Q.
The real estate market needs some bases and variables for the segmentation. With the use of examples of a residential property development, explain the variables to be used for segmenting the customers' market.
(25 marks, 2011 Q3)
A.
Market segmentation is defined as a subset of buyers who carry certain common characteristics and would response to product features in quite similar manner. It is a selected group of individuals who carry some similarities, for example, age group, income bracket, or educational level. An nature conservationist or environmentalist group can be a segment of consumer group who does not buy leather goods but consume organic food.
For property market, these segments can be selected based on a few characteristics. In particular to residential properties, an example of segmented market could likely be young married couples. Especially in a baby boom society, residential properties would cater much for baby boomers who are starting a family.
But, before we answer the question, let's define what are the bases and variables for the segmentation.
From Abdul Hamid Mar Iman's book "An Introduction to Property Marketing" Chapter 11 - Market Segmentation, page 267, it said:
"The property market, just like any other product markets, needs some bases and variables for its segmentation. While there is no specific way of doing it, Table 11.1 provides an outline for segmenting the market for property buyers. This scheme breaks up various variables into five (5) main bases.
This five main bases were originated from various researches in marketing segmentation. They are generally grouped as:
- Geographical bases in which markets are divided into geographic units.
- Demographic bases include segmentation studies based on age, sex, socio-economic group, family size, life cycle, income, occupation, education, etc.
- Psychological bases in which personality factors, attitudes, risk, motivation, etc. are used to divide the market.
- Psychographic bases include lifestyle, activities, interests, opinions, needs, values and the like as market delineators.
- Behavioural bases include brand loyalty, usage rate, benefits sought, use occasions.
(Page 306 of Market Segmentation by A. Caroline Tynan & Jennifer Drayton, 1987)
Hence, incorporating both tables above:
Ref:
Tynan, A C & Drayton, J. 1987. Market Segmentation. Journal of Marketing Management. 2. No.3, 301-335.
Abdul Hamid, M I. 2002. An Introduction to Property Marketing. Rangkaian Pelangi Sdn Bhd. Page 268.