Businessmodel of PulteGroup

Customer Segments

PulteGroup has a mass market business model, with no significant differentiation between customer groups. The company targets its offerings at all types of consumers who want custom-built homes.

Value Proposition

PulteGroup offers four primary value propositions: customization, accessibility, performance, and brand/status.

The company enables customization by designing different types of homes for different customer groups. Its Centex brand builds homes for entry-level buyers, its Pulte Homes brand is marketed at consumers seeking to trade up, and its Del Webb brand is targeted at buyers in the 55-plus age range. It also collects information from customers regarding their preferences for different aspects of their homes in order to tailor it further.

The company creates accessibility by providing a wide variety of options. Its building formats include single-family houses, duplexes, townhouses, and condominiums. It offers a broad range of countertop, appliance, and flooring options, and provides different upgrade packages.

The company has demonstrated strong performance through tangible results. It established its Value Creation strategy in 2011. This plan enabled it to obtain significant gains in pretax income and higher returns on invested capital (ROIC) over the housing cycle. It has also made eco-consciousness an important part of its home designs, with low emissivity windows, high efficiency HVAC systems and insulation, and solar power. As a result, its Pulte Energy Advantage homes are up to 30% more efficient than average homes.

The company has established a strong brand due to its success. It is the top homebuilder in the United States, a status it attained when it merged with competitor Centex in 2009. It operates in 70 major metropolitan markets in 30 states across the U.S. It has built more than 655,000 homes and has land pipeline exceeding 100,000 lots. Lastly, it has won many honors, including recognition as one of the “World’s Most Admired Companies” by Fortune and for outstanding achievement in the DOE Builders Challenge program by the U.S. Department of Energy and BASF.

Channels

PulteGroup’s main channel is its direct sales team, which sometimes works with outside sales brokers. The company promotes its offering through its website, social media pages, brochures, advertising, and mobile apps.

Customer Relationships

PulteGroup’s customer relationship is primarily of a dedicated personal assistance nature. The company’s employees work with clients to build their homes and offer related services.

It operates Pulte Mortgage, a subsidiary that provides lending services. Customers receive guidance from personal loan consultants and a personal mortgage advisor on borrowing.

Key Activities

PulteGroup’s business model entails designing, developing, and building homes for customers and providing associated services.

Key Partners

PulteGroup’s key partners are the independent subcontractors working under contract to construct its homes for customers and the suppliers who provide necessary equipment and materials.

Key Resources

PulteGroup’s main resources are its human resources, who include the architectural services teams that create the plans for its homes, the on-site construction field managers that supervise home construction, and the advisors that provide guidance on usage of its lending services.

Cost Structure

PulteGroup has a value-driven structure, aiming to provide a premium value proposition through enhanced personal service and frequent product improvements. Its biggest cost driver is cost of revenues, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

PulteGroup has two revenue streams:

• Homebuilding Revenues – Revenues generated from the sale of custom-built homes to customers.
• Financial Services Revenues – Revenues generated from various types of fees. One is mortgage servicing fees, fees earned for servicing loans for various investors. They are based on a contractual percentage of the outstanding principal balance, or a contracted set fee in the case of certain sub-servicing arrangements, and are credited to income when related. Other types are loan origination fees and commitment fees.