Q.
Discuss 3 macro and 3 micro factors that affect selection of appropriate Marketing Mix as your strategy in launching a new housing project.
(M2022-1 Q4, 25 marks)
A.
Updated 14 Sep, 2022.
Macro factors
Macro factors are factors that affect the general environment, not only to a specific market.
Political
The political development of an area heavily influences a company's marketing decision. If the area's political condition is stable, then the economic condition of country will likely be stable as well and the political decisions made would not change too much, thus suitable for all market development. For example, the current government's approval for a housing project may be rejected after the new government has taken over - much of a political plot in many corrupted administrations. Furthermore, the different government may passes different law that may influence the pricing of the product. For example, government passes a law that increases basic salary of construction workers can cause increase in price of property due to increased cost in operation.
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Political sentiment can impose certain financial limitation to the mortgages especially when government is concerned about speculative property selling. This is like financial bubble and it is risky to a nation's financial structure. During the hike of speculative property market, illogical buying and borrowing from the bank may inflate property prices to outrageously over-valued. The banking system will be in danger of succumbing to a melt-down when the market crashes.
Thus, in politically more socialist country like China, where such risks could cripple the nation, the government impose sanction on secondary market - thus no loans are dispersed to buyers of second-hand properties. They maintain the basic need that housing is for shelter, and not for speculation. Therefore, secondary market properties will not sell as no loan is dispersed for purchasing them.
In light of the above scenario, a developer who is launching a new housing project will have to lower the price of the new launches because the policy of cooling down house price by the government. Due to lower second-hand house demand - hence secondary house are much cheaper than it normally is, the new developer units cannot sell over-priced.
Conversely, if the government is not stopping the over-heated market, the secondary market will drive the primary market to even higher price. Then, the new launches will sell at much inflated price. This therefore would induce the developer in launching more new projects and at much higher price.
The above scenario illustrates that macro factor like government policy could affect the new launches as it changes the fabrics of the mortgage structure, and hence the pricing strategy of the developer.
Ecological
Ecological factors are related to the environment around us, like the climate, weather and availability of resources such as land, raw materials. All of these greatly influence the strategy of the marketing mix, especially the product of the marketing mix.
For example, in real estate when launching a new housing project, the availability of land is crucial. If the land is small, then possibly instead of houses, a condominium might be a better choice. However, if the land is big, then a luxury housing project of houses with big areas can be built.
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Some laws and regulation on environment will affect the strategies of property market. Like in some advanced countries, green building concept is what is promoted by the government. Less carbon emission as less consumption of energy during winter or summer (air-conditioning). Thus, with different regulations, developers will incorporate their construction into building green building to adhere to regulations. Such is also a promotional strategy of new launches as it may attract tax deductions or savings. So policies of government on carbon emission also gives away subsidies to buildings with environmental friendly structures, and this will be long-term cost saving for property buyers.
Demographic
Demographic is the study of human population. The change in trend of human population such as age, population growth, races greatly influence the decision of marketing mix. It is also one of the main bases in segmenting customers, which means that by segmenting the customers as according to demographic, helps to identify which specific group of customers to target, and strategize marketing mix according to that group.
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For example, when launching a new housing project, by targeting a specific age group, the type of property to be built can be decided like condominiums for young working adults of age between 25-30. The price set can be lowered to a threshold to penetrate the market since they are working adults, likely with little amount to spare. This can be compromised with smaller size build or having a versatile use - SOVO (Small Office Versatile Office) - a new product type.
Moreover, since they are busy young adults, developer launching new housing project may choose to do exhibition or mock-up showroom near their working place. Promotion method employed could be giving them discounts or rebates, like 3 months management fee waived.
Other sales channels may be arranged with sweat-clubs or gyms as these working adults frequent these outlets instead of visiting the sales gallery of the developer. Hence, segments of various demographic patterns and their behaviours will determine the marketing mix to deploy for successful engagements.
Micro factors
Micro factors are factors of the nearby environment that affect the specific market.
Competitors
It is impossible to control how competitors do in the market, one can only take note of them and then respond to them by making important decisions that delivers value and satisfaction to customers better than them. Hence, it is important to understand the customers better than the competitors, and design the marketing mix according to that.
For example, it is known that nowadays customers like houses equipped with the latest technology. To upbeat existing competitors, new launches need to study the competition. If it is the market trend, developer of new launches need to incorporate designs of smart home concept to win competition.
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Price, and value need to be explained to the prospect customers. Engaging in a competition of what is best for the prospect buyer is a lot of emotional selling. Thus, a well trained sales team is an important strategy in capturing the market amid competition. Developer launching a new housing project must understand the resources and time needed to accomplish this effect of targeting the right segment of market with the selling points that close the sale.
Media
Media determines how a company profile itself and present to the customers. Hence, a company with good media is able to strategize a good promotional plan that is able to effectively promote itself and its product to the public. To better reach out, the company would need to study how the market reacts best to the promotional methods.
For example, when launching a housing project, the developer company with good media will employ its best promotional method, like putting up advertisement. The company's media is also responsible in determining the direction of the sales from its promotion. For example, employing different real estate agency's of different areas as a way to distribute the newly launched housing projects as the advertisement has reached out to many areas of the whole country.
Conclusion
Macro and micro factors are conditions of the surrounding that the developer operates in. It has to ride in tandem with these factors affecting its outcome with a set of strategies and resources that is limited. What is best for its launch would mean how to execute a good plan with the limited resources available in achieving its objectives. This includes avoiding failures and risks while capitalizing on its strength and available opportunities.