Zero Carbon HUB Consumer Engagement Workstream Creating the Marketing Programme

1.  Zero Carbon HUB Consumer Engagement Workstream Creating the Marketing Programme Steering Group Meeting 31 March 2009

2. 2 Agenda Review since last meeting MR & NJ Customer Engagement Workplan - overview MR & ME discussion / input All Stage 1 Workplan ( Marketing Context) presentation MR & ME discussion / input All 5 min break Working sessions All to discuss specific issues set-up in working session Conclusion and next steps MR

3. Customer Engagement Workplan

4. 4 The Client

5. 5 The Client Context Not consumer-facing Facilitation for industry 5 integrated workstreams Building energy efficiency Energy supply Examples & scale up Skills & training Consumer engagement

6. 6 Note on the brief specific task an actionable strategy & marketing plan not specifically a research project both marketing-led and consumer-driven ensuring consumer voice and demands are kept to the fore in an impartial and unbiased manner within context of new homes building industry benefits a robust plan having run the rigorous test of consumer acceptance and uptake. a plan to gain consumer acceptance and takeup and implementation by industry and government

7. 7 Note on Sinclair Barnes Independent not tied to either side of the debate Educational background Masters Degree - urbanism & environmental studies Brand and marketing specialist Sinclair Barnes � brand strategy consultancy Creating & implementing brand and marketing strategies and plans

8. 8 Recommended Workplan Stage 1 Developing the consumer case Part 1 � current marketing context Based on existing information & new industry and consumer interviews Part 2 - develop and test concepts Concepts re consumer choices To be developed within new home marketing category conventions Developed with industry input Part 3 - develop and test prototypes - product proposition Stage 2 Developing the marketing plan including positioning broad consumer positioning positioning implications for individual developments target audience � propriety targets messaging message distribution marketing materials media detail of the marketing plan will be informed by: Stage 1 discovery process above Product developments as they happen Agreed Codes, policies, programmes, allowables and definitions.

9. Marketing Context

10. 10 The Marketing Context Stage 1 - Part 1of Workplan

11. 11 The debate so far

12. 12 1. Previous reports & research Consistent findings Caveat: mainly EST & NHBC-sourced reports Overall �social� desire for energy efficiency Individual actions evident Via small solutions found and subscribed to Lightbulbs Recycling - almost oversubscribed Plastic bags � huge response / market change No � solution� re eco/green housing Partly because a bigger issue Partly because current examples / choices are perceived to be non-mainstream Niche, experimental, social housing

13. 13 Previous reports - Analysis Proves people will take individual action for common good ( and lower costs) But solution needs to be provided And people do not see a housing solution So both sides of the debate are correct Consumers � �there are no effective green choices� is correct in consumer terms Developers � � there is no consumer demand� � is correct in developers� terms Closing the gap Create a solution that both sides recognise Beginning with an identifiable and realistic product

14. 14 2. Media check Level of debate: Niche, new, future, generally expensive A separate ,mindset � the �eco column � etc Government � health warning�- driven Current , growing media angle ( because it grabs more headlines ?) Showing flipside of green Opposition to wind turbines Insulation causing moisture problems / water damage Recycling not being recycled

15. 15 Media - analysis Eco/green is moving past just an idea And the cracks are beginning to show Consumer reaction Interest remains / people not put off But tending to wait until technology matures Nobody wants to be a guinea pig Credit crunch aligning with this wait-and-see attitude

16. 16 3. Experts input builders � sustainable Feeling that higher standards are possible but not in current planning structure Margins achievable only if Incentives � social High risk � eco-builders Zero-carbon Possibly a red herring as largely unachievable on most developments � so every development will fall short�

17. 17 3. Experts input 2 Builders � volume Some are experimenting with solutions But most cite lack of consumer demand Which is correct given current homes marketing conventions Their business models will not support building higher cost homes if no evidence of demand

18. 18 Experts input - analysis The will and the possibilities exist Government policy is pushing the market But government mandates clash with current commercial business models Both in tone and in reality Which is leading to scepticism � even bad feeling Which is partly stalling the market Especially when played out against this economy

19. 19 4. consumer input - secondary Mainly from social housing feedback And eco-builders ( including websites) Reported definite comfort level advantages Fewer draughts More even heat Reduced bills But generally niche examples Ex: Living Villages ( � in-the-know� residents) Social housing ( no commercial imperative)

20. 20 4. Consumer input � omnibus Checking benefits as decoupled from Features, Technology alone Cost alone Cost is currently definitely # 1 driver But consumers interested in other benefits Comfort levels ,warmer, fewer draughts etc And a green source generally Awareness very low 53% have seen none of these technologies installed � even in a show home.

21. 21 4. Consumer input � omnibus - 2 Perception of higher cost due to New technology Cost of additional elements Need for specialist suppliers, building expertise Media & lack of their own awareness But there is � conditional � demand People want houses with these features 65% of our sample said they were interested and are willing to purchase with certain conditions For those who would pay 32% would pay If they received a grant to cover cost 21% would pay if they got a council tax discount And some people would pay the premium in full without an incentive 11% of the 65% who would pay So 7% of 2000 sample

22. 22 Consumer input - analysis Definite motivations Which can be leveraged re homes marketing Cost � savings Non-cost ( not in priority) - fabric Fewer ( to no) fluctuations in temperature Better air quality Light / bright � re windows Quieter � sound insulation Non-house Feeling of community Feeling of making a green choice Conditional propensity to purchase Some demand to pay full price Much more demand if incentivised

23. Analysis

24. 24 Debate so far � analysis of topline Current debate does not reflect reality Consumers are interested Developers are interested if it makes market sense Some see this as possible differentiator But public debate / discourse does not reflect this both sides looking for a solution But it appears to be separate debates Not linked up Job of HUB?

25. 25 The job at hand coming across as � I should � not � I want� Government-led ( Act on Co2) Technology-led DIY-level � nuts and bolts Architect-level More Grand Designs than everyday/ real life Huge need to � normalise� energy-efficient features Normal to see, use in a home And in time, to become standard How to begin? Re-think the issue

26. 26 Lower & Zero Carbon Housingthe Debate so far

27. 27 When people buy homes� They buy a home - not a cause A life for my family Vs an ecological statement They buy benefits - not features A warm home with no draughts Vs superinsulation and triple glazing They buy a product - not a hypothesis Something they can see / experience Vs a potential product in the future

28. 28 When developers build new homes� They build buildings - not a cause A product for the market Vs an ecological statement They buy lifestyles - not just features To appeal to buyers To differentiate their offer Vs existing homes Vs their competitors They build a product - not a hypothesis Something tangible even if of-plan CGI Vs a potential product in the future

29. 29 Develop a customer-centric strategy

30. 30 1. Re-focus the debate

31. 31 2. Re-frame the issue

32. 32 Proposition follows naturally� From the demand side � the consumer � I want to buy a home for me and my family. I like the idea of a new home which has advantages for me over an existing house. And I want it to be built to the most modern and effective standards � in all ways including better energy-efficiency� From the supply side � the industry � our business is to build and sell mainstream homes � and specifically new homes. We will differentiate by building these homes to increasingly higher standards in building, lifestyle amenities and community life - in all ways including better energy-efficiency�

33. 33 Caveat product must fulfil the proposition technologies that work skills to build them affordable re the mass market a key role for Zero Carbon Hub 5 inter-connected workstreams

34. 34 The wider context � No option Geopolitical events Climate change Economy globalisation Leading to changes in Macro � the way consumers will live Micro � the way consumers will buy homes Implications � the way industry must deliver homes

35. 35 Who are we speaking to? Focus to date Eco-aware New homes buyers New focus What? Why?

36. 36 The Target Consumer

37. 37 Who are we speaking to? Focus to date Eco-aware New homes buyers New focus General public All in households Then further targeting

38. 38 Create the market � then sell the market creating a mass market � movement� start with the general UK public to create broad understanding and public appeal for such innovation And lead to demand from that base, zero in on the actual potential purchasers drilling down to specific targets and subsets with specific offers and messages. and ideally people who want to buy homes who can be persuaded to buy a new-build home as opposed to only those who specify new-build from the start

39. 39 Step 1 � create the product Even if initially a prototype CGI etc Must be portrayed via category conventions That consumers recognise Marketing in a way they are used to That developers recognise Marketing that fits their goals and marketing conventions And covering the zero carbon hierarchy Development benchmarks 2009-2016

40. 40 What to test?

41. 41 Some specific issues Product nature of , specifics of Allowables what does this mean for industry as well as for consumer Cost including affordability and financing ( incentives, grants) Labeling will a label help clarify, if yes, what labels and what will it mean Brand how can developers migrate and leverage their brand reputation ( as volume builders) in a market that has to date, been a niche proposition Media Channels to the consumer

42. 42 Step 2 � test against a realistic target Combination of General public � to create public discourse New home buyers Against current demographic - new homes buyers Target via current developments need to include (but not be exclusive to) eco-aware Otherwise, it remains niche but equally begin to identify early adopters Variables from DIY�ers to greens to design-led

43. 43 The Target Consumer

44. 44 Where do we go from here? Real world concepts Based on familiar marketing conventions And media angles and message streams To develop with developers & media on Steering Group Test against real buyers ( qualitative and quant) Testing � not exploratory Via estate agents TBD Via developers lists TBD Possibility of real installations Milton Keynes � compare / contrast Exemplar homes Real world examples � commercial propositions Possibility of filmed examples? Advantage of input & involvement of Steering Group

45. Working sessions

46. 46 Some specific issues Product nature of , specifics of Allowables what does this mean for industry as well as for consumer Cost including affordability and financing ( incentives, grants) Labeling will a label help clarify, if yes, what labels and what will it mean Brand how can developers migrate and leverage their brand reputation ( as volume builders) in a market that has to date, been a niche proposition Media Channels to the consumer

47. Conclusions & Next Steps

48. 48 Conclusions & Next Steps Zero Carbon Hub topline future activity across the workstreams

49. 49 Conclusions & Next Steps Zero Carbon Hub topline future activity across the workstreams Workplan proceed to Stage 1- Step 2 Develop & test concepts

50. 50 WorkplanDevelop & test concepts Looking for input re: Residents of lower carbon homes Especially commercial propositions Testing benefits Sample marketing materials To ensure test materials conform to industry marketing conventions Note: we do not need commercially-sensitive material

51. 51 Conclusions & Next Steps Zero Carbon Hub topline future activity across the workstreams Workplan proceed to Stage 1- Step 2 Develop & test concepts Steering Group set up & populate formal working sub-groups

52. 52 Steering Groupset up & populate formal working sub-groups Subjects: Product - nature of , specifics of Allowables - what does this mean for industry as well as for consumer Cost - including affordability and financing ( incentives, grants) Labeling - will a label help clarify, if yes, what labels and what will it mean Brand - how can developers migrate and leverage their brand reputation ( as volume builders) in a market that has to date, been a niche proposition Media - Channels to the consumer Others � TBC Format proposal CE Workstream to lead & circulate Input via email, phone Regular updates / progress

53. 53 Conclusions & Next Steps Zero Carbon Hub topline future activity across the workstreams Workplan proceed to Stage 1- Step 2 Develop & test concepts Steering Group set up & populate formal working sub-groups Next Steering Group Meeting TBC � late June 2009

54. Sinclair Barnes