MARKETABILITY STUDIES AND IDEA REFINEMENT IN DEVELOPMENT

sumophilconsultant
Apr 5, 2020
3 min read

Updated: Apr 10, 2020

Market and marketability studies are important because in one respect they stimulate and manage demand. The studies often stimulate demand because the target market is asked to consider needs and wants that perhaps the target market has never considered before. In this process, you will be able to manage the demand by asking speciﬁc and direct questions of your targeted market. This effort in essence creates new demand by making end users aware of their new needs and wants. In creating this new demand, you are to a certain extent practicing some of the principles of the Blue Ocean Strategy. One common way to create new demand is to create dissatisfaction with old products that perhaps may be outdated in the face of new technology or new amenities. Consider this example: Most people use laundry detergent in their homes. It’s been shown that people are very brand loyal when it comes to laundry detergent. Let’s say that you have run out of your favorite laundry detergent. You have been using it for years and are very familiar with not only its name but also its package shape and color. You now go to the grocery store to purchase more laundry detergent; however, you cannot seem to ﬁnd your laundry detergent package. You look around and eventually see that your brand of laundry detergent is now in a new shape of package and the package is a different color. Emblazoned on the label are three almost omnipresent words: ‘‘New and Improved.’’ Did you know that you needed new and improved laundry detergent? Were you not happy with your laundry detergent the way it was? This is a simple but direct example of creating dissatisfaction with old products. It is an approach used by consumer product companies, and it is used by real estate developers as well.

Finally, marketability studies are important because as you work through the process, you will identify the level, timing, and composition of the product (your proposed project). The information that you obtain in this process will often help you decide whether you should pursue a project today or at some point in the future. It will also help you with some basic information, such as what property type you should build.

IDEA REFINEMENT AND THE APPLICATION OF THE MARKETABILITY STUDY

As you reﬁne your idea, you are studying it in speciﬁc physical detail, with the site and use identiﬁed (simply a marketability study). One of the easiest ways to accomplish this is to work with your prospective end users—investors and/or buyers—to develop a tentative program and schematic design for your proposed project. In short, you can often save yourself a lot of time by working with your constituencies, because they are the ones who will decide whether they will buy or lease your project, invest in your project, or give legal approval (entitlements) so that you can build your project. In short, you may have some phenomenal ideas for building a unique project. However, what really matters is what your constituencies think. What you think is irrelevant. It is your constituencies, and speciﬁcally your end users, who will buy or lease your project and should have their needs and wants satisﬁed. I often refer to this approach through a metaphor of gathering your jigsaw puzzle pieces. Your jigsaw puzzle pieces are the needs and wants of your constituencies. It’s up to you to put these jigsaw puzzle pieces together in such a way that you have a completed picture or project.

THE PROCESS OF IDEA REFINEMENT