Market Segmentation for the Real Estate Business

Before you can select your target market and hence pursue with the first of the three marketing goals mentioned in my last post, you have to go through market segmentation.

The Real Estate Dictionary defines market segmentation as "The process of defining the socio-economic characteristics of the demand for a specific property or properties." For Example: Market segmentation shows that the tenants for a new garden apartment complex are likely to be young married couples with incomes between $40,000 and $60,000.

A market is driven by customer needs and since there are many different groups within a market that hold differing needs, it is very important to divide these groups into segments such that each segment can be thought of to consist of customers with similar needs and similar reaction to a marketing action.

How you build these segments is quite up to you, the prevailing marketing environment you face and the decision that you have to take. But overall, conventional marketing offers the following basis for market segmentation:

• Geographic Variables; such as region, population density and growth rate, climate etc


• Demographic Variables; such as age, income, education, gender, religion, profession, socio-economic conditions etc


• Psychographics Variables; such as personality, lifestyle, attitudes etc


• Behavioral Variables; such as benefits sought, brand loyalty, usage frequency, price sensitiveness etc

For a market segment to be viable as a target market it should be of a substantial size, should be accessible for targeted marketing communication and of course it should have similar needs and respond similarly to marketing mix strategies.

Another important point is that it's not necessary to target only one segment of the market. You can by all means cater to a number of these segments, however you'll need to have seperate marketing strategies for each of the target markets, e.g. different kind of properties for families with different income levels and different advertising messages that are customized for these segments.

A few interesting case studies for market segmentation in real estate scenario are listed here:

Single Female Homebuyers - Who, Where and What
An interesting case study that looks at one of the fastest growing segment of the home buying market.

A Growing Market Segment - New Immigrants
Not really an in-depth case study but you can see the application of market segmentation in Canadian real estate market.

Related Links:
Market Segmentation

What Are The Goals of the Marketing Process?

The marketing process, when explained in detail, will almost take the lenght of a book.

In a nutshell, it starts with the situation analysis, moves towards strategy, gets down to tactics and the last is nothing but implementation and control of the formulated startegy and tactics. That's quite a simplified view because at the moment we are more interested in the goals of this marketing process.

The marketing process is carried out to help the business:

1. Select a Target Market


2. Identify the Needs of this target market


3. Attract, Retain and Grow a profitable customer base

No matter how simple the above three goals seem, it's an irony that not many businesses follow them in a structured manner. The difference between strategically planning for these goals or running on a day-to-day ad-hoc basis can make or break your real estate business.

Why Every Real Estate Manager Should Take A Marketing Class?

There is a lot more to marketing than just advertising or sales.

Marekting is an overall process that a business must conduct in order to identify the needs of customers it will be serving, develop products or services to be offered to these customers and then attract and retain these customers for profitable transactions.

The knowledge of marketing is so common sense, we all assume to be possessing it from day one. However, it's not in the bits and pieces of marketing that we know but the real benefits lie in our ability to build a system within our business firm whereby the complete marketing process is carried out.

In a nutshell, the marketing process is greater than the sum of its parts and that's why it's very important for any business to practise it as a whole.

A course in marketing will definitely help you gain the right knowledge required to apply marketing principles for your firm's advantage. You'll be able to deliver a lot more goals in short term as well as the long term.

Short Term Forcus:

• Identify more prospects for your services
  
• Generate more leads for the properties you are managing


• Improve the conversion ratio of these leads into actual sales

Long Term Focus:

• Improve customer satisfaction and build a customer base that is more loyal to your Real Estate Agency


• Build a better image in the real estate maketplace than your competitors and stay ahead of them


• Help you establish a mechanism for sensing the market conditions, predicting its movements and delvelop a winning strategy based on this information

Revisitng Marketing ... Back To Square One

So many things have changed in my life and in the world that surrounds it, but I was glad to know that the definition of Marketing is still the same: "Satisfying Customer Needs at a Profit".

Revisiting a marketing class after such a long break is kinda eye-opening. It's so easy to learn the concepts of marketing in class and forget about them as soon as it is over. I've been running a small web hosting business since 2003 but I can hardly recall a time when I sat there infront of a PC or notebook dedicating time for a marketing plan. Forget a detailed plan, I've hardly touched the SWOT analysis or marketing models such as Ansoff or BCG matrices. All I could devote time was for things like Search Engine Optimization and web promotion that can deliver immediate results. Needles to say that now when I look back at it, I find my hosting company without a solid marketing base.

Marketing is a wonderful art or science or better yet a hybrid that when performed intelligently can build the base of a very profitable business and help you keep it growing. In the next few posts, we will have a look at basics that every business must follow.