THE MARKETING LANDSCAPE IS changing. So is the market, many say. Because the two are closely intertwined, the practice of marketing production homes may well be entering a new era of greater scope, complexity, and sophistication.
So what's ahead for big builder marketing executives? In short, they can expect to have their hands full next year juggling strategic challenges, both immediate and developing. Here are the top seven marketing issues they'll face.
1. The Affordability Problem Although it may not appear to be a marketing issue on the surface, affordability is high on the list of concerns for most marketers. “Land has been and will continue to be the biggest issue,” says Chris Shaxted, executive vice president of Lakewood Homes in Hoffman Estates, Ill. “Second is keeping costs in line as we see commodities and other costs continue to rise.”
Affordability is a complex issue and builders—let alone, marketers—don't have control of all its pieces, concedes Eric Elder, senior vice president of marketing and communications at The Ryland Group in Calabasas, Calif. Interest rates, after all, are the provenance of Alan Greenspan. Still, “The continuation of more creative programs,” is up to the builder, Elder says, such as “how we design our products and in our land plans.”
As an example, Elder cites a popular Ryland model in Las Vegas featuring a one-car garage. “The design allows us to build on a slightly narrower home site and—with a few less boards and nails—make that group of homes a little more affordable,” he says. Moreover, from a marketing standpoint, companies such as Ryland that have their own mortgage operations also have the opportunity to “bring out customized and creative programs and market those as a significant element in the home buying process,” Elder says.
2. The Segmented Market Home buyers now come in more stripes and varieties than ever before. “Having to deal with dramatically stratifying demographics will play a more important role in our marketing,” says Mark Drumm, director of marketing for Hills Communities in Cincinnati, Ohio.
He points to the varying product needs of different ethnic groups, such as for larger homes to accommodate larger families at a particular price point. “I think we're seeing some of that in the move to a ‘bigger box, lower finish' product,” he says. The senior market is stratifying, too, in terms of product and location. “What we do in this segment may be very different from what we've done in the past,” says Drumm.
Burgeoning segmentation makes obsolete some of the ways in which companies have defined and described markets even in the recent past. New buyer groups such as singles and single moms “are becoming power groups in certain areas, along with the obvious emerging markets who have the future of homeowner-ship in their hands,” explains Elder.
Moreover, says Elder, segmentation is not a simple matter of ethnicity, age, and other demographics. “It's no longer OK to look at somebody in demographic terms,” he adds. “You have psychographic terms [and] life stage terms.” Elder's favorite example: The 28-year-old couple living next door to the couple consisting of a 52-year-old male and a 32-year-old female. Both families have a 4-year-old child.
“They have more in common at that point because of their life stage than they might in any demographic or psychographic terms,” says Elder. “That life stage event puts them on a parallel of worrying about schools and safe locations in the neighborhood and amenities for the kids in the community.”
Learn more about markets featured in this article: Los Angeles, CA.