Market Research

1. Market Research

2. A Case for Research • Research results in marketing decisions that: • save time; • reduce risk; and • save money.

3. A Case for Research Helps answer questions • What is the market’s direction? • What does an interest rate increase mean to my consumer? • What affect will a decrease in housing starts have on the market? • Has the affordability index turned and what does this mean to me?

4. A Case for Research Helps answer questions • Use research and facts to evaluate the market • Leave the guesswork to your competitors • Interest rates may be going up and that information is of no value if the agent can’t evaluate how it affects their target market

5. A Case for Research What benefits? Aren’t houses generally the same? Amenity What it means

6. Customer Data Gathering • Customer analysis provides tools that: • attract the target market; • determine their demographic make-up; • help list properties appropriate for the demographic group; • lead to demonstrating the appropriate benefits; and • increase the volume of sales.

7. 2 Red Marbles 48 Black Marbles 35 Red Marbles 15 Black Marbles Customer Data Gathering Imagine having two bags with 50 marbles in each. Your demographic research shows the following: Your promotional efforts should be designed to attract which group in each bag?

8. Benefits of Research • Identify opportunities • Identify customer needs and problems • Identify the best price • Identify channels of distribution • Identify company strengths and weaknesses • Identify the competitions strengths and weaknesses

9. Identify opportunities Opportunities go undiscovered without research • Distribute your listings to the most active agents in the area • Discover which media attracts your target market • Discover your competitor’s decreased activity in a tract

10. Identify opportunities Opportunities go undiscovered without research • Locate a geographic area not serviced by any competitors • Discover a demographic group currently overlooked: football enthusiasts, boaters, K-4 teachers, etc.

11. Best Price and Customer Needs • Discover the most attractive price for your target market • Identify the problems faced by the target market • Discover what solutions are available to the target market

12. Channels of Distribution • Use research to determine the best way to communicate with a segment of the market • Different segments of the market respond differently to the same stimuli, so different channels must be used

13. SWOT • Match your strengths to a competitors’ weaknesses • What threats may limit your opportunities for success? • Convert a competitors’ weakness into your opportunity • What is your personal SWOT? Strengths Weaknesses Opportunities Threats

14. Forms of Research • Read the daily newspaper • Read financial newspapers • Participate in office caravans • Sit on open houses • Work a farm area • Watch people • Conduct surveys

15. Steps Involved Define the problem Gather and evaluate data Analyze data Draw conclusions

16. Define the Problem Compare this to writing a term paper. Define the topic, find the data, evaluate it, and write your paper.

17. Define the Problem • The topics for research are unlimited: • Why are my sales down? • How do I find a buyer for my listing? • How will my competitors’ new housing tract affect my sales? • Why didn’t the listing contest work? • How do I locate sellers for my buyer?

18. Gathering and Evaluating Data Where you gather the data and the kind of data that’s collected depends upon the defined problem.

19. Gathering and Evaluating Data • Research methods • Mail surveys • E-mail surveys • Telephone surveys • Observational studies • Experiments • Samplings

20. Gathering and Evaluating Data • Primary data • Expensive • Time consuming • Secondary data • Data collected for another purpose • Government, banks

21. Gathering and Evaluating Data • Collected for a specific reason • Often time-consuming • Expensive • Collected by government or private companies • May become available as secondary data Primary Data Collection

22. Gathering and Evaluating Data • Farming a neighborhood • Open houses • Observe the interests of people at a home show Primary Data Collection (done by agents)

23. Gathering and Evaluating Data • Read the financial papers • Evaluate closed escrows and determine where buyers come from • Qualifying interview Primary Data Collection (done by agents)

24. Gathering and Evaluating Data • Research studies done by others but can be modified for agents use • Saves time for the agent • Sources (limitless) • Utility companies • Radio stations • Almanac Secondary Data Collection

25. The Federal Reserve • The Fed • Central Banking Authority • Regulates the growth of credit • Affects the direction of inflation, employment and interest rates domestically

26. Research and the Federal Reserve • Monitor the Fed’s actions • Study and understand the tools used to manipulate the money markets • Anticipate direction of interest rates • Anticipate the availability of credit

27. Research and the Federal Reserve Open Market Operations Reserve Requirements Discount Rate The Tools

28. Open Market Operations Purchase and sale of government securities • Treasury Bills, Bonds, and Notes When purchased, it cuts the money supply When sold, it increases the money supply

29. Reserve Requirement For every dollar entering the banking system, a percentage cannot be loaned Generally 8 to 14% of transaction deposits A higher reserve requirement means that less cash is available for loans

30. Expanding the money supply—8% Reserve • Bank 1 Bank 2 Bank 3 Bank 4 Others Total • Loaned • Deposit $1,000 $920 $846 $778 $8,240 • Less Reserves 80 74 68 62 659 • Loan 920 846 778 716 7,581 $11,500 • Bank 1 receives a deposit for $1,000. After 8% reserves are withheld, it loans out $920, which is deposited in Bank 2 (or the same bank, it doesn’t matter) and the process starts again. After all of the new loans are added together it’s discovered that the initial deposit created over $11,500 new money in the economy, and $12,500 if you add in the original deposit.

31. Expanding the money supply—14% Reserve • Bank 1 Bank 2 Bank 3 Bank 4 Others Total • Loaned • Deposit $1,000 $860 $740 $636 $3,360 • Less Reserves 140 120 104 89 470 • Loan 860 740 636 547 2,890 $6,143 • Bank 1 receives a deposit for $1,000. After 14% reserves are withheld, it loans out $860, which is deposited in Bank 2 (or the same bank, it doesn’t matter) and the process starts again. After all of the new loans are added together it’s discovered that the initial deposit created over $6,143 new money in the economy, and $7,143 if you add in the original deposit.

32. Expanding the money supply Loans created with an 8% Reserve $11,500 Loans created with a 14% Reserve $6,143 The higher the reserve requirement the smaller the expansion in the money supply.

33. Discount Rates • Rate charged to member banks when the borrow from the Fed • Thrifts are discouraged from borrowing from the Fed • The discount rate is used more as a signal to thrifts to expand or contract their lending activities