Readers who have been following my columns would be aware that I don’t particularly hold real estate developers in high regard. Despite the importance of the industry, most players showcase negligible effort in planning, shoddy product development strategy, disdain for committed timelines, etc.
Admittedly the external environment is not easy but there has been little or no introspection or adaptability by the builders themselves.
I have addressed themes like pricing and product earlier but a segment that is of importance but gets almost no attention is – marketing and branding. At the branding level, there really isn’t much to talk of an industry that has companies which sell apartments priced at Rs 5 crore and Rs 40 lakh under the same brand. Irrespective of which city you are in – a home purchase is an aspiration that buyers often stretch themselves for. Yet there is no other industry in India today that sells high-ticket-sized products to a retail customer and yet treats marketing and communication in as unsophisticated a manner. Notice the shoddy website that almost every developer in India today builds and continues with.
The current approach of marketing basically involves spamming SMSs, sales staff / brokers hounding prospects to do a site visit, persistent advertisements in newspapers or billboards and modest advertising on social media.
Here’s the problem: It doesn’t work. And in its current structure, it won’t work.
No one I know takes any SMS messaging seriously. This is if they at all open it in the first place given the flurry of promotion messages that we are generally hurled with. Sales staff and brokers deserve credit for their relentless push to a prospect but their approach often gives me the feel of being sold an insurance policy or a personal loan. Even if a prospect agrees to visit the project the chances are the presentation will be with such low energy and strategy that one suspects that the staff has been barely trained.
Innovative approach needed
Advertisements on a billboard or a newspaper are good mechanisms to create awareness. And developers are doing it in abundance (with a celebrity brand ambassador if times are good). As an experiment in 2018, I had noted the front page of a local newspaper daily to discover that on 322 days of the year – it had a real estate advertisement. The challenge is that by the time one completes reading any newspaper now – he / she is inundated with so many real estate advertisements that it requires something radically different to register in the mind of a prospect.
A few have indeed tried something novel. I am not certain regarding the legality associated with it but notice the creation of new names of localities like New Cuffe Parade or Upper Thane by developers themselves. The more audacious ones refer to Bhiwandi-Kalyan Corridor as the new BKC. The ostensible purpose is to give a new name and feel at a psychological level to a location that is currently not perceived to be elegant. Data isn’t available to showcase whether this approach has any impact but I suspect it will be a naïve buyer to fall for it.
Why don’t most developers take marketing more seriously and strategically? The simple reason: They think it doesn’t matter. Sales happened previously without it and they can happen in future as well without it. They aren’t completely wrong. When the market earlier was booming everything was selling. As Pankaj Kapoor of Liases Foras says, “There was no project that wasn’t feasible almost a decade ago.”
As the market subsequently tightened developers found themselves leveraged in a high-cost structure amid weak demand. Price, size and location of the apartment are important but in an environment of excess supply there ought to have been a degree of differentiation through marketing. It hasn’t. The only change in marketing strategy by developers has been, well, outsourcing their marketing. I have nothing against any consulting firm (much better than the average broker) but delegating such a critical function is merely lazy on the part of a developer. It may help in reducing the fixed cost for a developer who will not need to hire talent internally but that will be myopic. Consulting firms will work with numerous projects and offer a bouquet of options across several developers to a buyer. This is akin to having a car dealership selling vehicles across different companies. As Fiat found out with its distribution tie-up with Tata Motors, these strategies don’t generate optimal returns.
Lack of imagination
Marketing has to be in-house even if support from an agency is taken. Budgets often don’t translate into results though it’s worth noting that Oberoi Realty spent Rs 23 crore last year in marketing – 1.5 percent of its overall expenses or just over half the brokerage expense for the company. Even Godrej Properties which always has a new launch nearby – their marketing and advertising expense was at Rs 65 crore - 1.8 percent of total expenses. In comparison, most consumer brands spend over 5 percent of their budgets on marketing and advertising. The current percentage spends by the industry are even lesser than companies with mature brands like Maruti Suzuki.
Even with the marketing and advertisement one has to gasp at the lack of imagination involved. The picture in most of the advertisements are tacky and repetitive. It either involves a picture of a couple next to a swimming pool or a father sitting in a garden with his child. The ones with even lesser imagination just show a picture of how the final building will look like. When one overlooks the pictures, only a handful believe that the advertised price is the actual price given the additional charges levied by developers.
Given the poor state of the industry over the past five years it’s stunning to note that there has been barely any strategic change in marketing of real estate. Even something as basic as offering a virtual reality experience to an overseas buyer is a rarity today.
Similarly, average flat sizes have fallen by almost 1/4th in the past five years as builders opt to make compact homes. Yet the experience with furniture in smaller homes has remained almost the same making even the sample flat appear congested.
Eventually, newer approaches and touch-points will be needed. Will this result in an increase in sales immediately? No. But the only way to survive going forward will be through building credible brands and sophisticated communication. An aspirational home buyer who will stretch himself financially certainly deserves at least that much.When not busy with his newstoon platform Snapnews, Vishal Bhargava is a real estate enthusiast who views and reviews new projects. The views are personal.