Bending one ear are the sages of consumer marketing. They make a compelling case: that the essence of a sustainable competitive advantage lies in deciding who you want to serve, understanding what they want, and delivering a value which is distinct and can keep connecting with customers time after time.

Bending the other ear are shareholders. They make a firmer case: that the essence of a sustainable company lies in creating value that rewards capital better than the next company.

Obviously, the best companies succeed in doing both. Toll Brothers is perhaps this industry's most notable example at bringing the benefits of brand positioning to the bottom line. Another is T. W. Lewis, a mid-size builder surviving fierce competition in Phoenix by delivering consistently on a carefully crafted positioning strategy. The story of Tom Lewis and the brand legacy he built is one of several in this special issue report on how builders are tackling brand positioning strategies.

For many home builders, however, building truly distinctive product lines and bottom line returns at the same time isn't as simple as it sounds. One reason is the sheer number of unforeseeable players and events that can alter the outcome of a single land acquisition and development deal -- let alone a portfolio of deals. Builders have learned the hard way that sometimes the best strategy is to keep their options open.

For big builders, like Pulte Homes, that has often meant being able to build homes for every lifestyle, from green fields to gray fields; and across a price point range that would humble even a Procter & Gamble marketing graduate. For smaller builders, like Matzel and Mumford, a K. Hovnanian Company since 1999, that has meant adapting swiftly to New Jersey's virtual moratorium on new construction. Originally known for its higher-end single-family detached homes, the company has recast its business and now focuses primarily on redevelopment and attached home projects.

A review of this year's Builder 100 data suggests more companies are having -- or choosing -- to follow suit. Of the 344,574 homes closed in the U.S. by the Builder 100 in 2002, 35,370 were attached units (excluding condos for sale). The top 10 big builders are no strangers to this side of the market: They built 57 of every 100 of those attached homes.

But looking between the lines: Attached units were up just 11 percent for the top 10 builders over the year before compared to a 17 percent increase in their total U.S. closings. In contrast, attached units built by the next 90 companies on the list jumped 31 percent compared to what the corresponding group built the year before. Some Builder 100 companies, such as Hunt Building of El Paso, Texas, Pasquinelli Construction of Burr Ridge, Ill., and Century Builders Group of Miami, Fla., have already carved out distinctive businesses focused almost exclusively on the attached home market.

In the end, with so many builders in the enviable position of not being able to keep up with demand, the issue of corporate branding and product line positioning may seem like much ado about nothing. But when market begins to slow, as it eventually will, the brand and positioning decisions of today will likely make a big difference to the shareholders of tomorrow.

Wyatt Kash

Builder 100 -- Top 10 Attached Home Builders
2002 U.S. Closings*
Yr. vs. Yr. Change
Builder 100 Rank Company Total Attached % of Total Total Attached
2 Pulte Homes 28,903 4,936 17.1% 26.1% -4.7%
3 Lennar Corp. 27,393 4,657 17.0% 14.6% 29.9%
1 D. R. Horton 31,584 2,843 9.0% 38.7% 51.5%
4 Centex Corp. 24,524 2,825 11.5% 9.2% 15.6%
7 The Ryland Group 13,145 1,813 13.8% 3.6% -23.9%
35 Pasquinelli Construction 2,004 1,798 89.7% 14.6% 26.1%
9 Hovnanian Enterprises 9,514 1,689 17.8% 42.0% -6.7%
40 The Rottlund Co. 1,641 1,319 80.4% 22.1% 48.9%
6 Beazer Homes USA 15,743 1,149 7.8% 1.5% 72.0%
58 Hunt Building Corp. 1.098 1,095 99.7% 27.5% 27.2%
Builder 100 - Top 10 191,829 20,039 10.4% 16.5% 11.0%
Builder 100 - Next 90 152,745 15,331 10.0% -1.8% 31.2%
* Excludes manufactured housing; adjusted for acquisitions
Source: Builder 100; Big Builder analysis