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Individualizing Consumers: Segmentation becomes Key to Getting More Business
Posted By beth On August 17, 2007 @ 1:06 PM In Today's Top Story | Comments Disabled
By Desiree French
RISMEDIA, August 20, 2007–We hear often, and statistics prove, that underserved markets, women, and young first-time home buyers have made significant homeownership gains in recent years, and the expectation is the trend will continue. Given the outlook, marketing and advertising through segmentation takes on greater significance. The reason is simple. Targeting the consumer, or dividing the consumer population into subsets that are highly varied and emerging, is critical to growing profitability and reaching consumers in today’s market.
Steer Clear of Homegenization
This is true in virtually every business, and real estate is no exception. The reality is that different people often have different needs based on lifestyle, race, age, and income. The key to getting their business rests less on bombarding them with homogeneous ads and more on a genuine understanding of their needs.
“It’s been said that if any brand or any type of service tries to be all things to all people, then it’s nothing to anyone,” says Kaira Sturdivant Rouda, president of Real Living in Columbus, Ohio.
Many brokers agree, including Ed Krafchow, president and owner of Prudential CA/NV/TX Realty. “Segmentation of the consumer hasn’t been our tradition in the real estate industry. We’ve tended to be all things to all people and undefined,” he offers. “But trying to be all things to all people is an occupational hazard. Every business has to make a decision about what it’s going to be and what it’s not going to be.”
You may have already made that decision. But because markets change, so might your approach to addressing them.
Take a Good Look in the Backyard
To use segmentation, industry experts first recommend looking in your own backyard to first identify who’s special to your market. Is it young adults, Asians, the nouveau riche? They say it helps to also identify your best customers, those whom you engage with most regularly. Ask yourself what percentage of company sales they have helped to generate and what is their future home buying potential. Also, what are they buying? And equally important, says Rouda, “Why did they pick your company?”
If it all seems a little mind-boggling, consider the alternative—getting left behind. It’s no secret, for example, that buyers and sellers will be even more racially and ethnically diverse by 2010 because of immigration and natural spikes in the U.S. population. Diversity across generations is also significant because the Baby Boom, Generation X and Generation Y age groups all approach the real estate transaction differently.
A 2006 study by the National Association of Realtors said as much, noting that Generation Xers are not only technologically savvy and demand instant gratification, they are also very diverse culturally. The report, The Consumer: Catalyst of Change, states “this is the first-time buyer of the next decade. How many brokers and agents will understand her values and be able to serve her effectively?”
Get the Right Training
It’s a good question that could, ideally, be raised and applied to a member of any market segment group, from first-time home buyers to high-income investors. However, whatever group is embraced, it’s important to make sure “you have the education and the training [to interact honestly and effectively with them]. Otherwise, if you try to fake it, it could backfire,” says Bill Plattos, executive vice president and broker of First Team Real Estate in Costa Mesa, California.
Again, Krafchow, whose company focuses primarily on two segmented markets—Hispanic and high-wealth households, for their buying power and discretionary lifestyle, respectively—agrees.
He says it’s not enough to simply enter those markets. One must also become educated about those who will be served. “You can’t pretend you know things that you really don’t know. And, you have to commit to your designated market segments. You can’t run ads looking for Hispanic agents and buyers in an English-language paper.”
Krafchow contends General Motors learned this the hard way. fter running ads targeted to Hispanic buyers, it had no Spanish speaking representatives to answer their phone calls. “The lesson learned,” he warns, “is not to advertise if you can’t speak the language. It’s all about building the infrastructure.”
This is why Prudential hired Dr. Oscar Gonzales, the founder and managing partner of The Gonzales Group, which provides business solutions to help real estate and financial services firms develop and implement multicultural market projects. Through The Gonzales Group, Prudential has learned nuances about the Hispanic culture and ways to best serve Hispanic consumers.
Even Plattos has learned little subtleties from Hispanics within his company. When First Team recently opened an office in Santa Ana, which has a large Hispanic population, he was told the office had to have toys because the Hispanic clientele is very family-oriented, and sometimes whole families visit a real estate office together. “I never would have thought of that,” he says.
Racial and ethnic market differences cannot be ignored. For example, brokers who fail to recognize that Hispanics and Asians prefer to work with agents who speak their language and understand their cultural preferences may be at a competitive disadvantage. Another NAR report, The Nation’s Residential Realty Business in 2010, states minority buyers and sellers behave very differently in information gathering and where they get settlement services. They also prefer less written material and the Internet in favor of driving around more to see properties—and they like working more with builders.
Adjust Communication Accordingly
Knowing your consumer market and the subtle differences that exist can make it easier to define your message, which should “be a reflection of the audience you’re targeting,” says Rouda, who has a background in marketing. “How they want to be communicated with is how you communicate with them.”
Plenty of information is categorized and can be gleaned from a number of sources, including surveys and existing studies—NAR and some state Realtor associations provide several documents on demographic trends and consumer preferences—as well as magazines, marketing firms, and title companies.
In the end, says Plattos, “We go after everyone. However, we then will segment to an area to be able to communicate well with the people. When you put a big plan together, you have to keep changing it on a continuous basis. If you see movement in your market and you don’t change with the market, you will get left behind,” he says, adding “people say to me ‘You’re color blind.’ I say, ‘No, we’re green.’”
Sidebar: The Importance of the Internet and Women
The Internet, which has indisputably played a wide and crucial role in how real estate is bought and sold, has been identified as a tool that makes it easier for brokers, both large and small, to more effectively target consumers for products and services and to segment properties by price, cities, and school districts.
According to Kaira Sturdivant Rouda with Real Living, the Internet allows brokers to become experts in their areas in ways they could not using traditional media outlets for advertising and marketing. In fact, in 2006, a few years after Real Living was created from a merger, the company had an opportunity to focus on what it felt was missing from its marketing strategy. The answer: women.
Thus, women became the company’s primary consumer group, and that change, Rouda says, is reflected on Real Living’s Web site and in the knowledge that “women control or direct 90% of all home purchases.” She concedes that it’s a broad focus. “It’s not that we don’t like men, but you can’t be all things to all people,” Rouda says.
After identifying women as an important group, Real Living then segmented that broad population into eight subsets, including buying types, demographics, and lifestyle.
The move isn’t so unusual. In the spring, First Team Real Estate completely restyled its Web site to cater to women, who—whether single or married—are responsible for making a disproportionately large number of decisions about home purchases. The First Team site is not necessarily family-oriented, but it has softer images, themes and colors.
Sidebar: Cozying Up to Research for Success
Segmentation is very important to broker-owners looking to sell real estate, and “reaching the correct market is a key ingredient toward the success of any advertising/marketing effort,” insists Gary Koeffler with Guru Partners, a full-service marketing and advertising agency in Irving, Texas.
There are literally dozens of ways to identify and reach specific consumer groups. Koeffler says PRIZM, a major lifestyle research group, recognizes as many as 66 core clusters of people according to age, income, geography and other identifying factors. The company then indexes the information into three major lifestyle groups and four major social groups. These clusters, he maintains, will most definitely influence the type, style, location and price range of properties.
“It is the marketers job,” he says, “to effectively target each individual property or groups of properties to the segments who are most likely to be suited and able to buy that property. The target market as well as the message must be geared toward this end, or the entire effort will prove futile.”
His thought on the most effective method for gathering information? A tried and true way: “research, research, and more research,” asserts Koeffler. “At the core, this information is used to develop the strategy that will drive the tactics and determine the best advertising plan to achieve the desired results.”
How does this work in your market? Tell us in our Forum .
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