We can hardly recognize this current group of people with rigid demand.

To be honest, real estate practitioners who have worked in the industry for a long time will develop fixed mindsets. Especially in the dimension of customer cognition, particularly the judgment of young people's home purchase demands, there have been huge misjudgments at the current stage.

We are used to segmenting homebuying groups according to their purchasing power and number of purchases: those who buy a house for the first time are defined as essential demand buyers, followed by first-time upgraders, second-time upgraders, property swappers and luxury home buyers. The misjudgment of young people first arises from this classification standard. For the new generation of young people buying houses, their overall cognitive system is affecting their home purchase decisions.

01

First of all, we have to admit that one of the most important reasons for the current sluggish essential demand market is the overall industry background. After the supply of houses exceeds demand, everyone's home purchase decisions become slower, especially for young people who have never bought a house, they suffer from heavier anxiety and hesitate for a longer time before making a decision.

However, we are not going to talk about this today. Moreover, if we stay trapped in this negative emotion for a long time, we will only feel desperate and find no solution for the whole industry. Apart from that, there is an essential change in the consumption cognition of young people.

One of the biggest status changes of modern young people is that their cognition and pattern are no longer determined by purchasing power. For people born in the 1970s and 1980s, most of their cognition of the world is driven by purchasing power. Where you have been, what you do, and what you buy determine your aesthetic standards and demands. That's where the view that "people with less money pursue cost-effectiveness, while wealthy people pursue high quality" comes from. Therefore, segmenting crowds around purchasing power and then launching differentiated products has indeed become the industry standard.

But for the generation born after 1990, the biggest change of this group of consumers is that their cognition and pattern are being reshaped by the Internet. Especially the mobile Internet, you can pick up your phone and search for any information you want at the fastest speed. Your cognition and pattern can be seamlessly expanded through the Internet. Customers can learn a lot about any product in advance without actually purchasing it.

Therefore, this also determines that: in an environment of supply shortage, the overall market is still driven by purchasing power; but once entering a cycle of abundant supply, individual customers will put forward the demand of "value exceeding price" for products. This is not a so-called trend, but an objective reality.

Just look at the new energy vehicle industry today. A car priced at 100,000 yuan can be equipped with a refrigerator, a large screen, a comfortable wide seat, as well as numerous intelligent systems, with a wide range of shapes and colors for you to choose from. This is completely unimaginable in the era of fuel vehicles. This is a typical result driven by two factors: industry transformation and the Internet changing user behaviors. There is no doubt that this result will also appear in the real estate industry, starting with the essential demand track targeting young people.

02

Regarding the construction of essential demand property categories, if some real estate enterprises still focus on this track at present, there is a major prerequisite: Essential demand properties also need to deliver upgraded experience. That is to say, we need to re-examine the current home purchase demands of young people with the logic of improved housing.

For products in this track, two factors cannot be changed: one is the floor area, and the other is the investment per square meter. Restricted by purchasing power, these two indicators must be controlled. However, this premise does not mean that the total investment should be reduced. On the contrary, it is necessary to make extra over-allocation investment in certain dimensions.

1. Complete Functions Even with a relatively small floor area, the property must be equipped with complete functions, and even have derived and expanded functions in certain areas. Recently I connected with an essential demand project: with a small household type area, the entire storage area is designed very completely, and even derived areas such as explicit storage and emotional storage are set up, all of which are built to meet the current demands of young people.

2. Overgraded Space Experience Young people buy houses with small areas, but they definitely do not want others to feel that the space is cramped. Therefore, making appropriate overgraded expansion in reasonable places is very likely to impress young people. Designs like the open wide living room in a one-bedroom unit, the master bedroom suite embedded with a corner balcony, and other overgraded space designs in local areas, will make people feel valued when buying the property.

3. Point-like Emotional Value What are the emotional sensitive points of young people? For the whole family, the kitchen is the key area; for individuals, the bathroom is the key area. Young people no longer regard the bathroom as a simple functional area for washing and grooming. It is an important space for them to zone out when they are alone, enjoy romance with their partners, refresh themselves in the morning, and release all stress at night. Therefore, the solution suggestion I put forward for the bathroom in one project is to add various light strip modes, and provide multiple choices of bathtub styles and colors, all of which aim to amplify the point-like emotional value.

4. Over-configured Public Areas Given the limited indoor space, the over-configuration of public areas becomes particularly important. However, compared with high-end top-tier projects that are equipped with many private dining halls and cigar bars, young people prefer places like libraries, gyms, cafes and flower houses, which can meet their small-probability daily demands and increase community stickiness.

5. Long Tail Effect The so-called long tail effect means that besides the highlights in the marketing stage, the community also needs to continuously output new highlights in the subsequent operation stage. This generation of young people has grown up in an environment full of "one more surprise" experience: even if a product is already extremely good, there will still be another highlight to be released. The long tail effect of real estate comes from no other source but operation. No matter the operation of residents around property services, the operation of space around supporting commercial facilities, or the so-called community operation, all these become the source for the continuous release of long tail effect.

03

Why do we need to put so much effort into this? Because contemporary young people have a different snowball effect. The Internet is fragmenting the crowd, and at the same time re-segmenting the crowd according to their interests. The simple interest-driven way of encouraging existing customers to refer new customers is no longer feasible, and the model of getting huge profits with one single trick no longer exists. The existence of various long tail effects makes customer connection more refined and tribe-based, so as to realize "accurate customer referral" among specific groups for the project.

Why do we do this? Because for the new generation of young people, there are more than enough reasons for them not to buy a house. First, the change of ideology; second, the institutional reform makes renting a house a much better experience; third, there is no sense of urgency to buy a house. Everyone says that you need to buy a house before getting married, but now the average marriage age is getting later and later, and if you wait, you may even get a better property later.

Therefore, the essential demand customer group is indeed facing such a dilemma now. I have been suggesting real estate enterprises to learn more from the practices of new energy vehicle enterprises. From the perspective of industry insiders, the new energy vehicle industry is the most similar to the current status of the real estate industry: apart from real estate, it is an industry with relatively high customer unit price and low purchase frequency; the industry is full of various brands, new and old brands are fighting fiercely with each other, and the competition is extremely intense; product strength is highly involuted, and brands strive for customer recognition by providing far better driving experience than fuel vehicles; the R&D cycle inside enterprises is two years, and all enterprises are currently developing products that will enter the market two years later.

At this time, as practitioners, when we look back at the competition mode of new energy vehicles, we can see it is a typical hit product strategy. A very typical example is Xiaomi Auto. As a latecomer brand in the new energy vehicle industry, it can stand out in such a fiercely competitive market, and achieve sales of more than 200,000 units with just one press conference. Apart from the proper overall strategy, this also fully demonstrates the current mindset of customers: they either don't buy, or rush to buy the product.

This is the hope and despair of the current industry. There is no retreat in the dimension of product creation, but over-allocation investment in products does not necessarily lead to good results. This determines that for current real estate enterprises, not only correct strategies are needed, but also more firm execution. The strategic goals have almost reached a consensus in mainstream real estate enterprises, but the implementation of strategies tests the execution ability of the middle management team and the top management's ability to infiltrate values to the whole enterprise.

The source of all this is to first eliminate the real estate enterprises' misjudgment of young people's home purchase concepts. This is the first step, and also the hardest step.

This article is from the WeChat Official Account "Zhen Jialu Jun", written by Zhen Jialu Jun, and published with authorization from 36Kr.