Real Estate Branding: Effects and Functions Essay

An average apple computer costs almost twice as much as an average normal computer. Similarly, Gucci t-shirt costs ten times more than a T-shirt from unknown company. Also, coca-cola costs more than RC-coke. However, these branded products have more average sales than the cheaper competitors. Although the cost of production is almost equal the difference in sales is as a result of branding differentials.

Branding has become a very important part of marketing (Kauko, 2004). As a result, the rate of its adoption and application especially in the real estate sector has noticeably increased in the last few years. Branding brings a new aspect to the development and regeneration of areas, towns and luxury developments.

Branding also brings a uniquely perceived lifestyle to a project that goes beyond identity and a logo. When branding is incorporated into the real estate projects, it presents them as well- planned projects that offer consistently high value to the customers and generates emotional responses in the consumption of real estate products (Preshant, 2007).

Just like any other business, real estate sector offers products and services to its clientele. Although there may be some variations in the mode in which the players in this sector carry out their day-to-day business operation, the fundamental business principles, especially for marketing, are inevitably similar to those in other industries.

Real estate branding is an area that has been given little attention in the past (Kauko, 2004). Although real-estate firms have tried to improve this, the area of branding in the real estate industry has not yet been given the full attention that it deserves.

However, with the sector becoming increasingly competitive every day, as well as the onset of the current global economic crisis that gravely threatens the real estate industry throughout the world, firms see branding as an effective tool to beat the competition and shrug off the effect of the economic downturns (Peter, 1997).

Evidence of increased branding is found in the efforts to improve the objective quality of the products, the sector’s operational functionality, and the enhancing of the value stability of a given firm’s products and services in the spirited attempts to win the ever increasing war over market share. This paper therefore seeks to review the concept of branding in real estate and look into how an undeveloped land can be successfully developed into a high value and known brand.

Real estate branding

Brand is the image of an entity that is built by visual, emotional, rational and cultural tools that we associate with a company or a product. Branding seeks to increase the product’s estimated value to the customer and thus increases the brand franchise and brand equity (Preshant, 2007).

It is what people think, believe, say or champion about the company or what constitutes the ‘corporate reputation.’ In the real estate sector, a brand is the general perception or the known identity through which individuals associate a company or product. The brands include the company’s name, products and product lines and connect to an individual’s perception, emotions and cultural background (Kauko, 2004, david, 1992).

Consequently, real estate branding is an attempt by a real estate organization to establish a brand name and identity using the products that it offers, including commercial buildings, residential premises, markets shopping centers and vending outlets (Jean, 2007; Preshant, 2007). Real estate branding is an attempt by a firm to step out of the ordinary and differentiate from a huge set of competitors.

In order for a real estate to brand successively, it must offer better conditions, services, location, and quality products, in addition it must stay flexible and with the changing society and through a strong advertising plan (often involving a well known advertising experts, it must encourage awareness of the brand (Peter, 1997)).

Effects/functions of real estate branding

Real estate branding seeks to enhance the company’s identity by ensuring that the products and services that are offered therein give the maximum value to the customers while maintaining a high level of market appeal. In addition branding increases customers’ expectation (Fishwick, 2009).

As a result, the products and services value must be consistent with the created brand to avoid disappointing those expectations. With a highly competitive marketplace and little difference between rivals’ products, branding is a key and effective source of identity and makes the company to stand out differentiated from the others in the industry (Peter, 1997).

According to Dorit Katsir, deputy director-general of marketing in a well known real estate in Israel “most companies who build undifferentiated and unbranded projects face almost equal competition thus will likely to earn nothing more than the ordinary profits”, adding that the company that he worked for had adopted branding as a strategy to win over the competition irrespective of the risk and high costs involved.

According to Kauko (2000), brands are used to describe the names, logos, trademarks or packaging associated with an organization that create a means for identifying the company or products, and criteria for it to be differentiated from the rest in the market place. If successful, they can be points of uniqueness.

They also scuttle imitation attempts by other firms in the real estate sector (Preshant, 2007). According to the CEO of Habas group, Hertzel Habas brand creation is a costly and thus risky factor that is compounded by the fear of brand rejection. However, benefits of branding are clearly laid down although the customers will have to bear an extra cost of additional value relative to an equivalent unbranded product.

Furthermore, a brand that succeeds in meeting its objectives and that is able to effectively meet the customers’ expectations will automatically sell the future products and lower the costs since no major advertising and persuasion costs will be incurred

Real estate branding brand valuation and brand equity

An undeveloped lot of land may be a product that doesn’t present any service/value to the user while its current state since they are not brands. Although undeveloped land is a fundamental requirement for real estate success, it is obviously incomplete thus does not promise a potential occupier a clear value.

Kauko (2004) suggests that occupiers are the main consumers of real estate products and services. A buyer of an idle piece of land will have to begin a process of developing it so that it can attract consumers’ interest and ultimately occupancy. This can be achieved through construction of premises or establishing structures that will certainly create utility for potential users. To successfully and competitively achieve this goal, the developer must create a brand, process that requires the developer to have several factors in mind; and which will serve as his objectives.

First, he must consider the target market, the image that he intends to create, the performance of the brand that developments will create, the level of services, and the location. The last factor is the most fundamental consideration, since the success of the brand will depend on how well the developer chooses its location.

The long held maxim is that the key to the success in real estate lies in the ideality of its location. Nevertheless, it has been found that location is not a guarantee of success. A bad location is difficult to develop and is unlikely to receive interest from potential clientele (Peter, 1997) and is almost a sure prediction of project failure. Nevertheless, a good location increases the probability of project success but does not offer 100% assurance that the project will succeed

Knowing the target market for a given real estate product is also of significant importance since it will give the real estate firm an idea of the level of products and services it must meet.

The lifestyles of individuals differ and therefore their real estate choices will similarly differ. As a result, prior understanding of the potential occupant’s targets is crucial. In addition, the developer must plan in advance the kind of image that the developments intend to create after completion.

The significance of this is that the image has the potential to create either a positive or negative initial identity of the product. Also the image forms the heart of the brand (Kauko, 2004). In addition, prior understanding target customers and desired image, ensure that the land is developed to meet the expectations of the target market as well as provide value that is strong enough to position the product at the peak of the market, successfully beating the market competition.

Also, the developments that are made must provide the occupiers with the expected level of services. The nature of the target market will certainly dictate the level of services that the developments to be made on the piece of land must offer to the potential customers.

Both the image and the level of services will be determined by the nature of features that constitute the land developments. As a result, the developer must ensure that the nature of developments are superior to the competitors’ and that they have the ability to deliver the highest value to the occupiers or users of the created products.

In addition, the features should be consistent with the expectation of the target market in order to succeed in emerging as a top brand (Kauko, 2004). According to Kauko, such feature should be exceptionally furnished and groomed for them to generate emotions and deep interests in potential customers this applies for exceptionally furnished residential apartments, highly groomed offices, top-class hotel premises, all of which must have continuous and reliable access to valuable services such as power, transport, entertainment, catering and internet services that top what the general market can offer.

To further compound the developments the land should be located in a rather strategic place that is highly attractive, secure and accessible to the potential occupiers and this lies in the developer’s skills to initially choose the land.

Brand valuation in real estate is not an old phenomenon just like branding. Indeed it is still an evolving discipline that is in its infant stages. However, its adoption in the accounting and financial sector has a longer history (Witawat, 2000). In real estate marketing, brand valuation goes hand in hand with brand equity (Lloyd & William, 1992).

According to David (1994), brand equity is the perceived value from the customer perspective concerning the company or the organizational products and services. Brand equity exists when customer’s attitude towards the organizations products and services is positive. Brand equity is measured in five main factors.

These include ability of the brand to solicit and maintain customer’s loyalty, the high level of customers awareness of the brand or company’s identity or trademark/logo, perception of the brand as being of superior quality or having the ability to deliver high value to the clientele, ease in the ability of the customers to associate the brand with the company or other product lines that the organization offers as well as effectively compare with the substitute and compliments that the market offer, and the ability of the brand to provide other assets related value to the organization (Lloyd & William,1992).

Brand image and brand equity

The piece of land therefore should be developed in such a way that brand equity is sufficiently generated thus creating real brand value as far as the piece of land is concerned (Peter,2009). The brand image that the project is able to create will dictate the brand equity that the project generates (Lloyd & William, 1992).

According to the latter, the factors that affect brand equity differ for real estates practitioners and customers. Nevertheless, the developers of a piece of land should look at the developments from customers’ perspective since they form the main Market targets.

From the clientele’s perspective, brand equity is influenced by, the age of the organization, the market position, the company customer service ranking, the organization’s marketing functionalities (such as PR, advertising, brand appeal and elegancy of the project), the quality or the perceived standards of the projects and the location of the project. As a result, all these factors have to be maintained a notch higher than the competition to guarantee success of the entire project.

A branded real estate is likely to stand out much more than unknown one (Fishwick, 2009). Projects that incorporate branding encompasses many more marketing efforts and programs than unmarked projects. In the former, there is enhanced brand awareness, favorable perception of the brand, and enhanced quality, meaning high brand value and equity (Witawat, 2000, Fishwick, 2009). However, real estate branding creates very high customers expectations, at times causing over expectation.

In such a case, branding would be counter-productive; this is because the misleading expectation will generate frustration and negative customer’s attitudes towards the company or the project. In addition, branding leads to additional overheads as the company directs a lot of fund towards marketing the company as a brand, instead of concentrating on marketing a particular product (Kauko, 2004).

Choosing land for a successful branded real estate project

The choice of land on which to establish a real estate project is fundamental if at all success of the project is to be achieved. According to NWS news (2008), it is important for an individual to seek the advice of real estate experts or of an individual who is experienced in the real estates sector or in purchasing of land for real estate purposes.

In addition, an individual must accurately judge land based on his criteria, if he is to make a suitable choice for a piece of land for the project. In order to get the best results from the choice, a number of important factors have to be put in consideration. First you should consider whether the nature and characteristics of the land that you intend to buy suits the lifestyles that you would like to set for the potential occupiers e.g. the availability of high class entertainment facilities, schools, medical services childcare centers, clubs among others if you intend to build residential houses on it etc.

In addition, one should be able to accurately figure out the development potential of the area. Services such as transport, water, electricity, communication networks coverage and the associated costs of connecting and maintaining such should also be considered.

Furthermore, one should evaluate the land he or she is about to buy to see whether it favors the purpose for which the land is being bought as well as the ease with which the purpose will be achieved e.g. whether the land has stumbling blocks that have to be removed to pave way for development.

Also, the accessibility of the site to favor transportation of construction materials and construction equipment is paramount. Proper analyses should be made to establish the authenticity of land ownership and right to sell by the other party, well established boundaries and ensure that there are no restrictions that are pegged on the land whatsoever that may limit the desired development of the so bought land. Also, the size of the land should be evaluated to ensure that the land is sufficient to adequately serve the intended purpose (Guidelines to buying land and building a home source, NWS news March 17 2008).

Conclusion

In conclusion, marketing, and especially branding, is essential in real estate as it is in other business sectors. Even though real estate branding has not been a major factor in the market in past years, people of today have understood its major significance in the real estate field. As a result real estate branding has spread worldwide.

All indications are that competition in the real estate industry stiffening every other day. For a real estate project or to beat this competition and position itself favorably in the competitive market therefore, it is vital that the firm adopt a coordinated and effective marketing strategy, including unmatched branding of its real projects.

The whole branding process begins in the initial stages, and if appropriate steps have been taken in choosing the land, branding and marketing the project, the firm involved will create a successful and long lasting brand. Branding adds value to the real estate projects, attracts customers and ensures that the projects are exceptionally furnished to deliver maximum value and exceptional services to the consumers. In addition it is only branding that can transform an abandoned piece of land into a high value delivering real estate project.

For the company to enjoy a long term success the company must fulfill the marketing promises that it makes to the customers thus building a solid reputation and reliability that is extremely difficult to destroy (Preshant, 2007). Finally entrepreneurs and real estate practitioners have all the reasons to adopt real estate branding because even though it is costly and risky, it is a sure source of strategic and long term competitive edge over competitors.

Work cited

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