Construction Marketing - Essay Example

Construction Marketing Questions and Answers Using the textbook approaches of your choice as a basis, answer the following questions. Question 1 1. Identify the main ways in which the marketing activities of construction companies and consumer goods companies are similar, and the ways in which they differ. What do each have to learn from the other, and why? Some of the similarities between the marketing processes used by construction companies and companies selling consumer goods would be the structured process of strategic marketing followed, the approach to branding, profits and pricing strategies used, segmentation and differentiation of customers and understanding customer needs. Understanding customer needs and experiences would be related to marketing orientation and both the construction companies and consumer goods companies would be focused on providing the best services to the customer. Within the construction marketing framework and the consumer marketing framework, there is a need for delineating company vision, customer segmentation and focus, benchmarking and identifying distribution channels. The construction and consumer goods companies also go through the process of external audit or market research and market analysis along with competitor analysis as well to understand the marketing processes and dynamics of business. Construction and consumer goods are marketed in accordance with analysis of processes, profit margins, organizations, product life cycles, as well as strategic plans such as branding and market reengineering. All these processes of strategic marketing, market orientation, customer focus, benchmarking, distribution and following company vision seem to be the similarities identified between construction marketing and consumer goods marketing. Strict monitoring and control, quality and customer services improvement are also some of the similar marketing objectives. This would bring us to the differences in marketing between the two types of products and the related companies. The construction companies will have to specifically focus on the economic conditions, market orientation and business cycles as for such companies, business seem to follow a pattern. The staff recruitment and retention strategies, relationship marketing and budgeting methods would differ from that of companies selling consumer products. Thus even if the basic approach to marketing does not change between the two types, the elements of marketing seem to differ between construction marketing and consumer goods marketing. This is exemplified by a study in which the influence of marketing policies is seen on corporate performance. Bennett (2005) studied 119 businesses in the UK construction industry and suggested that firms that adopted a long term approach to marketing management tended to attain superior performance. Although short term approaches are more common. The study showed that the construction industry responds in a certain way to the market conditions. Unlike most consumer goods companies, marketing in this case is long term whereas for consumer goods, marketing approaches are based on short term goals and targets. Instead of mission and long term vision followed by construction companies, consumer goods companies are focused on short term goals and objectives. Construction marketing is more directly based on the concept of relationship marketing than consumer goods marketing as building trust with long term customers would be the primary tool for success in any construction endeavor. It has been found that the level of marketing orientation is rather low in the construction industry and in this industry, unlike the consumer goods industry, marketing strategies are developed and followed with only superficial knowledge of the marketing process. The consumer goods industry seems to be more well versed on the dynamics of marketing strategies used than the construction industry. Pettinger (1998) has consistently highlighted the success of construction firms and the importance of marketing perceptions suggesting that the appropriate perceptions would go a long way in improving company performance. Although it is widely accepted that company managers and marketing professionals in the construction industry follow a different approach and set of goals, and have a different method of evaluating market orientation and company competitiveness, in general the main objective would be to satisfy customers and this followed by all companies. 2. Evaluate the marketing initiatives and activities of the construction company of your choice as follows: a) In no more than one paragraph, describe the company and the main markets served. The company chosen here for research purposes is Wates that is described as a construction company established in 1897. During 1920s and 1930s, the company started pioneering in speculative house building, and extended their activities into general construction. The company built aerodromes, army camps, factories, as well as concrete barges and floating docks. The company also developed high rise and low rise housing systems and built over 60000 houses and flats and the company employs 1700 people. Property development, core housing and contracting are the main areas of service provided. The company gives primary importance to corporate social responsibility, and they want to deliver the best to the customers according to budget and on time. The company follows business improvement programmes and follows the methods of best practice. The company has scored among the highest scores in corporate responsibility among businesses in the UK and has been focused on developing clear and challenging career paths for every employee and manages customer projects within mutually beneficial strategic partnerships. The company seeks to eliminate negative factors that hinder any benefit to stakeholders and the impact of Wates’ activities on stakeholders is taken seriously. Some of the highlights and targets of the company considering its financial results last year have been given as follows: Recent Achievements: Ranked in BITC’s Top 100 for the first time Increased percentage of sustainable sourced timber from 32% to 53% Donated 3,000 hours of employee time to local organisations in just one day 74% of the business was managed within long-term partnerships Achieved Group-wide Investor in People accreditation Targets Improve BITC CSR Rating and positioning in the Top 100 Companies that Count which currently stands at 77% Procure 60% of timber from sustainable sources 60% of waste to be diverted from landfill Donate 3,500 hours of employee time on the next Community Day Wates is a land management and new property development business and has been operating in UK for more than 100 years now. Wates serves primarily within the UK construction market and works on new property development and high rise and low rise housing. The company manages more than £100million worth of projects across UK, Ireland and Channel Islands. The company works in the areas of new property development, home improvement, land development and regeneration. b) Describe briefly the core, foundation or generic strategic position of the company. Wates primarily operates within UK and has been responsible for developing several properties, both public and private and as the company has easy access to European markets as well, raw materials for its projects are obtained at cheaper costs. In fact interaction with its suppliers has been a main focus of the company and the company transformed its interaction with the supply chain by introducing Profiler, a sophisticated, web-based tool that enables buyers and suppliers to work more effectively together. With profiler, the company can easily choose the ‘ideal’ vendor considering the compatibility and requirements of the project as well as technical competences considering issues of culture and values, environmental credentials, health and safety record of the supplier and commitment to corporate and social responsibility. Every Wates supplier and subcontractor is asked to match their capabilities with the requirements of the company, by answering an online questionnaire. The resulting detailed profile helps Wates to: Build and access accurate information on suppliers Better understand the strengths and capabilities of their supply chain and how these can be leveraged for customers Accredit new suppliers more efficiently Ensure that all policy obligations are met and targets for improving health and safety and CSR engagement are followed Track the performance of suppliers over time (from Wates.co.uk, 2007)  The core or foundational principles of the company have been focused on delivering the promise given to customers within their budget and on time. Maintaining a sense of corporate responsibility is also in the company’s agenda and the company has been focused on providing environmentally friendly products and services such as sustainable timber. Wates is also positively concerned about the benefits to its stakeholders and have tried to identify the factors for stakeholder satisfaction. The company is also geared towards progress and building futures with a modern progressive outlook on its building plans. It also actively supports all community development programs thus along with professional goals, some social objectives are also obvious in its mission. Wates is a development company and in some instances also work with building and other construction groups for joint venture projects on land or housing development projects. Apart from its geographic proximity to markets in Europe, the strategic position of the company could be examined in terms of its relationship with partners and competitors. The foundational principles of the company to improve its products and market orientation could be given as follows: Clarity of purpose, service and organisational structure Uncompromising approach to safety, health and welfare Consistently deliver to our promise of time, cost and quality Ongoing commitment and investment in research Adding value through design and process efficiencies, teamwork and collaboration c) Identify and evaluate the range, nature and application of each marketing activity. The primary areas on which Wates Construction works focuses on education as well as commercial building, public sector frameworks, and the projects are delivered across the UK. The issues taken into consideration are collaboration with suppliers and customers and delivering best value projects and on time. The marketing activities of the company are thus focused on five main areas of activity related to construction, retail, living space and renovation, interiors and developments. The marketing strategy of the company emphasizes on partnerships and collaboration with suppliers, and consumers. Joint venture also form part of its management goals as this increases the reputation and popularity of the company and helps it to take up larger projects. Wates as been marketed as having a philosophy geared towards innovation and commitment to delivery of projects on time and on budget. Wates has a reputation for working in the departments of education, city councils, public works and also in restoration of historic buildings and in store refurbishment of major stores across UK such as Marks & Spencer and Boots. The marketing strategies followed by the company include maintaining good public relations with the press and with the consumers, building partnerships and collaborative efforts as well as joint ventures with other builders and with the governments and large business organizations. Relationship marketing seems to be one of its main tools of marketing and building its reputation though promise of value and delivery on time as according to company mission seems to be an equally effective marketing technique as well. The marketing activities of the company could be given as follows: 1. Joint venture – this activity seem to be focused on working with other builders and private or public organizations to handle larger projects in different areas of construction. Joint venture is a strategy that helps to overcome the limitations of the company giving it wider reach and structural support 2. Press releases and interaction – This is an important part of public relations marketing as giving the right information to the press either directly through interviews or indirectly through advertisements and company reports and profiles 3. Collaboration and partnerships – This may not be joint ventures but working in association with other companies, suppliers and consumers to attain certain objectives for the company and the consumers 4. Media and Public relations- Relationship marketing is at the centre of all public activity for the company and providing the right information about its activities to the media and highlighting the company’s achievements are some of the ways in which the company could become even more popular 5. Marketing regions – Although the company is primarily focused on marketing to UK consumers, Businesses and constructs housing systems across UK, Ireland and Channel Islands, many of its suppliers being international, the company can also expand its market and areas of work to go global d) Produce a detailed critique of the range, nature and applications of the marketing activities and media usage. The marketing structure, range and applications of the company could be explained diagrammatically as follows: The five main areas of the company’s works are based on construction, living space, retail, interiors, and developments. The three areas on which the corporate structure is based relate to people as in change, leadership development and recruitment; on operational excellence as in innovation and delivery and cost excellence; and marketing focus that aims to create a more market and customer oriented organization (Kotler, 2001). The marketing motto of the company is to highlight an project itself as the first UK construction and development company to deliver projects to customers on budget and on time and every time. The company also promotes its values of integrity and intelligence, respect for collaboration and teamwork, maintaining performance and respect for people and communities. The marketing approach of the company is largely based on ethical principles and the company seems to be very concerned about its public image and reputation. As a strategic and marketing initiative the company has re-focused its construction activities around four strategic national business units – Wates Construction, Wates Living Space, Wates Retail and Wates Interiors – to diversify and specify their strengths at the same time and to enable the company to closely match their strengths and capabilities to the needs of customers (Wates.co.uk, 2007). One of its recent moves has been reducing housing projects and focusing more on land development and management, creating value for customers. The company’s strategy indicates that the focus is on customers and through four strategic business units we have already highlighted Construction, Living Space, Retail and Interiors. These four businesses are supported with three primary corporate initiatives: MARKETING EXCELLENCE The company has delineated a five year marketing plan to focus on delivering real value to customers and to build long term relationships with customers. The company gives the following strategy – ‘A five year marketing development plan will help create a more market and customer-focused organisation, capable of delivering real value and building successful long-term relationships. This programme will position time/cost certainty and delivery excellence at the core of Wates’ offering to customers’.(Wates.co.uk, 2007) OPERATIONAL EXCELLENCE New tools and equipment as well as upgraded infrastructure are necessary to meet the targets set by the company and the company reports that they are ‘supporting the business units with new processes and tools that provide the guidance and measurement they need to deliver on time and budget’. INVESTING IN PEOPLE Investing in people and employees and along with improvement of recruitment services the right kind of reward services are also helpful for the company in the long term and some referral services could also be introduced. The company has been stepping up investment in recruiting, developing and rewarding the right people. The HR policies and programmes required to support and achieve goals are in place and even reconsidered and improved (Wates.co.uk, 2007). The company’s focus on consistent performance and clear strategic direction considering the needs of the customer as primary and providing them with value services on time would be some of the main areas through which Wates seem to promote its image and thus its marketing strategies are based on a two way approach for attracting suppliers, partners, investors, stakeholders and for attracting customers, including government bodies, public and private authorities and business organizations. The critique here could point out to the fact that the company seems to have no separate marketing approach for investors, stakeholders or suppliers as opposed to marketing approach for customers that the company focuses on and promises to deliver it projects on time and on budget. There is a monitoring strategy for suppliers although a proper marketing strategy to reach out to a wide range of clients, suppliers and stakeholders could be recommended (Mahmoud-Jouini, 2000). The range and applications of the marketing activities of the company are primarily within UK and most of its land development projects are in South of England. The company has a good working relationship with major businesses and many store refurbishment and public building renovation work within the UK has been done by Wates. Media releases and press contacts have to be increased in order to make the company’s marketing initiatives more effective. 3. Identify the company’s main competitors, stating why you have identified these as competitors. Some of the competitors of the company that could be a possible threat to its success to the topmost position among UK construction companies would be: Wrekin Group Constructions which was founded in 1960 and the company remains family owned. It delivers integrated construction services across four major disciplines; Civil Engineering, Regeneration, Design & Build and Rail. Like the Wates group philosophy, even Wrekin focuses on delivering high quality customer focused services to public and private sector clients on time and to budget. Other companies are Shepherd Construction, McNicholas Construction that remains as a national service provider for delivering infrastructure projects in utilities, rail and renewable energy markets. The focus of this company is on innovative design and planning, supply chain management, in-house training and specialist resources. The projects taken up by McNicholas are related to gas, water, communications, power, rail, mechanical and electrical providing total solutions to meet and exceed customers' expectations, from traditional contracts to full partnering agreements. Anwyl Construction is yet another company known for building houses of superior quality. As could be seen most of these companies such as McNicholas, Anwyl, Wrekin, Shepherd Construction specializes in a particular area of construction and Wates group seem to provide the most comprehensive construction services and thus has a clear competitive advantage over other construction companies. Skanska Plc is a European construction company with a strong British presence and is one the third largest providing construction solutions in educational and social contexts for schools, hospitals and houses. These construction companies have been identified as the main competitors for Wates as they undertake similar projects and also tend to have similar mission, values and company focus. 4. Identify and evaluate the product portfolio of your company of choice, broken down according to the Boston Matrix, or another structured approach of your choice. State briefly why you have placed each of the products and services where you have placed them. The products and services of Wates could be identified in accordance with its four main units of activity namely construction, living space, retail, interiors and even land and new property development. Profits before tax seem to the highest for living space or housing projects with construction of housing and private and public buildings also raking in considerable profits for the company. However profits are lower for interiors and moderate for retail projects in which complete store refurbishment has been done for several UK companies. A detailed table is provided below. Some case studies of store refurbishment are Random House, Marks &Spencer, Boots and Whitefriars Housing, Coventry, New Hall Primary School, Downham Fields, are construction or interior projects undertaken by the company. The product portfolio is thus broken into five categories show that most of these projects are being carried out across the UK, Midlands and Channel Islands and even Scotland although development projects are mainly limited to the South of England. The product portfolio shows the geographical locations, the number of employees working for the projects, the profits from each unit and from individual projects and the general approach of the company towards these different product units and individual projects. The aim is to provide improved customer services and satisfaction along with increasing profits for every sector of the company portfolio (also in Cartwright, 2002). 5. Conclusions: draw conclusions as to the overall effectiveness of the marketing effort of your company of choice; and draw attention especially to the lessons that the company needs to learn in terms of developing effective construction marketing. The marketing efforts of the company, that is Wates as described here would be based on the following approaches and channels: Through Media and press releases including advertisements and brochures, company published reports and Through public relations with other companies, and relationship marketing with customers, stakeholders Through joint ventures and publicity of partnership agreements that could aid in building up the reputation of the company Through focusing on providing customer satisfaction and stakeholder benefits that could improve long term relationships with clients, suppliers and investors. This would bring to the analysis of the overall effectiveness of marketing efforts used by Wates and whether its marketing approaches are successful and whether it needs to focus on other strategies to highlight the potential and importance of the company. In this context, a study by Yisa and Edwards(2002) emphasized on business strategies that are used to sell products or perform services and according to them strategies employed are determined by company reaction to events that are beyond the control of the company. The main business strategy for UK construction firm may have to be based on the increasing marketplace competition and the strategies will have to adapt to the rapid changes from traditional contract procurement route to relatively new design and build management contracting and the construction firms in the UK have thus ushered in a new form of market competition that seem a lot to depend on change and new designs. This shows how the smaller or medium sized companies could cope in the presence of bigger companies. The study surveyed partners and chief executives of 57 consulting firms to identify the existing practices in these firms and the results indicated that there is a need for more coordinated marketing strategy, increased partnership with other consulting firms and need for strategic planning through environmental analysis (Yisa and Edwards, 2002). In another similar study, El Diraby et al (2006) analysed the main indicators of the construction market and conducted interviews with 39 experts and identified the important factors used for measuring company competitiveness and market attractiveness. The results indicate that factors influencing company competitiveness include customer satisfaction, cost efficiency, and safety record. Market attractiveness on the other hand is determined by sustainable profitability (return on investment), supply of finance, and overall economic conditions (El Diraby et al, 2006). The studies here show that the effectiveness of Wates marketing strategy could be gauged in terms of market attractiveness and firm competitiveness (Cicmil and Nicholson, 1998) and other external and internal factors such as employee and customer support, stakeholder collaboration, partnership agreements, media focus and so on. Recommendations for the company that could improve the effectiveness of construction marketing and its approach within the company could include: 1. Evaluating company effectiveness and market conditions 2. Evaluating company competitiveness and attributes of the competitors 3. Performing a SWOT analysis to determine the strengths, weaknesses, opportunities and threats of the company 4. Using more effective and comprehensive media relations strategy to relate to media and clients at different levels of the projects 5. Taking a more effective stance on human resource management and using employee opinion in the marketing process both for better opinions and to increase sense of involvement This study is effectively based on the advantages and disadvantages as well as the unique characteristics of construction marketing. I have provided a case study of Wates Construction company and highlighted the Wates values, vision and marketing approach to suggest whether an how the marketing strategies could be made more effective for this UK based construction company. Bibliography Bennett, Roger (2005) Marketing policies of companies in a cyclical sector: an empirical study of the construction industry in the United Kingdom The Journal of Business and Industrial Marketing, Volume 20, Number 3, pp. 118-126(9) Cartwright, Roger. 2002. 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(2002) Evaluation of business strategies in the UK construction engineering consultancy Measuring Business Excellence, Volume 6, Number 1, pp. 23-31(9) Websites: http://www.wates.co.uk/ http://www.wrekin.co.uk/ http://www.shepherd-construction.co.uk/ http://www.mcnicholas.co.uk/home/default.asp http://www.skanska.co.uk/ http://www.anwyl.co.uk/build.asp?page=default.asp Read More