Segmentation and targeting within Lang varies depending on the maturity of the region and the prevailing market conditions. A mature region, benefiting from a strong market, directs its activities towards purchasers who are seeking to upsize. Whilst the most profitable, this is often the first market to falter in times of economic uncertainty.
A young region, which has yet to establish a market share, noticeably concentrates on the lower end of the market. This tends to be the most fluid and resilient to economic downturn.
In this respect Lang employs a differentiated strategy whereby the market mix is blended to meet both customer and market needs rather than a undifferentiated strategy which seeks to meet the needs of all. For example we do not provide rented, bungalows or social housing as core products.
Our position in the market also varies on a geographical basis. Lang as yet does not benefit from national coverage, for example we do not build in Scotland, the north east or inside the M25 motorway.
Lang traditionally used volume (of units produced) or financial measures (turnover, profit, gearing etc) as benchmarks against which to ascertain its marketing position. This is changing slowly as the values move towards an emphasis on customer focus and the need for quality.
Market Information & Strategy
In the exchange process Lang are attempting to offer more than just bricks and mortar to a purchaser, we seek to offer a lifestyle. In return our customers offer us money, which if the profit margin is acceptable will satisfy our shareholders and the City, allowing the company to continue to operate.
However, we should as a priority be seeking customer loyalty. This in turn will allow us to fulfil our mission statement:
“Lang will become the number one choice of homebuyers by focusing the experience of its highly trained staff on anticipating and satisfying customer needs with top quality homes and exceptional levels of service”
Marketing is represented at Plc Board level. The Group Marketing Director is principally responsible for strategic marketing and research/innovation on a group wide basis. Unusually the Marketing Department does not report directly to the Group Marketing Director, but to the Homes Division Managing Director.
A Marketing Manager oversees the Marketing Department which is based at Head Office in Cheltenham. The company also employs a Public Relations Officer, who is primarily concerned with improving the City’s perception of Lang.
Marketing within each of the 8 regions falls under the jurisdiction of the Regional Sales Director. Each region has a Customer Relations Manager, responsible for after sales care, but whose remit also includes continuous feedback with customers. This assists in identifying regular defects which in turn affect customer satisfaction. The intention is to continuously improve the build process to meet and exceed customer expectation.
The Marketing Department in Cheltenham is principally concerned with communication and branding. The protection and enhancement of our image is detailed in our marketing handbook. Close liaison exists with the regional sales teams in relation to sales literature and site boards.
The department is increasingly involved with customer feedback as a means of influencing the strategy, with specific focus on product.
Since 1998 two forms of customer survey have been initiated. Firstly ‘The Homeowners Survey’, comprising a questionnaire sent to existing and potential customers requesting details of their wants and needs for future home purchases. An average 32% return rate has been achieved by incentivising replies with prize draws, free gifts etc.
The second customer survey is undertaken by NOP on our behalf. This survey involves two telephone interviews with Lang home owners. The first 6 to 8 weeks after legal completion, the second 6 months later. Response rates average 52%.
The information is collated into a Customer Satisfaction Index. Whilst the company target is 75% satisfaction, the current group average is 65.8%
While analysis of the above results does take place, few of the points raised by purchasers are investigated fully. The information collated should be the basis for all major and minor improvements to our products and service. This is a critical area for improvement within Lang’s marketing strategy.
Lang’s marketing strategy is fully integrated with the business plan. Each region produces a 3 year plan, which is then amalgamated into the group document. Areas identified:
• The market segment.
• Land requirements.
• Development of efficient and attractive house types.
• Responding to customer and planners requirements.
• Introduction of system build technologies.
• Expansion into new geographical areas.
• The need for Lang to be the customers ‘number one choice’.
• Social and political risk.
Product
As stated, Lang’s core product is new homes. Whilst the construction methods employed in producing housing has changed little in the last 100 years, the design has altered greatly to satisfy changing customer expectation, legislation regarding planning and product efficiencies.
Historically following a sustaining technology approach (Christensen 1997). Making incremental changes to internal layout, utilising new ancillary products as they become mainstream and changing external treatments as fashion dictates. This long term development has in the past suited the product due to it’s apparent endless life cycle.
While an accepted, even admired approach to defending the market share (Doyle 2002), only radical product innovation will offer substantial growth opportunity.
Recognising this Lang have embarked on developing pre-manufactured wall panels and system build approach’s to construction. In accordance with this disruptive technology (Christensen 1997) the resulting product is superior in many ways, however performs badly in the areas of cost and durability during construction.
With the above, Lang are at the forefront of house building innovation, this impetuous must be maintained to realise the full benefits.
Price
New homes account for 6% of all UK house purchases. Our pricing policy is therefore led by the larger second hand housing market. By monitoring this market we set basic pounds per square foot prices.
Lang demonstrates effective pricing policy in maximising the difference between the base figure and actual price obtained. Shortfalls in available housing, customer aspirations, economic conditions and perceived economic value (EVC), (Doyle 2001) benefit current pricing.
EVC is the main contributor to the difference between second hand prices and new. Security of investment is the customers prime concern, Lang imply quality through high pricing, so attracting purchasers.
By increased specification on desirable items i.e. kitchen units, offering value for money, but option selling of the more mundane i.e. plug sockets, allows Lang to attract purchasers, then maximise the spend.
This combination of bundle and option pricing (Doyle 2001) has over the last 12 months increased profits by 14.7%. The opportunity for a customer to customise their new home should be encouraged. Increasing options and therefore profit should be pursued.
Distribution
Location, for a discerning house buyer the most important consideration. As the product is built, demonstrated, sold and used in the same place, location is of vital importance.
Site position impacts on the product, price and promotion, all being tailored to planning regulations.
Given the complex nature, the need for personal contact and high prices charged Lang choose to supply direct to customers. This additionally gives Lang the cost advantages of direct selling (Jobber 2001).
The sales/distribution process has changed little in the last 20 years, the recognised process may become obsolete if not updated. Changes in customer needs, communication and purchasing innovation are increasingly shaping the market place.
A new multichannel marketing system (Doyle 2002) should be developed to maximise sales potential.
Promotion
The promotion of Lang Plc. is tied to the promotion of our products. The aim is recognition of the brand values though name/logo, by public and corporate sectors.
Corporate promotion is managed by the Head Office Marketing Department. Strictly controlling the identity with prescriptive designs for all areas i.e. typeface/logo, site sales areas, uniforms and website.
It is the Marketing Departments responsibility to ensure acknowledgment in industry competitions and trade publications. Recognition as a progressive innovative company is vital to Lang’s corporate image.
Product promotion is controlled regionally and can be defined by following Doyles (2002) communication strategy.
Inform. Employ half page newspaper adverts with simple graphics and few words. Roadside advertising of the name/logo only.
Persuade. Detailed editorials of specific product or site. Media coverage of new site launch’s and industry awards.
Image creation. Utilise product, layout and presentation of sale area, including show homes to create an aspiration setting. The creation of Lang’s differential advantage (Doyle 2002).
Reinforcement. Literature, brochures etc, designed to re-assure potential and existing owners of the benefits of purchase.
Process
Heterogeneity most accurately describes the problems facing Lang both with product and service.
Predominately a craft based industry, house building is prone to large swings in product quality. No two houses are identical, the quality of a property rests upon individuals, who’s performance is unpredictable.
The service element suffers also. Defending ‘industry standards’ to a customer who believes their home is substandard alienates both parties. Relatively poor quality product/service and an ever increasing customer expectation has left Lang looking to set and control rather than meet or exceed.
The Strategic Planning Institute found that business’s running this way, on average annually lost 2% market share, re-gaining only 1% on sales (Buzzell & Gale 1987).
Rightly, Lang are re-examining the way it produce’s and service’s the product. Quality improvement plans and development of system build houses must be expanded to ensure growth.
People
Lang recognises that both customer and employee satisfaction are linked. Commitment to the customer is documented in the mission statement and core values. Commitment to the employees is stated with the same importance, in the same publications.
Opportunities created under the ‘Investors In People’ umbrella have impacted on employees professional and personal development. Identifying that people create the value and are the most important asset, development of personnel, environment and remuneration is continuous.
Doyle & Cook (1985) stated that proper training can boost a person’s productivity by 20% and boost profit margins by much more. This then allows increased reward leading to employee satisfaction.
Entry into the 2002 ‘Sunday Times Top 100 Companies to Work For’ is independent confirmation of employee satisfaction.
Physical Evidence
Lang conduct customer satisfaction surveys via phone, post and focus groups. Results have been positive regarding house design, specification and site layout, but increasingly critical of finishing quality and after sales care.
It is recognised that continual customer feedback is vital to any business wishing to grow (Doyle 2002, Jobber 2001, Brassington & Pettitt 2000). In the last 15 months, Lang have failed to obtain any meaningful customer generated information.
Fault rectification analysis, 3rd party site inspections and quality improvement plans are presently used as focus for the business/marketing plan. While improving certain areas of the business, these fail to identify what the customer wants and whether we are providing it.
Conclusions
Lang understand and employ various marketing concepts. The differentiated strategy followed identifies and targets specific customer groups. Products and service are tailored to the market place.
The brand is strong, benefiting a good reputation both with customers and financial organisations.
However this is at a time of relative market buoyancy. Should there be a downturn, shortfalls in product quality, service and marketing channels may significantly affect market share.
Recommendations
Lang has a relatively low market share (3.4%) with clear scope for expansion in existing and new geographical areas. This growth can be accelerated by implementing the following:
• Continue to develop innovative construction methods, that offer Lang and the customer marked improvements of the traditionally built product. Market those benefits so developing a new market, with Lang as the leader.
• Make customer feedback the basis for product and service improvement. Respond to this information quickly with flexibility in design and specification, maximising customer choice.
• Develop multichannel marketing, to include web, agents and direct mailings.
References
