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