the use of innovative marketing in the real estate industry
Abstract
This paper seeks to explore the successful entrepreneurial marketing communications done by a small, residential real estate firm, Best Address LLC, in Washington, DC (USA). The goal of the study is to develop an understanding of best practices used by this firm that can translate into marketing tactics used by other small businesses. Qualitative research was conducted to investigate the tactics used by Best Address LLC along with an extensive academic literature search to provide support for the studys findings. Findings - The service quality portrayed by the firms marketing communication efforts were examined and the key tactics used by this firm were categorized into three areas that fall in line with previous research on successful entrepreneurial marketing strategy. This paper concludes by presenting a theoretical model that conceptualizes service quality as a function of the marketing communications efforts executed by a firm in hopes of guiding entrepreneurs activities towards positive consumer affect. This study highlights how Best Address LLC differentiates itself from its much larger competitors and provides key insights for successful entrepreneurial marketing strategy in the residential real estate business. Although there is a stream of academic literature regarding entrepreneurial marketing, there are few cases such as this one that present the marketing communications tactics successfully used by a small firm. Entrepreneurs hoping to venture into the real estate industry would benefit from the findings of this study.
Key Words: Innovative marketing; Real estate industry; Marketing
Introduction
Entrepreneurs often fail to plan strategically and differentiate themselves on service quality despite their best intentions as they become occupied with short-term, day-to-day tasks ([38] Quinton and Harridge-March, 2006). In addition, due to budget constraints, and lack of expertise, they may fail to take advantage of technology to support both operations and marketing ([35] Fillis et al. , 2004). This paper highlights the way Best Addressreg; Real Estate, LLC, a residential real estate start-up in the Washington, DC (USA) metropolitan area, has planned strategically and provided excellent service quality, differentiating itself from competitors through the use of new technology and a comprehensive approach to marketing for all its customers - buyers and sellers alike.
Like most successful, small firms that are focused on entrepreneurial marketing, Best Addressreg; Real Estate, LLC is 'constantly scanning the environment to discover or create new opportunities, assessing these opportunities and then exploits these opportunities successfully creating and renewing competitive advantage' ([20] Morrish et al. , 2010). Care is taken by the firm to insure success by attempting to leave nothing to chance. Although the entrepreneurial instinct is to rely solely on personal experience as the lead to understanding how the consumer thinks of and hears about a brand or service, there is still a proven need to 'institute more formalized information gathering' ([28] Stokes et al. , 2002). This firm also employs marketing research and tactical marketing communications efforts, focusing on the objectives of understanding its consumers, providing excellent service quality, and successfully differentiating itself from competitors. In a marketplace where only 50 percent of new American businesses are still in existence after five years ([33] United States Small Business Administration, 2010), Best Address reg;Real Estate, LLC has managed to not only remain in business, but has also been able to grow and become an increasingly profitable venture for its principals. The best marketing practices are highlighted in this examination in order to classify, understand, and potentially translate these successful tactics to other entrepreneurial ventures. This paper concludes by presenting a theoretical model that conceptualizes service quality as a function of the marketing communications efforts executed by a firm in hopes of guiding entrepreneurs activities towards positive consumer affect.
Marketplace differentiation
Previous research has shown that businesses operate under one of several orientations as a method of differentiation: a marketing orientation; an entrepreneurial orientation; a production- cost-focused orientation; a sales orientation; or a quality orientation ([32] Vitale et al. , 2004; [8] Craven et al. , 1987; [18] Morris and Paul, 1987; [29] Taguchi, 1987; [17] Miles et al. , 1995; [1] Becherer and Maurer, 1997). Superior performance by a successful firm mandates that both marketing-oriented (an orientation toward creating value for the customer and the firm by meeting customer needs) and entrepreneurial-oriented (an innovation focused - orientation) activities take place ([32] Vitale et al. , 2004). Focusing on the actual encounter where the consumer receives service from the firm, or the service encounter, is a marketing-oriented activity and is the simplest and most straightforward way a firm can build positive affect with its consumers.
Service encounters have been defined as the moment of interaction between a customer and a firm ([3] Bitner et al. , 2000; [4] Bitner et al. , 1994; [14] Keaveney, 1995; [26] Shostack, 1985; [34] Winsted, 1997). The subject of this analysis, Best Addressreg; Real Estate, LLC, is an independent, full-service real estate firm that prides its self on providing its clients with the 'highest level of customer service, a mastery of real estate practices, a commitment to confidentiality and integrity.' ([2] Best Address reg;Real Estate, LLC, Web site, 2010) Providing a superior service encounter is the primary aim of this Washington, DC firm. This goal guides the small company as it seeks to distinguish itself from its much larger competitors such as Long and Foster and Sothebys. Having chosen 'level of service' as its distinctive feature is an appropriate approach because research has shown that an effective way to satisfy customers during service encounters is to provide them with a pleasing experience that they were not expecting ([3] Bitner et al. , 2000). This is particularly important for start-up companies in service-oriented industries such as real estate because their brand is not yet well-known in the marketplace.
In volatile industries such as real estate, short-term decisions need to be made with foresight into the longer term implications ([16] Mador, 2000). Best Addressreg; Real Estate, LLC, makes many of its decisions based upon the 'short-term goal of pleasing its customers' and 'long-term goals of building loyalty' ([2] Best Addressreg; Real Estate, LLC, 2010). Real estate firms are largely operating in what can be seen as a 'commodity' business in that commissions are essentially fixed at 6 percent of sales price. While there is no 'official' setting of commissions, as that would be a violation of anti-trust law, rarely are there deviations from the standard 6 percent commission. This commission, paid by the seller to the sellers agent, is then split 50/50 between him/her and the buyers agent. Therefore, businesses have little opportunity to differentiate themselves on the price dimension, making the service dimension, including all aspects of marketing properties for sellers and providing the highest level of service in the search process for buyers, the main avenue of differentiation for a start-up real estate firm.
Previous research has shown that marketing is a key entrepreneurial competency that is critical to the development and survival of small firms ([7] Carson et al. , 1995, [36] Hills and LaForge, 1992). This key competency, entrepreneurial marketing, is defined in current academic literature as 'the proactive identification and exploration of opportunities for acquiring and retaining profitable customers through innovative approaches to risk management, resource leveraging and value creation' ([19] Morris et al. , 2002, p. 5). Focusing on strategically guided marketing is an effective way for small entrepreneurial ventures to differentiate themselves, and therefore to prosper, given the dual disadvantages of limited resources and a low level of brand recognition. In the case of this subject, being a small entrepreneur dictates the need to focus this marketing effort towards brand building and client acquisition.
Conceptually, the marketing effectiveness of a real estate firm is dependent upon its revenue generation efforts ([25] Richins et al. , 1987). Best Addressreg; Real Estate, LLC, uses what is called in real estate a balanced strategic orientation, meaning that the firm generates revenue from real estate equally by selling properties that are listed by other firms and by listing properties for other firms to sell on its behalf. The firm in this situation is tasked with building its brand and reputation, along with selling properties and servicing clients. According to this research, a balanced orientation requires a heavy focus on marketing efforts in order for it to be successful. The ongoing and differing marketing endeavors must coincide with the goal of pleasing the various audiences involved.
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