Property Management Instructor Materials PDF

6 Marketing Learning Objectives After completing this lesson, students should be able to… Explain general marketing principles Identify traditional and online advertising methods Distinguish between marketing rental property and ma...

6 Marketing Learning Objectives After completing this lesson, students should be able to… Explain general marketing principles Identify traditional and online advertising methods Distinguish between marketing rental property and marketing a property management busi- ness Explain the difference between traffic reports and prospect cards Define cost per prospect and conversion ratio Characterize the importance of public relations in responding to negative events and identify some of the advantages of a prompt response by property management Discuss the state and federal laws that regulate advertising for rental properties Suggested Lesson Plan 1. Give students Exercise 6.1 to review the previous chapter, “Financial Aspects of Property Management.” 2. Provide a brief overview of Chapter 6, “Marketing,” and review the learning objectives for the chapter. © 2021 Rockwell Publishing  Property Management Instructor Materials 3. Present lesson content: General Marketing Principles – Knowing the product – Knowing the customer – Branding EXERCISE 6.2 Building a brand EXERCISE 6.3 Distinguishing generations for marketing purposes Marketing Property for Lease – Targeting potential tenants – How much advertising? – Advertising methods – Incentives Marketing the Property Management Business – Management company’s website – Advertising – Networking/referrals – Direct solicitation Evaluating the Effectiveness of Marketing – Traffic reports – Prospect cards – Cost per prospect and conversion ratio – Following up with the owner EXERCISE 6.4 Prospect costs and conversion ratios Public Relations – Community involvement – Announcements – Responding to negative events Advertising Laws – State and federal antidiscrimination laws – State license laws – Blind ads – Advertising on internet – Phone and electronic marking restrictions 4. End lesson with Chapter 6 Quiz. 2  Chapter 6: Marketing Chapter 6 Outline: Marketing I. General Marketing Principles A. Marketing: the process by which a business promotes and sells a product or service to a customer B. Product: anything, such as a good or service, that can be marketed or sold to the pub- lic 1. The property manager marketing a rental property first needs to know the product being sold (for example, a one-bedroom unit or a 5,000-square-foot warehouse) 2. Then, in addition to the main facts about property, such as location, size, and price, the manager should note any basic features, such as parking, cable, and internet access; commonly expected features vary from market to market 3. Finally, the manager should note special features that make the property stand out from its competition, such as the view or proximity to amenities C. To market effectively, the manager needs to know the customers that are likely to be potential tenants 1. The best marketing efforts attract qualified prospects: those with a need and the financial means to acquire the product 2. Targeted marketing: an effective way to attract qualified prospects that involves dividing a large group of potential customers into smaller groups, and then focus- ing marketing efforts on one or two key segments a. The first step is to identify the target market, which is usually done using demographics and geographic location b. Demographics: characteristics of a human population or a segment of that population, such as average family size or median age c. Generational marketing: a way of segmenting a market, not just by age but also by social, economic, and psychological factors; generations include Tra- ditionalists, Baby Boomers, Generation X, Millennials, and Generation Z (the internet generation) D. Branding: the process of developing and creating a company’s or product’s image in the minds of the target audience 1. A brand can be a name, term, symbol, design, or idea that’s associated with a product or company; branding is more important for larger properties and their management companies 2. The benefits of branding are customer loyalty and distinctiveness EXERCISE 6.2 Building a brand EXERCISE 6.3 Distinguishing generations for marketing purposes 3  Property Management Instructor Materials II. Marketing Property for Lease A. When marketing properties for lease, “knowing the customer” means knowing the type of person or company who is likely to rent the property; that’s who must be reached with marketing B. How much advertising is necessary depends on the property and its turnover rate; branding efforts; and location (in some places a sign would be sufficient; in others, more advertising is needed) C. A manager needs to consider the reach and frequency of each advertising method 1. Reach: the size of the audience exposed to the advertising 2. Frequency: the number of times each ad will appear 3. Traditional advertising methods are those that were used before computers and the internet a. All properties should display a sign with the manager’s contact information, regardless of vacancies; the sign should reflect the property’s overall image and be easy to read b. Classified advertising involves simple, brief ads, usually in a newspaper or magazine, used to advertise a single available unit or the property as a whole; should be written to attract only qualified prospects c. Display advertising adds photos and other visual elements; because they’re expensive, display ads are typically used during lease-up or for high-end properties d. “For Rent” magazines are another medium for classified/display ads; publica- tions are free to consumers and are usually used to advertise an entire office or apartment building rather than individual units e. Direct mail refers to postal mail and email delivered to prospects; it’s only effective when sent to the right individuals 4. Internet advertising has distinct advantages including 24-hour-a-day availability, fewer space constraints on content, the ability to target specific segments of the market, and the ability to track the results of marketing efforts a. Property websites are an effective way to showcase a property, but can also turn potential tenants away if not carefully designed and regularly updated b. Rental listing services charge a fee to property managers to advertise units and buildings; tenants can search by location, cost, features, and amenities, which may lead to more qualified prospects c. Social media like Facebook, Twitter, and LinkedIn are a cost-effective meth- od of branding, allow the property manager to show his knowledge, and can turn into viral marketing: a type of marketing that occurs when customers market a product themselves, often by word of mouth 5. Other forms of advertising may be appropriate, depending on the type and size of the property, including bulletin boards, flyers/brochures, open houses, or model units; billboards, radio and television, or promotional presentations 4  Chapter 6: Marketing 6. Incentives (such as cash, discounts on rent, free parking, etc.) may be offered to current or prospective tenants; managers must comply with federal and state law III. Marketing the Property Management Business A. When the manager is marketing her own business, the manager’s product is her man- agement services 1. The manager should identify the features that make her property management services unique 2. When targeting potential customers, the property manager must consider the types of buildings she manages, and the types of clients she wants to work with B. The management company’s website allows the manager to show the kinds of prop- erties and clients he works with, and identify what services he offers 1. The site can showcase properties currently managed and also provide information and services for existing tenants, such as forms to submit repair requests and on- line rental payments 2. The site can illustrate the manager’s knowledge of the market and the industry by providing links to a blog and social networking sites C. Ways to advertise the management business include on-site signage, classified ads, online directories, and social media 1. Advertising should list the manager’s name, phone number, and website a. State law may require additional information 2. The type of advertising should be based on the target audience, type of property, and budget constraints; the manager should track her advertising results D. New business can also come from networking at local events and trade shows, and encouraging referrals from real estate professionals and satisfied clients and tenants E. Direct solicitation includes direct mail, email, and phone calls; managers can pur- chase mailing lists and phone lists, and can also research area rental properties and contact owners where appropriate 1. Property managers who use lists must comply with federal and state anti-spam and do not call laws IV. Evaluating the Effectiveness of Marketing A. It’s important to continually evaluate the cost-effectiveness of the overall marketing plan and individual marketing efforts B. Traffic report: a record of the number and type of prospects who call or visit, includ- ing how they heard about the property; usually given to the owner weekly or monthly C. Prospect cards: forms that are used in person or online to gather information about individual prospects, including name, address, the type of property desired, and how the prospect heard about the property D. Cost per prospect: evaluates the money spent on a particular advertising method based on the number of prospects generated by that method ($100 for an ad that gen- erates 10 prospects = $10 per prospect) 5  Property Management Instructor Materials E. Conversion ratio: measures how many prospects it takes to get a signed lease, ex- pressed as a percentage (if one out of ten prospects signs a lease, the conversion ratio is 1:10, or 10%) F. The manager should follow up with the owner by sending periodic traffic reports, preparing to provide more details on cost effectiveness and prospects generated, and suggesting changes in approach where appropriate EXERCISE 6.4 Prospect costs and conversion ratios V. Public Relations A. Public relations: the process of creating and maintaining a positive image in the com- munity B. Community involvement involves participation in local events, and is a form of advertising; branding can be targeted by careful selection of event types (such as sponsoring a little league team to appeal to young families) 1. Take care to choose events that aren’t controversial or negative C. The manager should issue press releases to inform the public about events and note- worthy developments with the property, such as the signing of a large new retail tenant 1. Use websites and social media to draw attention to press releases 2. Consider internal press releases to foster tenant involvement, satisfaction, and referrals D. It’s important to react effectively and promptly to negative events such as crime, ten- ant nuisances, construction, or other disruptions 1. A quick response minimizes disruptions to tenants, reduces the risk of potential liability for the owner, preserves the reputation of the manager and the property, and reduces the chance of similar problems in the future VI. Advertising Laws A. State and federal fair housing laws apply to property management marketing activi- ties 1. Under the federal Fair Housing Act, it’s illegal to use an ad that indicates a prefer- ence, restriction, or intent to discriminate against potential tenants on the basis of race, color, national origin, religion, gender, disability, or familial status a. Protected classes: groups of persons protected under the federal Fair Housing Act and other federal and state antidiscrimination laws 2. An ad can violate the law even if the manager does not intend to discriminate 3. Solicitations to current tenants for referrals must be crafted and distributed so that no particular race is excluded, and so that there’s no suggestion that current ten- ants can control the type or character of the person who moves in 4. It’s necessary to include the fair housing logo in all advertising 6  Chapter 6: Marketing B. When the property manager is a real estate licensee, advertising that is misleading un- der state and federal laws may also violate the state’s real estate license law and could be grounds for disciplinary action 1. Blind ads: ads that violate state licensing law by failing to disclose the real estate firm’s name as licensed; prohibited in many states 2. Most states also require an agent advertising her own rental property to disclose her licensed status in the ad 3. Most states require an agent who advertises on the internet to disclose the li- censee’s name and her associated firm’s name, address; the states where she’s licensed; and the firm’s name as registered, the city or state where the firm is lo- cated, and the states where the firm is licensed C. Federal and state laws restrict telephone and electronic marketing 1. Do not call law: it is illegal to cold call call individuals who have registered with the Do Not Call registry 2. CAN-SPAM Act: a federal law that restricts emails and texts Exercises EXERCISE 6.1 Review exercise To review Chapter 5, “Financial Aspects of Property Management,” have your students fill in the blanks below using the following terms: Passive Cash flow Capital Depreciation Gross 1. After many years as a landlord, Melinda sells her house for a profit. She realizes a ____________ gain on the sale. 2. A real estate investor owns an apartment building run by a professional manager. He makes money during his fifth year of operations. The IRS would probably clas- sify this as ____________ income. 3. A strip mall owner deducts a portion of the purchase price of the shopping center from his taxes each year. This kind of deduction is called a cost recovery or a ____________ deduction. 4. The ____________ income from a property is the amount available before paying operating expenses. 7  Property Management Instructor Materials 5. Barney puts a new roof on his warehouse; this is a ____________ expense. 6. ____________ is the amount of money left over each month after paying the ex- penses of a rental property. Answers: 1. CAPITAL. Money made on the sale of an asset held for more than one year is a capital gain, not ordinary income. 2. PASSIVE. The IRS treats income from rental real property as passive income. 3. DEPRECIATION. Depreciation deductions help an owner recover the cost of a real estate investment. 4. GROSS. Gross income is the total income from rent and other sources. 5. CAPITAL. The cost of major improvements, as opposed to ordinary maintenance expenses for example, are capital expenses. 6. CASH FLOW. Cash flow is how much money the investor has left over after paying expenses of the property. EXERCISE 6.2 Building a brand Discussion prompt. Ask your students to define branding. Suppose you manage a large shopping mall. What could you do to build a brand for the mall? Answers: Definition of branding: the process of developing and creating a company’s or product’s image in the minds of the target audience. A brand can be a name, term, symbol, design, or idea that people associate with a product or company. Students should be able to come up with numerous ideas for branding a mall. We’ll mention a few ideas here. Branding begins with the shopping center’s name. The graphic design of this name in print and electronic media, along with the look of the logo (if any), help reinforce the brand. The overall look of the mall itself helps brand the business. Is the design of the shopping center’s common elements hip, elegant, or children-friendly? The types of events a mall sponsors also help reinforce the brand. For example, a mall eager to target active urban singles might sponsor a running event. The charities the mall supports also contribute to a sense of the mall’s brand. With a mall aimed at family shopping, supporting youth soccer might make sense. A more polished, upscale mall might contribute to a fine arts museum or the ballet. 8  Chapter 6: Marketing EXERCISE 6.3 Marketers often aim their marketing at particular generations. The names below are sometimes used to identify particular generations. Match these names with the descriptions given below. Boomers Traditionalists Generation Z Millennials Generation X 1. Born before 1945. Viewpoints shaped by the Great Depression and both World Wars. Not very active online, although some use email and Facebook. They prefer traditional forms of marketing, including newspapers, television, and face-to-face sales. 2. Born in the years after the World War II, views shaped by Kennedy assassination, Vietnam, and civil rights movement. Both traditional and online advertising work well with them. 3. Born to the generation described in #2 above, before 1980. Early experiences included Watergate, the fall of the Berlin Wall, and various U.S. economic crises. Often the children of divorce, this generation has trust issues and isn’t likely to take advertising seriously. Individuals born in this time use the internet as a way to find information for themselves. 4. Born from 1980 to 2000. This generation grew up with the internet. New things hold special appeal for them. Many of this generation place heavy value on com- munication with family and friends, making social media a potentially effective way to reach them. 5. Born recently. This generation grew up with the dominance of high-speed internet and smartphones. The recession that began in 2008 is likely to be a strong influ- ence. What form of marketing might work best with them is yet unknown. Answers: 1. TRADITIONALISTS 2. BOOMERS 3. GENERATION X 4. MILLENNIALS 5. GENERATION Z 9  Property Management Instructor Materials EXERCISE 6.4 Question: Dominguez manages a mid-size office building and has a vacancy. He spends $540 for a small display ad in a local business journal. It runs two weeks. Representatives of four businesses come by and look at the space. One of them signs a lease. What is the cost per prospect? What is the conversion ratio? Answers: The cost per prospect is $135 ($540 ÷ 4 prospects = $135 each). The man- ager converts one of these prospects into a tenant. That’s a conversion ratio of 25% (1 tenant ÷ 4 prospects =.25 or 25%). 10  Chapter 6: Marketing Chapter 6 Quiz 1. Which of the following would be considered 5. The size of an audience exposed to advertising a special feature for a suburban apartment is an ad’s _____; the number of times the ad building, and should be a point of emphasis in will appear is its _____. advertising? a) frequency; reach a) $2,000 monthly rent for 1-bedroom unit b) penetration; frequency b) Cable TV c) reach; frequency c) Parking spots d) scope; frequency d) Spectacular view 6. Which advertising method is ineffective in 2. A manager of an apartment building that is near low-traffic areas but is low-cost and likely to a college campus decides to focus on appealing attract strong prospects? to potential tenants in their 20s. Knowing that a) Classified ads consumers this age get much of their informa- b) Display ads tion online, she decides to focus her marketing c) Internet ads strategy on online media, especially social d) Signage media, rather than spending money on print media. The manager is engaged in: 7. Ed manages a medical office building. He nar- a) branding rows the potential range of tenants to several b) generational marketing hundred doctors around the metropolitan area. c) target marketing With that narrow scope in mind, it might make d) Both B and C sense to advertise through: a) direct mail 3. Which of the “cultural generations” is least b) display ads in daily newspapers likely to seek out information through the c) “For Rent” magazines internet? d) radio a) Baby boomers b) Generation X 8. All of the following are advantages of market- c) Traditionalists ing rental properties online, except: d) Millennials a) prospects can access the information 24 hours a day 4. A name, term, symbol, design, or idea that b) targeting specific market segments more people associate with a product or company easily is its: c) tracking results of marketing efforts a) brand d) will only generate likely, qualified pros- b) demographic pects c) goodwill d) target market 9. When customers like a product so much that they start marketing it for you, through word of mouth or social media sharing, that is known as: a) branding b) generational marketing c) target marketing d) viral marketing 11  Property Management Instructor Materials 10. What would be the best reason to use a bulletin 15. The measure of how many prospects it takes to board as part of an advertising strategy? get a signed lease, expressed as a percentage, a) Broad reach is the: b) Inexpensive a) conversion ratio c) Prestige b) cost per prospect d) Targeting a very specific audience c) marketing operational ratio d) traffic report 11. Which of the following advertising methods is likely to have the widest audience but also be 16. The business of promoting a property through the most expensive, without any guarantee of announcements to the news media and through effectiveness? community events is known as: a) Classified ads a) branding b) Signage b) media marketing c) Television c) public relations d) Twitter and Facebook d) viral marketing 12. All of the following are reasons a management 17. In addition to getting local media to focus on company might have its own website, except: positive aspects of a property, public relations a) advertising management services to prop- also refers to: erty owners a) addressing and minimizing negative events b) advertising various properties to potential b) advertising to find new management clients tenants c) advertising to find new tenants c) answers to tenants’ frequently asked ques- d) informing tenants about new rules tions d) providing market analysis data to investors 18. Which of the following ads is least likely to be seen as a violation of the federal Fair Housing 13. All of the following are universally acceptable Act? methods of finding new tenants, except: a) Ad referring to building as “near local a) advertising online church” b) on-site signage b) Ad showing a white and an Asian model c) payment of referral fees to current tenants c) Ad suggesting that referrals can help “up- d) trade shows hold community standards” d) Flyers that weren’t sent out to non-white residents of a neighborhood 14. Which of the following is likely to create the biggest impediment to a plan to find new man- agement clients through cold calling? 19. A blind ad: a) Do Not Call registry a) does not give the name of the property b) Equal Credit Opportunity Act manager c) Fair Housing Act b) does not give the name of the real estate d) Truth in Lending Act company’s name as licensed c) does not give the property’s address d) does not include the rent 12  Chapter 6: Marketing 20. Emails and texts are restricted by the federal: a) CAN-SPAM Act b) Do Not Call registry c) Fair Credit Reporting Act d) Patriot Act 13  Property Management Instructor Materials Answer Key 1. d) A spectacular view is unusual for an 8. d) The internet is widely available and apartment building, and therefore unfiltered, so a manager is still likely would be a special feature that might to field calls from many mildly inter- differentiate the building from compa- ested or unqualified apartment hunters. rable properties. It would be a strong selling point that should be empha- 9. d) It’s a boon to a marketer when a prod- sized in marketing efforts. uct “goes viral;” in other words, it gets touted online or in person by happy 2. d) Generational marketing is a particu- consumers. larly focused form of target marketing, emphasizing a particular segment of a 10. d) A bulletin board would be effec- market based not only on age but also tive only when trying to reach a very social and cultural preferences. narrowly defined audience, like an advertisement for corporate housing on 3. c) The Traditionalists (persons born be- an employer’s bulletin board or a com- fore 1945) are the generation that tend plex for retirees advertised on a senior to be the least active online, and will center’s bulletin board. be more effectively reached through traditional forms of marketing. 11. c) The main advantage of television is that it reaches a very large audience, 4. a) A brand is a slogan, logo, or anything but the drawback is that it doesn’t else that consumers come to link with reach qualified, interested prospects a product or company. very effectively. 5. c) Reach is the size of an audience (in 12. d) While a manager might post about the other words, how many people it local market or neighborhood, this is reaches), while frequency refers to usually not at the same level of depth how often the ad will appear. as would be found in the market analy- sis portion of a management plan. 6. d) Signage is inexpensive and easy, and will attract calls from people who’ve 13. c) Online advertising, signage, and trade already seen the property and liked it. shows are all potential methods of On the other hand, if there’s little traf- reaching new prospects. However, a fic in the area of the property, it’s not majority of states prohibit paying re- likely to generate many responses. ferral fees to current tenants, and even those that do allow it usually limit the 7. a) Direct mail can be expensive, and isn’t dollar amount. worth doing unless you can specifical- ly target likely prospects. If a building 14. a) Property managers who engage in di- is likely to appeal only to certain rect solicitation must comply with do professionals, though, that’s a helpful not call and anti-spam laws. place to start. 14  Chapter 6: Marketing 15. a) The conversion ratio expresses how many prospects it takes to get one signed lease. It is expressed as a per- centage. For instance, if 100 prospects leads to 10 signed leases, that would be a 10% conversion ratio. 16. c) Creating and maintaining a property’s favorable reputation through outreach to the press is known as public rela- tions. 17. a) Public relations is as much about put- ting a positive but honest and helpful spin on negative events as it is about touting positive happenings. 18. b) An ad that features only white models may give the inference that non-white residents are not welcome, even if there is no explicitly discriminatory content in the ad. 19. b) A blind ad is an advertisement for real property that does not include the real estate company’s name as licensed. This is illegal in most states. 20. a) The Controlling the Assault of Non- Solicited Pornography and Marketing (CAN-SPAM) Act places certain re- strictions on emails and texts. 15  Property Management Instructor Materials PowerPoint Thumbnails Use the following thumbnails of our PowerPoint presentation to make your lecture notes. 16 Chapter 6: Marketing 17 Property Management Instructor Materials 18 Chapter 6: Marketing 19 Property Management Instructor Materials 20 Chapter 6: Marketing 21 Property Management Instructor Materials 22 Chapter 6: Marketing 23 Property Management Instructor Materials 24 Chapter 6: Marketing 25 Property Management Instructor Materials 26 Chapter 6: Marketing 27 Property Management Instructor Materials 28 Chapter 6: Marketing 29 Property Management Instructor Materials 30 Chapter 6: Marketing 31 Property Management Instructor Materials 32 Chapter 6: Marketing 33 Property Management Instructor Materials 34 Chapter 6: Marketing 35 Property Management Instructor Materials 36 Chapter 6: Marketing 37 Property Management Instructor Materials 38 Chapter 6: Marketing 39 Property Management Instructor Materials 40 Chapter 6: Marketing 41