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Selecting the best market research.

One of the most important marketing developments in recent years was the discovery that consumers can be asked about what they want in a product, before the product is actually marketed. Unfortunately, too many managers substitute their own opinions of what customers want for actual market research.

Apartments, condominiums, and townhouses are generally designed to suit the tastes of developers, who relied on the "feel" of the project instead of the preferences of potential renters.

In the typical scenario, it is often the responsible of property managers and leasing agents to determine the primary market of renters after the fact. Without a good idea of the types of people who will find the complex attractive, a marketer will probably cast a very broad net, hoping to catch as many prospects as possible. When a prospect is caught, it will be pretty much by accident.

By contrast, when management begins by defining a target market, the entire leasing effort can be crafted to appeal specifically to that group.

Thus, an apartment building that is designed for the athletically inclined would emphasize its sports facilities, and might include illustrations showing residents in active settings. The company might even consider placing an ad in a sports-oriented media, such as after a cable workout show or in a fitness magazine.

While there are many techniques for conducting market research, two of the most useful for the real estate manager are the focus group and the research questionnaire.

Focus groups

A focus group consists of a number of people brought together in a group interview setting to focus on a specific product, organization, or service. Because the intent is to obtain personal viewpoints, the group is usually small; twelve people or fewer is optimal.

A moderator asks group participants questions about their personal preferences in housing. The members of the panel are carefully chosen so that the group's composition will have the same general demographic characteristics as the target market (age, economic status, occupations, and so forth). The participants are usually paid a small fee for attending, either in cash or a gift certificate. In addition, refreshments may be served as a means of making everyone comfortable.

The session should be held in comfortable surroundings away from the property, with seating arranged in a semicircle or horseshoe shape. The meeting may last as long as two hours, and the proceedings are often tape-recorded or videotaped. Panel members are encouraged to participate actively, but the moderator may have to intervene to ensure that no single member of the group dominates the discussion.

The moderator selected should have training in group dynamics and consumer behavior. In addition, he or she should have some knowledge of real estate and the overall purpose of the discussion. However, the moderator must be absolutely disinterested in the outcome of the discussion. Otherwise, the moderator might become an active member and influence the discussion by intruding into the proceedings, via tone of voice or body language.

In general, the moderator for a focus group should not be a property manager or anyone who is associated with the marketing or management of that particular apartment community.

The moderator of a focus group is often a professional market researcher whose responsibilities may include finding participants and developing the program. This person is usually compensated with a consulting fee. Consulting fees and participant compensation vary widely and depend on the nature of the "product" being analyzed and the qualifications of the participants.

Participants in a focus group are told very little about the subject matter they will be discussing. The selection of the panel members for an apartment marketing focus group is dependent on two things: They must have demographic characteristics similar to those of the target market, and they must have moved to an apartment building in the neighborhood of the subject property recently or have the intention to do so within a fairly short period of time.

These qualifications are designed to create a group that is as similar as possible to the market of prospective residents. The people recruited will be told that they will be involved in a panel discussion about their housing preferences; they will not know that the discussion will concern a particular apartment building.

There are any number of applications of focus groups in apartment marketing and management. We have used a focus group session to evaluate the advertising campaign for properties. Focus groups are also ideal for evaluating resident satisfaction with a property.


Questionnaires are a particularly productive means of finding information. Two specific applications in apartment marketing are to learn what influenced renters' choices of residence and to find out why prospects did not become residents. Questionnaires are also useful in measuring resident satisfaction and in finding out why residents leave.

At our properties, we send new residents a questionnaire shortly after they move in. It combines questions about their satisfaction with their new apartments and questions about what factors influenced their choice of residence.

The combination design is effective because it allows residents to suggest ways in which management can improve their apartment living, and it allows the manager to discover and quantify residents' most important reasons for choosing their apartments. Factors that strongly influenced the residents' choices should be considered for incorporation into (and emphasis in) any future marketing efforts.

Sometimes, though, no matter what apartment marketers do, they are not as successful in filling their multifamily buildings as they think they should be. They wonder whether there is something fundamentally wrong with the apartments, the amenities packages, or the rent structure. Maybe the living rooms are too small, or perhaps the amenities are outdated; maybe the rents are not competitive.

The manager can choose to worry about these possibilities and attempt to address them by painting the living room walls blue or tinkering with the rent schedule. However, he or she is more likely to find out if something is actually wrong by going out into the marketplace and asking.

We use a questionnaire for telephone follow-up of nonrenters. This example was drafted primarily to explore renting or buying motivators for prospects. Note that it includes detailed questions about the importance of concessions in the renting decision, factors that led the renter to choose his or her current unit, the price sensitivity, and the responsibility for paying utility charges.

A follow-up questionnaire to nonrenters enables the manager to determine buy factors throughout a particular market. An apartment manager may think he or she knows what those factors are, but there is always a possibility that the results will be something of a surprise. Even if the research only validates what had already been assumed, the results can be used to rank the property's features based on respondents' preferences.

This process is also vital to targeting advertising and on-site marketing because it gives the marketer a better idea of what actual prospects are likely to consider important.

Developing a specific questionnaire may be a one-time activity for a marketing consultant or the responsibility of the manager of the property. Hiring a marketing consultant will incur a fee, of course, depending on the complexity of the project and the amount of work done. Unless a mass mailing is being made to the marketplace, postage costs for mailing each questionnaire, plus postpaid return, are nominal, and personnel costs should be negligible. Mailing costs may be avoided altogether by hand delivering questionnaires to residents on site and having them returned to the management office.

A telephone survey will take staff time (probably at least 15 minutes for each contact) plus the cost of the telephone calls. Local calls may accrue time charges; long-distance charges are based on time and distance.

Choosing a methodology

The difference between focus groups and questionnaires is primarily one of format, with each having its advantages and disadvantages.

The focus group format is more personal and more intense. It is conducted by a person whose position indicates to the participants that their landlord is interested in their reactions. Because of the length of time involved, a focus group can explore many subjects. Its limitation is the small number of participants; the results cannot be used for statistical analysis. On the other hand, a well-chosen panel of prospects can yield information in the form of personal opinions that no amount of generalized data can provide.

At the same time, it is important to keep in mind that focus groups are simply what they appear to be: several people who represent different (and, hopefully, relevant) points of view that exist in a particular population group.

The questionnaire format provides a vehicle for participation by every person who chooses to respond. If space is included on the questionnaire for additional comments, the respondents can explain their opinions or raise additional issues that are not covered by the questionnaire.

A questionnaire permits results to be quantified. People can be asked to respond to particular questions using a numerical scale to indicate differing levels of intensity. At least theoretically, questionnaires permit researchers to get a response from every person they want to sample and to gauge how strongly the respondent holds an opinion.

The number of responses of any one type can be added together and divided by the total number of respondents to arrive at an average gradient of opinion.

Putting it to use

You can use the techniques in this article to survey your markets. They are easy to use and relatively inexpensive. Your findings can sharpen your overall marketing efforts and improve the efficiency of your advertising campaigns. The end result will be satisfied residents and full apartments.

Ultimately, the decision to use a focus group or a questionnaire depends on the type of information to be obtained and whether varied points of view are more important than being able to quantify results.

The material in this article is based on the new book Contemporary Apartment Marketing by these authors, which is available from the Institute of Real Estate Management. For ordering information, call (312) 661-1953.

Kathleen M. McKenna-Harmon, CPM|R~, is president of McKenna Management Associates and the Towle McKenna Company in Edina, Minnesota. The firms have a combined portfolio of 2,500 apartment, condominium, and townhouse units. Ms. McKenna-Harmon is an IREM

|Incomplete Text in Original Publication~

Laurence C. Harmon, CPM|R~, is CEO of McKenna Management Associates and president of GreaterData, a residential marketing research firm in Edina, Minnesota. He holds a law degree from Stanford University.
COPYRIGHT 1992 National Association of Realtors
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:McKenna-Harmon, Kathleen M.; Harmon, Laurence C.
Publication:Journal of Property Management
Date:Nov 1, 1992
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