Strategic Residential Marketing

Several years ago I decided not to attend a Bee Gees concert. The event was in Miami Beach on New Year’s Eve and the thought of a long drive home late at night with drunks on the road overcame my desire to see a group that I have always greatly enjoyed. Following Maurice’s death in January 2003, the group disbanded and I realized that I had made an error in judgment, missing an opportunity that would never come again, a decision I have regretted for the past ten years.

Last night I had a second chance as Barry Gibb performed his first ever solo concert and it was absolutely wonderful, coming very, very close to making up for my previous mistake. I was fortunate as life seldom gives us second chances and missed opportunities are normally gone forever.

It seems to me that we are missing opportunities every day in the homebuilding industry and those opportunities, once gone, will not return.

I was in a southwestern housing market recently and shopped some of the competition. The majority of new home properties are multi-builder operations – the developer has abdicated responsibility for the sale of the homes and each builder utilizes his or her own general real estate broker for sales, competing head-to-head in the same property. In one development I saw signs for eleven brokers with several of those representing multiple competing homebuilders. There is no on-site presence except for occasional open houses and homes in these developments are sold as if they were resales.

There were a few new home communities with on-site presence, operated by the larger builders. Although I registered at every such sales office, not a single sales representative has followed-up with an email, a phone call or a letter. The sales presentations that I did experience were far less than optimal, even when presented by the two new home representatives that had apparently received some professional training as evidenced by certificates proudly displayed on their walls.

There were so many opportunities for improvement in the sales operations, not only with the sales personnel but also in sales management and supervision, that I was astounded. I realize that new home sales have been slower than desired for the past few years and that many of the sales people and their managers have been through hard times, but I have to believe that many more sales could have been made in this market, as in most others, even in the worst conditions of the past several years, if the entire sales team had simply been performing their jobs properly.

Certainly the housing markets have been in turmoil across the country for the past several years and many markets have seen serious declines in values that pose challenges on the sales floor. Appraisal values may be lacking, financing may be difficult to obtain. But the homebuilding industry has always faced challenges and while different than what now exists we have always found solutions and managed to sell new homes. Read the rest of this entry »

The Art of War is a 2,000 year old Chinese military treatise attributed to Sun Tzu.  Composed of 13 chapters, each of which is devoted to one aspect of warfare, it is considered to be the definitive work on military strategy and tactics of its time.  It has been translated into dozens of languages and is still read today for its military insights.

As a strategist and tactician, I respect and admire the principles of The Art of War as they are applicable to any competitive endeavor or business.  Perhaps the best example of these applications is in the auto industry where the Japanese automakers, virtually non-existent at the end of World War Two, quickly secured the “price” position worldwide through automation and other production efficiencies (plus government subsidies and incentives) at the expense of Ford, GM and Chrysler, They then attacked the quality position with Lexus, Infiniti and Acura soon also securing a major share of that market segment, again primarily at the expense of the American auto industry (Cadillac and Lincoln) while also making inroads on the German auto industry.  But inertia and lack of attention to maintaining a strong defensive position took its toll on the Japanese as the Korean automakers, with Hyundai leading the way, has made substantial inroads into the “price” position and has now also moved into the “value” position.

Following are a few selected quotes from The Art of War which, in my opinion, are especially applicable to homebuilding, along with some specific applications:

Speed is the essence of war. Take advantage of the enemy’s unpreparedness; travel by unexpected routes and strike him where he has taken no precautions.

Extensive research of the market and the competition is essential to creating a USP, a unique selling proposition that is the basis of the homebuilder’s strategy, bringing to the market what the buyers want and can afford and is different from the competition.  Most homebuilders are complacent, with inertia holding them back from making the changes in location, product, design and features and processes that the market demands.

Once you have identified the “hole in the market”, the opportunity that exists waiting to be served, then you must expeditiously provide the solution and bring it to the market while the competition is asleep. Read the rest of this entry »

A recent article in Business Insider had the headline “There’s About To Be A Huge Housing Shortage In The U.S.”.  The author’s premise is that new home inventory has continuously declined over the past four years and as of September there were only 163,000 new houses for sale in the U.S.  I have been making a similar argument for almost two years so it is nice to learn that someone agrees with me.  But even when the markets fully recover and this shortage materializes, not every homebuilder and developer will benefit equally from the new opportunities as not everyone is prepared for success.

It would seem reasonable to me that with housing demand over the past few years having been slower than desired for our industry, there would have been ample time available for every homebuilder and developer to have analyzed and fine-tuned every aspect of their operations so that their companies are operating at optimized efficiency and, with strategic plans in hand, are ready for success.  But as I travel around the country looking at the local markets that is not what I see and I have to wonder – is anyone listening, not just to me but to any of the industry experts and pundits who have made their knowledge widely available though industry seminars, lectures and educational programs?  Or instead, when the markets regain strength, will these builders and developers revert to their stale, trite, inertia-laden and ineffective operations that helped lead them into the troubles of the past several years? Read the rest of this entry »