[adsense]

Property developers get closer to customers to tap real demand in a downturn.

Property developers are turning increasingly to direct approaches to stimulate real demand in the economic downturn, with more selective and effective marketing channels beyond mainstream and traditional ones.

Opas Sripayak, managing director of the condominium market leader L.P.N. Development Plc, says his company needs new channels to lift sales as traditional ones may be insufficient.

One choice is network marketing. The company uses the strength on its large customer base, totalling almost 100,000 residents living in 30,000 L.P.N. condominium units, to draw other customers to buy units. This strategy is basically an extension of word-of-mouth marketing.

“We will attract our customers to be our salespeople,” says Mr Opas. “This strategy can help at a time of limited budgets.”

The rewards for customers-turned salespeople include commission fees, discounts on new L.P.N. units, or tour packages.

The company has set up sales booths at educational institutions or companies to encourage students or employees to get involved as well. For example, a booth set up in February at Ramkhamhaeng University is close to its Lumpini Condotown Bodindecha.

“We still use mass media as they can communicate with customers on a wider perspective while the direct approach is employed to close sales,” says Mr Opas.

This year the company has a marketing budget at 1% of sales, up from 0.75% in 2008, as it plans marketing activities every month, on special occasions or festivals to draw attention and raise awareness.

Though unfavourable market sentiment has prompted many competitors to scale back media buying, Mr Opas views feedback from online marketing is better than from print advertisements. The company last year closed sales for 400 units directly through its website, double the total of the previous year.

Inventory management is also a big concern for L.P.N.. This year it is less concerned with mortgage rejection rates and is focusing more on speeding up mortgage loan approvals and processing. This means less time is spent on each unit and customer.

Another direct approach the company has used successfully is to sell completed units to customers who currently rent apartments. It offers attractive incentives and low-cost packages, and a one-stop service where sales and unit-transfer staff, Credit Bureau staff and banks are at the project site.

“Consumers have felt negatively toward property developers so we will also focus on customer management and after-sale service. We’ve set up a customer experience management team to take care of community management and build understanding among complaining customers,” says Mr Opas.

Suparat Veerakul, vice-president for corporate communications at the residential market leader Land & Houses Plc (LH), says LH this year will focus on every kind of marketing strategy that creates maximum effectiveness. Its key focus is on customers it believes have real demand.

“In such [a sluggish] economy, whoever has no plan to buy a house will not buy it no matter what strategies you use,” she says.

“We will definitely not use pricing strategy. It is useless during s crisis, because no matter how many discounts you give, if they don’t want to buy, they will not. It should be a good product with a suitable price.”

Ms Suparat says property developers should be able to divide real and prospective buyers. That’s why LH uses direct marketing approaches to win the right targets. These also include a marketing mix of consumer touch points where the company can easily communicate with potential customers.

For first-time homebuyers, the company is making use of a special website http://www.myfirsthome.com, offering a price range of 3-5 million baht.

“Spending on billboards and print ads will decrease as we shift the budget to other effective channels like online,” says Ms Suparat. “In bad times, we can’t be wasteful. We need to spent smartly on the right target.”

Information on its billboards will be re-prioritised to focus on marketing events to draw customers to sites rather than directions or images.

In May 2009, LH will launch new marketing campaigns which Ms Suparat says will bring LH even closer to consumers with an easy-to-access strategy.

“We will focus on customers visiting project sites because in a sluggish time, if they visit the project site, they are showing real demand,” she says. “So forget investors and speculators.

“If customers visit a project site but don’t make a decision, we will use a customer relationship programme to win them. We must do more research to get to know what factors might be hidden among the target customers’ needs. We plan to study living behaviour to develop our product as well.”

For Preuksa Real Estate Plc (PS), which is launching more projects this year than any other developer, market segmentation at its 22 new projects and 82 existing ones covers every segment of residential units and price ranges.

[relatedposts]“We have downsized the projects, launched a variety of product and price ranges, so we need to customise our marketing strategies to fit each segment,” says Prasert Taedullayasatit, PS’s chief business officer.

One of them is “easy buy, easy transfer” with teaser campaigns to spur sales and seek alternative financial sources for customers to book more easily. For example, it offered 4,000 toward booking fees for people who used the 2,000-baht cheques they received from the government.

Other developers, including Fragrant Property and Chewathai, are offering a buyback option, under which condominium purchasers can sell their units back to the developer once the project is completed.

This approach is seen as building confidence among buyers who may be worried about their financial futures and may change their minds. It also builds liquidity for developers as they can use downpayments as a revolving fund.