markets that the company would compete in the next step was organising a
promotional strategy in these area. Following the apportionment of a marketing
budget discussions were held in order to decide the best way of using this
allocation. In this idea of market development the company would attempt to sell
its range of services to a wider market. The communication of the firm’s
reputation and ability to the targeted markets was necessary. One source of such
markets was a database of forthcoming planning applications for building work
that the company thought would be of benefit to subscribe to. Mail shots would
be sent to the companies on this database and to large local companies in the
commercial and industrial sectors and a follow up call strategy would be
implemented. Further promotion of the company?s name was also planned through
promoting the company through it?s assets and the projects being worked on.
Sign boards were to be redesigned and the policy was introduced that all
projects would display these in prominent positions. Company vehicles and plant
would also be in a good state of repair and display the company logo. Good
relations with the press were keen to be developed so that coverage could be
given to occasions such as foundation stone laying and official openings. As
well as the clients the company also planned mail shots and a follow up call
strategy for firms offering professional services relating to the building
industry such as architects project managers and design companies. The price as
regards building contracting is largely determined by the amount of margin to be
added to the build up of the estimate for the project. Price is almost always
considered as being the single most important factor for the client as 99% of
contracts are let to the lowest bidder. "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 organisation."
(Page, 1995:p.120) 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(location, client etc.), number of competitors and recently reported
results. It was agreed that use would be made of the analysis undertaken for
marketing purposes when making the commercial decision of the level of profit
margin to be added to a project. We have seen how the firms approach to
marketing management links closely to theory. Now the effectiveness of this
approach shall be analysed and it?s success shall be measured. It has been two
years since the implementation of the initial marketing plan and it is assumed
that sufficient time has past to draw conclusions as to it?s effectiveness.
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. The company has experienced both growth in
turnover and not only sustained the level of profitability but increased this.
This is largely down to the fact that it has concentrated it?s efforts in
particular sectors. This narrowing of it?s portfolio in some areas (no
residential or transport) and diversification (design & build) into others
seems to have had a positive effect. When comparing the company?s performance
to the rest of the industry (Appendix D) we can see that most of the areas the
company chose were areas that the industry as a whole experienced growth. This
could perhaps prove that the external analysis made by the workshop team,
despite not being data analysis, was beneficial. Now critical analysis of the
marketing management strategy recommending improvements and changes to promote
future business success and development. Firstly, 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.
Analysing marketing opportunities, developing marketing, planning marketing
programs and implementing the strategies is in essence the way that the workshop
team organised itself during this initiative. "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 affect in some areas. However, I believe that the actual
significance of the marketing concept has not been realised. "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. It has
to be agreed that the detailed analysis of the company was a particularly useful
exercise. However, in spite of this it is still an old fashioned production
orientated company or perhaps is part way between production and customer
oriented. The markets are segmented but the act of understanding the customers
values and needs are not performed. The workshop team?s analysis of the
external environment curtailed at the PEST analysis, which was in itself only
personal views brought about by experience. 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 it?s
customers requirements and capitalise 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 organisation faces.
Companies which fail to recognise and take account of changes in their
environment have, in the past, either failed to capitalise on their
opportunities or – worse still – have suddenly realised 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. External analysis can also contribute to the marketing management
strategy by identifying significant trends, future events, opportunities and
threats. It has to be recognised that by identifying these areas threats to one
organisation 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." (Fidfield, 1992: p.39) As the customers are the
focus of the marketing concept the first logical step when beginning marketing
management is to analyse the customers. The workshop team?s 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. Nevertheless,
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 recognised the broad categories like to the industry were
to 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 organisation, it?s markets and it?s customers.
It also provides the focus for the organisation?s strategy for business
success. The workshop team?s method of segmentation links directly to the
Department of Trade and Industry?s method of segmentation when analysing the
whole of the construction industry for government statistics. For this reason it
is very easy to collect data and analyse the external sectors and then link this
to the company?s own business. The data has been collected from various
sources and this is stated in the appendix D. The conclusion are drawn below.
The output of the construction industry for work done for the industrial sector
is relatively small. The current output for this sector is estimated to be ?3.26
bn, where as the total output of the industry as a whole is in excess of ?55bn.
The problem with this particular sub sector is the manufacturing sector has not
grown by very much, steel has undergone radical changes and coal has all but
disappeared. Fewer factories and warehouses are being built. For the company the
only work undertaken in the industrial sector is the construction and major
alteration to warehouses, it is a large and important part of the company?s
turnover. Clearly the prospects for the industrial sector are less favourable
than for those of the others. 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. However, 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. The deciding factor
is whether or not this will continue to be the case. Commercial construction is
a much more important sector in that it represents nearly 39.8% of the output of
the construction industry. It is highly cyclical and very sensitive to changes
in economic conditions. The sector has been favourably affected by privatisation.
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. There are still a large number of small and medium
sized firms in the industry but this number is declining. Design and build has
been a growth area in the construction industry in recent years. Design and
Build is where on organisation takes responsibility for both functions on behalf
of a client. As the market for building contractors has become more competitive
and margins have been squeezed tighter the contractors sought other ways of
increasing competitive advantage by offering the full service it had dual
benefits for client and contractor. 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. 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 some what." (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." (Aaker, 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. Decline also in coal mining and steel based industries
causing construction firms connected with these areas to switch their efforts to
other activities. 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. Despite objections from various pressure groups, large commercial centers
are increasing in number. 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. When analyzing the external environment using
PEST the company needs to have a list of areas to investigate for each of the
four factors; political, economic, social and technological. Political factors
could be to look at the effect of a change of government would have on spending
in the public sector. The state of play as regards the ability to obtain grants
from the European commission. Changes in the requirements for obtaining planning
permission. Changes in the health and safety regulations. Economic factors to be
looked out for would be situation with the UK?s Gross Domestic Product. Which
industries are experiencing increased investment as this is likely to lead to
increased construction activities. Change in the demand for new buildings that
will be suitable for changing needs of other industries for example the needs of
a high technology environment. Changes in interest and exchange rates have large
effects on construction projects. 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.
Environmentalist pressure for the extension of the Green Belt and other current
environmental factors. Demographic changes leading to increased need for special
housing. Changes in social trends and consumer behavior. Technological factors
that could potentially provide the company with competitive advantage can be
identified by looking at the following areas. Increased use of information
technology. Innovations in construction techniques for example the greater use
of pre-fabricated elements. Further development in high technology creating a
need for suitable buildings. Using the information gathered from an appraisal of
the external environment we need to turn the information into action. What?s
important is to search through the environment for specific opportunities which
appear to be open to our 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.