The unique marketing challenges facing the house building industry
Marketing new homes is like marketing no other product. Whilst there may be some lessons to be drawn from other consumer markets, none can directly compare to the challenges facing marketing professionals in the residential property sector.
The first main difference is that buying a new house (and I include second hand properties in this comment too) is almost entirely a needs driven process. One of the following will apply in 99.9% of cases:
- Grown up children leaving home
- Couples setting up home together
- Couples starting or growing a family
- Relocating due to work commitments
- Singles either choosing to live alone or being forced due to relationship breakdown or death of a partner
- Downsizing after children have left home
We also need to understand the main factors affecting the choice of property:
- There is truth in the cliché ‘location, location, location’ – this is probably the first factor that movers will consider and is something that there is unlikely to be much compromise on. Factors such as proximity to work, schools, shops, road and rail links will all come into play, as will a general perception of the neighbourhood.
- Then comes property type (or design) and again this will be largely predetermined by the buyers’ needs and perceptions: number of bedrooms, apartment or bungalow, architecture, plot size, orientation and so on. And incidentally, whether the property is newly built or second hand is of no consequence to around 75% of house buyers.
- Last but not least comes price; again this is pretty much an immovable – everyone will have a maximum budget determined by savings, the amount of equity in their existing property and the amount they earn, which will directly affect the amount they can borrow.
So, to recap so far, there are a whole load of needs and factors affecting choice that we as marketers have little control over as, in most scenarios, they will have been established before the business of serious marketing is addressed (with apologies to enlightened developers who embrace the marketing department at the land buying stage). And there are many reasons why a buyer may choose one property over another. Unlike any other consumer products, we cannot use marketing to create a demand (because the demand is created by the needs) and neither can we use marketing to greatly influence choice on a macro level as the main three determinants of choice (what, where and how much) are outside our control.At this point you may be asking: ‘what’s the point of marketing new homes if all of these key influencing factors are beyond the control of marketing?’ The trick of course is to identify what we can influence through good marketing practice. We may not be able to create a demand, but we need to understand how consumers go about satisfying the demand that is created by their needs. In the good old days it was pretty simple. Prospective house buyers used the classified property sections of their local newspapers and the shop windows of high street estate agents and that was pretty much it. As long as the house builder had a good exposure in these areas and the product was built in the right location, at the right price and was of a type the buyers were looking for, success would surely follow.
In a way, the basics haven’t changed. If the price, location and property type boxes are all ticked then sooner or later the sales will happen. But now there are more ways of communicating with prospective buyers, beyond the old staples of local press and estate agents, and this is where effective marketing can start to make a difference, enabling us to communicate the ‘what, where and how much’ to a much more precisely targeted audience. Many of the more recently available communication channels revolve around online activity, although we shouldn’t ignore target direct mail, door-to-door and other creative media solutions.
Another external influence we have to contend with currently is the generally ‘flat’ property market, largely brought about by lack of mortgage funding and lack of consumer confidence. But looking back to the premise that it is a needs driven market, there will always be a core of people that have to move; it’s our job as marketers to make sure they buy from our clients.
There is also a big onus on the house builder and specifically its sales team. For example there are creative mortgage products out there that can be made to work for many categories of buyer. The house builder needs to embrace these, working with a good broker to ensure that purchasers are given every opportunity to acquire funding for their purchase (preferably via a product that is not generally available on the open market). A similar rationale applies to incentive packages. Whilst it would be great to sell on the basis of value, quality and service alone, that is unlikely to lead to an upward sales curve in the current market where incentives such as shared equity, part exchange and the Government’s newly announce FirstBuy scheme are widely on offer. If incentive lead marketing is rejected, or utilised grudgingly and half-heartedly, it is reasonably to anticipate reduced sales rates as a consequence. Conversely, a well thought-out and sensitively implemented incentive lead campaign is likely to yield tangible dividends.
The other area where the sales team can have a major effect is the customer journey, from the first point of contact with the house builder through to moving in day and beyond. It is no longer appropriate for sales staff to act as note takers; they need a professional approach supported by a well-planned customer relationship management strategy to ensure that the communication process with prospective purchasers is seamless and ruthlessly efficient. This factor more than any other can probably do more to guarantee your house goes to the top of the prospective buyer’s shortlist.