Issue No. 6: Trex

When I started researching Trex, my assumption was that I’d be writing about all the amazing things the brand is doing today as the category leader.

But instead, I found myself learning about a brand that’s seen its category start to become commoditized. This story isn’t about why Trex is winning today, it’s about what Trex needs to do if it wants to avoid losing.

But first, some background.

Trex Created the Composite Decking Category

In case you’re not familiar with Trex, it manufacturers composite decking boards. Instead of using wood boards for your deck, which can rot, splinter, fade, and warp, you can use composite boards. It’s an engineered product that uses wood and plastic to create a board that’s much longer lasting and easier to work with. It’s also much better for the environment.

Trex is the company that built this category. Back in 1997, some former engineers from Mobil Oil split off to develop an entirely different type of decking material. The company they built to make this happen was called Trex. For a while, Trex was the only player on the market. But even though composite decking was a much better product in many respects, it was also relatively expensive.

As almost always happens with valid categories, a single player space soon turned into a multi-player space. Starting in the late 90s and into the 2000s, other manufacturers entered the space. Some of those companies, like LP Building Products and TAMKO, couldn’t make a good business out it. They either exited the category or spun off the product line. Other brands, like TimberTech and Fiberon, were successful enough to carve out some market share. Along with Trex, they’re the main players in the category that remain today. Trex, however, continues to be the category leader. It’s valued around $7.5B and does just north of over $1B in revenue each year.

Now that you have the basics down, here’s where things get interesting from a category and competitive perspective.

Trex Was Unique in 1997. Is That True Today?

Category leaders typically do one (if not multiple) things that are radically different from the status quo. And underpinning those choices is a unique strategic narrative (or Point of View) about how that brands sees the world. Let’s look at each, starting with the narrative.

Remember, in the 1990s and early 2000s, if you were going to build a deck, you were going to build it out of wood (pressure treated lumber, if you want to be specific). There was nothing “wrong” with a wood deck back then. Yes, wooden decks would eventually wear out, and they needed regularly maintenance. But because there was no other option, those shortcomings weren’t seen as negatives; it’s just how things were. Pressure treated lumber was a commodity then, and it is now.

That’s where Trex’s unique POV came into play. In Trex’s view, wood was the problem. Trex just didn’t market for its own products, it marketed against rot, splintering, fading, warping, maintenance, and environmental damage. Like a good category creator, Trex focused on selling problem above selling the solution. For a while, it was the only brand with this POV. Its ability to communicate it well is a big reason why Trex became the go-to name in this space.

But here’s an interesting thing about categories. As they evolve, what was once a unique POV can soon become the new status quo. A couple decades later, and marketing “wood as the problem” isn’t so special. Visit the website for Trex or any of its competitors and you’ll find plenty of material on the shortcomings of wood. TimberTech even uses the tagline “Against the Grain” 🙄. Naming wood as the problem was unique and powerful back when composite decking was new, but now it’s run of the mill.

Category Leadership Needs More Than a POV

But a POV alone does not a category make. Are there other ways Trex has been able to evolve the category and remain its leader? The answer (for any category) is always going to be yes. (That’s why The 8 Category Levers of Radical Differentiation is one of my favorite resources, btw). Here are a few things Trex has done to depart from the status quo.

• Trex actively markets to contractors and homeowners. The company even spent $10M on brand marketing in the years before it went pubic. They know that even if consumers aren’t buying from Trex directly, they want to make sure they’re the preferred brand when working with a contractor.

• Trex incentives contractors to use its products. If you're certified as a Trex Silver, Gold, or Platinum builder, then Trex will not only showcase your business on your website, it will provide you with access to leads and other incentives, too.

• Trex has library of resources for contractors and DIYers. What’s powerful about this play is that it positions Trex as a trusted brand well before decking is ever purchased.

• Trex offers free calculators and deck building software. You can quickly get design ideas and figure out what a deck will cost before you ever talk to a contractor.

• Trex highlights interesting design concepts in its content. Trex’s marketing and social media isn’t about product attributes alone, it’s about inspiring homeowners about what’s possible.

• Trex created proprietary fasteners. Instead of sticking to decking itself, Trex expanded the category to include fasteners that are hidden from view and make installation easier for contractors.

• Trex continued to widen the gap with wood. Now, its boards are capped, scalloped, grooved, and textured. They last longer, cost less, install easier, and have better traction than the original product line from the 90s.

• Trex expanded its product line. It continues to find opportunities where composite can replace wood, and now offers railing, fencing, pergolas, stairs, lighting, and even cornhole boards.

• Trex keeps extending its warranties. Now, some of its products are covered for up to 50 years.

• Trex is committed to sustainability. It’s partnered with brands like REI, has its own recycling program, and has made big commitments to reducing waste.

There’s a Huge Problem With That List, Though

If that all sounds powerful, there’s just one problem with that list: Trex’s competitors have all done the same things. Every single thing I listed above can also describe TiberTech and Fiberon. It’s hard to tell who did what first, but it doesn’t really matter. The point is that the composite decking category has now evolved to a state of maturity.

The products, business models, sales and distribution channels, POV, all look eerily similar. That’s why the difference between Trex and its competitors is a matter of degree, not of type. Yes, they each have some interesting attributes that make certain products better for certain edge cases, and you can find contractors who prefer one brand over another, but for your typical deck project, there’s not much setting them apart.

The same is true when it comes to marketing, distribution channels, environmentalism, and so on. Trex may or may not do some of these things better, but the difference is no longer meaningful.

Can Trex Avoid Commoditization?

Trex is a brand that built a brand new category by doing something radically different. But with that “radical difference” now being the status quo, Trex mainly wins by having a larger market presence. There’s no guarantee that will last, though, so what can Trex do to avoid turning into a commodity itself?

Here are three options I came up (which aren’t mutually exclusive, by the way):

Option #1: Develop a new POV on outdoor living

Consumer preferences, values, and lifestyles are always changing. When people build a deck, there’s always a bigger reason than “wanting outdoor space.” Maybe it’s to spend more time with your kids, to bring fresh life to a house that you can’t afford to leave, to provide a gathering space so you can get to know your neighbors well. Yes, technical specifications for decking products are important to win buyers’ minds, but if you can connect with buyers on something that really matters to them, you can win their hearts. Today, Trex and its competitors only have vague position on why outdoor living is important, but it doesn’t have to stay that way.

Option #2: Use R&D to make the current category obsolete

This one is easy for me to say as an outsider, but who’s to say that composite decking couldn’t be made obsolete entirely? Stone decks are even a thing now. Some of Trex’s competitors are already probing this angle with PVC-based products. But materials science is always evolving. How about a deck that self-heals when scratched? A deck that does double duty as a solar panel? One that changes color based on the season? I’m sure they’re some engineer reading this laughing at how bad these ideas are (sorry). But even if these specific ideas are way off, there will likely come a time when this category becomes obsolete, too. It’s just a matter of who, and when.

Option #3: Collaborate with brands serving the same “super consumers”

In his book Supercomsumers, Eddie Yoon teaches that a “super consumer of one product is a super consumer of nine.” What he means is that if someone is really passionate about decking, they’re a super consumer of outdoor living. That could connect to all sorts of other products - lawn care, grilling, entertaining, hot tubs, outdoor kitchens, fire pits, and so on. I’m not suggesting that Trex necessarily build products for these activities (although it and its competitors are starting to, with outdoor furniture). But by finding ways to partner with brands who serve these same consumers, Trex could build greater affinity among buyers who really care. And remember, buyers who really care are the most likely to drive word-of-mouth.

This isn’t an exhaustive list. As you’re reading this, I’m sure you’ve come up with some yourself. (If you do, I’d love to hear about them). The point I want to convey is that just because Trex’s category has started to mature, it doesn’t mean that Trex has to concede to commoditization. Instead, it must evolve and expand its category, continue to invest in its market presence, and ultimately find ways to do things its competitors can’t or won’t.

Wrapping Up: No Category Is Static

Becoming the category leader doesn’t guarantee you that position forever. Every category evolves. A once novel category can become obsolete or commoditized (like MP3 players) or it can be reimagined by an upstart who eventually takes the lead for itself (like Zoom). If you're in a category that’s near or at maturity, your job is to look ahead and find ways to avoid that fate your brand. If you’re in a new or emerging category, your job is to ingrain your company with a culture of never being content. Once you're fat and happy, it’s hard to act hungry again.

3 Questions You Can Discuss With Your Team

Where is our category in its evolution?

Every business competes in at least one category. Understanding where that category is in its evolution can inform you about the choices you need to make regarding your narrative and your strategy. If you’ve recognized that you’re in a category that’s at or nearing maturity, like Trex, then now is a good time to begin thinking about how to sustain your leadership (or even better – developing a new category that can make your competitors obsolete).

Do we have a unique POV?

There are a couple of missed opportunities in the composite decking category. For Trex’s competitors, it’s that they simply followed in Trex’s footsteps. Instead of developing a unique POV, they only mirrored the prevalent one. TiberTech and Fiberon might be different around the edges, but not in any meaningful way. For Trex itself, the miss is that it’s let it POV stagnate to the point where it’s no longer special. Not every POV has the same shelf life. Porsche’s is still going strong, 60 years later. But for Trex, it may be time to revise or rethink it. How about your brand?

What can we do that no one else is willing or able to do?

Remember those ideas I had for how Trex could avoid commoditization? Those aren’t available only to Trex. Any of its competitors could pursue those as well (especially since they are part of conglomerates and have more resources at their disposal). But just because an option is on the table doesn’t mean a company has the courage or ability to pull it off. If you can find a a way to be radically different – in a way your competitors aren’t able to willing to follow – then you’re on the right track.

The One Quote to Leave You With

Cheers,

John Rougeux
Founder, Flag & Frontier

P.S. This summer, Devin Reed, Founder of The Reeder, is helping me out with an issue on Rolex. It’ll be my first guest collaboration for this newsletter, and I can’t wait to share it with you. Devin’s not only a top category designer and content strategist, he’s also a massive fan of the brand. Here’s a preview of what we’re discovering so far. If you’re aren’t following Devin on LinkedIn already, you should.