Week Five Assignment

Market Position Analysis 7

Market Position Analysis

Monique P. Garland

Argosy University

Introduction

During the week one assignment student were asked to select a company to conduct a strategy audit. This company will be used throughout the course and additional research will be conducted in the coming weeks. Week one students will assess the portfolio of their selected company by analyzing the value proposition, market position, and the competitive advantage of its products and or services. There will be three parts to this assignment, part one is interview, part two analysis, and part three matrix. The company that will be used throughout this assignment and course is my current employer The Department of Housing and Urban Development. Currently employed with the agency in the Single Family Housing Division. This division is responsible for receiving foreclosed properties from lenders that have issued an FHA loan. Once the lender files a claim, its paid by HUD and the property enters HUDs active inventory to be cleaned and re-sold to the public.

Part One Interview

This interview was conducted with one of the Branch Chiefs employed with the Single Family Housing Division named Danielle Lewis. Based on the interview with the manager, she disclosed that the product portfolio were single family properties that have been through the foreclosure process after a borrower defaulted on an FHA loan. Lenders that well FHA loans have an insurance that comes with the mortgage. Once a borrower defaults on a loan, the lender has the option of filing a claim with HUD to re-coup what was loss. Sometimes the bank will keep the property and sell it themselves if it in good condition. Danielle stated the target market for these properties are owner occupants, even though investors can purchase the properties as well. The manager went on to state that because HUD properties are usually sold below the market rate it is usually appealing to the customer because they will have some equity that is present in the home after its purchase. The main needs of the customer that are not met is the amount of money HUD pays for closing cost. Most of the customers do not have a lot of money to pay the closing fees and HUD is only willing to pay three percent of the closing fees. Also, HUD doesn’t complete repairs on the properties, so some customers are lost because they are not able to obtain a loan on HUD properties that need extensive repairs. Based on the interview Danielle believes that HUD has competitive advantage because the agency offers programs that no other agency has such a Good Neighbor Next Door which provides housing at a fifty percent discount to members of the police force, teachers, and EMT. This is just one program that allows everyday working families to purchase an affordable home. HUD also has a larger inventory which allows for more choices for customer.

Part Two Analysis

Target Customer

HUD’s target customer are owner occupants searching for single family housing dwellings. The owner occupants must dwell in the properties for a minimum of three years as their primary residence. Although owner occupants are the target for the single family housing division, HUD will allow investors to purchase their properties after the ten-day exclusive period has ended for owner occupants. The Atlanta HUD office has properties in eleven states which are, North Carolina, South Carolina, Kentucky, Tennessee, Alabama, Mississippi, Indiana, Florida, Illinois, Puerto Rico, Virgin Island. HUD makes sure the market strategy includes incentives that would be attractive to owner occupants such as $100 down program, and Good Neighbor Next Door (GNND), which provides homes to owner occupants that are police officer, teachers, and EMT. The buying habits of HUD’s customers are pretty simple; homes sell mostly in the summer months of May- August. The homes buying season usually slows down in September- December.

Customer Segment

The specific wants and needs of HUD owner occupants are single family housing dwellings that are free from hazards and health issues. Most of the customer’s request properties that are three to four bedrooms, which around 95 percent of HUD’s inventory meet that criteria. At one point a customers requested HUD buy back the property she purchased because she found out there was a horrible crime that was committed in the property. Based on her beliefs she would not be able to dwell in the home. HUD perform the transaction and the property was brought back with no penalty. The customer purchased another HUD property which she loved. Customers purchase HUD homes over the competitors for a few reason such as price, property condition, and buyer incentives. HUD competitors do not have employees that are hire to keep properties cleaned and free from liens. That is one major advantage for HUD.

Satisfy Customer Wants and Needs

HUD’s product satisfies the wants and needs of customers. Many customers will write and tell HUD employees they appreciate the hard work of the staff. The only want HUD doesn’t satisfy for customers is performing more repairs for properties. HUD homes are sold as is and sometimes that means the property has a lot of damage. As long as the property is free from health and safety hazards HUD will sell the home. Purchasers have to understand there are many properties and HUD doesn’t have the resources to repair all homes.

Position of Product and Services

Currently, HUD has a market share around 28 percent. The two main competitors for HUD is Fannie and Freddie Mac. In relation to the HUD competition Fannie and Freddie wanted to extend credit to low income purchaser by extending credit by purchasing loans with combined loan-to-value ratios of up to 97 percent in order to meet their congressionally mandated affordable housing goals for low-income borrowers. FHA announced a major cut of about 50 points for the mortgage insurance rate. Also, FHA provides better quality homes because field services contractors are hired to clean and maintain properties. This allows HUD to sell homes that are good quality. HUD properties are sold below market, but hold equity for purchasers. HUD has a larger brand image over Fannie and Freddie Mac because most real estate agents are partnered with HUD to sell homes, vs Fannie and Freddie that try to sell their own. HUD works with industry professionals to gain knowledge and a greater market position. (HUD@Work, 2016).

Competitive Advantage/ Long-Term Sustainability

When it comes to IT competitive advantage, it is not the IT itself that will give a company the advantage over other business it’s the way the IT is used that will give them the advantage. Most companies have to understand how IT can mitigate the problems of the company. HUD will have the competitive advantage because the department managers and branch chiefs of the department understand the importance of IT and make sure that all employees are trained and fully understand the IT strategy. The managers understand that if they employees do not understand the product, then the business and IT strategy will never work. Educational training and meetings are set up quarterly for employees, also providing additional webinars for employees that need additional training. Another reason why HUD has the competitive advantage is because the department understand that technology should bridge the gap between business and technical people. The business staff of HUD understand the importance of IT and staff work closely with the IT department when the implementation of a new IT tool is created. The IT staff holds sessions to understand the goals of the single family housing department and explain how the IT will improve and manage those goals. Because there is such a good relationship between the IT department and housing staff this is what sets HUD apart from other agencies. The relationship will ensure the IT strategies will be used to the highest possibility because there is an understanding tools and between staff. (Use of Information Technology, 2014).

Conclusion

In conclusion this assignment required students to complete a market position analysis. The company that was selected would be used though out the course to complete assignments. The organization that was used for this assignment was The Department of Housing and Urban Development, which is the agency that re-sells foreclosed properties that have an FHA mortgage. The assignment had three sections, part one required and interview of mid-level or senior manager employed with the selected company, part two was the analysis which provided detail information regarding the product and services offered by the company. Lastly, part three was a matrix to which compared the selected company with its competitors.

Reference

Use of Information Technology in Competitive Advantage - Use of Technology. (2014). Retrieved October 09, 2016, from http://www.useoftechnology.com/information-technology-competitive-advantage/

Program offices/U.S. Department of housing and urban development (HUD). Retrieved October 10, 2016, from http://portal.hud.gov/hudportal/HUD?src=/program_offices

HUD@Work. (n.d.). Retrieved October 11, 2016.