Thursday, September 20, 2012 | Edited by Daniel Moores
||U.S. Homebuilder Confidence Surges to Six-Year High
Confidence among U.S. homebuilders rose this month to its highest level in six years, and many expect the housing recovery will strengthen in the next six months.
The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday increased to 40 in September. That's up from 37 in August and the highest reading since June 2006, just before the housing bubble burst.
Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached that level since April 2006, the peak of the housing boom.
Still, a measure of builders' outlook for sales in the next six months rose to 51. That's up from 43 in August and also the highest level since June 2006.
Builders also reported seeing the best sales level since July 2006. And turnout by prospective buyers returned to levels not seen since May 2006.
The positive trends have helped bolster optimism that the U.S. housing recovery will endure.
"We think things have turned around and this recovery is sustainable," said Patrick Newport, an economist with IHS Global Insight. The rise in builder confidence means that new-home construction is likely to increase over the next six months, Newport said.
The survey, which is based on responses from 445 builders, has been trending higher since October. After a dismal 2011, homebuilders have seen their fortunes begin to turn around this year as the housing recovery has steadily gained momentum.
Sales of both new and previously occupied homes are running ahead of last year. Home prices are increasing more consistently, in part because the supply of homes has shrunk and foreclosures have eased. And mortgage rates remain near record lows, beckoning potential buyers with good credit.
Still, the housing market remains depressed. While the turnaround will continue next year, a complete recovery in home construction isn't expected before 2016, Newport said.
The housing market isn't expected to recover fully until job growth improves and the unemployment rate, now at 8.1 percent, declines further.
Still, sales remain on the upswing at Taylor Morrison, which builds homes in five U.S. states and caters to entry-level and move-up buyers, as well as seniors.
The Scottsdale, Ariz.-based company's sales are up 40 percent from last year, said Graham Hughes, the builder's vice president of sales and marketing.
Hughes says the lower inventory of previously occupied homes for sale has helped drive stronger demand for new homes. Demand has been especially strong in markets like Phoenix, where the builder's sales are up 80 percent. That's made it possible for Taylor Morrison to hike prices there by an average of 15 percent.
Taylor Morrison expects to close out 2012 with 15 percent more employees than last year. It also anticipates boosting payrolls by another 10 percent next year.
"I'm definitely optimistic now," Hughes said. "We've turned the corner and we're at the bottom and starting to look up."
Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the NAHB's data.
(Source: The Associated Press, 09/19/12)
||Prescription-Drug Wars Begin
The prescription-drug wars are underway.
Walgreen Co. lost as many as 10 million customers at the beginning of this year due to a pricing dispute with Express Scripts, a large administrator of pharmacy benefits. For months, Express Scripts members who had been getting prescriptions filled at Walgreen had to go elsewhere.
Now, that spat is resolved, and as of last Saturday, Express Scripts members can go back to Walgreen. The big question for the Deerfield, Ill., pharmacy chain and its rivals is, will they?
Up for grabs are some 60 million one-time Walgreen prescriptions that have already migrated this year to rivals like CVS Caremark Corp., Rite Aid Co. and Kroger Co., according to Dane Leone, a health-care analyst for Macquarie Capital. The prescriptions represent about $3.6 billion in revenue and around $600 million in gross profits, Mr. Leone said.
To try to win customers back, Walgreen is offering $25 gift cards to Express Scripts members who transfer back their prescriptions. Rivals like CVS are enticing shoppers to stay with deeper discounts on nonpharmacy items, as well as with a barrage of advertisements.
"I don't ever recall a situation of this magnitude that occurred on one day," said Larry Merlo, chief executive of CVS Caremark. "The big thing we're trying to get patients to understand now is they can stay with us. They don't have to go back to Walgreen."
CVS Caremark has predicted it would retain "at least 50%" of the former Walgreen's business.
Among those customers CVS is hanging onto so far is Mary Sweeney, a 66-year-old retired payroll manager in Norfolk, Va., who brought her prescriptions to her local CVS after being shut out of Walgreen, and now plans to stay. "I like that my pharmacist not only knows who I am, but a lot of the other people who come in," she said. "At Walgreen, they kept switching pharmacists out."
For Walgreen, the loss of Express Scripts business contributed to a nearly 11% drop in third-quarter earnings to $537 million from $603 million in the previous year. Walgreen believes customers will eventually trickle back, said spokesman Michael Polzin.
"We still have the same close and convenient locations, the same pharmacy staff who people have known and trusted over the years," Mr. Polzin said.
At stake are more than prescription-drug sales. Patients walking into a drugstore also help boost sales of shampoo, soap and Halloween candy-items that typically carry higher profit margins than prescription drugs. Prescription drugs account for about two-thirds of drugstore revenue, but sales growth has slowed in recent years.
About two-thirds of people use just one pharmacy to fill their household's prescriptions, and more than 90% reported having a preferred pharmacy, according to a report released last month by AccentHealth LLC, which surveyed 745 people in an online poll. Store location, customer service and wait time were the three most important factors, the report said.
Walgreen's rivals say they don't want the work they've done in past months attracting Walgreen customers to go to waste. "We've done a lot of research to make sure we understand those customers, what they like about Kroger, what they liked about Walgreens," said Rodney McMullen, president of Kroger, during the company's earnings call last week. Kroger, the nation's largest supermarket chain, operates more than 1,900 in-store pharmacies.
In television advertisements, Kroger highlights a pharmacy program offering commonly prescribed generic drugs for as low as $4.
Melanie Friedlander, of Hermosa Beach, Calif., has already called Walgreen, notifying them of her plans to transfer back from her local CVS. "Every time there was a problem, the pharmacists would sort of look at me and say, 'Well...' Let's just say I'm excited to go back to Walgreen," said Ms. Friedlander, a 45-year-old surgeon.
Both Express Scripts and Walgreen placed big bets in letting their contract expire last year, taking heavily principled stands on the future role of pharmacies in U.S. health care. Express Scripts, a pharmacy benefit manager, believed Walgreen demanded too high a reimbursement rate for its pharmacists for dispensing drugs and didn't produce significant cost savings over competitors.
Walgreen Chief Executive Greg Wasson, who was criticized by investors for his handling of the Express Scripts negotiations, has tried positioning the pharmacy as a hub for health-care services, amid a physician shortage and with an aging baby-boomer population.
(Source: The Wall Street Journal, 09/17/12)
||Q&A: Stores Rule; Social and Mobile Lag
While there's no arguing that digital channels are increasingly important in retail, new research from Forrester indicates that physical stores are still the most important way that Americans shop.
Social media, however, turns out to be a bit of a bust, with only 1% of the Forrester sample naming Facebook as a top-three resource. (Twitter fared about the same.) Even among the most digital researchers, only 7% used the Internet on their mobile phones to research a recent purchase, and 4% used the Internet on their tablet. (Its sample included 4,500 adults.)
So how exactly does digital influence the way shoppers behave, from product research to final transaction? Analyst Corinne Munchbach, who wrote the report, tells Marketing Daily a little more.
Q: Could you talk a little bit more about the value of the physical store?
A: There's been so much emphasis on digital drivers, and that's all a bit overblown. The continued importance of the physical store is really impressive. It's not that people aren't digitally aware. We found that 82% of U.S. adult consumers research a product before buying it, and most of them use digital tools to do so.
But the store is absolutely still king. In our report, 67% say they plan to buy something offline in a traditional store in the next three to six months, compared with 58% online. Just 14% plan to do so on their tablet, and 11% on their phone.
Consumers really value the ability to touch and feel what they are about to buy.
Q: And do you think that will surprise marketers?
A: It's important that they realize that the store continues to be an important channel, and that they do not ignore it in favor of some of these other shiny digital objects.
Q: But if 82% are doing research before, that means digital has a major role. What's the best approach?
A: Yes, and in every product category we looked at, online research is much more important than in-store research. For us, the takeaway is that there is the explosion of shopper research, in every category. So the big thing for brands is to focus on being able to provide the right type of information, in ways that are relevant and timely.
Q: So should brands shy away from mobile and social, which turn out not to be so significant?
A: No, we are not discounting them, and 10% of U.S. online adults are likely to use emerging tools such as the mobile Web or shopping apps. The point is, this is an experimentation phase, and we think it's important for marketers to remember the oft-forgotten paths, including stores, and such basic digital areas as Google and brand Web sites.
Q: What else can marketers learn from this trend?
A: I think it's easy to think that online research focuses on things like couponing and looking for discounts. But people are making the distinction between price and value. They aren't just looking for coupons -- they are seeking solid information.
(Source: Marketing Daily, 09/06/12)
Daily Sales Tip: What Is Rapport?
Rapport creates the space for the person to feel listened to, and heard, which doesn't necessarily mean they have to agree with what you say or do. You can appreciate each other's viewpoint.
When you have rapport with another person, you have the opportunity to enter their world and see things from their perspective, feel the way they do, get a better understanding of where they are coming from. And as a result, enhance the whole relationship. This will allow them to feel good about themselves, you, and the relationship you've started.
The key to establishing rapport is an ability to enter another person's world by assuming a similar state of mind. The first thing to do is to become more like the other person by matching and mirroring the person's unconscious behaviors -– body language, voice, words, etc. Matching and mirroring is a powerful way of gaining an appreciation of how the other person is seeing/feeling/experiencing their world.
The simplest way to help build rapport is to match the micro-behaviors of those you wish to influence. Any observable behavior can be mirrored, for example:
* Body posture
* Spinal alignment
* Hand gestures
* Head tilt
* Blink rate
* Facial expression
* Energy level
* Breathing rate
* Vocal qualities (volume, tonality, and rhythm)
* Key phrases and words
* Anything else that you can observe...
At first, this may seem a little strange or uncomfortable for you as a salesperson; though I assure you, with a little practice you'll become natural and proficient at it in a short period of time. And remember this: The basis of rapport is a natural process, which is happening already within any interaction between two or more individuals. You are simply duplicating the process on a 'conscious' level with purpose and volition.
You may wish to start with family members by beginning to match different aspects of their posture, gestures, voice, and words. Have fun with it and see if they notice what you are doing. At work or socially, start by matching one specific behavior and once you are comfortable then match another. For friends with whom you really feel comfortable, notice how often you naturally match their postures, gestures, and tone of voice or words.
Matching comes naturally. You need to learn how to do it with everyone. Matching will then eventually become automatic.
Source: Sales speaker/author John Santangelo