MARKETING SMALL CONSTRUCTION FIRMS
By
Stephen Kirk
For
CNST 626 Construction Processes
Fall 2010
Abstract
Professional marketing has only recently been recognized as an important factor for business success in the construction industry. This paper will analyze the trends in construction enterprises and compare the organizational structures of construction industry and the factors inhibiting the development of specialized construction enterprises. With a shift towards partnering and the creation of long lasting relationships with clients, contractors may be able to add considerable value to their company through in-house marketing skills. There is still a lack of understanding of the true meaning of marketing and how it can be integrated with business and project planning in construction, rather than being used as a bolt-on promotional tool. This marketing in the construction industry evidence supports the view that small and medium construction enterprises can benefit from a deeper understanding of marketing.
Keywords: marketing, construction, meaning, business, project planning
Table of Contents
I. Introduction
A. Why Are You in Business
B. What Business Are You In
The Business plan on Small Business Enterprises
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II. Marketing
A. Where Is Your Market
B. Advertising
C. Sales Strategy
D. Competition
III. Planning the Work
IV. Getting the Work Done
A. Personnel Requirements
B. Equipment Requirements
V. Put Your Plan Into Dollars
Introduction
The recent economic downturn and tightening of the credit markets has been hard on the construction industry, especially small construction firms who have slowly started to dwindle because they are unable to cope with competition from established larger firms, making it essential for existing small construction firms to have a well-thought-out marketing plan and effective marketing strategies. Regardless of the economic conditions, construction marketing is always a hot topic. Some people think that offering fair prices and doing superb work is enough to generate plenty of new business. Many of these contractors try to appease everyone by building almost anything with a roof, while other firms have selected a certain niche to specialize in, and still others form alliances with other services to stay in business. With a good marketing strategy, smaller construction firms can attain their target goal more easily and can stimulate innovation capability within and between small and medium sized construction firms in an effort to bring in a new and innovative culture to the construction industry by selling their range of services to a wider market.
Why Are You in Business
Planned promoting of a company through its assets and their projects can help to further a firm’s reputation to their targeted markets. For every business organization or home office, sign boards, company vehicles and plant assets with the name of the company can do the publicity for the company. Good relations with the press can also be developed so that coverage can be given to occasions such as foundation stone laying and official openings. Planning applications, such as The Center for Land Use Interpretation’s Land Use Database is a collection of unusual and exemplary sites throughout the United States. The database is a free public resource designed to educate and inform the public about the function and form of the national landscape to accommodate the complex demands of our society. Some sites included in the database are works by government agencies involved in geo-transformative activities, such as the Department of Energy, the Bureau of Reclamation, the Army Corps of Engineers, and the Department of Defense. Mail shots are another way for firms to automatically track all communication with their customers and ensure a professional interface with customers by laying a foundation for a long-term relationship and additional sales.
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Mail shots are bulk mail advertising sent through the mail in the United Kingdom to potential customers to advertise goods or services, and are a good way for firms to send information to companies on their database and to large local companies in the commercial and industrial sectors, and when linked to accounting packages provides essential financial information. Price is almost always considered as being the single most important factor for the client. The setting of the correct price is of enormous importance in marketing – both in getting the product accepted by the target market, and in generating sufficient revenue for the organization. Factors taken into consideration in determining the level of profit margin to be added to the tender build-up are contract workload, nature of work, number of competitors and recently reported results.
What Business Are You In
Correct decision on market position is the basis for specialized construction enterprises to develop and possess market share and make smooth development. In determining the market position, on one hand, the company should take market account of what field the projects have high degree of complexity and large-scale contractors have a relatively high demand for specialized construction enterprises. On the other hand, the enterprises should take their own strengths into consideration, such as in what field the enterprise has the technology and equipment advantage, personnel and management advantage, high market reputation, and stable cooperative relationship with large construction enterprises. Technology can be a key factor to the success of specialization development of small to medium-sized construction enterprises. Specialized construction enterprises should pay special attention to the balance between the exploitation of practical technology and advanced technology. New technologies could indeed improve production efficiency, but the costs for exploiting new technology are relatively high. Meanwhile, because of uniqueness of construction projects, new technologies sometimes can only be applied in a relatively narrow field.
The Term Paper on Marketing and Market Research
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It will lead to the relatively high costs for the application of new technology to a certain extent. At the present stage, most of the specialized construction enterprises are still favorable of using those patents and technologies that have been promoted by the state, exploiting too many advanced technologies may bring difficulties to the specialized enterprises which are not strong enough. Therefore, making plans for the exploitation of new technologies, specialized construction enterprises should take both the technology innovation ability and other supporting factors into consideration. To draw a conclusion on the effectiveness of a strong marketing plan, a determination on if sufficient time has passed must be made. The obvious ways of determining this is by the analysis of financial information and statistical data. However, not only has financial information and statistical data been collected relating to the internal environment of the firm but also data has been collected about the external environment i.e. the economic climate, the building industry and about local companies and competitors during this period. This is largely down to the fact that it has concentrated its efforts in particular sectors. This narrowing of a company’s portfolio in some areas and diversification into others seems to have had a positive effect. When comparing the company’s performance to the rest of the industry, most of the areas the company chose were in areas that the industry as a whole experienced growth.
Marketing
The stages taken by the company in developing the marketing management function relate directly to that of theory and therein provide the perfect framework for the critical analysis. Analyzing marketing opportunities, developing marketing, planning marketing programs and implementing strategies is in essence, how a team will organize itself during this initiative.
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Where Is Your Market
“As a management function marketing involves the process of analysis, planning, implementation and control.” (Lancaster and Massingham, 1993: p.8) On the surface the company’s approach seems logical and well applied and as we have seen it seems to have had a positive effect in some areas. However, I believe that the actual significance of the marketing concept has not been realized. “When applying the marketing concept the firm seeks to evaluate market opportunities before production, assess potential demand for the good, determine the product characteristics desired by consumers, predict the prices consumers are willing to pay, and then supply goods corresponding to the needs and wants of target markets more effectively than competitors.” (Bennett, 1996 :171) Marketing’s contribution to business success lies in its commitment to detailed analysis of future opportunities to meet customer needs. The central focus of the business has to be the customer; marketing management has to take the lead in researching the customer and the markets in order to develop strategies. The ideas don’t have to be new ones just ones that are potential good for business success and development then the company can strive to become more profitable in these areas thus either creating value for the customer or by reducing costs so that the firm can compete better with the competitors.
The markets are segmented but the act of understanding the customer’s values and needs are not performed. While this type of analysis can be beneficial it is not usually wholly accurate. Further detailed analysis of the macro environment is undoubtedly required if the company is to understand its customers requirements and capitalize by being one step ahead of the competition. “Changes and trends in the macro environment give rise to some of the most significant opportunities and threats that any organization faces. Companies which fail to recognize and take account of changes in their environment have, in the past, either failed to capitalize on their opportunities or – worse still – have suddenly realized that their markets have disappeared.” (Lancaster and Massingham, 1998: p.26) A successful external analysis needs to be directed and purposeful. There is always the danger that it will become an endless process resulting in an excessively descriptive report. Without discipline and direction, volumes of useless descriptive material can easily be generated. The external analysis process should not be an end in itself. It should be motivated throughout by a desire to affect strategy and it should contribute to the decision of the application of investment, by doing all of these it will be responsible for the development of a sustainable competitive advantage.
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Advertising
External analysis can also contribute to the marketing management strategy by identifying significant trends, future events, opportunities and threats. It has to be recognized that by identifying these areas, threats to one organization can become opportunities for another in being able to sustain competitive advantage. Attempting to lay any sort of plans for the future without first gathering enough information is not only foolish, it also demonstrates dangerous tendencies towards complacency and arrogance. Knowing that information must be gathered is one thing, knowing how much and what to gather is quite another. As the customers are the focus of the marketing concept the first logical step when beginning marketing management is to analyze the customers. The workshop teams approach to segmentation was the right platform. However, as we saw their segmentation for this type of industry is applied differently than that of other different industries that tend to be referred to in marketing theory.
Sales Strategy
Through segmentation we can identify customer groups that respond differently than other customer groups. The way that the workshop team undertook the task of defining the segments was good as it identified the variables that can differentiate between one project and another. Following this, the subdivision was useful because it recognized the broad categories like to the industry were too vague. In essence the divisions proved to be effective and can be linked to the industry standard. The act of segmentation opens the doors for analysis of the industry, an individual organization, its markets and its customers. It also provides the focus for the organizations strategy for business success. The workshop teams method of segmentation links directly to the Department of Trade and Industries method of segmentation when analyzing the whole of the construction industry for government statistics. For this reason it is very easy to collect data and analyze the external sectors and then link this to the company’s own business.
The Research paper on Cumberland Metal Industries Pads Cmi Market
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Competition
Work undertaken in the industrial sector is an important part of a company’s turnover. In general, there has been no change in the pattern of investment and, although there has been an increase in the value of orders in the private sector, it is not large enough to make a significant difference to future output of the construction industry. The level of output for work carried out in relation to warehouses is increasing year on year despite the shift from a manufacturing to a service economy. Commercial construction is becoming a more important sector in the construction industry. It is highly cyclical, very sensitive to changes in economic conditions and has been favorably affected by privatization. In the private sector the sub sections of offices shops and entertainment are the dominant factors. While for the public sector output is concentrated in the areas of education and health. The overall trends for both are positive, however, there is a strong element of volatility in the output and the orders, for private sector work.
Planning The Work
Design and Build is where on organization takes responsibility for both functions on behalf of a client, and has been a growth area in the construction industry in recent years. As the market for building contractors has become more competitive and margins have been squeezed tighter, contractors are searching for ways to increase their competitive advantage by offering the full service for their clients. Design and build projects do have an attraction nevertheless there are pitfalls to this market. To the detriment of the traditional architects practice, recent times have brought about the augmentation of design and build contractors. It appears to be an increasingly preferred method of tendering for private concerns in the light industrial and commercial sectors.
Getting The Work Done
More recently research suggests some building contractors have paid the penalty for entering the new sector with little experience. The attractiveness of low competition and perceived greater margins had blinded the judgment somewhat.” (Ashworth, 1998: p.7) The identification of trends within the industry can provide vital information as to the current and future state of the various sectors. The correct prediction of future trends is the key to achieving the competitive edge. “Trends within the market can affect current and future strategies and assessments of market probability.” (Asker, 1995: p.26) In the construction industry clear trends can be identified. The long term trend in the industrial sector has been a move away from manufacturing towards a service-based economy causing overall decline in the industrial sector. A decline in coal mining and steel based industries has caused construction firms to switch their efforts to other activities.
Personnel Requirements
When analyzing their external environment, the company must investigate their political, economic, social and technological factors. In the commercial sector an appreciable amount of traditionally public sector work has been transferred to the private sector though the privatization of industries. Increase in demand for entertainment and leisure activities and the consequent increase in demand for the necessary facilities. Changes in interest and exchange rates are having a large effect on construction projects despite objections from various pressure groups. There is a demand for modern offices adaptable to the requirements of information technology and computerization, together with the recognition of the fact that the working environment has a significant effect on the performance of individuals. Political factors could be to look at the effect of a change of government would have on spending in the public sector, which are experiencing an increase in construction activities. That change in the demand for new buildings will be necessary for changing needs of other industries, for example, the needs of a high technology environment.
Equipment Requirements
Development grant awards for various regions and sectors such as the national lottery. Social factors that could be identified are as follows. Inner city regeneration and outer city development would bring about an increased requirement for construction work, and can lead to an increased need for special housing. Innovations in construction techniques can potentially provide the company with a competitive advantage. One example is the greater use of pre-fabricated elements, which has also created a need for suitable buildings?
Put Your Plan Into Dollars
What’s important is to search through the environment for specific opportunities which appear to be open to their organization. It takes time to develop new services and develop new markets. If there is a hint that new market possibilities are likely to open then we should plan our time accordingly to gain the maximum benefit. As well as identifying the opportunities in tomorrow’s market place it is also important that we clearly identify the threats which may appear in the business environment. The important thing is not just to identify the threats but to be able to do something about them.
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