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 »

In anticipation of this Halloween as in the past few years, my wife and I again stopped at Costco and picked up cartons of individual packages of Famous Amos cookies.  Apparently these are big hits with the area kids as we seem to get a larger number of “trick or treaters” than our neighbors and several of the children remember us from year to year and make it a point to stop at the home they refer to as the “cookie house”. 

As we were wandering in Costco we were reminiscing about Halloween when we were young.  My wife grew up in Long Island, New York, a neighborhood of single family homes very similar to where we live today where she walked door to door to collect her goodies.  I, on the other hand, grew up on the “South Side” of Chicago, an area of rental apartment buildings, primarily six flats with secured entries, so the process of trick or treating was more challenging as we had to find someone to ring us in.  One year my friend and I “went for the gold”, ringing bells in a seventy-unit high rise apartment building and, to our surprise, someone actually buzzed us in. As few of the other kids in the neighborhood ventured into this building, perhaps deterred by the several signs proclaiming “private property” and “no solicitors allowed”, we hit the jackpot, filing our bags to overflowing.  One resident, an “older woman” as I recall (probably younger than I am today), was truly pleased to see us and had baked huge chocolate cupcakes, the best treat that I have ever received on Halloween.

How different things are today!  Back when we were kids, we walked around the neighborhood into the evening on our own.  Today, parents stand at the sidewalk keeping a watchful eye on their children.  In our day, we accepted anything that was given out without concern for possible safety – the homemade cupcakes were gladly received and were excellent!  Today, only treats in the original manufacturers’ sealed packaging are accepted and those are then carefully inspected by parents to detect possible tampering before being transferred to the children.

The world of homebuilding also is a different place today.  Housing values remain depressed in many markets; the media continue to forecast doom and gloom and consumer sentiment is still uncertain.  Household formation patterns have been stunted, buyer profile segments have changed, employment trends are shifting daily and retirement migration patterns have stalled. Competition has become increasing stronger as the larger regional and national builders have been able to buy distressed land at bargain basement prices and pass those savings on to their buyers to dominate the “price” position in many markets. Read the rest of this entry »