Marketing Strategy of Real Estate

Development Firms

Marketing concept vs selling concept (in real estate)

Development firm develops a parcel of land--- once units available for sale, the marketing staff becomes involved in advertising and promotion of these units to prospective buyers

Available Real Estate Property

Selling Real Estate Property

Purchase Real Estate Property

Development firm starts out with good marketing research to understand the housing needs of consumer group. The goal is to achieve customer satisfaction, which ultimately leads to profitability.

Customer need

assessment

Integrated marketing

effort

Customer satisfaction

Achievement of

organizational goals

Example

Retirement community with a variety of living options:

• Active adults• Independent living• Assisted –living level 1• Assisted living level 2• Memory care• Long-term nursing care

Real estate developer uses marketing research to plan the :

• Product mix (*e.g., the various types of residential structures suited for six different market segments)

• Price the various housing structures (as a function of cost, competition, and customers’ willingness to pay)

• Find optimal location sites for the planned structures (as a function of customers’ location preferences and other structural, environmental, and legal conditions)

• Promote these housing structures to the various market segments (As a function of understanding the housing needs of the various customer groups and their media habits)

Real Estate Marketing

Real estate marketing involves anticipating, managing, and satisfying demand via the exchange process between buyer and seller of a property.

Strategic Analysis

Prospect Strategy

Product Strategy

Place Strategy

Price Strategy

Promotion Strategy

• Sales Analysis• Customer Analysis

Internal Analysis

• Market Analysis• Competitive analysis

External Analysis

Strategic Analysis

Strategic analysis involves an assessment of the internal and external environments.

A Sales analysis focuses on plotting sales trends over the last several years and making an attempt to explain sales fluctuations.

Sales analysis of residential homes for the retired sold by real estate development firm XYZ

Customer analysis focuses on current customers– customers who have bought property from the real estate development firm. The goal is to capture the extent to which customers felt satisfied or dissatisfied with four major areas:

• the product (e.g., housing design, residential site, and energy conservation),

• the place (e.g., location in the neighborhood and the community, neighborhood, and community features),

• the price (e.g., price affordability, value for the money, and price negotiations),

• the promotion (e.g., quality and quantity of information provided to customers to help them with the buying decision).

Customer Satisfaction Survey

Customer satisfaction

with aspects of

the product

Customer satisfaction

with aspects of the price

Customer satisfaction

with aspects of the place

Customer satisfaction

with aspects of

the promotion

Market Analysis

Market analysis

related to prospect strategy

Market analysis

related to product strategy

Market analysis

related to place

strategy

Market analysis

related to price

strategy

Market analysis

related to promotion

strategy

Market analysis refers to collecting and analyzing data about issues directly related to target marketing, product strategy, pricing strategy, and promotion strategy.

Market analysis related to target marketing– focuses on collecting data about specific population segments to assess their market potential and the extent to which the firm may want to target these segments.

Market analysis related to product strategy involves collecting and analyzing data dealing with housing design, residential sites, and energy conservation.

Market analysis related to place strategy focuses on collecting data on neighborhoods and communities to aid in the decision of where to build. Data about the physical, social, and economic features of neighborhood s should be collected.

Market analysis related to pricing strategy involves collecting and analyzing data about housing costs and prices.

Marketing analysis related to promotion strategy involves data collection of the media habits of the target market segment.

Competitive Analysis

Competitive analysis

related to prospect strategy

Competitive analysis

related to product strategy

Competitive analysis

related to place

strategy

Competitive analysis

related to price

strategy

Competitive analysis

related to promotion

strategy

Competitive analysis related to target marketing involves gathering information about key competitors in an attempt to identify their target market.

Prospect StrategyProduct

decisions with

target market in

mind

Place decisions

with target

market in mind

Pricing decisions

with target

market in mind

Promotion decisions

with target

market in mind

Prospect strategy (or target marketing) involves identifying all the possible market segments for the real estate development firm and then making a deliberate decision to go after certain segments while ignoring others. Target marketing is foundational.

Market segmentation

Market segmentation model involves technologies, customer needs, and customer groups.

Technologies refer to those particular products that can be defined and distinguished from other products through technological features.

Needs are functions or purposes of a product serves for prospects.

Groups are “homogeneous” sets of prospective buyers.

GroupsNeedsTechnology

House on the lake

House with a dock on the lake

House that serves living year-round

Retired couples who enjoy water

sports

House that serves as a

summer home

High income professionals

who enjoy water sports

House without a

dock

House that serves living year round

Retired couples who

are sedentary

House that serves as a

summer home

High income professionals

who enjoy entertaining

guests

Marketing managers select market segments using a set of criteria:

• Size of each segment• Anticipated growth of each segment– trends analysis,

regression, judgment method• Identifiability and reachability of each segment–

identifiability refers to the extent that the segment is clearly profiled in demographic, geographic, and/or psychographic terms.

• Responsiveness of each segment• Ethical and societal considerations related to each

segment