Transcript FUNDAMENTAL ASPECTS OF MARKET RESEARCH Main objectives of chapter: * To discuss types and levels of market research. * To discuss the issues.

FUNDAMENTAL ASPECTS OF MARKET RESEARCH
Main objectives of chapter:
* To discuss types and levels of market research.
* To discuss the issues and scope of market
research.
* To discuss research consulting in general.
* To discuss the research process.
Expected learning results:
* know the types and levels of market research;
* can identify issues and scope of market research;
* understand property market research consulting;
* understand and apply the scientific method in a
market research.
Types of research
Level of research
Level of research – Inferential analysis
Sometimes called trend analysis.
Uses secondary time series data and
emphasises on the estimates of future changes
in values by investigating past market trends.
Identifies trends and patterns and infers
expected market behaviour.
Real estate analysts use statistics two draw
inferences about a general class of phenomena,
studying recent data to predict future events.
Attempts a projection of historical trends
focussing on macro data.
Take-home exercise
Study the rental trend of properties in your
state since 1990. Use any forecasting
methods to estimate the likely rental level in
2004.
Apply your finding above to office in your
locality. Comment on your findings.
Submission: next lecture
Level of research – Fundamental analysis
Goes beyond trend analysis.
Forecasting based on segmentation of broad demographic
and economic data to reflect the subject’s specific market.
Principle: real estate value is tied to the services the real
estate provides.
Uses micro data for a specific parcel of land and sub
market
Oriented toward future developments.
E.g. to estimate the future capture rate of retail property:
* identify the market/area of competition
* identify competing properties
* compare subject with competing properties
* estimate capture rate of competing properties
* estimate capture rate of subject property.
Issues and scope of market research
Direct Factors
S = f(expectation of demand; planned
supply; competitive environment, and;
availability and cost of land, labour and
capital)
D = f(population; income; employment;
relative prices; taxes; interest rate; down
payment requirements; and future
expectations)
Indirect Factors
STEP factors:
* Topography and soil conditions,
* engineering,
* production process,
* zoning, utilities,
* transportation linkages,
* environmental impact,
* public facilities & amenities,
* consumer behaviour,
* economic conditions,
* and government law and regulations.
Scope of market research
Data Synthesis and Recommendations
Research Consulting Process
Instructions to carry out a specific study
Consulting proposal
Contract signing
Systematic procedure for study
Communication and co-ordination of work
Four stages of research consulting:
* Developer’s goal and objectives;
* Analysis of the general market conditions;
* Market and/or feasibility study;
* Project decision.
Example
Steps in Research
STEPS IN THE SCIENTIFIC METHOD
Three basic steps in property market research:
 Ascertaining market conditions:
* Information: SS & DD, prices and rentals, sales &
and leasing transactions, investment, competition,
product innovation)
* Analyze markets and produce forecasts
 Converting ‘gut feelings’ into ‘intelligent information’
through a scientific approach
 Drawing conclusions & communicating the results
Defining the research problem and objectives
• A problem/decision needs information.
• Must know how to obtain the information.
• Avoid wrong information, incorrect interpretations,
or information that costs too much.
• Advise how to define the problem and suggest
ways to make better decisions.
• Identify the necessity of research (See Figure
2.4).
Defining Research Problem and Objectives (contd.)
• Do not too vague or too broad.
E.g. “Gather the data on the residential market",  hundreds
of things can be researched!
What is specific decision facing the company?
Best site for residential or commercial?
How much demand from each alternative use?
Should price be the sole factor?
If not, what are other factors?
• From the problem comes objectives.
• Govern the entire research process.
• Can be exploratory, descriptive, and causal.
• Put in writing to be certain about purpose and expected
results.
Deciding on Research Approach
Primary versus secondary research
Primary and secondary (already discussed).
Primary: original research, carried out for a new
and specific purpose.
Secondary: existing research, useful to those who
buy or read the published reports.
Ad hoc versus continuous research
Ad hoc: once-only basis and is complete in itself.
E.g. To evaluate the management quality of a
shopping complex to find out what the tenants and
shoppers say about facilities, security, rental level,
business
profitability,
management-tenant
relationship, etc.
Deciding on research approach (contd.)
• Continuous: conducted regularly, each succeeding
report shows the movement of trends over time,
about a particular variable. E.g. surveys on rental
level, selling price, cost of material, sales turnover,
and competitors' strategies can be conducted from
time to time.
• Quantitative versus qualitative
Quantitative: total, percentage, mean, std. deviation,
etc.
Qualitative: seeks information on reasons,
perceived images or motives rather than numerical
measurement of variables.
Deciding on the Types of Research
• Some of types of market research:
A.
B.
C.
D.
Desk research
Field research
Observational research
Survey research
Developing a Research Plan
A. Determining specific information
•
•
•
•
•
Decided based on research objectives.
E.g. to investigate how the prospective buyers will react to a
new housing product at a reduced price:
The demographic, economic, and lifestyle characteristics of
current owners of similar housing products.
The benchmark information of overpriced housing products.
Affordability profile as reflected by the affordable average
propensity to spend and the required average propensity to
spend.
The price bands and how they affect consumers' purchase
decisions.
Forecasts of sales of the product under study with the
reduction in price.
Developing a Research Plan (contd.)
B. Survey of information
Secondary or primary.
Starts by gathering secondary data, internally or
externally.
Help define the problem and research objectives.
Cheaper and quicker.
Problems: unavailability, irrelevance, inaccuracy,
non-currency, partiality of data.
Thus, go for primary data!
Developing a Research Plan (contd.)
Developing a Research Plan (contd.)
2. Research instruments
Questionnaire.
Questionnaire is difficult to design.
Elicit relevant information to answer research questions.
Needs to be developed, tested, and debugged for actual
survey.
A good research comes from a good questionnaire design.
Needs proper sampling techniques.
Checklist.
Contains elements/items of interest for which the subject
perceives, pays attention or acts upon.
Popular in observational research.
E.g. visitors inspecting a model house: What a visitor
inspects? Why? How he/she evaluates things? What he/she
finally does?
Developing a Research Plan (contd.)
3. Implementing data collection
Most expensive and subject to error.
Should monitor the fieldwork closely to:
* make sure that plan is correctly implemented.
* guard against various survey problems
(contacting respondents, respondent’s non
cooperation, biased or dishonest answers,
interviewer’s mistakes, etc.).
Data must be processed and analysed.
* checked for accuracy and completeness.
* coded for computer analysis.
* apply computer programs to prepare statistics and
advanced statistical and decision analyses.
Developing a Research Plan (contd.)
D. Presentation of results
Interpret the findings
Draw conclusions about the implications
Report them to management
Useful tips:
• Do not overwhelm managers with numbers and fancy
statistical techniques
• Present major findings that are relevant to the major decisions
research problem
• Interpretation should relate to problem situation
• Avoid bias
Check whether:
the research project was properly carried out, all the necessary
analyses were done, there area additional questions that could
be answered using the data collected.
Put up recommendations objectively.
SUMMARY OF THE CHAPTER
▪ Real estate market research: a systematic
design, collection, analysis, and reporting of data
and findings relevant to a specific market situation
facing a real estate company.
▪ Market research can be specific or general.
▪ Two levels of market analysis: inferential (trends
and future forecasts) and fundamental (specific
site analysis).
▪ Research consulting process: developer’s goal
and objectives; analysis of the general market
conditions; market and feasibility study; and
project decision.
SUMMARY OF THE CHAPTER (contd.)
Seven general steps in conducting any research:
defining the research problem and objectives;
deciding on research approach; deciding on the
types of research; developing research plan;
implementing research plan; presentation of
results; and disseminating information.
Research results must be presented to company’s
management and results be interpreted correctly.
Findings may be distributed internally for company
use or published for wider access.
REFERENCES
Abdul Hamid bin Hj. Mar Iman (2002). An Introduction to Property
Marketing, Skudai: Academic Publication Unit;
Barett, G.V. and Blair, J.P. (1982). How to Conduct and Analyse Real
Estate Market and Feasibility Studies. Van Nostrand Reinhold Company.
Fanning, S.F., Grissom, T.V., and Pearson, T.D. (1994). Market Analysis for
Valuation Appraisals. Chicago, Illinois: Appraisal Institute.
Greer, G.E. and Farell, M.D. (1988). Investment Analysis for Real Estate
Decisions, 2nd. ed.
Thank you!