Recently, a big bang marketing survey was published in one of the leading business newspaper. The marketing survey was all about potential property buyers. One of the key findings of a marketing survey was that 2 out of 3 people are planning to invest in a property in next 12 months. The same day i received few calls and email queries. The potential buyers / investors quoted the reference from the same marketing survey. They asked me whether they should buy the property before the price starts increasing. While going through and answering the queries, i was thinking that marketing survey actually worked :).
What is the purpose of Marketing Survey?
I am not saying that all types of marketing survey are bad or manipulated. The point is that most of these surveys are designed to influence the buying decision of the potential buyers. This is especially true in the case of high ticket purchase say Car, Property etc. Sometimes a marketing survey is used for the aspirational or luxury purchase i.e. foreign travel package, higher education abroad etc.
In layman terms, there are 2 types of potential buyers i.e. Decided and Undecided. The 3rd type is who don’t intend to purchase / buy or have no such plans. The marketing efforts are different for these 2 categories i.e. decided and undecided. As i cover real estate in detail, therefore, let’s take an example from the same sector. Assuming in city A there are 5 builders and 1000 potential buyers. Out of 1000 potential buyers, 300 are decided and 700 are undecided. The undecided buyers may or may not buy & are borderline cases.
Here i would like to clarify that in the BULL market i.e. when the demand is HIGH, the no of undecided buyers are LESS. On the other hand when the market is in BEAR phase i.e. when the demand is LOW, the no of undecided buyers are MORE. Currently, the market is weak and is in a bear phase, therefore, no of undecided buyers are more than decided buyers.
You must be wondering why so many potential buyers are undecided. One of the key reasons is that they are waiting for property prices to fall / correct further. It is a vicious cycle. In other words, undecided potential buyers are in a WAIT and WATCH mode & lookout for discounted property. Only a handful of undecided buyers is waiting because of personal reasons. These personal reasons are like the maturity of an existing investment, promotion, marriage etc.
To continue with our example, the marketing survey is conducted to influence the decision of borderline cases i.e. undecided potential buyers. In this case, all 5 builders will join hands as it is matter or question of their survival. It is in their common interest that 700 undecided potential buyers should decide to buy a property. Though they will fight a separate marketing battle with each other for potential buyers who have decided to purchase a property.
Therefore, the purpose of marketing survey is to influence the buying decision of the undecided buyers. This marketing survey will make X% of 700 undecided potential buyers to change their mind. They will switch from undecided to the decided category. If i say that 2 out of 3 people are planning to buy a property then it means no of UNDECIDED BUYERS is NIL. The 2 people have already decided to buy a property and 3rd one does not have any plan or intent to purchase. Thus i don’t agree with the finding of the marketing survey. It is one of the marketing practice to create artificial demand. Under any circumstances, it is not feasible that no of undecided potential buyers are NIL.
Whether you can trust Marketing Survey or not?
1. The intent is always positive:
If you wake me up in the midnight and ask me whether i would like to buy a house or planning a foreign trip. Trust me the answer is always positive. To share real life example, one of my clients from Delhi who is a govt employee is nearing his retirement. He is staying on rent in the same house from last 20 years. His age is 55 years and he told me that since joining a Govt job he always intends to buy a property in Delhi but could not do so because of XYZ reasons.
Therefore, be it BULL or BEAR market the intent of 2 out of 3 people will always be to buy a property for self-use or investment. The important point is that if you are an undecided buyer then you should not take a decision based on the intent of people who participated in the survey :).
The result of marketing survey always varies from city to city. In real estate, the sentiment is more negative in Delhi & NCR compared to Mumbai or Hyderabad. Therefore, i can conduct the survey depending on the result i am expecting. A city wise marketing survey is more reliable compared to generic survey without any such details. Therefore, you should always refer sentiments in your city rather sentiments in other cities.
The response from females on luxury / high ticket purchase is more affirmative compared to males. Moreover, the male is more concerned about financial or funding aspect compared to females. I can conclude the same because 90% visitors in real estate or personal finance section of my blog are males. Therefore, if i am doing any marketing survey on personal finance or real estate then i should include 90% male respondents and 10% female respondents in sample size for accurate findings.
The marketing survey is more accurate if the decision makers participate in the marketing survey rather end user. Otherwise, it’s like asking my wife whether you are planning a trip abroad in next 3 months. The answer will always be YES. If the same question will be posed to me the answer will be NO for next 3 years :).
4. Ability to BUY or PAY:
As real estate is a big ticket purchase. Therefore, the response of the participant is more relevant if he has the ability to BUY or PAY. The only intent of purchase or buy is of NO USE. If i can’t buy a property because of insufficient or inadequate funds then my response is as good as a bluff. The marketing survey does not consider the ability to buy or pay as a factor for respondents. Therefore, in most of the cases, the results have NO Relevance.
To share an example, if someone asks me, Are you willing / intend to BUY a luxury car worth Rs 25L. The answer will be definitely YES. Hold on but my budget is only 10L and i am not willing to avail Car Loan. Therefore, my answer does not have any relevance or meaning in this case. The reason being, i don’t have adequate funds to fulfill my intent to buy a luxury car.
# There can be multiple factors that influence the results of a marketing survey. It is not feasible to cover all these factors in this post. At the macro level, you can trust the results of marketing survey conducted in a more scientific way rather frivolous surveys conducted to influence buyer’s decision.
Words of Wisdom:
Any purchase or buy decision should be backed by sound logic and reasoning. For example, if you are buying a property for investment purpose then it should be backed by growth drivers and future scope of appreciation. My decision should not be based on the intent of 2 out of 3 people. It can be a marketing gimmick to influence the decision of undecided buyers.
Please remember that property prices have corrected up to 60% in certain pockets. When the sentiments are negative there is NO bottom or floor. If you are planning to purchase a property then you should identify good pockets in the city where the prices are stable or increasing. As i keep highlighting anytime is a good time to buy a property for self-use. You can bargain a good deal. If you are planning to invest then wait for the sentiments to improve. The current inventory level is at all time high. Let the property prices stabilize & buyers enter the market before you invest.
Copyright © Nitin Bhatia. All Rights Reserved.