Strategic Residential Marketing

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 »

Driving home from dinner last evening the name “Maynard G. Krebs” popped into my mind.  I have no idea why that occurred but I am assuming (and hoping) that it was simply a neuron misfire due to my age. I have a theory that all of the useless information that I have acquired over the years must feel neglected and every so often a little bit manages to force its way out.  As this happens relatively infrequently, I will assume that my initial diagnosis is correct and not worry about other possible causes.

For those who have not had the opportunity to accumulate as much useless information as have I, Maynard G. Krebs (the G. stood for Walter and was silent) was the “beatnik” sidekick of the title character in the U.S. television sitcom The Many Loves of Dobie Gillis which aired from 1959 to 1963.  The character, portrayed by actor Bob Denver, began as a stereotypical beatnik, with a goatee, “hip” (slang) verbiage, and a generally unkempt appearance, but as the show progressed he evolved into a bohemian free thinker, a prototype of the late-1960s hippie.

While I am fortunate in that my neuron misfires are infrequent short-term occurrences and so far have not caused any noticeable harm, I was recently looking at a mid-Atlantic housing market where it seems to me that every builder, developer and lender simultaneously suffered major long-lasting neuron misfires;  there simply is no other logical explanation for what took place and continues even today.  And while the recent national economic and housing misfortunes certainly visited this market, they did not do even one-fifth of the harm that the homebuilders, developers and lenders did to themselves when their brains apparently malfunctioned.

I have visited hundreds of housing markets across the country but this one is truly unique and, in my opinion, arguably a strong contender for the least professional housing market in the country.  Read the rest of this entry »