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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 902 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 903 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, 904 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. 905 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 906 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. 907 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. 908 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. References [1]Huang Jianchong,Huang Yuanheng, Real estate marketing practice, Beijing: Higher Education Press, 2006:1. (in Chinese) [2]HouLimin,China's assistant marketing manager credentials examination materials, Beijing:Publishing House of Electronics Industry, 2006:12. (in Chinese) [3]Lv Ping,real estate development and management, Beijing: the Chinese People's University Press, 2002:(in Chinese) [4]Xie Jingrong, Lv Ping,Qiao Zhimin, real estate economics, Beijing: the Chinese People's University Press, 2002. (in Chinese) [5]Guo Xinmei,real estate marketing, Beijing:Economy and Management Publishing House, 2005. 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