The challenge of positioning investors and developers
Shaping the perception of real estate
A strong starting position
On the surface, the real estate industry, and thus also developers and investors, seem to have an excellent starting position – especially when you consider that this is a highly emotional matter. Who can boast 100% market penetration for a product? Car companies? No. Chocolate bar manufacturers? No. Tour operators? Perfume brands? Far from it. After all, real estate is the only product that is used by absolutely everyone and whose image is shaped by a unique, individual experience. In other words, every real estate user forms their own opinion or a whole range of opinions. Usually this relates to a building’s appearance, location, and room layouts. However, it is when we consider a developer’s creative process, or an investor’s investment or management analysis, that the situation becomes more nebulous. Institutionally, real estate is still seen as a long-term asset rather than a commodity. You would think that market and brand positioning analyses, which are usually based on a survey of current and potential customers, would have a deep well of information to draw from. But you couldn’t be further from the truth. In comparison with the research carried out by companies in the aforementioned investment and consumer goods industries, the real estate industry is still in its infancy.
In German-speaking countries, the culture of identifying with a building and an address has so far been slow to develop. When they are used, phrases such as “the building in the banking district” or “situated in the heart of HafenCity” are only used to soberly convey the facts of a building’s location and, in the worst case, can actually arouse negative emotions. In contrast, Henninger Turm (Frankfurt), Friends (Munich), Pandion d’Or (Düsseldorf), Königskinder (Düsseldorf), Cloud No. 7 (Stuttgart) or Max & Moritz (Berlin) instantly conjure up emotive images, which will certainly become more than just reference points in the heads of local taxi drivers.
Becoming a brand
Positioning a real estate brand within the very heterogeneous real estate sector would therefore seem to be an extremely long-winded process. From a purely analytical point of view, the following steps can be used in order to develop strategic courses of action or to develop a brand image:
- Using a perceived emotional and factual package of services to position the property as closely to the ideal as possible;
- Identifying suitable marketing measures, e.g. property and location-centric communication;
- Closer alignment with ideal positions in order to optimise perceptions of relevant characteristics;
- And, albeit in terms of segmentation, the identification and creation of niche products or locations for users with specific profiles.
The objective of any positioning stategy includes defining the emotional and functional needs of the target group. “What is the relevant market?” may be an easy question to ask, but this is the essence of brand building and positioning. It forms the essential, integrating element that underpins all of the appropriate marketing tools used to clearly define the meaning of a brand’s offering. Ultimately, the market research required for this is not concerned with identifying a complex structure of motivations, but above all about identifying the real, central – mostly emotional – reason for an investment, and distilling it into a positioning statement, e.g. in one to five words.
Positioning? What positioning?
In principle, every real estate positioning strategy is only as good as the market analysis it is based on. But in almost all cases, this type of positioning is not analysed consistently enough in strategic market research. Reflecting on experiences with developers and investors reveals significant methodological deficits and inadequate consideration of the five key dimensions of positioning:
- Emotional benefit
- Functional benefit
- Reason why / reason to believe
- Usage situation(s)
- Tonality and execution style
The unique role of real estate is always raised as a diagnostic argument. These five dimensions of positioning may range from low to high profitability and from low to high prestige. It is at this point that the term niche strategy is most likely to be introduced, with a focus on positioning strategy, which strives to position a property in such a way that it does not duplicate the offering of an existing, competing property.
Brand positioning in real estate – focus on the customer?
According to Domizlaff, the positioning of developers and investors must include the clear, conscious and differentiated positioning of their corporate or property brand in the customer’s conceptual world. The concept of brand positioning for properties and companies thus includes two components: the brand and the customer.The brand image of a property, when purely analytically formulated, can therefore only be successful if it incorporates the conceptual world and thus the expectations, experiences and motivations of the customer. Brand positioning provides a concrete statement of what a brand stands for and what the customer can expect from that brand. The simpler and more specific this value proposition, and the more relevant it is to the customer, the greater the credibility and resulting success of the brand.
In summary, brand positioning forms the basis for all marketing tools and is a key element of any brand strategy. Thus, brand positioning is the active differentiation of your own brand from that of your market competitors and embodies the status your brand has in the consciousness of your customers. Your brand should be seen as more relevant than the existing competition, and should communicate to your customer precisely where and how your company wants to be perceived on the market.
Developers & investors
As a result of their thankless position, developers certainly don’t have it easy. On the one hand, they have to acquire land, then they have to build and market their real estate, often according to the demanding specifications of their customers. On the other hand, their customers – in many cases, the investors – want to be told exactly what exactly what types of building they need to build in order to survive in the market in the long term. And last but not least, municipal building authorities have the final say on what they are actually allowed to build. More precisely, mediator or problem solver would be far better terms for describing much of what developers actually do. In addition, competition is becoming increasingly cut-throat. How is my property currently and inherently more attractive for different customer groups and market segments than that of my competitors?
A “to do list” is therefore essential. But to provide the necessary answers in the midst of a complex situation, four questions need to be asked:
- What is the classic USP of the property?
- How will the target group be identified?
- What competitive comparisons should be made?
- Why must attention be paid to market dynamics?
The answers to these questions will result in a clear strategic positioning. These answers can be found by analysing all relevant factors, including the market, existing customers and target customers. You can also determine your current market position by using a Porter Curve or McKinsey matrix and/or identify alternative courses of action.
The overriding goal of those who want to establish the relevance of brand positioning in the real estate sector is relatively simple – to ensure a reliable pool of data in both qualitative and quantitative terms. This may seem like an overly obvious statement, but it also acknowledges that the resources required to establish a brand in the real estate sector are often barely available. In other words: While branding plays a very important role in the marketability of products in almost all industries and service sectors, this insight is only slowly gaining ground among real estate developers and investors. The tasks facing developers and investors are anything but simple: On the one hand, people want to live in vibrant neighbourhoods and have the shortest possible distances between where they live, work and shop. On the other hand, investors want to be sure of the long-term profitability of their investment. One way to resolve this tension is to build a brand and a clear positioning strategy. Not tomorrow, but today.
Dr. Thomas Beyerle
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