I haven't formalized the theory but I'm sure someone with an MBA has written on this.... markets in the USA/world are turning into a point of maturity where not only are the competitors all of similar value but the markets are over-served. But, the markets are often controlled by cartel activity. By using the cartel the companies in the market can drvie up the cost to the buyers. For example, TV. Or computers. By changing technology each few years they can force the consumer to continue to buy new products and prevent commoditization and lower and lower prices profits).
Where am I going with this? Housing. Cars are a perfect analogy now. Who wants to buy used? Re-read this: "Who wants to buy used?" Used houses! We recently purchased a new house because the new ones are selling for less than many used ones.
I don't really see a way for the housing markets to keep changing the technology and force upgrades but by using planned obselence they can at least limit the time the buyer is able to enjoy his purchase. But, for sure, they could take housing from the traditional model to one of "buy new". Perhaps by workign with the govs to continue to revise the building codes, toilet codes, etc then they can reduce the possibility of one upgrading a used house and make it more cost attractive to buy a new house.
First point on markets. These are in an order of evolution.
1. find a need. provide a solution
2. differentiate on attractiveness of solution
3. design for failure to force upgrades (thanks you China!)
4. get laws/standards to prevent new competition
5. market yourself as "cool" or "fulfillment" so customers buy based on imaginary benefits
6. introduce addictive substances into your product (i.e. make competing software products fail on your platform or introduce satiating fat and suger into your burger, etc.)
So, the housing market itself is definitely NOT mature like the computer hardware market, the health insurance market, nor the carbonated beverage market; but, it is maturing from a custom solution market to a commodity market. "new" is the new standard. Used houses will continue to plumment. This means DRHorton and others can continue to profit. I think they have like $1B in the bank. They can build new for less than what people are willing to sell used.
I haven't formalized the theory but I'm sure someone with an MBA has written on this.... markets in the USA/world are turning into a point of maturity where not only are the competitors all of similar value but the markets are over-served. But, the markets are often controlled by cartel activity. By using the cartel the companies in the market can drvie up the cost to the buyers. For example, TV. Or computers. By changing technology each few years they can force the consumer to continue to buy new products and prevent commoditization and lower and lower prices profits).
Where am I going with this? Housing. Cars are a perfect analogy now. Who wants to buy used? Re-read this: "Who wants to buy used?" Used houses! We recently purchased a new house because the new ones are selling for less than many used ones.
I don't really see a way for the housing markets to keep changing the technology and force upgrades but by using planned obselence they can at least limit the time the buyer is able to enjoy his purchase. But, for sure, they could take housing from the traditional model to one of "buy new". Perhaps by workign with the govs to continue to revise the building codes, toilet codes, etc then they can reduce the possibility of one upgrading a used house and make it more cost attractive to buy a new house.
First point on markets. These are in an order of evolution.
1. find a need. provide a solution
2. differentiate on attractiveness of solution
3. design for failure to force upgrades (thanks you China!)
4. get laws/standards to prevent new competition
5. market yourself as "cool" or "fulfillment" so customers buy based on imaginary benefits
6. introduce addictive substances into your product (i.e. make competing software products fail on your platform or introduce satiating fat and suger into your burger, etc.)
So, the housing market itself is definitely NOT mature like the computer hardware market, the health insurance market, nor the carbonated beverage market; but, it is maturing from a custom solution market to a commodity market. "new" is the new standard. Used houses will continue to plumment. This means DRHorton and others can continue to profit. I think they have like $1B in the bank. They can build new for less than what people are willing to sell used.
timjowers
#housing