The latest crisis in real estate which had widened to a global financial crisis extremely affected an assumed solid and safe investment vehicle – open end real estate funds. The high share redemption by institutional investors caused a wave of redemptions since the reaction of institutional investors had lead to an uncertainty of private investors. The consequence: many open ended funds suspended the right of the redemption of share certificates by reason of illiquidity. And even today numerous capital investment companies still suspend the share redemption, respectively again. The problem is a high information asymmetry. Many investors are informed in an insufficient way. New investors need to be appealed and activated to achieve the goal of new issuance of shares. A sustainable success of the fund products for investors can only be achieved by new guidelines for liquidity management and the help of a competency based holistic marketing strategy. Mr. Wolfgang Schäuble (CDU) wants to achieve a minimum investment horizon for open ended funds, but this would endanger the main advantage of this asset class – the daily possibility of redemption. Therefore it would be better to implement the law only for institutional investors. However, it is questionable whether this product can further exist in this form. The Term paper deals with open ended funds which are mainly launched for private investors. Aside exists special funds which are launched for the specific needs of institutional investors. The aim of the paper is to figure out which instrumental strategies are applied pursued by open ended funds.
Table of Contents
1. Introduction
2. Managing the Marketing Mix of open ended funds
2.1 Product policy
2.1.1 Design of the fund product program
2.1.2 Product design of open ended funds
2.1.2.1 Strategy of product variation
2.1.2.2 Strategy of product differentiation
2.2 Price policy
2.2.1 Pricing of open ended funds
2.2.2 Discount possibilities
2.2.3 Comparison of selected open ended funds
2.3 Distribution strategies
2.3.1 Distribution objectives
2.3.2 Structure of distribution channels in funds business
2.3.2.1 Indirect distribution
2.3.2.2 Direct distribution
2.3.2.3 Multichannel distribution
2.3.2.4 Channel design
2.4 Communication strategies
2.4.1 Corporate Identity as basis for communication strategy
2.4.2 Elements of the communication strategy
2.4.3 Above-the-Line Advertising
2.4.3.1 Advertising in print media
2.4.3.2 Advertising in electronic media
2.4.3.2.1 Applied forms of electronic advertising in funds business
2.4.3.2.2 Key techniques for a successful advertising design
2.4.3.3 Outdoor Advertising
2.4.4 Further advertising instruments applied by investment companies
3. Summary
Objectives and Topics
The term paper examines the marketing strategies employed by investment companies for open-ended real estate funds. It aims to identify the specific instrumental strategies used within the marketing mix to appeal to private investors and ensure success in a competitive environment, particularly following the global financial crisis.
- Application of the 4 P's (Product, Price, Promotion, Place) in the fund industry
- Differentiation and variation strategies in fund product design
- Cost structures, pricing, and discount models for individual investors
- Distribution channel structures, including indirect, direct, and multichannel approaches
- Communication strategies and the role of Corporate Identity (CI) in advertising
Excerpt from the Book
2.3.2.1 Indirect distribution
Fund providers usually use the strategy of indirect distribution to sell their open ended funds. Indirect distribution implies that there is no direct contact between investment companies and potential investors. Economically and legally independent intermediaries establish contact to customers. In practice a selective distribution or rather so called guided architecture is distinguishable. Investment companies choose several partners who fulfill appropriate standards, mainly based on qualitative criteria. Benchmarks such as marketing activities and equipment requirements including image, staff qualifications, customer service and business size and situation are applied for the choice of adequate intermediaries. Capital investment companies benefit from shifting the distribution to intermediaries as mass distribution, intermediaries have high market efficiency (economies of scale) and conservation of resources.
The BVI (Bundesverband Investment und Asset Management e.V.) published a study on investment funds in December 2009. Findings from GfK were introduced to the study. Main outcomes of the study were the intermediaries which are used by investors when purchasing shares of open ended funds.
Summary of Chapters
1. Introduction: Discusses the impact of the global financial crisis on open-ended real estate funds and the resulting need for holistic marketing strategies to re-engage private investors.
2. Managing the Marketing Mix of open ended funds: Provides a comprehensive analysis of the four marketing functional areas (product, price, distribution, communication) applied to the fund business.
3. Summary: Concludes that a successful marketing strategy for open-ended funds requires a combination of elements integrated through a consistent Corporate Identity to assert competitiveness.
Keywords
Marketing Mix, Open ended funds, Real estate funds, Product policy, Price policy, Distribution strategy, Communication strategy, Corporate Identity, Indirect distribution, Direct distribution, Above-the-Line Advertising, Total Expense Ratio, NAV, Investors, Financial crisis.
Frequently Asked Questions
What is the primary focus of this paper?
The paper explores the marketing strategies utilized by capital investment companies to effectively promote open-ended real estate funds to private investors.
What are the core thematic areas discussed?
The core areas include the four marketing mix elements: product policy (design/variation), price policy (cost structures/NAV), distribution strategy (channels/intermediaries), and communication strategy (advertising/branding).
What is the primary objective of the research?
The goal is to determine which specific instrumental strategies are applied by providers of open-ended funds to maintain market success and attract new investors in a competitive environment.
Which methodology is used in the research?
The paper employs a conceptual framework based on marketing theory, supported by an analysis of financial reports, industry data, and specific case examples from major German investment companies.
What is covered in the main section of the paper?
The main section details the '4 P's' of marketing, analyzing product design, pricing models, distribution channels (including the concept of guided architecture), and various advertising instruments like print, electronic, and outdoor media.
How can the paper be characterized by its keywords?
The work is characterized by terms such as Marketing Mix, Open ended funds, Distribution strategy, Corporate Identity, and real estate asset management.
What role does the 'Total Expense Ratio' (TER) play in the pricing strategy?
The TER is used as a transparent metric to summarize the total costs for the investor, allowing for a better comparison of cost structures between different open-ended real estate funds.
How do distribution partners influence the success of a fund?
Distribution partners, such as banks or online brokers, act as intermediaries that establish essential customer contact, often utilizing 'guided architecture' to recommend funds while benefiting from retrocessions.
- Quote paper
- Melanie Kotschenreuther (Author), 2010, Marketing strategies for open-end real estate funds, Munich, GRIN Verlag, https://www.grin.com/document/194333
