Research.     Insight.     Answers.
January, 2016
In This Issue
Industry Study
IBS 2016: Home Design Trends
Residential Remodeling Spending Trending UP
Existing-Home Sales Pick Up the Pace
Is Social Media Useless for Research?
Areas of Focus 
DIY and Pro Research:
Channel U&A
Purchase Behavior
Product U&A
Segmentation
 
Branding Analysis:
Image
Position
Extendability

Market Sizing:
Channel Distribution
Brand Share

Product Development:
Pricing Elasticity
Feature Evaluation

Contact Us to discuss your research needs.
About Us

For over 25 years, The Farnsworth Group has provided data-based answers based with custom research and industry expertise to help clients evaluate the DIY and Contractor markets.  To learn more contact us at [email protected] or visit TheFarnsworthGroup.com

Industry Study: Pro Media Consumption
The Farnsworth Group recently completed a new, public industry study on media usage among Remodelers, Builders and Designers.  Results address:
  • Mediums used for building product information
  • Technology used to access mediums
  • Frequency mediums are used for information
Please contact us to set up a time to review the full set of findings with you and your organization.  Email  us at  [email protected] or call 317-241-5600 x.301.

IBS 2016: Home design trends with the power to attract elusive millennial buyers
The International Builders' Show in Las Vegas has come and gone, and one of the most common threads of the event was attracting millennial homebuyers. While day one focused on model homes designed specifically for the cohort and the struggle to reach the young generation, day two delved deeper into the question of the impact millennials have on the housing market, as well as what specific design trends younger buyers prefer.

How millennials affect the overall housing market
Last year presented an unpleasant surprise to residential industry experts, as most predicted a major influx of first-time buyers entering the market. Government programs aiming to aid homeownership were expected to ease the financial burden and encourage young people to switch over from renting.

That surge, however, did not come to fruition, according to Rose Quint, a ssistant vice president for survey research for the National Association of Home Builders. As a result, first-time buyers' share of existing home sales has remained stagnant around 30%, well below the historically "normal" level of 40%.

So where are all those millennials if they aren't buying homes? According to Quint, they aren't just in the rental sector. A significant portion of them are still living at home with their parents. In 2015, the percentage of adults ages 25-34 living with their parents was at 15%, higher than the "normal" rate of 12%. That 3% difference translates to 1.3 million young people who would otherwise be creating households and possibly buying homes, Quint noted during a panel session Wednesday.

As a result of this lack of first-time, lower-income buyers, home prices and sizes have been steadily climbing. Without the demand from the younger generation balancing out the upper end of the market, prices and square footage have skewed toward the higher end.

In 2015, the average size of a new single-family home rose to 2,721 square feet, and the average price grew to $351,000. According to Quint, first-time buyers purchase homes that are, on average, 20% higher than the typical trade-up buyer and nearly $100,000 less.

She emphasized the importance of the younger generation to the residential industry, as their entrance into the market  - or lack thereof - will determine average prices, sizes and other characteristics of homes. "Before we see any significant pullback in square footage or price, we're going to need to see the comeback of this market," she said.

Millennial home design preferences
Keeping in line with the millennial trend, Jill Waage, executive editor of Better Homes and Gardens, shared the results of the publication's survey of 1,600 homeowners and focused on the millennial takeaways. She emphasized the younger generation's preference for personalization, their focus on the living experience of their home as a hangout area, and their interest in the joining of digital connections with personal connections.

Personalization
In the survey, 63% of millennial respondents said having a home customized to them was a top priority, and 60% said having a home that is a reflection of them is more important than it was to their parents' generation.

Waage said that millennials' thirst for personalization likely stems from the fact that they are in their first homes, and they know they will be living there for several years. With that in mind, the homeowners want to make it as comfortable and uniquely theirs as possible. The Internet age and popularity of Pinterest and online shopping has also offered owners countless ideas for home renovation ideas. "
They've been planning this since college with Pinterest," Waage said.
"They already know what they want. They've already shopped it out."

A focus on the living experience
Millennials have expressed they care less about a large square footage, and more about the feeling of their home and the relaxing atmosphere it creates. They want to hang out with their friends and family in a space where they feel comfortable, Waage noted. 

"Outdoor living space is huge for millennials," she said. In the survey, the most-desired space in a home was a deck or patio, with 59% of respondents.

However, despite that emphasis on outdoor spaces being integrated with the indoor living area, millennials reported they were less concerned with the curb appeal, or exterior, of their homes. In the survey, one in three respondents said they believed exterior makeovers are expensive and not worth the investment. "Millennials may not see the value in curb appeal that boomers did," Waage said.

Smart home technology
According to the Better Homes & Gardens survey, 54% of survey respondents under 35 have at least one smart home technology product in their house. This statistic is unsurprising, Waage said, as millennials are constantly connected to their smart phones and want their homes to connect seamlessly to the rest of their digital lives.

However, despite the growing trend of smart home products, most homeowners still believe the technology is expensive. Waage pointed out that products in the Internet of Things can range from very low to very high prices. She said the residential industry should implement more education in the marketplace to make homeowners aware of all the smart home tech options, from the cheapest to the most expensive. 

Why builders should care
Despite the delayed entrance of millennial buyers into homeownership, all surveys of the younger generation indicate they do in fact want to own their own single-family, detached homes. Builders need to keep their sights set on the future of this powerful buying segment, as millennials now outnumber the baby boomers.

And once the younger cohort does make the leap into homeownership, experts say those builders who design specifically for them and stay attuned to their preferences will be a step ahead of the competition.

Source: Construction Dive.  January 21, 2016. Written by: Emily Peiffer.
Residential Remodeling Spending Trending Up
Spending on residential remodels will continue to trend upward, according to experts at a press conference hosted by the National Association of Home Builders (NAHB) Remodelers at the International Builders' Show in Las Vegas. Professional remodelers from around the country agreed with the forecast, citing clients' increased financial security.          

NAHB projects that remodeling spending for owner-occupied single-family homes will increase 1.1 percent in 2016 over 2015, and another 1.9 percent in 2017.

"Our remodeler members have regained confidence in the market as home owners move forward with new remodeling projects, as reflected in the positive fourth quarter results of NAHB's Remodeling Market Index," said 2016 NAHB Remodelers Chair Tim Shigley, CAPS, CGP, GMB, GMR, a remodeler from Wichita, Kan. "NAHB Remodelers looks forward to working in a strengthened market as remodeling continues to increase in popularity."

"After recent revisions, Census estimates now indicate that improvements to owner occupied housing increased at a real rate of 1.3 percent last year, which is consistent with NAHB's expectations and our measure of remodelers' sentiment," said Paul Emrath, NAHB's vice president for survey and housing policy research. "Going forward, we expect this modest growth in the market to continue, fueled in part by steady appreciation in house prices that will enable owners to tap into their home equity to fund remodeling projects."

"While the economic recovery has brought about a surge of remodeling activity for second homes in our market, access to credit continues to hamper the remodeling market's full potential locally," said Jeff Grantham, CAPS, CGP, CGR, GMB, a remodeler from Petoskey, Mich. "We remodel many of these homes to make them accessible to family members of all ages."

Source: NAHB.   January 19, 2016. http://www.nahb.org/en/news-and-publications/Press-Releases/2016/01/residential-remodeling-spending-trending-up.aspx
Existing-home Sales Pick Up the Pace
Existing-home sales outdid the expectations of many economists in December, surging 14.7% to a seasonally adjusted annual rate of 5.46 million in December.

That's up from 4.76 million in November, as well as up 7.7% year-over-year. Additionally, December's performance delivered a finishing touch to what's been the best year of existing sales (5.26 million) since 2006 (6.48 million).

According to the National Association of Realtors, the momentum was partially credited to the "Know Before You Owe" initiative, which delayed some of November's would-be transactions.

"While the carryover of November's delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015," said NAR chief economist Lawrence Yun. "Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year."

The median existing-home price was $224,100, up 7.6% year-over-year.

Total housing inventory at the end of December dropped 12.3% to 1.79 million existing homes available for sale, which is 3.8% lower than a year ago.

As for the single-family market, home sales jumped 16.1% to a seasonally adjusted annual rate of 4.82 million in December from 4.15 million in November, and are now 7.1% higher than last year. The median existing single-family home price was $226,000 in December, up 8.0% year-over-year.

"Although some growth is expected, the housing market will struggle in 2016 to replicate last year's 7% increase in sales," added Yun. "In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas."

Regionally, increases abounded. However, the West led the charge by a long shot with an increase of 23.2%, followed by the South (14.6%).
 
Source: Hardware + Building Supply Dealer. January 22, 2016.  Written by: HBS Dealer Staff.  
Is Social Media Useless for Research?
Cast the right net on the Net
Facebook has over 1.49 billion monthly active users worldwide and every 60 seconds, 510 comments are posted and 293,000 statuses are updated. On Twitter, over 500 million tweets are posted a day. We have all seen statistics like this. Most of us will also have heard the logic that flows from this: These millions of unfiltered social conversations are a treasure trove for researchers seeking insight into consumers' lives, opinions and behaviors - all you need to do is tap into them, run some smart analytics and away you go.

In the real world things are painfully different and in practice getting genuine insight from social media listening is much more challenging.

Harvesting social data is a bit like trawler fishing; you cast a big net out into a wide expanse of ocean in the hope of landing a good catch. If you use a net with a fine mesh you catch pretty much everything that swims, the vast of majority of which is useless to you. Most social data tools cannot distinguish between content that has originated from a consumer and content produced by a brand, or worse still, a bot. Analysis platforms have a long way to go before they can accurately classify the authors of social content. It's only as you manually pick through your catch that you find how much of it is total junk.

Go with too wide a mesh and some really fine specimens that just happened to be a bit too small will be missed and you'll never know they were even there. This often happens when trying to research broad subject areas, for example "snacking." People talk about subjects like this in many different ways and getting a good sample out of the noise becomes a neverending quest to refine keywords, products and brands while fighting to exclude all the usages that don't fit with your target.

Lack context
A lot of social posts lack context or, rather, the majority of social listening tools are not designed to retrieve it. For example, in a lot of tweets the author expresses his or her opinion and links out to a piece of content. Unless you follow that link and assess what the content is about you cannot really tell if it is relevant to your research.

A frequently-used item of context is geographic location. Let's say you want to focus a study on U.K. consumers. You might set your social listening platform to only include content originating from within the U.K. The problem is, only a fraction of social posts are geo-tagged so you're missing out on lots of relevant content. Listening platforms use various techniques to try and work around this; for example by extrapolating from a single geo-tagged tweet to the assumption that other tweets come from this place. Other platforms dig into the author's bio and if the author has specified a location they assume everything they post is from there. These are big assumptions and must be factored in when working on studies that have an important
geographic component.

What about the data sources themselves - the social channels? Can we consider them representative? For obvious privacy reasons, social analytics platforms can only tap into content that has been shared publically or channels under brand control (for example, its Facebook page). The problem is that people share a lot more privately ("dark social" as it is sometimes termed) than publically - reportedly around 70 percent1 is shared privately. The subjects that people share publically are also heavily skewed; people are fine publically sharing posts about their pets but are much more reticent in almost every other content category. All too often public content is not coming from people but from brands and bots.

Listening platforms are almost entirely geared towards text-based searching and analysis. A lot of sharing, particularly among younger generations, involves a high percentage of image and video sharing. If the poster provides enough context in any associated description or tags it's sometimes possible to pull images from the stream. They can be useful for providing qualitative color to a study. However, until image search and analysis algorithms improve significantly this type of content is largely a dead zone for social media research at scale.

When you do manage to land a good catch of healthy, tasty-looking fish/social content, how do you sort through it all? Most platforms are fine at counting how many times your brand has been mentioned - assuming you've got an easily distinguishable brand name like Heineken. Try doing that if you're Next! Does counting how much you've been mentioned actually tell you very much? It can occasionally be useful for benchmarking purposes but in most cases it's a vanity metric.
You probably want to know if people are saying good or bad things about your brand or product.

Most tools will sport some form of sentiment analysis which categorizes posts into positive, negative or neutral. The reality is that the error rates on such tools are tremendous and it's not just because of the classic issue of detecting irony and sarcasm; frequently there simply isn't enough context in what the person has said to be able to distinguish sentiment and even humans struggle to place content into such simple polarity categorizations.

Some social-listening platforms claim to be able to go deeper than simple polarity categorizations through the application of machine-learning techniques. They purport to be able to classify posts into categories such as purchase intent. Trouble is that in our experience, they only really work if you have neat, mutually-exclusive categories each with distinct language patterns. You will rarely find yourself in this enviable position.

Useful for research?
With all these challenges and limitations, is social media-listening useful for research? Yes but you need to be selective about the business questions you seek answers to and where you go fishing.

Generally, the more specific the question the better as it is usually much easier to craft the query to pull a good signal out of the noise. Self-evidently you need to be going after something that a decent number of people are talking about on social channels. For example, understanding initial reactions to a major new phone launch is likely to yield good results. Even in a domain like this the challenge of filtering out brand and promotional message should not be discounted - bots are designed to exploit anything that garners a lot of engagement to spread their own unrelated messages.

The art of successful social listening is identifying channels and Web properties that provide high-quality social content. Forums, for example, typically provide categorizations and tags that are useful for getting context and metadata on the user-generated content and the author. It's critical to have an approach that is capable of gathering this context and making it available for analysis.

As you would expect, where people write longer-form content they express more complex and nuanced opinions, which can yield useful insight. The challenge is how do you break such posts down into the entities and concepts to uncover what things people are talking about and what they are saying about each thing? Natural language processing technologies are now capable of addressing this challenge at scale, enabling you to discover patterns and insights across large volumes of conversations.

At the risk of stating the obvious, any business process that has a social component - be it your own or a competitor's - can usefully have social listening applied to it. Customer service, promotions and content marketing efforts are clear targets here. What are your customers complaining about? Which elements of competitor customer service are they raving about? Which of your competitors' social media campaigns are driving engagement from your target segments? What types of content are customers like yours sharing? These are all good business questions to be asking of social-listening research.

Focusing on the authors of social content can sometimes be a much more interesting avenue of research. You don't need to pull things out from the social fire hose based on a target topic. You can instead select your target audience - for example, a large group of your existing consumers - and analyze everything that your audience has publically shared over the last year. This is a great technique for getting a deeper understanding of the digital lives of your consumers, how they break down into discrete communities and what influences them.

In summary, if you going to use social media successfully for research consider the following:
  • Frame the business questions as specifically as possible. If they are too broad you're better off going back to the drawing board.
  • Identify and focus on the cleanest, most context-rich set of data sources where consumers are talking about your target topic of interest.
  • Be mindful of the filtering and skews that using social content inevitably introduces.
  • Figure out how you're going to analyze the content for qualitative insight. Do you have a platform that enables to you explore the meaning of what people are saying?
  • Find ways to get more context around social content - follow links to understand what content is being shared and dive into author profiles and classify them.
 Source: Quirks.com. December 2015.  Written by: Paul Oram.   
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