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| Going beyond the conventional? | | While the real estate market has grown by leaps and bounds in recent years, marketing of real estate doesn?t seem to have kept pace |
| Pranab Dutta / Feb 06, 2012, 00:00 IST |
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 Since recovering remarkably fast from the effects of the global meltdown, the real estate (RE) market is currently experiencing some strong headwinds. In most metros, volumes are sliding, inventories are piling up and with the macro-economic and political scene not looking rosy at least from a near-term perspective, consumers are preferring to wait it out, fully aware that given the market conditions the chances of price appreciation are unlikely. They now have the upper hand and with a greater choice available they are becoming very discerning and discriminatory. A perfect market situation.
The pro-buyer swing in the scale requires an altered mindset on the part of developers to cope with the discontinuity. A comprehensive overhaul of the marketing strategies is seriously called for to draw back customers, away from competition. The classical marketing tools of a differentiated marketing strategy that sharply focuses on a brand's unique selling proposition connecting emotionally with the consumer may be the need of the hour.
A look at the ad campaigns of some the leading developers indicates the usual stereotyped approach. Most ads have the same look and feel. Invariably, they show the building elevations, mention the product features which are more hygiene than differentiators, leaving one wondering what separates one from the other, apart from price and location.
Which leads one to ask at which stage of the marketing evolution is RE currently in? It needs to be remembered that all these years it has been a seller’s market; whatever was produced could be easily sold as demand far outstripped supply.
However, in the last few years as developers concentrated more on the money spinning premium and luxury segments; the demand-supply equation in this segment seems to be shifting, offering buyers a greater choice and bargaining clout as well. Inventory levels are therefore higher relative to the velocity of sales, creating a discontinuous situation for the developers. Trapped in the old mindset, they continue to rely on the typical sales promotion gimmicks to do the trick. Alas, the goal-post has shifted. So unless there is a better consumer connect, RE marketers will only have themselves to blame.
Let’s come back to what the RE ads currently convey. Most of them will invariably rely on the rational story-the elevation, a bit of the view of the inside of the flat, and finally a stock shot of kids, family and feel of nature enveloping the project. When most ads rely on the same elements, the poor consumer is left wondering on the differences, other than location and price. The rapidly changing demographics and psychographics suggesting that a house is also an expression of self worth is somehow overlooked.
The drivers of purchase inevitably vary with each segment and unless this is appreciated, a developer will end up creating a product not in sync with customer needs. Not surprisingly, some developments sell faster than others despite price differentials and as one moves up from the lower to the premium end, it is observed that projects conceived with sharp consumer insights invariably sell much faster than those based on gut feel and past success.
A look at most RE organisations will reveal that marketing as a function is notable more by its absence. Most organisations will have a sales outfit that relies heavily on the broker network to pull in the customers. The front end lead generation activity is limited to throwing in some ads to announce the development, hoping that would suffice. But when market dynamics change, they don't appreciate the fact that such strategy may not suffice. Sadly, many organisations are clueless about how to address the challenge. What worked in the past may not do so in the future.
So what is the answer?
It is stating the obvious that the task of marketing is to understand the need and then offer a product that meets the need. The marketing task begins when the product is being conceived. The brief to the architect, capturing the consumer insight, has to be prepared by marketing; the interface between the architect and marketing is a very iterative process to ensure that the design is faithful to the brief. Unlike the hit and run approach that may have worked earlier, the induction of professionals is thankfully giving a structure to the whole process in the more evolved organisations.
The brand or the project has to be positioned, again based on the insights gathered and the communication, irrespective of the media, must bring across the consumer value that will distinguish the brand/project from competition. Some developers have adopted their own unique positioning that has done wonders for them. So Hiranandani stands for ‘Community Living’, Mahindra for ‘Healthy Homes, Healthy Living’, the Tata Group and Godrej for trust and Lodhas for ‘Luxury and Premium Living’. In each of these cases, the brand promise is a great pull.
The Lodha group stands out for having brought some freshness in their communication strategies, which certainly has helped establish the brand though it tends to use the same brush for vastly different products and segments. Of late, it has brilliantly repositioned Wadala in Mumbai, rechristened as New Cuffe Parade, as the destination of the future. While the campaign may benefit competing projects in the vicinity, undoubtedly the Lodha group will be a major beneficiary as in the consumer mind, that locality is spontaneously associated with that brand.
Hiranandani’s ‘Community Living’ gives it a powerful differentiation though one hopes the communication was more creative. The product is not only the house but the surrounding area, which together pulls the consumer despite the huge price premium over competition. It is not surprising for them to enjoy a market premium of, in many cases, over 50 per cent and yet manage high sales velocity. Just goes to show brand power is possible in real estate as well.
The RE industry is going through a metamorphosis. The sellers’ market syndrome will not hold for long particularly at the upper end where the demand-supply proposition is steadily shifting in favour of the buyer. Developers need to orient their development strategies in accordance with the changing market dynamics and create products that meet the stated and unstated customer needs. The last leg of bringing the idea across to the consumer also requires a paradigm shift to better connect with the customer, which eventually will help them advance from the commodity to the brand level.
The author is vice-chairman & managing director, Knight Frank India
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