by John Butler
The torrent of criticism in recent years directed at the marketing techniques used by our industry could well make the most hardened property professional feel a victim of the anonymous rhyme: When I did well, I heard it never, But when I did ill, I heard it ever!
Say what they will, outsiders cannot deny that the market mechanism works, nor that the techniques currently employed produce satisfied occupiers and buyers in the majority of cases.
I believe that two characteristics of the property market are responsible for this criticism: the longevity and visibility of the product.
Our mistakes have the unpleasant habit of staying with us. Long after ill-conceived, unresearched branded consumer goods, or “technologically brilliant” innovations like the C5, have disappeared from department stores, High Streets and thoroughfares, our roofless sheds, depopulated shopping precints and vacant office blocks linger on, fully visible, awaiting the day that local economics will make their redevelopment a viable proposition.
Is it not true that these mistakes are a minority, a fraction of all property development? Is it not true that, in the main, we succeed in producing the right product for the right person at the right time?
How do we compare with non-property marketeers from whom so frequently and so volubly the criticism arises? Consider their track record, for instance, in the field of consumer products.
Non-property marketing
While estimates vary from market to market, it is reckoned that 24 out of 25 new products fail during test marketing in the US. A worldwide food manufacturer states that only 8% of new products remain on shelf by the second year of their life. Another firm has stated that two out of three new products fail after introduction to the trade. A further authority has calculated that in Britain it takes 16 ideas to produce one successful national brand. Finally, using data from Proctor & Gamble, the Harvard Business School estimates one successful new product launch in every 10.
The prize, however, for a successful launch is substantial, and well outweighs the cost of the failures.
In property, every building standing was, at one time, a new product launch. While it is very difficult to estimate the success rate of new product launches in the property business, logic dictates that it must certainly be far higher than 10%.
There will, no doubt, be cries of “unfair comparison!”
But, of one thing I am sure: while in the main property professionals do not understand marketing, marketeers in non-property industries seldom grasp the essential characteristics and realities of the property industry.
Do not interprete this to mean, however, that we in the property industry have any grounds for complacency — indeed, we most certainly have not.
There is a great deal wrong with current property marketing techniques and industry practices, and professionals must rapidly adjust or take the consequences. The cosy days of professional lines of demarcation are gone forever and there are some very powerful and hungry predators who, even now, are stealthily stalking their prey.
In reality, the success of our industry to date owes more to Ricardo than to Ogilvy. As with life, so with property, where timing has often been far more critical than performance. The enlightened property marketeer advocates — and even the most hardened cynic must agree — that any process which unexpectedly brings forward a letting, purchase or sale must be worthwhile pursuing.
On the other hand, I have been amazed at just how ingrained, particularly at senior levels of the profession, is the concept that marketing is no more than a cosmetic smoke-screen which obscures the client’s vision, while the agent, with almost Buddhist fatalism, waits for the inevitable taker to appear.
I know one senior member of the profession who, while happily advocating expensive marketing campaigns, privately maintains that this is no more than a placebo for the client — a very costly pacifier, to be sure!
Another acquaintance maintains that since the majority of tenants are represented, the principal marketing effort should be directed not to the potential consumer but to agents — a strategy which, although less expensive, merely exhibits a bunker mentality that confuses the mechanics of acquisition with the process of consumer-selection.
Nor are these isolated examples. Consider what Adam Smith, the founder of economics as a discipline, wrote nearly 200 years ago:
Consumption is the sole end and purpose of all production, and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident that it would be absurd to attempt to prove it.
What was self-evident to Adam Smith certainly appears to have taken a long time to filter through to the property industry.
By contrast, the following statement was made by the senior partner of one of England’s largest agents in 1983, referring to 1982 as a bad year:
In such difficult times, it becomes apparent that it is the occupier and his requirements that are of paramount importance to the property industry.
So frequently, it takes a bad year for the industry to remember this basic marketing tenet. It is not the investor, the developer nor the agent but the consumer who is the ignition key to the entire property process, and it is to him that all marketing efforts must be directed.
The neglected consumer
Harrods is a retailing operation and so a jumble sale. The two organisations have a lot in common and the same singular end objective: to make a profit. Obviously, each appeals to a different market sector and the most cost-effective way of reaching each target audience will be different.
Standard techniques currently used in property marketing tend to ignore market segmentation and rely on blunder-buss or pebble-dashing approaches, rather than simple targeting.
It cannot be denied that both techniques work, up to a point. But they are also crude, cumbersome and waste resources, with no finesse or quality. As the Tyburn hangings so aptly demonstrated, popularity is not necessarily a guide to quality and it is the quality of property marketing which is so crucial to success.
The untried “targeting” technique
It seems odd that, although we know so much about the characteristics of our target audiences, so little property marketing identifies end-users’ requirements or envisages the considerations that will be uppermost in consumers’ minds when taking property decisions.
Above all, I find it incredible that there are so many misconceptions with regard to the nature and, in particular, the size of the potential market in any given property opportunity.
Targeting, after all, is a question of elimination rather than any other process. There are always linear correlations between a company’s characteristics and minimum net lettable units. Basic research into turnover, number of personnel and Standard Industrial Classification should be a prerequisite. Add demographic factors and the true target audience will then emerge as a far more manageable number of potential firms. Further investigation, after these basic criteria have been established, will refine the opportunity and methods of approach even further.
Companies are, of course, made up of individuals, and by this stage of investigation we should think a great deal about the person or persons we are trying to reach. Published surveys provide statistics on his or her age, background, experience, likely salary, car, favourite sports and aspirations. Armed with this knowledge, approaching them should be reasonably easy. After all, now there are only several individuals not the huge, unidentifiable mass which, by definition, blunder-bussing or pebble-dashing implies.
It would only be wise to add at this stage that we are still dealing with probabilities and that there will always be exceptions to any “profile”. Nevertheless, each person, or group of people, taken individually, will be “exceptional”. Targeting does nothing but help to identify these characteristics of exceptional differentiation, making the opportunity that much easier to realise.
Above all, I believe that what is missing in the development of marketing techniques for the property industry is, simply, adequate basic research.
Valiant work is being done in this field, principally by the large agencies, but there is huge scope for a great deal more. We all need to know far more about how people take property decisions. What are the factors that influence their decisions?
It is encouraging to see that the professional institutions and academic establishments are beginning to recognise the problem and are trying now (albeit somewhat late in the day) to strengthen the industry’s understanding and use of marketing.
I believe that the matter is so fundamental that diploma courses and seminars are not sufficient. Every property course in the land should have marketing as a compulsory subject.
I believe we have arrived at the classic dilemna that faces every industry from time to time: “We have found the enemy and he is us!” Before we can, as an industry, solve the property marketing problem, we must first understand and accept that a problem exists.
