Q.
What is "market research" and how "market research" differs from "marketing research"? Briefly describe marketing research in property marketing. Why is marketing research necessary? Why is it not?
A.
Market research is like its name, a study of market relating to a certain product or service. On the other hand, marketing research is a lot wider, and encompasses market research. In short, market research is a subset of marketing research.
In general, marketing research is the process of defining a marketing problem and opportunity, systematically collecting and analyzing information, and recommending actions to improve an organization's marketing activities (Berkowitz et al., 1992 pg 168).
From the above definition, we can say that real estate marketing research is a systematic design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing a real estate company.
Another definition of marketing research for property marketing is a systematic study of data, including the use of scientific methods to obtain information relevant to the marketing of real estate products or services.
Marketing research becomes necessary since the normal process of record keeping may not provide specific information to enable specific decision to be made. For example, which condominium size is the best sell-able and profitable? Secondary data from housing departments and government agency like Valuation Office may not provide up-to-date information on such a question. Its data is lump into just "condominium" "single storey house" "double storey house" but never by size of space. Thus, a specific research may be required to answer that question.
However, marketing research for property can be costly. It has its merits as well as flaws. For a lot of developer would argue that without any research, their products (developments) sold like hot cake! There is a certain reasons behind this 'sold like hot cake' phenomena.
Firstly, a good location would definitely call for a good sale! This is easy to understand as more demands would inflate the price. Scarcity of land in city centre or proximity to commercial and healthcare amenities would appeal most to middle age and executive level businessmen. They can afford the higher end property products.
Next, approval for development by State Authority could have been delayed, and whatever earlier strategies envisaged for the new plan may have been out dated upon approval. It could have by coincidence that the approved project is shelved and long awaited residential approval suddenly became commercial. Especially in a matured garden, this commercial approval would be meeting a great demand unfulfilled! It is engineered to be such as the land cost has gone up over time, and profit from commercial development would definitely be higher than residential. Building on the same plot of land a commercial unit would require less investment (4 walls only) and fetch a higher price. The whole food chain of the approval cycle had probably been oil-ed up for a fat harvest.
Largely, development projects are multi-million dollar in scale, and those behind the developments would have connection with the approving authority. Inevitably, the price factor could have been a single most determining factor for a big scale development especially for massive residential development. Mass production for a medium cost or low cost project is unlikely be difficult to sell, more so when the demographic of the population is medium and low income earners. Land cost is cheap in remote location, and market is driven by enormous low income demand for housing. Hence without research, the fact of unmet needs of housing is acute in certain income brackets.
Therefore, a specific exercise of design, collection, and analysis of data relevant to a specific situation or problem is needed. On the other hand, it is hard to prove that research is indispensable as many a time, real estate development has many other factors which could have influenced the success or failure of the project in a dynamic social economic system. Factors like general economy, loan availability, approval time frame or matter of public concern for example theft and security of the area, can affect demand of the project.
To summarize, it is more important to ask what exactly is the objective of the research and if any answer could be obtained from secondary data. Such answers could have more meaning than embarking on a long journey of marketing research and wasting all the resources.
Ref:
Own account.
Abdul Hamid, Mar Iman. 2002. An introduction to property marketing. Rangkaian Pelangi Sdn Bhd. Page 327-328.