Strategic Marketing – Why Builders Must do Their Homework

 Strategic Marketing: Why Builders Must Do Their Homework [28:30m]: Play Now | Play in Popup | Download

BuilderRadio speaks with Dan Levitan, Levitan & Associates

“‘The economy’s bad and the market’s been down, but projects that are well conceived and well implemented are still selling.”

Dan Levitan is getting excited.  As a strategic consultant to homebuilders and developers, he’s seen the turmoil of the last few years from two different perspectives – his client’s and his own.  And, while it appears that the housing crisis has bottomed out and the recovery has begun in many markets, Levitan is adamant that more builders could recover more quickly if they would look at their market, discern where the market is going and what buyers are really wanting, and plan a strategy the meets market demands.

To make his point, he shares this experience:  “We have one client in a southern state that over the last two years has doubled his market share and substantially increased his sales and profits because he paid attention to the market.  He did his homework.”

Others haven’t fared as well.  Why?  “Other communities are in trouble because the builders simply didn’t take the time to do it right from the beginning.  They didn’t do their market research; they didn’t plan the job to create a unique selling proposition or anything really special.  They’re building the same old product and selling it with salespeople that are not properly trained or motivated, and it’s not selling.  You can’t blame the market entirely for the problems we’re seeing in the industry today.

The good news is that you can fix a great many of the existing jobs that are not moving well, and on a new community you can plan something that has a unique selling proposition, that appeals to the market, that’s targeted to the market – and it will sell!

The housing units that  are going to sell are those that are something different – It’s not the same old product; it’s not in the same community; it’s not lacking features that people want today.  You’re really going to have to do your homework and come up with something special, and then bring it to the market creatively and intelligently.”

Step 1: Prepare a written market strategy.
“Look at the demand factors in the marketplace:  Who are the buyers?  What can they afford?  What’s selling now?  Then, come up with something that satisfies a viable market segment.  It has to have the features that the market wants, and it has to be priced affordably.”

To accomplish this builders will have to make fundamental changes in they way they approach planning and developing new communities, particularly in choosing land and locations.  “You don’t go out and buy a piece of land and then figure out what you can put on it,” he says, “you figure out first what the market wants and then come up with a land residual that allows you to build that product in that location and make a profit.

So, the market strategy is what to build and where to build and how to market it and how to sell it.  And it has to be updated on a regular basis because the market changes every 90 – 120 days.”

The southern builder that was mentioned at the outset has done just that.  He continually analyzes the market and comes up with new products to keep up with changing market demands.  This takes research and planning, but allows him to to introduce new products on a regular basis that are fresh and current and that have a market appeal that virtually eliminates competition, particularly from the existing market.  “They can differentiate themselves from everything else in the market and really make a statement,” says Levitan.

How to research your market.
Levitan offers three ways to acquire the data you need to put together your market strategy:
1.  Hire a professional marketing consultant
2.  Utilize your local network:  Realtors, your sales staff and your ad agency
3.  Do it yourself.

For those that want learn how to conduct your own market research, the NAHB’s Institute of Residential Marketing offers classes and training.  “There are four basic IRM courses,” explains Levitan.  “Course One teaches you how to do the research; Course Two teaches you how to prepare the written strategy; Course Three talks about marketing and merchandising, and Course Four talks about sales management.  Each course is two days long.  So, if you invest eight days of your time you’ll at least get the basic principles down along with a template to use for this process.”  These courses are offered at most NAHB events and can be arranged through your local builders association.

Step 2:  Align Your Team with Your Strategy
“The strategy document, once it’s prepared, is shared with every member of your team.  Whoever is designing your houses has to read the document so that what’s designed is not what the designer or architect likes, but what the market wants.  It’s shared with the land planner so that you create a community and not just another subdivision.  It’s given to the merchandisers so that the model is targeted to the market.  It’s given to the advertising and PR firms and every other person on your team – including the construction people – so that they understand what’s important [to buyers] and what’s not.”

Step 3:  Implement a Dynamic Plan
Okay, so you’ve done your market research, identified a need that is not being adequately served, written a strategy, and now have your entire sales, marketing and construction team on board and ready.  What’s next?

“Find a piece of ground and work with the team to implement that plan.  However, every plan has to be dynamic because the market is going to change constantly.  You can’t get stuck in a rut.  The market is going to move on you, and if you don’t move with it, that’s inertia.  You’ll get left behind.”

Keeping up with the market doesn’t mean that you have to completely redesign your homes every year.  In most cases, slight changes and updates will let you reintroduce new versions of your most popular homes.  So, it’s not the plans themselves that become obsolete, it’s the smaller details – options, technologies, etc.

“You have to watch the trends on a daily basis.  You’ve got to be talking to the sales team, reading the sales reports, and understanding what the customers are saying.  And when you do, you’ve got to be willing to make those changes.”

Planning Now for the Next Wave
Opportunities to build and sell market-relevant homes are all around us.  Families are still having children; children are growing up and forming new families.  Each change creates a need that you can fill if you remain aware of your market, and make sure your market is aware of you.

Again, change is required to keep up.  “Advertising has changed 100% if not more in the past two years.  It used to be that if you had a website you were alive.  Now, if you don’t have your community on Facebook and LinkedIn and Twitter, and all the others, you’re losing buyers.  We’ve sold condos on Craig’s List.  Those are the kinds of things that you’ve got to be looking for.  There are a lot of marketing opportunities that are not only amazingly good, but are also cost effective.”

Getting the Information to Get Started
“For those builders and marketing professionals that have the opportunity to attend IBS, I would suggest that it’s the best money you’ll ever spend to find out what really works today and where the industry and the economy and the markets are going in the future.  You’ve got some of the brightest minds in the business sharing proven strategies, techniques and tactics with you at no charge.”

Aside from that, Levitan lists these sources for current marketing information:

1.  Your real estate broker
2.  Join a Builder 20 group and find out what other builders are doing
3.  The U.S. Census Bureau website (www.census.gov)
4.  Exit Surveys – Survey those people that didn’t buy or that bought from a competitor.
5.  Join the various builder groups on LinkedIn
6.  Use the NAHB’s Expert Hotline – get a free 30-minute consult with an expert
7.  Dan’s blog:  http://DanielLevitan.blogspot.com.  Free marketing tips and advice.

The market is going to recover.  It’s already begun.  Those builders that will lead the way out are those that have done their homework, understand their market, and have a strategy for meeting, even setting, the trends.  Those that don’t will be playing catch up for a long time.

So, what’s your plan?

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Contact Dan Levitan, at http://www.levitanassociates.net

Next Online Coaching Session:

Wednesday, November 4  2:00pm ET
Click Power:  Become the Master of Your Domain
with guest coach, Meredith Oliver

Your website is the central element to your entire marketing.  Is your site working to gather leads, qualify prospects, and convert sales?  Internet marketing specialist Meredith Oliver will share strategies that you can use to create an online sales funnel and increase the effectiveness of your online presence.  Click here to register.