Just like its trademark chameleon can change colors, Valspar has shown how consumer marketing can change a company.
Valspar made plenty of history since it began manufacturing spar varnish for masts of tall wooden ships in 1806, then moved into industrial coatings in the 1930s to help make everything from Coca-Cola cans to Charles Lindbergh's Spirit of Saint Louis possible. But its transformation into a consumer brand may be one of history's better examples of how marketing can reshape a company.
In 2007, just before the onset of the deepest recession in generations, Valspar was largely unknown to consumers. It was then that management decided to shift from selling industrial coatings and manufacturing private-label paint for such retailers as Lowe's to building a consumer brand. Since then, its stock has soared 180%, and Valspar research shows the brand has risen to become the No. 2 U.S. paint brand by purchase intent, behind only Behr. By this internal measure, it's leapfrogged century-plus-old brands Sherwin Williams, Glidden, Dutch Boy and Benjamin Moore.
Valspar's overall sales rose a modest 2% to $4.1 billion for the year ended Oct. 31, but its consumer paint sales rose 4% to $1.7 billion. The company expects sales to climb another 7% to 9% next year, again led by the Valspar consumer brand making a move into Ace Hardware stores. That move already helped boost the company's paint sales 13% to $449 million in the fourth quarter.
The shift to consumer branding right at the outset of recession couldn't have been better timing in a sense. The recession decimated the professional side of the paint business. But Valspar's business, even as private label, is mostly focused on the do-it-yourself market. The shift to building a consumer brand increased Valspar's DIY footprint just as more people stayed in and fixed up their own homes rather than moving into new ones or hiring pros, said John Anton, who was VP-marketing at Vaslpar from 2010 until June, when he became VP-general manager of the company's business unit dedicated to Ace Hardware.
With the Ace unit, he's leading a new phase of the Valspar rollout as it becomes a premium branded product being added to around 3,000 of the chain's 4,000 stores as an addition to private-label lines the company already supplies.
Key to success
One key to Valspar's success, Mr. Anton said, has been senior management sticking with the plan and the marketing spending, including market research, despite the economic downturn.
Market research found the two biggest obstacles to people painting their homes were concerns about the amount of work and lack of confidence that they'd get the color right.
Valspar addressed the work issue by rolling out digital tools that included online color consultants who talk customers through issues live on their mobile devices as they apply shades to photos of rooms.
Most importantly, Valspar addressed the confidence issue with the Love Your Color Guarantee, becoming the first paint brand to offer refunds on paint after it's tinted -- even after it's been applied to walls at home. Driving that guarantee home through TV, print and digital ads from DraftFCB, Chicago, with Valspar's trademark chameleons has been the biggest factor in Valspar's success, Mr. Anton said.
Because the guarantee was unprecedented, Valspar had an insurance company underwrite the risk. "It turns out that not as many people as you expect take you up on it," he said. "Most people don't want to paint a room twice."
Though the marketing spending has come on the consumer side, it's also been helping the industrial business-to-business side of Valspar that includes coatings for such things as John Deere tractors, Mr. Anton said. "We keep hearing from the sales and marketing folks on the industrial side that the marketing has created a halo effect for them as well."