The real estate market tends to be segmented into two distinct categories: buyers and sellers. From there, it is usually segmented into categories such as ‘first-time buyer’ or ‘real estate investor’. These segments help focus promotion so that communication is delivered in a concentrated form to the people who are most interested in receiving it.
Consumers have diverse needs and wants beyond their demographic or geographic locations. The consumer decision process relies on specific promotional information that is available for the buyer to research and refine. By focusing the promotional message on a particular point, issue, or concern, the professional promoter is speaking directly to the target audience. The more customized the message for the segment, the more likely the consumer is going to respond favourably.
Basic segments include geography, demographics, socio-economic issues, psychographic profiles, buying and selling situations. A typical farm area is based on geography because it’s easier and more cost efficient to market into a specific area. The agent has less travel time between appointments and she can keep a watch on the area for activity. In urban areas, a prospecting farm may be a condo tower or a multi-family housing complex.
Depending on the nature of your business, you may want to consider segments such as lifestyle, personality, culture, and social class. Lifestyle as a segment can be defined by combining levels of education, household incomes, personal vigour, and consumerism. Community practice of lifestyle creates culture which is what makes neighbourhoods special. Culture may one of the easiest traits to spot in urban areas as many neighbourhoods are created by ethnic or socio-cultural groups.
A product that confers a benefit to the consumer may be promoted using a benefit segmentation strategy. Some examples are family-oriented amenities, luxury or location status, and adaptability. The presence of a benefit assumes there is a ‘pain point’ that needs to be attended. To do that, the promoter must understand the priorities and nomenclature of the target audience so that marketing materials will speak directly to the problem/solution paradigm with a common language. It’s easy to take communication for granted but when the words match the viewpoint of the consumer, wonderful things happen. A good example of this concept is the phrase “mortgage helper,” which was coined to promote houses with rental suites.
Behaviouristic segmentation targets consumers who meet a specific demographic or psychographic profile, such as a rental investor. These groups are engaged in a meta-analysis of the product and circumstances in order to satisfy requirements above the need for personal housing. The intended use of the property will influence the analysis and/or the circumstances-of-purchase will affect the decision. Some examples of this a need to buy/sell now or an investor who chooses a basic rental apartment based on ROI instead of status features.
The promoter must weigh the benefit of segmentation with the total addressable market for each niche. High segmentation means fewer customers will be found at each level of specialization. For this reason, the analysis of the marketplace should be done methodically and be supported by statistics.
The analogy of microscopes and telescopes might be helpful to visualize two approaches to segmentation. For example, an agent might use a microscope strategy to examine specific properties, filtered through a buyer profile: neighbourhood, price, size, etc. Alternatively, she may use the telescope strategy to specialize in a particular type of property and scan the horizon for buyers that fit the profile. An example of a balanced approach is to select a farm area, get to know the people who live there, market their values and lifestyles as features, and solicit their listings as a neighbourhood expert. This method maximizes the various combinations of micro and macro approaches.
Using the farm example mentioned, the idea of brand loyalty is introduced to the consumer in several dimensions. Promotions into the farm area may solicit listings with examples of recent sales, volunteer work on condo councils, or any other messages that convey an intimate knowledge of the area. Studies have shown that the frequency of a broker’s signage in a neighbourhood correlates to loyalty and brand switching. By building a sense of community and loyalty through demonstrations of trust and competency, the promoter’s business becomes analogous to buying and selling in a particular area.
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