How Indian real estate should market in a COVID world
To survive the crisis developers need to rethink the 4 Ps of real estate marketing
- Article |
- 22 June, 2020
- Coronavirus and the coming economic downturn present an existential threat for Indian real estate companies
- To survive and emerge stronger post-COVID leaders will need to radically rethink their approach to real estate marketing
- By acting across three time horizons on each of marketing's 4 Ps, developers can sustain during the downturn and lay the ground for a more profitable future.
Indian residential real estate is expected to see price falls of up to 20% this year as rising unemployment, falling incomes, and increased uncertainty undermine consumer sentiment. Furthermore, previous bright spots like commercial real estate could be hit even harder as white-collar workers shift to work from home and retail footfalls plummet.
To survive the crisis and emerge stronger in what is likely to be a more consolidated industry post-COVID, Indian real estate companies need to re-think the 4 Ps of real estate marketing. From digitalising the sales channel to rethinking the product offering, the sector must make a quantum leap in order to adapt to new trends triggered by the crisis and catch up with longer-term shifts that COVID-19 has accelerated.
To successfully transform their marketing approach during the crisis, real estate leaders should think across three time horizons to build and execute their response. The first horizon covers the present scenario as the country cautiously moves out of lockdown, the second horizon spans the sharp economic downturn that is likely to persist for the remainder of the year and possibly longer, and the third horizon looks to the new post-COVID world that will emerge out of the pandemic.
By thinking along these three time horizons concurrently, leaders can act, adapt, and advance in each of the four pillars of marketing strategy to stimulate sales, sustain demand and ultimately return to stronger and more profitable growth.
The real estate sector in India and globally has been late to adopt digital sales channels. Instead relying heavily on show homes, in-person events, and sales agents. This dependency has been exposed in the crisis as homebuyers have been unwilling or unable to venture out to viewings. In response, agile real estate developers have enhanced their project websites, set up virtual tours, and transitioned to video meetings during the crisis. However, with the pandemic set to persist and accelerate customers' shift online, companies need to move from bit-part virtualisation to comprehensive digitalisation of the sales process.
Here, early adopters and industry innovators in digitalisation are showing the way. Godrej Properties sold 800 crores of property online in the last 15 days of March. More impressive still, digital-first player SquareYards has sold 3,100 units worth 1,600 crores during the lockdown. The latter leveraging its completely online capabilities from home search to mortgage approval to attract buyers, brokers, renters, owners, and developers to its platform.
Such players have benefited from realising early on that the notoriously sticky nature of the Indian real estate transaction was ripe for digitalisation. With the pandemic rendering in-person interactions less favoured and making consumers more digitally savvy, Indian homebuyers will become less tolerant of tedious and time-taking processes. Instead, they will likely gravitate to developers who can provide a hassle-free buying process as well as a great product.
For the majority of real estate players who have yet to embark on a serious digitalisation programme, the near-term imperative is to identify how they can make virtual selling more effective. Jumping directly into digitalisation without thinking through end-to-end processes and appropriate technology platforms can lead to wasted investment. Instead, to lay the ground for the broader digital transformation that they require, developers should first map the current customer journey and pain points. Through this process, they can identify the high priority areas where digitalisation can have the greatest impact on customer experience and sales productivity. This exercise can form the starting point for rapid process redesign and accelerated evaluation of different technology platforms.
Looking toward the post-COVID time horizon, real estate players need to think strategically about how customers will buy real estate and the role different channels will play. Companies that fail to think about this longer-term horizon risk making critical decisions - like whether to build digital sales capabilities internally or outsource to third-party platforms - without realising the full implications for their business model. A lesson that was sorely learnt by many retailers over the last decade as they took on the challenge of e-commerce.
Create an integrated marketing platform
When it comes to the promotion of real estate in India, developers' reliance on conventional sales channels has skewed marketing spend toward traditional media like print and outdoor. However, the COVID-19 pandemic is accelerating the trend to digital marketing and by 2024 77% of all global real estate advertising is expected to be online. Therefore developers need to view digital marketing as a core capability for their organisation. In the present context, developers must first understand how they can leverage digital marketing to strengthen their pipeline at a time when buyers are still reluctant to venture out. At the same time, companies should be carrying out the spadework to build an integrated digital marketing platform that can sustain a healthy lead pipeline during the pandemic and provide their sales force with sharper customer intelligence to increase conversion.
Unfortunately, Indian real estate companies too often look at digital marketing in separate silos like social, SEO, and CRM. These silos sit on isolated technology platforms and are often outsourced to different service providers. This fragmented approach tends to deliver sub-optimal results and therefore leads developers to cut their digital marketing investment when they should really be doing the opposite.
Looking beyond COVID-19 developers need to start planning future investment in building entirely new and immersive customer experiences that can seamlessly blend the physical and the digital. Here new technologies like augmented reality will play a major role in enabling customers to visualise and customise the real estate product both online and in-person.
Use pricing and payment terms creatively
In a recession downward pressure on real-estate pricing is inevitable. However, companies that listen carefully to customers, segment intelligently, and price creatively can protect margins without jeopardising sales and cash generation. By thinking across the three time horizons developers can adjust their pricing approach appropriately. For example in the near-term it may be necessary to identify price points which can be lowered to stimulate sales and generate cash.
Looking past the present, companies will need to think beyond price cuts and develop options that can be sustained over a longer downturn. Here one advantage is the record low interest rates in India that make it an appealing time to buy. In response, Indian real estate developers have promoted attractive payment plans and EMI free periods to entice buyers. However, these schemes only scratch the surface of what is possible. Globally real estate companies are creating innovative offers like part-exchange. This involves developers helping buyers upgrade to a new home in a weak market by purchasing their existing property on the expectation that they can hold and sell it at a profit later on. Developers are also providing 'assisted move' options where they handle the administration of both the purchase of their property and the sale of the customers existing home. Further, by marketing such promotions in eye-catching ways, companies can simultaneously cut through the clutter and ease buyer concerns. For example, one leading UK-based developer launched a campaign to 'move home for £99' by bearing all the transaction related costs.
The effectiveness of any pricing and payment strategy is dependent on deep customer insight and the right segmentation. For example, opportunity niches are emerging in NRI's repatriating from the Gulf, homeowners looking to shift to ownership from rental, and families looking to upsize their properties after the experience of lockdown. Further, while some segments of the economy have been hit hard, others like technology and medical professionals are likely to have secure jobs and may see incomes increase. Therefore with the right segmentation developers can identify pockets of demand that are less price sensitive.
Looking beyond COVID, this customer-insight driven approach will be crucial to ensuring developers' pricing creates the right positioning for the brand. A key factor in achieving sustainable long-term growth.
Adapt the product to changing customer needs
Whilst product is normally considered as the first P in the four Ps of marketing, for real estate developers it can be the hardest one to adapt given the long project development cycle. Despite this challenge developers' survival will be dependent on having a product that is relevant to customer needs both during and after the pandemic.
Therefore real estate players should not regard their value proposition as fixed - even for completed projects. Through better understanding customers' current needs developers can identify existing project features that resonate strongly during the pandemic and highlight them in their marketing communication. For example, a project that already offers a suburban location, high-speed broadband, and on-site parking can spotlight these features to tap into customer demand to be closer to nature, work from home, and avoid public transport.
Looking forward to the second time horizon, developers should consider the steps they can take to adapt under-construction projects to meet emerging needs. For example, installing external washing facilities to promote hygiene, creating urban or rooftop gardens so customers can grow their own food, or converting extra bedrooms to home office space.
Finally, looking beyond COVID, developers need to start carefully tracking consumer behaviour to see which of the current trends will be sticky and which will be transient to help reimagine their future projects. Decisions about where to buy land, what product mix to have, and which amenities to offer will all be determined by these emerging trends. Therefore companies should put in place robust consumer trend tracking systems today to avoid costly mistakes down the line.
By thinking concurrently along these three time horizons and across the four Ps of marketing, real estate developers in India can take immediate action to stabilise sales, sustain them during the downturn and reinvent themselves to win in the post-COVID world.
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