decisions in conjunction with their significant other. Among contractors who responded to the same question, just 28% agreed that couples make decisions as a team. Fifty-five percent of the contractors believe the female head of the household is the primary decisionmaker, while only 17% cited men. Home Channel News, 2006

• Home Ownership - According to a report by the Joint Center for Housing Studies of Harvard University, the share of home improvement expenditures based on how long consumers have lived in their current homes: 0-2 years, 14%; 3-5 years, 21%; 6-10 years, 25%; more than 10 years, 40%.Harvard University, 2005

• Home Value – A study by the Joint Center for Housing Studies of Harvard University calculated the share of remodeling expenditures in the U.S., based on the value of the country’s homes: Under $150,000 49%; $150-250,000, 29%; $250 - $400,000, 14%; $400,000+, 8%

National Research Why Does the Customer Buy?

• Recent national surveys commissioned by Minwax and Ace Hardware found that up to 83% of homeowners say they remodel at least in part to enhance their property values.USA Today, 2005

• Most important influences in making a decision when hiring a remodeling professional (multiple answers): Trustworthiness, 79%; service and dependability, 75%; capabilities, 73%; schedule accommodation, 72%; best size for the type of job, 71%.National Association of the Remodeling Industry, 2004

• According to a survey by the National Association of the Remodeling Industry, primary reasons that people remodel their homes (more than one answer possible): Update their homes to their taste or the latest trends, 79%; address the changing needs of their family, 62%; increase their home's market value, 47%; address the needs of a home business or one's professional work, 10%.NARI, 2004

• Sources for consumers' home improvement ideas (more than one answer possible): Personal ideas, 53%; newspapers and magazines, 49%; catalogs mailed to their homes, 24%; sales help in home improvement stores, 22%.American Express Retail Index, 2003

National Research Customer Spending Patterns

• Based on a survey by Scarborough Research, types of home improvement projects undertaken by homeowners in 2004 (multiple answers): Interior paint or wallpaper, 35%; landscaping, 30%; carpeting or floor covering, 18%; exterior paint or siding, 15%; remodeled bathroom, 14%; remodeled kitchen, 10%; heating or air conditioning, 9%; replaced windows, 8%; any addition, 4%; installed home security system, 2%; installed pool or spa, 2%.Scarborough Research, 2005

• Types of home improvements made to owner-occupied properties that accounted for the most spending in 2003 (totals in billions): Room additions, $12.342; bathroom remodeling, $11.048; interior restructuring, $8.862; painting and papering, $7.167; kitchen remodeling, $6.609; finishing space, $5.060; heating/cooling replacement, $5.684; roofing replacement, $4.446; window replacement, $4.227; patio additions/alterations, $3.083; deck and porch additions, $2.798; driveway/walkway additions/alterations, $2.757; roofing maintenance/repairs, $2.662; plumbing replacements, $2.286; detached building additions/alterations, $2.269; fence additions/alterations, $2.203.U.S. Census Bureau, 2004

Business Trends

• According to research by the National Association of Home Builders, Americans spent an estimated $210 billion on home remodeling projects in 2005, 5.8% higher than the previous year. The NAHB forecasts a 13.2% jump in spending on remodeling for 2006, which would be the largest increase in more than 10 years. Home Channel News, 2006

• The Home Improvement Research Institute estimates sales of home improvement products reached $271.4 billion in 2004, a 12.8% increase over the 2003 figure of $240.6 billion. Between 2005 and 2009, the HIRI projects an annual growth rate for the industry at 3.9%. Home improvement spending is predicted to rise to $280.9 billion in 2005, and reach $329.1 billion by 2009.Home Improvement Research Institute, 2005

• According to a 2004 survey of recent homebuyers, commissioned by the Home Improvement Research Institute, contractors are involved in about one-third of projects done to newly-purchased homes, and nearly one-half of the projects completed in previous homes prior to sale.HIRI, 2004

• Based on a survey commissioned by the National Association of the Remodeling Industry, consumers are much more likely to hire a professional remodeler for certain types of jobs, including new additions, roofs or siding projects. On the other hand, decks, bathrooms and basements are more likely to be tackled by do-it-yourselfers.NARI, 2004

Summary of National Research

• Primary age cells: 30–50 years of age 33% more likely to remodel

• Gender: Female is the decision-maker

• Home ownership: 86% of remodeling is done by people who have lived in their homes 3 or more years

• 51% of all remodeling is done on homes with a value of $150,000 or more.

• Home improvement category is projected to experience significant, continuous growth.

• Contractors are valued for their trustworthiness and ability.

• Primary reasons for home improvement include increasing the value of the home and accommodating family needs/lifestyle.

Phoenix Market Research Target 1 – Major Home Improvement Customer Age Demographics

Customer by Age Cells

17%

21%

13%

20%

22%25-3435-4445-5455-6465+

All local research sourced to Scarborough

Phoenix Market ResearchIncome of T-1 Customer

Customer by Income Level

32%

19%

13%

8% 1%

$50-74.9K$75-99.9K$100-$149.9k$150-249.9K$250K+

Phoenix Market ResearchHome Value of T-1 Customer

Customer by Home Value

16%1%

9%

6%14%

11%

11% $150-199.9K$200-249.9K$250-299.9K$300-349K$350-499.9K$500-999K$1M+

Phoenix Market ResearchCross Tabulation of T-1 Customer by Age/Home Value

Qualified Customer Home Value $150K+

13862

9163

15220

2843

18068

0

5000

10000

15000

20000

25-3435-4445-5455-6465+

Phoenix Market Research SummaryDefining Major Home Improvement Target Demographics

Gender: Male 57% & Female 43% added rooms or remodeled last year

Age: Two primary cells – 25-34, 35-64

Household income: 41% of all who added a room last year had a household income of $75,000 or more.

Home value: 68% of all who added a room last year had a home value of $150,000 or more

T1 Target = Adults 25-54, HHI $75K+, Home value $150K+

Media Usage Habits for T-1 Target Qualified by $75K+ HHI, $150K+ Home Value

0

0.1

0.2

0.3

0.4

0.5

0.6

Radio TV Print

25-3435-64

T-2 Phoenix Market ResearchAge of Potential

Cosmetic Home Improvement Customer

Customer by Age Cells

13%

17%

23%

26%

14%

25-3435-4444-5455-6465+

All local research sourced to Scarborough

Phoenix Market ResearchIncome of T-2 Customer

Customer by Income Level

18%

21%54%

$35-49.9K$50-74.9k$75K+Slice 4Slice 5

Phoenix Market ResearchHome Value of T-2 Customer

Customer by Home Value

14%

3%

9%

6%7%

10%

13%$150-199.9K$200-249.9K$250-299.9K$300-349K$350-499.9K$500-999K$1M+

Phoenix Market ResearchCross Tabulation of T-2 Customer by Age Cell

Qualified Customer Home Value $150K+

5846451184

375352957331848

0

20000

40000

60000

80000

25-3435-4445-5455-6465+

Phoenix Market ResearchGender of Decision Maker T-2 Customer

Customer by Gender

60% 43%

0

0.2

0.4

0.6

0.8

MaleFemale

Phoenix Market Research SummaryDefining T-2 Target Demographics

Gender: Male 60% & Female 40% had “other home improvement” last year

Age: 35+ captures 79% of target, with 65+ the smallest of those cells at 13%, primary target is 35-64.

Household income: 54.3% who had “other home improvement had a household income of $75,000 or more.

Home value: 68% of all who added a room last year had a home value of $150,000 or more

T2 Target = Adults 35+, HHI $75K+, Home value $150K+

Media Usage Habits for T-2 Target Qualified by Adults 35+, $75K+ HHI, $150K+ Home Value

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

Radio TV Print

35+

Internet Usage by Age

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

25-3435-4445-5455-6465+

The Necessity of Using the Web in the Marketing Mix

• Pew Internet reports that 38 million Americans use search engines every day to research goods and services.

• One fifth of internet users will use a search engine four times or more per day.

• 67% of U.S. adults who research online before making a purchase decision use search engines as a research tool.

• 40% of those conducting online research go to search engines first. Nearly equal percentages of respondents who use search engines to research products online use them to find a web site from which to buy (54%) or investigate where to purchase their desired product (53%).

• Metro Phoenix ranks 11th in the U.S. for internet access, with 1.8 million adults online.

T-1 Marketing Overview

• Strategy & execution• Begin with 35-64 age cell for

conservative approach.• Media usage shows radio at 50%,

television at 57%, and print media at 30% for this demo

• Internet usage is at 71.5% average for this age demographic, and increases as household income increases.

• Recommendation: The nature of the product lends itself to visual appeal. Television and internet should be the first marketing tools used, with radio following and then print.

T-2 Marketing Overview• Strategy & execution

• 35+, HHI $75K+, Home ownership $150K+• Media usage shows radio at 47.8%, television

at 60.8%, and print media at 34.5% for this demo

• Internet usage is at 71.5% average for this age demographic, except for 65+, where it is as 40%. Usage increases as household income increases.

• Recommendation: The nature of the product lends itself to visual appeal. Television, internet, and print should be the first marketing tools used, with radio following to reinforce message. Radio will be used to reinforce message and drive traffic to the website.

Phoenix MetroLocal Cable TV – T1

Phoenix MetroLocal Cable TV – T2

Phoenix MetroLocal Cable TV that Delivers T-1 and T-2 Targets(by total cume)

Station T-1 T-2

DSC 191,942 211,866

TNT 175,647 199,838

AEN 165,017 183,028

CNN 161,543 179,890

TBSC 154,143 161,207

Cable Rates by Daypart/AQH T1 & T2

Daypart

Discovery

AQH RATE

TNT

AQH RATE

TBSC

AQH RATE

CNN

AQH RATE

AEN

AQH RATE

9A-4P 2803 $50 5838 $200 2004 $ 75 3041 $30 2588 $ 30

4-7P 3223 $100 8711 $200 5607 $250 5932 $100 2236 $100

7-10P 5181 $200 14811 $500 9610 $500 5637 $300 6371 $300

10P-12M 3618 $150 11271 $300 7012 $400 2895 $150 4637 $150

SA/SU 9A-4P 4813 $100 6481 $150 5948 $250 3204 $75 2683 $ 75

SA/SU 4-7P 5263 $100 7043 $250 7557 $300 3067 $125 6256 $125

SA/SU 7-10P 6428 $150 10335 $400 7096 $400 2906 $200 4161 $200

SA/SU 10P-12M

4999 $150 6776 $200 9792 $300 788 $150 6071 $150

Cable TV RecommendationsAQH Cost Totals

TNTTU-FR4-7P

2 :30’s/day8 :30’s/week

8711 $250/spot$2000/week

2 weeks16 spots$4000/mo.

DiscoverySA/SU 4-7P

3 :30’s Sat.3 :30’s Sun.6 :30’s/week

5,263 $125/spot$750/week

2 weeks12 spots$1500/mo.

AENSA/SU4-7P

3 :30’s Sat.3 :30’s Sun.6 :30’s/week

6,256 $125/spot$750/week

2 weeks12 spots$1500/mo

CNNM-W4-7P

2 :60’s/day 6 :30’s/week

5,932 $100/spot$600/week

2 weeks12 spots$1200/mo.

Totals 26 :30’s/week 26,164 $600 combined rate26,164 AQH

52 spots$8200/mo.

Local Radio ResearchSTATION TI* AQH T2* AQH RATE

M-F; 6a-10a KESZ-FM 10734 11388 $460

KTAR-AM 12393 13918 $300 (6/26 on)

KOOL 10143 10248 $325

KFYI 10529 12943 $375

M-F; 10A-3P KESZ-FM 9132 9756 $460

KNIX 8751 9061 $375

KOOL 8777 9230 $325

KFYI 12939 15596 $390

M-F; 3P-7P KESZ-FM 8492 6877 $355

KTAR-AM 5290 6146 $275

KOOL 9536 9589 $325

KNIX 7178 7338 $395

Local Radio Recommendations

• KFYI – Middays 10A-3P– T1 & T2 targets combined, KFYI delivers

15,596 AQH persons– Most AQH persons, most cost efficient– Use KFYI to drive to website for both

products– Use in Phase 2 Schedule:

• Tues – Weds. 10A-3P, 3:60’s per day• 2 weeks per month• Monthly cost: $4680.00

T1 Media Comparison Chart

T2 Media Comparison Chart

T-2 Print Recommendation • AZ Republic by zone, (Valley reach 401,712 T-2),

then add Phoenix Home & Garden quarterly in Phase 3

Internet Marketing

• Natural Search– Search engine optimization is necessary to increase

the number of visitors to the site that come as a result of search engines

– Initial optimization of site while being built– Ongoing optimization of site per month

• Paid Internet Advertising– Google PPC local campaign – AZ Central online advertising

• AZ’s most visited local website• 44% have HHI $75K+, 60% are age 35+• Can target by age/zip code• $22 per 1,000 impressions

Summary of Media Recommendations

• Local cable TV: Discovery, A & E, CNN– 52 :30 spots, $5250/mo

• Website: – Monthly optimization $300.00– Monthly local Google PPC $300.00– AZ Central online

• Print: Inside Out 2 zones quarterly– AZ Republic & add Phoenix Homes and Gardens magazine

Phase 3

• Local Radio: – KFYI 10A-3P, Tues., Weds., 3 :60’s per day, two weeks per month, $4680/mo

Timing Strategies

• Phase 1– Preparation

• Website– Build site that services T1 and T2 customers

• Interactive site to capture data, utilize as marketing tool for blast e-mail• Optimize site to increase traffic

• Create Credibility kit including brochures, product folder with 5 insert pieces, business cards, DVDs, flyers, door hangars

• Create “back-end” systems to track lead source• Phase 2

– Product Introduction to Target Demographics• Purpose: Educate/inform T1 and T2 Targets about benefits• Implement Marketing Strategy/Measure Results

• Phase 3– Expand marketing mix for more aggressive campaign to increase

ROI

Jan Feb Mar Apr May Jun July/ Aug Sept Oct Nov Dec

Phase 1Phase 1 Phase 2Phase 2 ’07 Phase 3 ’07 Phase 3

Success Metrics

• First year goals– Current sales level: $125K/mo. gross sales– August 2007 sales increased to $250K/mo. gross

• Requirements for success– Each piece of marketing mix must be measurable

and perform optimally.• TV leads tracked by phone receptionist• Radio leads tracked by web metrics• Internet tracked by web metrics• Print tracked by phone receptionist

– Monthly lead analysis spreadsheet will be generated.

• Phone lead data passed on to Vantage Media• Internet lead data handled by Vantage Media• Monthly report generated & analyzed by Vantage Media• Adjustments to marketing mix will be made for non-

performance

Marketing Schedule

• 12-month schedule highlights• Marketing Timing

Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec

Marketing Mix: TV, Web, PrintMarketing Mix: TV, Web, Print

’07 Marketing Mix: TV, Web, Print, Radio’07 Marketing Mix: TV, Web, Print, Radio

PreparationPreparation

1 Year

Phase One Budgeting

• Phase One: May – June– Website $5750 - $6900.00

• Flash, database capture, copywriting, SEO– Product Folder: 2-pocket w/ 5 insert pieces $2752.50

• Graphic design, copy writing, printing– Business Cards: $ 333.75

• Graphic design (4 w/ names, 1 generic), printing– Two Brochures (self-mailer) $2025.00

• Graphic design, copy writing, printing– Door hangar $ 351.25

• Graphic design, one sided, die-cut $11,212.50 -

$12,3625.00

Phase Two Budgeting

Cost per Month July – Dec. ‘06– Internet $ 600.00

• SEO Optimization• Google PPC

– Cable TV $7950.00• Discovery, CNN, AEN, TNT

– Print: $1866.00• Inside Out or AZ Republic

$10,416.00 per month

Phase Three Budgeting

Cost per Month Jan – July. ‘07– Internet $2875.00

• SEO Optimization• Google PPC • AZ Central (50,000 impressions)

– Cable TV $7950.00• Discovery, CNN, AEN, TNT

– Print: $3866.00• Inside Out or AZ Republic• Phoenix Home & Garden

– Radio $4680.00• KFYI

$19,371.00 per month

Marketing Strategies/Budgets will be reviewed/adjusted based on performance. These Phase Three strategies/budgets are projections.