Dominique C. Pfrang

Dominique C. Pfrang

Real Estate Branding Effects–

A Neo-Behavioristic Analysis focusing on Sustainability Certificates

ERES Conference 2009

Doctoral Session 2.4 / Chair: Mats Wilhelmsson

Content

1. Problem Set

2. Research Questions and Objectives

3. Theoretical Framework & Research Methodology

4. Preliminary Results

5. Expected Contribution to Real Estate Research and Practice

6. Back-Up: Time Frame / fMRI-Study / Literature References

1. Problem Set

Intensification of CompetitionIntensification of Competition Increasing StandardisationIncreasing Standardisation

Property BrandingProperty Branding

Sustainability CertificatesSustainability Certificates

Deficient Brand Management

Deficient Brand Management

Deficient Use and Positioning of

Sustainability Certificates

Deficient Use and Positioning of

Sustainability Certificates

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2. Research Questions and Objectives

Investigation of the reasons underlying the effectiveness of property brands and sustainability certificates based on a neo-behavioristic approach

Deduction of key success factors for property brands and sustainability certificates

Development of a property branding model and deduction of practical recommendations for real estate practitioners (developers, owners, certification institutions)

1.1.

2.2.

3.3.

How do property brands / sustainability certificates affect the behavior (attitude, desire, willingness-to-pay) of real estate professionals?

Which are the underlying cognitive and affective processes leading to the

behavioral outcome?

Which are the particularities of real estate brands in comparison with consumer brands?

How do sustainability certificates support existing property brands?

What characterizes strong / successful property brands and sustainability

certificates?

How can real estate professionals build up strong property brands?

How can certification organisations improve the communication power and effectiveness of their certificates and accelerate their spread in the market?


Stimulus Response

Brand Knowledge as the core of all branding

effects:

Brand / Certificate Recognition

Brand / Certificate Image

Attitude towards branded property / certificate

Appreciation of branded property / certificate

Trust in performance

Willingness-to-pay

Organism

Brain Activity

Reactiveness

Investigation using…

Traditional Approaches:

- Recall / Recognition Test

- Association Network Test

- Attitude / Appreciation Test

Neo-Behavioristic Approaches:

- Brain Scan

- Response Time

Influ

en

ces

Influ

en

ces

Influ

en

ces

Influ

en

ces

1.1. 2.2. Key Success Factors 3.3. Property Branding Model

Neo-Behavioristic Approach

Effectiveness

Analysis of associations regarding uniqueness, accessability,

cognition/affect

Experts: 2 Real Estate Researchers / 2 Brand Managers / 2

Psychologists

Expert Round Table

Online Survey targeting real estate professionals from the office real

estate sector

Step 1: Recall and recognition test covering 50 international property

brands and all sustainability certificates

Step 2: Association network test for known property brands /

sustainability certificates

Target: 150 – 200 responses

fMRI-Study (brain scan)


Survey

Tra

dit

ion

al

Ap

pro

ac

he

s

Functional Magnetic Resonance Imaging (fMRI) study with 10-15 real

estate professionals

Cooperation: Chair for Experimental Psychology

(Prof. Dr. Greenlee), University of Regensburg

Measurement of the brain activity associated with the processing

of property brands and sustainability certificates

Test 1: n-back Task (memory focus)

Test 2: Rating Task (attractiveness/desirability focus)

Additional measurement of response time (reactiveness)

Ne

o-B

eh

av

ioris

tic A

pp

roa

ch

Combination through Statistical Methods (Regression Analysis etc.)


Activation of areas related to (visual) memory

Emotional valuation of memorized aspects (positive)

Emotionalization of cognitive processing

Processing Property Brands

Higher cognitive efforts (in certain areas of lateral and

parietal cortex)

[Strong real estate brands lead to a cognitive relief]

No / Negative emotional activation (Insula)

Confrontation with Unknown (Fictive) Property Brands

Simple recognition vs. Memorization of property brands Memorization of unknown vs. Known property brands

Pre-Test for the fMRI-Study with Real Estate Professional


High exposure of memory (verbal aspects); additional

effort in cognitive processing

Slightly positive emotional activation

Processing Sustainability Certificates

Tendency (preliminary!):

Effectiveness of strong property brands is based

on an emotionalization of the property

(even in the eyes of ‚rational‘ real estate

professionals)

Sustainability certificates in the real estate industry

do not yet evolve conventional brand effects

Sustainability certificates cannot compensate weak

property brands

But: Sustainability certificates possess potential to

become strong emotional components of

property brands

Memorization of certified vs. Uncertified properties

5. Expected Contribution to Real Estate Research and Practice

Further professionalization of property brand management in the real estate industry

Providers of sustainability certificates:

Improvement of the brand management for green building certificates

Enhancement of the communication power of sustainability certificates

Acceleration of the spread of green building certificates in the market and the overall success of sustainable buildings

Contribution to the overall economic success of certificate providers

Property developers and owners:

Improvement of property brand management (brand building; communication strategies etc.)

Strengthening of property brands‘ effectiveness (differenciation potential; behavioral impact on tenants and investors)

Support of an efficient incorporation of sustainability certificates in property brands

Contribution to the overall economic success of developers and owners in times of the economic crisis

Pra

ctic

eR

esea

rch

Closing the knowledge gap regarding the effectiveness and mode of action of property brands and

sustainability certificates

Development of a neo-behavioristic model covering the particularities of property brands

First test of the applicability of neuro-scientific methods in real estate research

Contact DetailsContact Details

Thank You

very much

for

Your Attention!

Email: [email protected]

Tel.: 0611/236809-5

Fax.: 0611/236809-0

IRE│BS Institut für Immobilienwirtschaft

Wilhelmstraße 12

65185 Wiesbaden

Markus Raabe (Dipl.-Psych. M.A.)

Email: [email protected]

Tel.: 0941/943-3869

Chair for Experimental Psychology

Prof. Dr. Mark Greenlee

University of Regensburg

Back-Up: Time Frame

Pre-Test for fMRI-StudyPre-Test for fMRI-Study

Development of Experimental Design

Development of Experimental Design

fMRI-StudyfMRI-Study

Literature ResearchLiterature Research

Analysis of the Results

&

Finalization

Analysis of the Results

&

Finalization

Fin

alized

Work

in P

rogre

ss

(70%

finaliz

ed)

Finalized

To Do

To Do

September 2008

April 2009

June 2009

July 2009

September 2009

January 2010

SurveySurvey

Back-Up: fMRI

Functional Magnet Resonance Imaging (fMRI)

Allows to differenciate brain regions according to the degree of their activity

Based on the BOLD effect

Necessary to build „contrasts“ between different states of brain activation in

order to determine the relative brain activity (subtraction principle)

Identification of underlying mental processes

AdvantagesAdvantages DrawbacksDrawbacks

Insight into the „Black Box“

Socially acceptable/wanted answers impossible

Non-invasive

Small study population

Ethical Issues

Discomfort through magnetic field

Costs

Complex data analysis

Back-Up: Stimulus Material (n-back task)

Hearst Tower

1.

2.

LAIM290

3.

4.

Hearst Tower

5.

6.

…

Back-Up: Building Contrasts

fMRI-Study: Stimuli & Contrast Analysis

Strong Brand / Certified

(e.g. DB Towers, FFM)

Weak Brand / Certified

(e.g. Regionshaus Hanover)

Strong Brand / Not Certified

(e.g.Westhafen Tower, FFM)

Weak Brand / Not Certified

(e.g.Leopoldstraße 7, München)









Branding Effect













Relative Strength:Branding/Certification

Consistency Control











Neo-Behaviorism / Neuro-Economics

Back-Up: Theoretical Framework

Interdisciplinary Approach

Real Estate Marketing (Property Branding)

Development of a comprehensive real estate brand model requires an in-depth understanding of

the characteristics of strong property brands

Brand Knowledge (brand recognition & brand image) in real estate professionals‘ minds is the core

of branding effectiveness

Current body of knowledge in consumer research suggests to combine traditional and neo-

behavioristic methods to investigate branding effects

Back-Up: Theoretical Framework

Interdisciplinary Approach / Real Estate Marketing / Neo-Behaviorism

Particularities of Real Estate as a ProductParticularities of Real Estate as a Product

Branding EffectsBranding Effects

Brand Knowledge Consumer Behaviour

Stimulus (Independent Variables)

Stimulus (Independent Variables)

Response (Dependent Variables)

Response (Dependent Variables)

Organism (Dependent Variables)

Organism (Dependent Variables)

Brand / Certificate Knowledge a) Brand / Certificate Image

Type of Associations (emotional/cognitive)

Strength of Associations

Representation of Associations (verbal/non-verbal)

Amount of Associations

Uniqueness of Associations

Direction of Associations (positive/negative)

Accessability of Associations

b) Brand / Certificate Awareness

Brand / Certificate Knowledge a) Brand / Certificate Image

Type of Associations (emotional/cognitive)

Strength of Associations

Representation of Associations (verbal/non-verbal)

Amount of Associations

Uniqueness of Associations

Direction of Associations (positive/negative)

Accessability of Associations

b) Brand / Certificate Awareness

Bio-Signals• Brain Activity

• Response Time

• [ Eye Activity ]

Bio-Signals• Brain Activity

• Response Time

• [ Eye Activity ]

Behaviour• Attitude towards Property

• Property Desirousness

• Willingness-to-Pay

Behaviour• Attitude towards Property

• Property Desirousness

• Willingness-to-Pay

Operationalization on the basis of Neo-Behavioristic ApproachOperationalization on the basis of Neo-Behavioristic Approach

1. Problem Set

Intensification

of

Competition

Intensification

of

Competition

Increasing

Standardisation

Increasing

Standardisation

Tightening of space and transaction markets

Differenciation of properties from competing offers is of utmost impor-tance for developers and owners to ensure economic success

Ongoing standardisation of office buildings (functionality, flexibility, equipment, etc.) conflicts the need for uniqueness

„Location“ is still a necessary but not a sufficient condition to reach

sustainable success

Property BrandingProperty Branding

Sustainability CertificatesSustainability Certificates

Some developers and owners try to develop property brands (The Gherkin; Kista Science Tower; Turning Torso; etc.) to break through the clutter

Increase in tenants‘ perceived utility loyalty and trust

Reduction of perceived risk in leasing and purchase situations

„Green Building Trend“ as new possibility to differenciate from competitors

Sustainability Certificates as visible cue for sustainability as a brand component

Deficient Brand

Management

Deficient Brand

Management

Deficient Use and

Positioning of Sustainability Certificates

Deficient Use and

Positioning of Sustainability Certificates

Developers and owners often fail to develop strong brands (deal-oriented marketing; „creative names“ as brand building)

Positioning, differenciation and economic success not at optimum

Insufficient communication of advantages (mostly technical)

Incertitude concerning the marketing effects of sustainability certificates

Deceleration of the spread of sustainability certificates in the market

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Back-Up: Literature References (Excerpt)

AGUIRRE, GEOFFREY K. (2006): Experimental Design and Data Analysis for fMRI, in: Faro, Scott H./Mohammed, Feroze B.: Functional MRI – Basic Principles and Clinical Applications, New York.

BREITER, HANS C./AHARON, ITZHAK/KAHNEMANN, DANIEL/DALE, ANDREAS/SHIZGAL, PETER (2001): Functional Imaging of neuronal Responses to Expectancy and Experience of Monetary Gains and Losses, in: Neuron, Volume 30, Cell Press, pp. 619-639.

CAMERER, COLIN F. (2007): Neuroeconomics: Using Neuroscience to make Economic Predictions, in: The Economic Journal, Volume 117, Number 519, pp. 26-42.

CAMERER, COLIN/LOEWENSTEIN, GEORGE/PRELEC, DRAZEN (2004): Neuroeconomics: Why Economics Needs Brains, in: Scandinavian Journal of Economics, Volume 106, Issue 3, pp. 555-579.

COSTAR GROUP – REAL ESTATE INFORMATION (2008): Study on Green Buildings, URL: www.costar.com.

DAVIS LANGDON & SEAH INTERNATIONAL (2007): Cost of Green Revisited – Reexamining the Feasibility and Cost Impact of Sustainable Design in the Light of Increased Market Adoption, URL: www.davislangdon.com.

FUERST, FRANZ/MCALLISTER, PATRICK (2008): Doest it Pay to Be Green? – Connecting Economic and Environmental Performance in Commercial Real Estate Markets, Paper presented at the 2008 IREBS Conference on Real Estate Economics and Finance.

KIM, YEONSHIN/CHOI, SEJUNG M. (2005): Antecedents of Green Purchase Behaviour: An Examination of Collectivism, Environmental Concern, and PCE, in: Advances in Consumer Research, Volume 32, pp. 592-599.

MAINIERI, TINA et al. (1997): Green Buying: The Influence of Environmental Concern on Consumer Behavior, in: Journal of Social Psychology, Volume 132, Issue 2, pp. 189-204.

XIAO, CHENYANG/DUNLAP, RILEY E. (2007): Validating a Comprehensive Model of Environmental Concern Cross-Nationally: A U.S. – Canadian Comparison, in: Social Science Quarterly, Volume 88, Issue 2, pp. 471-493.

Documents

Dominique C. Pfrang