Ray White: Real Estate Property Agents - Case Study Example

Ray White – real estate property agents Name Institution Date Ray White: Real Estate Property Agents 1. Industry, Environment, Market and Product Category The real estate industry in Australia re-established itself following the global financial crisis and has continued to grow over the past few years. The Australian real estate market has witnessed a significant amount of inbound capital from investors overseas. The industry has, however, experienced a great level of property market uncertainty which has resulted to relatively slow growth. From as early as 2003, according to a survey by the Australian Bureau of Statistics, there were about 10,001 real estate services businesses that operated within Australia. This comprised of 3,639 franchised real estate agents, with 4,545 agents who were non-franchised and another 1,818 other real estate services businesses. The industry had already employed about 76,599 people. The incomes generated by these businesses were already impressive and stood at $7, 524.7 million, working out to an average of $98,200 for every person employed. The Franchised real estate businesses generated over $3, 672.9 million compared to $3, 145.7 million from the non-franchised agents. These figures revealed significant growth in the industry compared with the previous survey. The total income had grown by 17.8% above the 1998-99 results. The growth majorly attributed to the property boom experienced across the country during this period. The major income source was from leasing commissions and property sales, both of which were growing at a rate of about 20.9% annually. As shown in fig 1 (see appendix), the following sources represented the income proportions the non-franchised agents: property management commissions (17.8%), commissions from property sales of non-residential properties (9.6%), leasing commission fees (5.8%), and vacant land (4.5%). The proportions for franchised agents were: 15.6%, 6.7%, 3.7% and 4% respectively (Australian Bureau of Statistics, 2004). The real estate industry in Australia has been under transition for some time now. After emerging from the global economic challenges, it has managed to achieve strong balance sheets, with investment property valuations that are stable. The listed REITs as well as the unlisted funds remain relatively safe, serving as defence investments during unpredictable economic situations. However, the industry is faced with challenges of establishing new growth opportunities. It has struggled to close the gap between NTA and share price and to diversify sources of funding (PWC, 2010). Ray White is an established real estate business in Australia with great success in the industry. The firm has been in operation for over a century in the property management business and serves customers interested in buying or selling a house or any commercial property, seeking to buy land or renting an apartment. The firm sells approximately one in every ten properties in Australia and New Zealand and has gained reputation as a property expert in real estate. The agents are ready to help clients with house prices, information about the suburb and other details to help one familiarise with the property market in Australia. IBISWorld estimations indicate that four of the largest operators represent 18.5% of the industry revenue, an indication of low market concentration. Businesses that make over $2.0 million account for not more than 4.7% of business in the industry. The largest establishments have strong presence within smaller markets since they compete with smaller operations in these regions. Ray white has been dominant in the market with more than 700 offices but has had to compete with other great performers. McGrath Estate Agents boasts of around 45 offices in NSW, with more others in Queensland. Victoria-based hocking Stuart, the Professional, RE/MAX are among establishments with the top four of their agents doing very well in the market (Real Estate Business, 2012). 2. Product Type, Branding Strategies The assets and markets in the real estate industry are unique as compared to other goods. The uniqueness of the products in this industry is that they are heterogeneous and immobile. Therefore, the market for selling, buying and leasing tends to be localised and greatly segmented. They are associated with private negotiated transactions with considerably high transaction costs. The market is also highly segmented given the heterogeneous nature of the products. Segmentation also arises from the product price. The commercial property markets are also segmented by both investors and users while each land parcel has a unique location-value signature (LSV); differences in the LVSs of each piece results to variation in property values (Fik, Ling & Mulligan, 2004). This product can be described within Tukker (2004)’s product-services system (PSS). Tukker explains that a product services system consists of ‘tangible products, together with intangible services whose design and combination can fulfil the customer’s specific needs. This approach to business has been seen as an excellent means of enhancing competitiveness and fostering sustainability. PSS has been classified into several categories; the most distinct classifications include product-oriented services, use-oriented services and result-oriented services. In Ray White, quality of renting services combines excellence in customer relationship services which attracts and retains high profile clients and quality physical properties that fulfil the requirements of the clients. Branding of products has been practised for a long time in history. Ellwood (2002) suggests that branding functions like a flag that keeps waving to customers, awareness creation and differentiation from the other competitors. Branding has significant effects in the manner in which marketers sell their ideas and design and conceptualize their products. Organizations have increasingly realised the importance of market research in assisting them address branding issues correctly (Clegg, 2007). Temporal (2001) believes that strategic communication through promotions, packaging and advertising goes a long way to build the brand 3. The Target Segment Including Their Defining Characteristics Yakup, Mucahit & Reyhan (2011) defines a consumer as an individual with desires, needs and requirements for marketing components in their capacity as a buyer. The authors further mention that marketers should have the ability to influence the customer’s behaviour. Sellers, on the other hand, want to identify and delineate segments within the market and then focus attention on these sets of buyers when designing the marketing plans. This is known as market segmentation (Tynan & Drayton, 1987). Such segmentation is advantageous because through this technique, the marketers are able to divide total demand into homogeneous segments that can be identified through some identical traits. The identified characteristics are then used when explaining and forecasting the response patterns of customers within a segment to particular marketing stimulus. Segmentation has been carried out by marketers basing on several factors including geographic, psychological, demographic and behavioural variables. Mihic & Kursan (2010), on the other hand finds a relationship between situational factors proposed by Anic & Radas (2006) and buying behaviour (Belk, 1975). Ray White serves a diverse market and has fought to expand market to new grounds. Over the years, the firm has extended services and currently, has become a link to several sellers and sellers of real estate properties. The firm targets property sellers throughout Australia and New Zealand. The firm developed various marketing avenues that were designed and targeted at specific potential clients. The marketing methods adopted for a particular segment is developed to suit the needs of the customers. The firm reaches out to local customers through physical and electronic means. Signboards, capital city auctions, professional photography and print media are used to reach out to local clients while eMagazines, Web Marketing, eWeekly and eBronchures and web Marketing have been used for both local and international advertising. Targeting has also been based on financial capabilities where huge transactions and smaller transactions Through these means and several other physical and electronic means, Ray White has managed to maximize profits and expand operations through increased businesses and customer contact. The firm has become one of the greatest real estate firms in Australia. 4. Customer Needs and Wants Met by Current Market Mix Ray White has aimed at providing excellent service that is focused at maximizing client satisfaction. The firm’s agents specialise in finding rental and purchase properties and using effective marketing procedures to meet the clients’ needs for both commercial and residential purposes. The firm realises the extensive and diverse needs of the clients and ensures that these needs are met. Ray Whites professionals are equipped with years of experience and knowledge of the market and are adequately trained to assist clients achieve their property goals. The agents have accumulated extensive knowledge of particular suburbs, cities and neighbourhoods through years of experience and use this information to respond to the requirements of the clients. The firm has access to houses, units and apartments as well as all the other property for rent and purchase ensures that clients are given the chance to make preferred choices when it comes to making the decision about where to live. The firm has agents who are efficient so that clients are served within a specific period of time. The firm strives to ensure that client requests are attended to in time to ensure convenience and timely deliverance of service. The firm also offers extensive services for commercial properties, realising the huge demand for office space in the country. The firm therefore monitors the vacancy rates available, any unlisted advertisements and other business trends in the market, providing options for owners and other property managers who need options for establishment of start-ups or expansion of business. By doing this, the agents ensure that business owners are not stressed by the need to find new spaces or rooms. They provide them with options, allowing them to focus on their individual businesses. Ray White, therefore, aims at satisfying any interested persons who come to seek their services. In the commercial sector, the agents realise the circumstances surrounding commercial properties. They therefore help owners find suitable renters with long term tenant potential. Their vast experiences in the industry have given them an edge in provision of service and satisfaction of customer needs. As reported by Ricki (2013), Ray White decided to redesign its marketing approach, realising the change of preferences and customer taste. The firm launched a new advertisement campaign in 2013 that took into account the fact that buyers, sellers, renters and property owners were tired of baseless statements marketed by the real estate agents. The campaign – Ray White_Know How included proof statement under the seven crucial areas considered to influence buyers’ and sellers’ decision making on their service provider: experience, tailored marketing, passion, knowledge, competition, results and ease of process. The firm focused the campaign on newspaper advertising, but also exploited other avenues including direct mail, social media, print media, outdoor media, radio and online marketing. The firm has also strengthened its brand through the household imagery featuring pops of Ray White’s popular yellow. This colour has underpinned the brand for years. By employing a customer-driven approach, the firm has supported its broad marketing agenda that has been focused on customer experiences (Ricki, 2013). Some of the ads are shown in fig 2 (see appendix). 5. Recommendations The firm has done well in provision of services to the clients in a professional manner and to their satisfaction. The agents are well trained and have gained experience in the industry, offering unmatched service to the clients. Yet still, the firm has potential to explore more ground and expand business to new clients. There remains growing demand for commercial office space in town and residential properties in the rural areas. The firm should consider exploring the construction industry and focus on selling and renting new properties. While construction costs remain high, the returns from these properties will definitely be rewarding. The firm should also engage clients more on social media, and initiate negotiations through such channels to further increase interaction with clients. Social media continues to present great opportunities for growth in increased sales and will help the firm extend its dominance in the industry, both locally and in the international scale. References Fik T.J., Ling D.C. & Mulligan G.F. (2004). Modeling Spartial Variation in House Prices: A variable Interaction Approach. Real Estate Economics. Vol. 31, No. 4. Belk R.W. (1974). An exploratory assessment of situational effects in buyer behavior. Journal of Marketing Research. Vol. 11, No. 2, pp. 156 – 163. Yakup D., Mucahit C. & Reyhan O. (2011).The Impact of Cultural Factors on the Consumer Buying Behaviors Examined through An Impirical Study. International Journal of Business and Social Science. Vol. 2 No. 5 Tynan A.C. & Drayton J. (1987). Market Segmentation. Journal of Marketing Management. Vol. 2, No. 3, pp. 301-335 Mihic M. & Kursan I. (2010). Assessing the situational factors and impulsive buying behaviour: Market segmentation approach. Management. Vol. 15, No. 2, pp.47-66 Ellwood I. (2002). The Essential Brand Book. Great Britain: Kogan Page. Clegg, A. (2007). Unlock the Power of Brands. Marketing Week. UK, April 1, 23–25. Anić I. &Radas, S. (2006). The impact of situational factors on purchasing outcomes in the Croatian hypermarket retailer. Ekonomski pregled. Vol. 57, No. 11, pp. 730-752. Temporal, P. (2001). Branding in Asia. Singapore: John Wiley & Sons (Asia). Australian Bureau of Statistics. (2004). Real Estate Services, Australia, 2002-03. Retrieved on 18th July 2014 from Real Estate Business. (2012). Top 100 Agents 2012. Retrieved on 18th July 2014 from PWC. (2010). About the real Estate team. Retrieved on 18th July 2014 from Ricki. (2013). Ray White dumps 'flowery' real estate marketing and launches new campaign via Arnold Furnace. Retrieved on 18th July 2014 from Appendix Fig 1: selected income sources by real estate agent type, proportion of total income Fig2: Ray White advertising and brand strengthening through using the traditional Ray White yellow Read More