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Comunidad Pulte New Market Opportunitites for Pulte Homes

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					Comunidad Pulte
 New Market Opportunities
 for Pulte Homes,
 America’s Largest Homebuilder




 A Project for
 Strategic Planning Workshop
 IIT Institute of Design | Spring 2006
 Advisor: Professor Vijay Kumar


 Joshua Kaplan
 Christine Kim
 David McGaw
 Waewwan Sitthisathainchai
                            Comunidad PultE




                      0.1   Executive Summary

                            pulte Homes is uniquely positioned to respond to the
                            needs of the underserved Latino real estate market, and
                            could earn more than $2 billion a year by being
                            the first to offer a compelling, culturally-appropriate,
                            and integrated real estate buying experience to Latinos.




                            Background and overview                       in by providing integrated products and
                            Pulte homes, founded in 1952, has become      services.
                            the nation’s largest homebuilder, with
                            2005 revenues of $14.69 billion.However,      Targeting the Latino market, in addition to
                            Pulte’s competitors are close behind. More-   its current efforts, would give Pulte:
                            over, mortgage interest rates are rising,     » First-mover advantage in an under-
                            and home sales are falling.                      served, rapidly growing market of 40
                                                                             million people
                            Using innovation planning methods de-         » The benefits of viral marketing in a
                            veloped at the Institute of Design, we have      tightly-knit community
                            analyzed Pulte Homes and its competitors,     » Diversification in a time of industry con-
                            the homebuilding industry, and a poten-          solidation
                            tial market target. Drawing insights based
                            on comparative analytic tools, we gener-      We believe by entering Latino market with
                            ated new concepts and systemized them         an integrated offering, Pulte stands to profit
                            into targeted innovations that offer Pulte    more than $2 billion each year, after the
                            strategic recommendations for this new        strategy is fully implemented.
                            market.

                            opportunity
                            Latino homeownership in the U.S. lags
                            nearly 30% behind that of other Ameri-
                            cans. Our research shows that Latinos
                            have not been offered homeownership
                            opportunities that are both culturally and
                            economically relevant. This present an
                            opportunity for Pulte Homes to innovate




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                                  Comunidad PultE




Opportunity Map
                                                                                                     Integrated Offering
Many companies provide
single or vertically-integrated
homeownership offerings to                                                  Pulte
the general population, and                                                                                      Lennar

some focus on single offerings                                      Habitat for Humanity
                                                                                                               Centex
to the Latino population. But
none provides an integrated                                   KB Homes
                                                                                             DR Horton
offering to Latinos.              Non-                                                                                                                                                      Latino
                                  specific                                                                                            Fannie Mae                                            Target
                                  Target                                            RE/MAX
                                                                                                                        Wells Fargo
                                                                WallHomes                    Bank of America                                          Freddie Mac

                                                       International Bank                                                                                               Latino Home Loans
                                                                                     Chicago Housing Authority
                                                                                                                                                   Hispanic Business.com

                                                             Lending Tree                    Loan USA                                                                           Telemundo
                                                                                                                                                     PactoLatino
                                                     Small, local                                                                                         Small, local homebuilders in
                                                     homebuilder
                                                                                                                   Single                                      Latino community

                                                                                                                  offering




                         0.2      the opportunity Space
                                  Latinos are both the fastest-growing ethnic
                                  minority in the United States, and the
                                  group with one of the lowest home owner-
                                  ship rates.

                                  tHe opportunity Map
                                  The framework shown above defines
                                  prospective areas in the homebuilding
                                  industry in the U.S. Currently, there is no
                                  homebuilder who offers homebuilding ser-
                                  vices catered for the Latino market in the
                                  U.S. This presents an outstanding oppor-
                                  tunity for Pulte to fill the gap—and to earn
                                  significant profits.




Institute of Design               Strategic Design Workshop | Spring 2006                                                                                                                            
Solution Space             HomeBUyIng: U.S. latInoS, WItH PUlte
                                             Comunidad PultE




     Comunidad Pulte Strategy Overview Pulte
                Latino | Comunidad
     Pulte adaps its offerings to support the unique needs of the Latino community.
                            5 Years                               10 Years                          11–12 Years                      20+ Years
      Immigrates to U.S.    Pulte provides financial              Pulte connects the family with    A non-agressive sales process    Move-up and remodeling
                            education and planning, helping       current Pulte homeowners          embraces family decision         services are offered as the
                            the family save for a new home.       who are Latino, helping them      making, treats customers with    family grows.
                                                                  through the process. They         respect
                                                                  even get to know their future
                                                                  neighbors before they move in.




                                        Financial                          Community                         Culturally-Relevant            PultePlus
                                        advising                          empowerment                         Communications




                              0.            Strategic Recommendation overview
                           ComU nI dad PUlte                                                                                                                   23
                                             We propose that Pulte undertake a series                         We have developed two strategic ap-
                                             of initiatives to respond to the unique                          proaches, depending on how immigra-
                                             needs of the Latino community, becoming                          tion policy reform and migration patterns
                                             the first national homebuilder to offer an                       unfold in the coming years. We call them
                                             integrated home buying experience.                               Strategy Verde and Strategy Rojo.

                                                                                            Recommendations   Strategy rojo
                                             Low Population Growth:                                           High Population Growth
                                                                            +
                                                                           ++
                                             75 million U.S. Latinos by 2050                                  60% million U.S. Latinos by 2050
                                                                                                              155 more Latinos, concentrated in key
                           Recommendations   Strategy Verde                                                   markets, merits a higher-risk strategy.

                             +               Anticipating 75 million U.S. Latinos by 2050:                                               Cultural Relevance

                                                                               Cultural Relevance                                        Preparation &
                                                                                                                                         Education

                                                                               Preparation &                                             Affordability
                                             Strategy Verde                    Education                      Strategy rojo

                                                                                                                                         Home/Town
                                                                               Affordability                                             Design

                                                                                                                                         Urbanismo

                                                                                                              Com U n I dad PU lte                                      33




                                             ComUn Idad PU lte                                          29




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                        Comunidad PultE




                        contentS



                      1	 The	Homebuilding	Industry
                        1.1    Homebuilding in america 8
                        1.2    eras and trends in u.S. real estate 9
                        1.3    near- to Mid-term outlook 12
                        1.4    comparing real estate industry Segments 13



                      2	 Pulte	Homes
                        2.1    overview of pulte Homes 15
                        2.2    History 16
                        2.3    offerings and core competencies 17
                        2.4    innovations 19
                        2.5    value web 25
                        2.6    pulte and the Home Buying process 25
                        2.7    pulte’s plans for the Future 28



                      3	 Pulte’s	Competitors
                        3.1    competitor overview and revenues 30
                        3.2    competitor core competencies 31



                      4	 Latinos	in	the	U.S.
                        4.1    what is a “Latino”? 36
                        4.2    Latino core cultural characteristics 37
                        4.3    Latino urban planning issues 40
                        4.4    Latino user types 41
                        4.5    Sensing trends: Latinos & real estate 43
                        4.6    Latinos and geography 46
                        4.7    Latino Household wealth 46
                        4.8    Latinos and the american dream 48
                        4.9    native country real estate experience 50
                        4.10   Buying a Home: u.S. Latino timeline 53
                        4.11   real estate offerings for Latinos 55
                        4.12   the impact of immigration reform 57




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                        Comunidad PultE




                        contentS (continued)



                      5	 Insight	Analysis	and	Concept	Generation
                        5.1    From insights to design principles 61
                        5.2    preliminary design principle clulstering 62
                        5.3    critical design requirements 64
                        5.4    concept generation workshop 65
                        5.5    concept evaluation and System Building 67



                      6	 Strategic	Recommendations
                        6.1    comunidad pulte 69
                        6.2    Low population growth Scenario 68
                               Initiative 1: Cultural Relevance
                               Initiative 2: Preparation and Education
                               Initiative 3: Affordable Homes
                        6.3    High population growth Scenario 77
                               Initiative 4: Home/Town Design
                               Initiative 5: Urbanismo
                        6.4    implementation roadmap and requirements 82
                        6.5    outcomes 85
                        6.6    Financial projections 86
                        6.7    next Steps 89



                      	 Appendix
                               History of pulte Homes




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      Comunidad PultE




      The Homebuilding
      Industry




sub   title
                                              Comunidad PultE

                                              20%                                                                            10%


Homebuilding
Industry Size
vs.
                                              15%                                                                            8%
Interest Rates
The homebuilding industry
grew at tremendous rates in
the late 1990s, but growth
rates have been declining—                                                                             uncertainty cone
and dropped sharply in 2005.                  10%                                                                            6%
Prime mortgage rates, mean-
while, have been declining
less, and actually increased in
2003 (though still at a historic
low).
                                                5%                                                                           4%
                                                         2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
                                                                                                        (forecasted)




                                   1.1        Homebuilding in america
                                                 20
                                              Homebuilding is a nearly $550 billion an-       Market SegMentation
                                              nual business in the United States, thanks      The homebuilding industry comprises
                                              largely to tremendous demand fueled by          of all residential construction including
                                              low interest rates and a strong economy.        apartment blocks, housing estates and in-
                                                 15
                                              Profits for the largest national homebuild-     dividual home developments, prefabricat-
                                              ing companies have recently risen as much       ed houses and semi-fixed manufactured
                                              as 30%, year to year. These historically high   homes. Privately owned firms account for
                                              profits have allowed builders to invest in      nearly two-thirds of the total.
                                              improved processes and to build brand
                                              recognition.                                    The biggest homebuilders account for
                                                 10                                           nearly 25% of new home construction—
                                              However, homebuilding is heavily depen-         twice what it was in the 1980s. Economic
                                              dent on cyclical factors in the economy,        downturns then resulted in consolidation
                                              and has thus experienced highs and lows         which has led to more efficient opera-
Datamonitor, “Homebuilding in the United
                                              over the years—and another downturn is          tions—though possibly with a trade-off in
States,” June 2005. Business Source
Premier via EBSCOhost, Galvin Library, IIT,   expected in 2006. No wonder that home-          sensitivity and responsiveness to users.
January 2006.                                       5
                                              building stocks are currently trading at just
 2006 2007 2008 2009                                    2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
                                              six times 2006 projected earnings—com-
Interest rates from Freddie Mac, (http://
www.freddiemac.com/pmms/pmms30.               pared with sixteen times earnings for the
htm).                                         stock market at large.




Institute of Design                           Strategic Design Workshop | Spring 2006                                                     
                                            Comunidad PultE




                                   1.2      Eras and trends in u.S. Real Estate

                                            HiStoricaL eventS                                 governMent reguLationS
                                            Many significant historical events affected       Government regulations also played a
                                            the development of the real estate market,        significant role in the development of the
                                            and are shown in the chart on the follow-         real estate market. Some of the significant
                                            ing page.                                         regulations include:

                                            1861       The Civil War results in significant   1862    The Homestead Act makes it
                                                       population shifts and changes of               possible for a citizen to claim 160
                                                       lifestyle—especially as returning              acres, speeding settlement of the
                                                       veterans resettle or become pio-               West.
                                                       neers.                                 1920s   First formal mortgages
                                            1920s      The fast-paced stock market and        1934    National Housing Act created the
                                                       prosperous lifestyle of the “Roar-             first “fixed rate mortgages”
                                                       ing Twenties” fuel real estate—        1986    The Tax Reform Act removed capi-
                                                       home ownership rates rise.                     tal gains tax from sale
                                            1929       The stock market crashed, result-      2003    Interest rate dropped under 6% for
                                                       ing in the Great Depression                    30 year fixed mortgages
                                            1944       The Serviceman’s Readjustment
                                                       Act, or “G.I. Bill” provided govern-   productS and ServiceS
                                                       ment loan guarantees for return-       Important real estate products and ser-
                                                       ing war veterans, ushering in one      vices developments include:
                                                       of the most significant creations
                                                       of middle-class wealth in the 20th     1879    The first gated communities were
                                                       century                                        developed in St. Louis
                                            1950s      Post World War II housing boom         1900    Pre-fab housing was developed by
                                            1960       The development of the Interstate              Sears & Roebuck
                                                       Highway System enabled suburbs         1958    The largest planned community
                                                       to develop                                     was created in Levittown, Pa.
                                            1973       The Mideast Oil Crisis raises ques-    1973    RE/MAX is founded in Denver,
                                                       tions about suburban sprawl as                 shifting power to salespeople
Lacayo, R. “The Time 100: Builders and
Titans: William Levitt,” Time, Dec. 7,                 the cost of driving spirals.           1998    Microsoft’s “Home Advisor” web-
1998.                                       Late       Recession hits the homebuilding                site launched
                                            1980s      and real estate industry hard.         2004    The Internet streamlines lending
Vault.com, History of the Real Estate
Industry, online at http://www.vault.       Late       The dot-com boom drives the
com/nr/newsmain.jsp?nr_page=3&ch_           1990s      general economy higher, spurring       Buyer deMograpHicS
id=259&article_id=18187121.                            new suburb creation, and a home        Real estate buyer demographics have also
RapidImmigration.com, US Immigration
                                                       construction bonanza.                  changed over the years. In the beginning,
History, online at http://www.rapidimmi-                                                      the first settlers were the pioneers.
gration.com/usa/1_eng_immigration_his-
tory.html.
                                                                                              1880s   Four million Italian immigrants ar-
Weiss, M. The Rise of the Community                                                                   rived in the U.S. due to a troubled
Builders: The American Real Estate Indus-                                                             economy in Italy
try and Urban Land Planning (Bethesda:
                                                                                              1959–   Many Cuban and Puerto Ricans
Beard Books), 2002; synopsis online at
http://www.beardbooks.com/the_rise_of_                                                                em-
the_community_builders.html.




Institute of Design                         Strategic Design Workshop | Spring 2006                                                         
                                                                                  Comunidad Pulte
Institute of Design




                                          Real Estate Era Analysis
Strategic Design Workshop | Spring 2006




                                                                                                                                                                                                        Comunidad PultE
                                                          1800s           1900               1930                1960                         1970                1990               2000

                                          Interest Rate                                                                               20

                                                                                                                                      15

                                                                                                                                      10

                                                                                                                                          5

                                                                                                                                          0


                                          Significant     1861
                                                          Civil War
                                                                          “Roaring
                                                                          Twenties”
                                                                                             Stock
                                                                                             Market
                                                                                                            World            Interstate
                                                                                                                             Highway
                                                                                                                                              Oil Crisis
                                                                                                                                              Recession
                                                                                                                                                                  Dot-com boom       Terrorism
                                                                                                            War II
                                          Events                          prosperity fuels   crash;                          System
                                                                          real estate        The Great
                                                                                             Depression



                                          Government &    1862
                                                          Homestead Act
                                                                          First formal
                                                                          mortgages
                                                                                             National Housing
                                                                                             Act, “Fixed-Rate”
                                                                                                                 G.I. Bill                    Tax Reform Act:
                                                                                                                                              Capital Gains tax
                                                                                                                                                                                     Interest Rates
                                                                                                                                                                                     drop below 6%
                                          Financial                                          mortgages                                        removed




                                          Products &      First gated
                                                          communities
                                                                          Pre-fab housing
                                                                          from Sears
                                                                                                                 Levittown,
                                                                                                                 Pa. planned
                                                                                                                                              RE/MAX founded,
                                                                                                                                              shifts power to
                                                                                                                                                                  Microsoft “Home
                                                                                                                                                                  Advisor” website
                                                                                                                                                                                     Internet lending
                                          Services                                                               community                    salespeople




                                          Buyers          Settlers &
                                                          Pioneers
                                                                          European
                                                                          immigrants
                                                                                                                 Returning G.I.s              Cuban refugees                         Overcrowding in
                                                                                                                                                                                     Hispanic areas




                                          Experience      Self-Made                                                                                                                        Empowered
10
                      Comunidad PultE




                      1966       migrated to the U.S. due to Cas-    are a host of services that cater to people
                                 tro’s Revolution                    seeking home ownership. Houses are no
                      2000s      Overcrowding of Hispanic popula-    longer built by the owner’s bare hands.
                                 tion in urban areas                 Other services help buyers to find, finance,
                                                                     and acquire a home. The Internet has
                      over-arcHing trend                             further enhanced real estate empower-
                      There has been a general shift in experi-      ment, giving the buyer more information
                      ence from Self-Made, during the early          and services than ever available to help
                      stages of real estate market development.      the achieve home ownership in the quick-
                      Land owners built their own homes and          est, easiest, and most informed manner
                      farmed their own land. They were allowed       to date. Where as once a buyer had to find
                      to do as they pleased with the land, includ-   and manage land, sequester materials,
                      ing selling off parcels for other to build     and construct a home, now buyers merely
                      homes. This created the basis for the real     enroll the services offered to them at every
                      estate market as it has been for most of       step of the home buying journey.
                      the 20th century.

                      Today’s real estate world is entirely dif-
                      ferent, as people are Empowered. There




Institute of Design   Strategic Design Workshop | Spring 2006                                                  11
                                              Comunidad PultE




                                   1.        near- to mid-term outlook

                                              Recent housing demand, driven largely by       Homebuilding industry
                                              low interest rates, has provided the indus-    will decline 8% in 2006
                                              try with annual growth rates of 14% in the
                                              2000–2004 period. While continued growth       interest rates will rise to
                                              is expected by many analysts, it will be       6.7% by december 2006
                                              at a much lower rate—perhaps an annual
                                              growth rate of 6.6%. While this is still ex-   new housing starts will
                                              pected to be stronger than in other global     decline 10% from 2005
                                              markets, it represents a significant change
                                              from how the industry has operated in the      —Key forecasts by the National Association of Homebuilders
                                              recent past.

                                              Additional uncertainties lie ahead: the
                                              cost of oil, now at record highs, has a        » Constructing on land closer to urban
                                              major impact on the homebuilding indus-          cores—at a higher initial acquisition
                                              try, because of the significant impact of        costs, with potential legacy environmen-
                                              transportation costs on building materials,      tal issues, and less desirable neighbor-
                                              and the role of petrochemicals in some of        hood cachet, or
                                              those materials—notably asphalt, which         » Developing self-contained communities
                                              new home builders provide in construct-          that have more centrally-located ameni-
                                              ing roads for their communities, unlike          ties, such as stores, recreation and com-
                                              builders creating one home at a time in an       munity amenities, not all of which can
                                              established neighborhood.                        be sold directly to purchasers.

                                              But is is the cost of gas that is the larg-    Immigration reform (to be discussed in
                                              est concern. Increasing personal trans-        Section 4.12) may also have significant
                                              portation costs make the idea of living in     mid- to long-term impact on U.S. popu-
                                              a distant, brand-new suburb much less          lation statistics, presenting a range of
                                              appealing. Homebuilders may be forced in       uncertainties in the needs of various kinds
                                              two directions:                                of homes.




Datamonitor, “Homebuilding in the United
States,” June 2005. Business Source
Premier via EBSCOhost, Galvin Library, IIT,
January 2006.


National Association of Home Builders,
April 28, 2006 press release (Online
at http://www.nahb.org/news_details.
aspx?newsID=2486).




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                                  Comunidad PultE




Strategy Canvas
This diagram uses Doblin’s




                                   Needs Improvement Average Innovative




                                                                                                                                                                                                                Needs Improvement Average Innovative
Ten Innovation Types to com-
pare the relative levels of in-
novation in different segments
of the real estate industry.




                                  Business Networks Enabling Core      Product                                                          Product          Service         Channel          Brand         Customer
                                   Model      and    Process Processes Perfor-                                                          System                                                          Experience
                                           Alliances                   mance
                                  How the firm                             How the firm   How the firm   How the firm    How the firm   How the firm     How the firm    How the firm    How the firm How customers
                                  makes money                              joins forces   supports its   creates and designs its core   links and/or    provides value     gets its     communicates feel when they
                                                                            with other   core processes add value to its  offerings       provides a     to customers    offerings to    its offerings   interact with
                                                                          companies for and workers        offerings                       platform     and consumers      market.                     the firm and its
                                                                          mutual benefit                                                 for multiple     beyond and                                       offerings
                                                                                                                                          products.        around its
                                                                                                                                                           products.


                                                                             Developer (Homebuilder)
                                                                             Realtor
                                                                             Lender
                                                                             Mortgage Broker
                                                                             Rental




                         1.      Comparing Real Estate industry Segments
                                  The strategy canvas looks at five differ-                                                             and relatively few customer experience
                                  ent real estate industry segments, each                                                               innovations. Homebuilders focus on strong
                                  involved in the home buying process: the                                                              core process innovations while lenders
                                  home builder, realtor, lender, mortgage                                                               focus on superior product performance
                                  broker, and apartment rental company.                                                                 and channel innovations. There is a clear
                                  Using Doblin, Inc.’s “Ten Types of Innova-                                                            opportunity for all market segments to
                                  tion” model, the degree of innovation in                                                              improve their product systems, service,
                                  different key business areas were com-                                                                brand, and customer experience.
                                  pared.
                                                                                                                                        Pulte’s own innovations are evaluated on
                                  We found that most industries involved                                                                the Strategy Canvas in Section 2.4.
                                  in the home buying process have very few
                                  product system and brand innovations,




Institute of Design               Strategic Design Workshop | Spring 2006                                                                                                                                                        1
      Comunidad PultE




      Pulte Homes




sub   title
                                                   Comunidad PultE




Pulte Revenues                                             $15.0

› 2005 net income
  was $1.49 billion—                                       $12.5
  an increase of 51%
  over 2004                                                $10.0
› Financial service                           (Billions)
  makes up 1% of                                            $7.5
  total revenue—Pulte
  Mortgage is a mar-
  keting expense, not                                       $5.0
  a profit center.
                                                            $2.5


                                                              0
                                                                   1996 1997 1998 1999 2000 2001 2002 2003 2004 2005




                                   2.1             overview of Pulte Homes
                                                   Pulte Homes, founded in 1950, has grown        ing consisted of 99.1% of the total revenues
                                                   to be the largest homebuilder in the U.S.      with a net profit of 1.49 billion. Financial
                                                   Since its founding, it has constructed         services consisted of 1% of revenues, with
                                                   nearly 450,000 homes—and ten percent of        an increase of 42% over 2004.
                                                   those were built just in 2005. With almost
                                                   16,000 employees and operations in 54          Investors have seen the value of their Pulte
                                                   markets, Pulte is strongest in single-family   holdings increase by more than 200% from
                                                   homes and active adult communities.            2002 to 2005.

                                                   In 2005, Pulte for the sixth time garnered     As of October, 2005, Pulte had a $8.9 billion
                                                   the most awards of any builder in J.D. Pow-    inventory of land and unsold homes—higher
                                                   ers and Associates’ annual New Home-           than preferable, but not unexpected.
                                                   Builder Customer Satisfaction Survey.  ™

                                                   iMpreSSive FinanciaL
Datamonitor, “Pulte Homes, Inc. Company
                                                   perForMance
Profile,” March 2005. Business Source
Premier via EBSCOhost, Galvin Library, IIT.        In 2005, Pulte Homes recorded revenue
January 2006.                                      of $14.9 billion, an increase of 27% from
                                                   2004. Increased revenues are attributed to
Kerwin, K., “A New Blueprint At Pulte
Homes” October 3, 2005, Business Week,
                                                   higher sales volumes from improved pric-
Issue 3953.                                        ing in the domestic segment. Homebuild-




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                                      Comunidad PultE




                               2.2    History

                                      Pulte Homes has been in business since          users have very well-defined needs. It also
                                      1950 when Bill Pulte built his first house      presents an opportunity to make an addi-
                                      in Detroit and sold it for $10,000. For the     tional sale to an existing customer as their
                                      next eight years, the he continued building     lifestyle changes. In 2001, Pulte completed
                                      homes in the metropolitan Detroit area,         a merger with Del Webb, a respected name
                                      along the way incorporating the business        in active adult communities.
                                      as William J. Pulte, Inc., in 1956. In 1959,
                                      Bill Pulte introduced plans for Pulte’s first   Today, is ranked #181 on the FORTUNE 500
                                      subdivision, Concord Green in Bloomfield        list and #12 on Business Week’s list of the
                                      Township, Mich., where the homes sold           Top 50 Best Performing Companies.
                                      for $29,000.
                                                                                      Latin aMerican ventureS
                                      Vertical market integration began in 1972       In the late 1990s, Pulte began building
                                      when Pulte established the ICM Mortgage         homes in Puerto Rico and Mexico. One ef-
                                      Corporation to offer convenient financ-         fort, in Nuevo Laredo, was a joint venture
                                      ing and competitive mortgage rates to           with Mexican home builder Grupo Condak
                                      its homebuyers. Later renamed Pulte             and the Mexican government’s infonavit
                                      Mortgage, the division does not bring in a      worker housing agency, which produced
                                      significant portion of the firm’s revenues.     500 homes for a Sony maquiladora. Pulte
                                      However, by being able to handle financing      also entered Argentina’s rocky real estate
                                      for its housing customers, Pulte makes the      market, building 70 high-end single-family
                                      buying process easier and simpler—thus          homes in the suburbs surrounding Buenos
                                      selling more homes.                             Aires.

                                      In 1988, Pulte acquired five Texas-based        But by the end of 2005, both the Mexico
                                      thrift institutions, which were subse-          and Argentina ventures were sold. Pub-
                                      quently merged to form First Heights Bank,      licly-available information does not reveal
                                      a federal savings bank based in Houston.        the full context of the business decision,
                                      Accusations were leveled against the bank’s     but it is reasonable to assume a primary
                                      lending practices, and regulators soon          factor was economic instability—including
                                      made ongoing operations difficult. First        currency devaluations and wildly fluctuat-
                                      Heights Bank was sold in 2005. It is not        ing exchange rates, making profits impos-
                                      clear whether this experience has soured        sible to predict. Pulte claimed the ending
                                      the firm on pursuing other kinds of finan-      of overseas operations (with the exception
                                      cial services integration with its core hous-   of those in Puerto Rico, which operate in
                                      ing business.                                   dollars) would help it focus on core opera-
                                                                                      tions in the U.S. Some of the institutional
                                      Active adult communities were a profit-         expertise exercised in managing opera-
Pulte Homes website, www.pulte.com.   able extension of the housing line, start-      tions and sales in Argentina and Mexico
                                      ing in 1994. Targeting adults aged 55 and       could be invaluable as Pulte considers add-
Pulte Homes, 2004 Annual Report.
                                      older, these communities are profitable         ing a U.S. Latino market focus.
Pulte Homes, 2005 Annual Report.      because the sales process is very focused:




Institute of Design                   Strategic Design Workshop | Spring 2006                                                   16
                                              Comunidad PultE




                                  2.         offerings and Core Competencies

                                              Pulte’s primary offering is new homes,         build homes in pieces and assemble them
                                              supported by land acquisition, home de-        on-site. Through the efficient manufactur-
                                              sign, construction, and financing divisions.   ing of Pulte Sciences, Pulte can erect an
                                              Four main core competencies, shown in          enclosed shell of a home in five days. In
                                              the diagram on the following page, support     addition, Pulte has developed an advanced
                                              these activities:                              supply chain management.
                                              » Land Development
                                              » Spending Capital                             MergerS and acquiSitionS;
                                              » Operational Efficiency                       partnerSHipS
                                              » Mergers & Acquisitions and Partnerships      Pulte has successfully merged with com-
                                                                                             panies for growth and market share. Its
                                              Land deveLopMent                               merger with Del Webb allowed Pulte to
                                              Pulte’s land development includes entitle-     expand to the growing active adult popula-
                                              ment and development of certain land           tion segment. Through the acquisition of
                                              positions for sale to other homebuilders,      DiVosta, Pulte obtained new intellectual
                                              retail, and commercial establishments.         property for manufacturing. And through
                                              Pulte earns revenues from the develop-         the acquisition of five banks in Texas,
                                              ment of homes on land purchased as             Pulte was able to vertically integrate by
                                              well as from the sale of land acquired. To     offering mortgage banking services to its
                                              prepare for any economic climate, Pulte        home buyers. Pulte has also partnered
                                              has also developed a robust land pipeline.     with GE to supply Pulte’s developments
                                              Many customers have signed up to have          with in-home appliances.
                                              Pulte homes built for a future date. Pulte
                                              constantly analyzes land positions to en-      It is noteworthy that Pulte has not devel-
                                              sure the most effective use of its capital.    oped a core competency in sales or de-
                                                                                             sign—both of which could be important to
                                              Spending capitaL                               entering the Latino market.
                                              Pulte has significant spending capital
                                              because it maintains a strict 40% debt-
                                              to-capital ratio to prevent putting stress
                                              on their balance sheet. Pulte adheres to
                                              stringent underwriting criteria and prac-
                                              tices conservative operating, financial,
                                              and reporting practices. Pulte’s access to
                                              spending capital enables them to invest in
                                              new innovations.
                                              operationaL eFFiciency
Datamonitor, “Pulte Homes, Inc. Company       Pulte’s strongest core competency is its
Profile,” March 2005. Business Source         operational efficiency. Through the acqui-
Premier via EBSCOhost, Galvin Library, IIT,
                                              sition of DiVosta, Pulte was able to gain a
January 2006.
                                              fast build cycle capacity. DiVosta delivered
Pulte Homes website, www.pulte.com.           an industry-leading 47-day build cycle.
                                              Pulte also uses component-owned manu-
Pulte Homes, 2004 Annual Report.
                                              facturing techniques to create operational
Pulte Homes, 2005 Annual Report.              efficiencies. This technique allows Pulte to




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                                          Offering Structure
                                          &                                                                              Pulte Homes
                                          Core Competencies
                                                                                        Homebuilding                                                   Mortgage Banking
                                          Pulte’s main offerings are sup-
                                          ported by four core competen-                                                                          Products:
                                          cies.                                    Land Acquisition and Development                              Mortgage Loans
                                                     support                                                                                     Refinancing
                                                     flow                                     Home Design
Strategic Design Workshop | Spring 2006




                                                                                                                                                                                       Comunidad PultE
                                          Notably, Home Design is
                                                                                                         Construction
                                          unsupported by a core com-
                                          petency. Home Sales is only
                                          partially supported by Del                                                  Home Sales       Products:
                                          Webb innovations.                                                                            Semi-custom homes
                                                                                                                                       Single-family detached homes
                                                                                                                                       Duplexes
                                                                                                                                       Townhouses
                                                                                                                                       Condominiums
                                                                                                                                       Active adult communities




                                           Land                              Operational                        M&As,                                 Spending Capital
                                           Development                       Efficiency                         Partnerships
                                           » Includes buying and de-         » An industry-leading 47-day       » Successful mergers add              » Pulte maintains a strictly
                                             veloping land positions for       build cycle.                       growth and market share—              40% debt-to-capital ratio to
                                             sale to other homebuild-        » Component-owned manu-              for example, Del Webb and             prevent putting stress on
                                             ers, retail, and commercial       facturing techniques deliver       the active adult market seg-          their balance sheet.
                                             establishments.                   home modules for assembly          ment.                               » Access to capital allows
                                           » Profits from land sales add       on-site.                         » New intellectual property,            them to invest in new in-
                                             to revenues.                    » Advanced supply chain              in homebuilding efficiency,           novations.
                                           » A robust land pipeline pre-       management ensures ma-             resulted from acquisition of        » Stringent underwriting
                                             pares Pulte for any economic      terials arrive when & where        DiVosta.                              criteria and conservative
                                             climate.                          needed.                          » A partnership with GE sup-            operating, financial, and
                                           » Land positions constantly       » Pulte can erect an enclosed        plies Pulte’s developments            reporting practices keep the
                                             re-evaluated to ensure effec-     shell of a home in five days.      with in-home appliances.              firm healthy.
                                             tive use of capital.
1
                            Comunidad PultE




                      2.   innovations

                            Residential home building have constantly         store migrated to the big box, eager to
                            innovated. In 1900, the Sears, Roebuck, &         fill their trucks and trunks with lumber,
                            Co. mail order catalog offered the first pre-     tools, appliances and gardening supplies,
                            fabricated home kit-of-parts. However, it         all from one convenient location.
                            was not until the 1950s that home building      » Sun City Active Adult Community. Cre-
                            innovations began to change the industry.         ated in Arizona by Del Webb, Sun City
                            The end of World War II brought soldiers          was the first Active Adult community
                            home to their wives to start families. The        catering to people age 55 and up.
                            Serviceman’s Readjustment Act, known
                            popularly as the G.I. Bill, enabled tens of     1970s
                            thousands of people to purchase a home.         » Manufacturing Engineering Building
                            This in turn created an immediate hous-           Methods. Pioneered by DiVosta Homes in
                            ing shortage. With the completion of the          Florida, these methods turned the once
                            National Interstate Highway System com-           craft-like process of building a home
                            bined with the growing need for affordable        and applied Manufacturing Engineering
                            single-family homes, the suburbs were             theory home building.
                            born and the residential home industry          » RE/MAX Real Estate Agent Service.
                            began to flourish.                                Prompted by their dissatisfaction with
                                                                              the way real estate business was con-
                            1950s                                             ducted, RE/MAX shifted the balance of
                            » Levittown. The realized dream of William        power from broker to agent, offering
                              Levitt, Levittown was the first modern          agents maximum compensation, ad-
                              version of a suburban community, as             vanced support services and the free-
                              we know them today. As reaction to the          dom they need to succeed.
                              post war housing shortage, Levittown
                              was built and the suburbs grew from           1980s
                              there.                                        » 47 Day Build Cycle. A process innovation
                            » Lightframed Construction. A building            achieved by DiVosta Homes, the 47 day
                              technique created by Sanford Industries,        build cycle was the industry low and
                              based around structural members, usu-           soon became the standard by which all
                              ally called studs, which provide a stable       home builders measured themselves
                              frame to which interior and exterior wall       against.
                              coverings are attached                        » Everything Included. An initiative created
                            » Underground Power Lines. A building             by Lennar where they add thousands
                              technique created by Centex that en-            of dollars in upgrades already included
                              abled power lines to run underground,           in the price, allowing them to give the
                              creating a safer and more efficient             homebuyer everything needed in an
                              method of connecting homes to the               upgraded home at no extra cost.
                              energy grid.
                                                                            1990s
                            1960s                                           » Built Solid Construction Process. A multi-
                            » Lowe’s Building Supply Store. Lowe’s            step Customer Care and home build-
                              signaled the rise of one-stop retail store      ing process that involves three main
                              for builders and homeowners alike. The          steps: 1) use reinforced steel and poured
                              crowds at the town square hardware              concrete construction, 2) construction




Institute of Design         Strategic Design Workshop | Spring 2006                                                    1
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                                           Innovation Timeline, Residential Real Estate Industry
                                           While the industry as a whole has flourished in the Postwar era, Pulte is a clear leader.




                                                               1950s                     1960s                    1970s                       1980s                       1990s                        2000s
                                                                                                                  Manufacturing Engineering   47 Day Build Cycle          “Built Solid” Construction
                                                     process


                                                                                                                  Building Model ■ DiVosta    ■ DiVosta                   Process ■ DiVosta
Strategic Design Workshop | Spring 2006




                                                                                                                                                                                                                                    Comunidad PultE
                                          Industry




                                                                                         Lowes Building Supply    RE/MAX Real Estate          “Everything Included” ■
                                                                                         Store ■ Lowes            Agent Services ■ RE/MAX     Lennar
                                                     service




                                                               Lightframe Roofs ■        Sun City, Active Adult                                                           Super Value Homes ■          “Path” Concept Homes
                                                     product




                                                               Sanford Industries        Community ■ Del Webb                                                             Lennar                       ■ HUD
                                                               LevitTown ■ Levitt
                                                               Underground Power Lines
                                                               Building Model ■ Centex




                                                                                                                                              Pulte University            System for Facilitating      Pulte Home Sciences
                                                     process




                                                                                                                                                                          Home Construction and
                                                                                                                                                                          Sales                        Regional Distribution
                                                                                                                                                                                                       Centers
                                                                                                                                                                          Component Home
                                                                                                                                                                          Manufacturing                Poured Concrete Forms
                                                                                                                                                                                                       Construction and Sales

                                                                                         7 Step Customer Care     ICM Mortgage Co.            Wholesale Building Supply   Home Sales Concierge
                                          Pulte




                                                                                         Process                                              Co.
                                                     service




                                                                                                                                                                          Pulte Protection Plan
                                                                                                                                              First Heights Bank
                                                                                                                                                                          Direct to Customer Sales



                                                                                                                  Bonus Space                                             Accessible Water             Precast Concrete Wall
                                                     product




                                                                                                                                                                          Management System
                                                                                                                  Quadrominium                                                                         Structural Insulated Panel
                                                                                                                                                                          Energy Efficient Home
                                                                                                                  14ft Wide Townhouse                                     Milestone                    Engineered Floors
                                                                                                                                                                                                       Management System



                                                                                         1998: Acquisition of DiVosta                         2001: Merger with Del Webb
                                                                                         By acquiring DiVosta, Pulte took their               Merging with Del Webb allowed Pulte
                                                                                         industry-low “47 day build cycle” and                to grow its market share and develop
                                                                                         permeated that knowledge throughout                  robust capabilities to provide offerings
                                                                                         the company at large                                 to the active adult customer segment.
20
                      Comunidad PultE




                        method is an efficient production line      1960s
                        process with rigorous quality control,      » Seven Step Customer Care Process. Build-
                        3) people are trained full-time DiVosta       ing an ongoing relationship with today’s
                        specialists.                                  homebuyers takes understanding. With
                      » Super Value Homes. Created by Lennar,         the seven step process, Pulte de-mysti-
                        Super Value Homes are designed specifi-       fied the daunting tasking of building
                        cally for first time home buyers and are      and purchasing a new home by creating
                        a home that is well-designed, well-built,     a customer management service that
                        and well within the first time buyers         shepherd buyers through the entire
                        price range.                                  process.

                      2000s                                         1970s
                      » PATH Concept Home. The PATH Con-            » Establishment of IMC Mortgage Company.
                        cept Home is an initiative to develop         The formation of a mortgage arm began
                        high-quality, affordable homes that are       Pulte’s movement towards vertical
                        easily adaptable to changing lifestyles       integration. This provided Pulte with a
                        and increasing technological advances.        new revenue stream that came from the
                        Innovations include flexible floor plans      financing side of the residential building
                        that accommodate family changes, cus-         home industry.
                        tomizable designs that give the home        » Bonus Space. Making a new home afford-
                        the quality and curb appeal of a cus-         able without sacrificing square footage
                        tom-built house without the high cost,        drove the Bonus Space innovation. An
                        and improved production methods that          unfinished room would be built into a
                        speed construction and enhance long-          new home, giving customers a lowered
                        term durability.                              cost while still allowing them to have
                                                                      room to grow once they had the money
                                                                      to finish the space.
                      puLte innovationS                             » Quadrominium & 14 ft. Wide Town House.
                      Pulte Homes has proven to be the indus-         These were new, cost-efficient, innova-
                      try leader in home building innovation.         tive designs with special appeal for the
                      Pulte’s pursuit of innovation has stretched     baby boomer market.
                      throughout their history and has set the
                      standard for the residential home build-      1980s
                      ing industry. Pulte’s innovations range       » Pulte University. Established to train
                      from revolutionary building processes and       entry-level construction personal in the
                      product solutions to progressive financial      Pulte methods of home building.
                      and customer management services. Some        » Wholesale Building Supply Company.
                      of their most valuable innovations have         Instead of buying their materials from
                      come by way of mergers and acquisition          other suppliers, Pulte established its own
                      with other companies, most notably with         materials supply company. This further
                      DiVosta Homes and Del Webb.                     integrated their operation vertically and
                                                                      gave them another revenue stream by
                      Notable Pulte innovations include:              selling building materials to other home-
                                                                      builders.




Institute of Design   Strategic Design Workshop | Spring 2006                                                 21
                      Comunidad PultE




                      » Establishment of First Heights Bank.        2000s
                        Further enhancement of the Mortgage         » Pulte Home Sciences. Revolutionary home
                        financing arm of their business, Pulte        manufacturing technique where home
                        acquired five Texas banks and formed its      parts are computer-made, providing a
                        own loan operation.                           level of precision never before reached
                                                                      in residential home building. Also
                      1990s                                           helped to speed up the on-site construc-
                      » Component Home Manufacturing. A pro-          tion timeline to a new industry low of 47
                        cess that allowed Pulte to speed up con-      days.
                        struction time and reduce on-site waste     » Regional Distribution Centers. Further
                        by manufacturing parts of the home and        pushing to lower the home construction
                        shipping them to the build site.              time, Pulte created Regional Distribution
                      » Home Sales and Construction System.           Centers, allowing them to get materials
                        An internal management process that           to building sites more quickly. This also
                        streamlined the sales and building of         saved on the cost of building a home and
                        new homes.                                    was more energy efficient.
                      » Home Sales Concièrge. A customer man-       » Form System for Poured Concrete. A
                        agement service that gave each and            manufacturing process innovation that
                        every Pulte homebuyer a point person to       allowed workers to pour concrete more
                        contact throughout the buy and build of       easily and create the Precast Concrete
                        their new home.                               Wall system.
                      » Pulte Protection Plan. Launched a ten-      » Precast Concrete Wall System. Product
                        year insured warranty package offered         innovation that allowed Pulte to en-
                        to all Pulte homebuyers, furthering their     hance the manufactured home system
                        vertical integration initiative.              by creating foundation walls that could
                      » Direct to Customer Sales. Home sales          be shipped to work sites, lowering build
                        channel that lets customers work di-          cycle time and creating less waste on-
                        rectly with Pulte, bypassing the need for     site.
                        real estate agents.                         » Structural Insulated Panels. Product
                      » Accessible Water Management System. A         innovation that merged the structural
                        product innovation that manages all the       elements of a wall and the insulation
                        water system within a house and makes         elements of a home. These innovations
                        it easy to service in the event that a        also helped to lower build cycle time and
                        problem arises.                               reduce on-site waste.
                      » Energy Efficient Home Milestone. Due        » Engineered Floors. Product innovation
                        to manufacturing and construction             that combined the structural elements
                        techniques, material specs, and home          of a home with floor treatments such as
                        designs, Pulte became the nations leader      tile and hard wood. These products are
                        in energy efficient homes and energy ef-      part of a system designed to make as-
                        ficient home building.                        sembly quicker and easier.
                      » Acquisition of DiVosta Homes. By acquir-    » Merger with Del Webb. Merging with
                        ing DiVosta, Pulte took gained access         Del Webb made Pulte the largest home
                        to DiVosta’s industry-low “47 day build       builder in the country, and also gave
                        cycle” and spread that knowledge              them access to rapidly growing and
                        throughout the company.




Institute of Design   Strategic Design Workshop | Spring 2006                                                22
                      Comunidad PultE




                        highly lucrative Active Adult Communi-      concLuSionS
                        ties segment of the residential market.     This quick survey of the innovation history
                                                                    of the homebuilding industry, and of Pulte
                      puLte innovationS on tHe                      Homes, shows the dramatic way small
                      Strategy canvaS                               improvements in design, operations, and
                      Doblin, Inc., has developed the “Ten Types    marketing techniques can raise the profit-
                      of Innovation” model, which examines          ability of the entire sector. Pulte can partic-
                      what kind of innovations a company or         ularly be proud of the scope and depth of
                      industry excels at. Shown on the follow-      its innovations.
                      ing page, Pulte’s Strategy Canvas reflects
                      significant innovations in all areas except   Building on the foundation of these in-
                      Brand, channel, and core processes. We        novations, Pulte should be able to exercise
                      also note that some of the user experi-       the same level of ingenuity and perspicac-
                      ence innovations may have limited appli-      ity in entering the Latino market. Just as
                      cation beyond the mainstream American         Pulte acquired DiVosta and Del Webb to
                      culture—that is, they may not fully ad-       bring certain innovations in-house, it may
                      dress all the User Experience issues faced    find it expedient to find firms and organi-
                      by Latino customers.                          zations whose Latino strengths it can tap
                                                                    into, either by acquisition or partnership.




Institute of Design   Strategic Design Workshop | Spring 2006                                                    2
Institute of Design
Strategic Design Workshop | Spring 2006




                                                                                                                                                                                                       Comunidad PultE
                                          Pulte Innovations on the Strategy Canvas
                                          No significant Brand innovations are shown; Core Process and Channel Innovations are also areas of opportunity.




                                          Finance                           Processes                       Offerings                                          Delivery

                                          Business          Network         Enabling       Core             Product       Product           Service            Channel         Brand   User
                                          Model                             Processes      Processes        Performance   Systems                                                      Experience

                                          Wholesale         Joint venture   Regional       Pulte Home       14-ft wide    Form system       ICM Mortgage       Direct to               Home sales
                                          building          with GM         distribution   Sciences (PHS)   townhouse     for poured        Company            customer home           concièrge
                                          supply                            centers                                       concrete                             sales
                                          company           Partnership                                     Quadro-                         Pulte Protection                           Seven-step
                                                            with GE         Component                       minium        Accessible        Plan                                       customer care
                                          First Heights                     home manu-                                    water                                                        process
                                          Bank                              facturing                       Bonus space   management
                                                                                                                          system                                                       System for
                                          Tight financial                   Pulte                           Energy-                                                                    facilitating
                                          discipline                        University                      efficient     Precast                                                      home
                                                                                                            home          concrete wall                                                construction
                                                                                                            milestone     system                                                       and sales

                                                                                                                          Engineered
                                                                                                                          floors

                                                                                                                          Structural
                                                                                                                          insulated panel
                                                                                                                          assembly
2
                                Comunidad PultE




Pulte Value Web                                                                                                                                                                External
                                                                                                                                        Pulte
                                  Lawyer                          Sales                                      Designer
                                                                                                                                       Supplier                                Suppliers
Pulte has created a complex




                                                                                    In
                                              Ad




                                                                                    fo



                                                                                              fo
network of interactions that




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                                                  ice




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                                                     ,F




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                                                       or




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                                                                                                                                      Materials
                                                                                                                          In
works together efficiently to




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produce and sell homes at




                                                                                                                                                                     In
peak efficiency.                                   $                                                                                                              Components
                                                                                                               Home                    General                                  Manu-
                                   Bank                           Buyer
                                                                                                             Concièrge                Contractor                               facturers
                                                  Fees                                         Info                           Info                                  Info




                                                                       Commission




                                                                                                                         Ha
                                                              Loan$




                                                                                                                          nd




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                                               $




                                                               Personal
                                                                Broker
                                                                                                               Pulte
                                                                                                              Lender                  H


                                                                                                                          fo
                                                                                                                         In
                                                                                                                                                                    Pulte entity
                                                                                                                                                                    Non-Pulte entity
                                                                                                              Inspec-
                                                                                                                tor                                                 Exchange inside Pulte
                                                                                                                                                                    Exchange outside Pulte




                         2.    Pulte Value Web
                                This diagram shows a value web of the                                                    Pulte’s Home Concièrge is a noteworthy
                                home buying process for customers of                                                     innovation which dramatically simplifies
                                Pulte Homes. This model shows the home                                                   the sales process for customers, and is
                                buyer’s interactions with external service                                               described in the following section.
                                providers as well as internal groups within
                                Pulte when buying a home.

                                As a very large company, Pulte has been
                                able to bring in-house much of the com-
                                plexity in the homebuilding industry. For
                                example, rather than rely on regional
                                building materials suppliers, as most
                                homebuilders do, Pulte acts as its own ma-
                                terials supplier, and is actually in the pro-
                                cess of making its supply chain nationally
                                consistent. These integrated approaches
                                help reduce costs.




Institute of Design             Strategic Design Workshop | Spring 2006                                                                                                                         2
                                          Comunidad PultE




Home Buying
Process                                     Home                                    Pulte Seven-Step
Realtor-identified stages expe-
                                            Purchase                                Process
rienced by home buyers are                  Milestones
compared with Pulte’s Seven-
Step Customer Care Process.
                                            °   Dreaming                            1. Pre-Construction Meeting
Pulte has done a good job
of addressing mid-purchase                  °   Scaling
                                                                                    2. Pre-Drywall Frame Walk
concerns—especially those                   °   Viewing
related to new home construc-                                                       3. Quality Assurance
                                            °   Rescaling
tion—but hasn’t responded
                                            °   Finding                                Inspection
to issues related to finding a
home.                                       °   Negotiating                         4. Pre-Closing Orientation
                                            °   Accepting
                                                                                    5. 30-Day Follow Up
                                            °   Inspecting
                                            °   Limbo                               6. Three-Month Follow Up
                                            °   Closing
                                                                                    7. 11-Month Follow Up
                                            °   Completing




                                    2.6   Pulte and the Home Buying Process
                                          First-time buyers go through a series of           puLte’S SoLution
                                          emotional highs and lows in the home-              Although some aspects of home buying
                                          buying process, based on eleven key “sat-          remain the same with Pulte (most people
                                          isfaction milestones” identified in research       still need to obtain a mortgage, for exam-
                                          from RealEstate.com. Those milestones              ple), buying in a new development reduces
                                          include everything from the initial dreams         the uncertainty of price negotiation while
                                          of homeownership and what that might               providing a range of amenity and floor-
                                          entail to the harsh realities of home-in-          plan options for convenient viewing.
                                          spection reports.
                                                                                             Pulte has worked to develop a smooth se-
                                          HigHeSt “pain pointS”                              ries of interactions, coordinated by a Home
                                          30%   Time and effort spent obtaining a            Concièrge to make the experience more
                                                mortgage                                     enjoyable.
                                          29%   Anxiety of “limbo” time, between
                                                making an offer and closing on the
                                                house.
Kerch, S. “First-Time Buyers Ride
Emotional Roller Coaster,” Wall Street
Journal, July 8, 2005 (Online version:
http://www.realestatejournal.com/buy-
sell/markettrends/20050708-kerch.html),
referencing a RealEstate.com study.




Institute of Design                       Strategic Design Workshop | Spring 2006                                                     26
                                               Comunidad PultE



Pulte Homes                        PUlte’S CUrrent SaleS ProCeSS
 A Pulte Customer’s Homebuying Journey
 Typical Customer | Pulte
                                   Typical Customer | Pulte

                       1 Month                       3 Months                       6 Months                     9 Months                1 Year
   Ready to buy        Pre-approved for loan         Meets with Pulte sales agent Obtains loan, gathers          Receives periodic         Closes on home and
                                                                                  10–20% of total cost for       contacts from Pulte Home commits down payment.
                       (Can finance through Pulte    Learns about customization down payment.                    Concièrge as construction Moves in
                       Mortgage or own lender.)      options and pre-construction                                continues.
                                                     sales.                       Signs contract to buy home.

                                                                                    Construction begins.




                          $

                                   Pulte “Seven-Step” Process                       1. Pre-Construction Meeting
                                   Coordinated by the Home Concièrge                              2. Pre-Drywall Frame Walk
                                                                                                                 3. Quality Assurance Inspection
                                                                                                                              4. Pre-Closing Orientation
                                                                                                                                   5. 30-Day Follow Up
                                                                                                                                        6. 3-Month
                                                                                                                                           Follow Up
                                                                                                                                              7. 11-Month
                                                                                                                                                 Follow Up


                                   C o mUnId a d PUl t e                                                                                                          14
                                               tHe HoMe concièrge and                                           The consistent point of contact through-
                                               tHe Seven-Step proceSS                                           out this process is the Home Concièrge,
                                               While Pulte has been bringing operational                        which helps minimize the uncertainty
                                               complexity in-house to reduce costs, it has                      for customers, because they always know
                                               also made a significant effort to simplify                       whom they are dealing with. However, this
                                               the experience for the home buyer. To                            process, and the Home Concièrge, do not
                                               provide enhanced customer service, Pulte                         come into play until a buyer is ready to
                                               guides customers through a Seven-Step                            make a commitment. In other words, there
                                               Process when building a new home:                                is no seamless process involved helping a
                                                                                                                person come to the point of being ready to
                                               1.   Pre-Construction Meeting                                    buy.
                                               2.   Pre-Drywall Frame Walk
                                               3.   Quality Assurance Inspection
                                               4.   Pre-Closing Orientation
                                               5.   30-Day Follow Up
                                               6.   Three-Month Follow Up
                                               7.   11-Month Follow Up




 Institute of Design                           Strategic Design Workshop | Spring 2006                                                                                 27
                                         Comunidad PultE




                                  2.7    Pulte’s Plans for the Future

                                         With more than three years of exceptional   centraLization & StreaMLining
                                         year-to-year sales increases, fuelled by    Although the homebuilding industry has
                                         record-low interest rates and the largest   traditionally been locally-focused, cater-
                                         homebuying boom since the post-war era,     ing to widely varying regional tastes and
                                         Pulte Homes has taken prudent steps to      requirements, CEO Richard J. Dugas, Jr.,
                                         prepare itself for a less rosy future.      has set a goal of using common compo-
                                                                                     nents wherever possible, and making more
                                         Two key elements make up Pulte’s current    decisions from the Michigan home office.
                                         Long-Term Strategy:                         Most other competitors have production
                                                                                     chain inefficiencies, and Pulte’s continuing
                                         diverSiFication                             efforts to simplify and optimize will help
                                         The 2001 acquisition of Del Webb Corp.      them stay on the leading edge of opera-
                                         brought active senior living to the Pulte   tional efficiency.
                                         portfolio, and purchases of other home-
                                         building operations, and expansions into    Dugas sees the value in making changes
                                         new markets, give Pulte a presence in 28    while Pulte is riding the top of the home
                                         states.                                     building industry wave. Rather than wait
                                                                                     for the inevitable downturn, “We’re attack-
                                                                                     ing this while we’re strong,” he says.




Kerwin, K., “A New Blueprint At Pulte
Homes” October 3, 2005, Business Week,
Issue 3953.




Institute of Design                      Strategic Design Workshop | Spring 2006                                               2
      Comunidad PultE




      Pulte’s Competitors




sub   title
                                                 Comunidad PultE




Competitor                                                    $15.0           Pulte
Revenue
                                                                              D.R.Horton
The dominant companies                                        $12.5
                                                                              Centex
in home building have all
profited immensely from the                                                   Lennar
late 1990s/early 2000s real                                   $10.0
estate boom.
                                                 (Billions)
                                                               $7.5


                                                               $5.0


                                                               $2.5


                                                                 0
                                                                      1996 1997 1998 1999 2000 2001 2002 2003 2004 2005




                                              $15.0 billion                   Pulte
                                   .1           Competitor overview and Revenues
                                                          D.R.Horton
                                                              $12.5
                                                                              Centex
                                                 The U.S. homebuilding industry—the            Other large homebuilders have been explor-
                                                                       Lennar
                                                 world’s largest—has experienced healthy       ing cost-cutting and streamlining strategies
                                                     $10.0
                                                 growth in the last few years, which has led   similar to Pulte’s. Component standardiza-
                                                 to rapid revenue growth for many of the       tion, and off-site manufacturing, are becom-
                                                 leading companies. Leading companies
                                                       $7.5                                    ing more accepted in the industry. These
                                                 in the industry include Pulte, D.R. Horton,   efforts have not yet reached the same levels
                                                 Centex, and Lennar. The revenues for all      of efficiency as at Pulte—but competitors are
                                                       $5.0
                                                 four dominant companies have rising           catching up.
                                                 significantly (see graph). Currently, Pulte
                                                 holds the leadership position with the
                                                 highest revenues, followed by D.R. Horton,
                                                 then Centex and Lennar.




Datamonitor, “Homebuilding in the United
States,” 2005, Business Source Premier
via EBSCOhost, Galvin Library, IIT, January
2006.


Kerwin, K., “A New Blueprint At Pulte
Homes” October 3, 2005, Business Week,
Issue 3953.




Institute of Design                              Strategic Design Workshop | Spring 2006                                                  0
                                              Comunidad PultE




                                   .2        Competitor Core Competencies

                                              On the following page, the core compe-           process for until a year after closing. For
                                              tencies of Pulte’s major competitors are         customers that are not interested in buy-
                                              mapped into five categories: Land, Re-           ing a new home, Pulte offers a web search
                                              search, Build, Financing, and Customer.          to help customers find a new home. Ad-
                                              These five categories span the process           ditional information is available on Pulte’s
                                              from land acquisition to selling and financ-     website about moving help, home care,
                                              ing the home for the customer. The grey          and warranty service.
                                              boxes show the company’s core competen-
                                              cies, while the text in red show additional      d.r. Horton
                                              resources and offerings within the com-          D.R. Horton’s core competencies include
                                              pany that make it unique.                        acquisitions, operational flexibility, and
                                                                                               incentive/strategy alignment. D.R. Horton’s
                                              puLte HoMeS                                      growth is attributable to its many acquisi-
                                              Pulte’s core competencies of land develop-       tions of geographically diverse construc-
                                              ment, M&A/partnerships, market research,         tion firms. The company now builds
                                              and operational efficiency fall within the       homes under the brands D.R. Horton,
                                              Land, Research, and Build sections. Pulte        Cambridge, Continental, Dietz Crane, Em-
                                              operates in the U.S. (including Puerto           erald, Melody, Milburn, Schuler, Stafford,
                                              Rico), with headquarters in Bloomfield           Torrey, Trimark and Western Pacific. D.R.
                                              Hills, Michigan. Pulte’s research capability     Horton is the most geographically diverse
                                              is a big enabler that leads to product and       homebuilder, operating in 63 metropolitan
                                              building innovations. Pulte has a dedi-          markets in 21 U.S. states. The company is
                                              cated group called Pulte Home Sciences           headquartered in Arlington, Texas. Pulte,
                                              that focuses on generating and testing           the next most geographically diverse
                                              new product and building innovations.            builder, operates in 44 metropolitan mar-
                                              Pulte’s operational efficiency competency        kets.
                                              is Pulte’s competitive advantage. With an        D.R. Horton’s core capability of opera-
                                              advanced supply chain management and             tional flexibility is possible because of its
                                              fast build cycle times, Pulte is the leader in   decentralized structure. Driven from the
                                              creating building efficiencies.                  realization that homebuilding is a local
                                                                                               business, D.R. operates through more than
                                              Pulte has vertically integrated to pro-          45 divisions, giving division presidents
Datamonitor, “Pulte Homes, Inc. Company       vide additional services to the customer.        the authority and responsibility to react to
Profile,” March 2005. Business Source
Premier via EBSCOhost, Galvin Library, IIT,
                                              Through Pulte Mortgage, llc, Pulte of-           changes in local markets. Division presi-
January 2006.                                 fers home loan financing options for its         dents act as entrepreneurs, adjusting land
                                              customers. Pulte also offers active adult        positions, pricing, and product as neces-
Pulte Homes website, www.pulte.com.
                                              communities. D.R. Horton is the only other       sary. This decentralized structure allows
Pulte Homes, 2004 Annual Report.              major competitor that competes with Pulte        D.R. Horton to be flexible to meet local
                                              in this target market. To provide enhanced       market needs.
Pulte Homes, 2005 Annual Report.
                                              customer service, Pulte guides customers
Datamonitor, “D.R. Horton Company             through a Seven-Step Process when build-         D.R. Horton’s core competency of incentive/
Profile,” 2004, Business Source Premier       ing a new home (see Section 2.5).                strategy alignment has been created through
via EBSCOhost, Galvin Library, IIT, January                                                    its management incentive plans. Division
2006.
                                              This Seven-Step Process ensures custom-          presidents have ownership in the company
D.R. Horton website, www.drhorton.com.        ers’ needs will be met at every stage of the     through stocks and stock options, ensur-




Institute of Design                           Strategic Design Workshop | Spring 2006                                                     1
Institute of Design




                                          Competitor Analysis Core Competencies
                                            Core Competencies of the Leading Homebuilders

                                                                                     Land               Research             Build              Financing                Customer
Strategic Design Workshop | Spring 2006




                                                                                                                                                                                                        Comunidad PultE
                                                                                     Land                  Market           Operational         Pulte Mortgage LLC       7-Step Process
                                                                                  Development             Research           Efficiency                                  Moving help
                                               Operational excellence                                   Pulte Home        Advanced                                       Active adult
                                                                                      M&A                                                                                communities
                                          Innovative building practices                                 Sciences          supply chain
                                                                                  Partnerships                            management
                                                  People development                                    New Innovations                                                  Personalized Home
                                                   Financial discipline                                                                                                  Design

                                                                                                                            Operational         Affordable price         Active adult
                                                                                   Acquisitions                                                                          communities
                                                                                                                             Flexibility        DHI Mortgage
                                                                                 Geographic                                 Incentive/          Title Agency             Customization
                                                                                 Diversity                                   strategy
                                                    Largest residential                                                     alignment
                                                                builder                                                   Decentralized
                                                 Strong balance sheet                                                     structure
                                                         Liquid Assets                                                    Pursuit of quality

                                                                                                                           Commercial           CTX Mortgage             Home Team
                                                                                   Land Buying                                                  Company                  Pest Defense
                                                                                                                           Construction
                                          Long-term shareholder value                                                     Construction          Centex Title &           Community
                                                  Social responsibility                                                   Products              Insurance                Service
                                                   Decision discipline                                                                          Centex                   Extreme Makeover:
                                                                                                                          Energy efficient
                                                                                                                          homes                 Home Equity              Home Edition

                                                                                                                          Subcontracts          Universal American         Customer
                                                                                   Land Buying                            development &         Mortgage Company
                                                                                                                          construction                                     Experience
                                                                                                                                                North American
                                                 “Balance sheet first”                                                                          Title Company            Community Involvement
                                                Conservative leverage
                                                                                                                                                                         Strategic Technologies
                                                  Substantial liquidity                                                                                                  (cable TV & alarm
                                                                                                                                                                         monitoring)

                                                                                         Core Competencies


                                          Research Brief     Kaplan : Kim : McGaw : Sitthisathainchai                                Strategic Planning Workshop, Spring 2006 • March 10 version • 22
2
                                              Comunidad PultE




                                              ing management and stockholder interest           Pest Defense, the largest pest management
                                              alignment. An incentive bonus program             company to serve new home builders.
                                              also rewards management for their efficient       HomeTeam provides pest management
                                              management of Company assets and their            and termite treatment services. Centex
                                              bottom-line performance.                          offers patented Tubes in the Wall® pest
                                                                                                control system and the Tubes Under the
                                              An offering that makes D.R. Horton unique         Slab® termite control system are installed
                                              is its ability to customize production            during new constructions.
                                              homes.
                                                                                                Through its commitment to its commu-
                                              D.R. Horton also provides mortgage broker-        nities, Centex is involved in community
                                              age and title agency services to its home-        service through Extreme Home Makeover,
                                              buyers, in addition to providing affordable       sponsoring Habitat for Humanity, employee
                                              quality homes.                                    service projects, community investment,
                                                                                                and programs such as Hearts & Hammers
                                              centex corporation                                and Give Kids the World Foundation.
                                              Centex’s core competencies include land
                                              buying and commercial construction. Cen-          Centex’s broad yet shallow diversification
                                              tex Corporation is involved in a wide range       creates competition between Centex’s
                                              of activities through its subsidiaries, includ-   businesses. Centex’s recent strategic plans
                                              ing home building, home services, financial       include streamlining to allocate more capi-
                                              services, construction services, construc-        tal to its core homebuilding business.
                                              tion products, and investment real estate.
                                              Centex Homes is a subsidiary of the Centex        Lennar corporation
                                              Corporation and is primarily involved in the      Lennar’s core competencies are land buy-
                                              purchase and development of land or lots          ing and customer experience, which exist
                                              and the construction and sale of homes,           at the opposite ends of the homebuild-
                                              town homes, and condominiums.                     ing/sale process. This is possible because
                                                                                                although Lennar is involved in all phases
                                              Centex is the most diversified of the home-       of planning and building of residential
                                              builders. It is the only one of the large         communities, it subcontracts virtually all
                                              residential builders that is also involved        segments of development and construc-
                                              in commercial construction projects. The          tion. Subcontracting the development and
                                              company also provides mortgage broker-            construction of the homebuilding process
                                              age, home equity loan, title, settlement,         enables Lennar to focus on the customer
Datamonitor, “Centex Corporation              and insurance services to its residential         experience, one of its core competencies.
Company Profile,” 2004, Business Source
                                              and commercial clients. Centex provides
Premier via EBSCOhost, Galvin Library, IIT,
January 2006.                                 building contractor services through Cen-         Lennar Corporation provides homebuilding
                                              tex Construction. Centex Construction’s           and residential financial services. Lennar’s
Centex website, www.centex.com.
                                              primary markets include: multi-unit               homebuilding operations include the sale
Datamonitor, “Lennar Corporation              residential, corporate, education, correc-        and construction of single-family homes,
Company Profile,” 2004, Business Source       tions, health care, government, hospitality,      as well as the purchase, development and
Premier via EBSCOhost, Galvin Library, IIT,   transportation, public assembly, military         sale of residential land. It is involved in
January 2006.
                                              housing, and retail. Centex also provides         land acquisition, site planning, land prepa-
Lennar website, www.lennar.com.               home services through its Home Team               ration and improvement. Lennar is also




Institute of Design                           Strategic Design Workshop | Spring 2006                                                     
                      Comunidad PultE




                      involved in the design construction, and
                      marketing of homes.
                                                                    none of the four
                      The company’s financial services opera-
                                                                    leading homebuilders
                      tions provide mortgage financing, title       have culturally-
                      insurance and closing services for buyers
                      of Lennar homes and other homebuild-          targeted offerings.
                      ers. Lennar also offers title insurance and
                      insurance products through its Title Com-
                      pany and Insurance Agency.                    their new home as it is being built. Lennar
                                                                    strives to provide TLC— Total Lennar Care
                      Lennar also offers cable television and       and make the home buying process a true
                      alarm monitoring services for residents       celebration.
                      of its communities through its strategic
                      technologies division. Through all of these   SuMMary
                      services, Lennar focuses on providing         Notably, none of the four leading home-
                      the best customer experience, uphold-         builders have culturally-targeted offerings,
                      ing their commitment to Quality, Value        beyond those for (mainstream American)
                      and Integrity, their founding principles.     active adults.
                      Lennar created a TDH Customer Touch
                      Points Program to fulfill their commitment    While economies of scale certainly make
                      to “keeping our Homeowners Tickled,           a generalized sales approach the most
                      Delighted and Happy” throughout their         sensible in a boom market, as opportuni-
                      entire home experience. Lennar hold fun       ties for selling homes begin to contract,
                      events, such as Home Owner Orientation        untapped niche markets, like Latinos and
                      and Celebration, to celebrate each event      other ethnic minorities, could prove to be a
                      of the home building process and provide      valuable way of broadening sales.
                      an opportunity for homebuyers to see




Institute of Design   Strategic Design Workshop | Spring 2006                                                 
      Comunidad PultE




      Latinos in the U.S.




sub   title
                                           Latino Population of the United States
                                            Comunidad PultE

                                           by Place of Origin

Latino                                     Other Latino 8%
Population                                 South America 5%
of the United
                                           Other Central America 4%
States, by
Place of                                   El Salvador 3%                                                                            63% Mexico
Origin                                     Dominican Republic 3%
                                           Cuba 4%
                                           Puerto Rico 10%


                                           Source: Pew Hispanic Center tabulations from the 2000 Census




                                           Latino Population, Actual and Projected,
                                           1980-2020 (millions)
                                                                                                                 Percentage of total population
                                            1980       5.1 4.        5.5                                                                     6.45%
                                            1990             9.1       6          7.1                                                        8.99%
                                 .1        What is a “latino”?11.3
                                            2000    14.   9.9                                                                              12.55%
                                            2010                           18.1                 15.4            14.2                         15.5%
                                            2020
                                            Although the term has 20.6
                                                                  different mean-                            21.7                      18.2         17.8%
                                                                                                           riety of issues that distinguish them from
                                             ings in other parts of the world, in the
                                                    0            10             20             30          native-born Americans. Meanwhile,70
                                                                                                              40            50             60           those
                                             U.S. the term Latino is applied exclusively
                                                    Millions                                               who speak English express attitudes more
                                             to immigrants from Spanish-speaking                           similar to those of the U.S. population in
                                                               1st-generation                    2nd-generation                        3rd+ generation
                                             countries in North and South America,                         general.
                                             and to their descendants. Most people
                                           Source: U.S. Census Bureau for 1980 to 2000; Pew Hispanic Center and Census projections for 2010 and 2020
                                             also use it to include descendants of                         Note: there has been much discussion of the
                                             South and Latin American native peoples                       relative merits of the terms “Latino” and
                                             as well, though some believe Latinos are                      “Hispanic.” U.S. Census leaders have used the
                                             only those with some European blood.                          latter term to avoid confusion with another
                                             As with many other aspects of race in                         ethnic group, Ladinos. We use the term Latino
                                             America,1980 it is both a personal choice of                  for consistency and simplicity.
                                                                                          1990                             2000
                                             affiliation that others are reluctant to                                                                     2010
                                             question, and also an attribute on which                      Likewise, we refer to other citizens and resi-
                                             prejudices are based.                                         dents of the U.S.—particularly those who are
                                                                                                           more or less “integrated” with the majority
                                             A majority of Latinos in the U.S. trace their                 culture—as “mainstream Americans.” We do
                                              Family Household Size: Latino vs. US Total
                                             origins to Mexico. Despite the diversity of                   not thereby imply that U.S. citizens who are
                                             cultural backgrounds, those Latinos who                       Latino are any less fully American—only that
Pew Hispanic Center tabulations from the     speak only Spanish (almost all20%      of them                those whose language or culture are not “main-
2000 Census.                                  2 Person share a set of views on a va-
                                             immigrants),                                                  stream” may be easily overlooked.
                                                                                                          41%

                                                                                        22%
                                              3 Person
                                                                                        23%
Institute of Design                         Strategic Design Workshop | Spring 2006                                                                      6
                                                                                        23%
                                              4 Person
                                                                                      20%
                                              Comunidad PultE




Individualist                                            Individualism Index
vs. Collectivist                              Small power            0
                                                                                                 Guatemala
                                                                                                             Large power
                                                                                                             distance
Societies                                     distance                                             Panama
                                                                                                             > Collectivist
                                              > Collectivist
                                                                   16                     Peru
Group identity is highly valued
in countries from which La-                                                              Chili

tinos come. The U.S. main-                                         32                             Mexico
stream culture, by contrast, is
more individualistic.
                                                                   48                                              Power
                                                                                                                   Distance
                                              10           30            50             70           90        110
                                                                                                                   Index
                                                                   64




                                                                   80


                                                   United States
                                                                   96
                                               Small power                                                   Large power
                                               distance                                                      distance
                                               > Individualist                                               > Individualist
                                                                   112




                                      .2     latino Core Cultural Characteristics
                                              FaMiLiSM and interdependence                                    ForMaLity
                                              Among Latinos the family often assumes a                        Latinos are meticulous about having a
                                              position of ascendance over the individual.                     proper appearance outside the home
                                              Traditional households include extended                         since this is related to status, respectabil-
                                              families and both problems and solutions                        ity, and family pride. Many appear over-
                                              are owned and shared by all members.                            dressed within the workplace because of
                                                                                                              the importance of “proper” attire. Poorer
Hofstede, Geert, Cultures and Organiza-       SIMPATíA and RESPETo                                            people may be reluctant to attend school
tions: Software of the Mind (New York:        In Spanish, simpatía refers to a “general                       or social functions because they lack this
McGraw-Hill), 1997, pp. 54, 141.
                                              tendency toward avoiding personal con-                          attire.
Arcilla, M.S., Liang, Y., The Rising Influ-   flict, emphasizing positive behaviors in
ence of the Hispanic Population on U.S.       agreeable situations, and de-emphasizing                        work etHic
Real Estate (Parsippany, N.J.: Prudential
                                              negative behaviors in conflictive cir-                          The attitudes of authority and family af-
Real Estate Investors), November, 2005.
                                              cumstances.” Respeto (respect) is related                       fect attitudes toward work. On the one
Richards, A. Cultural Assets for Latino       to the concept of simpatía and values                           hand, Latinos feel that family should take
Community Building in East Palo Alto (San
                                              automatic deference to authority. These                         precedence over work because work is an
Francisco: Wildflowers Institute), 2003.
                                              values affect communications with                               obligation to meet family responsibilities.
Understanding Bilingual and Monolin-          specialists, professionals and other such                       This contrasts with respect for authority
gual Latino Consumers (San Francisco:         figures seemingly entitled to obedience                         and the value of work causing Latinos to
California Poison Control System), 2003,
published online at http://www.calpoison.
                                              or acceptance, frequently disempowering                         invest a great deal in their work. The may
org/hcp/hispanic_findings.pdf.                the consumer.                                                   choose to work within a firm that merits




Institute of Design                           Strategic Design Workshop | Spring 2006                                                                         7
                                   Comunidad PultE




Interaction                                        Uncertainty Avoidance index
Resolution Styles                  Village Market                        0                     Family
                                   Small power distance                                        Large power distance
Based on a comparison be-
                                   Weak uncertainty                                            Weak uncertainty avoidance
                                                                    16
                                   avoidance
tween a nation’s willingness to
tolerate uncertainty, and the
distance separating those at                                        32

the top of the power structure
from those at the bottom.                           United States
                                                                    48

                                                                                                              Power
In Latino source-cultures, one
                                                                                                              Distance
expects to be told what to do                 10            30
                                                                    64
                                                                             50   70            90      110
                                                                                                              Index
by a person in authority; in the
U.S., everybody feels more or
less equal.                                                         80
                                                                                           Mexico
                                   Well-oiled machine                             Chile    Panama             Pyramid of People
This has dramatic implications                                                     Peru
                                   Small power                      96
                                                                                                              Large power distance
for the sales process.             distance                                                                   Strong Uncertainty
                                   Strong Uncertainty                                     Guatemala           avoidance
                                   avoidance                     112




                                   their loyalty, and where they can build                     evidence FroM cuLturaL
                                   long-term relationships.                                    antHropoLogy
                                                                                               IBM anthropologist Geert Hofstede’s
                                   ACUERDoS and ASEMBLEAS                                      landmark research into cross-cultural
                                   Acuerdo (agreement or consensus) is a cul-                  differences in the workplace revealed key
                                   turally specific method of group decision                   supporting data for Latino cultural charac-
                                   making. Everyone gathers together, in an                    teristics. Ranking cultures on two indices,
                                   asemblea (assembly), and after an issue is                  he established a measure of two different
                                   presented, the floor is opened for everyone                 kinds of societies:
                                   who wishes to state an opinion. It is the                   » Individualist: “I.” Personal identity is
                                   task of community leaders to listen to all                    built on the self and on one’s own pref-
                                   speakers and to slowly weave together a                       erences. This is typical of mainstream
                                   solution that accommodates everyone (a                        U.S. culture.
                                   solution that all can live with, if not love).              » Collectivist: “We.” Identity is based on
                                   Great care is taken to consider everyone’s                    membership in a group. This is typical of
                                   positions and interests, striking a balance                   cultures in Latin and South America.
                                   between individual interests and the inter-
                                   ests of the whole. Producing an acuerdo is                  power dynaMicS
                                   a long and arduous process.                                 Hofstede also looked at power dynam-
                                                                                               ics in business relationships. While these
                                                                                               findings cannot be mapped precisely to




Institute of Design                Strategic Design Workshop | Spring 2006                                                                  
                      Comunidad PultE




                      consumer interactions, they do tend to       concLuSionS
                      support the other evidence of differences    The subtle differences between Latino and
                      in how negotiations take place:              mainstream U.S. culture could easily be
                                                                   overlooked. Yet, these differences could
                      » Village Market. With power hierarchies     also derail a high-value transaction such
                        minimized, and a willingness to tolerate   as a home purchase. Great care should be
                        uncertainty, people commonly “work         exercised in evaluating and responding to
                        out” problems in interactions, much as     cultural differences. It could be that Pulte
                        neighbors in a local market would. This    loses sales opportunities each day by not
                        is typical of mainstream U.S. culture.     understanding these differences more
                      » Pyramid of People. People at the bottom    fully.
                        of the pyramid expect to be told what
                        to do by the people at the top. This is
                        sometimes typical of cultures in Latin
                        and South America.




Institute of Design   Strategic Design Workshop | Spring 2006                                                 
                                                                                                                                                     2010

                                             Comunidad PultE



                                             Family Household Size: Latino vs. US Total
Latino
Household Size                                                                          20%
                                             2 Person
                                                                                                            41%
Latinos tend to live in larger
groups than the U.S. main-                                                               22%
stream. What kind of homes                   3 Person
                                                                                             23%
are more suitable for larger
households?                                                                                  23%
                                             4 Person
                                                                                         20%

                                                                                       17%
                                             5 Person
                                                                           10%

                                                                           9%
                                             6 Person
                                                                    4%

                                             7 Person                       10%                Hispanic
                                               Plus                3%                          U.S. Total

                                            Source: Census 2000




                                    .      latino urban Planning issues
                                             FaMiLy Size,                                               crowded on weekend afternoons, when

                                             U.S. Population Projection Scenarios
                                             and extended FaMiLy
                                             Latino families are larger than those of
                                                                                                        the entire community turns out to see one
                                                                                                        another and be seen. In many ways, it pro-
                                                                                                                                                        U
                                             the U.S. population at large. This not only                                   Amnesty + Growth
                                                                                                        vides a link between generations.               (
                                              500
                                             means that Latino families may prefer to
                                             have more bedrooms than standard homes                     cHurcH
                                                                                                                           Status Quo
                                             offer, but that as multi-generational fami-                The role of the Catholic Church in com-
                                              400                                                                                                       O
                                             lies grow in prosperity and buy homes of                                         be underestimated,
                                                                                                        munity life cannot Limited Immigration
                                             their own, they may wish to stay in close                  even among Latinos who do not describe
                                             proximity to their relatives. While it is not              themselves as particularly religious.           A
                                              300
                                             uncommon for non-Latino U.S. families to                   Key life changes are marked by church
                                             have relatives on both coasts and every-                   ceremonies, including baptism, presenta-        B
                                             where in between, many Latino extended                     tion (age 3), first communion, confirma-
                                              200
                                             families live in the same neighborhood.                    tion (the marker of religious adulthood),
                                                                                                        quinceaños (16 yrs, for women), weddings,       L
                                             pLazaS                                                     and funerals.
                                              100
                                             Serve as the social, economic, political,
U.S. Census data.                            and cultural center of a town, and are
                                             tightly tied to Latino notions of commu-
Richards, A. Cultural Assets for Latino
                                                 0
                                             nity. A ceremonial center and a common
Community Building in East Palo Alto (San
Francisco: Wildflowers Institute), 2003.                                       especially 2030
                                             recreational space. The plaza is 2020
                                                         2000       2010                                      2040     2050



Institute of Design                          Strategic Design Workshop | Spring 2006                                                            0
                                 Comunidad PultE




User Types                        Undocumented                                        Documented
                                  › Day laborer                                       › Legal status in U.S.
These sample profiles, though
not exhaustive, reveal some of    › Speaks Spanish only                               › Speaks “Spanglish”
the different kinds of people     › Social network limited to rela-                   › A blue-collar worker
within the Latino community.        tives                                             › Most friends are within Latino com-
                                  › Earns cash wages and may                            munity
                                    send money home                                   › High school education or GED


                                  Semi-assimilated                                    Assimilated
                                  › High school graduate; some                        › Speaks English
                                    college (or Associate’s degree                    › A businessperson
                                    from a community College)
                                                                                      › Has college degree
                                  › Speaks English, but Spanish
                                                                                      › Identifies with Latino community but
                                    at home with her Abuela
                                                                                        also circulates comfortably in society
                                                                                        at large




                        .      latino user types
                                 No culture is monolithic. We have identi-                Spanish. They may have education but not
                                 fied four user types within the Latino com-              enough to work at a job in U.S. Their social
                                 munity, as a way of exploring some of the                networks are limited to the Latino com-
                                 contours of that population. It is important             munity and their relatives. They earn cash
                                 to note that Undocumented persons, who are               wages and may send money to their native
                                 present in the U.S. illegally, are not foreseen          country. These characteristics typically
                                 as a potential market target for Pulte Homes.            describe the first generation Latino popula-
                                 However, the current political discussion on             tion in the U.S.
                                 immigration reform (discussed in Section 4.12)
                                 may result in some amnesty programs that                 docuMented
                                 would have the effect of shifting Undocumented           These group members have legal status in
                                 types to Documented. Furthermore, the inter-             the U.S., either through winning an immi-
                                 connectedness of the Latino community means              gration lottery, having relatives in the U.S.,
                                 it is still important to consider issues affecting       or having applied for “Green Card” status.
                                 all types.                                               They speak “Spanglish,” a combination of
                                                                                          Spanish and English. Most of their friends
                                 undocuMented                                             are within the Latino community. They
                                 Some Latinos begin living in the U.S. with-              might have had up to a high-school educa-
                                 out having entered the country legally.                  tion or a GED, which they can use to get
                                 Members of this group are typically day                  a job as a blue collar worker. This group
                                 laborers and can communicate only in                     might consist of the first generation of




Institute of Design              Strategic Design Workshop | Spring 2006                                                              1
                      Comunidad PultE




                      Latino immigrants that settled themselves
                      in the U.S. more than ten years ago or the
                      second generation of Latino immigrants.

                      SeMi-integrated*
                      Members of this group typically have a
                      high-school education, some college or
                      might have an Associate’s degree from a
                      community college. They generally speak
                      English but use Spanish at home—par-
                      ticularly with older family members, like a
                      grandmother, or with other relatives who
                      are more recent arrivals. This group often
                      includes the third generation of a Latino
                      family that has come to the U.S.

                      integrated*
                      This group generally speaks English. They
                      often have college degrees and hold jobs
                      throughout the American economy—many
                      in positions of authority and power. They
                      identify with the Latino community but
                      comfortably circulate in U.S. society at
                      large. This group describes the third and
                      fourth generations of Latino immigrant
                      community.

                       Note: The term “integrated” is preferred over
                      “assimilated,” which might suggest that a
                       person must lose their culture in adopting the
                       culture of the country to which they have immi-
                       grated. Many have suggested that the standard
                       American concept of the Melting Pot of Cul-
                       tures should be more like a salad, or a stew, in
                       which the component parts retain part of their
                       identity, even as they join the whole.




Institute of Design   Strategic Design Workshop | Spring 2006             2
                            Comunidad PultE




                      .   Sensing trends: latinos & Real Estate

                            Recent trends in the real estate indus-          agents, Latinos are getting into business
                            try are driving a shift in the way people        with other Latinos.
                            purchase homes. Many of these trends are       » Ethnic Pioneers. Ethnic families, who
                            related specifically to Latino buyers. These     have achieved a multi-generational as-
                            real estate trends can be organized into         similation into American society through
                            three groups:                                    higher education and higher paying jobs,
                                                                             are migrating to cities that are predomi-
                            » People Focused trends are those that af-       nantly white. They are taking advantage
                              fect individual homebuyers.                    of new opportunities in cities like Salt
                            » Community Focused trends are those that        Lake City and Minneapolis, creating new
                              effect groups of people engaged in the         melting pots.
                              real estate experience.
                            » Market Focused trends are those that af-     coMMunity FocuSed trendS
                              fect the businesses and services within      » Holistic Communities. Communities such
                              the real estate industry.                      as Anthem, a Del Webb project outside
                                                                             of Phoenix, offers not only a friendly
                            These trends are detailed below, and pre-        neighborhood to live in, but has also
                            sented in the chart on the following page.       integrated a shopping mall, town center,
                                                                             golf course and private school system.
                            peopLe FocuSed trendS                          » Social Networking. Finding that “needle-
                            » Downsizing. Due to high energy costs           in-a-haystack” perfect home has never
                              associated with owning a large home,           been easier as friends share word-of-
                              people are trading up for smaller resi-        mouth info about real estate and web-
                              dences, making it home ownership cost          sites like Craigslist.com foster more
                              more affordable on the back end.               person-to-person home sales.
                            » Empowered Buyers. Services like Realtor.     » Latino Politics. More and more Latino’s
                              com and Lendingtree.com are empower-           are being elected to powerful political
                              ing buyers, allowing them to self-edu-         and legislative positions. That translates
                              cate faster, and giving them access to a       to more laws and initiatives directed
                              wider range of information.                    towards Latino lifestyle issues.
                            » Undocumented but not Forgotten. New          » Cultural Identification. A proliferation
                              initiatives to help the 10.3 million un-       of brands such as Lala Dairy and Fanta
                              documented immigrants are being put            which target the Latino population,
                              into place. A study by the Hispanic Real       along with a growing awareness of
                              Estate Professionals concluded that nearly     Hispanic society by mainstream Amer-
                              216,000 undocumented immigrants could          ica, are yielding an enhanced sense of
                              be homeowners if they had better access        cultural pride for American’s with Latino
                              to home buying processes.                      heritage.
                            » L2L (Latino 2 Latino). Latino entrepre-      » Urban Re-migration. As Baby Boomers
                              neurs are entering the business world          become empty nesters, they are trading
                              everyday with new offerings, and they          up their large, suburban homes in favor
                              are targeting their own kind as a prof-        of moving back into the city where they
                              itable customer segment. From Maya             purchase town homes and condos.
                              Cinema to Latino-specific Real Estate




Institute of Design         Strategic Design Workshop | Spring 2006                                                  
 Institute of Design




    Trends Trends Latino Culture & the
Sensing At the Intersection of Latinos and Real Estate Real Estate Market
                                                                 Elements                         Proliferation                  Options                          Reactions                           Societal
                                                                 parts and pieces                 how info is being gathered     how government and               how the markets is                  how society is changing
                                                                 of an industry                   and shared                     industry aid buyers              responding to buyers
 Strategic Design Workshop | Spring 2006




                                                                                                                                                                                                                                         Comunidad PultE
                                           People                Downsizing                       Empowered Buyers               Undocumented but not             L2L (Latino 2 Latino)               Ethnic Pioneers
                                                                 Due to high energy               Services like Realator.com     Forgotten                        Latino entrepreneurs are            Ethnic families who have
                                                                 costs associated with            and Lendingtree.com are        New initiatives to help the      entering the business world         achieved a multi-generational
                                                                 owning a large home, people      empowering buyers, allowing    10.3 million undocumented        everyday with new offerings,        assimilation into American
                                                                 are trading up for smaller       them to self-educate faster,   immigrants are being put into    and they are targeting their own    society through higher
                                                                 residences, making it            and giving them access to a    place. A study by the Hispanic   kind as a profitable customer       education and higher paying
                                                                 home ownership cost more         wider range of information.    Real Estate Professionals        segment. From Maya Cinema           jobs, are migrating to cities
                                                                 affordable on the back end.                                     concluded that nearly 216,000    to latino-specific Real Estate      that are predominantly white.
                                                                                                                                 UI’s could be home owners        agents, Latino’s are getting        They are taking advantage of
                                                                                                                                 if they had better access to     into business with other            new opportunities in cities like
                                                                                                                                 home buying processes.           Latino’s.                           Salt Lake City and Minneapolis,
                                                                                                                                                                                                      creating new melting pots.

                                           Relevant User Types   ●                                ●●                             ●                                ● ● ● ●                             ●

                                           Communities           Holistic Communities             Social Networking              Latino Politics                  Cultural Identification             Urban Re-migration
                                                                 Communities such as              Finding that “needl e-in-a-    More and more Latino’s are       A proliferation of brands such      As Baby Boomers become
                                                                 Anthem, a Del Webb project       haystack” perfect home         being elected to powerful        as Lala Dairy and Fanta which       empty-nestors, they are trading
                                                                 outside of Phoenix, offers not   has never been easier as       political and legislative        target the Latino population,       up their large, suburban homes
                                                                 only a friendly neighborhood     friends share word-of-mouth    positions. That translates       along with a growing awareness      in favor of moving back into the
                                                                 to live in, but has also         info about real estate and     to more laws and initiatives     of Hispanic society by              city where they purchase town
                                                                 integrated a shopping mall,      websites like Craigslist.com   directed towards Latino          mainstream America, are             homes and condo’s.
                                                                 town center, golf course and     foster more person-to-person   lifestyle issues.                yielding an enhanced sense of
                                                                 private school system.           home sales.                                                     cultural pride for American’s
                                                                                                                                                                  with Latino heritage.



                                           Relevant User Types   ●                                ●● ● ●                         ●● ● ●                           ●●●                                 ●

                                           Market                Vertical Integration             Digital Agents                 Disaster Readiness               Operational                         Mortgages for Non-
                                                                 Businesses such as Pulte         Armed with cell phones,        As earth quakes, landslides      Effectiveness                       citizens
                                                                 Homes are partnering with        digital camera’s,              and hurricanes continue to       Economies of scale have             For foreigners who plan on
                                                                 real estate sales companies,     Blackberry’s, laptop’s and     destroy communities, builders    allowed home builders to            moving to the U.S., they can
                                                                 mortgage and lending             email, today’s real estate     are re-thinking construction     streamline the time it takes        now buy property before they
                                                                 services, and insurance          agents are more mobile         techniques in favor of           to build a home by better           arrive. With 30% of the total
                                                                 providers to streamline the      and offer clients a more       durability, while insurance      integrating their materials,        cost to put down, they can
                                                                 home sales process.              information-rich, customized   providers offer a variety of     construction and systems            purchase a home without
                                                                                                  service experience.            disaster coverage plans.         teams.                              citizenship or a green card.




                                           Relevant User Types   ● ●                              ● ● ●                          ● ● ● ●                          ● ●                                 ●

                                           Latino User Types              ● Undocumented                           ● Documented                       ● Semi Assimilated                             ● Fully Assimilated
 




Research Brief                                 Kaplan : Kim : McGaw : Sitthisathainchai                                                                    Strategic Planning Workshop, Spring 2006 • March 10 version • 35
  2000
    2000
     2000
 2000 2000                 14.14.
                          14. 14. 14.      9.99.9    11.3 11.3
                                                       11.3
                                          9.99.99.9 11.3 11.3                                              12.55%
                                                                                                         12.55%
                                                                                                        12.55%
                                                                                                            12.55%
                                                                                                              12.55%
  20102010
    2010
 20102010                          18.1
                                 18.1 18.1
                                18.1 18.1             15.4 15.4
                                                         15.4
                                                       15.4 15.4            14.2 14.2
                                                                             14.2 14.2
                                                                               14.2                        15.5%
                                                                                                             15.5%
                                                                                                              15.5%
                                                                                                          15.5% 15.5%
  2020
    2020
     2020
 2020 2020                          20.6 20.6
                                   20.6 20.6
                                      20.6                     PultE 21.7
                                                     Comunidad 21.7 21.7
                                                                  21.7
                                                                21.7                           18.218.2 17.8% 17.8%
                                                                                                18.2 18.2 17.8%
                                                                                                  18.2     17.8%
                                                                                                             17.8%

        0 0 00 0         10 10
                        10 10 10         20 20
                                        20 20 20       30 30
                                                      30 30 30       40 40 40
                                                                      40 40          50 50
                                                                                    50 50 50       60 60
                                                                                                  60 60 60      70 70
                                                                                                               70 70 70
         Millions
             Millions
              Millions
        MillionsMillions

              1st-generation of
                Portion
        Latino 1st-generation
                     1st-generation
                   1st-generation
                 1st-generation                         First Generation
                                                      2nd-generation
                                                           2nd-generation
                                                         2nd-generation
                                                     nn2nd-generation
                                                             2nd-generation                           Second
                                                                                                 nn generation Generation
                                                                                                    generation
                                                                                               3rd+ 3rd+ generation
                                                                                                3rd+ 3rd+ generation
                                                                                                  3rd+ generation                   nn Third+ Generation
        U.S. Population
  Source: U.S. U.S. Census Bureau1980 2000; 2000; Hispanic Center Center Census projections for 2010 2020
    Source: Census Census Bureau to 1980 Pew Pew Pew Hispanic and Census projections for forfor 2010 2020
      Source: Census Bureau forfor 1980 2000; 2000; Hispanic Center Census projections for 2010 and and and 2020
        Source: Census Bureau for 1980 2000; Hispanic Center and and and Census projections 2010 2020
Source: U.S. U.S. U.S.Bureau for 1980 forto toto to Pew Pew Hispanic Center and Census projections2010 and and 2020




              1980
               1980
                1980
             19801980                               1990
                                                     1990
                                                      1990
                                                       1990
                                                        1990                        2000
                                                                                     2000
                                                                                      2000
                                                                                   20002000                        2010
                                                                                                                    2010
                                                                                                                     2010
                                                                                                                  20102010                    2020
                                                                                                                                               2020
                                                                                                                                                2020
                                                                                                                                                 2020
                                                                                                                                                  2020

        Latinos, first, second, and
        third generation, will make up
    Family Household Size: Latino vs.USUSTotal
     Family Household Size: Latino vs.USTotal
      Family Household Size: Latino vs. US Total
       Family Household Size: Latino       Total
   Family Household Size: Latino vs.vs.USTotal
        an increasing percentage of
        the U.S. population in years to
        come.                        20% 20%
                                       20%
                                    20% 20%
     Person
       Person
        Person
          Person
   2 2 22 2 Person
                                                                  41% 41%
                                                                   41%
                                                                 41% 41%

                                              22% 22%
                                               22%
                                             22% 22%
     Person
       Person
        Person
          Person
   3 3 33 3 Person
                                                23% 23%
                                                 23%
                                               23% 23%

                                                 23% 23%
                                                  23%
                                                23% 23%
     Person
       Person
        Person
          Person
   4 4 44 4 Person
                                             20% 20%
                                              20%
                                            20% 20%

                                         17% 17%
                                          17%
                                        17% 17%
     Person
       Person
        Person
          Person
   5 5 55 5 Person
                                10% 10%
                                 10%
                               10% 10%
                                                      Market FocuSed trendS                                 home by better integrating their materi-
                               9% 9%
                              9% 9% 9%                » Vertical Integration. Businesses such as            als, construction and systems teams.
     Person
       Person
        Person
          Person
   6 6 66 6 Person                                      Pulte Homes are partnering with real             » Mortgages for Non-citizens. For foreign-
                          4% 4%
                         4% 4% 4%
                                                        estate sales companies, mortgage and                ers who plan on moving to the U.S., they
         Person
       Person
   7 7 77 7 Person
     PersonPerson       10%
                       10% 10%
                      10% 10%                           lending services, and insurance provid-
                                                    Hispanic
                                                     Hispanic
                                                       Hispanic
                                                         Hispanic
                                                           Hispanic                                         can now buy property before they arrive.
        Plus Plus 3% 3%
      Plus Plus 3% 3% 3%
          Plus                                          ers toTotal
                                                               streamline the home sales pro-
                                                    U.S. U.S. Total
                                                     U.S. Total
                                                       U.S. Total
                                                         Total
                                                           U.S.                                             With 30% of the total cost to put down,
                                                        cess.                                               they can purchase a home without citi-
           Census 2000
 Source: Census 2000 2000
   Source:Source: Census 2000
     Source: Census 2000
       Source: Census
                                                      » Digital Agents. Armed with cell phones,             zenship or a green card.
                                                        digital cameras, Blackberrys, laptops
                                                        and email, today’s real estate agents are        popuLation trendS
                                                        more mobile and offer clients a more             The dynamic intersection of culture and
                                                        information-rich, customized service             the marketplace teems with opportuni-
                                                        experience.                                      ties. In comparison with homebuilding and
                                                      » Disaster Readiness. As earthquakes,              real estate industry trends, Latino culture
                                                        landslides and hurricanes continue               seems to be changing more rapidly. The
                                                        to destroy communities, builders are             question is: how will Pulte respond?
    U.S.Population Projection Scenarios
     U.S.Population Projection Scenarios
      U.S.Population Projection Scenarios
           Population Projection Scenarios
   U.S.U.S. Population Projection Scenarios             re-thinking construction techniques in                            U.S.Ethnic Distribution Pr
                                                                                                                           U.S.Ethnic Distribution P
                                                                                                                                Ethnic Distribution
                                                                                                                        U.S.U.S. Ethnic Distribution
                                                                                                                         U.S.Ethnic Distribution Pro
                                                                                    insurance Growth
                                                                                     Amnesty pro-
                                                        favor of durability, whileAmnesty + ++ + Growth
                                                                                 Amnesty + Growth
                                                                                      Amnesty Growth
                                                                                        Amnesty Growth                     (Assuming Amnesty High
                                                                                                                          (Assuming Amnesty && Hig
                                                                                                                         (Assuming Amnesty &High G
                                                                                                                        (Assuming Amnesty & &HighG
                                                                                                                            (Assuming Amnesty High
     500 500
      500
    500 500                                             viders offer a variety of disaster coverage
                                                        plans.                       Status Quo
                                                                                      Status Quo
                                                                                         Quo
                                                                                   Status Quo
                                                                                 StatusStatus Quo
                                                      » operational Effectiveness. Economies
       400
     400 400
    400Source: U.S. Census Bureau for 1980 to
        400                                                                                                             9 million
                                                                                                                     Other: million
                                                                                                                    Other: million
                                                                                                                  Other: 9 99 million
                                                                                                                 Other: Other: 9 million
        2000; Pew Hispanic Center projections for       of scale have allowed homebuilders to
                                                                                     Limited Immigration
                                                                                      Limited Immigration
                                                                                        Limited Immigration
                                                                                   Limited Immigration
                                                                                 Limited Immigration
        2010 and 2020.                                  streamline the time it takes to build a
                                                                                                                  Asian: 50 50 million
                                                                                                                    Asian: 50 million
                                                                                                                     Asian: million
                                                                                                                        50 million
                                                                                                                 Asian: Asian: 50 million
     300 300
      300
    300 300
                                                                                                                           Black: 53 53 million
                                                                                                                             Black: 53 million
                                                                                                                              Black: million
                                                                                                                                 53 million
                                                                                                                          Black: Black: 53 million
     200 200
      200
    200 200
        Institute of Design                          Strategic Design Workshop | Spring 2006                                   Latino: 164 million
                                                                                                                                  164 million
                                                                                                                             Latino: 164 million
                                                                                                                           Latino: 164 164 million
                                                                                                                          Latino:Latino: million           


     100 100
      100
    100 100
                                            Comunidad PultE




                                 .6        latinos and Geography

                                            The following page shows three layers of       In the Northwest, however, Pulte has no
                                            information:                                   operations at all. Washington and Oregon
                                                                                           represent two opportunities for growth.
                                            » Latino population concentrations (shades     Pulte could investigate the purchase of a
                                              of red)                                      homebuilding company in that area.
                                            » States with high rates of increase in the
                                              Latino population (shades of blue)           At the moment, the Latino retirement
                                            » Pulte Home operations                        market is not currently strong, largely
                                                                                           because Latino families have not amassed
                                            In the American Southwest and eastern          sufficient wealth to have the same re-
                                            seaboard, there is a strong correlation        tirement expectations as do typical U.S.
                                            between states with a high or increasing       middle-class families. But in the coming
                                            Latino presence and with Pulte operations.     generations, a rising tide of prosperity may
                                            Florida has an especially high degree of       yet see Pulte’s Del Webb active adult com-
                                            overlap. This suggests tremendous natural      munities becoming of greater interest to
                                            opportunities for Pulte to begin engaging      senior Latinos.
                                            the Latino population more intentionally.




                                 .7        latino Household Wealth

                                            Hispanic households have less than ten         80%     Homeownership Rates
                                            cents for every dollar in wealth owned by      70%
                                            White households. Large segments of both       60%     US total
                                            Latino and African-American households
                                                                                           50%
                                            are extremely vulnerable to economic
                                                                                           40%
                                            downturns, because they are less likely                Latino
                                                                                           30%
                                            to own real estate and other significant
                                            assets, and thus are more likely to live       20%

                                            paycheck to paycheck. In fact, home own-       10%
                                            ership is closely tied to the net worth of a   0%
                                                                                                 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
                                            household.
                                                                                            80

                                            LatinoS at a diSadvantage                       70
                                                                                           and thus are more difficult places to buy
                                            Compared to mainstream America, Lati-          homes. While these factors will change
                                                                                            60

                                            nos are younger, less well educated, and       over time as the Latino population ages,
                                                                                            50
                                            have significant population concentra-         becomes better educated, and disperses
                                                                                            40
                                            tions in locations like southern Califor-      more broadly across the country, newer
Kochlar, R. The Wealth of Hispanic House-                                                   30
holds: 1996 to 2002. (Washington, DC:       nia and the New York City metropolitan         immigrants may face the same set of
                                                                                            20
Pew Hispanic Center), October 2004.         area, which have a higher cost of living,      challenges.
                                                                                            10




Institute of Design                         Strategic Design Workshop | Spring 2006                                                                       6
       Institute of Design




omes                                              loCatIon, loCatIon, loCatIon
                                                 Number of Hispanics By County + Hispanic Population Growth By State
                                                 Compared with Pulte Locations



o
       Strategic Design Workshop | Spring 2006




                                                                                                                                             Comunidad PultE
lation
 unty
th
ate
                                                                                                                           Pulte Homes
ence                                                                                                                       Del Webb
                                                                                                                           DiVosta

                                                                                                                    0-999
                                                                                                                    1,000-9,999
                                                                                                                    10,000-49,999
                                                                                                                    50,000 or more

                                                                                                    New Hispanic state
                                                                                                    (growth > 200% and increase > 200,000)
                                                                                                    Established Hispanic state
                                                                                                    (growth < 200% and increase > 200,000)
                                                                                                    Emerging Hispanic state
                                                 Pew Hispanic Center tabula-                        (growth > 200% and increase < 200,000)
                                                 tions from the 1980 & 2000
                                                 Censuses.                                          Nonmagnet state
panic Center                                                                                        (growth < 200% and increase < 200,000)
 the 1980 & 2000
                                                 Pulte website.
       7




                                                  C o mU nId a d PUl t e                                                               11
                                           Comunidad PultE




Latino Belief in the                       › 76% believe the American                         Dream is attainable.
American Dream
                                           › 61% believes life will get better for the average
                                             Latino over the next 25 years.

                                           › Providing “a better life for our children” is the
                                             most important part of the American Dream.

                                           › Least important: financial success and secu-
                                              rity—only ranked as 9% of the American Dream.

                                           › A majority feel connected                       to the government—
                                             unlike most non-Latinos.




                                  .      latinos and the american dream
                                           The American Dream is an ingrained idea          Another concept that Latinos associate
                                           that thrives throughout Latino culture.          with achieving the American Dream is
                                           More than three quarters of Latinos believe      breaking away from the ethnic enclave
                                           the American Dream is attainable, and 61%        and moving to the suburbs. The image of
                                           believe the life of the average Latino will      success in America is tied to living in the
                                           get better over the next 25 years. For Lati-     suburbs. For Latinos, the idea of living in a
                                           nos, the concept of the American Dream is        suburban setting is a sign of someone who
                                           often a hybrid of traditional Latino values      has “made it,” someone who has achieved
                                           with American ideals and behaviors. Lati-        the American Dream. Often times several
                                           nos see the American Dream as an accul-          Latino families will combine their incomes
                                           turation process where they adopt aspects        to rent or buy a home in the suburbs, each
                                           of American culture while holding on to          family occupying a single room.
                                           parts of their original culture.
                                                                                            Although many Latinos who live in met-
                                           Latinos believe the most important part of       ropolitan areas do live in the suburbs, the
The National Community for Leadership,
                                           the American Dream is providing a better         move is not a complete separation from
Inc, “The Latino American Dream: High
Hopes and Harsh Realities” (Washington     life for their children. For Latinos, children   the barrio. Suburban Latino residences are
D.C.), 2005.                               come first. In Latino families it is expected    often adorned with souvenirs from peo-
                                           that everyone nurture the children. It is also   ple’s native countries and proudly display
Figureredo, D.H., The Complete Idiot’s
Guide to Latino History and Culture (New
                                           common for the older children to continue        their native flag. Suburban Latinos often
York: Alpha), 2002.                        to live at home until their wedding day.         return to the barrio to hear Spanish being




Institute of Design                        Strategic Design Workshop | Spring 2006                                                     
                      Comunidad PultE




                      spoken and to partake in neighborhood
                      rituals.

                      Latino aSpirationS:
                      tHe Latino dreaM HouSe
                      The ideal home for a Latino family is cen-
                      tered on the kitchen. The kitchen would be
                      larger than a normal home, a place where
                      the mother prepares meals for her fam-
                      ily as a way of keeping them healthy and
                      happy. The house would have a mini-
                      mum of three bedrooms and two to three
                      bathrooms to accommodate the children,
                      aunts, uncles and possibly grand parents.
                      Ample outdoor space such as a back yard,
                      deck or porch are necessary for the fam-
                      ily to enjoy celebrating with neighbors
                      outside, and having space for the children
                      to play.




Institute of Design   Strategic Design Workshop | Spring 2006      
                                           Comunidad PultE




Financing a                                Company                         University                     Bank                        Savings
Home in Mexico                             › Employees are eligible        › Employees of public          › Home loans are offered    › Since the 1994 devalu-
                                             for government loans            universities are eligible      from banks at higher        ation of the peso, many
Mexicans have several op-                    provided through their          for loans through their        interest rates              Mexicans prefer to save
                                             employment after work-          employment                                                 their own money little by
tions that ease their path to
                                             ing for 5 or 6 years                                                                       little rather than finance
homebuilding—most notably,                                                                                                              through banks
                                           › Employees must fulfill
INFONAVIT (website shown be-                 eligibility requirements
low), the government’s worker                to receive govern-
                                             ment loans, which are
housing agency.                              designed to help the
                                             low-income population
                                           › A 15 or 30 year mort-
                                             gage is provided by the
                                             government to the em-              Home Buying Process
                                             ployer at lower interest           1.   Save money or secure financing options
                                             rates than are offered             2.   Find and buy land using real estate agent
                                             at banks
                                                                                3.   Work with an architect to design home
                                           › Mortgage payments
                                             are deducted from                  4.   Build the home’s outer frame
                                             the employee’s pay-                5.   Build home’s interior
                                             check every month                  6.   Move in (house may still be under construction)
                                                                                7.   Build second story or other additions to the home in the future once
                                                                                     more money is saved




                                  .      native Country Real Estate Experience
                                           One of the reasons Latino’s find the pro-                       » Family moves in to house, house still
                                           cess of buying a home in the United States                        under construction.
                                           so intimidating is because the process for                      » Complete construction of primary home.
                                           buying in their native country is very dif-                     » When family saves enough money and
                                           ferent. By understanding how the native                           as the family grows in size, additions
                                           country real estate process works, insights                       and a second story is added onto the
                                           can be used to create a new home buying                           house.
                                           process for Latinos in the U.S. that reflects
                                           a process similar to that which they are                        Financing a HoMe in Mexico
                                           familiar with.                                                  There are many ways to finance a home in
                                                                                                           Latin countries. For Mexican immigrants,
                                           overview oF tHe HoMe Buying                                     the process of acquiring a loan back home
                                           proceSS in Mexico                                               is very different from obtaining a loan in
                                           » Save money or secure financing.                               the U.S. There are four general ways in
                                           » Find and buy land using a real estate                         which a Mexican citizen can obtain a loan
                                             agent.                                                        to buy a home in Mexico:
                                           » Work with a private architect to design                       » Through their Company. Employees are
                                             home.                                                            eligible for government loans provided
                                           » Architect’s personal contracting crew                            through their employer after they have
Ricardo Lopez, Mexican citizen and MBA
Student, IIT Chicago, Interview February
                                             builds the home’s outer shell.                                   worked with the company for five or six
23, 2006.                                  » Begin to construct the home’s interior.                          years. The employee must fulfill certain




Institute of Design                        Strategic Design Workshop | Spring 2006                                                                             0
                                                        Comunidad PultE




Latinos Latinos        HomeBUyIng: mexICo 1
                HomeBUyIng: mexICo 1
    Home Purchase Timeline, Mexico: Educated or Middle-Class Person
        Mexican Middle-Class Person | Others
                                              Educated/Middle | Others
                                         Educated/Middle Class Class |                                         Others


                                           1 Month1 Month                      1 Year 1 Year              5 Years 5 Years
                                                 Obtains                             If building                         Adds on to home, creating
          Ready to buy Ready to buy Obtains a bank loan. a bank loan. If building own home, own home, Adds on to home, creating
                                                                                     construction is       more          more room
                                                                       construction is now partially now partiallyroom for growing for growing
                                                 realtor to find       complete. Moves in while
                                    Works with a Works with a realtor to find                              family.
                                                                                     complete. Moves in while            family.
                                                  an architect         construction continues.
                                    land. Engagesland. Engages an architect          construction continues.
                                                 and a
                                    and a construction construction
                                                 company to
                                    company to build home. build home.




                                                         Or, works
                                           Or, works with a realtor with a realtor
                                                         to find an
                                           to find and purchase and purchase an
                                           existing home.existing home.




                                                       eligibility requirements to receive a gov-                 not happen in a bank. Since the 1994
                Source: Ricardo
Source: Ricardo Lopez, Mexican Lopez, Mexican          ernment loan. These loans are designed                     devaluation of the Peso, many Mexicans
                MBA Student, Chicago, Interview
MBA Student, Chicago, Interview
2/23/06         2/23/06                                to help the low-income population of                       prefer to save their own money little by
                                                       Mexico. A fifteen or thirty year mortgage                  little—and often in a hard currency, like
                                                    d PUl t e a d PUl t e
                                                       mU nId
                                         C o mUnId aC ois provided to the employee by the gov-                    dollars—rather than through a tradition- 18

                                                       ernment at a lower interest rate offered                   al savings account in bank. In Mexico,
                                                       at a bank. Mortgage payments are then                      banks are distrusted and represent a risk
                                                       deducted from the employees paycheck                       for personal savings.
                                                       each month.
                                                    » Through their University Employer. Em-                    HoMe purcHaSe tiMeLine
                                                       ployees of public universities are eligible              in Mexico
                                                       for loans provided to them through the                   » Educated Middle-Class Mexican. The
                                                       university. The process of obtaining                       timeline is much quicker for a middle-
                                                       a loan such as this is similar to loans                    class Mexican citizen. It is not required
                                                       given out by a non-university employer                     that they spend five to six years in ser-
                                                       (described above).                                         vice to a particular company before they
                                                    » Through a Bank. Home loans can also be                      are allowed to apply for a loan. They
                                                       obtained through a bank, however are                       can acquire a loan from a bank right
                                                       usually a last option due to higher inter-                 away. Working with a realtor, they find
                                                       est rate.                                                  a home or a parcel of land and purchase
                                                    » Through Accumulated Personal Savings.                       it. They then work with an architect and
                                                       While this is a common practice in most                    contracting crew to design and build the
                                                       countries, in Mexico saving money does                     home. If they are building a new home,




       Institute of Design                              Strategic Design Workshop | Spring 2006                                                           1
                                                 Comunidad PultE




Latinos         HomeBUyIng: mexICo 2
    Home Purchase Timeline, Mexico: Educated or Middle-Class Family
         Mexican Worker | Government | Other

                                  Average Worker |                               Government               |    Others


                                   5 Years                             10 Years                               15 Years                          20+ Years
            Begins working.        Qualifies for a government          Working with family and                Hires workers to build addition   Patrimony: passes home
                                   subsidized loan through             friends, builds an addition onto       onto home to accomodate           ownership on to younger
            Saves money in hard    INFONAVIT.                          home to create more room for           grandchildren.                    generation as a financial
            currency.                                                  growing family.                                                          inheritance.
                                   Works with a realtor to purchase
                                   a home.




                                   Works with a realtor to purchase
                                   land. Engages architect and
                                   contractors to build a home.

                                   Moves in when first portion is
                                   complete, and construction
                                   continues.



Source: Ricardo Lopez, Mexican
MBA Student, Chicago, Interview
2/23/06

                                                    it may take several years to complete all                          years of working for one company,
                                  C o m U n Id a d P U l t e                                                                                                19
                                                    of the home. However, the family will                              they are qualified for a government-
                                                    move in and occupies the house as soon                             subsidized loan through infonavit
                                                    as the shell is constructed. After ten                             (Instituto del Fondo Nacional Para La
                                                    years additions are added to accommo-                              Vivenda de Los Trabajadores). After
                                                    date a larger and growing family.                                  completing some simple paper work,
                                                                                                                       the loan is granted and payments are
                                                 » Average Mexican Worker. For the aver-                               automatically deducted from their
                                                   age Mexican worker the savings and                                  paycheck. Using a real estate agent
                                                   preparation period is anywhere from                                 or an architect they find land or an
                                                   five to six years. During this time they                            existing home and purchase it. After
                                                   are saving money in hard currency                                   an average of ten years, as the family
                                                   since banks are not trusted due to                                  grows and more money is saved, ad-
                                                   the 1994 Peso devaluation. After five                               ditions to the house are built.




         Institute of Design                     Strategic Design Workshop | Spring 2006                                                                                    2
                                                  Comunidad PultE




Latinos         HomeBUyIng: U.S.
    Buying a Home: U.S. Latino Timeline                                                     latInoS
        Latino | Others
                                    Latino Immigrant |                              Others


                                     5 Years                            10 Years                        11–12 Years                     20+ Years
            Immigrates to U.S.       Continues renting. Family grows.   Contacts realtor.               Ready to buy.                   Builds addition onto home to
                                                                                                                                        create more room for growing
            Works as many as         Pools wages with entire family— Works with realtor to prepare to   Takes eight weeks to find and   family.
            three jobs at once,      everyone works.                 buy a home: establishing credit,   buy home, putting 10% down.
            saving 5–10% of                                          learning the process, setting
            income.                                                  expectations.                      Moves in.




                                    .10          Buying a Home: u.S. latino timeline
Source: Zeza DeCosta, Coldwell
Banker Real Estate Agent, Boston,
Interview 2/17/06                                 Buying a home in the Unites States is a                     buys to forgo having an inspection, or that
                                                  very intimidating and drawn out process                     having a real estate lawyer represent them
                                                  for Latino immigrants. Some of the major
                                    C o m UnI d a d P Ul t e                                                  is not necessary. These cost-saving mea-  20
                                                  barriers that make this process so chal-                    sures appeal to cash-strapped Latinos up-
                                                  lenging are: the language barrier, poor                     front, however come back to haunt them
                                                  or no credit history, cash-based income                     later on. It is not uncommon for Latino’s
                                                  coming from multiple members of a                           who have been taken advantage of to pay
                                                  single household, and no documentation                      enormous legal fees in a last ditch attempt
                                                  of residency.                                               to sue the sellers and agent who’s house
                                                                                                              they bought, only to spend all their money.
                                                  Aside from these challenges, there are                      This finally results in the tragic end of
                                                  other more intimidating concerns of new                     the bank foreclosing on their house and
                                                  immigrated Latino family that discourage                    the family being left without any savings.
                                                  them from buying a home. Latino commu-                      When a family has been taken advantage
                                                  nities are tight-knit cultures where word                   of by a real estate agent, the Latino com-
                                                  of mouth information is the fastest, most                   munity hears about this and immediately
                                                  reliable source of learning about the new                   develops skepticism about the real estate
                                                  American world they are living in. It is not                process.
                                                  uncommon for Latino families to be taken
                                                  advantage of when they try to buy a home.                   All agents who are successful in working
                                                  Realtors have been known to advise Latino                   with Latino buyers exhibit many of the




        Institute of Design                       Strategic Design Workshop | Spring 2006                                                                         
                      Comunidad PultE




                      same behaviors. They are fluent in Span-       who has a good track record within the
                      ish, they have a strong word-of-mouth          Latino community. After understand-
                      reputation in the Latino community, they       ing their financial situation, the agent
                      understand the extended time-frame in          informs the family, up front, that they
                      which they will be working with the fam-       will need to work together for a mini-
                      ily, and they know what needs to be done       mum of one year to get them prepared
                      up-front to prepare Latino buyers to own a     to buy a home. The agent helps them
                      home.                                          establish credit, optimize their savings,
                                                                     obtain legal documentation of residency,
                      Latino tiMeLine For Buying                     and educates them about the real estate
                      a HoMe in tHe u.S.                             process. All the while, the agent is com-
                      » Immigration/Arrival. The head of the         municating to them in Spanish.
                        household typically works as many as       » Eleven Years from Arrival. Once the fam-
                        three full time jobs—and everyone in         ily is ready to buy, the process moves
                        the family works some type of job. Five      very quickly. It usually takes approxi-
                        to ten percent of collective household       mately eight weeks for the family to
                        income goes into savings. They are liv-      search for the home, obtain financing,
                        ing in a rented apartment, usually to        purchase the house, and move in. By the
                        small of a space for the whole family to     time the closing day arrives, the family
                        be comfortable. They are linked into the     has 10% to put down on the total cost.
                        community and learn from others about
                        the real estate process in their new
                        country. They also hear horror stories
                        about other Latinos that have been taken
                        advantage of by realtors.
                      » Ten Years From Arrival. After work-
                        ing and saving for ten years, the fam-
                        ily contacts a trusted real estate agent




Institute of Design   Strategic Design Workshop | Spring 2006                                               
                                            Comunidad PultE

 Latinos                          attemPtS to HelP U.S. latInoS
Latino-Targeted Real Estate Offerings
                                  Latino |              Others
                                      Initiation                      Assimilation                    Transaction       Acquisition

                                   5 Years                            10 Years                          11–12 Years                     20+ Years
            Immigrates to U.S.     Continues renting. Family grows.   Contacts realtor.                 Ready to buy.                   Builds addition onto home to
                                                                                                                                        create more room for growing
            Works as many as       Pools wages with entire family— Works with realtor to prepare to     Takes eight weeks to find and   family.
            three jobs at once,    everyone works.                 buy a home: establishing credit,     buy home, putting 10% down.
            saving 5–10% of                                        learning the process, setting
            income.                                                expectations.                        Moves in.




                                                   Casa Latino LLC
                                                Real Estate Agent
                                                   Fannie Mae
                                                       En Su Casa
                                                              NAHREP                              Freddie Mac
 Solution attempts                                                                    De Oro          Chase Home Finance
                                            Casa Nueva.com                            Group
      Single Offerings                                                                                Wells Fargo Home Mortgages
                                                       First American Corp.
      Multiple Offerings                                                                  U.S. Bank Home Mortgage
      Holistic Offering


                                  C o m Un I d a d PU l t e                                                                                                     21



                              .11         Real Estate offerings for latinos
                                            As Latino homebuyers journey through the                           tranSaction
                                            process of buying a home, they migrate                             During this phase Latino buyers go
                                            through four stages of experience.                                 through the process of locating the home
                                                                                                               they plan to buy and obtaining a loan.
                                            initiation
                                            During this phase, the Latino buyer builds                         acquiSition
                                            awareness as to how the process works.                             This is the final phase of the home buying
                                            They prepare themselves for the buying                             journey and here Latino buyers ready their
                                            process as the community, friends, and                             down payment, take possession of the
                                            family educate them.                                               loan and close on the house.

                                            aSSiMiLation                                                       There are a number of offerings in the real
                                            During this phase, Latino buyers take                              estate industry that cater specifically to
                                            preparation to the next level as they begin                        the Latino homebuyer. These businesses
                                            to button up their finances and solidify the                       fall under four different offering types
                                            necessary documentation.                                           and align themselves with the stages of
                                                                                                               the Latino buyers experience timeline (see
                                                                                                               framework).




Institute of Design                         Strategic Design Workshop | Spring 2006                                                                                    
                      Comunidad PultE




                      » Preparation. These constitute offerings      covers the spectrum in a limited way. They
                        such as education services that teach        help Latino buyers through the Initiation,
                        Latinos about the real estate process.       Assimilation, and Transaction phases. They
                        These services also aim to build aware-      provide guidance throughout the more
                        ness about Latino homebuyers in the po-      complex stages of the process and func-
                        litical, business and real estate sectors.   tion as teachers, educating the buyers
                      » Finance. These offering revolve around       about the unfamiliar undertaking they are
                        the financing side of buying a home.         embarking on. Independent agents spend
                        Services such as credit history checking,    a considerable amount of time with the
                        loan pre-qualification, savings account      Latino buyer before the sale ever happens.
                        management, government assistance            If the agent is well referred by the Latino
                        programs, mortgage brokering and lend-       community, the buyers find this type of
                        ers all fall under this classification.      relationship to be very helpful and are
                      » Purchase. These offerings are directly re-   grateful for the service.
                        lated to the physical property that is be-
                        ing purchased. They constitute services      There are a few companies that offer this
                        such as real estate agents, appraisal,       same type of holistic service on a more en-
                        inspections, lawyers, and post-closing       hanced scale. Casa Latino, llc in Danbury,
                        work.                                        Connecticut, is a Latino specific real estate
                      » Build. These offerings concern them-         agency. They focus their offerings and
                        selves with the construction of new          messages around Latinos specific home
                        homes, the renovation of existing            buying needs. They hold a high degree of
                        homes, and the development of new            relevancy to Latino culture, and are Latino
                        properties. Currently, there are very few    owned and operated.
                        “Build” offerings that are targeting the
                        Latino buyer.                                There are no companies however, that are
                                                                     operating in the Build phase of the market.
                      As illustrated in the framework, there are     Building homes and communities that are
                      very few offerings that focus on the entire    specific to the needs of the Latino buyer
                      spectrum of the Latino home buying expe-       and Latino culture is an untapped opportu-
                      rience. The independent real estate agent      nity area.




Institute of Design   Strategic Design Workshop | Spring 2006                                                   6
                                           Comunidad PultE




                                    .12   the impact of immigration Reform

                                           Recent efforts to address immigration            cause the same porous borders that allow
                                           concerns have boiled over into the streets,      many Central and South American natives
                                           as protestors ranging from ethnic com-           to enter the U.S. can become a conduit for
                                           munity activists to college and high-school      terrorists.
                                           students, to citizens and non-citizens of all
                                           varieties have assembled in record num-          As with many difficult political issues,
                                           bers to express their concerns. At issue are     current legislative proposals may simply
                                           efforts by Congress and the White House          be part of a long debate that continues for
                                           to amend the Immigration and National-           many years.
                                           ity Act (8 usc 1101 et seq.). As of late April
                                           2006, nearly 400 amendments have been            deMograpHic cHangeS
                                           proposed to the central legislative propos-      in Mexico
                                           al (S. 2454, the “Securing America’s Bor-        Immigration reform is only one of several
                                           ders Act”), and it is not clear yet what the     factors that may change rates of Latino
                                           outcome, if any will be. Among the options       immigration, but it appears at present
                                           that have been discussed are:                    to be the largest factor. Some observers
                                                                                            have raised the question of how rising
                                           » changing the number of legal immigrants        living standards in Mexico will affect both
                                             permitted each year                            emigration trends, as well as the birth-
                                           » increasing enforcement of existing im-         rates of families both before and after they
                                             migration laws                                 leave their homeland (see, for example,
                                           » issuing guest-worker visas for people          Kronholz, J., and Lyons, J., “As Families
U.S. Congress, Senate, 109th
                                             who will work in the U.S., but not be-         Shrink in Mexico, the U.S. May Feel Im-
Congress, 2nd Session. S.
2454, Securing America’s                     come citizens, and                             pact” The Wall Street Journal, April 28, 2006
Borders Act [introduced in                 » offering a form of amnesty for illegal         (Vol. 247, No. 99), p.1). However, Mexican
the U.S. Senate; March 16,
                                             aliens.                                        government predictions suggest that an
2006]. Library of Congress <
http://thomas.loc.gov/cgi-bin/                                                              estimated 429,000 people will cross the
bdquery/z?d109:SN02454:>                   The political issues are tangled—many            border into the U.S. each year for at least
April 23, 2006.                            Republicans are inclined to place more           the next thirty years.
“America’s Immigration Quan-
                                           strict limits on immigration, but realize
dary: No Consensus on Im-                  that would likely limit their popularity         It should also be noted that since dra-
migration Problem or Proposed              among the Latino community, long seen            matic change in immigration patterns
Fixes” Pew Research Center
                                           as critical to retaining control of Congress     would have a huge impact on the ability
for the People & the Press,
and the Pew Hispanic Center                and the White House in coming elections.         of certain industries to attract and retain
(Washington, DC), March 30,                There is concern about the ways illegal          workers, employers may recruit from other
2006.
                                           immigration impacts employment, though           countries, including southeast Asia, Africa,
Telephone interview with                   some see it as a necessary way of dealing        and former Soviet republics. Although
Dr. Mary Habeck, Associate                 with the number of low-paying service            some of the proposals in this document
Professor of Strategic Studies,            jobs (particularly in agriculture and con-       are culturally-specific to Latinos, much of
John’s Hopkins School of
Advanced International Studies,
                                           struction) that Americans are unwilling to       the general approach could be re-config-
April 2006. Dr. Habeck is a                take. Others feel that illegal immigrants        ured to targeting other cultural groups as
frequent advisor to the U.S.               are taking jobs away from Americans and          potential Pulte customers.
Government, and has research
                                           contributing to a reduced standard of liv-
interests in the strategic impli-
cations of cultural and ethnic             ing. Homeland security threats are also
coalitions.                                connected with illegal immigration, be-




Institute of Design                        Strategic Design Workshop | Spring 2006                                                     7
      Scenarios
      Scenarios                               ImmIgratIon
                                              ImmIgratIon
                                                    Comunidad PultE


                Immigration policy is unresolved.
                Immigration policy is unresolved.
                We see two potential outcomes.
Two Immigration Scenarios two potential outcomes.
                We see


                              +               Fewer Latinos: 75 million by 2050
                                                                                                                                    75 million
                                              Fewer Latinos: 75 million by 2050
                                                                                                                                    75 million

                                              »
                                              »   Significant curbs on immigration, limited or no Guest Worker program
                                                  Significant curbs on immigration, limited or no Guest Worker program
                                              »
                                              »   Increase in living standards in Mexico
                                                  Increase in living standards in Mexico
 40 million                                   »   Continued elevated birthrate of U.S. Latinos
 40 million                                   »   Continued elevated birthrate of U.S. Latinos
 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |


                          + More Latinos: 155 million by 2050
                          ++
                             More Latinos: 155 million by 2050
                                              »
                                              »
                                              »
                                                  No limits on immigration, and a positive Guest Worker program
                                                  No limits on immigration, and a positive Guest Worker program
                                                  Continued living standards differential between Latin and North America
                                                                                                                                    155 million
                                                                                                                                    155 million


                                              »   Continued living standards differential between Latin and North America
                                              »
                                              »   Ongoing U.S. need for service-economy workers
                                                  Ongoing U.S. need for service-economy workers
                                              »
                                              »   Explosive growth in Latino communities in destination states:
                                                  Explosive growth in Latino communities in destination states:
 40 million
 40 million                                       Nevada, Arizona, California, Texas, Colorado
                                                  Nevada, Arizona, California, Texas, Colorado
 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
      Martin, Jack, and Fogel, Stanley,
      Martin, Jack, U.S. Population to
     “Projecting theand Fogel, Stanley,
     “Projecting the U.S. Population to
      2050: Four Immigration Scenarios”
      2050: Four Immigration Scenarios”
      (Washington, DC: Federation for
      (Washington, DC: Federation for
      American Immigration Reform),
      American Immigration Reform),
      March 2006; based on U.S. Census
      March 2006; based on U.S.
      data and other projections. Census
      data and other projections.


                                              C o mUnId a d PUl t e                                                                      26
                                              C o mUnId a d PUl t e                                                                      26




                                                    two ScenarioS                                  Strategic pLanning iMpact
                                                    Standing in the present, three general sce-    Since population growth, immigration leg-
                                                    narios can be discerned:                       islation, and global migration patterns are
                                                    » Much less immigration. With stringent        significantly beyond the control of Pulte
                                                      limits on legal immigration, and heroic      Homes, how should these issues impact
                                                      border control measures, population          strategic planning?
                                                      growth is largely due to higher birth-
                                                      rates in some population segments. U.S.      First, Pulte should recognize the oppor-
                                                      population in the year 2050 is projected     tunity presented by the massive increase
                                                      to be 368.2 million, up from 300 million     in the Latino community in coming
                                                      at present.                                  years—regardless of whether that growth
                                                    » More legal immigration. Through am-          is extraordinary, or merely what has been
                                                      nesty programs, guest worker visas, and      predicted for some time.
                                                      other mechanisms, more immigrants
                                                      could come to the U.S., bringing the         Second, Pulte should be prepared to play
                                                      population to 495.5 million by 2050.         a significant role, perhaps in partnership
                                                                                                   with government agencies—and per-
                                                    It should be noted that recent immigrants      haps even with other homebuilders—in
Martin, Jack, and Fogel, Stanley, “Project-         typically have a higher birth rate than        responding to the extra housing needs pre-
ing the U.S. Population to 2050: Four               other segments of the U.S. population. As      sented by the high-growth scenario.
Immigration Scenarios” (Washington,
                                                    a result, even if ongoing immigration (both    But most importantly, Pulte should take
DC: Federation for American Immigration
Reform), March 2006; based on U.S.                  legal and illegal) is discontinued, most im-   note of an essential underlying issue that
Census data and other projections.                  migrant populations will still grow in size    has been revealed in the recent debate
                                                    relative to other population segments.         about immigration policy.




Institute of Design                                 Strategic Design Workshop | Spring 2006                                                      
                      Comunidad PultE




                      BuiLding HeaLtHy, MuLti-                      Pulte can bring its considerable expertise
                      cuLturaL coMMunitieS                          to bear on the challenge of new U.S. resi-
                      Whether more or fewer immigrants come         dents, and become part of the solution that
                      to America, there is a nascent consensus      helps legal immigration continue to be a
                      that communities need to adapt better         driver to the American economy—without
                      to immigrants, and to help immigrants         placing an undue burden on society.
                      adapt themselves to the community.
                      The notion of “cultural assimilation” is      An important note: Pulte may choose to target
                      troubling to some, but the idea of helping    design and marketing efforts to reach out to
                      immigrants form healthy connections to        the Latino community, in order to build brand
                      their neighborhoods and communities,          presence and market share. However, care will
                      and to participate more fully in civic life   be required to ensure that the open door this
                      is a basic American aspiration—one that       presents to Latinos doesn’t lead to a Latino-
                      Latinos already have shown a prefer-          only enclave. We contend that the present
                      ence for, and that can only help improve      challenge is primarily to reduce the barriers
                      relationships between Latinos and non-        that keep Latinos out. Understanding and re-
                      Latinos.                                      sponding to Latino values will help bring them
                                                                    in—but it needn’t exclude other cultures. In
                      The homebuilding industry has taken           fact, an openness to Latino culture may prove
                      great pride in the value that homeowner-      very attractive to Generation X and Millen-
                      ship brings to any community, by fostering    nial homebuyers, of every ethnic background,
                      commitment, building wealth, and ensur-       just as urban and near-suburb areas of older
                      ing the stability of neighborhoods. Nearly    cities—typically, the location of the “barrio” or
                      every government program promoting ho-        Latino neighborhoods—are becoming tremen-
                      meownership has used that as a primary        dously popular places for younger people to live
                      justification for its existence.              and spend their time.




Institute of Design   Strategic Design Workshop | Spring 2006                                                      
      Comunidad PultE




      Insight Analysis
      & Concept Generation




sub   title
                            Comunidad PultE




                      .1   From insights to design Principles

                            During the research phase of this              Position home as a step towards a better future for a Latino family.
                                                                           Create product systems.
                            project, and drawing on the preceding          Invest in industry outside of current growth areas.
                            pages, insights were gathered on Pulte         Empower the whole community
                                                                           Think and communicate in “we” terms, not “I” terms.
                            Homes, the real estate and homebuild-
                                                                           Support Latino-to-Latino promotion of Pulte.
                            ing industries, and Latino culture.            Elevate Latino presence within Pulte.
                            These insights were then rephrased             Anticipate collective decision making.
                                                                           Empower the buyer.
                            as Design Principles to guide concept          Focus on customer experience.
                            generation.                                    Decentralize marketing to adapt to local market needs.
                                                                           Respond to emotional needs of homebuyer.
                                                                           Provide homes and sales strategies for larger families.
                                                                           Anticipate growth in Latino market.
                                                                           Provide family financing options.
                                                                           Communicate options to people in need.
                                                                           Support cash-based financing (rethink credit assessments).
                                                                           Foster positive Latino interactions with banks.
                                                                           Expand into northwest US.
                                                                           Expand into midwest US.
                                                                           Provide outdoor spaces (celebration spaces) as part of a residence
                                                                           Allow occupancy during construction.
                                                                           Design home for long-term flexibility.
                                                                           Emphasize customer service and human interaction
                                                                           Provide services that accommodate Latino home-buying journey
                                                                           Make core processes user-centered.
                                                                           Be transparent and foster trust in packaged offerings.
                                                                           Innovate in brand design.
                                                                           Target Latinos in developing business model.
                                                                           Target Latinos in brand communications.
                            Research                          Design       Adapt to non-traditional homebuying needs.
                                                                           Develop Spanish communications.
                            Insights                          Principles   Assess and respond to Latino behavioral needs.
                                                                           Assess and respond to different user types within Latino community.
                                                                           Demonstrate respect and formality in communications and
                                                                           environments.
                                                                           Accommodate Latino interaction style in sales methods.
                                                                           Provide financial services targeted to Latinos
                                                                           Accommodate urban land development process.
                                                                           Explore renovation as well as new construction.
                                                                           Develop new service offerings.
                                                                           Develop Latino senior living options.
                                                                           Revisit existing Pulte innovations to discover additional applications
                                                                           for Latino market.
                                                                           Redirect overseas expertise to US Latino market.
                                                                           Create integrated offerings.
                                                                           Commit to long-term relationship building with customers and
                                                                           community.
                                                                           Foster connections with employers and others who can help home
                                                                           buyers.
                                                                           Foster partnerships with government agencies.
                                                                           Develop partnerships that simplify financial operations for users.
                                                                           Engage with customers ten years prior to home purchase.
                                                                           Work with potential homebuyers to help them prepare.
                                                                           Support real estate agents pre-sale work with customers.
                                                                           Respond to emotional needs of homebuyer.
                                                                           Simplify financial decision-making
                                                                           Demonstrate difference from real estate horror stories.
                                                                           Develop operational strategy for urban settings.
                                                                           Provide shared spaces in community.
                                                                           Provide inter-generational space in homes and communities.
                                                                           Explore suburb/urban core connections.
                                                                           Support religious community involvement.




Institute of Design         Strategic Design Workshop | Spring 2006                                                                                 61
                            Comunidad PultE




                      .2   Preliminary design Principle Clustering

                            Design principles, shown on the previous page, were clustered using the Insight Matrix
                            algorithm, after being rated for mutual interactions, resulting in the larger groupings of
                            design challenges shown in the left column.



 Pulte doesn’t offer        Decentralize marketing to adapt to local market needs.

 homes in communities       Anticipate growth in Latino market.

 where Latinos              Expand into northwest US.

 live: urban centers,       Expand into Midwest US.
 Latino population          Accommodate urban land development process.
 concentrations.            Develop operational strategy for urban settings.

                            Redirect overseas expertise to US Latino market.

                            Revisit existing Pulte innovations to discover additional applications for Latino market.

                            Explore renovation as well as new construction.


 The design of              Provide homes and sales strategies for larger families.

 Pulte homes and            Provide outdoor spaces (celebration spaces) as part of a residence

 communities, while         Design home for long-term flexibility.

 not unattractive, do       Provide shared spaces in community.
 not especially appeal      Provide inter-generational space in homes and communities.
 to Latinos.                Explore suburb/urban core connections.


 Pulte’s current sales      Empower the buyer.

 model is designed          Develop new service offerings.

 to appeal to people        Focus on customer experience.

 who are ready to           Communicate options to people in need.
 buy now. But many          Emphasize customer service and human interaction
 Latinos need years of      Provide services that accommodate Latino home-buying journey
 financial preparation,     Engage with customers ten years prior to home purchase.
 and education to           Foster connections with employers and others who can help home buyers.
 understand the U.S.        Commit to long-term relationship building with customers and community.

 real estate process.       Create integrated offerings.
                            Make core processes user-centered.
                            Adapt to non-traditional homebuying needs.
                            Provide financial services targeted to Latinos
                            Assess and respond to different user types within Latino community.




Institute of Design         Strategic Design Workshop | Spring 2006                                                      62
                         Comunidad PultE




 Pulte homes are         Position home as a step towards a better future for a Latino family.
                         Support cash-based financing (rethink credit assessments).
 difficult from Latino
                         Simplify financial decision-making
 families to afford
 without alternate
 credit, or other
 assistance.


 Pulte’s sales methods   Empower the whole community
                         Think and communicate in “we” terms, not “I” terms.
 are translated to
                         Support Latino-to-Latino promotion of Pulte.
 Spanish, but are not
                         Elevate Latino presence within Pulte.
 culturally adapted to
                         Anticipate collective decision-making.
 Latinos.
                         Respond to emotional needs of homebuyer.
                         Provide family financing options.
                         Foster positive Latino interactions with banks.
                         Allow occupancy during construction.
                         Be transparent and foster trust in packaged offerings.
                         Innovate in brand design.
                         Target Latinos in developing business model.
                         Target Latinos in brand communications.
                         Develop Spanish communications.
                         Assess and respond to Latino behavioral needs.
                         Demonstrate respect and formality in communications and environments.
                         Accommodate Latino interaction style in sales methods.
                         Foster partnerships with government agencies.
                         Develop partnerships that simplify financial operations for users.
                         Demonstrate difference from real estate horror stories.
                         Support religious community involvement.
                         Work with potential homebuyers to help them prepare.
                         Support real estate agents pre-sale work with customers.
                         Respond to emotional needs of homebuyer.


 Long-term Latino        Develop Latino senior living options.
                         Invest in industry outside of current growth areas.
 strategy
                         Create product systems.




Institute of Design      Strategic Design Workshop | Spring 2006                                 6
                            Comunidad PultE




                      .   Critical design Requirements

                            Careful study of the initial clusters of     These Critical Design Requirements be-
                            Design Principles, shown on the previous     came a foundation for a creative workshop,
                            pages, resulted in the formulation of five   engaging nearly twenty design profession-
                            Critical Design Requirements, which we       als in a focused effort to explore potential
                            deem essential for any successful attempt    design strategies.
                            to respond to real estate opportunities in
                            the Latino market:




                              Critical Design Requirements
                              1� Sales methods must be culturally
                                     appropriate.

                              2� Provide sufficient financial preparation
                                     and education—over years if necessary.

                              3� Make homes easier to afford.
                              4� Offer homes in urban centers,
                                     not only suburbs.

                              5� Design homes and communities for
                                     Latino culture.

                              A system of solutions will best address
                              these requirements.




Institute of Design         Strategic Design Workshop | Spring 2006                                                6
                            Comunidad PultE




                      .   Concept Generation Workshop

                            A concept development workshop was
                            held to generate concepts that would help
                            Pulte Homes target the Latino home buy-
                            ing market.

                            croSS cuLturaL exerciSe
                            To provide participants cultural context
                            before beginning concept development,
                            participants were taken through a brief
                            cross-cultural exercise that presented a
                            scenario of what it might be like to live in
                            a different country with a different culture.
                            They were then asked to consider what
                            it may be like to navigate the home-buy-
                            ing process in this foreign environment.
                            This situation is a parallel to what many
                            Latinos face in the U.S. The exercise was
                            used to help participants imagine what the
                            Latino home buying experience might be
                            like.
                                                                                                                        Buying                 Interdependence
                                                                                                                        Latino Home            La Familia and           Core Cultural Values          Who are Latinos?

                            Latino Movie cLip
                                                                                                                                             Buying                                                                                    Interdependence
                                                                                                                                             Latino Home                         Who are Latinos?           Core Cultural Values       La Familia and
                                                                             Who are Latinos?        Core Cultural Values         La Familia and                Latino Home Buying                                Interdependence             Buying

                            Participants viewed a scene from the film                      Buying
                                                                                                  Who are Latinos?
                                                                                           Latino Home
                                                                                                                Interdependence
                                                                                                                La Familia and
                                                                                                                                  Interdependence
                                                                                                                           Core Cultural Values
                                                                                                                                             Buying
                                                                                                                                                                 Latinos?
                                                                                                                                                        La Familia and
                                                                                                                                       Core Cultural Values
                                                                                                                                                                                     Core Cultural Values
                                                                                                                                                                                      Latino Home Buying
                                                                                                                                                                                              Interdependence
                                                                                                                                                                                                                  La Familia and
                                                                                                                                                                                                                           Buying
                                                                                                                                                                                                                                              Latino Home
                                                                                                                                                                                                                                       Who are Latinos?
                                                                                                                                                                                                                                            Interdependence
                                                                                                                                                        Interdependence
                                                                          on
                            My Family, to gain a richer perspectiveCore Cultural Values
                                                                                                                                             Latino Home          re Cultural Values          La Familia and               Latino Home
                                                                                                                                                                                                                Core Cultural Values        La Familia and
                                                                                                                                                                                     Who are Latinos?
                                                                                                                          Who are Latinos?        Core Cultural Values          La Familia and              Latino Home B
                                                         Who are Latinos?                      La Familia and                Latino Home Buying                                 Interdependence
                                                                                               Interdependence
                            the multi-generational interactions within
                                                                                              Who are Latinos?         Core Cultural Values   Who are Latinos? and
                                                                                                                                                   La Familia          Core Cultural Values        La Familia and
                                                                                                                                                                                  Latino Home Buying
                                                                                                                                                   Interdependence                                 Interdependence


                            one fictional Mexican-American house-
                            hold.



                            group BrainStorMing SeSSionS
                            Workshop participants were separated
                            into different groups to brainstorm around                                                        Information cards that listed insights and
                            four category areas:                                                                              imperatives about the topic were also
                                                                                                                              distributed to provide context for brain-
                            1. Finances                                                                                       storming.
                            2. Sales Experience
                            3. Home/Neighborhoods
                                              Finances                                                                                          Finances
                            4. Value Web Latinos with tight finances are not aware of what their op-
                                     Insights                                                                                     Insights      Latinos with tight finances are not aware of what their op-
                                                       tions are for financing a home.                                                          tions are for financing a home.
                                                       Mexicans may be less likely to trust banks.                                              Mexicans may be less likely to trust banks.

                                                                    Finances, Sales
                            The first three Agroups, finances are down-payment.
                                                   Latino family’s
                                                 everyone pools resources for
                                                                                 more likely cash-based;                                        A Latino family’s finances are more likely cash-based;
                                                                                                                                                everyone pools resources for down-payment.

                            Experience, and Home/Neighborhoods
                                                 All members of the family contribute to household income.                                      All members of the family contribute to household income.


                            were given brochures thatpeople in need.          described Lati-
                                     Imperatives Provide family financing options.
                                                 Communicate options to
                                                                                                                                  Imperatives Provide family financing options.
                                                                                                                                              Communicate options to people in need.

                                                        and their (rethink credit assessments)
                            nos, their values, positive Latinofinancinghome buying
                                                 Support cash-based
                                                 Foster                 interactions with banks.
                                                                                                                                               Support cash-based financing (rethink credit assessments)
                                                                                                                                                Foster positive Latino interactions with banks.

                            experience. Simplify financial decision making.                                                                     Simplify financial decision making.




                                                       Finances                                                                                 Finances
Institute of Design                              Latinos | Spring 2006
                            Strategic Design Workshop with tight finances are not aware of what their op-
                                        Insights                                                                                  Insights      Latinos with tight finances are not aware of what their op-                        6
                                                       tions are for financing a home.                                                          tions are for financing a home.
                                                       Mexicans may be less likely to trust banks.                                              Mexicans may be less likely to trust banks.
                                                       A Latino family’s finances are more likely cash-based;                                   A Latino family’s finances are more likely cash-based;
                                                       everyone pools resources for down-payment.                                               everyone pools resources for down-payment.
                                                                                                                                                                   Comunidad PultE




                                                             Status	
                                                                         Papá
                                                                         Came to America at age 15.                                   Status	
                                                                                                                                                  Mamá   roLe pLay, round roBin
                                                                                                                                                  Came to America in her 20s, to marry Papá. She has


                                                                                                                                                        The second round of brainstorming in-
                                                             Works	      Started as a busboy in a restaurant, and now works                       been too busy to learn English well, and has been
                                                                         as a manager of cleaning supply business, and as a                       afraid of taking the citizenship exam, so she still has
                                                                         part-time janitor on the weekends.                                       a Green Card, even though she could become a citizen
                                                                                                                                                  (because she is married to a citizen)
                                                             Lives 	     in a mostly Latino neighborhood in an older part of a
                                                                         big city, in a rented house.                                 Works       As a shift leader in a drycleaning plant, with four close


                                                                                                                                                        volved a role playing round robin activ-
                                                                                                                                                  friends from the neighborhood.
                                                             Speaks	     English well, but with an accent; Spanish at home.
                                                                                                                                      Lives 	     in a mostly Latino neighborhood in an older part of a
                                                             Media	      Enjoys watching the Spanish Univision channel, but
                                                                                                                                                  big city, in a rented house. Much of her life involves
                                                                         also reads the newspaper sometimes.
                                                                                                                                                  the children, church (Catholic), and friends.
                                                             Hopes	      To see his five children be successful and happy.


                                                                                                                                                         ity. Each member of the team developed
                                                                                                                                      Speaks	     Spanish, and some English (heavily accented)
                                                             Worries	    About having enough money, even though he saves
                                                                                                                                      Hopes	      To see a big happy family—lots of grandchildren!
                                                                         and works two jobs.
                                                                                                                                      Worries	    About having enough money, and about missing
                                                                                                                                                  friends in their neighborhood (and family in Mexico)




Papá                                                         Status	
                                                             Works	
                                                                         Papá
                                                                         Mamá
                                                                         Came to America at age 15.
                                                                         Started as a busboy in a restaurant, and now works
                                                                                                                                      Status	
                                                                                                                                                  Mamá
                                                                                                                                                         concepts from the perspective of their
                                                                                                                                                  Came to America in her 20s, to marry Papá. She has
                                                                                                                                                  been too busy to learn English well, and has been
                                                                                                                                                  afraid of taking the citizenship exam, so she still has

                                                                                                                                                         assigned role.
                                                                         Came to America in her 20s, to business, and as a
                                                                         as a manager of cleaning supplymarry Papá.
Came to America at age 15.
Started as a busboy in a restaurant, and now works
                                                             Status	
                                                                         Pulte Contractor has She has
                                                                         been too busy to learn weekends.
                                                                         part-time janitor on the English well, and  been                         Pulte Concièrge
                                                                                                                                                  a Green Card, even though she could become a citizen
                                                                                                                                                  (because she is married to a citizen)
as a manager of cleaning supply business, and as a           Lives 	     afraid of taking the citizenship exam, older part has
                                                                         in a mostly Latino neighborhood in anso she stillof a
                                                             Culture	    White/Protestant, of mixed European background.              Culture	
                                                                                                                                      Works       As a American; in a drycleaning at UCLA. Has friends
                                                                                                                                                  Asianshift leader was in a sorority plant, with four close
part-time janitor on the weekends.                                       a Green Card, even though
                                                                         big city, in a rented house. she could become a citizen
                                                                         Took Spanish in high school, has a Latino neighbor.                      of many ethnicities.
                                                                                                                                                  friends from the neighborhood.
in a mostly Latino neighborhood in an older part of a        Speaks	     (because she is with an to a citizen)
                                                                         English well, but married accent; Spanish at home.
                                                             Lives 	     in an upper middle-class neighborhood, mostly white.         Lives 	
                                                                                                                                      Lives 	     in an kinda “cool” downtown neighborhood.
                                                                                                                                                  in a mostly Latino neighborhood in an older part of a
big city, in a rented house.                                 Works
                                                             Media	      As a shift leader in Spanish Univision with four close
                                                                         Enjoys watching thea drycleaning plant,channel, but
                                                             Works	      In an office trailer on the jobsite, for about a year at a
                                                                         friends from the neighborhood.                               Works	      big sales a rented a Pulte development, for about
                                                                                                                                                  In acity, in center at house. Much of her life involvesa
English well, but with an accent; Spanish at home.                       also reads the newspaper sometimes.
                                                                         time, and other times out of the Pulte regional office.                  year and a half at a (Catholic), and friends.
                                                                                                                                                  the children, church time, before moving to a new one.
                                                             Lives 	
                                                             Hopes	      in a mostly Latino neighborhood            older part of
                                                                         Tolarge his five his employees arein an and happy. a
Enjoys watching the Spanish Univision channel, but                       A see part of children be successful  Latinos… but he        Speaks	     Is mostly familiar with anglo-american families
                                                                                                                                                  Spanish, and some English (heavily accented) moving
                                                                         big city, in a rented house. Much of her life involves
also reads the newspaper sometimes.                          Worries	    usually doesn’t think money, as potential customers.
                                                                         About having enough of them even though he saves                         from the suburbs—not anti-Latino, but not as familiar
                                                                         the children, church (Catholic), and friends.                Hopes	      To see a big happy family—lots of grandchildren!
To see his five children be successful and happy.            Ambition	   and works two jobs.
                                                                         Wants to continue rising within Pulte, and so he con-                    with their needs.
                                                             Speaks	     Spanish, and some English (heavily accented)                 Worries	    About having enough money, and about missing
About having enough money, even though he saves                          stantly looks for ways to improve production quality         Ambition	   Wants to become a sales executive at Pulte. Delights
                                                             Hopes	      To see a big happy introduced several innovations in
                                                                                               family—lots of grandchildren!                      friends in their neighborhood (and family in Mexico)
and works two jobs.                                                      and efficiency. Has                                                      in helping customers through the process of buying a
                                                             Worries	    About having enough money, and
                                                                         simplyfying construction methods.about missing                           home.
                                                             Worries	    Decline in their home sales bothers him, though he
                                                                         friends in new neighborhood (and family in Mexico)           Worries	
                                                                                                                                                                        Pulte Homes and the Latino
                                                                                                                                                  Not as sure what to do in situations beyond what is
                                                                                                                                                                                                                                       Homebuying Experience Round-Robin Concept Development
                                                                         still has plenty to do. Notices new developments are                     covered in her training—doesn’t want to look unpro-
Papá                                                                     Mamá
                                                                         further away—and gas is expensive.                                       fessional.            CUSTOMER ExpERiEnCE

Came to America at age 15.                                   Status	
                                                                         Pulte Contractor has She has
                                                                         Came to America in her 20s, to marry Papá.
                                                                                                                                                  Pulte Concièrge   When buying an existing home, there are typi-                      1   Your Role:
                                                                                                                                                                                                                                                                                                                     2    Your Role:


                                                                         been too busy to learn English well, and      been                                         cally eleven stages of the process, according
Started as a busboy in a restaurant, and now works
                                                                         afraid of taking the citizenship exam, so she still has                                    to interviews, surveys and focus groups with
Pulte Contractor
as a manager of cleaning supply business, and as a
part-time janitor on the weekends.
                                                             Culture	
                                                                         Pulte is married to she could become a citizen
                                                                         a Green Card, Concièrge
                                                                         White/Protestant, of mixed European background.
                                                                         Took Spanish in high school, has a Latino neighbor.
                                                                         (because she
                                                                                         even though
                                                                                                      a citizen)
                                                                                                                                      Culture	    Asian American; was in a sorority at UCLA. home friends
                                                                                                                                                                    more than 2,000 first-time Has buyers:
                                                                                                                                                  of many ethnicities.
                                                                                                                                                                       » Dreaming
in a mostly Latino of mixed European older part of
White/Protestant, neighborhood in an background. a           Lives 	
                                                             Culture	    in an upper middle-classaneighborhood, mostly white.
                                                                         Asian American; was in sorority at UCLA. Has friends         Lives 	     in an kinda “cool” downtown neighborhood.
big city, in a rented house.                                 Works       As a shift leader in a drycleaning plant, with four close                                     » Scaling
Took Spanish in high school, has a Latino neighbor.          Works	      of many ethnicities.
                                                                         In an office trailer on the jobsite, for about a year at a   Works	                              Pulte
                                                                                                                                                  In a sales center at »aViewing development, for about a
                                                                         friends from the neighborhood.
English well, but with an neighborhood, mostly white.
in an upper middle-class accent; Spanish at home.            Lives 	     in an and other times out of neighborhood.
                                                                         time, kinda “cool” downtown the Pulte regional office.                   year and a half at a »time, before moving to a new one.
                                                                                                                                                                         Rescaling
                                                             Lives 	     in a mostly Latino neighborhood in an older part of a                                         » Finding
Enjoys watching the the jobsite, for about a year at
In an office trailer onSpanish Univision channel, but a      Works	                                            Latinos… but he
                                                                         In acity, in center employees are of her life involves
                                                                         A large part of hisat a Pulte development, for about a
                                                                         big sales a rented house. Much
                                                                                                                                                  Is mostly familiar with anglo-american families moving
                                                                                                                                                                       » Negotiating
also and the times out sometimes.
time,readsothernewspaper of the Pulte regional office.                                     think of them as moving to
                                                                         usually doesn’t at a time, before potential customers.
                                                                         yearchildren, church (Catholic), and friends. a new one.
                                                                         the and a half
                                                                                                                                                  from the suburbs—not anti-Latino, but not as familiar
                                                                                                                                                                       » Accepting
A see part of children be successful and happy.
Tolarge his five his employees are Latinos… but he           Ambition	   Wants to continuewith anglo-american and so he con-
                                                                         Is mostly familiar rising within Pulte, families moving                  with their needs. » Inspecting
                                                             Speaks	     Spanish, and some English (heavily accented)
About having enough money, as potential customers.
usually doesn’t think of them even though he saves                       stantly looks for ways to improve production quality
                                                                         from the suburbs—not anti-Latino, but not as familiar        Ambition	   Wants to become a »sales executive at Pulte. Delights
                                                                                                                                                                         Limbo
                                                             Hopes	      To see a needs.
                                                                         with their big happy family—lots of grandchildren!
                                                                         and efficiency. Has introduced several innovations in                                         » through
                                                                                                                                                  in helping customers Closing the process of buying a
and works two jobs.
Wants to continue rising within Pulte, and so he con-
                                                             Worries	    simplyfying construction methods.about missing                                                » Completing
stantly looks for ways to improve production quality         Ambition	   About to become a sales executive
                                                                         Wants having enough money, and at Pulte. Delights                        home.
and efficiency. Has introduced several innovations in        Worries	    friends in new neighborhood the family in Mexico)
                                                                         in helping customers through (andprocess of buying
                                                                         Decline in their home sales bothers him, though he a         Worries	                          do in situations beyond to eight
                                                                                                                                                  Not as sure what toThese steps typically take sixwhat is weeks
simplyfying construction methods.                                        still has plenty to do. Notices new developments are
                                                                         home.                                                                    covered in her training—doesn’t want to look unpro- buyer
                                                                                                                                                                       (at a minimum). Most of the time, the
Decline in new home sales bothers him, though he             Worries	    Not as sure what gas in situations
                                                                         further away—andto do is expensive. beyond what is                       fessional.           works with his or her own real estate agent,
                                                                                                                                                                       mortgage broker, and often a lawyer.
still has plenty to do. Notices new developments are                     covered in her training—doesn’t want to look unpro-
further away—and gas is expensive.                                       fessional.                                                                                    While Pulte has some homes for sale that are
                                                                                                                                                                       already built, at the moment, most of their
                                                                                                                                                                                                                                       3   Your Role:
                                                                                                                                                                                                                                                                                                                     4    Your Role:

Pulte Contractor                                                         Pulte Concièrge                                                                               sales are done before a home is constructed.
                                                                                                                                                                       The buyer can meet with a designer to custom-
                                                                                                                                                                       ize certain features of the home, and can visit
White/Protestant, of mixed European background.              Culture	    Asian American; was in a sorority at UCLA. Has friends                                        the construction site while it is being built. The
Took Spanish in high school, has a Latino neighbor.                      of many ethnicities.                                                                          process can take from one month to a year.
in an upper middle-class neighborhood, mostly white.         Lives 	     in an kinda “cool” downtown neighborhood.
In an office trailer on the jobsite, for about a year at a   Works	      In a sales center at a Pulte development, for about a                                         COnSTRainTS
time, and other times out of the Pulte regional office.                  year and a half at a time, before moving to a new one.                                        (First person on this sheet, use space below to list any
                                                                                                                                                                       constraints on this scenario)
A large part of his employees are Latinos… but he                        Is mostly familiar with anglo-american families moving
usually doesn’t think of them as potential customers.                    from the suburbs—not anti-Latino, but not as familiar
Wants to continue rising within Pulte, and so he con-                    with their needs.
stantly looks for ways to improve production quality         Ambition	   Wants to become a sales executive at Pulte. Delights
and efficiency. Has introduced several innovations in                    in helping customers through the process of buying a
simplyfying construction methods.                                        home.
Decline in new home sales bothers him, though he             Worries	    Not as sure what to do in situations beyond what is
still has plenty to do. Notices new developments are                     covered in her training—doesn’t want to look unpro-
further away—and gas is expensive.                                       fessional.




                                                                                                                                                                   vaLue weB redeSign
                                                                                                                                                                   Rather than brainstorming new concepts,
                                                                                                                                                                   the value web group set out to re-evaluate
                                                                                                                                                                   Pulte’s current value web.

                                                                                                                                                                   Value Web
                                                                                                                                                                                                                                                                                                                                    Pulte                                    External
                                                                                                                                                                                              Lawyer                                              Sales                                      Designer
                                                                                                                                                                                                                                                                                                                                   Supplier                                  Suppliers
                                                                                                                                                                                                                                                                     In
                                                                                                                                                                                                                       A




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                                                                                                                                                                                                                                                Personal
                                                                                                                                                                                                                                                 Broker
                                                                                                                                                                                                                                                                                               Pulte
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                                                                                                                                                                                                                                                                                                                                                                 Pulte entity
                                                                                                                                                                                                                                                                                                                                                                 Non-Pulte entity
                                                                                                                                                                                                                                                                                              Inspec-
                                                                                                                                                                                                                                                                                                tor                                                              Exchange inside Pulte
                                                                                                                                                                                                                                                                                                                                                                 Exchange outside Pulte




                                                                                                                                                                      Pulte’s Position                                                                                                           Latino’s Needs
                                                                                                                                                                         Pulte focuses on building new homes.                                                                                      Latino's are not looking to buy new homes.

                                                                                                                                                                         Pulte builds single family homes where one family lives.                                                                  Latino's have multiple generations living in one home.

                                                                                                                                                                         Pulte offers customized design services for new home buyers.                                                              Latino's renovate old homes and construct additions as the family grows.

                                                                                                                                                                                                                                                                                                   Latino's often buy multi-family homes and rent one unit out for supplemental
                                                                                                                                                                        Focus on getting current Pulte home owners to buy their next home from Pulte.
                                                                                                                                                                                                                                                                                                   income. When children get married they often move into the second unit with
                                                                                                                                                                                                                                                                                                   their spouse and children.




                                                                                                                                                                      Pulte’s Position                                                                                                           Latino’s Needs
                                                                                                                                                                        Pulte has a suburban-focused strategy.                                                                                    Latino's live in urban settings.

                                                                                                                                                                        Pulte does market research in suburban areas to evaluate what type of community                                           Latino’s live in unplanned urban communities but value living around other Latino’s.

                                       Institute of Design                                                                                                         Strategic Design Workshop | Spring 2006
                                                                                                                                                                        to build: First Time Buyers, Family Home Owners, Active Adult Communities.

                                                                                                                                                                        Pulte focuses on developing large, open land parcels.
                                                                                                                                                                                                                                                                                                  Urban area’s where Latino’s live are highly developed.

                                                                                                                                                                                                                                                                                                  Latino’s value having amenities close by such as markets and cafe’s.
                                                                                                                                                                                                                                                                                                                                                                                              66
                                                                                                                                                                         Pulte is focused on developing whole suburban communities.                                                               Latino’s value having public gathering spaces in their neighborhoods.
                                    Comunidad PultE




Concept Scoring                                                                                                                                  Critical Design Requirements
                                                                                                                                                                                                                                          User

and Clustering                                                                                                                                   Location            Financial               Sales             Low Risk
                                                                                                                                                                                                                                          Value         Business
                                                                                                                                                 where      Home &   Preparatio              Process Long-Term (likely             Ease of Score        Score
                                                                                                                                                 Latinos    Communit n and      Affordabilit Culturally Brand  will suc- Profit    Impleme (scaled to   (scaled to
                                    No.   Cat.    Name                  Description                                                              want       y Design Education y             Relevant Building ceed)     Potential ntation 100 pts)     100 pts)     Issues (concerns, depen
                                                                                                                                       Weight        1          1         2         2        1.5        1         2       1.5       1        76.50         40.5

Concepts were ranked on             V08   urban   Acquire Airoom
                                                                        Buy out the urban real estate development company Airoom and
                                                                        leverage their capabilities to create a Latino-based urban real estate       9          7         1         2         1         3         5        5        5        34.64        55.56      Airoom may not want to b
                                                                        offering.
their success in addressing               afforda Alternative Credit    Credit score created by history of phone, gas, and electric bill                                                                                                                             May need to partner with
                                    F10                                                                                                              1          1         7         6         8         7         7        2        5        61.44        54.32
                                          ble     History               payments.                                                                                                                                                                                    past bills.
each of the five Critical Design
                                          long-   Commercial            Develop commercial property to be used by Latinos for their own                                                                                                                              Latinos may not want to p
                                    F17                                                                                                              5          4         6         6         6         8         4        3        6        65.36        45.68
Requirements, as well as on               term    Development           businesses to establish a relationship for future home purchase.                                                                                                                             commercial property may

                                          prepar Community              Workshops held at picnics, BBQs, churches, to provide Latinos with                                                                                                                           Need to identify local com
their likelihood of providing a     F03
                                          ation  Education              information on loans and financing.
                                                                                                                                                     2          3         9         2         5         8         7        2        5        55.56        54.32
                                                                                                                                                                                                                                                                     setting


return on investment through        F08
                                          afforda Community Mutual
                                          ble     Fund
                                                                        Community invested mutual fund used to collectively grow money,
                                                                        but keeps contribution percentages separate.
                                                                                                                                                     1          3         7         8         8         9         3        2        4        71.90        32.10      Need to develop investme


their feasibility, profitability,   S15
                                          cultural
                                          sales
                                                   Community Together Bring several families at once into Pulte homes.                               2          7         5         9         6         7         4        3        6        69.28        45.68      Need to create multiple fa


and risk.                           V10
                                          long-
                                                  Continuous Service
                                                                        Pulte offers Latinos post-purchase offerings such as remodeling,
                                                                                                                                                     2          7         3         6         7         6         3        3        4        56.86        35.80
                                                                                                                                                                                                                                                                     Additions, remodeling, an
                                          term                          additions, and resale services.                                                                                                                                                              purchases
                                                                        Fixed payment that goes towards a downpayment savings account
                                          afforda                       until home can be purchased, then towards mortgage payments,                                                                                                                                 Customers will have to de
                                    F18           Customers for Life                                                                                 1          1         6         7         8         9         3        4        3        64.05        37.04
                                          ble                           then additions, and finally retirement funds to save for retirement                                                                                                                          staying with Pulte
                                                                        and to pre-pay future health insurance and home repairs.
                                                                        Savings or investment account through Pulte Finance or bank
                                          afforda Downpayment
                                    F07                                 partnership where people can save for a downpayment for a future             1          3         8         7         6         6         3        3        4        64.05        35.80      May need to partner with
                                          ble     Savings Account
                                                                        home.
                                                                        Allow purchase of membership in a community before buying a
                                          cultural Early Community
                                    F19                                 home, so they can use Town Hall features (pool, gym, childcare) and          2          6         5         5         5         6         5        2        4        54.25        41.98      Latinos may not want to p
                                          sales    Purchase
                                                                        build relationships.

                                          prepar Educational            Educational videos & games, direct marketed to Latinos, on the
                                    F02                                                                                                              1          1         9         5         6         7         9        2        9        60.13        74.07      Direct marketing materials
                                          ation  Multimedia             home buying process in the U.S.

                                          cultural Employ the           Hire Latinos to staff the new functions that Pulte creates with their
                                    V04                                                                                                              1          1         2         1         9         7         7        3        8        37.25        65.43
                                          sales    Community            new offering.

                                          cultural                      Send marketing team (and others) to experience Latino life first-
                                    S14            Ethnography                                                                                       6          7         7         5         7         9         7        1        8        73.86        58.02
                                          sales                         hand.

                                          cultural
                                    S04            Family Friendly      Buying process considers family questions; involves whole family             1          1         6         3         9         8         5        2        9        54.25        54.32      time consuming, confusin
                                          sales

                                          afforda                       Redefined value web where Pulte provides financial assistance and
                                    V03           Finance & Materials                                                                                2          1         6         7         8         6         6        6        5        61.44        64.20      finacial support system, s
                                          ble                           sells raw materials and plans.

                                                                        Interior designs featuring moveable walls, fold-away furniture, etc.,
                                    D07   design Flexible Floorplans                                                                                 2          9         1         5         3         3         9        8        8        39.87        93.83      Number of floorplans mea
                                                                        to broaden options and lower cost.




                          .       Concept Evaluation and System Building
                                    The concept development workshop
                                    produced more than sixty unique design
                                    concepts. After an initial evaluation for
                                    fit with the project goals, the remaining
                                    concepts were scored on their likelihood of
                                    success in addressing the five Critical De-
                                    sign Requirements. Each concept was also
                                    ranked on general return on investment
                                    criteria: feasibility, risk, and profitability.

                                    Normalized scores (scaled on a 100-point
                                    scale) allowed concepts to be compared
                                    and clustered. The rankings also made it
                                    possible to short concepts by each of the
                                    Critical Design Requirements, making it
                                    possible for an intensive, intuitive second-
                                    stage process to combine key concepts to
                                    form solution systems (pictured at right).
                                    These solution systems evolved into they
                                    key strategic initiatives recommended in
                                    the following section.




Institute of Design                 Strategic Design Workshop | Spring 2006                                                                                                                                                                                    67
      Strategic
      Recommendations




sub   title
Solution Space             HomeBUyIng: U.S. latInoS, WItH PUlte
                                          Comunidad PultE




     Comunidad Pulte
                 Latino | Comunidad Pulte
     Strategy Overview
                            5 Years                            10 Years                         11–12 Years                     20+ Years
      Immigrates to U.S.    Pulte provides financial           Pulte connects the family with   A non-agressive sales process   Move-up and remodeling
                            education and planning, helping    current Pulte homeowners         embraces family decision        services are offered as the
                            the family save for a new home.    who are Latino, helping them     making, treats customers with   family grows.
                                                               through the process. They        respect
                                                               even get to know their future
                                                               neighbors before they move in.




                                       Financial                        Community                    Culturally-Relevant               PultePlus
                                       advising                        empowerment                    Communications




                              6.1         Comunidad Pulte
                           ComU nI dad PUlte                                                                                                              23
                                          Our recommendation, which we call                            Uncertainties in the future of immigra-
                                          Comunidad Pulte (“Pulte Community” in                        tion reform, and indeed of immigration
                                          Spanish), shows how Pulte can respond                        patterns in general, prompted two differ-
                                          to the needs of the Latino community,                        ent strategies, depending on how many
                                          and position itself to become their pre-                     Latinos are expected to be part of the U.S.
                                          ferred source for new homes. The general                     population in the coming generations.
                                          outline of our strategy is shown above. At                   Because the second strategy includes and
                                          its heart, Comunidad Pulte is about sup-                     builds on the initiatives of the first, the
                                          porting Latino families and individuals in                   latter strategy can be implemented several
                                          their journey towards buying a home, and                     years down the road, after population fore-
                                          continuing that support after they have                      casts can be revised based on government
                                          purchased their first home and move on to                    policy and economic changes.
                                          other Pulte communities later in life.




     Institute of Design                  Strategic Design Workshop | Spring 2006                                                                             6
                            Comunidad PultE




                      6.2   low Population Growth Scenario
          Recommendations   Strategy Verde


              +             Anticipating 75 million U.S. Latinos by 2050:
                            Anticipating 75 million U.S. Latinos by 2050:

                                                                            Cultural Relevance

                                                                            Preparation &
                            Strategy Verde                                  Education


                                                                            Affordability

                            The two Latino population growth sce-
                            narios explored in Section 4.12 prompted
                            two strategic plans. Our first plan is called
                            Strategy Verde, and anticipates slower
                            population growth (due to immigration
                            restrictions, and/or reductions in the qual-
                            ity of life differential between the U.S. and
                            Central America) that will lead to approxi-
                            mately 75 million Latinos in the U.S. by the
                                  2050.
                            yearUn I d a d P U l t e
                            Com                                                                       29




Institute of Design         Strategic Design Workshop | Spring 2006                              70
                                 Comunidad PultE




STRATEGY VERDE                   initiative 1: Cultural Relevance

  » Ethnographic research. Immerse
    Pulte leaders in the community.
  » Nuestras Palabras. Marketing
    campaigns in Latin idiom, using
    common aspirations.
  » Latino Staff; PulTeen. Bringing
    Latinos (including teens) into the
    Pulte team, to connect better with
    the community.
  » La Familia y Pulte. Support joint
    family decision-making.
  » De Tú a Tú. Connect with other
    Latino homebuyers and owners.
                                                                           Speaking to the Latino community
  » PultePlus. Maintenance and                                             with a Latino voice, pulte becomes the
    expansion for the homes’ lifetime.                                     homebuilder of choice.




 Goal                            Pulte’s current communications to the                 begin to understand some of the ways
 Provide a culturally-relevant   Latino market consist largely of Spanish              their communication efforts need to go
 sales process to encourage      translations of its core marketing materi-            further to connect better.
 Latino purchases of Pulte       als. This is insufficient to connect with           » Nuestras Palabras. Learning to use “Our
 homes.                          Latinos, whose cultural differences from              Words,” Pulte will engage with a special-
                                 mainstream America go beyond language.                ized advertising agency to develop new
 St R atEG y oWnER                                                                     marketing campaigns that speak directly
 Marketing Department            Our Culturally-Relevant Communications                to the Latino experience. Themes like
                                 initiative includes:                                  The American Dream, Multi-genera-
 SuPP oR tEd By                                                                        tional living, and Community will drive
 Executive Team, Outside         » Ethnographic research. Key Pulte divi-              a new approach. Depending on how the
 Consultants, Ad Agencies,         sions (initially, the executive team and            relationship works, we also envision
 Latino Community members,         marketing departments, followed by                  Pulte buying partial or complete owner-
 Pulte homeowners                  design and sales) would be provided an              ship in the agency, eventually bringing
                                   immersive experience within the Latino              Latino marketing creative in-house.
                                   community. By living among, observing,            » Latino Staff; PulTeen. By hiring members
                                   listening to, and speaking with contem-             of the Latino community (even teenag-
                                   porary Latino families, Pulte leaders will          ers), and training them in sales and out-




Institute of Design              Strategic Design Workshop | Spring 2006                                                      71
                                  Comunidad PultE




                                    reach methods, Pulte begins a cultural         ingness to be transparent (a key overall
                                    shift towards the target population.           principle), since some buyers may have
                                  » La Familia y Pulte. Recognizing that           negative feelings which they will be
                                    extended Latino families make decisions        sharing—Pulte’s willingness to expose
                                    together, sales methods are revised to         those feelings and respond promptly will
                                    explain the benefits of a Pulte home to        be a valuable testimony of their commit-
                                    all ages. PulTeen representatives, for         ment to customer service.
                                    example, engage with children on their         —Community Networking. Maintaining
                                    level.                                         a database of recent homebuyers, Pulte
                                  » De Tú a Tú. This Spanish phrase literally      encourages them to be coaches to help
A potential strategic partner       means “face to face,” and describes the        new buyers join the Pulte Family. Hom-
in the Cultural Relevance           kind of personal interactions that are         eowners are rewarded with discounts on
initiative is the Rios Group,       valued in Latin cultures. We foresee two       Pulte maintenance services.
a Denver-based advertising          kinds of face to face interactions:          » online tracking. Recognizing that La-
agency with a strong track re-      —The Roundtable. Because a home                tino homebuyers may take longer to go
cord in marketing to the Latino     purchase is such an emotionally compli-        through the whole process, Pulte de-
community.                          cated undertaking, Pulte facilitates con-      signs a Latino-friendly website to track
                                    nections between homebuyers who are            their way through the purchase process,
                                    at similar stages in the process, allowing     helping them visualize their progress
                                    them to encourage each other and share         towards homeownership.
                                    their findings. This step requires a will-




Institute of Design               Strategic Design Workshop | Spring 2006                                                72
                                 Comunidad PultE




STRATEGY VERDE                   initiative 2: Preparation and Education

  » Grassroots networking. Building
    ties with the Latino community.
  » Community events. “Tamale
    Cookoff” + real estate tutorials.
  » Magazine. Painting a picture of
    Latino home ownership.
  » Broadcast Media. Telenovelas on
    Univision—and regular bits on “El
    Piolin por la Mañana.”
  » Viral Media. Educational videos,
    brochures, and games to pass
    along.                                                                 working within the Latino community
  » Neighborhood Financial Advisors.                                       to foster knowledge, understanding,
                                                                           and financial preparedness, pulte helps
    Partnering with bank, in an open                                       Latinos get ready for a new home
    platform.                                                              purchase.




 Goal                            Buying a home is hard enough for people               to talk to, and can be invaluable in forg-
 Support Latino families over    born in America, with friends and relatives           ing links to build the Pulte brand.
 the years it requires them to   to turn to for advice, and conventional             » Community events. Many Latino fami-
 become financially ready for    credit situations. But a recent immigrant             lies enjoy spending time together on
 a home purchase.                may have fewer people to turn to, is more             the weekends, often having cookouts at
                                 concerned about being taken advantage of,             parks. Hosting an event like a “Tamale
 St R atEG y oWnER               and suffers from being at a financial dis-            Cookoff” could provide a draw to then
 New Buyer Preparation Team      advantage—which can make the process                  offer tutorials on homeownership.
 (members from Marketing         both difficult and long.                            » Magazine. High-end magazines like Ar-
 and Pulte Mortgage)                                                                   chitectural Digest and This Old House help
                                 We envision a suite of initiatives that will          upper socio-economic groups fantasize
 SuPP oR tEd By                  both address the knowledge and comfort                about their ideal home. Sponsoring a
 Executive Team, Bank or         gap, and build Pulte into the name Latinos            magazine about Latino dream homes
 Financial advisor partners,     can trust most for a new home:                        would help provide an aspirational path-
 Latino Community members        » Grassroots networking. Latino commu-                way for people in the Latino community.
                                   nity leaders know the value of home-              » Broadcast Media. Networks like Univi-
                                   ownership in building healthy neighbor-             sion and Telemundo have grown rapidly
                                   hoods. They also know the right people              in recent years. Pulte could partner with




Institute of Design              Strategic Design Workshop | Spring 2006                                                       7
                                   Comunidad PultE




                                     them to offer a telenovéla, or soap opera,   » Viral Media. If Pulte could provide edu-
                                     featuring themes related to owning a           cational videos, brochures, and even
                                     home, or moving to a new neighbor-             games (try your hand at Pultino!), these
                                     hood. And naturally, advertising would         pieces could end up being passed from
                                     also help. One particularly valuable con-      person to person and educating each one
                                     nection to build would be with Eduardo         along the way how saving for a home
                                     Sotelo’s Spanish-language radio show,          is very manageable—and has a huge
                                     “El Piolin por la Mañana,” which beats         payoff.
                                     Howard Stern, Rush Limbaugh and Tom          » Neighborhood financial advisors. This
                                     Joyner every weekday morning, accord-          concept, discussed in more detail under
A potential strategic partner in     ing to Arbitron ratings. Sotelo was an         the following Affordable Homes initia-
the Preparation and Education        illegal immigrant when he started work-        tive, foresees Pulte building a partner-
initiative is EARN, a San Fran-      ing in radio, and today is one of the most     ship with an organization like EARN (see
cisco organization committed         powerful voices in Spanish radio.              sidebar), and/or a bank with an existing
to helping lower-income fami-        Production capacity need not be in-            presence in the Latino community, such
lies develop a solid financial       house for Pulte.                               as Banco Popular, and to provide longer-
foundation.                                                                         term education about homeownership.




Institute of Design                Strategic Design Workshop | Spring 2006                                                7
                               Comunidad PultE




STRATEGY VERDE                 initiative 3: affordable Homes

  » Local & Federal Government
    Partnerships. Identify needs.
    Green Card as a credit qualifier.
  » Alternative Credit History. Home-
    country and work records count.
  » Neighborhood Financial Advisors.
    An open platform for financial
    assistance & expertise, offering
    planning and savings advice.
  » Multi-buyer & Modular Financing
    Mortgage products for extended
    families; adding-on made easy.
                                                                         pulte works with its own Mortgage
  » Materials Credit. Tap into Pulte’s                                   division, and with government and
    supplier network when adding on                                      financial partners, to engineer ways
    to your home.                                                        for homes to be more affordable for the
                                                                         average Latino family.




 Goal                          The average Latino-American family has                mation resources. For example, holders
 Make homes more afford-       less accumulated wealth than mainstream               of Green Cards could be granted easier
 able for the typical Latino   Americans—largely because fewer Latinos               credit, depending on government re-
 family.                       own their own homes. To address this                  cords that support their trustworthiness
                               challenge, we recommend providing a wid-              as a credit risk. Because many immi-
 St R atEG y oWnER             er range of financial products, adjusting             grants enter the U.S. without domestic
 New Buyer Preparation Team    credit methodologies, and indeed manu-                credit scores, even such a simple valida-
 (members from Marketing       facturing a different mix of home products            tion could help them gain a foothold on
 and Pulte Mortgage)           when targeting the Latino community.                  the first rung of the credit ladder.
                                                                                   » Neighborhood Financial Advisors. Also
 SuPP oR tEd By                » Working with local & Federal Government.            part of the previous initiative, this effort
 Executive Team, Bank or         Local government planning agencies                  foresees Pulte building a partnership
 Financial advisor partners,     have already identified key community               with an organization like EARN, and/or a
 Latino Community members,       housing needs, and may be ready to                  bank with an existing presence in the La-
 government agencies.            offer loan guarantees, tax increment                tino community, such as Banco Popular.
                                 financing, and other kinds of support to            Financial advisors could help members
                                 housing developers. They also can “con-             of the community with free assistance
                                 nect the dots” on some important infor-             developing a personal financial plan,




Institute of Design            Strategic Design Workshop | Spring 2006                                                         7
                                  Comunidad PultE




                                    encouraging savings and aiding in credit
                                    building (and credit repair). Through a
                                    bank, such an agency could also of-
                                    fer Down-payment saving accounts and
                                    even a product such as a Pulte Visa Card,
                                    which would provide points redeem-
                                    able towards a down-payment when the
                                    holder is ready to buy a home. Advisors
                                    could also promote a Community mutual
                                    fund, which could encourage mutual
                                    investment towards helping multiple
                                    members of the community own their
FannieMae, the government-          own homes. While much of these of-
chartered agency responsible        ferings are similar to those provided by
for fostering low- and mid-in-      community groups and existing institu-
come homeownership, has a           tions, this plan envisions an integrated,     » Modular Financing. Many Latinos live
variety of projects underway to     Latino-targeted offering.                       with extended family members to save
support homeownership—in-           It should also be noted that this plan          money. Mortgage products could allow
cluding within the Latino com-      would be greatly strengthened by being          each wage-earning member of the ex-
munity.                             “open platform”; that is, sponsored by          tended family to be part of the mortgage,
                                    Pulte, but not exclusively serving future       spreading risk and reducing payments
                                    Pulte customers. Pulte still could gain         overall. This is a significant departure
                                    first-mover advantage and brand equity          from historic lending practices, but could
                                    by being identified as the sponsor of the       be justified based on research results
                                    Neighborhood Financial Advisor service,         from a field test. Likewise, many Latino
                                    but would avoid the risks of appearing to       families add on to starter homes as their
                                    provide less-then-objective information.        families grow. Mortgage products could
                                  » Alternative credit history. Building a good     have add-on components to make it
                                    credit score is they key to getting an          easier to finance additions, without hav-
                                    affordable interest rate. Many Latinos          ing to go through the process of a second
                                    are at a disadvantage because they have         mortgage.
                                    been in the U.S. for a shorter period than    » Cheaper homes. Of course, a simple way
                                    others, and because they often begin            to make homes affordable would be to
                                    their life in the U.S. with lower-paying        build cheaper homes. Pulte excels at
                                    jobs—some of them cash-based. Pulte             reducing costs, and the company may
                                    Mortgage could work with reporting              decide to adjust its product mix when
                                    agencies, employers, and demographers           developing a community with Latinos in
                                    to develop a wider range of metrics to          mind.
                                    evaluate credit-worthiness—perhaps            » Materials credit. Pulte could open its sup-
                                    using employer evaluations, community           plier network to homeowners when they
                                    involvement, or attendance at Neighbor-         add on to their homes, reducing remod-
                                    hood Financial Advisor classes.                 eling costs.




Institute of Design               Strategic Design Workshop | Spring 2006                                                    76
                            Comunidad PultE




                      6.   High Population Growth Scenario
          Recommendations   Strategy rojo

           +
           ++
                            Anticipating 155 million U.S. Latinos
                            (60% more than in concentrated in key
                            60% more Latinos,the Low-Growth Scenario)
                            by 2050:
                            markets, merits a higher-risk strategy.

                                                                               Cultural Relevance

                                                                               Preparation &
                                                                               Education

                            Strategy rojo                                      Affordability

                                                                               Home/Town
                                                                               Design

                                                                               Urbanismo

                            C o m Un I d a d P U l t e                                                                     33
                            The two Latino population growth scenar-       ture from the ways Pulte has done busi-
                            ios explored in Section 4.12 prompted two      ness for the last fifty years, though both
                            strategic plans. Our second strategy, Strat-   could be accomplished with in-house tal-
                            egy Rojo, anticipates higher Latino popula-    ent if necessary, or by acquiring an interest
                            tion growth that will lead to approximately    in (or outright ownership in) other builders
                            155 million Latinos in the U.S. by the year    and marketers that are more familiar with
                            2050. This strategy adds two initiatives,      Latino culture and/or urban construction.
                            Home/town design and urbanismo to the
                            three initiatives which make up Strategy       We contend that the additional risk is mer-
                            Verde. This makes it possible to switch to     ited, based on the significantly larger La-
                            Strategy Rojo if population growth takes       tino population. It is especially noteworthy
                            the higher path.                               that the high population growth scenario
                                                                           foresees concentration of Latinos in sev-
                            HigHer riSk… HigHer reward                     eral key states: California, Texas, Nevada,
                            The two additional initiatives that com-       and Colorado. Executing Strategy Rojo in
                            prise Strategy Rojo admittedly involve         these states would provide the strongest
                            higher risk. They require a greater depar-     likelihood of success.




Institute of Design         Strategic Design Workshop | Spring 2006                                                   77
                                 Comunidad PultE




STRATEGY ROJO                    initiative 4: Home/town design

  » Ethnography for design staff.
  » Latin Style. Architecture picante!
  » Casa 2.0 – Prefab. Partner with
    Global Homes—$10/sq ft goal.
  » Casa 3.0– Modularity. Anticipate a
    second storey.
  » Latino-specific home design. Larger
    family rooms; central location for
    the kitchen.
  » Comunidad. Walk to shops, see
    your friends—have block party!
  » Nuestro Centro. A club even non-                                       pulte creates homes and communities
                                                                           that feel more Latino (though welcome
    residents can pay to join, before                                      to everybody)—more about family,
    they own a home.                                                       extended family, and celebration with
                                                                           neighbors.




 Goal                            Asked to describe an ideal home for a               » Ethnography for design staff. Good design
 Make homes and communi-         Latino family, one Mexican-American                   happens when creativity is rooted in the
 ties more in tune with Latino   described a large kitchen, where Mama                 real needs of actual users. Architects,
 cultural values.                works preparing food for the family while             interior designers, civil engineers, and
                                 watching over the kids. Outside, neighbors            even landscape architects and play-area
 St R atEG y oWnER               are within earshot for a friendly conversa-           designers would benefit from immersing
 Pulte Design Team               tion, and later in the evening, there might           themselves in several vibrant, healthy
                                 be a neighborhood party, with food and                Latino communities to observe how
 SuPP oR tEd By                  music continuing until quite late. This               people typically interact with the built
 Marketing Department,           vision is not entirely incompatible with              environment. While first-hand observa-
 Construction Services, new      some new home developments, but nei-                  tions can be augmented by the wisdom
 Community Living coordina-      ther is it fully supported. A careful design          of consultants or others who understand
 tors.                           process, starting with field ethnography to           the needs of the Latino culture, they can-
                                 understand user requirements, could help              not be replaced merely by second-hand
                                 Pulte provide homes and communities for               information.
                                 a Latino lifestyle—without sacrificing those        » Casa 2.0–Prefab. As part of an affordability
                                 qualities that would make them appeal to              effort, and providing for certain home-
                                 people of all ethnicities.                            design features without adding costs,




Institute of Design              Strategic Design Workshop | Spring 2006                                                         7
                                 Comunidad PultE




                                   Pulte can purse prefabrication of home
                                   elements to a greater degree than they
                                   do currently. Global Homes International,
                                   which is undertaking an effort to use
                                   modular construction and prefabrication
                                   to reduce costs to less than $10 per square
                                   foot—yet still meet global building codes
                                   standards. Acquiring an ownership stake
                                   in this company would allow Pulte to
Global Homes International         benefit from the intellectual property and
could be a partner in develop-     methods, but without having to assume
ing lower-cost home construc-      management of the firm.
tion methods.                    » Casa 3.0–Modularity. Latino families
                                   often add on to their homes, preferring
                                   to stay within a friendly neighborhood
                                   as their family grows, rather than mov-
                                   ing to a distant new development. Pulte
                                   could support this behavior by making
                                   homes modular—to the point of having
                                   sections that could be added on as nec-
                                   essary, to provide new rooms when the
                                   family grows.
                                 » Latino-specific home design. Give Mama a
                                   larger family rooms, and a central loca-        coffee, and dry cleaning. Providing many
                                   tion for the kitchen, to help her raise the     of these features has become standard
                                   family.                                         in new urban developments (see the
                                 » Comunidad. The attractiveness of dense          following initiative), but Pulte may need
                                   communities, rediscovered for many              to acquire some of these skills by buying
                                   Americans in the writings of Jane Jacobs,       an interest in a company with a proven
                                   has become a key tenet of the New               track record in developing integrated
                                   Urbanism. But Latinos have yearned for          towns.
                                   that all along. If Pulte wishes to attract    » Nuestro Centro. Community centers
                                   Latinos in number—and indeed, those of          aren’t new, even in Pulte developments.
                                   any ethnic background who enjoy being           Our innovation, however, opens that
                                   connected with their neighborhoods—             community center to potential home-
                                   the design of housing developments              buyers, allowing them to benefit from
                                   needs to support healthy and safe in-           swimming, child care, gatherings, a
                                   teractions, with sidewalks seeing active        video library, and other resources for a
                                   use, porches occupied by neighbors who          small fee. This would help them get a
                                   watch over the street, and shops, within        taste of the community they will eventu-
                                   walking distance, for basics like food,         ally join by becoming homeowners.




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                                 Comunidad PultE




STRATEGY ROJO                    initiative 5: urbanismo

  » City Land Plan. Land acquisition
    (and hazmat disposal tech)
  » Urban-focused brand. El Pulte?
  » Public-Private Partnership. Urban
    renewal, earning credits.
  » Go vertical. Learning density from
    Jane Jacobs.
  » Build partnerships with firms
    skilled at construction in urban
    areas.
  » Suburban Safety in Urban
    Development. Haven in the city.
                                                                           pulte builds homes in the urban and
  » Urban network. Commercial real                                         near-suburb areas where Latinos
    estate, for services & stores.                                         already live—and which are attractive
                                                                           to young people of all backgrounds.




 Goal                            The renewal and resettlement of downtown              some adjustments, but could easily take
 Develop home ownership op-      areas has been one of the secondary effects           on a new role of finding and develop-
 portunities in the urban (and   of the recent economic boom. The increase             ing real estate in downtown, urban, and
 near-suburb) neighborhoods      in the safety of downtown neighborhoods,              near suburb neighborhoods. Additional
 where Latinos already live.     coupled with fresh interest in urban liv-             challenges include a thicket of city regu-
                                 ing—perhaps fostered by such television               lations, the potential for hazardous ma-
 St R atEG y oWnER               shows as Friends and Seinfeld—presents both           terials disposal, and competition from
 Urban Task Force (members:      a challenge and an opportunity to a pre-              other developers.
 Land Acquisition group,         dominantly suburban developer like Pulte.           » Urban-focused brand. Pulte’s current
 Design, Marketing)              Land acquisition would require a very differ-         brand is rooted in new suburban (and
                                 ent approach, but ongoing redevelopment               ex-urban) developments. Creating a new
 SuPP oR tEd By                  efforts could make that easier. Many Latinos          brand strategy specifically for urban
 Construction Services, new      are interested in moving to the suburbs,              communities may help in marketing
 urban development partners.     but they might prefer to stay closer to their         urban communities.
                                 established communities—if Pulte can give           » Public-Private Partnership. Many cities
                                 them that option.                                     are actively pursuing developers, to revi-
                                 » City Land Plan. Pulte’s famed Land Ac-              talize formerly industrial neighborhoods.
                                   quisition core competency would need                Some cities (notably Chicago) are in the




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                                 Comunidad PultE




                                   process of dismantling failed public          eownership is that personal safety, while
                                   housing projects; the resulting vast va-      significantly better than in years past, is
                                   cant areas are prime for redevelopment.       still somewhat less secure than in a typical
                                   Forging links with these agencies will        suburban (and often gated) community.
                                   help identify opportunities.                  Care will be required to provide a similar
                                 » Go vertical. Naturally, denser devel-         level of comfort in urban developments,
                                   opment will require more vertical             though the use of both aesthetic and
                                   architecture than in Pulte’s present          practical design features, like walls, gates,
Airoom Construction, based         suburban developments. The design             monitored and high traffic open spaces,
in Chicago, has decades of         expertise can be acquired or devel-           and community policing.
urban construction experience,     oped in-house, but needs to address         » Urban network. Urban communities are
and could add their expertise      thoughtful and creative ways of provid-       attractive partly because they offer many
to the more-complex process        ing not only housing but commercial           of the daily necessities without isolat-
of building homes downtown.        and recreational areas.                       ing a person within a car. For Pulte to
                                 » Build partnerships with firms skilled at      provide a complete community experi-
                                   construction in urban areas. Airoom           ence, it will need to make connections
                                   Construction is one such firm, which has      with commercial enterprises that offer
                                   a solid track-record of mid- and high-end     those services. Pulte may even create a
                                   developments and rehabs in the Chicago        network of urban service providers so
                                   area. Learning from their experience can      that their residents can experience a
                                   help Pulte navigate some of the complexi-     safe, seamless experience, never having
                                   ties of downtown building.                    to worry about whom to call for home
                                 » Suburban Safety in Urban Development.         and appliance repair, auto repair, and
                                   One of the few drawbacks to urban hom-        other services.




Institute of Design              Strategic Design Workshop | Spring 2006                                                    1
                            Comunidad PultE




                      6.   implementation Roadmap & Requirements

                             On the following page, we present a road-     iMpLeMentation requireMentS
                             map diagram, showing the staged imple-        On the page after the roadmap diagram, a
                             mentation of each of the five initiatives     grid of implementation issues is consid-
                             we are recommending. Each one will draw       ered, which can guide Pulte in evaluating
                             resources from Pulte’s core capacity for      the resources required to accomplish each
                             homebuilding, though depending on the         of the initiatives. Further discussion will
                             level of investment, that capacity could      likely be required, especially with those
                             be replaced or supplemented as needed.        departments or units of Pulte whose
                             Some of the initiatives have major sub-       expertise would be called upon for imple-
                             components that are shown as separate         mentation.
                            “streams” which break off into their own
                             ventures.

                            Scenario Monitoring
                            The virtue of scenario planning is that
                            it anticipates a wider range of potential
                            implementation contexts. Our Strategy
                            verde and Strategy rojo accommodate
                            two different Latino population outcomes.
                            But it will be important for Pulte executive
                            leadership to monitor developments in
                            immigration policy and trends, to decide
                            if and when the additional initiatives in
                            Strategy Rojo should be implemented.




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                                                                                                                                                                                                           Comunidad PultE
                                          Implementation Roadmap for Strategy Verde and Strategy Rojo
                                           Recommendations roadmaP: Strategy rojo

                                                                          Beachhead                         Near Term                           Mid Term                          Long Term



                                                                                                                                                                 de tú a tú—roundtable     Community
                                                                                                                                                                                           network

                                                                                                                                                Networking
                                                                                                    latino Staff      la Familia y Pulte
                                                                          nuestras Palabras


                                                                                                     Viral media    magazine                   Broadcast media


                                                      Cultural                                                                               Urban      Urban Branding go Vertical   Suburban Safety
                                                     Relevance                 Preparation                                                   land Plans      Partnerships Urban network
                                                                               & Education                                       Urbanismo
                                            Begin
                                            ethnography                                         Land acquisition; Partnerships
                                                                               Design development
                                                      Form partnerships
                                                                                                           Home                                              Create House Plan and style
                                                                                                                    Comunidad                                   revise design and production
                                                                                                          & Town    Home design latin Style.
                                                                                                          Design                                Casa 2.0
                                                                                                                                                                 Pre-Fab   modularity


                                                                                                                   green card credit         materials Credit       modular financing          PultePlus
                                                                                      Affordability government           multi-buyer finance
                                                                                                 Partnerships      Financial
                                                                                                                   Advisors
                                                                                                                                                                          Community plan
                                                                                                                                       Personal financial plan    downpayment saving account

Institute of Design
Strategic Design Workshop | Spring 2006




                                                                                                                                                                                                              Comunidad PultE
                                          Implementation Issues

                                                         Cultural Relevance            Preparation                  Affordability                 Home/Town Design                Urbanismo
                                                                                       & Education

                                          People         Ethnographic researchers
                                                         Spanish speaking marketing
                                                                                       Ad agency oversight
                                                                                       Print designers
                                                                                                                    Latino partner alliance/
                                                                                                                    relationship/biz dev
                                                                                                                    employees
                                                                                                                                                  Latino salespeople
                                                                                                                                                  Architects with residential
                                                                                                                                                                                  Latino residential and
                                                                                                                                                                                  commercial real estate
                                                                                                                                                                                  agents
                                                         & design employees            Latino marketing employees                                 design experience for Latino
                                                                                                                    Latino financial advisors     clients or in Latin countries
                                                         Spanish translators           Video producers
                                                                                                                                                  Architects/engineers
                                                         Latino trainers               Magazine writers, editors                                  experienced in prefab and
                                                                                       Latino event hosts                                         modular homes



                                          Systems        Training programs
                                                         Events to bring home buyers
                                                                                       Education programs
                                                                                       Community events
                                                                                                                    Open platform for financial
                                                                                                                    assistance; Pulte financial
                                                                                                                    assistance area within bank
                                                                                                                                                  Prefab planning and
                                                                                                                                                  construction systems
                                                                                                                                                                                  Urban and commercial land
                                                                                                                                                                                  acquisition process
                                                         together                                                                                 Club membership program
                                                                                       Media production             Mortgage products for
                                                                                                                    extended families
                                                                                                                    Modular financing products
                                                                                                                    Personal and community
                                                                                                                    first home purchase savings
                                                                                                                    programs
                                                                                                                    Supplier network for home
                                                                                                                    additions



                                          Structures     Research facilities
                                                         Discussion areas
                                                                                       Pulte education materials
                                                                                       display area within local
                                                                                       banks
                                                                                                                                                  Prototyping space for
                                                                                                                                                  Nuestro Centro
                                                                                                                                                                                  Urban land
                                                                                                                                                                                  Urban commercial tenants



                                          Partnerships   Hispanic cultural
                                                         organizations
                                                                                       Neighborhood banks (Banco
                                                                                       Popular)
                                                                                                                    Neighborhood banks (Banco
                                                                                                                    Popular)
                                                                                                                                                  Global Homes                    City governments
                                                                                                                                                                                  Urban construction
                                                         Latino staffing company       Spanish TV, radio networks   Local and federal                                             companies
                                                                                                                    governments
                                                                                       Ad agencies
                                                                                                                    Non-governmental agencies

            builder to target Latinos, who:
            » spend $240 billion a year
                                  Comunidad PultE




            » are growing in numbers
Long-Term Benefits: Latinos in Active Adult Communities
            » are intensely loyal
No developer has successfully targeted the Latino active adult market on a large scale—because there isn’t one … yet.


                       Today                            Tomorrow                            Future

                       Supporting the Latino connects Pulte to the Latino                   for the future of Pulte Active
                       customer today...     community tomorrow...                          Adult Communities.




                      Com U n Idad P Ulte                                                                                      39




                        6.       outcomes
                                  Successful implementation of Comunidad              Latino active aduLt
                                  Pulte would give Pulte Homes a significant          coMMunitieS?
                                  lead over other new home developers.                We have not yet seen a strong Latino
                                  While they continue to pursue a shrinking           presence in the active adult community
                                  pool of new home buyers—one that Pulte              market—largely because the lack of Latino
                                  already dominates—Pulte can also reach              household wealth precludes the kind of re-
                                  out to the underserved Latino market.               tirement living to which most Americans
                                                                                      aspire. By serving Latinos early in their
                                  The payoff may come sooner than ex-                 homeownership journey, Pulte could posi-
                                  pected. The Latino community is very                tion itself as the leading offering for this
                                  close-knit, and word of mouth is powerful.          market, which could grow significantly as
                                  If Pulte can become the brand of choice,            Latino net worth increases.
                                  the benefits would accrue rapidly. Latinos
                                  currently spend $240 billion each year,
                                  and that figure will naturally rise as they
                                  make up a greater and greater portion of
                                  the population.




Institute of Design               Strategic Design Workshop | Spring 2006                                                       
                                              Comunidad PultE




Potential Sales                                                                                             49,250 homes
Increase from                                                                                                              With Comunidad
                                                                                                                           Pulte, not only
Comunidad Pulte                                                       45,000 homes                                         are all 6,750
                                                                                                                           homes purchased
                                              Of the 45,000                             Instead, Latinos                   by Latinos, but
                                              homes Pulte                               purchased only                     because Pulte
                                              sold in 2005,                             2/3 the expected                   is the only major
                                              6,750 (15%)                               amount: 4,500                      homebuilder
                                              should have                               homes. (The                        targeting Latinos,
                                              been sold to                              balance were                       an additional 2,000
                                              Latinos, based                            purchased by non-                  homes are sold.
                                              on population                             Latinos.)                          Total homes sold:
                                              proportions.                                                                 49,250.

                                                                                                                           Net sales
                                                                                                                           increase:
                                                                                                                           4,250



                                                                      Comunidad Pulte sales = 4,250 additional homes
                                                      Average sale price: $250,000 × 4,250 = $1.1 billion gross revenues
                                                  $1.1 billion revenues × 17.5% profit margin = $185.9 million income




                                   6.6        Financial Projections
                                              Without access to more complete sales               tion, we estimate that an additional 2,000
                                              statistics and forecasts, we can make only          homes could be sold to Latinos, because
                                              rudimentary projections. But we foresee a           Pulte would be the only national home-
                                              strong profit potential.                            builder with a concerted Latino marketing
                                                                                                  and offering strategy. This would result in
                                              In 2005, Pulte sold 45,000 homes, at an             total home sales of 49,250—a net increase
                                              average sale price of $315,000, and with a          of 4,250 homes.
                                              gross profit margin of 23.4%. But because
                                              Latinos own homes at lower rates than               At Pulte’s current average home sale price
                                              other people (and especially, new homes),           of $315,000, that would result in gross
                                              we estimate they would only have pur-               revenues of $1,338,750,000, and income of
                                              chased 4,500 homes from Pulte. That is,             $313,267,500, at the current profit margin
                                              only two-thirds of the expected Latino pur-         of 23.4%.
                                              chases (6,750, 15% of 45,000 homes sold);
                                              the balance of homes were purchased by              But we would need to estimate that Latino-
                                              non-Latinos.                                        purchased homes might average a lower
                                                                                                  sale price—say, $250,000—and a lower
                                              If Comunidad Pulte were implemented                 profit margin—17.5%. Even so, that would
                                              successfully, all 6,750 homes would be              result in a gross income of $1,062,500,000,
Sales and profit margin statistics from the   purchased by Latinos—in addition to those           and a profit of $185,937,500.
Pulte Homes 2005 Annual Report.               already purchased by non-Latinos. In addi-




Institute of Design                           Strategic Design Workshop | Spring 2006                                                            6
                                            Comunidad PultE




                                            iMpLeMentation coStS                          Latino HoMeownerSHip
                                            Developing a full cost structure for the      Is it realistic to expect that there will be a
                                            recommended initiatives is beyond the         surge in demand for homes among Lati-
                                            scope of this current project. A very broad   nos? A University of Southern California
                                            cost estimate is $100 million, which would    report, from the Tomás Rivera Policy In-
                                            still leave $85.9 million in profit.          stitute, suggests that “84 percent of Latino
                                                                                          renters ‘strongly’ desire to
                                            Naturally, it will take some time to fully    buy a home and 55 percent plan on buying
                                            implement Comunidad Pulte, so initial         in the next five years.” The report goes on
                                            sales figures might not be as strong. How-    to estimate that at least 1.5 million Latino
                                            ever, the rapid growth in the Latino mar-     households will buy homes by 2010.
                                            ket, as more and more Latinos are born in
                                            the U.S., or immigrate, and the potential
                                            for strong word-of-mouth to prompt rapid
                                            Pulte sales increases, suggests vigorous
                                            growth in Pulte’s Latino market. Our sales
                                            forecasts are shown on the following page.




Lee, Jongho, Louis Tornatzky, and
Celina Torres, El Sueño de su Casa: The
Homeownership Potential of Mexican-
Heritage Families (Los Angeles: The
Tomás Rivera Policy Institute), 2004, via
http://66.102.7.104/search?q=cache:
WY0JjeZgyDcJ:www.ahorre.com/mercado/
archives/latino_home_ownership/la-
tino_home_ownership_hispanic_homebuy-
ers/projected+home+ownership+%2B+hi
spanic&hl=en




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Strategic Design Workshop | Spring 2006




                                                                                                                                                                                                                                                             Comunidad PultE
                                           Financial Forecasts for Comunidad Pulte
                                           This forecast anticipates slower first-year sales, resulting in a net loss, which is rapidly made up for in following years.



                                                      $3.0
                                                                                               Comunidad Pulte Income
                                                            2.5                                Comunidad Pulte Costs
                                                            2.0
                                              ($billions)




                                                            1.5

                                                            1.0

                                                            0.5

                                                              0

                                                       –0.5
                                                                    2007             2008             2009             2010             2011             2012             2013             2014             2015             2016              2017
                                           Add’l Homes sold              2,000             4,250            4,888            5,621            6,464            7,450            8,700           11,500           13,300           15,400            17,500
                                           Avg Sale Price            $250,000          $275,000         $302,500         $332,750         $366,025         $402,628         $442,890         $487,179         $535,897         $589,487          $648,436
                                           Gross Revenue          $500,000,000    $1,168,750,000   $1,478,620,000   $1,870,387,750   $2,365,985,600   $2,999,574,875   $3,853,145,175   $5,602,561,663   $7,127,432,793   $9,078,098,610   $11,347,623,263


                                           Gross Profit Margin          17.50%           18.20%           18.93%           19.69%           20.47%           21.29%           22.14%            23.03%           23.95%           24.91%            25.90%
                                           Income                  $87,500,000     $212,712,500     $279,873,194     $368,188,073     $484,376,989     $638,652,259     $853,205,127    $1,290,203,064   $1,707,017,188   $2,261,168,873    $2,939,519,534


                                           Program costs          -$100,000,000    -$75,000,000     -$65,000,000     -$65,000,000     -$65,000,000     -$65,000,000     -$65,000,000      -$65,000,000     -$65,000,000     -$65,000,000      -$65,000,000
                                           Net Profit              -$12,500,000    $137,712,500     $214,873,194     $303,188,073     $419,376,989     $573,652,259     $788,205,127    $1,225,203,064   $1,642,017,188   $2,196,168,873    $2,874,519,534





                                      3000000000
                            Comunidad PultE




Comunidad Pulte is a pathway to targeting other underserved ethnic populations.




                      6.   next Steps
                            We see Comunidad Pulte as a bold step        Even while Comunidad Pulte is under con-
                            for Pulte Homes—not only into the Latino     sideration, Pulte Homes could move for-
                            market, but into addressing the unique       ward with ethnographic research within
                            needs of a variety of ethnic and other       the Latino community, to explore ways
                            minority communities. As the homebuild-      of adapting even current sales methods
                            ing market grows less robustly in the near   to connect better. Field studies will also
                            future, new opportunities like these could   help validate some of the proposals in this
                            represent a desirable way for Pulte to       project. We therefore propose that Pulte
                            maintain and grow its leadership within      Homes immediately begin evaluating eth-
                            the industry.                                nographic research firms to move forward.




Institute of Design         Strategic Design Workshop | Spring 2006                                               
      Comunidad PultE




      append i x

      History of Pulte Homes




sub   title
                                 Comunidad PultE




                      Appendix   History of Pulte Homes

                                 1969       The company went public as Pulte       1988   Pulte acquired five Texas-based
                                            Home Corporation, with an initial             thrift institutions, which were
                                            offering of 200,000 shares of com-            subsequently merged to form First
                                            mon stock; acquired American                  Heights Bank, a federal savings
                                            Builders, Inc., a Colorado Springs-           bank based in Houston.
                                            based homebuilder that served          1992   PHM Corporation’s name was
                                            the first-time/affordable housing             changed to Pulte Corporation.
                                            market.                                1993   Robert K. Burgess became Chair-
                                 1972       The company’s stock began trad-               man and Chief Executive Officer.
                                            ing on the AMEX under the symbol       1994   Pulte enters the growing “active
                                            PHM.                                          adults” for 55 years and older.
                                 1972       Pulte established ICM Mortgage         1994   Pulte Corporation became the
                                            Corporation to offer convenient fi-           largest homebuilder in the United
                                            nancing and competitive mortgage              States
                                            rates to its homebuyers.               1994   Pulte is recognized as “America’s
                                 1977       The company declared its first                Best Builder” by the National As-
                                            cash dividend; the company’s                  sociation of Homebuilders and
                                            board of directors also authorized            Builder magazine.
                                            its first stock split in the form of   1998   Pulte acquired Radnor Homes and
                                            three-for-two stock distribution;             DiVosta; signed exclusive agree-
                                            Entered Phoenix market.                       ment with General Electrics to
                                 1979       A record 4,714 homes were sold in             supply all Pulte homes with its
                                            1979 with revenues of $294 million.           home appliances.
                                 1980s      Pulte homes sold for $50,000 to        1999   Pulte became a Fortune 500
                                            $600,000 in 17 markets throughout             company and sold a record 26,622
                                            11 states.                                    homes.
                                 1980       Established “Pulte University” to      2000   Pulte celebrated its 50th an-
                                            train entry-level construction per-           niversary with a presence in 41
                                            sonnel.                                       markets, 25 states in the United
                                 1983       Stock of the parent company, PHM              States, Mexico and Puerto Rico;
                                            corporation, began trading on the             Expanded into the Argentina
                                            NYSE.                                         market; launched a national brand
                                 1983       Robert K. Burgess became Pulte’s              development program with new
                                            president and chief operating                 corporate logo.
                                            officer and launched the Pulte         2000   Pulte built a record 27,781 homes
                                            Quality Leadership program; Pulte             with $4.2 billion in revenues,
                                            University was established to train           marking 50 consecutive years of
                                            promising future executives in un-            profitability.
                                            derstanding Pulte’s homebuilding       2001   Pulte Corporation changes its
                                            philosophy, design and methods.               name to Pulte Homes, Inc.
                                                                                   2001   Completed merger with Del Webb
                                                                                          Corporation to create the nation’s
                                                                                          largest homebuilder.




Institute of Design              Strategic Design Workshop | Spring 2006                                                  1
                      Comunidad PultE




                      2002       Pulte Homes named to Top 50           2004   J.D. Power and Associates named
                                 Performing Companies by Business             Pulte Homes the inaugural re-
                                 Week Magazine; Pulte Homes, Inc.             cipient of its Platinum Award
                                 listed on the Dow Jones Sustain-             for customer satisfaction among
                                 ability Index; Money Magazine Lists          America’s largest home building
                                 Pulte Homes as 30-Year Super                 companies.
                                 Stock.                                2005   Pulte Homes focused on the
                      2003       Pulte Homes honored by J.D. Power            expansion of its domestic home-
                                 and Associates for highest rank-             building operations with the sale
                                 ings in customer satisfaction;               of its Argentina and Mexico opera-
                                 Named to Top 50 Best Performing              tions. Pulte named #181 on the
                                 Companies by Business Week Maga-             FORTUNE 500 list and #12 on the
                                 zine.                                        Business Week Magazine list of Top
                                                                              50 Best Performing Companies.




Institute of Design   Strategic Design Workshop | Spring 2006                                                 2
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