Ryan Homes

INTRODUCTION

Ryan Homes has been building homes for families for over 50 years. Their reputation for award-winning designs and superior customer service has helped build a successful business that now spans over the entire Eastern half of the United States. Ryan Homes' mission statement is below:

Ryan Homes strives to maximize shareholder value in a cyclical industry by emphasizing return on equity and growth in earning per share while providing housing products and mortgage banking services that are consistent with the needs of customers.

Ryan Homes believes that by focusing on the following three areas, the company will be able to continue to be a successful and profitable company.

One-Stop Financing

Ryan Homes has its own in-house mortgage company, NVR Mortgage. By continuing to focus on both the building and financing aspects of home buying Ryan feels it sets itself apart from many other homebuilders in the marketplace. Through the NVR Smart Approval program, Ryan is capable of providing customers with everything they need in the home-buying process from selecting the style of home they want to providing a streamlined mortgage approval process.

Customer Involvement

Ryan Homes encourages the customer to be involved in the entire construction process. They arrange a series of meetings to familiarize the customer with their home. This, in turn, gives the customer a full knowledge of, and confidence in, the features and benefits of their home from the start.

Superior Customer Service

The customer service program is predicated on fairness, timeliness and completeness. The concern with quality construction doesn't stop at the point of sale. Ryan Homes carefully selects the people that build the homes that they sell. To give their customers peace of mind, they make at least two service inspections accompanied by the homeowners. One service inspection is prior to settlement and a second one ten months after settlement.

Ryan Homes stands behind everything they build. Ryan's exceptional 10-year Limited Warranty Program is evidence of their commitment to quality customer service. They promise to be there for their customers, both before and after they purchase. The service program is proactive, sincere and convenient. It's part of the overall concern for customers and helps to explain why more than half of their business is generated through customer referrals.

Objectives

Keeping the mission statement of Ryan Homes in mind, our group will develop a competitive marketing analysis for their new Archer's Rock housing community. This new community is located in Berkeley County, West Virginia. Our group will be focusing on marketing the first phase of the project, which are approximately 100 new single-family homes.

THE RESIDENTIAL CONSTRUCTION INDUSTRY

The construction industry generated 1.4 trillion dollars in sales last year and is one of the largest industries in the United States. Construction is vital to our nation's economy, accounting for approximately 15 percent of the Gross Domestic Product. The construction industry is made up of three primary sectors, non-residential building, residential building, and non-building construction.

The residential construction industry is a 150 billion-dollar industry. There are two main categories within the residential construction industry, single-family units and multi-family units. The table below lists the top ten competitors in the residential construction industry in terms of gross sales. The largest competitor in the industry is Centex Corporation. The table also lists what types of homes each competitor builds.

Top Ten Residential Construction Builders in the U.S.

Company 2004 Gross Sales What they Build

Centex Corp $12,062 EL, MU, AA, VAC

Pulte Homes $11,711 EL, MU, AA

D. R. Horton $11,156 EL, MU, LUX, AA, VAC

Lennar Corp $10,505 EL, MU, LUX, AA

KB Home $7,052 EL, MU, AA

NVR $4,300 EL, MU, LUX, AA

Hovnanian Enterprises $4,160 EL, MU, LUX, AA

Beazer Homes USA $4,009 AS, EL, MU, AA, VAC

MDC Holdings $4,009 EL, MU, AA, VAC

The Ryland Group $3,952 EL, MU

Sales are in millions of dollars.

AS= Affordable/Subsidized

MU=Move-up

AA=Active Adult

EL=Entry Level

LUX=Luxury/Custom

VAC=Vacation/second home

Looking at the table above, Centex, Pulte, and most of the major competitors build a wide variety of homes, which appeal to different types of customers. The large corporations typically build both large and small homes and generally have a more diverse product base than smaller competitors. Many of the smaller competitors in the residential construction industry only build certain types of homes, and thus only compete within certain markets. Most of the smaller competitors typically only operate within a certain area or region. Larger competitors operate on a multi-state or national basis.

The residential construction industry has reported strong sales growth over the last four years. Analysts from the U.S. Department of Commerce expect that growth to continue. The chart below shows the largest sales growth rates for residential construction builders when comparing 2003 to 2004.

Largest Sales Growth Rates

Residential Construction Builders

2003 to 2004

Company Growth Rate

M.D.C. Holdings 37%

Pulte Homes 30%

Hovnanian Enterprises 30%

Beazer Homes 22%

D.R. Horton 21%

KB