Joydeep Bhattacharya: Branding works as a premium for some brands
However, quality and delivery on time help in building image, believes Joydeep Bhattacharya, head, consumer products and retail practice, Bain India
Q. What are the key differences in branding between the FMCG and real estate sectors?
There are some differences like buying an FMCG product is a consumption decision whereas housing is an investment decision. The other difference is that in the FMCG sector, the frequency of purchase is high whereas housing is a once-in-a-lifetime choice. In the FMCG sector in India or for that matter in most parts of the world, we see very high repertoire behaviour among consumers who tend to have a number of brands for consideration in a particular category. The decision about an FMCG brand is taken at the point of purchase. Housing is a far more deliberate decision which requires a whole lot of work.
Q. How important is branding for real estate developers?
Branding is important in the housing sector. In recent times, we have seen many efforts by developers to do deliberate branding. But, regardless of it, there is anyway a brand in the user's mind. It is the perception that the consumer carries in his mind about a developer. So, a branding image is already there and the developer only needs to figure out whether this image is good, bad or ugly, and then figure out how to change that. The way we see it, branding works as a premium for some brands in terms of sales velocity in the housing sector. The so-called better brand results in higher sales velocity, higher absorption and better pricing. This is true across markets of Bangalore, Mumbai and Delhi.
Q. We have seen developers partner with global brands such as Armani or Disney to differentiate their brand in a crowded market. Do you think such partnerships help in attracting buyers?
In the case of FMCG, sales are very closely tied to the actual product promise. Delivery of product is what really drives how a brand is perceived. It has far less to do with marketing or celebrity endorsement. It is purely driven by product service and past track record. Partnering with global brands is pretty much what we would call high-end niche marketing that happens across a bunch of categories, say even handbags. There will always be a few luxury brands that exist. I would, however, find it difficult to believe a company is truly a luxury brand if it has a partnership with Yoo at one end and affordable homes at the other end. The brand should be consistent. Real estate companies can take a leaf out of FMCG companies and use celebrities to endorse their brand but they can't use celebrities to create a brand. It works to the point of creating a buzz but cannot create branding. I feel that unless the product is good, celebrity endorsements are a huge waste of money.
Q. Do brands play a role in the decision-making of buyers?
In terms of the buying process that users follow, the first decision made by a person is where to purchase a house. We see limited or zero impact of brand on that. If you want to stay in Koramangala in Bangalore, you will stay there and won't prefer a great brand somewhere else. The way people make housing decisions differs. In Bangalore, people choose to stay close to work. In the north, people prefer to stay where they have grown up and don't mind commuting to work. In Mumbai, since affordability is decided by how farther you are from town, people do not mind staying far from their workplace. Location choice is driven by affordability and the willingness to commute. The brand comes into play once you have made a location choice.
Q. Would you say developers belonging to large corporate houses such as Godrej have an edge over pure play real estate companies?
I think it goes without saying that it helps if you have an established brand name which stands for values that are relevant. It helps brand awareness, which would guide buyer consideration to the extent that they get the project right in terms of location. It gives you a head start, but you will have to deliver and play by the rules that users in this category want you to. We must also understand that even standalone brands such as Sobha and Prestige have done well because of their past track record.
We live in a digital world where buyers go online and talk about their bad experience with a developer. This can really damage the developer's reputation. How important is online reputation management for a developer?
You are right; we live in a digital world where consumers seamlessly move between offline and online. They deliberately look at reviews or information on past projects. Word-of-mouth publicity really counts. This is where developers need to make the effort in improving their brand image. Past track record, delivery on time, quality and bridging the gap between promise and delivery are the key drivers to existing perceptions.
Q. Are you working with developers to improve their brand image?
We work with mid- and large-sized developers to change their market perception. In the last 3-4 years, we have seen an upsurge in work for developers. We are helping developers enter new markets. We identify the micro market and help developers figure out the target consumer segment. We take them through a more sophisticated view of standard segmentation targeting. With a couple of developers in western markets, we are trying to change perception by saying. ‘Now let’s put out the next project with approvals in place’. We also help them in ensuring that they deliver quality projects on time at optimal cost. Another developer we have been working with has decided that it will not launch a project without getting all the approvals. It has also decided that it will adhere to design because what causes a delay in delivery of projects are multiple changes in design. The developer has decided that this is how it wants to change its brand perception. It will take time.
