The liberalization of the Indian economy in the 1990s led to a chaotic housing boom in Mumbai. Thousands of real estate developers jostled for space in a sellers’ market, throwing up apartment blocks with little regard for quality, cost or the customer. The industry was characterized by a lack of professionalism, little transparency and frequent cost escalations.
It was against this backdrop that Rustomjee Group entered the market. Percy Chowdhry, one of the company’s directors, says: “The industry was not very organized at this time. It didn’t attract the right talent, so it could not deliver the right communications and promises. When we came in, we understood that.”
The early years
Rustomjee’s first urban development sold out in three months. This was partly down to the fizzing market and the good family reputation of Rustomjee’s founder, Boman Irani, but other factors were also at work. Rustomjee was among the first to conduct market research among brokers, through which most people bought property. It considered the design and configuration of the apartments carefully. Even at this point, it was trying to differentiate itself by focusing on the needs of customers that weren’t being met by competitors.
“I think being alive to customers is what worked for us,” Chowdhry says. “It’s not about selling, it’s understanding what the customer wants.”
Customer research went on to be the foundation of the design of Rustomjee’s next developments in Malad and Andhari. The formula appeared to be working: half of the apartments in the Andhari project sold out in three days. The company started to explore options elsewhere in and around Mumbai.
By the mid-2000s the market was maturing. Strong economic growth meant that customers could afford to be more discerning about their homes. Developers responded by becoming more professional, although cost overruns and lack of communication were still the norm. Rustomjee realized that to retain its reputation, its approach to customer understanding would need to become more sophisticated. So as well as meeting customers’ basic housing needs well, it tried to discover the needs that customers themselves didn’t know they had. It started to conduct studies directly among its customer base, rather than relying on the insights of brokers.
“In our next consumer study we found that a lot of consumers were moving into Mumbai from smaller towns and cities. And their biggest anxiety was for their children growing up in the city,” Chowdhry says. “They were seeing that their children were missing out on all that they did as children.”
Rustomjee realised that it needed to reposition it offering, and this insight became the basis of Childhoods Available, the experimental concept underlying its next big project: a township incorporating 7,000 apartments in Thane near Mumbai. The architects incorporated gardens, playgrounds, classrooms and amphitheaters into the development with the idea that children would have space to play, and that parents and children could do activities together.
“Before the consumer even walked in, we knew exactly how we were going to talk to them because we knew who they were going to be,” Chowdhry says. “So it really worked for us. We were happy with the decision and the numbers looked good.”
By 2014, Rustomjee had established itself as a leading developer in the middle-income market. So it set its sights on the premium market (apartments costing more than $1 million). By now, Mumbai was home to the highest number of high-net-worth individuals in India.
Rustomjee set to work getting to know this new customer base. The initial findings were not encouraging. Some respondents had never heard of Rustomjee. Those who had heard of it associated it with the mass market. And Childhoods Available was met with a lukewarm response. Rustomjee needed a new concept and a new positioning.
The company found the right location for its luxury development in Juhu, and continued its consumer research. It put together a consumer profile. “There was this guy in his 40s who has been really working hard since the age of 20,” Chowdhry says. “He’s taken care of his family. His wife is also working. Both spouses have taken care of everything around them, but given up their passions. Our study said they want to do something that keeps them alive now. And that’s when we came up with the concept of My Spaces.”
The core idea for My Spaces was special zones in each apartment and building. In design terms, this meant the inclusion in each apartment of a ‘me space’ room for a hobby and a large kitchen and balcony for socialising. Common areas included a barbeque spot, a pool and a theater.
“The minute this concept was launched, everyone related to it,” Chowdhry says. “The sales pitch was not about a home. The starting conversation was ‘what keeps you alive?’”
These luxury projects are nearing completion. “The big question now is where does Rustomjee take the brand communication?” Chowdhry says. “Should we go with the umbrella brand, which is ‘It’s Thoughtful, It’s Rustomjee’? Should we have the individual brands, Childhoods Available and My Spaces?”
A foray into a new market, even in a familiar industry, requires careful repositioning. Even a developer as experienced as Rustomjee doesn’t yet have all the answers.
Goutam Challagalla is Professor of Marketing and Strategy at IMD. He leads the Strategic Marketing in Action Program.