Because of the consumer research done by Ladley & Associates, First Place refined the original…
With product and pricing adjusted to align with research findings, this architecturally unique townhome community exceeded its sales goals, with net profits exceeding 18%.
- Sold 54 townhomes in 7 months
- Sold first building homes within 60 days
- Attracted a broader customer base
- Kept architectural interest while reducing finishing costs and prices
- Initially achieved 14% margins, improved to an average margin of 18%
The townhome builder repeated the floorplans in a second location – and enjoyed higher sales rates and net profits.
“The new product vision worked with the specific attributes of this site and allowed us to reach our goals, even in an economic downturn. The research, connecting us to customers, allowed us to keep style and innovation and give buyers what they wanted, and meet our goals.” -Don Barrineau, Division President
A Texas homebuilder buys an award-winning townhome builder and inherits a product approach that is a victim of its own success. With pricy townhomes to sell, increased competition from resales of their past developments in the area, a shrinking income-qualified buyer pool and home designs that limited buyer appeal, the parent company sought innovative solutions.
Consumer research, using a survey and focus groups, allows the builder to adapt product and marketing and reposition for sales and profit goals.
The townhome builder had a single in-town neighborhood-focus with stylish, modern, multi-story townhomes built over time. The location had a walkable neighborhood ambiance and strong appeal.
However, as the builder added more townhomes with increasingly upscale features to the area, sales of new product stalled:
- New product was higher priced, reflecting added features, finishes and appointments
- The target customer, generally a single professional, found the higher prices out of reach
- The townhomes’ ultra-modern architectural design disproportionately attracted male buyers
- New product was in direct competition with robust resales of the builder’s own product
- The townhome builder was not positioned to meet sales volume or profit goals
The builder undertook a comprehensive opportunity study, incorporating both conventional and consumer-focused research methods.
Phase One: Survey-Based Demand and Pricing Study
The first phase of research provided a detailed understanding of the depth of demand. Research analysis showed that a successful townhome offering needed to be below $300,000, and more specifically between $229,990 and $269,990, with home size ranging from 1500 to 1900 square feet.
The survey results provided data for decision-making: Maintain the current price point and sell fewer units or lower the price point significantly and meet the target annual sales goal.
Phase Two: Study the Market, Conduct New Product Vision Focus Groups
The price-point target and location competition called for a unique offering.
A change in style: Townhome designs were tested and refined through customer focus group discussions and a competitive product audit. The revised styling and feature-level appealed to both women and men buyers, which enlarged the pool of potential buyers.
A new price point: A lower price point starting at $229,990 created a better value than competing area townhome resales and put the homes within financial reach of target customers.