1. Kaleidoscope Case Study – Resolving Aging Inventory Problems
Company problem
A periodic problem that is associated with managing a new home inventory program has to deal with aging
inventory. When an inventory home sits unsold, management must determine the correct course of action.
Clearly, the best solution is one that comes from an appreciation of the market and is not simply a “knee-jerk”
reaction to do something. In addition to needing a reasonably in-depth awareness of the competitive
landscape, management is often under time constraints, trying to balance numerous issues simultaneously.
Questions Considered
 What am I facing in my current price bracket? Is the product I’m offering competing with an
overabundance of similar product?
 Am I competing primarily with resale properties or similar new construction offerings?
 If I consider reducing my price, will my new price make me more competitive, or will I still find myself
trying to distinguish my product in a crowded field?
 Regardless of my “go forward” decision, how do I connect up with the Realtors most likely to help me
move my home?
Situation
Kristie Webber, a sales manager with Drees Homes’ Indianapolis division, was struggling with a particular
piece of standing inventory. Drees Homes’ Indianapolis division primarily builds upscale homes, focusing on
2
nd
and 3
rd
time buyers. Kristie had one particular inventory home that was still sitting at least 2 months
beyond its completion date and the carrying and maintenance charges were starting to accumulate. Kristie
was tempted to simply discount the home “in order to make something happen”.
Before doing that, Kristie decided to take advantage of Kaleidoscope to see if it could quickly pinpoint a
course of action. Her concern was that simply discounting the home wouldn’t solve the problem, and if the
new list price didn’t generate a sale, all she would have is a piece of standing inventory with a new “starting
price” from which Realtors or consumers would try to negotiate. This would only add to the pressure on her
gross margins.
Solution
Kaleidoscope, developed by NHMS and delivered through NHMS’ partner broker network, was just the thing
to help Kristie evaluate different courses of action. The first thing Kristie did was ask Kaleidoscope to break
her community’s price spread into 25K increments. Like most builders, Drees Homes doesn’t sell at just one
price point in any one community. In most instances, Drees pricing can span 125K or more in any
community. Through an easy to use interface, Kristie was able to easily display listing and selling activity
across the entire spectrum of price points where Drees Homes built.
Kristie quickly learned two things. First, there was an abundance of
resale competition in the current price range. Second, in the price
range just below, there was also significant competition that included
BOTH resale and new construction. That meant that dropping the
Evaluate Pricing Across the Market

2. THE NHMS CASE STUDY SERIES PAGE 2
price might actually make selling the home more difficult because of INCREASED competition.
Kristie determined that the best things to do were:
1. Remain in her current price bucket. While there was still an abundance of listings, she had less new
home competition.
2. Add a small Realtor spiff to the listings to create awareness about her home in the Realtor
community. The cost of the spiff was considerably less than the proposed price drop.
3. Get her salesperson to identify and connect to the Realtors listing and selling comparable product in
and around her community and introduce them to the spiff. By connecting directly with the Realtors
who were working with buyers and sellers in the same price range, Kristie determined that this
targeted approach to a specific set of Realtors would have more impact than a series of email blasts.
The result is that Kristie’s salesperson was able to sell the home less than 2 weeks after the spiff was
introduced. Randy McNutt, the division president for Drees Homes’ Indianapolis division was pleased with
the result. Per Randy, “Kaleidoscope’s value comes from the fact that it gets used. Kristie was able to
quickly articulate a course of action that made sense based upon what was happening in the
market.”
Benefits
Kaleidoscope delivers the following benefits to new home builders:
1. Provides quick and easy access to practical and actionable information about local demographics
and the resale space so that it is easy for salespeople to stay on top of an ever changing market.
2. Delivers access to information that makes it easy for salespeople to articulate their “Value Equation”
relative to resale.
3. Helps builders see the “real” competitive landscape. In other words, most builders aren’t competing
against all geographic regions, all product
types, and all price points. Analyze the
specific markets, product types, and price
points you serve for a more accurate
picture of what’s happening.
4. Improves conversions by helping builders
identify the Realtors that can have the
most impact on their success.
About Drees Homes -- Drees Homes is ranked
as the twenty-third largest home builder in the
country by BUILDER media brand. Headquartered
in Fort Mitchell, KY, the company builds in
Northern Kentucky; Cincinnati and Cleveland, OH; Indianapolis, IN; Nashville, TN; Raleigh, NC; Jacksonville,
FL; the Greater Washington, DC metro area; Austin, Houston and Dallas/Fort Worth, TX.
About New Home Marketing Services – New Home Marketing Services (NHMS) mission is “Making
Builders More Profitable”. Because profitability comes from growing revenues and/or controlling costs,
NHMS delivers products and services that support smart inventory home planning, pricing, and placement,
reduce unintended costs that impact margins, and empower salespeople with market knowledge to improve
sales conversions.
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