MUMBAI: Cash discounts, freebies, lucky draws, sale fiestas, home buying days, foreign trips, et al; if anyone were to talk about all of these in the real estate context, even five years back, it would just elicit disbelieving responses. Today, all these selling strategies, which have been drawn from sectors like retail, FMCGs, etc., is a major part of any real estate company’s marketing and branding strategy. As the players in the organised sector of real estate grow in numbers and profit margins get tighter, the customer is increasingly becoming more and more important. Add to this the demand supply conundrum, steep prices in markets like Mumbai, a wait-and-watch approach being taken up by several buyers in the hope of a price correction or more competitively priced projects being launched, and you have a scenario where developers are going all out to woo their buyers.
“Purchasing a home already puts a burden on the home buyer. Any discount or offers in real estate results in considerable savings. This attracts homebuyers, mainly fence-sitters to book their home at the time of offers or discounts, when they can end up saving money while purchasing the property” says Shailesh Puranik, managing director, Puranik Builders Pvt. Ltd
So, how successful are these strategies? Vivek Mohanani, JMD, EKTA World, that is in the midst of its month-long 27th anniversary celebrations, explains how “Every consumer loves an additional discount, a freebie, a value-add thrown in and when a consumer is making one of their biggest decisions of purchasing an apartment, then these offers tend to sweeten an already sweet proposition. Since the trend is relatively new, it would be premature to say that these strategies are successful, though there has been a very positive response from customers and certain time-bound activities will propel sale volumes.”
The question then arises if these offers are a strong enough incentive to encourage a fencesitter, to turn buyer. The answer would surprise many. Such offers could not only result in considerable savings for someone looking to buy, thanks to cash discounts, waiving off of floor rise premiums, freebies like modular kitchens, white goods, etc.; within the noveau riche class of buyers these offers can add to the aspirational snob value. Shajai Jacob, head-marketing, JLL India, points out that “This dynamic is true not just in the case of the noveau riche class of buyers but can apply equally to customers coming from established wealth. In India, as in most other countries, a plush foreign car is a valid external manifestation of the level of ‘arrivedness’ that buyers of luxury homes wish to portray in the first place. Likewise, gold is a highly accepted and coveted asset of appreciation that appeals directly to the Indian senses. Foreign travel still maintains sufficient glamour to attract attention as a value added offering, packaged into a property deal.”
Interestingly, Jacob also adds how “Often, such offerings meet with a level of success that foreign market analysts are challenged to explain. This is because they are pertinent to a highly individualistic national psyche, and are usually played out at times of the year, when the country’s residential property buying sentiments are at their traditional peak.”
The consensus seems to be that conversely, the middle-class buyer is the most price-sensitive and thus, responds to offers that will ultimately result in considerable savings. Sachin Deodhar, president-sales and marketing, Rustomjee, explains that “Discounts, offers and strategies work for the price sensitive target segment which forms the major percentage of the affordable homes category. When customers see ‘value-for-money’ or they get the feeling that they are ‘getting-more-for less’, they go ahead and invest or make the purchase. Freebies, cash discounts, have definitely worked and one of the main reasons for their success, is the sheer value of savings. The ticket-size of savings, makes it an extremely attractive proposition for a homebuyer. For instance – in FMCGs, one can save up to Rs 5-10 on a shampoo bottle. Here, the same is in the quantum of Rs 10-20 lakhs or more at times.”
Mohanani seconds this point. “Customers have always been more receptive to cash discounts/rate benefits since this gives them instant gratification or a payment relief. So, this definitely has a better pull. Having said that though, the consumer mind-set is such that buying a home itself, is such an auspicious decision that any value additions offered at the time of purchase, enhances the customer delight” he opines. Apart from the short-term benefit of boosting sales, most real estate developers who are brand-conscious, are waking up to the long-term benefits of such strategies, in terms of creating brand recall and fostering goodwill among their customers.
Mohanani has the last word when he concludes that “Such initiatives can tilt a consumer in favor of a developer during a purchase and they will spread the good word but continuous customer goodwill can only be developed through great service, periodic updates, great customer rapport building and to top it all, a product that they think is worthy of being owned. This is what will make them your brand ambassadors.”