Bezanilla & Bezanilla (B&B) faces a competitive environment in the Fifth Region. Sales of dwellings experienced a 10.8% growth on average in the year 2004. Low interest rates and lower inflation supported the growth of the market. Municipal policies gave more flexibility to the construction conditions in the downtown eastern area of the city. B&B faces a dilemma: to enter or not into the real estate business by focusing on the middle and middle-lower socio economical status. Currently, their target market is the upper and upper-middle customers. B&B differentiation is the innovation design. Their pricing strategy is cost-plus margin and they are above. Location of buildings is close to the ocean or near tourist centers. When it comes to promotion at the point of sales, there was no prior planning of activities; however, the personnel at the sales room were well qualified. B&B enjoys positive word-of mouth due to prior success of construction projects. They pioneered post-sales service.
A next issue examined by the case is the introducing a new brand to enter the middle and middle-lower socio economic segment; how to improve current B&B marketing strategies; whether or not the perception of the ratio price-product should be maintained in the target market, notwithstanding the entry of new competitors from the capital of Chile, Santiago.
The case is meant to four, senior level regarding difficulty level. This case has been designed to be taught in 1.5 class hours and it is expected to require 4 to 5 hours of outside preparation by students.
Bezanilla & Bezanilla is a family company having two strategic business units. On the one hand, it has the Real Estate Company, and on the other it has the Construction Business. It is a company that has been active for many years in the local market of Vina del Mar as well as a leader in the development of buildings targeted at the upper and middle-upper socioeconomic segment.
At the beginning of 2005, executives were appraising the introduction of marketing tools in the management of different activities carried out by the company. An important dilemma was how to maintain growth given the great competition in the real estate market of Vina del Mar, as well as add to the boom that the real estate market was experiencing. To this end, the executives were analyzing the possibility of creating a new real estate brand to manage the projects aimed towards a lower socioeconomic level.
Bezanilla & Bezanilla (B&B) Real Estate Development Company specializes in the construction of apartment buildings targeting the upper and upper-middle socio-economic segments. By mid 2004 they were considering how to face the following year due to the great threat posed by the arrival of companies from Santiago to the Fifth Region market (Chile is divided into twelve Regions or States and Santiago is its capital). The main reasons for this immigration were: an interesting growth in the regional construction industry, incentives promoted by the Municipality for urban renewal of the downtown-eastern area of the city, and the great attraction of the bidding process for a tract of land of 17.8 hectares, located in the waterfront of Las Salinas area.
Sergio Silva, Chief Executive Officer, and Ignacio Smith, Business Manager of the company, were seriously considering the possibility of integrating marketing strategies to the company's management with a view to strengthen the brand with both internal clients (suppliers, workers, outsourcing firms, etc) and external clients (buyers).
The main concern of the company's management was the perception of the ratio price-product should be adequately maintained in the target market, notwithstanding the entry of new competitors from the capital. Another debatable issue was the possibility of developing another brand for a real estate development company aimed at building apartments, primarily in the downtown-eastern area of the city, though aiming at another socioeconomic segment of buyers. …