Importance of Sales Skills for Builders - Case Study Example

Importance of sales skills for builders Name of the Student: Name of the Instructor: Name of the course: Code of the course: Submission date: Importance of sales skills for builders Executive summary The construction industry at the global level has been noted to having achieved enormous growth in the recent years, and currently playing a major role in the economic development of various regions in the world. This has seen diverse companies getting into this industry aiming at taking advantage of the different opportunities in this sector which has had an overall impact of increasing the level of competition in this industry. Against this background sales and marketing undertakings of the various players in this industry have been cited as being central in elevating their performance as well as ensuring that these companies attain sustainable competitive advantage in the market. This is paramount in facilitating both the short and long-term viability of these companies. Nonetheless, it fundamental to be cognizant of the fact that new entrants shifting from being employed in the construction companies and seeking to develop and run their small construction businesses are bound to be confronted by diverse issues, mostly during the transitional stage. These issues include bit not limited to extreme competition in the market, financial incapacity, market volatility and attracting competent workforce among others. In regard to building a robust client base, issues of market coverage and creation of a strong brand image confront these builders. The use of sales and marketing methods has been cited as being integral in overcoming some of these issues. However, despite the enormous necessity of sales skills by these builders, it is evident that they are not exclusively necessary in these new venture based on based on several reasons analyzed in the last section of this paper. Introduction The imperative niche of sales and marketing either in an old or a new venture cannot be downplayed. This is founded on the fact that sales and marketing plays a fundamental role in determining both the short and long-term performance of a business, whether it is in meeting the periodic financial targets or in achieving other non-financial results like consumers satisfaction. Thus, robust sales and marketing skills in any given venture are central in the attainment of sustainable competitive advantage, mostly in an industry which is characterized by extensive competition and dynamism in terms of the consumer demands. Thus, the acquisition of sales and marketing skills in a certain venture offers a unique strategic platform for the owner of a particular business to succeed in his/her undertakings. This is based on the fact that these skills enable him/her to offer the right goods or services to the target consumers in the highly differentiated market. The owner is also capable of identifying the ideal location for the business, strategically choosing the promotion channels for these goods and services as well as costing and determining the prices of these products, which will receive acceptance among the consumers based on their perceived value of these products and thus pave a proper channel of profits generation. The importance of the sales and marketing skills is underpinned by Salome, Osita and Marcel (2012, p. 41) who determined that sales and marketing skills enable an individual or a collective to make integral decisions in a business venture, for instance, ‘getting the price right’ which is an imperative variable in any business. In addition, Stanton (cited in Salome, Osita and Marcel, 2012, p. 41) cited that these sales and marketing skills helps in keeping the owner of this particular venture informed, confident and knowledgeable aimed at determining the most feasible, effective and efficient methods of physically distributing the goods and services to the ultimate consumers. Against this backdrop, this paper is a profound effort to critically analyze the importance of sales and marketing skills among builders breaking into a new market in the construction industry which is characterized by stiff competition. In addition, it will explore some of the issues faced during the transitional stage of going from being a construction company employee to developing and running a small construction company. On the other hand, the utility of sales and marketing methods in the creation of a client base will also be explored. Brief overview of the construction industry In a generic sense, the construction industry is usually responsible for building new factories, apartments, schools and houses among other buildings. This industry also occupies a key position in the processes of building ports, tunnels, sewers, bridges, roads among many other things. Moreover, it undertakes the basic maintenance and repair of these structures as well as producing the rudimentary materials like concrete which are used in making them. Thus, this industry plays a significant role in the economic advancement of any region, not merely because it facilitates infrastructural development and buildings which virtually all the other sectors depends upon but also because it is a massive sector in its own right. The construction industry has been characterized by immense growth in the recent decades placing it in a very integral niche in the economic base of various regions. This fact is epitomized by OECD (2008, p. 17) who determined that the construction industry in Europe has evolved into becoming the largest industrial employer and credited for around 7% of employment in the EU. Moreover, cumulative figure from EU, Japan and US exhibit that this industry employs more than 40 million people. Among the countries in the organization for economic development and cooperation (OECD), the construction industry is credited for an average of 6.47% of the GDP. However, it is imperative to be cognizant of the fact this industry has experienced extensive competition in the recent past with new entrants seeking to capture an increased share in the market. This has made the tenets of robust marketing and sales skills to be paramount among the players in this particular industry. According to a study conducted by Arslan and Kivrak (2009, p. 563), good advertisement, competitive pricing and the overall image of the company were considered to be some of the most integral factors propelling the performance of the companies in the construction industry. Based on the fact that this paper revolves around marketing and sales when a builder is breaking into a new market in the construction industry, the role of marketing and sales when starting a new business is explored in the subsequent section. Marketing and sales differentiation It is worth noting that there is an inherent difference between sales and marketing despite the fact that these terms have been used interchangeably in the business world and the marketing and sales departments being integrated or characterized by close interaction. Nonetheless, ESB Business School (2011, p. 3) defined marketing as the undertaking, the set of institutions, and the processes of creation, communication, delivery and exchanging of offerings that provide value to the consumers, shareholders, partners, clients and the larger society. On the other hand, sales from a personal selling perspective has been viewed as the face-to-face interaction with one or more prospective consumers aimed at making presentations, answering the raised questions as well as procuring orders. However, the emergence of e-commerce and m-commerce has partly replaced the personal selling (ESB Business School, 2011, p. 5). Marketing and sales when starting a business Starting a new business has been cited as being a complex and difficult process whose success depends on various factors. These includes but not limited to enormous knowledge about the regulations of the state, the consumer differentiation in the target market, the level of competition, the support programs for the business as well as the different opportunities which are evident in the market (Michigan Economic Development Corporation, 2011, p. 1). A new construction business has the capacity of offering diverse services to the consumers. These include asphalt paving, demolitions, painting services, heating ventilating, building renovation, electrical services as well as air handling and plumbing services among others. On the other hand, marketing and sales have been cited as being integral in new construction businesses. Therefore, the success in ensuring that the services or certain skills reach the consumers requires a strategic approach in structuring the sales and marketing plan for the new business. There are some basic considerations which have been noted as being chief to the sales and marketing plan. These include the market and competitive situation, the target consumers or end users situation, product and distribution situation as well as the macro-environment situation which present core information on demographic, technological, socio-political, economic, cultural and material supply which impact on the new business. In relation to marketing and sales, one of the major impediments which confront new entrepreneurs in the construction industry is the question of what ought to be given a greater emphasis in the sales and marketing orientation of the new business. This is based on the fact that at a very basic level, there are two primary marketing paradigms. These are relationship marketing and marketing mix (Skitmore & Smyth, 2006, p. 8).Nonetheless, at a very basic level, the marketing and sales undertakings of this new construction company business ought to be chiefly embedded in the marketing mix. The 4 P’s of marketing is explored in the subsequent section which forms the foundation of marketing and sales activities of the new construction services business. These 4 P’s are price, place, promotion and product. Price In regard to the price, the entrepreneur (s) of the new construction services business ought to divorce themselves from the assumption that the new business has to offer the lowest price in the market so that it can attain competitive advantage. This is because the idea that having the absolute low price in the market sends a negative signal of possible low quality of the services which can adversely affect its sales (Ehmke, Fulton & Lusk, 2010, p. 2). Thus, the pricing approach should end in a price that encompass the cost of the construction services and also include a substantial profit margin. However, the price should be balanced, not be too avid or too coy. This is based on the fact that while the prior will price the company out of operation, too low price will not only make the quality of the services being offered by these new construction business doubtful to the consumers but will also make the growth of the company infeasible. The pricing strategy combination for the new construction business can entail; Value-based pricing: This is founded on the perception of the buyer in regard to the value as opposed to the cost of the services or certain skills. This perception is determined by all theoutcomes of the service which include those not related to price, for instance, prestige and quality. This will make the consumers be willing to pay for the service. Competitive: This is founded on the range of prices being offered by other competitors.For instance, it can lower its prices slightly below those offered by other companies providing construction services for similar or higher quality services. This will make the new business achieve a competitive niche in the market. Discount: This is founded on the reduction of the advertised price. This will include things like after sales services like periodic guarantees. This combination will ensure that the consumers will be assured of quality and value for their money which will allude cost sensitivity to consumer needs. Promotion Promotion has been perceived as advertising and the selling part of marketing. This entails how the new business will let the people know which services that they are offering, how they can access and use this services as well as how these services will solve their various construction needs (Ehmke, Fulton & Lusk, 2010, p. 4). In its promotional endeavors, the advertisement in this new business will contain a clear message targeting the specific consumers through an appropriate channel. The message will inform the customers which specific outlets where they can access these services, theirs costs and the overall advantages of accessing these services from this new business as opposed to other competitors. The promotion of the services from this business will be disseminated through various channels which target the entire realm of prospective customers. In addition, the advertisements will pay close attention to users demand in terms of communication mode preferences as well as keeping a close touch with the changing trends in technology. This includes aspects like the dynamism towards e-commerce in the modern times previously mentioned. Place In a generic sense, place can be viewed to refer to the distribution channel in the marketing theory (Skitmore & Smyth, 2006, p. 10). Thus, it refers to getting the services to the consumers which entail where the services are made, sold and distributed. This is fundamental in ensuring that all the needs of the consumers are taken care of in one central locality in disregard of their income margins. Moreover, this locality is accessible to the construction services consumers from all walks of life within the shortest time and with the cheapest means available. The nature of the services offered by this business will greatly impact on the way the services will be distributed from the central place. This fact is supported by Ehmke, Fulton & Lusk (2010, p. 3) who determined that the products, either goods or services greatly influences the models of distribution. Products This is mainly related to consumer service. In its sales and marketing efforts, this new business will deliver to various services previously mentioned to the consumers. The entrepreneur of this new construction business ought to engage a high magnitude of creativity and innovation to enhance its services and be able to meet the changing consumer needs. The above fact is supported by Trott (2005, p. 16) who determined that innovation and the development of new products and services ought to be supported by the organizational framework under which technological research and development (R&D) and the entrepreneurship of individuals is integrated with strategic leadership in the business, employees’ participation and imperative market considerations. Figure 1.0: Innovation process towards product development. Source: Trott (2005, p. 10) The above figure shows the integration of innovation in the processes of a business towards the development of new goods or services or enhancing those which were previously in existence. Issues faced during the transitional stage of going from being a construction company employee to developing and running a small construction company There are diverse issues that an employee decides to leave employment tenure in a certain construction industry to develop and run a small construction company. Some of these issues in this transitional epoch in relation to sales and marketing are explored below. Extreme competition Hampson and Kwok (1997, p. 30) noted that the construction industry is considered as being highly competitive and in most cases, endowed with extensive risks. This is mostly elevated in the context of the emerging businesses which don’t have an established market share. Thus, during the transition epoch, the employee seeking to develop a small construction company is bound to be confronted by extreme competition from the more established companies in this industry. Thus, the competition level in the market might be more severe to the employee seeking to develop his/her own small business as opposed to when he/she was under the employment of a reputable company which had a concrete market share. However, the issues faced by the builder trying to start a new business and establish a client base will be explored in the subsequent section. There is thus a need to develop a robust strategy which will be key in overcoming this competition in the industry and gradually capture a sizeable market share through a proven reputation of being a construction service provider. Therefore, this employee ought to make very profound decisions in terms of quality of the services offered, the pricing among other tenets previously discussed in the marketing mix. This will be integral in surmounting the challenge of competition in this industry. Financial incapacity This is another issue that the employee venturing into the new construction business is bound to face. This can culminate in little money to be invested in activities like sales and marketing which can affect the viability of the business both in the short and long-term (Mbonyane, 2006, p. 6). Nonetheless, if the employee had saved enough financial capital to propel the business or has strong sources of initial and operating capital, then this cannot be a major challenge facing the owner of the business during this transitional period. However, during the initial stages of the business before it stabilizes, there can be mismanagement of the capital which has been cited as being a major reason why starting ventures fail. This fact is supported by Dickey (1994, p. 197) who determined that the small businesses in their initial stages tend to fail more often because of the improper management of the cash flow. Thus, the owner of this business is bound to be confronted with the issue of either finding strong sources to finance the new construction business, and if this is not the case, the owner is bound to be faced with the issue of finding competent personnel during the transition period who will be mandated with the responsibility of managing the cash flow in the firm. Attracting competent workforce This is also a major issue that is bound to face the owner of the new venture. This is based on the fact that when the owner of the new business embarks on the process of recruiting personnel for the new business, he/she might not have the adequate mechanisms to undertake this process. On the other hand, based on the fact that this is a new venture, it might fail to attract competent and experienced workforce because of the various uncertainties which confront new businesses. Thus, this can be a major issue during the transition period of the new business; attracting competent workforce. It is worth noting that event in the initial period after the instigation of the business, retaining the human resource can be a major issue to be resolved by the owner of the business. This fact is supported by Soni (2005, p. 2) who noted that the process of finding and retaining qualified and competent workforce is usually a major challenge to the growth and survival of small, new businesses. Market volatility This can be perceived as the instability of the market which can be caused by various factors, for instance, fluctuations of the exchange rate and the deficit of demand over high supply among others. These issues are external to the owner of the new business but can be detrimental during the transitional epoch. The instability in the market can be caused by unforeseen macroeconomic phenomena which can culminate in drastic and sudden changes in the market (RICS International Valuation Faculty Board (2008, p. 1). Some of the causes of volatility in the market can emanate from the elasticity of the services demand, the shifts in technology as well as the inflation of the commodities necessary in the delivery of services (Blanchard& Fischer, 1991, p. 17). Thus, the volatility in the market can be a major issue than can confront the employee shifting from a construction company to developing and running a small construction company, during the transition period, for instance, the increase of the prices for commodities necessary to instigate the delivery of construction services can to a great extent affect the capital base of the new company and prompt external capital outsourcing. Some of the above issues are bound to be confronted the employee seeking to shift from a construction company to developing and running a small construction company during the transitional period as well as in the early periods of establishment. Nonetheless, profound initial market research, establishment of a contingency plan as well as consulting with reputable consultancy firms are some of the approaches that this employee can use to surmount these issues. Issues faced for new builders in trying to build a client base It is imperative to note that though some of the issues analyzed above spill over to the issues that are faced by new builders in trying to build a client base, for instance, competition in the market, there are others, which are unique to the establishment of a robust client base and capturing a sizeable market share. Market coverage Ehmke, Fulton and Lusk (2010, p. 4) noted that despite the channels that the service provider will use while delivering the services to the consumers, he/she ought to decide on the extent that these services will be distributed in the market. Thus, this requires the decision of whether the distribution will be exclusive, intensive or selective. This will greatly influence the client base which will eventually be built by the builder in the new construction business. For instance, the use of intensive service delivery will mean lowering the prices of the services aimed at expanding the client base as much as possible across diverse market segments. Therefore, the choice of the services distribution model is one of the issues confronted by the owner of this new business during the transitional period. Creation of a strong brand image Keller (2001, p. 1) determined that building a strong brand image has been confirmed to provide extensive financial rewards to the firm, a fact which is exemplified on the basis that different organizations in the market have put it as a top priority in their undertakings. Thus, for a long time, brand image has been considered as an important tenet in the marketing efforts of a company. In a generic sense, brand image can be defined as a set of views in regard to a particular brand, either a good or a service which is reflected in the associations as conceived in the memory of consumers (Keller, 1993, p. 3). Similarly, Aaker (1991, p. 109) viewed brand image as a set of associations, usually organized in some significant manner. Thus, building a strong brand image is an issue which will have much significance in the efforts to build a client base by the new builder. Majority of the issues analyzed in the preceding sections can be comprehensively and effectively surmounted through the utility of robust sales and marketing mechanisms which are explored in the subsequent section. Use of marketing and sales methods The utility of sales and marketing methods in the new construction services provider requires a profound analysis of diverse variables, for instance, the consumer needs, level of competition in the market, the target consumers and the specific media channels which are consumed by the customers. Direct sales approach is one strategy that is feasible for this new construction business in its effort to sell itsconstruction skills and services According to Ehmke, Fulton and Lusk (2010, p. 3), direct sales method is beneficial to a new business based on the contact that the owner will get after meeting the clients face-to-face. This contact helps the owner of the construction business to detect even the slightest changes in the market immediately the surface and effectively adapt to them. In addition, the owner of this new construction business is endowed with complete control over the services range, how they are delivered to the consumers and at what price. This is also effective in fine-tuning the marketing methods, for instance, the detection of changes in certain media consumption by the consumers during the direct sales undertakings can trigger the changes of the methods of advertisement, for example, a shift from print media to online advertisement based on the technological dynamics in the market. On the other hand, the owner can opt for indirect sales through forming partnerships with other construction firms, for example, those engaged in the sale of construction materials like paints, cement, pipes and building blocks to market their services to prospective clients. In this case, the owner of the new business will use different marketing methods, for instance, advertising in the websites of these companies selling construction goods and also indirect sales methods. The necessity of sales skills by the builder From the preceding discourse, it is apparent that acquisition and utility of sales skills by the builder breaking into a new market are integral in elevating the performance of the business. This is based on the fact that they help the builder to convince the consumers that they need a particular service and inducing them to purchase this service. In addition, sales skills as also important in a highly competitive market, for instance, the construction market where diverse players in the industry are making every effort to persuade their goods or services as opposed to those of the competing firms. This makes sales skills to be particularly important for the builder who is penetrating a new market and who is not assured of a concrete client base. Moreover, some of the construction services being offered by this builder might be new in the market and the consumers have little or absolutely no knowledge about these services. Based on the fact that this is a new market opportunity, the builder offering these services ought to have robust sales skills to convince the buyers that these services are of high value to them and they will get a value of their money. The builder also uses the sales skills to assure the consumers that these services are of high quality, being delivered by qualified individuals and offer long-term benefits. Lastly, strong sales skills by the builder play a paramount role in cementing the marketing undertakings of this new company. This is whereby the robust sales skills helps in fortifying the message in the advertisement channels through delivering equal or higher quality services than those in the advertisement channels. Nonetheless, it is also imperative to be cognizant of the fact that in some instances, sales skills might not be primarily necessary to the builder entering into the new market. The best example is when an exclusive market has already been established through strong marketing processes. In this instance, the sales skills of the builder might be insignificant since the consumers have already gotten comprehensive information in regard a certain service and have already made up their mind whether they are purchasing the service or not. Lastly, in case the builder has entered into a partnership deal with another company in the construction industry, for instance, the one selling construction goods previously mentioned, the necessity of the sales skills by the builder will have limited significance since a greater part of sales will be conducted by this partner. Conclusion From the above discourse, it is evident that the construction industry has evolved into becoming chief to the economic development of various countries. The increased investment in this industry has heightened the level of competition, thus the need of strong sales and marketing efforts by the new entrants, with one of the approach towards this end being the application of the 4 P’s of marketing (price, promotion, place and product). However, it is important to recognize that issues like competition, market volatility and attracting a competent workforce are some of the issues which confront the new entrants like employees previously employed in a construction company aiming at starting a small construction company offering construction services venturing in this industry during the transitional stage. However, the use of various sales and marketing methods is a feasible strategy towards surmounting some of these issues. Nonetheless, sales skills are not predominantly necessary for the builders venturing into this field. References Aaker, DA., 1991, Managing brand equity. Capitalizing on the value of a brand name. The Free Press. New York. Arslan, G., & Kivrak, S., 2009, ‘Critical Factors to Company Success in theConstruction Industry’, International Journal of Human and Social Sciences, Vol. 4, No. 8, pp. 561-564. 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