Wednesday, June 17, 2009

Alive and trying to kick their real (e)state of mind!

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Real estate companies in India have failed to understand the magic of branding... Niharika Patra talks how this will bring heartaches, now and tomorrow!

So what’s a brand? Well, if you ask the renowned business innovator and author Stephen Sapiro, he’d probably shoot back – “No, it is not Nike’s ‘swoosh’. It is not McDonald’s ‘I’m Lovin’ It’ jingle. It is not Accenture’s Tiger Woods ads. It is not the design of my website or my ‘Unconventional Thinking’ tag line.” Well, he’d perhaps speak every word in the dictionary explaining what a brand isn’t, but does that answer your original question? Not really! Now to talk about Erik Hansen, Tom Peters’ brand manager. As he says, “[A brand is] what your customers say it is...” Well, that pretty much sums up our argument here – what the customers say it is... But there’s one community of traders that don’t appear very convinced by the power of the judgmental customers – the Indian realtors, whose lot needs to understand why branding in itself is critical to their existence. And if there are a few who do, they just don’t get the fact that one must use branding as a tool to ‘sell’ products, rather than waste resources in demonstrating that they’re still alive and trying to kick!

Loaded with attitude and being part of a market which is still largely unorganised, the real estate companies have failed to understand the true value of branding. What else could be expected from a sector where a majority of players do not believe in marketing themselves through means other than just word-of-mouth.

The basic problem is these players actually lack the foresight to understand the strong benefits associated with advertising. Well, of course we are not arguing about their lack of the microeconomics here (read ‘Advertising Elasticity of Demand’) but any sensible management rule defines marketing as an act that pronounces merits galore! Especially, at a time when global realty market is reeling under the weight of the financial slowdown, the large players should understand that branding is of utmost importance, especially when there are negative sentiments floating in the market; and thus their falling sales! Earlier dependent on just print media and supplements, thankfully some big names have started using media vehicles like sponsorship in cricket to build up on their lost images. DLF for example, has sponsored the DLF Indian Premier League T20, Tri Series and the UAE Cup and Emaar MGF tied-up with international cricketing events.

But despite the fact that of late, a few like DLF, Omaxe, Parsvnath, Unitech et al, have switched over to other non-traditional means of marketing, the basic problem lives on – i.e., customers even today find a mismatch in their branding promises and the products they deliver. Worse, the Indian reality market still can boast of numerous other players, who have failed to even recognise this fact. Even premium property sellers are not relying much on branding as a means to reach their costumers. Says Samarth Bedi, V-P, O&M, Mumbai to 4PsB&M, “Brands and branding do matter in whichever industry you go. And real estate is no exception. But the brand should communicate values and ethics behind it and marketing should not be used as a means to just talk about discounts (which most real estate companies actually do).” The importance of branding increases even more during the current crisis. Real estate has been badly hit by the slowdown. Reports suggest that the worst is yet to come for the sector as demand is expected to fall further. Fitch ratings predicts that the real estate market in India will continue to remain in the negative outlook zone for the whole of 2009, and only in the first part of 2010 would we see some recovery. Prices have already fallen and with supply exceeding demand by miles, housing prices will only get better for the consumers (the mid-segment has already seen a 10-15% fall while the upper segment has seen as much as 80% fall). In such a scenario, branding becomes even more significant. Says Pradeep Kumar Jain, Executive Chairman, Parsvanth Builders to 4PsB&M, “Branding helps reinstate customers’ confidence in real estate developers, more so in times of recession, when customers are skeptical in parking huge money.”

All said and done, it becomes clear that branding is important and does help improve sales. But the problem with real estate companies in India is that they are small in size and marketing is still at a very nascent stage. Unlike their Western counterparts, Indian companies don’t talk about any core value. Says Bedi, “There is no clear message that realty companies communicate to consumers through their ads.” For now, the realtors are showing real symptoms of ‘ambiguous marketing’, something that is as fatal as jumping off the 9th level of one of their tall structures. So there’s our verdict, – they’re alive, and they’re trying to kick, but how long...?!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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