Page 4: Pricing strategy
Bryant has set itself the target of achieving a 5-10% premium on its sales values. To achieve this objective, its production and sales activities are all geared towards emphasising the four core values of:
- location - being in the most desired spots
- individuality – providing properties with individual characters
- density - having fewer houses per acre than rival producers
- specification - producing homes which have a wider range of value adding features than those provided by rival house builders.
From identifying a new site to selling a house
Bryant must make sure it provides the right homes in the right place at the right time. For this to happen, there must be careful integration between three groups of people who are responsible for researching the housing market:
- land buyers are responsible for identifying land for immediate usage and also for creating a long-term land bank. The land buyer is responsible for negotiating the best possible deals and will often use estate agents to determine the availability of development land. They are supported by the technical department who provide detailed studies of local plans. They also spend time with local authorities discussing demographic trends (changes in population) and local opportunities.
- sales managers work closely with land buyers and advise them on the feasibility of the potential market. They will research locations to ascertain the target market, future rate of sale, sales values, the extent of competition etc. The sales manager is ultimately responsible for selling houses and therefore must get the price right.
- estate agents work closely with both of the above and will sell the houses for Bryant. They have the local knowledge that Bryant needs and will be best placed to advise on pricing decisions. Some estate agents are land specialists and act as intermediaries in the sale of land. Estate agents provide weekly and monthly updates on market research, for example, informing Bryant what the second-hand market is doing and what competitors are doing.
Bryant’s target customers fit into the commonly used market research classifications of ABC1 - i.e. better off consumers with higher incomes. This group of customers is best placed to pay premium prices. Indeed in purchasing a capital good as important as housing, it would be surprising if ABC1 consumers were to purchase property that did not have a premium price reflecting premium quality.