Prof. Ramya Neelamegham
on 15th January 2011
David Raju Kolakaluri1012018
Sudeep Kumar SK1012064
Vedula Ravi Phanindra1012071
5.Interview with dlf4
1. Key Challenge
As part of Part I of the project we did a situational analysis for Sobha covering the 3Cs (Company, Customer, Competition) and came up with a list of major challenges that Sobha faces. In this report, we kept our focus is in doing a STP (Segmentation, Targeting and Positioning) analysis for Sobha and come up with a list of recommendations that Sobha can consider to effectively handle those challenges.
Though the real estate sector in general experiences several common challenges like spiraling input costs, shortage of labor, global liquidity crunch etc. Sobha's marketing-specific challenges are the following in our view – 1. Get recognized as a major pan India player in the real estate segment 2. Competing with established all-India players like DLF, Unitech etc In this paper we discuss on how Sobha can leverage its unique differentiating factors like full backward integration, reputation on quality etc and effective marketing mix to address the above challenges.
The real-estate industry can be segmented broadly under the following heads –
b. Upper middle-class
d. Low income group
e. Office space
3. Location of individuals and company
j. Tier 1, 2 & 3 cities
k. SEZ (Special Economic Zones)
Further segmentation (sub-segmenting) can be done by combinations of above like housing for individuals at tier-1 Cities, office space at Special Economic Zones etc
Currently Sobha’s target segment is in tier – 1 and tier – 2 south-Indian cities like Bangalore, Cochin, Chennai, Coimbatore etc and it specializes in building residential and commercial projects (office spaces / retail)
A quick segmentation of people by salary in India across a wide variety of businesses is presented below
The segments in descending order of their salary range are Financial, Information technology, Engineering, Consumer and Auto. Generally, as a rule-of-thumb, the affordability for housing is calculated as five times the annual salary and hence we can arrive at the below chart for targeting people working under various segments
Industry Type| Senior Level| Middle Level| Junior Level| Financial| $425 K| $140 K| $ 47.5 K|
Information technology| $375 K| $120 K| $ 35 K|
Engineering| $ 270 K| $ 75 K| $ 23 K|
Consumer | $ 210 K| $ 72.5 K| $ 23 K|
Auto| $ 175 K| $ 65 K| $ 23 K|
The above computation shows that there is a market in India for houses starting as high as Rs. 2 Crores from people cutting across various professions. This is in addition to the real estate market needs from self employed people
Though there are a wider number of segments in place for any construction company to focus on, our recommendation for Sobha is to expand its presence across India in premium housing segment by establishing itself well in all major tier – 1 cities and fast growing tier – 2 cities across India rather than getting branded as a south-India player.
Need for pan-India presence
Urbanization is a pan-India phenomenon these years with India’s GDP growing steadily at the rate of 8 – 9% year on year across all Industries. If Sobha intends to grab a significant market share in this, it has...