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Anatomy of a product rollout

BY Ken Clark

A five-year plan to expand from 4% to 8% of the overall paint market in the United States is in the very early innings. Big boxes alone have 65% of the DIY paint market, according to Ace’s tally. “We want to put Ace on the map for the driving decision,” said Janet Davidson, marketing supervisor for Ace paint. “We think we have a good story to tell.”

A lot is riding on Ace’s latest paint name brand, Clark+Kensington, as the co-op seeks to brush its way into relevance in the competitive paint category. That’s why a lot went into its rollout.

“We really did build this from the ground up,” said Jack Wickham, VP manufacturing, Ace Paint. “We put a lot of RD into the product.”

Here are some of the key decision points that went into the rollout of Clark+Kensington: 

• Listening to the consumer

Paint and primer in one, regardless of anyone’s opinion about the importance of a separate primer, was clearly seen as a product in demand by the consumer. “When researching this, we learned that people go to the paint store and they ask for paint and primer in one,” Davidson said. “The selling proposition is very simple, and very straightforward.”

• The celebrity question

Nike has Michael Jordan. Jell-O had Bill Cosby. Should Ace’s new paint product have a celebrity endorser? Rachael Ray’s name came up in brainstorming discussions. Ace executives thought about it, but never very seriously.

• Picking a name

Before settling on Clark+Kensington as a brand, Royal Advantage was considered, which would have linked the new product to the current workhorse in most Ace paint departments. The team decided on a clean break for a breakthrough product. Clark+Kensington combines the Clark Street of an early Ace store with the Kensington Court address of the current Ace headquarters in Oak Brook, Ill.

• Ace brand vs. national brand

One of the most emotional decisions about Clark+Kensington dealt with the branding of the packaging. Should “Ace” be promoted on the can, or should Clark+Kensington stand on its own? After heavy consideration, Ace went with the latter.      

• Meet the product

Typically, product introductions take place at dealer conventions. But in the case of Clark+Kensington, Ace executives organized much more intimate gatherings with dealers on a regional basis. The product was promoted at 23 specially organized paint expos and 100 training sessions around the country in 2011.

• Make it work

Headquarters supported the program by offering market research to dealers, color display kits to stores and also programs that allowed dealers to send back older paint.

The results: Ace said the product is the most successful rollout ever.

By Dec. 3, 2011, the paint was on the shelves at 2,700 stores — above its internal goal of 2,500. Today, the penetration is close to 3,000, said John Surane, Ace VP merchandising.

The next step is national advertising, which kicks off Feb. 29, during an episode of “CSI: Crime Scene Investigation” on CBS. A free paint giveaway program is also coming to stores in early March.

“You name the medium and we’re going to be there with the Clark+Kensington paint lauch,” Surane said. 

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Anatomy of a product rollout

BY Ken Ryan

Scott Rhodes knew that for his innovative “dumpster in a bag” product — the Bagster — to make an impact in the home channel, it was imperative to forge relationships with major dealers.


“We knew we needed a national footprint to expand our retail distribution with Home Depot and Lowe’s,” said Rhodes, co-founder of the product and now a director at Waste Management Inc., the parent company. Bagster is Waste Management’s first retail product. 


“We saw a large void in the market,” he said. “We also saw the opportunity for Bagster to be a disruptive innovation for small waste removal through the combination of the customer experience and underlying business model.”


That was in May 2010. Today, Bagster is sold across 40 states and most parts of Canada at more than 4,000 home improvement and hardware stores, including Home Depot, Lowe’s, Menards, Ace Hardware, True Value, 84 Lumber and Do it Best stores.


The product — a 3 cu. yd. polypropylene bag, measuring 8 ft. long, 4 ft. wide and 2.5 ft. tall — is aimed at small-job contractors and DIY enthusiasts. The customer base split is almost 50/50 between individual consumers and contractors.


Rhodes said awareness of Bagster is still low but gaining traction. “We had a pretty Herculean effort to create awareness with consumers,” Rhodes said, mentioning advertising and social media among the tactics. “The good news is once people use it, they love it.”


Waste Management is exploring other potential Bagster applications, including different size bags and — important for its green positioning — ways to recycle contents and bags. Being “green” is part of Rhodes’ agenda. The company recycles materials that consumers put into bags, as well as the bags themselves. The polypropylene material, for example, can be recycled for carpet backing.


HOW IT WORKS

The Bagster is user friendly and easy to grasp, retailers said. Customers buy the bags at retail or online for roughly $29.95 (up to $39.99), fill the bag with up to 3,300 lbs. of waste, and then schedule a collection with Waste Management. The company dispatches a truck with mounted crane arm for removal within 72 hours. The collection fee of about $109 is not included in the original purchase price.


RETAILERS RESPOND 

84 Lumber, in Irondale, Ala., was among the first hardware/home improvement dealers to carry Bagster. Co-manager John Hughes, whose business is mostly new-home construction, saw an immediate response when he first displayed the bags on an endcap near the front entrance. 


“We have had the bags since early 2010 and sold more than 80 since then,” he said, noting that the damage left by nearby tornadoes this spring has also enhanced sales. “We sell a lot of them. It’s a novel product that I wish I would have thought of myself.” 


Ryan Jenkins, manager of O’Donnell Ace Hardware, Des Moines, Iowa, said most of his customers use Bagster for remodeling jobs, roofing, concrete, stone work or merely organizing an attic or garage. “They use this product especially if they have a lot of construction material and don’t need a regular dumpster,” he said. 


He has carried Bagster for more than a year and merchandises the product in the lawn and garden department near the heavy trash bags.


Chris Sterk, manager of Johnston Ace Hardware, Johnston, Iowa, said the inexpensive cost and ease of use have made Bagster the ideal on-demand waste-removal solution. “The product does a good job selling itself,” he said. “Typically customers know right away what it is and what it is used for.” 


Allen Antonio, owner of Hueytown Hardware & Supply, Hueytown, Ala., built a large display using PVC pipe to showcase Bagster near his front entrance. “It was a pretty neat display if I must say so myself,” Antonio said. “It has been an attention grabber.”


Likewise, Scherer Brothers Lumber, Minneapolis, displays the Bagster near its center entrance. “The display is in an open square, propped up by plastic piping,” said Kurt Netzer, sales manager. “It’s worked really well; people are drawn to it. We sell the product on a regular basis.” 


David Williams, co-owner of Gil’s Hardware, Smyrna, Tenn., merchandises Bagster in a display rack in the front of the store. “It’s a pretty neat product,” he said. “My wife Ginny ordered a bunch of them, and the next thing you know there’s only one left.” 


DISASTERS
An additional benefit of Bagster has been its use in natural disasters, including floods and tornadoes that have hammered the Midwest and South over the past two years. When Nashville, Tenn., was affected by widespread flooding in 2010, Waste Management deployed 19 team members and 12 drivers to help out. 


In fact, the Nashville flooding coincided with Bagster’s national rollout. Initially there were 150 Bagsters in Nashville-area Home Depot stores. The bags sold out in the first couple of days, after which Home Depot stores ordered 800 additional bags. Eddie Kirkus, marketing manager for Bagster, worked with the local retailers to set up tents so residents would have easy access to the bags. In some cases, as demand grew too high for the stores to handle, Waste Management directed customers to thebagster.com for purchase.


Bagster was introduced as a product in Waste Management’s mix of hurricane preparedness and recovery services. Bagster is meant for situations where there is a need to discard more debris than can fit in a typical bin or garbage receptacle but not enough to require a dumpster. “People dealing with storm cleanup are finding that Bagster is an excellent option,” Rhodes said. 


The Bagster holds less than a dumpster but also costs less, for which rental can run $250 to $300. There is also no time limit for Bagster compared with renting a dumpster. Once filled, Bagster must be placed within 16 ft. of a driveway or street for removal purposes.

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DiggersList.com joins social media trend

BY HBSDEALER Staff

DiggersList.com — the online classifieds described as a Craigslist for home improvement — is borrowing from the playbook of popular social networking sites. In June, the site introduced a new program, offering features that it said are similar to those found on Facebook, Twitter and Groupon. 


With the new program, users will create “storefronts,” personalized pages that display items for sale by category, and will also be able to follow other “storefronts” and be notified of new deals on the site with a “follow the deal” button. Additionally, the “storefronts” program will allow storefront owners to send coupons to their followers. Consumers will be able to receive deals on the products they want, without having to look through listings that do not interest them. In addition, each storefront will receive its own custom URL, which the owner may use to advertise across other business websites. 


“Our intention is to allow users to engage with each other, and to have access to deals they are interested in, without damage to small businesses,” said Matt Knox, CEO of DiggersList. He added that so far the “storefronts” program has met with a very positive response, with storefront owners already beginning to advertise on various websites.


The new program does not yet allow private businesses to set up “storefronts,” but is expected to open for private businesses by this fall.


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What’s ahead for ProBuild?

BY Brae Canlen

It’s been a tumultuous summer so far for ProBuild, the nation’s largest pro dealer, as it tries to keep its head above a churning housing market that has already pulled apart or capsized many of its competitors. Being a privately held company, ProBuild has done its best to quietly close or sell off yards, downsize staff and add — or subtract — staffing under the radar. But the recent consolidation of its regional offices into the Denver headquarters, followed by the sudden departure of two of the company’s top executives, has lifted the veil on the industry’s biggest player. No one has been untouched by the housing downturn, and no one is safe from its undertow — including ProBuild. 


The first signs of real trouble might have been in January 2011, when ProBuild owner Fidelity Capital, a private equity firm based in Boston, sent one of its representatives to oversee operations in Denver. ProBuild was technically part of Devonshire Investors, a portfolio that Fidelity used to separate out some of its own investments from other, more consumer-oriented financial services it offers. 


The executive who arrived in January, Perry Odak, was named president of Devonshire’s U.S. portfolio. Although he had no apparent experience in the LBM business, Odak has served as president and CEO of Ben & Jerry’s, Wild Oats Markets, and Evenflo Co. Odak was made chairman of ProBuild’s board of directors.


Few saw it as a vote of confidence for ProBuild. Four months prior, company CEO Paul Hylbert stepped down in what was explained as a long-planned succession move. Hylbert, chief executive since 2007, had been the CEO of Lanoga, a 325-unit LBM chain that became a cornerstone of ProBuild when it was formed in 2006. Hylbert turned the reins over to COO Bill Myrick, who had been hired away from competitor 84 Lumber, sent to the Harvard Business School Executive Education program, and rose quickly through the ProBuild ranks. From all appearances, he had been groomed to take over the chief executive’s job.


Myrick became CEO in September 2010. In less than a year he was out. 


The employee memo announcing Myrick’s departure, dated July 11, 2011, was signed by Perry Odak; it gave no reason why he was leaving. Fred Marino, who had served as president and CEO in the early days of the organization, would take over while the board searched internally and externally for a “permanent head of the business.” 


One likely candidate would be Jim Cavanaugh, executive VP operations. Like Hylbert, Cavanaugh had headed one of the companies — in this case, Hope Lumber — that formed ProBuild. All regional managers were already reporting to him in lieu of a chief operating officer, a position the company eliminated. 


Then the announcement came, on July 22, that Cavanaugh was leaving the company at the end of August. “We thank him for his many contributions to our company and wish him well in his future endeavors,” said the official statement. Of the original founders of ProBuild, the only one left is Marino, the former CEO of the Strober Organization, which formed the foundation of what is now ProBuild. Marino declined to be interviewed for this article. 


But plenty of people were willing to talk about what had gone wrong with ProBuild — provided they not be named, since they do business with the company, or are current or former employees. 


“ProBuild is one of our largest customers, and we don’t have a good feel for what the hell they’re trying to accomplish,” said one frustrated supplier. “They’ve gone through so many reorganizations in the last year. It’s chaos.”


The supplier is talking about ProBuild’s June decision to reorganize itself into three groups: metropolitan, smaller local and specialty. This restructuring follows on the heels of the April 2009 decentralization move that divided the company’s four divisions — North, South, East and West — into six regions, with various ProBuild executives tapped to change locations and assume leadership roles. 


When it started out, ProBuild was dedicated to a “decentralized operating philosophy,” Marino told Home Channel News in a 2006 interview. And Fidelity was on board with this, according to ProBuild’s executives. One investment banker went so far as to say that “ProBuild can take a multi-cycle, multi-year view of the industry that has nothing to do with quarterly earnings.” 


But with big LBM firms, centralization is like gravity: The pull of centralized purchasing and other overhead cost savings is too hard to resist, especially in a housing cycle where money goes out the door a lot faster than it comes in. 


“I think ProBuild’s mistake was heavily investing in centralization, while pursuing national accounts instead of regional dealers,” observed one LBM dealer. 


Either way, it was only a matter of time before “investor fatigue” set in. Although the amount of money that Fidelity has poured into ProBuild is a closely held number, information has leaked out from the financial community. In November 2009, a confidential prospectus, obtained by Reuters, stated that ProBuild’s parent company had spent $345 million to cover the pro dealer’s losses over the past six months. Another $105 million might be necessary to keep the company going through January 2010, the prospectus said. 

It’s doubtful that Fidelity has any immediate plans to pull the plug on ProBuild. But there may be some tough love in store for the LBM chain, measures that go beyond closing yards and reducing head counts. Significant losses have mounted at the Denver-based company, which sources say have been compounded by a costly Oracle SAP system rollout that began last year. The implementation, according to several sources, has been problematic, especially at the customer- and salespeople-facing applications. 


The company has also continued to make acquisitions. In April it purchased Harbert Lumber, a four-unit chain based in Denver. In June, ProBuild announced it was moving into western Pennsylvania with three locations. The company reportedly hired Harry Streyle, an area VP for 84 Lumber, in the fall of 2010 along with other outside salespeople in the Pittsburgh area. But so far ProBuild has opened only one location, in Morgantown, W.Va., where 84 Lumber already has two stores. Morgantown is located 40 miles from 84 Lumber’s headquarters. 


The whole question of pricing — what it charged builders and what it didn’t — is a can of worms when it comes to ProBuild. But this much is clear: Transparent pricing, selling below cost and similar concessions don’t work in the long run. Said one competitor: “If the market starts to accept a price where we can actually cover our costs, then we all get healthy.”

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P.Stevenson says:
Feb-29-2012 04:15 pm

As an ex employee I have
As an ex employee I have watched the demise of Pro-Build. The word on the street is they don't give a dam about the customer or the employees. They have hired managers from 84 & Stock that don't understand the business and have already ridden their respective compnaies down. In short the Inmates are running the institution. It all started when Fred Marino stepped aside as CEO. Fred Started The Strober Organization and was a Brilliant and great leader. The staff that followed had no clue. The previous coments have hit most of the issues. Current Management does not listen to those who know.There aren't too many of those left.

H.Potter says:
Aug-17-2011 01:55 am

It would please me to no end
It would please me to no end to see ProBuild implode. The greed, and arrogance the company management has exhibited should be a lesson to all LBM executives on how to NOT run a company. It would be a pleasure to see the company grasp for its last breath only to have it snuffed out by the builders and suppliers they've tried to exploit over the years. I pray for the day when their void is filled by establishments that value integrity, accountability, fair and honest business practices and when a handshake means something.

S.Subbert says:
Aug-16-2011 04:03 pm

As a former Manager for
As a former Manager for Probuild, I have seen constant change to centeralized sells model and management style. Which has taken away flexablity of local sales and management to develop and make local builder contacts and relationships. We have seen a move to more of a accountant model and not as much a relationship oriented model. The days of the hand shake are gone, and the days of the Good Old Boy network is gone. It is all about Volumne, better to have a Million dollar customer at 1% margin then a 100 customers at 30% margin. It is more about accounting for every nut and bolt and never mind the truck loads going out the door. While Probuild has gone to a Regional oversight system, the managment system and model is still governed by Denver. Upper Management with little or no experience in the industry continue to make decisions rather then seek input from local management who have years of experience and relationships.

a.anonamous says:
Aug-08-2011 10:42 pm

Pro build wanted to be the
Pro build wanted to be the boy on the block.They don't have the middle management to pull it off. Supply customers with a quality product at a competative price in a timely fashion should be their goal. They just can't do it right the first time and this is one of things causing problems. Wasting 10's of thousands of dollars sending managers to cheerleading courses was a waste of money considing the challeging times we are going through in this economy. Can we sue a company for being completly stupid?

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