by Lorna Hamill
What is marketing? The Institute of Marketing defines marketing as “the management process responsible for identifying, anticipating and satisfying customer’s requirements profitably”.
At the moment most segments of the property market are strong, but how long will it last? In 1974 and again in the early 1980s the property markets performed poorly and developers found themselves holding property for long periods. Even at the best of times developments run into difficulties when the plans are viewed as contentious by the planning authority, the community or both, and the cost of delaying development can mean that the initiative is lost.
Many developers and agents seem to feel that it is not realistic to compare the marketing of their product with that of consumer product goods.
It is true that there are elements of property which make it unique, but marketing can still be used to identify user needs and help design the property to suit, not merely to sell it. If this is done the property will sell faster and at a good price, it will probably have a longer useful life and be less affected in times of recession.
The solution usually means hiring an external firm of consultants, although some surveying firms and developers do have the expertise in-house to effect the necessary work.
The essentials of marketing are listed below.
- Market research is used to identify market need, customer profiles and to establish competitive activity.
- This information is incorporated in designing the product so that it best meets the customer’s needs.
- A marketing strategy is developed which determines the timing, the target market and the message to be conveyed.
- This strategy is implemented through selling and promotion.
- Finally, marketing is responsible for monitoring the results and the level of satisfaction among users.
Most people think of marketing as product-orientated, but that is selling rather than marketing — which begins and ends with users’ needs.
Currently, the most common source of external advice on the state of the property market is the independent surveyor. For example, the surveyor usually supplies the developer with commercial information of rents/prices, yields, the current level and type of market activity, often culminating in a residual valuation.
Promotion and selling can be undertaken by the developer, an agent or both. For large developments this will usually involve designing a brochure, advertising, issuing press releases and holding promotional events. This promotional activity, combined with direct mailing and telephone follow-ups, will, it is hoped, identify an occupier for the building and then the sales and negotiating activity takes over.
Clearly, such a “marketing” effort is better described as selling and promotion.
A well-conceived marketing plan should be based on research. This will involve interviewing prospective purchasers and independent experts to establish exactly what specification and type of property users want and need and what prices they are able and willing to pay. Interviews and group discussions define occupier requirements for incorporation in design, as well as views on prices and competing projects.
This process is not the same as an expert surveyor’s advice based on acquisition experience, since these occupiers might be taking property which represents the “best of a bad set of options”. Instead, the research is precisely directed at establishing what an occupier would seek in an ideal world and weighting these requirements.
Further research is undertaken to define the prevailing market trends and to establish what competitors are offering, at what prices, and how they are promoting and selling. These are areas where surveyors with specific market knowledge are particularly important.
The information gathered is then analysed to produce a set of preferred options and a financial feasibility appraisal can be undertaken, again with input from surveyors. DCF valuation techniques allow the developer to see the future impact which certain factors have on the viability of the project. Financial risk is not the only criterion which should be considered when making a commitment to proceed, since there may be other business risks to the developer which might dictate the abandonment or postponement of a project.
Projects for which demand has been established and which are viable are then the subject of an economic appraisal. This highlights the costs and benefits which accrue to the community and puts the developer in a position to anticipate and correct any difficulties which might arise prior to the planning process.
The marketing process continues through the design stage to ensure that the building incorporates the primary features desired by occupiers and necessary to satisfy planning authorities. Depending on timing, it may be necessary to confirm that no major changes in requirements have emerged by conducting further research. Marketing thus facilitates the design of a well-conceived building.
It is next the responsibility of the marketing expert to establish who will want the building, when they will want it and on what terms they will take it.
The original market research will have identified the target market for the building. This does not necessarily mean that it will have found a specific occupier but rather that the factors which define the most likely type of occupier are understood. From this base it is possible to determine the message to be conveyed to potential occupiers, including terms. The mix of advertising, promotion and public relations effort is established and directed at the target group. This targeting of potential occupiers results in a higher return on spend than a shotgun approach to promotion and selling.
The final, but crucial part of marketing a development is the management of the sales effort. If the sales force understand potential occupiers’ needs, their motivation for seeking new property and the decision-making process they will be better able to direct attention to the features which are key to a successful completion.
To demonstrate the effectiveness of these techniques I shall use a consultancy project in which I was involved for a residential developer, as part of a multi-disciplinary team. However, the methodology is equally applicable to other types of property and to organisations other than developers.
Market research was used to identify the key features which homebuyers were seeking, the prices which they expected to pay because of the features offered, their attitude to various locations and their opinions of both our client’s and competing developers’ homes. In addition, we gained a clear insight into the decision-making process. Local estate agents were contacted to gain their views on the prevailing market trends, particularly in the resale market. In addition, we tested their response to ideas generated in the customer research.
Our research and financial appraisals resulted in a residential development strategy which concentrated on the company’s strengths, not just in terms of the type of development but also on the location of the developments, given the company’s existing sites.
For example, our analysis resulted in comments about the quality of the internal finishes of the homes and the aesthetic appearance of the site and individual buildings.
The market research was then used to define the target market and to design a sales and promotion initiative specifically directed at them. In this instance our comments included advice on the quality of the show homes, the financial promotion package, part exchange on existing homes, and the salesforce.
Finally, we provided our client with several methods which could be used to monitor the results of the implemented changes. These included sales analysis techniques and a customer satisfaction survey. The results of these will allow our client to monitor any variations in the market which might impact on sales in the future.
Other areas of business where marketing has a role to play are varied. For example, marketing has an essential role in the development of strategic business plans. This involves defining where the organisation wants to go, and why and how it is going to get there. The types of organisations which find this useful include developers who have found it hard to establish a market identity, financial institutions who are embarking on providing “one-stop” financial services or surveying firms who are looking into the alternative of going public.
Marketing is more than sales and promotion; it is making sure that the product fulfills a need in the market place.
The moral is: You can lead an occupier to a building but you can’t make him buy!
