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Market Segmentation in Lennar Corporation

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Diverse customer segment

The United States has a diverse group of homebuyers, and one size doesn’t fit all. Today’s market is composed of a variety of buyers, including active seniors, empty-nesters, young professionals, singles, young families with children, and first-time homebuyers.

These homebuyers want different products. Some want attached or unattached single-family homes, and some prefer duplexes, row houses, townhouses, or condos. Some homebuyers want communities with activities and social events, while others want a quiet, serene ambience.

Homebuyers want in-town and out-of-town living, country living, urban living, luxury homes, affordable homes, and everything in between.

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Lennar’s target customers

Homebuilders such as Lennar (LEN), D.R. Horton (DHI), and Toll Brothers (TOL) often divide the market into key consumer segments made up of buyers who share similar characteristics and lifestyle needs. Market segmentation can be vital to a company’s success when consumers have such a variety of needs.

Lennar’s (LEN) homebuilding operation includes construction and sale of single-family attached and detached homes. Lennar’s market segmentation is primarily made up of first-time, move-up, and active adult homebuyers. Lennar offers a diversified product portfolio for these target customers, from urban infill communities to golf course communities.

Another one of Lennar’s target segments is multigenerational households. The company has come out with a new product called NextGen homes, or a home within a home, to target this segment.

Strategy to entice customers

To acquire target customers, Lennar has initiated its Everything’s Included marketing strategy. According to Lennar, this simplifies the home buying experience by including the most desirable features as standard items.

Lennar has also introduced home warranty programs that cover defective materials and workmanship for a minimum period of one year after the date of closing.

Major homebuilding ETFs such as the SPDR S&P Homebuilders ETF (XHB) and the iShares Dow Jones U.S. Home Construction Index Fund (ITB) have invested in Lennar with an exposure of 3.36% and 10.8%, respectively.

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