Saturday, July 23, 2011

What to pay attention to, supply or demand?

We took a drive this Saturday afternoon around some new home communities in North County San Diego, just to see what's happening. The first take away was there is something happening, in the way of new construction, which is great. One community had what appeared to be 8-10 specs under construction by two separate national builders. And this same community had a full selection of model homes to shop.

The supply seemed to be solid here. But it didn't jive with the demand at least our research, nationwide, and that of other trusted researchers have been identifying for years.

In all our travels we saw NO single-story models or specs. We saw one banner sign at Old Creek Ranch saying, "ask us about our NEW single story". But it was nowhere to be seen. We did see a few (literally less than five) completed single story homes but the elevations and architecture were seriously underwhelming. If that's my single story option, I wouldn't buy it either. Yet all the research we do, in markets from coast-to-coast shows buyers of all family types and life stages saying they would clearly prefer single story homes. The only buyer group where this is not the case in an overwhelming way is the mature family (those with teens they likely want some space from).

So here's the question... if builders keep building the same two story homes, that's all there is to buy. And the buying of them doesn't mean that's what the buyers want. It just means that's all we are offering them. I get it that some of these communities are land plans that are just emerging from the horrific housing recession with lot sizes dug into the bedrock, and not large enough to support innovative single story living.

Maybe we just need to get this inventory moved on through the pipeline and exhaust this supply, before we see a response to true buyer demand and take the product innovation risk to create a new, innovative product buyers say they want. For now, I am taking with a huge grain of salt any stats that tell me most buyers are still buying two story homes, 2,500 - 3,900sf ... because that's all I can see we are offering them right now.

Saturday, July 16, 2011

Service or a commodity?

When the next greatest thing is lined up to replace the thing you just bought, it would seem that brands based on service and particularly good, or compelling customer service have a sustainable competitive advantage over those that offer product-based features that can be copied or improved upon.

So what about those "service" businesses that have a low cost of entry (whether price, or emotional) and arguably offer very similar products and services as the next guy? How do they sustain customer commitment when they don't constantly release the newest greatest version? These businesses occupy a space that is service-based for sure, but if not careful, the "product" they offer can be thought to be very much the same as one down the street at the next place. Here's what I mean ...

While it would be tough to get most of us to change hair stylists (high emotional price of entry) what about nail salons or coffee shops? Sure they offer products of course, but their business model is based on offering a certain customer service. I have my favorite nail place now (those who know me from previous lives are laughing out loud hysterically now), and when I've been rushed for time and not near my nail place, I've gone to another, thinking, what could the difference really be right? Same deal with coffee places - I have my favorite weekend Starbucks. There are two others within a one mile radius, and on those occasions when it's just been more convenient to go to one of them, it's just not the same.

So what is it about these largely commoditized service businesses that makes the difference? It's the memory of previous interactions and exchanges we've shared that creates a common knowledge. It's that the women at the nail salon know I am from Canada and ask about when my next trip home will be, then proceed to tell me the latest about their cousins who live there, or the road trip they once took up to Vancouver from San Diego, 20 hours long. It's the woman at my Starbucks who remembers my drink and when I divert from it, asks me why and weaves it into a fun conversation with a vibe all her own.

It's connection. I will drive for that. I will put off my nails for a week rather than take a risk, on what truly is a low cost item, that my experience won't be what I want. Customer service, and a true, authentic, meaningful connection to the customer can turn even commoditized purchases into competitive advantage.

Wednesday, July 13, 2011

Marketing today: the best of both sides of the brain

Today was one of those days where I used every inch of my brain at work. The left side spent a chunk of time analyzing home sales absorption pace, calculating cost increases and thinking about projecting inflation rates. And it hurt. The right side earned its keep today envisioning the customer experience we will create in a new community, and thinking about the power of the subtlety of words chosen for the planning principles that will drive the development and creation of the same community.

As I sat in traffic driving home I thought back over the path of my life and how I ended up here in a senior marketing role. The only non-medical person in a family of well-accomplished doctors (all with PhDs or very focused specialties) ... I have my four year undergrad ... I never quite fit the family mold. But as marketers go, I pride myself on being one of the lucky ones who covets the balance between expansive "how might we" creativity and an almost forensic love of the analytical detail.

So, I may not be able to operate on an eye to save someone's sight, or save a trauma patient in the ER, or manage highly complex drug therapies for a rare auto-immune disease. That much is for sure.

But I can thank whomever and whatever got me here for the awesome opportunity being a marketer today provides to test the creative and analytical sides of my brain. It's a precious balance, and one that keeps each day interesting.

Tuesday, July 12, 2011

Casual Gaming. Big Escape. Bigger Money.

News broke today that Electronic Arts is acquiring the mobile game creator, PopCap, for $650M, and additional stock and performance bonus options that take the price up to $1.2B.

Wow. Big money for the mobile games, casual entertainment space. Bejeweled is one of PopCap's most popular assets, and with this acquisition it joins Angry Birds (from Chillingo) under EA's growing ownership.

Whether waiting at the doctor's office, or for your carpool buddy to join you on the ride home, or when attending a boring speaker at a conference, or waiting to pick the kids up at school, there's nothing casual about casual mobile games. They are ubiquitous and obviously fill a void. Space. Time. Easy escape. Whatever this void is, the value continues to increase.

What happened in days of old before handheld devices created a captive market for new casual games? I remember the very rare occasions I took an airplane trip as a kid, and buying word search and crossword puzzle books to pass the time. or MAD comics, and the Archie Digest. Same deal. Different time. Different media. And I would bet a whole lot less profit.

Find a void to fill.
Create a product that sticks.
And sell to the highest bidder. Then enjoy the ride until another innovation comes up to fill that space we humans need to constantly fill up with stuff like Bejeweled that exists to just give us a break.

Saturday, July 9, 2011

Gen Y Purchase Preferences = A Real Shift in Desires

Saw this recent data dump on the car purchases made in 2009 and 2010 by Gen Y buyers and though not one to take the "fear" side of the argument, in that decision makers in Detroit need to fear for their future, the parallels to what we see in housing preferences are solid.

Gen Y prefers smaller, less expensive (and that translates in more cases than not into foreign) cars. In our customer research on home shoppers in America we see the same thing - they tell us they want smaller houses, less expensive houses, but houses that are all about style and living the way they want to live.

Who's out there NOT saying to themselves, "When will it come back to the good old days? When will this economic shift get behind us and we can get back to building bigger homes, more of this and that? We know this is just a cycle and it will swing around again."

Those leaders and industries who are NOT looking in the rear view mirror and longing for a tired and irrelevant past will benefit from this forever-changed world. What a cool opportunity. Bring it on!