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Product review and planning are key to project marketing: Peter Chittenden

Last week I started to outline why product design and planning are project marketing essentials. I think it is reasonable to suggest that the project marketing team should play an important role here, because comprehensive planning can only improve the end product eventually taken to market.

While product design and planning tends to be seen as a non-core responsibility of the sales team I do not think this is the most productive approach. While clearly central to the architectural and building roles, this should also, and frequently does, need too include an active involvement from the sales and marketing teams. Together they can play a vital role that will help produce a final product the market wants and is happy to buy at the most competitive price helping to secure revenue targets.

During the planning cycle the anticipated prices for the end product are the core of the project’s viability. So the aim is not to overlook any aspects during the product review that could either directly reduce prices or delay sales. Product planning should be all about securing the best prices within the shortest possible time.

In a complex environment like this, there is a theme that keeps resurfacing that is a ‘collaborative’ effort. This is not always the way and poor planning can influence outcomes in the short and long-term. Lets consider a simple example.

Updating the buyer’s perspective

For reasons that are hard to pin-down an apartment balcony can end up with a view of roof-mounted air-conditioning units or garbage bays. Not only can the value of the apartment be impacted, but also it remains an ongoing source of frustration to the eventual buyer or tenant. Views are important and they’re not always picture perfect, but they should address privacy and everyday utility.

Hopefully a more collaborative approach might avoid such simple mistakes. It is also worth keeping in mind that services are very much a part of this discussion.

Poor design and services that are not subjected to sufficient checking can have ongoing and unexpected results. Post construction it might be possible to ‘fix’ the problems but band-aid solutions to overcome design or construction faults are never the best idea.

This type of outcome will, without doubt influence sales and prices. These concerns influence buyers across all apartment price bands. The problems can also extend beyond the directly affected apartment. If buyers are unhappy then bad reports about the development could result, and thanks to word of mouth and now social media soon spread.

The ramifications from not undertaking a solid product review as part of the project planning can be complex and ongoing. From a project marketing point of view the question should always be: will any aspect of this product and design stop or delay a sales or restrict the target in a negative way, is this what the market is looking to buy?

While these are simple question they can be taken for granted, mistakes still happen and so it is worthwhile setting in place structures that will help avoid any potential problems.

The Project Marketing function should play a co-operative pre-delivery role, as a core role to help secure sales and to help achieve the maximum sales revenue. After all lets be realistic because the project revenue will in the end be the main measure of success or failure.

 


The financial model

The marketing effort needs to be involved from the start of any project. The marketing team can champion the consumer’s perspective. So that via constructive and well-researched feedback the final product is the most suitable it can be within the project’s financial envelope.

Clearly there will always be a financial framework, and this raises the issue of how product research is applied. Those involved in marketing do need to invest time and energy so that any research is used in the most pro-active and constructive way – to get the best value from the funds available. We need to contribute more than feedback, there needs to be buckets of clever thinking as well.

This should be an area supported by solid and on-going feedback between project groups. Feedback is always valuable it helps highlight things that are going according to plan, or that they may not! Despite the best planning buyer feedback should be used to help pinpoint any problems that can be addressed in the future.

The aim should never be to get the job done with little fuss and without any product delivery involvement happily in my experience this is not the typical view.

Sales Revenues

Planning has a vital impact on sales revenue and it is important for the whole project team to stand shoulder to shoulder in achieving revenue targets.

From the start of any development revenue expectations should be clearly understood by the entire project team, and targets defined. Varied issues can impact ongoing sales and so there should also be regular revenue up-dates. Sales results and target (time in the market) will be a central.

Given the funding costs associated with every development, the time taken to sell all stock is very important.

Time in the market will be a big influence because un-sold inventory has a material impact on every project. It’s a factor no matter if we are selling off the plan or selling completed product. Time in the market is an area that marketing plans must always keep central and continue to review.

If sales rates are not being achieved the circumstances need to be closely examined and this is where we might find our teams looking back to the product review for re-assurance or with some doubts.

If marketing off the plan the required sales rate should drive all of the marketing dynamics. If a critical number of these sales are required to secure the project’s finance then the task is all the more important. If the pre-sales are not achieved the project will be delayed or may not go ahead.

What sells and when?

In addition to planning and then managing the sales timeline it will also be necessary for the team to influence the type of stock taken to market and sold. Product planning is again central here because experience predictably shows what apartments are more likely to sell first.

In a majority of big projects it is the smaller apartments that tend to sell first and the bigger (and more expensive) apartments that sell last and in smaller buildings it’s often the reverse.

Another key part of planning is how to manage the available stock to meet revenue targets. If a particular apartment design sells out and others fail to sell, then the on-sale mix may need to change. If this is not possible because for instance a projects starts to near completion, then other steps, such as price leverage may have to be used to move less popular stock.

If apartments are being built and completed in stages across various buildings then in some circumstances, it may be possible or necessary to review the product offer and again buyer feedback will be an influence.

When off the plan sales are slow, it may well delay the entire development and the marketing will need to be alert to this and again it may be necessary to review the product mix.

By contrast if off the plan sales run away this could well indicate that prices or other factors, such as the release strategy needs to be re-visited. Too many sales at prices below possible potential may impact the total end profit result. Across the varied circumstances the consequence of poor product review and planning are unmistakable.

Peter Chittenden is managing director for residential of Colliers International.

 

 


Peter Chittenden

Peter Chittenden

Peter Chittenden is managing director for residential of Colliers International.

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