Many economists and industry pundits agree that for the foreseeable future, the housing market will continue to improve. But, there’s no doubt that home builders will still have to navigate fierce competition and deal with cautious buyers.
David Levitan, MIRM, CSP, CMP, and CEO of Levitan & Associates, said that although most housing markets are now performing well (compared to recent years), he has been asked to evaluate several communities across the country that are still not performing up to par.
What he found — almost across the board — was home builders and developers who have been doing business in their markets for years without having conducted any market research or developed a marketing strategy.
“The reason for the lack of sales was crystal clear, and not surprisingly, consistent throughout most of these communities,” he said.
Among the greatest offenses:
- Stale home designs that had not been changed for the past five years or more;
- Product lines that failed to provide a full spread of designs, styles and pricing;
- Less-than-ideal, non-competitive locations;
- Communities built within a short distance of four or more competing builders/developers with almost identical product offerings and more attractive incentives;
- Sales and marketing staff who had no training and minimal management support or supervision over the years;
- Outdated advertising, promotional strategies and budgets (e.g., referencing a 10-year-old budget, creating only minor changes to the company website, making feeble attempts at social media).
Because today’s market conditions and buyers are completely different, he said, leaning on the same old strategies has hindered their ability to grow, prosper and be profitable. To get back on track, Levitan recommends the following five steps:
Step 1: Do your research. For every new community you plan to build, analyze the market and determine the local economy and market conditions, examine site conditions, and investigate current and future competition. Doing this type of analysis helps define the playing field, and from there a realistic sales and marketing strategy for success can be developed, Levitan said.
Ask yourself the following questions: What is the quantifiable demand for the location, design and price? What portion of the demand is already being met? What is happening with the resale market – remember it is an integral component of the demand quotient. Where are the holes in the market?
Step 2: Review your own properties, products, company and brand identity. What are the comparative strengths and weaknesses of your location? How does the marketplace perceive your company? What impact do those perceptions have on your ability to do business? Have you created an identifiable unique selling proposition that is meaningful to the consumer? If not, you are simply another seller of the same product, probably offered at similar or higher prices.
Step 3: Use your research and review or SWOT analysis, to develop housing products that satisfy the needs of the market and are noticeably better in some way than competition.
Step 4: Create and implement a sales and marketing strategy for every new community BEFORE development starts. Use tools that will get your message to your target market in a cost-effective way.
Step 5: Take Step 4 further and create a new sales and marketing strategy that reflects current market conditions for every existing community you have in your portfolio.
While it may take a little time and effort to properly create a development and marketing strategy that will maximize sales and profitability, Levitan believes that the value of doing so is immeasurable.