Download The Marketing Mode based on Customer-oriented in Residential Property Industry

The Marketing Mode based on Customer-oriented in Residential
Property Industry
LI Dalin
School of Economics and Management Henan Polytechnie University,P.R.China,454150
[email protected]
Abstract: The residential property market is developing rapidly, and competition is becoming
increasingly fierce. Existing residential property marketing model can not meet the needs of enterprises’
competitiveness. This paper recommend that enterprises should construct the customer-oriented
marketing mode by research of the housing market. The customer-oriented marketing mode includs
target market, customer needs,integrated marketing and profitability.
Key words:The Residential Property Market, Customer-oriented Marketing Mode
1. Introduction:
The housing industry research emphasize on the industrial structure, industry-related and so on. The
focus is the nature of the housing industry,contribution to the national economy, and the relationship
with the financial industry. Housing industry marketing research without thinking about industrial
development status and trends has been not yet ripe. Since China's reform of the housing system in 1998,
the domestic industry has developed rapidly, industry has become maturity, and our competition has
been becoming increasingly fierce. In view of the above analysis, enterprises must adopt marketing
model which is able to adapt to this situation. It is the marketing model based on customer-oriented.
2. The meaning of the housing industry and the analysis of market structure
2.1 Real estate and real estate industries
The real estate include housing and the land which is under the housing. It also include the land, any
kinds of building on the land, the construction, other inseparable material and their right. Its position is
fixed, and is intransportable.
The industry is the similar nature enterprise's set. Then the real estate industry is a set of many
enterprises which revolve the property development, the sale and the maintenance forms. Each
department may include some different organizations.
department
proxy
investment
Operation
Construction
Government
service
Table 1:The composition of the real estate industry
branch office
Broker
Stockholder's
right invement
the operation of
land
development
taxation
management
invement
mortgage loan
operation of
estate
contract
plan
of
real
estimate
the investment of
rents
the poeration of
loan
sublets
the poeration of
state-owned real
estate
The plans and consultation of
marketing
Other indirect investment
The operation of rents
construction
financing
2.2 Housing and housing industry
The real estate has many categories including housing-estate,business-estate,industry-estate,office-estate
and so on.The housing-estate holds an great proportion.The so-called housing is the building which the
people lives in.It belongs to one kind of special daily necessity.The construction of housing experiences
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four stages:firstly,the plan and design of housing;secondly,the constrution of housing;thridly, the stage
of market distribution and rents,sales;fourthly,the service and management after sale.In above four
stages,the first,third and fourth stage blong to the real estate industry,the second stage belongs to the
architecture industry.
From the analysis above, we can see that the housing industry is affiliated with the real estate and
construction industry, but more should belongs to the real estate industry.The housing industry should
be a sub-industries belong to the real estate industry.
2.3 The characteristics of housing
Housing is different from ordinary consumer goods, it is very special.
2.3.1 The indivisibility of housing and land
The housing must be built on a certain land. This is reflected in two aspects:firstly, the building must be
on the land; secondly, the property of housing is usually linked to the property of land. The customers
get the land’s right as the same time as they purchase the housing.
2.3.2 The non-mobility of housing
Various other consumer goods, housing is immovable. This characteristics makes that the sale of
housing is quite different from other goods. The sale of housing does not need the links of physical flow,
and housing also has a strong geographical color.
2.3.3 The regionalism of housing
Due to the non-mobility of housing, housing has many locational characteristics. This makes that the
differences of housing not only reflects on the design, but also reflect on their positions. The
housings’price at different locations are very different.
2.3.4 The compound of housing
The housing can be used to live, and also can be used to invest. This characteristic makes the marketing
mode of housing will be different form other ordinary customer goods.
2.3.5 The high-value and durability of housing
The price of housing is high,and general customers may buy housing with their saving in a few years or
by mortgage. It makes that housing industry and the financial industy link together closely. On the other
hand, the housing is durable,so it can be used for decades by customers.
Table 2:The maximum years of China's land-use right
Use
Statutory maximum years
Living
70
Industrial land
50
Education, science and technology and so on
50
Commerce, tourism, entertainment, and other
40
commercial sites
Comprehensive or other sites
50
2.3.6 The dispersion of housing
The non- mobility of housing and the scarcity of land resources make that the housing industry can not
form industrial clustering. The housing industry in the geographical distribution must be decentralized.
2.4 Analysis of the characteristics of the housing industry
Becase the housing industry is different form other customer goods, it has its own characteristics.
2.4.1 The protection of housing industries
In 1998, China carried out reform of the housing system. Residents’ living needs slowly change to a
market-based guide, then housing is not only consumption but also a means of production. The
conspicuous feature is its role in the protection of the lives of the residents. For this characteristic,
governments have enacted policies to protect the people's right to shelter.
2.4.2 The particularity of housing industry’s market structure
The housing is fixed and can not be sperated form land, so the housing industry as a whole should be a
monopoly competition in the market structure, and in part it is an oligopoly market structure. A land
once used for a certain purpose, or be developed by some enterprise, then the other enterprises on the
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land may lose the right to use.
2.4.3 The professionalism of the housing industry
Housing is a highly professional commodity. The consumers must get knowledge of legal and
construction when they buy housing. Ordinary consumers could not have comprehensive knowledge, so
customers often need a long time to make decisions and need professional advisory services.
2.4.4 Financial and housing industry
Real estate developers require a large amount of bank loans in the development process, and the
purchase of residential consumers need mortgage, so the housing industry and the financial industry are
closely linked. Enormous fluctuations in the housing industry will often cause considerable impact to
financial industry.
2.4.5 The intervention of policy
All countries in the world has always pay attention to resident rights as a human rights. In order to
guarantee the people's right to shelter, and in order to avoid the negative macroeconomic impact on the
housing industry with big ups and downs in the housing industry, governmet generally will carry out
macroeconomic control. It can be said that the housing industry is influced by the government’s
interventions.
In short, housing is a kind of special commodity, and the housing industry is a unique industry. The
housing industry has its own inherent laws which are different from other industries.
3. The analysis of China's housing industry and its existing marketing mode
Since 1998, in which year the state housing system began to reform, China's domestic market-oriented
industries operation has been going on for nearly a decade.Industry continuously raise the level of the
market, and competition has become increasingly fierce. In order to attract customers to buy, various
developers are constantly pay attention to the innovation of marketing,and gradually worked out a set of
Chinese-style housing industry’s marketing model.
3.1 The characteristic of the existing marketing model in China’s housing industry
Residential property marketing is mainly that residential property development companies provide
consumers with products and the value of residence by creative activities, adopt of certain measures for
the realization of residential sales, and access to investment value.
3.1.1 4Ps of marketing mix
3.1.1.1 Products.
Products include an overall concept of core products, the form of products and value-added. For
residential property industry, its core products is to meet the housing needs of the consumers, and the
form of products includ location, quality, appearance, shape and architectural style, building materials,
colors, name, structure and layout, outdoor environment, as well as the construction units and the
construction units’ brand such as name and reputation.The value-added belong to service areas,including
property management. For residential property industry, the consumer’s prime consideration is the area.
While developers are advertising their products, they often highlight its locational advantages, notably
the environment of areas, living facilities, schools, hospitals and so on. As consumers are becoming
mature, architectural style has become a selling point, such as the Continental style, the North American
style, Chinese style.The name of residential real estate is very important for maketing,too. In certain
extent, the sale display positioning. For example, some residences’ names include "House" and "Di",
"Court",these residences’target customers are often older, coming customers;other residences whose
name include English or "Shang", "international" may attract the young white-collar workers;the target
customers of the residences which have warm names were generally middle-class families;the
residences using elegant, subtle case of the real estate will generally target customers in the cultural
orientation of the higher level of the social strata.
3.1.1.2 Price.
Pricing include the development of cost-oriented pricing,demand-oriented pricing, competition-oriented
pricing. Residential property developers usually make pricing decisions with considering costs, profits,
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market demand, competition and so on. Becase the current land prices are constantly changing, the
actual cost of residential property developers is not transparent,residences’price may be based on profits,
market supply and demand factors. In the actual marketing process, the developers will use price
discounts for marketing or manufacturing gimmicks. In addition, on residence pricing, the developers
will use differential pricing to meet the different needs of consumers, in accordance with different floors,
different housing direction.
3.1.1.3 Distribution.
Residence is unlike daily consumer goods. It does not need to choose distributors.After developer
developed a real estate, the powerful developer has its own sales team for distribution, and small
developers achieve product sales through an intermediary.It is a principal-agent relationship between
intermediary and developers, in the sales process of residence, who using minimal distribution model of
the day-to-day consumer goods, so the middle link of distribution is rare. This is a major distinguishing
feature which is different from the day-to-day consumer goods sales. For developers, there are no
management problems of distribution channels.
3.1.1.4 Promotion.
In marketing, promotions mainly take the form of personal marketing, advertising, sales promotion and
public relations. Residence promotion include personal marketing, advertising and sales promotion.
Residence sales mainly reliance on the sales staff, and the sales staff always highlighting the advantages
of residential location, lifestyle and taste for which the the real estate stand,the furture revaluation and so
on.The marketing staff can understand customers by contacting with them,so the marketing staff can sell
residences against their demand.
3.1.2 STP Strategic Analysis
STP strategy includs market segmentation, target market selection and market position.
3.1.2.1 The analysis of market segmentation strategy
Residence is high-priced goods, and customers use it during a long duration. Residence is mainly for
families to purchase, so it is hard to segmentalize market according the characteristics of individual
consumers.It is difficult to establish the segmentation standard if we segmentalize market according the
characteristics of family. Generally speaking, there are certain residence market segmentation
difficulties. Segmentation is usualy based on price. A multi-level, small high-rise and high-rise are
naturally different on price, and the location of residence also make a great impact. To sum up, the
segmentation of the residence market is ambiguous, and mainly is natural segmentation by the price. To
sum up, the strategy of developers’makert segmentation is ambiguous, mainly getting natural
segmentation by the price.
3.1.2.2 Choice of target market strategy.
The segmentation of the residence market is ambiguous, so the choice of the target market will not be
too easy. At the beginning of the real estate development, there is a concept of a target market, and
developers design products in a targeted manner.This target market must have sufficient capacity, and
the scope of the market can not be too narrow.
3.1.2.3 Analysis of market positioning strategy.
Market position is based on market segmentation and target market choice. Residence market
segmentation and target market choice are fuzzy,but it does not represent that residential products will
have no clearly defined position. China's residence developers focus on the development of high-end
residence projects, so the positioning of residence generallly emphasizes on quality, grade, high-grade
communities,and the appreciation potential. To sum up, China's housing industry marketing still remain
in the initial stage, and are far from attaining the requirements of lean marketing, it also exist many
problems worth exploring.
3.2 Analysis of the existing marketing model
The use of marketing mix strategy and STP strategy is also very extensive in China's housing
industry.The existing marketing strategies are not customer-oriented and competitive,so enterprises can
not make scientific and rational marketing strategy and tactics. China housing industry’s existing
marketing model includs many problems.
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3.2.1 Product convergence.
Residence developers compete to develop the residential architecture, such as the European, North
American-style, Japanese, Chinese. During the choice of architectural style, the developers have not
been seriously understanding the needs of customers, and the architectural style is only speculation as a
concept. Another shortcoming is that there is no difference on the developers’ products in essence.
Competition in the market lacks levels,and the whole industry gets into homogenization of competition
which like the mire. Product development have not been set in STP strategy.
3.2.2 Lack brand.
Chinese enterprises’vulnerability is the poor efficiency of their internal operations,the same as they have
no external strong brand. For most Chinese residence enterprises, the same problems exist. Low
efficiency of internal operations need to change management, and marketing will have to focus on
building brand. China's domestic enterprises present following errors in the development of brand:
Firstly, the project is equivalent to the brand name;secondly, the project is committed to the promotion
of buildings’names,but they often neglect corporate brand;thirdly, enterprises think that brand will be
equivalent to high-end and expensive products.
3.2.3 The lack of an effective STP strategy.
Residential customers are mainly any types of families. Family size, structure (population structure,age
structure,the realation structure and the structure of education), income are different, and this is a very
clear segmentation standards. In addition, the families at different life stages also need different types of
housing, such as that families at the nest stage or the empty nest stage require completely different
residences. Developers do not have full use of these standards in the market segment, so the subsequent
choice of target markets and market positioning will be not out of the question.
Year
1985
1990
1995
2000
2005
2010
2015
2020
2025
Table 3:China's total number of households and the average household size
Average household size
The average growth
Population (in
The number of
(people)
rate
thousands)
households (in
of households
thousands)
1059522
1135496
1214221
1285894
1341412
1382463
1421408
1459753
1492552
251155
288675
330763
370636
403525
432022
459340
478668
504061
4.219
3.933
3.671
3.469
3.324
3.200
3.094
3.050
2.961
0.0582
0.0573
0.023
0.0171
0.0138
0.0123
0.0083
0.0104
——
3.2.4 Promotion means convergence.
The means of promotion is mainly advertising, staff marketing and discounts. Increasingly important
experiences marketing and network marketing has not been paid enough attention from developers.
When all enterprises within the industry use a similar mode of marketing, industry marketing costs will
inevitably increase, and the growth of these costs will be inevitably borne by consumers, so consumers
can not get tangible benefits.
3.2.5 Lack of support services.
With intensifying competition, enterprises should pay more attention to shape product differentiation
through services. Enterprises should meet housing needs of different families in the life cycle through
any kinds of market. In the sales process, the developer must also pay attention to provide adequate
counselling services for customers. At present, ancillary services developer has not become the focus of
competition in China's domestic market yet.
3.2.6 Ignoring strategy, but emphasizing art.
Between marketing strategy and marketing art, the developer is preferred marketing art.Because
formulation and implementation of marketing art are easy,and have short-term, visible effects,it is
favored by the developer. Marketing strategy requires enterprises to strategic positioning, strategic
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choice and strategy adjunct, and this is out of the most Chinese domestic enterprises’ horizon. When the
market demand are growing rigidly, the prosperity of the market will cover disadvantages such as loss
of strategy,but when the market fluctuate which is due to factors such as macroeconomic regulation and
control, the marketing strategy can not ensure expected market share and profits.
There is a crisis in the marketing mode which is exiting in China's domestic enterprises. Therefore,
enterprises must change by addressing the above problems,and establish the housing industry
customer-oriented marketing model.
4. Marketing model based on customer-oriented of the housing industry
Marketing philosophy changs from enterprise-oriented, competition-oriented to customer-oriented.
Competition-oriented is praised by Mike Porter and Jack Trout, but for the housing industry, its market
structure is monopoly and oligopoly competition,so enterprises don’t need to adopt competition-oriented
marketing concept, and should be adopt customer-oriented marketing concept. The so-called
customer-oriented marketing concepts is the need of consumers throughout the whole process of the
product design, development and marketing, and customer-oriented marketing concepts require that the
enterprises should concerne about the target market, customer needs, integrated marketing and
profitability.
4.1 Target Market Analysis
Enterprises must strive for a target market. Market must be large enough, and have value to reach. For
the choice of target market, enterprises can take marketing strategy such as no difference of marketing,
marketing differences,concentrate marketing, one-to-one marketing and anti-segmentation marketing.
The reality is that the enterprises do not take the analysis of the target customers’needs at the starting
point of enterprise products development, thus enabling various enterprises’ products convergence,
means competition convergence, and the market structure is irrational.So we must change this situation,
and we must choose a scientific target market.
4.2 Customers’ needs analysis
The need of residential customers must be started from the analysis of family characteristics. Different
families with different scale need different residences with different sizes, different families structures
affect the options of floors, the families at different stages of the family life cycle need different
residences, different families with different income need different grades of residences, and family
members’ profession will affect the choice of location. Residence developers must seriously analyze the
above features, and adjust their own products’ features. The location is the most important factor. To
some extent, the location of residence determine its basic values, but the location can not be changed.
Enterprises must develop products suited to the needs of customers based on the analysis of objective
customers,and achieve product differentiation. On the one hand, product differentiation can reduce the
decisive influence of location,on the other hand,it can achieve value-added products. For customers’
needs, enterprises can choose two different ways to meet them, namely response marketing and the
creation of marketing. Response marketing requires enterprises understanding customer needs, and
developing products in accordance with the needs of customers.Creating marketing is to create new
products to guide the needs of customers.
4.3 Integrated marketing Analysis
If all sectors of the company are serving the interests of customers, the result is integrated marketing.
After developers determine the target market and customer needs, integrated marketing require various
kinds of marketing functions including product management, marketing research, sales and advertising
must be co-ordinated to serve the interests of customers. This requires enterprises to pay attention on the
needs of customers at the starting point of product development. Marketing research is able to clearly
outline the characteristics of customers, sales staff is able to provide customers with adequate
information, and advertising must address the needs of customers.
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4.4 Profitability analysis
Marketing activities must ensure that enterprises have sufficient profits. However, enterprises must give
top priority to the interests and needs of customers, and profit as a by-product in the pursuit of profit.
When the customer needs and interests are fully met, enterprises will get profit.
In summary, the customer-oriented marketing model in the housing industry is to select target markets
and analyze customers’ needs of the target market at the starting point,meet customer needs through
integrated marketing,and achieve enterprises’ aim at last.This marketing model is a win-win business
marketing model.
5. The analysis of the implementation of customer-oriented marketing model
As a marketing idea, customer-oriented marketing is easily accepted by the enterprise, but is not easily
practiced by enterprises. Customer-oriented marketing mode of the housing industry must pass certain
path to ensure that it is implemented earnestly by enterprises.
5.1 Shaping corporate values
Enterprise values is an important part of culture, and it can strengthen the cohesion of the enterprise.If
we want that customer-oriented marketing model is accepted and practiced by enterprises, the
enterprises’ managers of the various grass-roots level must reach a consensus. This requires that the
corporate value is added customer-oriented concept, and customers’ interests will be put at the core of
corporate values.
5.2 Improve enterprise marketing organizations
If the developers take pursuit of satisfying customers’ needs and achieving the interests of customers as
strategic objects, it is necessary to adjust the organizational structure of enterprises. The marketing
activities must be throughout the entire process of the enterprises operating.The enterprises must
consider the needs and interests of customers from product development until the customers use
products.After customers buy products,the enterprises can still provide excellent customer service. This
is because that redential products is very expensive and have a long life.Many customers buy housings
with all their savings and will use housings in several decades. In the process of the use, the relevant
supporting services is very important. Improving marketing organization is to change that the marketing
organization departments only focus on the sales, and truly let the marketing departments play their
functions in the various links of the business operations.
5.3 Construction of customer database
As a means of precision marketing, database marketing and direct marketing are more and more
attached improtance form the enterprise.They become developing trend of marketing activities.Building
database is the core of database marketing. Customers database should include the customer's basic
personal information, family circumstances, preferences, interests and so on.There are four ways to
construct customers database: the collection of personal data through point-of-sale; recording customer
queries, the demand by telephone advisory activities; collecting consumers preferences through
corporate promotional activities; gather customer information through corporate activities such as trade
fairs.
5.4 Focusing on marketing innovation
China's housing industry history is relatively short,so the competition is still insufficient. Enterprise
marketing means is to follow the traditional tools and learn models. Enterprises are lack of innovative
marketing initiative. The ongoing transformation of marketing theory is accompanied by development
and practice of marketing. Chinese enterprises must establish a sense of innovation and actively use
foreign mature database marketing, experiential marketing, convention marketing, direct marketing, and
other innovative means of marketing.At the same time, Chinese enterprises actively develop new
marketing tool according to the needs of enterprise marketing practice.
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5.5 Brand building strategy
The creation and maintenance of brand is a key part of marketing. Brand can take profits beyond the
average level in the industry,but it also brings value to customers. Future residential market competition
will inevitably be brand competition, the enterprise has a strong brand in the market competition will
occupy a leadership position.
6. Conclusion
In short, with the increasingly fierce competition in the residential property market, enterprises must
establish customer-oriented marketing concepts, actively establish customer-oriented marketing model
and build core competence to gain a competitive edge.Then,the enterprises can survive and develop in
the residential property market.
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