What is Marketing?
If you are thinking of marketing as just putting your point across, you are partly correct. Your aim needs to be able to satisfy needs and wants through the process of exchange. Which means through marketing, you obtain something and give something in return.
When you do marketing, you do not only promote/sell. You will need to identify buyers, design products that suit the needs and also setting a price that is deemed to be affordable. Core marketing activities include product development, research, communication, distribution, pricing and customer service. These are only some of the core marketing activities and there are more which differs based on target market.
Marketing Terms and Concepts
Needs and Wants
You may want something but does it constitutes a demand for a certain product? For demand to be counted, the needs and wants needs to be backed by the ability and willingness to buy. In real estate, affordability is very important as it involves a large investment. Without the budget, your ability to purchase will be restricted even though how willing are you to purchase.
Products, Goods, and Services
Based on the ability and willingness to purchase, manufacturers will have an incentive to manufacture and produce goods to satisfy the people’s needs and wants. Real estate developers are more willing to build and sell properties when there is a demand for properties.
Value, Cost, and Satisfaction
Of course, developers will calculate the cost involved in developing. They will ensure that there is a reasonable cost of producing. They may use different valuation methods, in the case of land bidding. Developers will be encouraged to develop if they are able to derive reasonable profits.
If you are buying a property you will have to evaluate your own cost and benefits. You will need to see if this property can satisfy your needs and wants. For example, closeness to parents, rental yield, closeness to your workplace, etc. Taking into account all factors, you will have to evaluate the worth or value.
Through the exchanges and transaction, buyers and sellers engage in a negotiation to reach an agreement that is deemed beneficial for both parties. Often, buyers would try their best to lower the price as much as possible. While sellers, on the other hand, try to raise the price as much as possible. When the seller and buyer price meets, a transaction would take place. This transaction will form the transaction value of the real estate.
Relationships and Networks
A relationship is very important, a good relationship can go a long way. This does not only apply to doing business, good friendships may even develop. In real estate, it will involve the relationship between the buyer, seller, and the agent. It could also be between the landlord, tenant, and agent.
Marketers and Prospects
These people are usually agents/salesperson. They are looking for prospects to help match their needs and solve their problems. Salesperson often identify potential prospects as it is a fact that not all products are suitable for everyone. Not all homeowners see the need to upgrade. Salesperson job is an important one to solve the needs and at the same time value add by giving honest and well thought through ideas.
The use of branding is for creating an individual personality. You will need to create a unique name and/or symbol so that people are able to identify and differentiate you from other competitors. With a good branding, it will be able to attract and retain loyal customers. The brand created should exist in your customer’s mind as a network of associations, feelings, attitudes and behavioral tendencies.
The process of claiming your brand position is not a one-off thing. You will need ongoing efforts to put across a consistent image through all your companies marketing activities. For example, the attributes of your product, the company’s service, company’s employee and through your promotional activities. It is the accumulation of people’s experience in the past with your product/service. What are the associations you have when I mention the brand MacDonalds?
Advantages Of Branding
- You will be able to charge a higher price
- There will be barriers to entry for competitors
- Strong brands are usually associated with quality
- Your brand is seen to provide a guarantee of reliability
Before marketing, you would want to know the different markets out there. Market segmentation is done by separating the group of potential buyers into distinct groups with different needs and characteristics. Through proper market segmentation, you can focus your marketing efforts on the correct group of buyers that are likely to buy your products to satisfy their needs.
based on factors such as region, size of city, density of development, neighbourhood, climatic environment, etc
based on age, generation, household size, family life cycle, gender, income, occupation, social status, education, religion, race, nationality, etc
based on factors such as usage, occasions, buyer-readiness stage, attitude towards products or services, etc
such as lifestyles, personality, interests, etc.
A proper marketing segmentation can help you to save resources when the market is very large. You are better off marketing to markets that are responsive to your marketing efforts.
Market segmentation is the process by which a market is divided into distinct subsets of clients or customers with similar needs and characteristics that lead them to respond to similar ways to a product offering.
At this stage, you will decide which markets do you want to select. Try to select the market which you find that you have the best possibility of success based on your available resources, strengths, and weakness.
Target marketing requires an evaluation of the relative attractiveness of various segments and the firm’s capabilities in order to select the segment it will serve best taking into account factors such as:
- market potential
- growth rate
You will have to position your brand in the mind of your target market. You need to show what differentiates you from the other competitors. The way to do this is to show your unique selling point (USP). Customers often have different perceptions about competing goods and services in the marketplace. Hence, you need to position your products and services in a way to appeal to the desires and perceptions of your target market. You will have to win them over. If your customers perceive that your attributes align with their’s, they will tend to purchase products that are offered by you.
Market positioning entails designing product offerings and marketing programmes that establish an enduring competitive advantage in the target market by creating a unique image or position in the client or customer’s mind
Marketing Mix The 4Ps
The marketing mix allows for different strategies to influence the demand for products. The 4Ps are known as Product, Price, Place, and Promotion.
Careful planning in terms of product design, packaging, features, brand name and product positioning must be done. In real estate, the product strategy involves both tangible and intangible aspects of the property.
Tangible aspects of property: Location, size, design concept, building facilities, tenant-mix, green and sustainable features, etc.
Intangible aspects of property: Tenure, benefits and privileges of ownership, exclusivity, branding, market positioning, services such as concierge services, customer service, mall ambience, etc
For people to buy there is a need to set profitable but justifiable prices. Factors such as competition and the state of the market are important factors that you need to consider. I will mention four pricing strategies namely, Premium Pricing, Penetration Pricing, Economy Pricing and Price Skimming.
- By using a high price when there is a uniqueness about your product or service
- When your product has a high competitive advantage
- e.g. Sentosa Cove, The Sail
- Pricing is set artificially low with an aim to gain market share
- Increase your pricing once market share is achieved
- Usually used on new products to break into market
- Low pricing throughout
- Cost of marketing and building structure and finishes are kept to a minimum
- e.g. HDB flats
- A pricing strategy to use different prices over time to generate more profit.
- Usual 3 stage of price skimming
- Product is set at its highest price to attract early adopters
- Price is then lowered to gain more market share
- Price is further lowered when the property is on the decline due to age, obsolescence, etc.
You may be faced with a problem such as to list price or rental value above, below or at valuation? There are many ways to get around this such as using non-price incentives to maintain the price level that you want.
For Residential Property:
- Furniture and furnishings
- Rent-free period
- Free car park lots
- Lucky draws
- Deferred payment
- Guaranteed rental amount for investors
For Commercial Property (Retail, Office, and Industrial), non-price incentives include:
- Rent-free period
- Fitting-out Period
- Longer lease period (thereby ensuring fixed rent over a longer
- period than the norm of 3 years)
- Granting an option to renew
- Granting a first right of refusal to lease adjacent units for expansion (Office)
- Allocation of car lots (a privilege in office buildings) (Office)
- Negotiated rate for after office hour air-conditioning (Office)
- Free use or priority is given for use of atrium space during festive periods (Retail)
This refers to the type of marketing channel that you want to use either through the agent or direct sale. It is where and how you want to put your product to gain market share. A proper place strategy ensures that consumers are able to find their products in the proper quantities at the right time and place.
This is also known as the Marketing Communications strategy. Promotion strategy refers to the strategy of employing the various marketing tools to publicise and introduce the property.