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Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 1
Market segment and Consumer Preference analysis
for Affordable and Mid-Range Housing
PROFESSOR: Prof. Joshy Joseph, IIMK
COMPILED BY: Ravindran Devarajan (EPGP-06-122)
Vinay Vernekar (EPGP-06-151)
Balagopal Venugopal (EPGP-06-163)
Pala Anajaneyulu (EPGP-06-110)
Prashant H V (EPGP-06-116)
Saravana Kumar (EPGP-06-132)
V Nagaraj (EPGP-06-147)
Hari Prasad Jonna (EPGP-06-096)
Vineeth Purushothaman (EPGP-06-153)
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 2
Table of Contents 1. EXECUTIVE SUMMARY....................................................................................................................... 3
2. PROBLEM DEFINITION AND OBJECTIVE OF RESEARCH ............................................................ 3
2.1. Exploratory Research: ........................................................................................................................ 3
2.2. Management Decision Problem: ........................................................................................................ 4
2.3. Marketing Research Problem: ............................................................................................................ 4
3. THE REAL ESTATE LANDSCAPE ....................................................................................................... 6
3.1. Environmental Context (Secondary Data Analysis): ......................................................................... 6
3.2. Environmental Context (Internal Data analysis) ................................................................................ 9
3.3. Industry and Regional Context ........................................................................................................ 10
3.4. Competitor Analysis ........................................................................................................................ 11
4. APPROACH TO THE PROBLEM AND RESEARCH DESIGN ......................................................... 12
4.1. Analytical Model: ............................................................................................................................ 12
4.2. Plan and Methodology ..................................................................................................................... 12
5. DATA COLLECTION AND ANALYSIS ............................................................................................. 13
5.1. Data Collection: ............................................................................................................................... 13
6. REPORTING .......................................................................................................................................... 13
7. APPENDICES & REFERENCES .......................................................................................................... 13
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 3
1. EXECUTIVE SUMMARY
The real-estate sector in India has seen an enormous growth in the last few years and the growth is
expected to remain in the coming years. At the same time there are a large number of real-estate
developers ranging from mid-size to large corporate houses in the market making the market very
competitive. It becomes a key for the real-estate developers to target the correct segment
understanding the consumer preferences.
The objective of this project is to identify one segment of supplier in this case a mid-range developer
(Developer who supplies in the segment of 20Lakhs – 75Lakhs) and determine the management
problems which in turn will focus our analysis towards this target segment group. Our intention is to
identify the management decision issue which the mid-range developers are facing by focusing on a
particular developer and analyze the market and customer preference.
For our analysis we have cardinally categorized the housing segments as (1) Budget housing
(20Lakhs – 35Lakhs), (2) Affordable housing (35Lakhs -50 lakhs) and (3) Mid-range housing
(50Lakhs -75 lakhs)
This project was started identifying a mid-size developer M/s Prithvi Homes and problem
confronting the specific developer, however this analysis and report should be applicable for all mid-
size developers who would be interested in the above housing segments mainly in urban metros like
Bangalore or Hyderabad
2. PROBLEM DEFINITION AND OBJECTIVE OF RESEARCH
2.1. Exploratory Research:
M/s. Prithvi Homes and Sri Chowdeshwari Builders & Developers is located in South Bangalore in
Gottigere. It is into construction and marketing of apartments under the projects banner of Thirumala.
Details about the projects can be found at http://prithvihomes.com/
Interview with Managing Director (Decision Maker) Mr. D.V. Raghu was conducted to identify the
management problem currently experienced by the company.
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 4
Currently the company mainly is involved in mainly affordable (35 – 50 lakhs) and mid-range (50 –
75 lakhs) flats but also launches budget housing (20Lakhs – 35Lakhs). The competition has increased
a lot with many new real estate companies entering in the heated Bangalore housing market.
Also since the 2008 recession housing markets have seen with more cautious growth. Hence
currently management is not able to clearly able to judge the overall market demand and available
supply for launching new projects. Also management views that currently there are both quality and
non-quality builders available in these segments and M/s Prithvi Homes being core strength of
quality is not able to position Quality standards to the customer in the segment.
There is also issue of customer taking too much time and confused with lot of options which prolong
the decision making in between lot of real estate projects.
Due to this issue Management is not sure on the launching new projects and hence wants to slow
down the launches unless clear demand supply is foreseen and there exist a clear customer segment
and potential for specific market segment.
2.2. Management Decision Problem:
Based upon the interview with decision maker here are the decision problems encountered by mid-
size developers such as Prithvi Homes
1. Should mid-size developer continue with their current pace and launch new projects with
affordable (35 – 50 lakhs) segment and mid-range (50 – 75 lakhs) segment? Or should they
slowdown in this segment?
2. Is there specific customers groups who are looking for this segments and what are the
customer preferences for this segments so that specific customers can be targeted with
preferred amenities
2.3. Marketing Research Problem:
For the above management decision problem the marketing research problem is formulated as below:
A) Market Analysis: To determine if there is sufficient demand for affordable (35-50 lakhs)
and mid-range flats (50 - 75 lakhs) segments so that mid-size developers can compete with
big developers and provide housing with same amenities as provided by big developers but
with competitive pricing. The research should provide information to the following specific
questions:
1) Is there oversupply for the demand which is existing in the segments
2) Which segment, location and Type of building has less competition and good growth
B) Customer Analysis: To analyze the customer pattern in preference for specific market
segment and to analyze the preferences which is used in deciding a project. Also analyze
various personality traits of individuals and how it is exhibited in the decision process and
time to finalize a particular project. The research should provide information to the following
broad questions:
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 5
1) What are the customer groups e.g. mid-income consumers (5-6 years in private firms,
government employees, and small business owners) which exhibit similar pattern in
decisions process for a particular market segment?
2) What criteria’s like location , good approach, connectivity, infrastructure like school,
hospital, shopping complex and distance to city limit which consumers use when
choosing a affordable or mid-range flat?
3) Are mid-income consumers inclined to big builders even if it means paying a premium of
at least 10 lakhs for the same quality?
4) Are consumers aware of and place importance to quality construction, zero deviations
from approvals, occupancy certificates and how important is that in their decision
making.
5) Is there a pattern of customer traits (psychographic) including mental accounting which
exist in deciding a particular project?
6)
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 6
3. THE REAL ESTATE LANDSCAPE
3.1. Environmental Context (Secondary Data Analysis):
Overall the macroeconomics seems to
be stabilizing post 2008 recession
with GDP around ~5% in India and
Currency rate stabilizing.
Though macros economics stabilizing,
we see an increase in trend of people
constrained by financial and market
condition.
Effect of overall market decrease is
felt in 2009 post 2008 recession.
Trend in both 2 BHK and 3 BHK
increases while Villa houses was seen
increasing in 2011 due to stable
economic environment and increased
purchasing parity
Though we have seen price increase
with new launches in Q3 20011, the
price of absorbed units was not
impacted with price increase. Hence
price elasticity is low.
Though we see regional variation in
price trends overall the price trend
exhibits the overall price trend in all
the regions. But regional variation can
be drastically seen during stabilized
and heated up market.
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 7
Prices in east seem to be exhibiting
the overall trend with the very little
regional variation. This implies that
the regional locations act as substitute
for nearby location.
We see bullish sentiments both
positively and negatively exhibited for
central region whereas other regions
exhibiting even sentiments. But this
sentiment is not seen in the housing
consumption. Possibility may the
sentiments are reflected in land rather
than housing market.
Though the regional attractive index
variation in Whitefield and Sarjapur is
seen not much of consumption
difference is seen. Hence consumption
also depends on specific project
parameters. Hence preference analysis
to done specific to project parameters.
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 8
Overall the trend in housing
sentiments is reflection of financial
market trend.
Surprisingly housing sentiments are
exhibited bullish by higher age group
except for Q1 14
As predicted the sentiments in
housing market is bullish and huge
variation with increase in income
group and stabilized with lower age
group
Fast buyers <6 months are more
constrained by personal and market
constraints. Hence immediately
selling required easy financial
resources enablement and launching
in good market scenarios.
We see sentiments down post-
recession in higher value properties
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 9
and increase in trend for 20 lakhs to
40 lakhs property.
3.2. Environmental Context (Internal Data analysis):
Internal data acquired from companies recently launched and ongoing project Thirumala Anemone.
Anemone Flat
Details.xls
Thiramala Green
Fields.xls
0
5
10
15
2 3 4
Booked
Not Booked
0
2
4
6
8
10
12
1534 1737 1755
Booked
Not Booked
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 10
3.3. Industry and Regional Context
Location Preference
Projects are launched more in the
increasing trend regions and overall
regional bias seen in housing
proportion
Product Mix
Survey results in 2010 and 2011
indicate clear increase in 2BHK
and 3BHK and increase in villas.
This indicate consumers of 4BHK
stretching to villas
Customer Income& Budget:
Even though monthly income is
equally distribute mental
accounting may be factor to tend
towards 20-75 lakhs properties
Customer Preferences:
Equal preference is exhibited for all
stages of property.
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 11
It is clearly seen that 56% of people
take >3 months for purchase of
property. Marketing needs to
aligned for this behavior
Customer Traits
Clear increase in traits exhibited
with middle income and higher
income members going for stretch.
Hence for Lower income group
price point is crucial. More trait
analysis to be carried out.
The Bangalore residential real estate as a commodity is booming at present. The real estate markets
have shown signs of growth during the last twelve months in the affordable and mid-segment
category. The property prices have had an average appreciation of about 7%-9% due to which
affordability and location plays a decisive role in the sale of 2BHK(800-900 sq. ft.) and
3BHK(1200-1300 sq ft.) to suit the clients requirement.
We do find that it is during pre-launch offers by prominent builders that they have received a good
response, with 50%of units launched being sold in some cases. We believe that the steadily growing
interest in pre-launches indicates the increasing long-term investor participation in the Bangalore real
estate market.
The Bangalore real estate market witnesses major development of premium products, which is
looking across to the high net-worth (HNW) segment, across micromarkets. We expect this segment
to remain slow and staggered, with a gradual build-up in inventory over the coming quarters. The
realty market is now a luxury bubble!
We have divided the area into five distinct zones: North, North-East Bangalore, East, South-East
Bangalore; South Bangalore; West, North-West Bangalore and Central Business District/Off Central
Business District, on the basis of location and real estate activity to analyze the key trends and which
would provide a outlook of the existing market scenario.
3.4. Competitor Analysis
One of the competitors of Prithvi homes in same price bracket is Shriram properties. This realtor is of
Rs 60 billion company having 40 years of history and delivered 8.36 million sq. ft. in south India.
Major realtors like Shriram are offering affordable homes starting from 28laks. This builder is
renowned as Quality Builder, Environment Compliance and Social compliance. With same price
bracket, they are providing high class amenities like Amphi theatre Senior citizen Park, Children
Park, club house, rain water harvesting, biodegradable dispose and etc.
Marketing Research 2014
IIM KOZHIKODE- EPGP06 Page 12
In IT hub Bangalore, 82% software professionals are investing in real estate. They look for quality
builder, affordable price and amenities. The awareness in customers is high, now days. So they do lot
of study before choosing a builder
Another big competitor in value homes domain is Tata Housing Development Company (THDC)
since 1984. They are building homes for all classes of people range from 30laks to 14 crores. Below
is the comparative study of 3 competitors.
Pruthvi Shriram group Tata Housing Group
Turnover(Cr) --- 60,000 65,000
Area delivered(million Square Feet) --- 8.36 40
Affordable home approx cost 25-45 27-42 (Sameeksha, Bangalore)
30-45 (Tata Haven, Bangalore)
Competition for Prithvi is high considering major builders like Shriram & THDC. Through this
study, various approaches are suggested for Prithvi on competitive advantage.
4. APPROACH TO THE PROBLEM AND RESEARCH DESIGN
4.1. Analytical Model:
4.2. Plan and Methodology
Customer Survey & Analysis
Based on the secondary data analysis the factors which needs further inputs will be designed which
will be circulated to both existing customers of the real estate company and potential customers.
Survey is planned to conduct both physically and online.
Focus Group analysis
Focus group consisting of current and potential home owners around 8-9 members will be surveyed
for collecting and analyzing their decision process over time and the factors which have influenced
over a period of time. This will give the diagonal data analysis whether the decision process will be
changed for second home purchase or based on the macro environment change.