As a property developer, you may be forgiven for thinking the balance of power when it comes to buyers or tenants is in your favour. With a limited supply of new housing and ever-increasing prices, it would seem you could pay less attention to your product and focus more on profits and cash flow.
In many cases, this is standard practice. However, a new breed of developers and landlords pays much more attention to product quality and the brand of their businesses. We call this a customer or marketing orientation. A simple process for creating a marketing orientation is segmentation, targeting and positioning, or STP for short.
Segmentation, Targeting & Positioning for Property Developers
Segmentation is about defining a target market and breaking it down into manageable groups (aka segments) of similar buyers or renters. Typical segmentation criteria are demographics, psychographics, geography or behaviours.
For most property developers, you are well-advised to start with geography and the different demographics in that area. Or conversely, you might think about the customer group you want to target and then find areas that match.
Looking for young professionals to fill your co-living developments, or perhaps you are working at the social housing end of the spectrum. These two segments will be in different areas and with very different product requirements.
Once you have chosen some segments, you need to understand how attractive they are for your business.
- What is the market size?
- What market dynamics and macro factors are at play?
- Who is already serving this customer group?
- How are you different to or better than the competition?
In short, it’s market research time.
You need to evaluate the segments and decide which you are going to target. How are you relevant to buyers or renters in that space?
You also need to know what your target customers care about most to help you with selling units. Getting a rich, deep understanding of your customer needs is critical for creating high quality, well-differentiated product.
Remember, you can’t target every segment. You need to evaluate and target based on market attractiveness and your internal strengths as a developer.
Positioning, in essence, is about finding a clear, distinct and attractive place in the market. Something different to the competition. It’s how you want to be perceived relative to your competitors.
Are you cheap and cheerful for first-time buyers, or do you want a luxury feel that appeals to professionals? Perhaps you want a funkier vibe to make a co-living scheme appeal to creative types.
Whichever positioning you choose, think back to the segmentation and targeting. There must be alignment from top to bottom.
You need to clearly define your market segments, select a lucrative target market, and finally, design a product that fits your positioning, one that appeals to your target audience and differentiates you from the competition.
If you want to find out more about defining your position in the market and designing properties that fit, get in touch with Modern Architecture Workshop.
We are architects in Bedford and we work with developers and landlords interested in creating energy-efficient housing. That could be social housing or commercial development.
If that sounds like you, please contact us here.