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<b><font color="#ff0000">Guest Article:</font></b> Bitan Chakraborty: The Realty Saga: when the consumer became the protagonist
As a by-product of the global financial downturn, real estate in India, which was typically a sellers' market, has gradually become consumer-driven
In mid-2009 when the consumer became the protagonist, the entire world was witness to a global financial downturn, which was caused by, among other factors, the lack of transparency in the US real estate sector. This, in turn, affected financial institutions and thus set off a spiral effect, the ripples of which were felt up to the shores of Mumbai, and gradually across the nation.
As a result, real estate prices in India went down, to the extent that in certain parts of Mumbai, some builders were even offering FMCG-like promotional schemes, by giving certain amenities free, or giving an additional percentage of space free of cost.
Developers realized that they needed to cater to the demands of the customer. This is a fundamental learning that one would come across in the initial chapters of any marketing book and is religiously followed by all other industries; but somehow, real estate in India had always been an aberration to this and yet managed to survive. However, the sector might not be that fortunate in future.
In India, real estate is perceived more seriously as a means of investment, than as a product for consumption. As a result, the basic marketing ground rules, which are adhered to by other product categories, are openly flouted. One of the prime reasons for this is the lack of organized players and professionals in this industry. It's more a conglomeration of family businesses guided by intuition, better investment sense and creation of resale value.
On paper, real estate has gained industry status; but in reality, it is still at a nascent stage. And of course, releasing IPOs and listings across stock exchanges cannot help an industry to move faster across the experience curve. However, marketing can, and so can the creation of brand values.
Differences start with the very basics. Of the 4 Ps associated with any product, the fourth one of 'Place' is very different in the case of real estate. For any product, a prospective customer can see its communication in some media, find out where it is available and buy it off the shelf. In real estate however, the place is static and the interested customer cannot buy it off the shelf from multiple locations, as in most other product categories.
Therefore, in the case of real estate, the primary objective of every piece of communication is not only to build brand awareness, but also to generate calls from the prospective TG. So, a 'call for action' tone or the presence of contact coordinates is imperative in any real estate communication.
This further proves that the real estate category, by its very nature, is a 'pull market' - that is, it is a buyers' market. Ignoring basic premises such as these and creating ground rules based on beliefs which go against the fundamentals of the product category, contributed to the non-realistic growth of the real estate category in India.
Reality about the realty business emerged as the industry was put through the litmus test during the financial meltdown. The industry crumbled in places like Mumbai, where real estate prices are grossly inflated. On the other hand, in places such as Kolkata -- where the industry is still at a nascent stage and is more skewed towards being an end-user market - growth was stagnant.
In the real estate category, for every developer group, each project is a different brand. Thus, each of these brands has a very short shelf life in terms of customer engagement. The lifecycle of a brand starts from project launch and ends with the project being sold out. This could range from 12-18 months for building complexes and about three to five years for townships.
However, the corporate brand (builders' brand) exists perennially, like in any other category. The aura of the corporate brand gets rubbed off on each individual project (individual brand). The values of the corporate brand are, thus, viewed as being part of the individual project brands too.
Perhaps the best analogy could be drawn from the automobile industry. Here, if Maruti stands for service and Tata for trust, the brands (like projects in real estate parlance) that roll out from their respective stables carry that positive perception in consumers' minds. In real estate, at the individual project level, the differences are more relative in nature, just as in the case of automobiles.
During the era of licence Raj, the Indian automobile industry was a sellers' market, dominated hugely by Hindustan Motors. Things changed with the entry of Maruti, as they passed on the baton of market dynamics to the consumer, by lowering the entry level such that it became affordable for the Indian common man. In the Indian real estate industry, however, it seems that the shift of market dynamics in favour of the consumer has actually happened under the garb of the recent economic downturn.
(The author is assistant general manager marketing, Hiland Group.)