FUNDAMENTAL LAWS OF REAL ESTATE MARKETING
by Lim Lay Ying
Property Times, New Straits Times
21st August 2004

It used to be that only the big names mattered : SIME UEP Properties, Country Heights Holdings, IGB Corporation, Pelangi, Island & Peninsular – the five listed property developers with the largest market capitalisation in the Kuala Lumpur Stock Exchange (KLSE) five years ago.

Today, only SIME UEP Properties (now listed as SIME Property) remains in the big five but its pole position has been taken over by MK Land. SIME Property is now the fifth largest in terms of market capitalisation. At second place is IOI Property, while SP Setia and Foutain (formerly Plantation & Development) are at third and fourth places respectively.

Even then, the contest to get into the mind of the customer first is a lot hotter for these big firms as they have to contend with many more who have much smaller market shares. While MK Land and SP Setia can be commended for putting a fresh face on the real estate industry, others like YTL Land and Sunrise have been showing homebuyers how to appreciate their living environment rather than telling them what house to buy.

It was a subtle shift in strategy by these “smaller” developers who have to do battle with the larger companies. And it did make a profound difference to customers who long felt intimidated and frustrated by the complex process of home purchase decision making.

These are the real estate developers who have opened the door to more industry innovation and introduced fresh insights and perspectives into the business…..and in the process, have been rewarded with brilliant success.

Today, dozens more are entering the fray, each convinced their particular project can be a sell-out. But as everyone who is involved in the real estate world will attest, competition is harsh – a good location is not enough, and hard-sell tactics aren’t as effective as they used to. Millions of Ringgit have been wasted on marketing programs that didn’t work, no matter how big the budgets or how clever or brilliant.

And it wasn’t about not having got onto the marketplace first. Some have gotten that far, but success was still elusive. Why then do some make it where others fail? If the secret ingredient doesn’t lie in the location, or in the price, or in the quality, what then is the secret formula for success?

The answer could lie in some of the “immutable” laws of marketing described in Al Ries’ and Jack Trout’s best seller “The 22 Immutable Laws of Marketing”. The laws suggested by the authors who are amongst the world’s best known marketing strategists, were founded upon global real-life cases of what works in marketing and what doesn’t.

The Law of Leadership: it’s better to be first than it is to be better.

Most companies – including those in the real estate industry, are committed to the “better-product” strategy, and think that benchmarking against the best in the industry is the ultimate competitive strategy.

In reality, the secret of success is to be first – that is, the first to get into the customer’s mind. It helps to maintain the leadership position and often times, the name even becomes generic such as Xerox and FedEx.

Tan & Tan Bhd. was first in condominium development in Malaysia. Until now, it is still respected as a leader in this field.

The Law of Category: if you can’t be first in a category, set up a category you can be first in.

Being first in a new product practically guarantees zero competition. For instance, Sierramas was the first gated and guarded community in the country. Today, it remains the forerunner of this new residential living concept.

The Law of Perception: marketing is not a battle of products, it’s a battle of perceptions.

People believe what they choose to believe. In their own minds, they are seldom, if ever, wrong. Why couldn’t the leading developers in the Klang Valley command the same positions elsewhere in the country? Real estate developers throughout the country sell the same product categories. If marketing were a battle of products, the same “top-of-mind-recall” would hold true.

The Law of the Mind: it’s better to be first in the mind than to be first in the marketplace.

People tend to perceive the first product that got into their minds as superior and stick with what they’ve got. The law of the mind reinforces the importance of the law of leadership, and it follows from the law of perception mentioned above.

The Law of Focus: the most powerful concept in marketing is owning a word in the prospect’s mind.

Owning a word in the mind of the customer – just a simple word (without copying somebody else’s) helps to narrow the focus of the company’s operations and marketing strategy. This is especially effective when building brands.

The Law of Division: over time, a category will divide and become two or more categories.

A category starts off as a single entity.

Like computers which now comprise mainframes, laptops, personal computers, notebooks, etc., the house started off as a single category. Four types dominated the market – terrace house, semi-detached unit, bungalow, and apartment. Then the category divided.

Today we have superlinks, back-to-back semi-detached units, strata bungalows, SoHo, and many more. There are luxury homes, moderately priced ones, and the low cost types. This allows for opportunities to exploit new categories in a marketplace that is becoming more and more segmented.

The Law of Unpredictability: unless you write your competitors’ plans, you can’t predict the future.

Since the future cannot be predicted, getting a handle on trends offers one way to take advantage of change. One example of a trend is people’s growing concerns about their safety and security. The trend has opened the door for more gated and guarded communities.

Another trend is the growing orientation toward good health which has led to the mushrooming of fitness centres and public parks in new townships.

The Law of Success: success often leads to arrogance, and arrogance to failure.

Real estate developers who become successful tend to often substitute their own judgement (relying on their gut feel instead) for what the market wants. Donald Trump is an example of a person blinded by early success.

The Law of Acceleration: successful programs are not built on fads, they’re built on trends.

This law follows through from the law of unpredictability – that is, a trend is very powerful over the long term and should be taken seriously in marketing.

The Law of Resources: without adequate funding, an idea won’t get off the ground.

Competition is fierce and without the money to get a good idea going, success won’t follow.