The Real Estate Reality

There was a time in India when strangers you met on a train would ask you “What’s your salary?” Now, they ask you “Where do you live?” Mothers of prospective spouses visit not just the home of the would-be bride/groom but also the office.  And I know of one case where the wedding was called off because the building did not meet the mama-in-law’s definition of a corporate office. 

It is a product that every company in India is involved in – either as a buyer, investor, lessor or lessee.  Almost every adult is a target audience, and many minor children too. India has amongst the highest home ownership rates in the world at 80%, despite lagging in quality, and availability. This is partly due to government policies that encourage home ownership, a functioning financing system, and increasing transparency in the legal framework.  But it is also because Indians – even those who don’t actually live there – retain the (possibly irrational) belief that real estate is a great investment.  

Yet, real estate marketing is still, literally, the Wild West of marketing.  The market structure is unique to India which means that there aren’t a lot of global best practices or frameworks to build upon. It is also an area where Indian culture and beliefs have a strong influence on buying behavior so extrapolation of international marketing campaigns does not work. Media consumption habits span the entire gamut of traditional and modern, further adding to the challenge. The larger firms have both residential and commercial properties, which requires the marketers to be masters of both B2B and B2C marketing. High land costs (due to low Floor Space Index) results in eye watering prices.

So what is a marketer to do? 

In general, there are two routes available to a marketer, either build a differentiation in the core offering in this case the building or in the surround attributes i.e. location, services, amenities, pricing, payment, eco-friendly and ethnicity.  A successful offering is a combination of both, but a core differentiation is harder to duplicate, providing a barrier to entry.  

Product differentiation

First task is to think about product differentiation. Product design is often entrusted to the architects, but before that there has to be a marketing brief.  Whom do you want to sell to? What do they really want? What’s in the market and how will yours be different from that?  Ideally, you should not be just another “luxury villa/apartment/office building” but something that addresses a real or latent need. The axes of product differentiation are many and can be through 

• location
• design aesthetics
• functionality (eg double family houses or ready to move in offices)
• ingredients (eg use of high technology or exotic materials/fittings/furnishings)
• place of origin (eg Italian design) 

But supposing that ship has already sailed and you’re presented with a finished product concept. Then the possibilities of differentiation are through the levers of 

• pricing and payment terms
• timing
• demographic segmentation
• future usage flexibility
• eco-system (services for the occupants)

Freebies, particularly ones unrelated to the actual property like refrigerators and cars, are broadly pricing strategies, but in my view, not that impactful in positioning your offering.

There is a lot of wiggle room if you have understood the needs of your target audience.  

Pricing

Since both residential and commercial properties are often viewed as an investment, pricing becomes very important to the potential buyer.  More so because real estate is one of the rare products where the buyer is committed to pay years before the actual realization. It is difficult for real estate firms to raise working capital which is why they need money from their buyers up front. But the buyer’s inclination is to pay as late as possible. So there is a lot of opportunity to structure the payments and that in itself can be a significant differentiator.

But there’s another way to look at it, particularly if you are in the business of selling residential properties.  Are you selling “square feet” or a home? If it is a home, why not just offer a “package deal”? Rather than ingredient selling i.e. cost per square feet and then each modification or utility, it would be easier on both parties if you were able to sell a “housing solution”.  

Over time the solution sales approach is likely to be more profitable, as long as you are able to deliver value over and above the perceived cost of the ingredients.  

Positioning

This is an area with a lot of opportunity.  So far most properties have been sold to anyone who wanted to buy. But it helps to have a segmentation approach – for example a building for banks or tech firms, a residence for the elderly or joint families or expats. This would allow the core product itself to be crafted as per the needs of a niche. Keep in mind that in India even a niche runs into the thousands!

Ah yes! in this approach there is a danger of alienating those who are not in your niche. If you say it is for the banks then a pharma company may not look at it. If you say your single-bedroom serviced apartments are for the wealthy elderly then the rich yuppie would not buy it, even if she likes the product.  But that I think is at the heart of successful positioning – being clear about whom the product is NOT for.  And over time, if you’re really successful with a particular segment the appeal will broaden and become mainstream. 

Awareness

I was engaged in marketing an integrated township coming up in Bangalore, and as part of that we analyzed the messaging in a number of real estate ads in the mainline dailies. It was amazing how so many of the adjectives used were the same across brands and a wide spectrum of offerings.  Even the images were interchangeable – and for the most part generic shots sourced from photo banks. The consumer sees this too – and thereafter discounts all claims by marketers. They have no means of distinguishing what is truth and what is hype without an actual visit or sales call.  

To stand out, to get your message heard and believed in- this clutter is the key challenge for marketers.  Just having a good product (or a concept, if the product is still under construction) isn’t sufficient if no one expresses an interest in it. 

Marketers have relied on mainstream dailies as the staple diet of communication.  I think that is still required.  Not so much because the prospect believes the advertising but because if you haven’t advertised they doubt your fiscal soundness.  (Yes, sadly, ad spend is taken as a proxy for financial viability.)  But given that this route is used by every developer, you have to be either very creative or very big, preferably both.  Done well it is still the best source of inquiries.

But for the best results – and conversion to sales – you have to use a variety of other vehicles.  For this we have to understand the moments of truth and the researching process. 

Digital is certainly one of those – many people now start their research either by a simple search or by visiting a real estate marketplace like indiaproperty.com  If you’re not there, you may not be in the consideration set.  B2B buyers may use either the property portals or specialized sites for their industry – again, if you’re not there, you’re out of the list.

Social media is a tricky question – almost all Indian real estate players have shied away, fearing that they are providing a platform for negative comments.  The nature of the industry is such that a mildly negative experience is rather probable – the most common issue being delayed delivery.  But regardless of whether you encourage it or not, people will talk on public channels or source feedback through private channels.  By not having your own channel, you’re missing an opportunity to influence that dialogue.  I agree that it will require skill to manage this conversation, but that could be the differentiator for a smaller player who is more confident of managing the many variables in a real estate project delivery.  As for the negative feedback, airlines, banks and telecom firms also have multiple consumer touch points and have still taken the plunge, somewhat successfully.

What else beyond print and digital?  Plenty, actually.  The potential toolkit includes outdoor, direct mailers, events, conferences, community engagement, radio, cinema, product placement, alliances, loyalty cards…But these have to be customized based on the product.

Influencers

Influencers play a big role in creating credibility for the offering.  In the B2B space a number of real estate consultants have entered the market and are increasingly having their opinions taken before corporate buyers make their buying decisions.  In the B2C space it is trickier.  The influencer can be anyone in the potential buyer’s network – but it would still make sense to have some well-connected respected individuals willing to put in a good word for you publicly.  Facebook and LinkedIn have made some people master networkers with thousands of connections.  Sure, we don’t know all the people we’re connected to – but there is a high probability that someone in our network will reach out to us for information when it is relevant. 

Over time, the role of the influencer will be partly taken over by the marketplaces.  They are investing in research and they have access to massive amounts of data on customer feedback and experiences.  Certification will also be a rising trend.  Everything that I’ve talked about in this paragraph is about reducing uncertainty and increasing comfort levels.  Very important when all you’re giving in return for the consumer’s large amount of money is a promise of delivery at some faraway date.

So what’s the future of real estate marketing?

When I stay at a Four Seasons or Ritz Carlton or an Oberoi anywhere in the world, I have the same experience.  The signage, the finish, the staff greetings, amenities are the same.  And over time, people develop preferences for hotels depending on their comfort with the design ethos, furnishing and staff manners.  Some retail stores have also been able to do this – the placement of the products, lighting, cash counters and merchandizing will be the same across the world. This makes it easy for shoppers to find what they want, and gives them the comfort of entering a familiar space. (Hence the long queues at Starbucks and Cafe Coffee Day at tourist destinations – everyone feels the need for the occasional predictable experience.)

Very few builders have been able to create that level of standardization of expectation with their properties.  Rarely can you enter a building or residence and say, aha! this was built by so-and-so.  In my view, this hampers both loyalty and branding.  If you worked in an office developed by a particular firm, when you become an entrepreneur or CEO you should want to continue in a building by the same firm.  The space procurement folks should have a preference for a particular provider because he meets their checklist of requirements across his developments.  Your kids should want to buy a residence from the same builder who developed their childhood home, because they have positive associations that are reinforced at key points. 

In the absence of the homegrown ability to do this, builders have started partnering with companies that do.  These typically have roots in design, interiors or maintenance space.  Four Seasons branded residences, or YooPune are examples of this kind of partnership.  Trouble is that currently the partner brands are stronger – with more visibility and credibility – than the developer brands.  So I think a key step forward for real estate marketing is to build an internal capability to create a branded experience.  Then these partnerships will be more stable and profitable for both parties.

The second area – perhaps because they are afraid of the less-than-perfect experience provided the first time – is customer relationship management.  At the heart of this is (a) the belief that customers can buy or influence more than one purchase from you and (b) a commitment to transparency.  The first one is already dawning on the more enlightened.  But the second one requires a leap of faith – an acceptance that, sure, things go wrong, but people appreciate predictability even when it’s bad news.   In the long run a good CRM and loyalty program will reduce cost of sales and enable a premium.

The third area is to look at ingredient marketing.  Real estate development is in the middle of an enormous supply chain.  And given that credibility, distinctiveness, and transparency are among the big challenges for marketers, it may be a good idea to expose some of that value chain.  More so as some of these “ingredients” are strong brands in their own right.  For example, firms like L&T, Shapoorji Pallonji, Otis Elevators, Roca, Parryware, Jaquar, Anchor, Hunter-Douglas are well known in their respective spaces and it would enhance the power of the overall brand to let prospects know that they are a part of the eco-system.  There is also an opportunity for these brands to do an “Intel Inside” kind of campaign to enhance their own power in the industry.

Lastly, given that the ticket value of even a small flat starts at a minimum of Rs 20 Lakhs in most parts of India, residential property marketers need to recast themselves as luxury marketers.  As I had written in my piece on luxury at the bottom of the pyramid (see previous issue of this magazine) it isn’t the absolute value of a product that defines it as a luxury but its price relative to the spending power of its target audience, and its ability to render some positive cachet to the user.  Today, the language of most real estate marketing is that of investment. While that may be ideal for a person who is looking at multiple units, for the others, though they may rationalize the purchase as an investment, it is in fact a luxury. Like gold. That other Indian favorite.  But that’s a different story for another issue.  

This article first appeared in Marketing Booster magazine