Issues 2000: A yearlong series of interviews with top plumbing industry executives on what's been and what will be.

When Linda S. Mayer joined Moen Inc. in 1997 as senior vice president, marketing and product development, she also rejoined the plumbing industry. Mayer spent nine years in various marketing and product management positions at Kohler Co., before going on to John Deere Consumer Products.

Mayer was recently named president of the Plumbing Manufacturers Institute, the first woman to hold the position.

PM: Where is the faucet market heading?

Mayer: I think the future is rooted in the past. A lot of the changes we're seeing today originated in the trend for consumers to get more involved in the decision-making process throughout the 1990s. Consumers became better educated on products, demanded to see broader selections and became very connected with the process. This change in consumer behavior cut across many categories, not just plumbing products.

As a result of greater consumer involvement, there has been a heightened interest in the faucet category, particularly at retail. The variety of styles and price points offered has virtually exploded. There are more players in the category. We have seen a growth in the volume of products from off-shore manufacturers. Wholesalers and retailers are even "manufacturing" their own private label faucets.

This focus on product proliferation and speed to market with new designs has resulted in greater frequency of "knock-offs" - where an OEM supplier will develop a "new" faucet by copying a successful design of a faucet that is on the market.

This trend forces manufacturers to provide a leadership role - they have to add value and quality based on research and real innovation. For Moen, we want to maintain an industry leadership position in terms of both product style and durability.

PM: What's the next level of change going to be?

Mayer: The next level of change will be the result of the impact of two current forces of change.

The first one is consolidation. I wouldn't want to predict exactly what will happen, but consolidation in and of itself will have an effect on every segment of the industry - manufacturer, wholesaler, plumber, builder and retailer.

For example, the consolidation of wholesalers into truly national distribution chains. For the first time, they will be able to offer national service to national builders. Or, the consolidation of plumbing contractors - will they be able to market a national name to homeowners for plumbing services? Will they be able to train new labor and obtain a competitive advantage when there are shortages based on the lack of skilled plumbers?

The second factor is technology, which will also impact every part of our industry. Our traditional chain of distribution needs to become an electronic chain that stretches all the way from the raw material state to how products reach the end-user. Technology will clearly impact how product travels throughout the chain.

To a certain extent, both of these changes go hand in hand. For example, some of the leverage a consolidator has to have to be successful will inevitably come from technological advantages that will add value, shorten a process or take costs out somewhere.

PM: We tend to treat all change pessimistically. What's a change that contractors can think of optimistically?

Mayer: People have less time. It's gone from do-it-yourself to buy-it-yourself, and I don't think it's going to go back to just DIY. There will be an increasing demand for skilled labor to install plumbing products.

Everyone values "value" - and for most of the 1990s, that meant having control over the purchase process. And since the consumer controlled the purchase process, they cut someone out, in this case the plumber. It was only natural for them to then figure they'd get an even better deal by doing the installation themselves. We know it's not necessarily a better deal, but that's what consumers came to believe.

But now, plenty of consumers realize that they can't handle the installation - they don't have the skills or even the tools, but an even bigger factor is that they just don't have the time.

We'll have to see whether or not this will translate back into valuing the role of the plumber to not only install, but purchase product as well. I don't think consumers will ever go back to the days when they were not involved in the selection of the product, but it could swing back to the notion that it's way too much hassle to pick up the product at the home center or worry about dealing with a warranty down the line.

PM: You were in the plumbing industry, but then left in 1990 - right around the time the home centers started making their presence known. When you returned in 1996, how had the "old ways" changed?

Mayer: In the late-1980s no major manufacturer was selling directly to home centers. The manufacturers stood pretty much firmly behind the traditional wholesale channel.

There were a lot of reasons for doing this. Loyalty to the traditional channel was a large factor. At the time, home centers didn't represent enough volume to justify shipping directly. Plus manufacturers didn't have the infrastructure to ship to individual retailers. Finally, who was going to handle all the value-added services the wholesalers took care of? Items like returns, warranties and service problems.

PM: So when you came back, all that had changed?

Mayer: Since that time, volumes at retail have increased and most of the major manufacturers ship directly to retailers. A large part of the reason was that the home centers, Home Depot and Lowe's to name two, were so successful. The consumer had bought into the home center concept, and there were plenty of legitimate brands going through home centers in a big way. Everything was changing. It wasn't just about the plumbing industry. You almost have to credit the home centers for really opening up the remodeling industry, which has meant more business for everyone.

Another big change I found interesting was that I used to hear a lot of concerns from wholesalers who operated showrooms about the negative impact of home centers because of their low prices. Now, wholesalers realize they can coexist with home centers - that they are different and consumers do value the extra service that they get in a wholesaler showroom.

PM: Considering how much the market has changed, how has marketing your company's "brand name" changed?

Mayer: Moen markets to the consumer and the trade. Certainly that is a change - that we market to the consumer. For most of the company's history, Moen was always known as a trade brand - known mainly to the trade because of our cartridge durability. There really wasn't much advertising. It really was all a product-driven branding message aimed, not advertised, primarily to the trade.

In the 1990s, however, we had a change in ownership and management, and recognized the changing role of the consumer and how that would impact faucet purchases. These dynamics weren't so much about the faucet industry as they were about society itself.

So management decided to position Moen differently. Instead of being strictly a trade brand with little marketing support other than brochures, the company made a conscious decision to invest in advertising and develop a consumer brand.

As a result, Moen started TV advertising in 1994. In 1997, we added consumer print advertising, and in 1998 we also started to put dollars toward trade print advertising.

None of these decisions meant that we had become a consumer-only brand as opposed to a trade brand. It was to add a consumer element to our position. And we believe that the television advertising benefits the trade as well. It certainly creates name recognition that supports the plumber's product recommendations.

In addition, we find that marketing the Moen brand requires more than just advertising to the consumer and trade. We strategically look at the entire marketing mix including new products, merchandising, pricing, distribution, publicity, promotions, packaging, training and displays. In today's environment, it is important to communicate and reinforce the brand position in every aspect of going to market.

For example, the quality and structure of the package has to be consistent with the position of the brand in the market. So, if we want homeowners to think of Moen products as durable and good-looking faucets, we need to have packaging that is durable and stylish.

PM: Do you sell directly to home centers?

Mayer: Yes, as do most of the major plumbing manufacturers.

PM: What type of faucets are stocked at the home centers vs. what goes through wholesale channels?

Mayer: The faucets that sell well in home centers focus on "value" - an attractive style given the price. This does not mean only lower priced faucets. It means that the consumer has to perceive a value for the price. The home centers end up selling the higher volume items that appeal to a majority of consumers. If a product is low volume, it will likely get replaced with a higher selling model.

There are two primary types of consumers at a home center which influence the types of products available at retail. They often make their purchase decision very differently.

First, there are the "replacement" consumers who need to buy a faucet to replace a broken one. They are primarily interested in getting something very similar to what they had before for the best price.

Secondly, there are the "remodel" consumers who are purchasing a faucet as a room upgrade or because they are redoing a bathroom or the kitchen. They tend to want more information on what styles and functions are available. They are looking for a broader selection of products to find just the perfect faucet for their application. In a remodel, the range of price points and models in much greater. Home centers have to stock more complete lines of lav and bath faucets to enable the homeowner to get a matching style.

The home centers are limited by the shelf space devoted to the faucet aisle. In wholesale, there is often greater selection because they can carry broader inventories and have greater familiarity with using the entire manufacturer's catalogue. Plus, some retailers stock more brands of faucets than a wholesaler, which forces the selection within a brand to have less depth.

PM: Have the price points changed over the years?

Mayer: The average prices have gone up, which is interesting. This is not due to inflation but because consumers are upgrading. The product mix itself is shifting to higher end products. Home centers are helping that trend because consumers are being exposed to broader selections of faucets than they were used to seeing in years past.

The large retailers are actually growing the market, encouraging bigger projects and convincing people to do more than just replace an existing faucet. And when consumers decide to do more than just replace, they're more willing to spend money. For example, they may choose to trade up to a pull-out kitchen faucet rather than settle for the more traditional single-handle or two-handle "fixed spout" faucet they have always had.

PM: Has your sales percentage shifted toward the retail side in recent years?

Mayer: No, new construction has always been a bigger percentage of our business. It's our strength. Given the strong economic conditions, we have not seen an overall shift in the market from wholesale to retail, even though we have also grown dramatically at retail in recent years. The primary change at retail is really a consolidation of the major players, not a reduction in the percentage of business going through wholesale.

PM: We take it the traditional channel of distribution benefits from the new construction trade?

Mayer: Absolutely. When housing starts are strong, the wholesale business is strong.

PM: So what happens when new construction goes down?

Mayer: Well, it is cyclical, and we have all lived through housing slowdowns. A decrease in housing starts does affect wholesale.

PM: Do you foresee a day when a homeowner would order faucets over the Internet directly from a manufacturer?

Mayer: I don't want to say no because many of us didn't foresee the day that they would buy faucets from a home center.

Moen does not sell faucets directly to the consumer. However, consumers can buy faucets over the Internet today. Generally these are Web sites owned by current retailers, wholesalers, contractors, or "e-tailers."

I have not seen major plumbing manufacturers selling their products themselves over the Internet.

PM: What's the state of your current Internet activities?

Mayer: It's centered around information. For example, our catalog is on the Web. In addition, consumers can design their own special faucet by selecting a faucet style and finish and watch it change right on the computer screen. It also contains a "dealer locator" service so you can find the dealer, contractor, wholesaler or retailer nearest you who carries Moen products.

We're in the process of defining what the added value is of the Internet for our major customer groups. For example, what value does the Internet have to the plumber? How can we help in that? It may be communication. Or easier access to parts or installation information.

At the moment we continue to watch how contractors and consumers are using the Internet.

PM: What product trends will we see in the future?

Mayer: Filtration will continue to be a huge trend and represents a terrific sell-up opportunity for the trade. Plus, it's just beginning. The awareness of the overall issue is large, but there is very little awareness that there are faucets that answer that need. We think that the convenience of getting clean water directly from the kitchen faucet is a powerful concept that will be highly valued by consumers. Plus, the advantages of having the filter in the faucet removes many of the hassles and extra costs associated with other filtering methods.

PVD finish technology will continue to generate consumer interest. Special finishes will no longer be reserved for the high end. It's just like when consumers became enamored with colors and realized they didn't have to have white fixtures anymore. We're at that stage with faucets. No longer will polished chrome be the only recognized durable finish.

Related to that is the ability to customize the products. Consumers want to have their own look and personalize their environment with the latest color trend. Plus, it will be important for these colors to extend to everything in the room such as matching towel bars, shower heads, and so forth.

A major growth category is the whole shower environment. Consumers are buying everything from replacement showerheads to entire showering systems. They want more functions, more showerheads, diverter valves and matching accessories. The American propensity to shower is becoming the focus for luxury in the bathroom. The ability to design a personalized shower system is right in tune with consumer lifestyles that want to design products for their own home.

Upgrades are definitely in. Contractors need to offer them. The bottom line is consumers want better looking and better functioning products. Contractors are missing out if they don't proactively offer upgrades like filtration, special finishes, matching accessories and showering environments.