An entry strategy to the Danish market for global real estate agent “Re/max”

Andreas Ærtebjerg Malle

Student thesis: Master thesis

Abstract

This thesis seeks to develop an entry strategy for Re/max towards the Danish real estate agent market. The thesis concentrates on two different aspects: being the industry and the customer. The initial analysis of the industry illustrates the failure of a prior entry from Re/max ten years ago. The entry attempt failed due to wrong management decisions regarding the choice of master franchisor. The analysis then explained how different regulations have changes which improve the attractiveness of the industry. The current market situation was analyzed through the five competitive forces, entry modes and marketing warfare. Combined the analysis presented an unattractive industry with low switching cost and a high competitiveness. The company experience however increases the attractiveness and it was established that a master franchisor is the most suiting entry mode for Re/max. The master franchisor allows Re/max to exploit the brand value and prior experience with the model to increase successfulness. Combining the master franchisor with the multi unit franchising strategy, decrease opportunistic behavior, and generally increase the successfulness of the individual office. The vision for Re/max is to open 100 offices within the Danish market, and the sheer quantity of offices positions Re/max as one of the market leaders. The analysis therefore focused on how the industry would be affected by the entry of Re/max, and also how incumbents can defend their market position. It was illustrated that the four current market leaders will defend their market position at all cost since they do not possess additional markets to redraw to. Their best chance is to establish negative publicity, exploit their position and awareness and then also use possible entry barriers for Re/max. General it was stated there is no available market share, and Re/max is therefore forced into a direct confrontation with market leaders. Given the advantage for market leaders the analysis changed to a focus on the customer in order to establish a competitive advantage. The customer analysis was based upon the theoretical framework presented by Woodruff (1997), which focuses on customer value as a source for competitive advantage. The results of the survey showed that Danish customers value two categories which are the economic factor on both prices and commission, and the second being the personal perception of the individual agent. It is therefore of the utmost importance that Re/max attracts agents with a high degree of local knowledge in order to price correctly and with experience in order to meet the customer demands. The results also showed how Danish customers have no knowledge of Re/max, and therefore one of the main hurdles of establishing the company is to create awareness. These commercials need to target the male segment since these are taking the final decision on which agent to choose. Both analysis where then combined into a three step entry strategy. In the pre entry stage the main objective is to locate the correct master franchisor. Prior entry attempt showed how important the correct master franchisor is, and it is of the utmost importance that Re/max and the master franchisor align visions of the company. Re/max also needs to start creating awareness in order to attract customers. The medio state where initial offices are opened Re/max needs to anticipate an intensive competition with the four market leaders. It is therefore required to launch an intensive commercial strategy to reach the same amount of awareness as competitors. It is also required to maintain a strict focus on the delivery of the value providing factors. In the ultimo entry stage Re/max needs to expand the organization within the industry. Competition will be against nation-wide chains and Re/max needs to be established as such. Commercial strategy needs to be remained in order to attract customers. The overall conclusion is that the Danish market is not attractive based upon the industry. Re/max therefore has to provide the customers with a higher degree of value on the most important attributes. It is possible however Re/max is not in a situation where success is eminent just by opening offices and employ random agents.

EducationsMSc in International Marketing and Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2011
Number of pages119