Martha Stewart and KB Homes Announce Brand Extension...

I showed my youth a little bit yesterday.

While talking to someone about the news that KB Homes will now be offering houses designed by the Martha Stewart Co., I made the mistake of saying, "This is huge. This is the first time a big brand has attached their name to new home construction."

To which the person I was talking to said, "Uh, ever hear of Sears?"

And they're right, of course. Even though Sears hasn't sold a kit home since 1940, people still know it was a big deal for the retailer (until the stock market crashed and Sears absorbed the 2005 equivalent of about $11bil. in unpaid mortgage payments).

And though KB Homes has never done anything like this before, they have been a far more aggressive marketer than traditional home builders, attempting everything from placement campaigns to sponsoring network makeover shows. Still, the news that people can buy a "Martha Stewart" home is something we haven't seen in at least 65 years.

There are at least a few implications which come to mind, though:

A friend of mine has been fortunate to do enough business - or related business - over the years with Martha that he has a good sense of how her company operates. He once told me, "Everything with Martha has a dollar figure attached." Which means that KB is paying good money to put her name on their product. This sounds like common sense until you realize that new home construction sees lower margins than many industries (That being said, KB does enjoy some of the better margins in the business). Point being most consumers didn't have to pay for the brand when they pay for the house. Until now.

Secondly, it will be interesting to see how Martha's brand stands up in the world of new home construction, where customer service is generally poor, and most people end up hating their builder when the process is over.

Indeed, even with all of the negative news Martha's gotten over the years, it take a fair amount of work to find negative press about her products. Yet, when you Google ""KB Homes," the number two link takes you here, which isn't exactly a good thing.


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