Similar to Atlanta, the Charlotte, N.C., market is one characterized by favorable job growth, solid population gains, and cut-throat builder competition. The fierce rivalries have created a home sales landscape littered with short-term numbers—boosting gimmicks such as free plasma TVs. And for the local K. Hovnanian division, that incentives-driven environment bruised its bottom line and made closing in on NVR's market share lead seem near impossible. NVR controlled 6.8 percent of the market in 2004 with 1,288 closings, while K. Hovnanian had 2.4 percent of the market with 456 homes, according to Hanley Wood Market Intelligence.
K. Hovnanian's division marketing manager Stephanie Michaelis Powell describes the market, “When one [top 10] builder offers $20,000 off, all the other nine builders offer $20,000 off, and now nobody's making money.”
Knowing that to survive in the market the builder had to find a way to differentiate its promotions, the division plugged into Elberson Partners' creative outlet. The full-service marketing firm's task was to develop an umbrella marketing campaign that was “something more than dangling X amount of free upgrades,” says Zach Grove, a spokesperson for Elberson.
The challenge was not only finding an original idea but finding one that would allow K. Hovnanian to tailor the program to its different product lines. Although the company currently builds under a single name, up until roughly a year ago, it was building with three sub-brands: K. Hovnanian, Westminster Homes, and Fortis Homes. Each targeted different home buyers, and that needed to be maintained with the marketing initiative.
In the span of a month, Elberson turned around a promotion that packaged incentives not as freebies but as a selection of delicious morsels to be savored by the home buyer. Using a menu theme, home buyers are given a pamphlet that asks them to choose two “appetizers,” one “entrée,” and two “desserts.” Each menu selection represents an incentive offer that fits a specific product.
Besides allowing for customized incentives, the initiative creates a better sense of value than just offering a price cut. The menu became about “how we can tag that dollar figure to what [home buyers] actually get in the house,” says Michaelis Powell. Not to mention that it makes for a fun and unforgettable experience—two keys to customer satisfaction.
Learn more about markets featured in this article: Charlotte, NC.