AvalonBay Communities Marketing Research Process
AvalonBay Communities is a property management business for apartments with a presence in 11 areas in the United States: California, Connecticut, District of Columbia, Maryland, Massachusetts, New Jersey, New York, Rhode Island, Texas, Virginia, and Washington. In addition to managing apartment properties, AvalonBay also develops, redevelops, and acquires existing apartment properties for continued expansion and increased presence in the market. With such a varied real estate presence they have an in-house marketing research team to plan and develop solutions for problems such as filling vacancies in their properties, what segment to target their property offerings to, or seeking the next opportunity for acquisition, development, or re-development. It is important for the in-house marketing research team to have broad knowledge about the market in order to tailor their marketing research plan appropriately and to use the correct data sources for collection.
The problem and research objectives
AvalonBay Communities currently operates with three separate brands: Avalon, Eaves by Avalon, and AVA (Avaloncommunities.com, 2019). Operating under three different brands helps AvalonBay to differentiate from their competitors and to have a broader appeal to their customer segments. Recent strategic planning discussions led the company to consider whether to expand into new markets such as 55+ retirement communities and student apartment housing, but instead they decided to focus on deepening their knowledge about their existing customer base for a less risk-based opportunity (Shaver, 2012). To further explore the existing segments, AvalonBay hired the McKinsey & Co. consulting firm to perform an analysis to evaluate the management decision to learn more about existing customers in their target market segments with regards to their apartment preferences (Shaver, 2012). AvalonBay Communities wanted to determine that it would be more profitable for them to expand and improve the customer experience for existing segments than it would be to invest in pursuing new and unfamiliar target segments. They wanted to answer questions such as, “How can we profit from our aging properties that no longer have the high-end appeal that they once had? How can we offer more variety in our properties to attract a broader segment of customers and without having to invest a lot of money in the process?” (Shaver, 2012). This would involve expanding beyond the core brand for high-end customers, Avalon, to broaden the markets for the more casual living brand, AVA, and the value-oriented brand for families, Eaves (Shaver, 2012).
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Research plan
In order to seek answers to the questions, AvalonBay Communities needs to determine the most cost-efficient plan for collecting the information needed. This is based in part on an estimate of how much profit AvalonBay would expect to make when the vacancies in the aging properties are filled, versus the estimated costs of gathering the research. Hiring the consulting firm, McKinsey & Co. was an upfront investment that returned results that gave them insights as to the next steps to take in the marketing research process. If their budget is large enough, they can continue to work with McKinsey & Co. since they already have familiarity with the background of the company, or they can choose to pursue other marketing research sources and techniques. Primary research works well in this situation since AvalonBay Communities wants to customize the customer experience with their properties, and a good way to gather this information is with observation of customer behavior, reaction, and preferences as they visit the sales office for the apartment properties. The sales office personnel can further assist with gathering marketing research by asking a predetermined list of survey questions and recording the answers as they show the properties. Emails can be collected as customers visit the sales offices and used to send follow up questionnaires to further explore customer response and impressions of the properties to assess their appeal to customers.
Social media presence is another way to pursue marketing research and analytics can show customer behaviors such as how often a site is visited, responses can be monitored and data mined for further analysis of customer feedback, and 360-degree virtual photo tours can be updated regularly to showcase available properties as well as new and coming soon properties. Hosting open house events that can be advertised on social media sites as well as locally in the towns where the properties are located, and sent out through email and mailed flyers and postcards can also serve as marketing research opportunities because customers will certainly provide feedback and some may come with real estate agents, who are another resource of feedback of their clients’ responses.
Data collection
Questionnaires and surveys should have questions that require more than yes or no responses, and a mix of open ended and short answers questions should be included as well. According to Kotler & Keller (2015) collection of information is the most costly and susceptible to errors so it is important to consider the variables that may influence the accuracy and consistency of data in the collection process. The way that questions are worded, the method that is used to collect the responses whether online or in-person, and the type of setting that is used to collect data, such as the collection of personalities that are present in a given focus group, can all impact the quality of information collection (Kotler & Keller, 2015).
For a property management and development/re-development business like AvalonBay Communities, they will need to have sensitivity to the income levels, ages, gender, and other demographic characteristics of their customers as they develop questionnaires and surveys, collect the information, and interpret the data, as the variances in the responses and customer preferences can be affected by demographic differences. They should consider asking questions such as, “What amenities are important you I choosing a community to live in? Would you be interested in committing to a 2-year lease with a locked-in rate? What social opportunities should your living environment provide? Would a maintenance response guarantee and 30-day move-in guarantee increase the likelihood that you would choose an AvalonBay communities apartment over another property offering?” (Avaloncommunities.com, 2019). They will want to ask questions to determine what is important their customers and what brings value to their customers.
Analysis of the information
Once the collected information has been evaluated for usefulness, AvalonBay can isolate the pertinent information to mine the data and observe any trends and patterns in customer behaviors and traits (Kotler & Keller, 2015). Kotler & Keller (2015) also pointed out that any noted trends in customer behavior patterns should be tested before coming to any conclusions. For example, if the gathered data shows that the younger and trendier segment prefers the streamlined look of the reception area at an apartment property in Rhode Island and in California, AvalonBay will want to test whether the same holds true for other properties in the same states and also in other states, and gather additional feedback information from the new sites, before coming to the conclusion that this would attract the same segment at all properties. If not, and the trend proves not to be true on a bigger scale, AvalonBay risks over-investing in upgrading multiple properties with little return on their investment if it fails to attract the targeted segment.
Presentation of the findings
Following the analysis of the information findings, the marketing research team will want to present what they have found in their conclusive research. AvalonBay’s marketing research findings determined that customers who reside in AVA apartments are a younger segment who are more technologically connected and value the experience of a front lobby that has a community table with an iPad or iPhone present for the staff member on duty as opposed to a front desk with a computer and pencil and pens (Shaver, 2012). The Eaves properties attract customers who prefer value over atmosphere, yet the marketing research findings proved that the front lobby in Eaves properties while not a desk either, had a table that was more similar to a kitchen table and had a homey, welcoming feeling (Shaver, 2012). Based on the marketing research findings, there seems to be a lucrative market and interest from the target segments for Eaves and AVA properties that would make it a worthwhile investment for AvalonBay to invest in the marketing research to explore opportunities for converting Avalon high-end properties that have lost some of their original high-end allure due to the inevitable aging of the assets to Eaves and AVA properties to expand those market segments.
Decision-making
AvalonBay Communities can make the decision to proceed with expanding the marketing of their Avalon properties that have fallen from their original status of high-end appeal due to the aging of the properties based on the marketing research findings that they can accommodate the needs of the AVA and Eaves customer segments with less investment than it would take to invest in re-developing the high-end Avalon properties. Proceeding with the marketing research, although an investment in and of itself, will also cost less than the expected profit return of the newer customer segments it will attract to the expanded AVA and Eaves property offerings. Making the decision to move forward with the marketing research will assist AvalonBay Communities in maintaining their competitive market in the real estate apartment property market.
References:
- Avaloncommunities.com. (2019). Our strategy. Retrieved from https://www.avaloncommunities.com/about-us/strategy
- Businesswire.com (2015). Avalonbay communities ranked #1 among top apartment companies for online reputation. Retrieved from https://www.businesswire.com/news/home/20151221006135/en/AvalonBay-Communities-Ranked-1-Top-Apartment-Companies
- Kotler, P., & Keller, P.L. (2015). Marketing management. (15th ed.). New York: Pearson.
- Shaver, L. (2012). Inside Avalonbay’s three-brand strategy. Retrieved from: https://www.multifamilyexecutive.com/property-management/marketing/inside-avalonbays-three-brand-strategy_o/
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