Competition in real estate industry

If the three keys of selling real estate are location, location, location, then the three keys of selling consumer products are differentiation, differentiation, differentiation. -Robert Goizueta, former Chairman Coca-Cola Company.

Differentiation from the competitors is not providing low prices. It is a point but not a domination point. Differentiation is successful when a firm offers a product that based on differentiation it can set a price that in any manner turn back profit based on the costs of differentiation. Some products are not able to be differentiated, but some other products have great opportunities to be so. I have always thought: "how a computer and related products company, a multibillion dollars company can produce defective products? It is not possible. The essential of differentiation is not just offering additional features. Studding the consumers' needs or consumer possible behavior is the key point of a successful differentiation. To study that is needed to handle with the company part and consumers part. While the first approach needs to analyze the possibility to offer differentiated products in order to have incomes greater then the cost dedicated to differentiations made, the second needs to study what the consumer want, how does he behave and what drives him to buy a product. Only after we study these elements we are able to apply effective differentiation.

Remember that this in not a matter of uniqueness, differentiation is about convergence of the brand and costumer needs. After this we can analyze the group of our customers and what we can do in order to perform at the levels who no one else in the market can reach this level.

What differentiation is and what gives us advantage?

Let's start by exploding this notioins.

Variables

With a first view, opportunities for a product to differentiate depend on tangible features. It is partly true if we think as below: "If a product is simple the producer has not many ways to play in order to differentiate, but when the product is complicated there are plenty ways the let the producer space to work through the differentiation. In the first case the only place where the producer could play is just the market (physically), in other words you give almost exactly what the others offer. In other case, the complex products, on one hand it gives more spaces for differentiation and on the other hand requires a greater work toward meeting complex customer needs".

Exploring deeper in this part we can see that a product complexity is not constrained just only by the tangible characteristics. Intangible characteristics are as important as tangibles. Every element that is a premise, a base or a determining factor that add the product value on the consumer needs is important for differentiation. So we can extract two main variables about differentiation, tangible and intangible feature. The first is a physic element and the second is an element related with features like, how much does the product resist, what taste does it have, how reliable is it, how safety does it offer etc. Except upper variables the intangible variable is a matter of every feature offered before sale, after sale and even the way the employees are treated. The second variable is a broader then the first. It is even a matter of total quality management.

Differentiation Analyses(Customers)

To succeed with differentiation company should do two things: analyze the capability of itself to offer a differentiated product and also analyze the client part. This last relates with determining what characteristics would product have in order to create value to customers, and consequently make the customer expense for that product.

To analyze the demand starts with analyzing the factors that drives the customer to pay for that product. Research is a good start in understanding customers, but is not enough. Analyzing the data from the research is the key point of understanding customers. The questionnaires made for this purpose are simple and direct. This makes possible to have a gross opinion about the material studied. There is always the dilemma in questionnaires analyses related with: how from what? It means how mach to take from what we have taken in bases of information taken by customers. A analytical study about these data is made in order to rich how much that is possible the consumers mind.

Conjoint analyses

This is a technique that measures in quantitative bases the strength that consumers prefer a feature of product. First step is exploring the product characteristics. The second is the questionnaire for the customers that gives their opinion or choose which attribute of product is more important for them. The third step is creating prototype product and asking again consumers about the price that they can afford based on some variables like income. For example a car attributes may be: fuel consuming, shape, manual or automatic, color, number of doors and other options. The questionnaire consists of ranking from the sample consumers the importance of this options based on their preferences. After this some prototypes are designed in order to be valued by the consumers in this case in bases of price for the whole product or for additional options. In this point the researcher shapes a clear idea about what he is searching for.

Hedonic Price Analysis

This is the way how to calculate a price for every attribute of the product but not only, this also is a way how to calculate the attribute in bases of grade. For example the engine power is a attribute that makes consumers to pay more for more power. In this way it is applied a rate of type how-per-what_power.

Value Curve Analysis

Differentiation Analyses(Producer)

The data deducted are accompanied by the ability of the company to fulfill the consumer's differentiation expectations. This is an analysis in terms of technical abilities, or asking if we have the needed technology to do that. If no, how much does it cost to us? To buy or to lease? To do a cost analyses. To plan the sales, the marketing etc. All these elements are part of the company ability to differentiate. If the income is greater then cost then the company could continue to prepare things for the product realization.

Advantages