Text Marketing Impact to Real Estate Market in China

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Introduction

The Chinese real estate market has been growing at a rapid rate due to several factors. The first factor that is attributed to this rapid growth is the population of the country. According to Barnes and Scornavacca (2004), China is home to over 1.3 billion people, most of whom prefer staying in urban settings. This is about one-third of the world’s total population. This demonstrates the significance of the real estate market in this country. Another factor that has contributed to the growth of the real estate in China is the growth of the country’s economy. China is currently the second-largest economy in the world, only after the United States. This economy is projected to surpass that of the United States shortly (Barnes & Scornavacca 2004, p. 132). The country is currently ranked as one of the world’s leading manufacturers. Most of these manufacturing plants are located in major cities or upcoming urban centers. They employ a huge number of people. Business is booming in this country, specifically in these major cities. The international community is now turning to China for trade, and this makes it necessary to expand the real estate market to support business operations. Other industries such as tourism are also drawing people to China, causing increased demand in the products offered by the industry. Real estate firms have become very keen on reaching out to the customers to advertise their products. One of the marketing strategies that have gained popularity in the recent past is text marketing. This research paper will focus on determining the relevance of text marketing to real estate firms in China.

Research aims and objectives

According to Greene (2007), a researcher should set clear aims and objectives that will help in conducting their study. Setting aims and objectives makes it easy for the researcher to understand what he is looking for in the field. It also helps a researcher to determine if the process was successful or not by the end of the study. This research aims to determine the relevance of text marketing to real estate firms in China. The following are the specific research objectives.

To determine if firms in China’s real estate market can rely on text marketing to reach out to their target audience.
To determine the benefits of using text marketing in the context of the Chinese real estate market.
To gain more understanding of the dynamics in the Chinese real estate market
To explore real estate market consumer’s behavior towards the use of text marketing
To investigate how text marketing affects the Chinese real estate market growth

The researcher will use both primary and secondary sources of data in order to achieve the above-stated objectives.

Justification and rationale for the research

When conducting research, it is always important to clearly state its rationale to justify the need to engage in the study. China’s real estate market is currently one of the most attractive in the world (Burns & Bush 2006, p. 114). This is not only because of the massive population in the country, but also the rising number of the middle-class population. According to Craig and Susan (2005), China is currently home to the largest number of the middle class in the world. This makes its real estate market very attractive because most of the people in the middle class are aspiring homeowners. They have the means and desire to own homes when given to them at the right prices. It means that firms in this industry can benefit a lot when they build the right houses for this market segment and use the right marketing strategy. Text message marketing is one of the new marketing strategies that are emerging in the modern society. Many firms are now using text messages to reach out to their target audience. However, Esfandiar (2007) warns that sometimes such a text message may be considered a nuisance when it is sent to people who do not expect them. Instead of passing the intended message to the audience, such texts may irritate the people they are sent to because the information was not solicited by the recipient. When marketers say that text message marketing can be an effective means of reaching out to the target audience, it will only be fair to investigate its relevance and how it can be used in the real estate market to achieve optimum results.

Research questions

This section describes the research questions that will be used to collect relevant data from the field. According to Wamia (2005), developing effective research questions is very critical when planning to conduct a research. These research questions act as a guide when collecting data. They help the researcher to identify specific data that is necessary to achieve research objectives and avoid those that are irrelevant. In many cases, researchers waste a lot of time collecting irrelevant messages that do not add value to the research topic. It is impossible to come up with a correct conclusion in research that lacks clearly defined research questions. The researcher developed the following research questions based on the research objectives defined in the section above.

To what extent do firms in China’s real estate market rely on text marketing to reach out to their target audience?
What are the benefits of using text marketing in the Chinese real estate market?
What are some of the fundamental characteristics of the Chinese real estate market?
How can the real estate market consumer behavior be influenced through the use of text marketing?

In order to respond to these questions, the researcher will review the relevant literature before collecting primary data from the respondents chosen to participate in this study.

Review of Literature

Scholars who specialize in marketing research have always focused on analyzing the American market because it was considered the most lucrative market in the world (Egan 2013, p. 54). The purchasing power of the consumers was very high compared to that of other nations around the world and the size of the market was also big. For this reason, most of the marketing books in use today are based on this market. However, China has emerged as another dominant market that can no longer be ignored by the international business community not only because of its size, but also the purchasing power of its people. In this section, the researcher will review relevant literature to get an insight into this issue.

Marketing Research

According to Vogt (2007), marketing research is very important to any firm that seeks to achieve success in the current competitive market. The emerging technologies keep changing some environmental factors, and this has a direct impact on consumer behavior. Many firms are currently forced to conduct regular market researches to keep abreast with the changing environmental forces. It is only through this that a firm can remain relevant in the market. Market research is very important at different stages. For a firm that is making an entry into a new market, marketing research is an important activity that can define the ability to achieve success. Such a firm will needs to investigate issues such as the size of the market segment targeted, their purchasing power and patterns, their tastes and preferences, and the best delivery methods that can be used to ensure that the product reaches them. For a firm that is planning to introduce a new product into an existing market, the process is almost the same as the one described in the section above. It does not mean that existing firms may not need to conduct comprehensive research to get insights into the trends in the market.

According to Esfandiar (2007), many firms are now finding it necessary to conduct market research in every quarter. This research is meant for several purposes. One of the main purposes of such researches is to determine the new market entrants that offer products similar to those of the existing firm. This knowledge helps to determine the emerging market competition and the best way to respond to them to retain or even expand the market share. Such marketing researches also help to determine the new marketing technologies and how they can be applied to achieve the best results when promoting a firm’s products and brand. Egan (2013) notes that marketing research also plays an important role in helping marketers to understand the best ways of reaching out to customers using either the existing or new tools. This is the focus of this study. According to Wernerfelt (2006), when conducting market research, it is important to specify what is needed from the process. Marketing research is a rather wide field, and failure to clearly define what is needed from the study may result in a situation where irrelevant data is collected from the field. That is why the researcher has been very specific in defining the aim of the study to help determine the literature that will be relevant.

Consumer Behaviour in Real Estate Market in China

As mentioned above, the real estate market in China has become very lucrative to the local and international firms. However, the competition has also increased tremendously over the recent past following the entry of new firms. The local and international players are competing to have a share of this market (Smith & Chaffey 2013, p. 65). Only those firms with a deep knowledge of the market needs and how to meet the needs can succeed in such a competitive market. Understanding consumer behavior is, therefore, a critical issue that many firms are forced to take into consideration when conducting their market researches. In this context of the real estate market, consumer behavior will be analyzed from two perspectives. This includes the consumer purchasing behavior and consumer motivation.

Consumer purchase behavior

According to Ozuem (2004), almost everyone in the Chinese market is a potential customer that may consider buying a house or renting one based on an individual’s needs and financial capacity. To understand this market, Guest (2013) suggests that it is necessary to classify it to know how to target each group due to their unique characteristics. The first group of potential customers is the newly married couples. They are always looking for new places to start their families after staying with their parents or guardians for a long time. This group may want houses to rent or buy depending on their financial capacity. When targeting this group, a firm should be aware of what they need and their capacity to pay for these products. When making a purchase, they may need a flexible payment program because they are just starting families and may not have the capacity to pay huge sums of money in cash.

The second group are the investors in the real estate market. These are people who may want to purchase housing units for renting purposes or to resell to others at a later date when the price shall have gone up. These investors have the potential to pay for these products in cash. In most of the cases, they are always organizational buyers with huge financial potentials. The third group are the individuals who are interested in renting extra units at a lower cost for the purpose of re-renting to get a little profit. They operate like real estate investors only that their financial capacity is low hence cannot afford to purchase the housing units. The last group that many real estate investors have been keen to capture, is the rich class (Duckett 2001, p. 32). These are people who want magnificent houses in various parts of the country, especially in large cities like Shanghai and Beijing. They are willing to pay what it takes to own houses that meet their standards. In most of the cases, they own businesses in various cities and would want to stay in their own houses every time they visit these cities.

The growing economy of China has facilitated the massive growth of real estate, especially for household use and commercial purposes (Yu & Ting 2012, p. 250). Many companies in China are renting houses for manufacturing plants, stores, or retail outlets. This has pushed up the demand for housing units that can be used for such purposes. The growth of the industrial sector has seen an increase in the number of people moving from rural to urban centers where there are job opportunities in the companies. When they come to the urban centers, they have to find places to stay. According to Ying and Liu (2004), residential houses are scarce in the major urban centers in China, making the industry to be very lucrative, especially among firms that can afford to build residential houses close to the cities.

According to Geltner (2007), one of the most important factors that define the consumer purchasing behavior in the Chinese market is the pricing strategy. Unlike in the United States where people are not afraid to spend because they are assured of the future, the Chinese are always very sensitive when it comes to their expenses. They are keen on saving their extra earnings to help them through managing the uncertain future (Kent 2007, p. 38). They often avoid expensive houses. The larger part of the market is always willing to compromise on the quality of the products they buy if they can get it at a lower price. When it comes to buying residential houses, price still plays a major part. Since they desire expensive houses that offer superior value in their markets, their purchasing power limits their purchasing capacity. As an investor in this industry, these factors should be put into considerations before developing a product for a given market segment.

Consumer motivations

A firm in the real estate must understand what motivates consumers to make their purchases (Merisavo, Vesanen, Arponen & Kajalo 2006, p. 120). In the real estate market, people are motivated by different factors when they make their purchasing decisions. Some buy houses because they have just married and need their privacy as they start their lives. Another group may purchase or rent a house because they need somewhere to run their businesses. Others purchase a house because they want to lease it to other clients at a fee. The real estate is largely influenced by the perception of friends and family members. Every house buyer would want a house that will earn the admiration of friends and family members who come to visit them. For this reason, they will seek the opinion of their peers to determine their views (Chaffey & Chadwick 2012, p. 78). Many house buyers are willing to pay an extra fee to get a house that their peers admire as long as the cost is within their reach.

Text Marketing in the Real Estate Market in China

Text marketing is a relatively new form of marketing that is gaining pace not only in China but also in other parts of the world. Almost every adult in China owns a phone that is always in use throughout the day (Fill 2013). They use it to make or receive calls and text messages. When a text message is sent to one’s phone, it is not easy for them to ignore it, even if it is irrelevant to them. That is why, as Egan (2013) explains, marketers considered it to have a huge potential when it comes to communicating with the consumers. In this marketing approach, a firm develops a specific message for a specific target group explaining issues such as availability of a given product, its price, and any other attribute that may be relevant. The strategy requires that the target group be carefully selected and their phone numbers identified as accurately as possible. This is to ensure that those who get such messages are the intended audience that would find the message useful. This does not only help in eliminating cases of junk messages on the side of the recipient but also reducing the overall cost of the process by eliminating individuals who may not find the information relevant (Guest 2013, p. 148).

According to Koekemoer and Bird (2004), text marketing has become a relevant strategy in the real estate market. Firms are finding it appropriate reaching out to their customers through short message services on mobile phones. The most challenging part of this strategy is identifying the right target audience that will be interested in the information. When used correctly, this strategy can help a firm to develop a close relationship with its customers, especially when the process becomes interactive. Customers get to ask any relevant questions about the products and the firm gets to provide the needed information (Newell, Chau, Wong, & Mckinnell 2009). However, Weida (2009) warns that this strategy must be used responsibly. Sending messages regularly to individuals who do not respond or show signs of interest should be avoided because such messages to them are a disturbance.

Methodology

After reviewing the existing literature, the next important step in any piece of research is to collect the primary data from the respondents. The respondents have the most recent information about a given research topic and can help confirm the findings from the literature. In this section, the researcher defines the method that was used in collecting primary data, its analysis, and how validity was maintained in the research.

Sampling techniques

The researcher was interested in conducting a face-to-face interview with employees of some of the leading firms in the real estate market in China. For this reason, a sample was selected based on the availability of the respondents and their willingness to participate in the study. A total of 50 respondents were sampled to participate. Simple random sampling was used to gather the relevant data from the field.

Data required

The data required from the respondents were specific answers to the questions about the use of text message marketing in the real estate market. To give relevant responses, the participants must have used this marketing approach in one way or the other, giving them the authority to respond to the questions without guessing anything. The data collected through this approach had to either validate or reject the findings from the literature.

Data collection

As mentioned in the research proposal, the study relied on the data collected from the two main sources. They were secondary and primary sources. The secondary sources of data have been discussed in the review of the literature section. The primary data was collected from the sampled respondents defined above. This was done with the help of a questionnaire. The researcher designed a questionnaire based on the research objectives and research questions developed in the research proposal. The questionnaire had four parts. The first part focused on the personal data to ensure that the participants were Chinese residents who know the Chinese real estate market. The second section focused on the academic credentials of the respondents. The researcher knows that the academic background of individuals may influence their knowledge about real estate and issues about text message marketing. The third part of the questionnaire was specifically meant for the employees of real-estate firms. They are the users of text message marketing in the Chinese market hence they can shed more light on the success rates of the strategy and how customers have been responding. The last part of the questionnaire was meant for the customers, especially those that have received and acted upon a message sent to them by the real estate agents. These respondents will help us to get a general view of the thoughts of the consumers on the use of text messaging to communicate with them. The decision to have both the users and the recipients of this new marketing approach was arrived at due to the desire to have an all-round data that looks at both sides of the issue. This will make it easy to moderate the responses and come up with information that is comprehensive and highly reliable.

Scope of data collection

It is appropriate to define the scope of data collection so that the users of this report can understand the context under which the primary data was collected. Primary data was collected from 50 participants in Beijing, China. Half of the respondents were employees of real estate firms while the other half had clients who have experienced how text message marketing is used. The scope of primary data collection was limited to this city. However, literature was collected from a wide variety of sources, both local and international. The scope of primary data was limited to this region because of the time available for this research and the financial resources that would have been necessary had it been expanded to other major towns in the country.

Quantitative research

The research will take a quantitative approach. The decision to use the quantitative data analysis was arrived at due to the nature of the study. The research needed to determine the number of people that approve of the use of text message marketing in the real estate market of China. The two groups chosen were the consumers and employees of firms in the industry. These two groups can give clear information about the issue under investigation. The researcher used closed-ended questions in order to collect quantitative data for analysis. It was necessary to get explanations from the respondents over issues related to this marketing strategy. These explanations could not be quantified. For that reason, open-ended questions were used at some stages. The open-ended questions enabled the respondents to explain their experiences when using text message marketing. Their responses are also analyzed in the chapter that follows.

Validity and reliability

According to Brewer and Hunter (2006), when conducting a research, it is important to understand that such a report may be relevant in various contexts. Business entities may use the knowledge to inform their strategic decisions on how to use this marketing strategy in their plans. Market researchers may use the information as the basis of their future studies. Other upcoming scholars may also use the information. For this reason, it is important to ensure that the validity and reliability of the study is thoroughly checked to ensure that the report meets the expectations of the future users of the document. The researcher reviewed a wide range of reliable literature to act as the foundation of the report. The researcher was also keen to ensure that business was eliminated in the collection and analysis of the primary data. The use of mathematical tools in analyzing the collected data also helped in enhancing the reliability of data.

Data Analysis

In this section, the researcher will analyze the primary data collected from the sampled participants who agreed to take part in this study. The researcher quantified the responses given by the participants to facilitate the use of mathematical tools in the analysis process. The following are some of the findings from the analysis. The following was the first research question that was analyzed in the study.

To what extent do firms in China’s real estate market rely on text marketing to reach out to their target audience?

How important is text message marketing to China's real estate market? — *How important is text message marketing to China’s real estate market?*

From the results shown in the figure above, it is evident that most of the respondents believe text message marketing is important to China’s real estate market. Over 80% of the respondents shared this view. Only one participant felt that this approach of marketing is not important in the Chinese real estate industry.

The question below was meant to identify the specific benefits of using text message marketing among the players in the real estate market.

What are the benefits of using text marketing in the Chinese real estate market?

The respondents identified a number of benefits that Chinese real estate firms can get when they use text message marketing strategies. Most of them mentioned that it is quick when it comes to delivering a message to the target audience. The interactive nature of this marketing strategy was also mentioned as a major benefit. Other benefits mentioned include reliability, certainty, and low cost. However, not many felt that this approach is cheap.

Discussion

The analysis of both primary and secondary data has revealed that text message marketing is very important to the Chinese real estate players. The researcher was able to gather additional facts from the following two questions.

What are some of the fundamental characteristics of the Chinese real estate market?

According to the respondents, some of the fundamental characteristics of the real estate market in China can be defined in terms of size, purchasing power, and buyer’s behavior. The Chinese real estate market is one of the biggest in the world. The purchasing power of the market is on the rise because of the expanding size of the middle class. However, consumers are still reluctant to spend more when buying houses. The following question focused on determining how text message marketing can be used to influence real estate market consumer behavior.

How can the real estate market consumer behavior be influenced through the use of text message marketing?

Most of the respondents stated that when the players in this industry use the opportunity presented to them by text message marketing to explain to the consumers that their housing units are affordable, then they can get more customers. Currently, many believe that the units are too expensive for the average Chinese. The study has revealed the importance of text message marketing strategies to the Chinese real estate market. It is a new technology that should not be ignored.

Limitations

When collecting and analyzing data, the researcher met some limitations, top of which, was the amount of time available for the study. The inability to extend data collection to other major cities was also another limitation that affected the reliability of data beyond the city of Beijing where the study was conducted.

Conclusion

This study has revealed that text message marketing can influence consumers’ behavior and their attitude towards real estate markets. In this country, there is still a perception that owning a home in major urban centers is a preserve for the rich. However, the study reveals that if firms in this industry maintain proper communication with the customers, this perception can be demystified. These consumers can start warming up to the idea of owning their own houses in major cities like Beijing with the support of various financial institutions such as commercial banks. This can help in boosting the sales and profitability of firms in the real estate industry.

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