“I’M INGA FROM SWEDEN”

The title quote does not refer to the popular (2,000,000+ hits) music video currently available on YouTube featuring a rather buxom young lady but rather to a memorable scene from Trading Places, one of my favorite films and arguably one of the funnier movies of the past thirty years. If you are not familiar with the 1983 film directed by John Landis and starring Dan Aykroyd, Eddie Murphy, Ralph Bellamy, Don Ameche and Jamie Lee Curtis, I would strongly suggest that you rent it or download it on-demand as it is truly hilarious.

The Duke brothers, played by Bellamy and Ameche, are owners of successful commodities brokerage firm in in Philadelphia. Holding opposing views on the issue of nature versus nurture, they make a wager and agree to conduct an experiment switching the lives of two people at opposite sides of the social hierarchy, Aykroyd and Murphy, and observing the results. The storyline often draws comparisons to Mark Twain’s novel The Prince and the Pauper as well as Mozart’s 18th century comic opera The Marriage of Figaro and the music from the opera is used as background in an opening scene in the film.

The specific scene containing the title quote takes place near the end of the film where the heroes’ amateurish attempt at espionage has almost disastrous results. With all of the characters in costume on a Halloween party train, Jamie Lee Cutis enters the sleeping compartment and this conversation ensues:

Let me see, you would be from Austria. Am I right?
No, I am Inga from Sweden.
Sweden? But you’re wearing Lederhosen.
Je, for sure, from Sweden.

Jamie Lee Curtis’ character fails to pull off the masquerade and Dan Aykroyd in blackface falls equally short of success, soon resulting in the groups capture at gunpoint. Although the movie has a happy ending, I believe that this scene has special meaning for the homebuilding industry as it shows that, even with the best intention, lack of professional execution often leads to failure which, in the case of housing, will almost certainly not have a happy ending.

I was retained last year to examine an existing residential development in a mid-Atlantic market area. The developer had continued a successful existing first move-up “subdivision” (the developer’s term) with a new 180 homesite phase and three builders had contracted to purchase the improved sites with the developer providing centralized sales and marketing. Although the previous large development had achieved an average sales rate of eight homes per month in the prior seven years, this new property had sold only twelve homes in the seventeen months they had been opened. The builders were not happy with the results and had pressured the developer, who blamed the slow sales on the economy and market conditions, to pursue an independent examination of the operation and the builders had contributed to the cost.

My evaluation showed that although the homebuilding market had slowed substantially and new housing prices and demand were strongly impacted by the resale market which was full of foreclosures and short sales, new homes were still being sold. However, sales rates enjoyed by the competition were not being obtained in this community due to several reasons including:

1. The location was desirable but virtually built out and with little other new homebuilding activity nearby was fighting the other “hotter” market areas and was required to generate 100% of its own traffic;

2. The property had no identity independent of the prior development which had substantial resale inventory available including many of the same home designs currently being offered as resales at lower prices; Access to the new phase was through the existing community further compounding the problem of visible competition and lack of identity;

3. The homes being offered were of acceptable design but provided nothing new or different to the market;

4. The builders had taken random intermingled sites with no specific unique identity for any of the builders and they were competing head-to-head with virtually the same home designs;

5. The home prices available were limited, offering only an 8% +/- variance from average and satisfying only a portion of one of the market quintiles (the third);

6. The marketing and promotional efforts were limited to a single concept – “an opportunity for a new home in a proven market area” and failed to maximize the e-marketing tools available;

7. Although the sales team appeared to be qualified, they lacked a USP on which to base a stronger sales presentation and close.

My strategic recommendations included specific tactics to adjust all of the four “Ps”, basically creating a brand new community:

PLACE– although the actual location was fixed, the community itself was not. As the property backed to another street, I proposed that we ignore the prior development and create a new entry on this other street. Three homesites were lost for the entry road and new entry statement and the development was renamed with its own identity, retaining the value of the well known existing community (by which the local area was known) by including “at …”.

     To create further differentiation and choice, the new community was further divided into three distinct villages, with the homes in each built by a single builder. No homesites were lost as fortunately the existing sold homes were all located in the prior front of the development, now the back, and with the addition of some landscaping and “village” entry statements, differentiation was achieved. Lots were swapped between the builders and a cul-de-sac located near the entry became the sales and model center.

PRODUCT– Each builder was assigned a specific base price range; the three new price ranges overlapped and now fully filled two quintiles, ranging from the mid-point of the 2nd Quintile to the mid-point of the 4th Quintile, more than doubling the potential market appeal and differentiating the builders’ offerings by price thereby reducing direct competition.

     Each homebuilder was required to design three new homes to be available exclusively within this community for the next twelve months and to provide a professionally merchandised (furnished) model of one of these new homes within the model center. A minimum of one additional inventory (spec) home was also to be provided utilizing a new plan different from the model.

PRICE– The three new home designs by each homebuilder were to be cost-optimized to reflect the fundamental pricing and value changes that had occurred in the market (the average value within the third quintile had fallen in value by $25,000 in the eighteen months that the community had been opened).

     To meet the targeted price points and further differentiate the builders’ product lines, each builder was to create a unique set of standard features appropriate to his price point but all including a reasonably complete set of features and finishes as standard.

PROMOTION – A new web site was recommended, promoting the new community with three separate villages by three of the area’s leading homebuilders in a proven location. An ongoing SEO program was included including an active social media presence on Facebook, Twitter and You Tube. With no close-by competition from which to steal physical traffic, the media budget was increased and realigned with a concentration on e-marketing efforts including affiliate marketing (click-throughs and banner ads) to capture increased prospect traffic on the web.

     Recommended promotional efforts included a PR campaign previewing the new community, a “muddy booter” pre-sale campaign once the new model homes were under construction, a private grand opening preview for Realtors©, local officials, previous visitors and purchasers from the builders’ other communities as well as residents of the adjoining neighborhood, and a weekend-long Grand Opening.

     The sales staff was to be retrained in the USP created by the new homes with the new values and better features, the new community and the new villages. And they were also to be trained to provide the majority of the new social media activities as well as in the new selling skills and tools required to convert web visitors to on-site visitors and then convert on-site visitors (who were now repeat visitors) into purchasers.

I returned to this community last week for a follow-up visit and, while ongoing improvement is always possible, I was pleased to learn that most of the strategic recommendations had been implemented and that 27 sales had been made in the past five months – not too shabby as that time period included the Thanksgiving, Christmas and New Year holidays.

We all need the best intentions but that is just the starting point. More importantly, we also need professional execution to achieve success today and into the future in the homebuilding industry. But that’s just my opinion.

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