KB Home is one of America’s leading homebuilders with domestic operations in the
following regions and states: West Coast — California; Southwest — Arizona, Nevada,
New Mexico; Central — Colorado, Illinois and Texas; and Southeast — Florida, Georgia
and North Carolina. Kaufman & Broad S.A. (“KBSA”), our majority-owned subsidiary,
is one of the largest homebuilders in France based on revenues. We also provide
mortgage banking services to the majority of our domestic homebuyers through our
wholly-owned subsidiary, KB Home Mortgage Company (“KBHMC”).
Certain elements of the KBnxt operational business model include achieving
an in-depth understanding of customer desires and preferences through detailed
market surveys and providing a wide spectrum of choice to customers in terms
of location, design and options. Our communities offer homebuyers an abundance
of choices and options which allow customers to customize their home to an extent
not typically available with private builders. After selecting a floorplan and
homesite that meet their needs, our buyers visit one of our KB Home Studios
to select options for their home, the incremental cost of which may be rolled
into their new home mortgage. Our KB Home Studios, which are typically “retail”-type
locations of approximately 10,000 square feet but can be as large as our 21,000
square foot facility in Las Vegas, Nevada, are typically located separately
from our divisional business offices. These studios offer customers more than
5,000 options — from floor plans to fireplaces to garage doors — in a retail
environment convenient to multiple communities. Our personnel are available
at the studios to assist homebuyers in selecting options and upgrades.
One of our key competitive advantages is our unified, national brand. Unlike
many builders, we operate under a single name in every one of our markets utilizing
marketing programs from our centralized in-house advertising agency. This means
that whether you are in Charlotte, Sacramento, Tampa or Tucson, you will recognize
KB Home as one of the nation’s most trusted and premier homebuilders. This strategy
not only gives us terrific brand recognition in our existing markets, it also
allows us to transition seamlessly with the strength of a leading brand in new
market entries, whether through acquisition or de novo growth, including our
expansions into the Midwest and Southeast. In addition, we are able to capitalize
on today’s more mobile society, where one homebuyer may live in several major
homebuilding markets in his or her lifetime.
Our geographic diversity and large national reach also allow us to pool the
collective marketing resources of our operating divisions across the country
for partnerships and promotions. In 2003, we partnered with ABC Television and
its top-rated morning show, Live with Regis and Kelly, for a groundbreaking
promotion to build a home in the heart of New York City — in front of America’s
families — and give it away to one lucky viewer. This partnership gave us unprecedented
national reach, with hours of dedicated on-air time during prime May sweeps
valued at millions of dollars in media exposure. But the brand-name exposure
was only one of the benefits; even for those consumers already familiar with
us, we were able to demonstrate one of our most central marketing messages —
the powerful impact of our unique KB Home Studio and customization abilities.
In 2003, we took our online marketing efforts to the next level by bringing
our primary consumer web site, www.kbhome.com, in-house for greater cost efficiencies
and faster time to market for upgrades and new features. The new web site has
seen a significant increase in online traffic and qualified leads generated
from the site. The web site continues to be fully integrated with our houseCALLTM
Center, our phone service center, which is designed to bring potential buyers
to our communities while also simplifying the homebuying process for the consumer.
The houseCALLTM Center can be reached at 888-KB-HOMES AND 888-KB-CASAS.
We believe the use of our KBnxt operational business model, particularly the
aspects that involve gaining a deeper understanding of customer interests and
needs and offering a wide range of choice to homebuyers, provides us with long-term
competitive advantages. The housing industry is highly competitive, and we compete
with numerous housing producers ranging from regional and national firms to
small local builders primarily on the basis of price, location, financing, design,
reputation, quality and amenities. In addition, we compete with housing alternatives
other than new production homes, including existing homes and rental housing.
In certain markets and at times when housing demand is high, we also compete
with other builders to hire subcontractors.
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