Businessmodel of Lennar

Customer Segments

Lennar has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at all types of consumers who seek homes, including first-time movers, move-up customers, and active adult buyers (retirees).

Value Proposition

Lennar offers five primary value propositions: customization, convenience, pricing, cost reduction, and brand/status.

The company enables customization by providing tailored options. Its builds homes by taking into account buyer preferences. Further, its NextGen Home Within a Home option provides innovative floor plans with rooms customized for different age groups, ideal for multi-generational families.

The company creates convenience by enabling buyers to move in as little as 30 days. It provides a section on its website called “myLennar,” through which buyers can manage the process of evaluating, purchasing, owning, and enjoying their new homes.

The company offers a pricing value proposition. It can set competitive prices by reducing overhead and other costs through simplified construction, volume purchasing, and product standardization.

The company reduces costs for customers. Features of its NextGen option include a shared mortgage (two separate homes with one mortgage) and shared utilities (two separate homes with one utility bill). Also, transportation costs are reduced as family visits no longer require travel.

The company has established a strong brand due to its success. It is one of the largest homebuilders in the U.S., with operations in 40 markets across 19 states. As of November 2015 it had 125,914 homesites and access through option contracts to an additional 39,949 homesites. In 2015 alone it built over 24,200 homes at an average price of $344,000. Lastly, it has won a number of honors, including recognitoin as one of “America’s Best Managed Companies“ by Forbes.

Channels

Lennar’s main channels are its website and its sales team members, who are called New Home Consultants. The company promotes its offering through its social media pages, online advertising (paid search and display), e-mail marketing, traditional advertising (newspapers/magazines/radio/ billboards), and participation in trade shows and conferences.

Customer Relationships

Lennar’s customer relationship is primarily of a self-service nature. Customers utilize its products and services while having limited interaction with employees. The company’s website features “myLennar,” which enables buyers to compare floor pans and communities.

The site also features a “Resource Center” that includes helpful resources such as articles, blog posts, tips, videos, and answers to frequently asked questions. Despite this orientation, there is a personal assistance component in the form of phone, e-mail, and live chat support from New Home Consultants.

Key Activities

Lennar’s business model entails designing, developing, building, and selling its homes to customers, as well as developing and offering its home-related services.

Key Partners

Lennar’s key partners are the third parties from whom it purchases land and the suppliers that provide it with the equipment it needs for home construction.

Key Resources

Lennar’s main resource is the land that it uses to build its homes; it had 125,914 homesites as of November 2015. The company depends heavily on human resources in the form of independent contractors that complete most construction work and perform site improvements and New Home Consultants that conduct sales and provide customer service to buyers.

Cost Structure

Lennar has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of homes sold, a variable expense. Other major drivers are cost of land sold, a variable expense, and sales/marketing and administration expenses, both fixed costs.

Revenue Streams

Lennar has three revenue streams:  sales of homes, sales of land (to third parties), and sales of home-related services. Sales typically occur through the signing of contracts.