Economics of the Construction Industry - Advertising and Marketing

CRAIG DUTTON

HND BUILDING STUDIES

ASSIGNMENT 2

Economics of the Construction Industry

Advertising and Marketing

Although the company has some marketing strategies in hand, its policies are not generating sufficient interest in current projects, suggesting some up dating is needed. Not knowing what policy is in place it is reasonable therefore to start from scratch.

What is marketing?

Fundamentally, marketing is about identifying, satisfying, or exceeding the needs and wants of the customer, which are constantly changing, and which can be fulfilled in a product more efficiently and effectively than the company's competitors, whilst still maintaining profit. This broad statement is apparent in most forms of business activity, from planning, pricing, promoting, and distributing a product or service to the target market. Marketing entails several features that present themselves during the course of the marketing process, such features include:

Marketing is a comprehensive process that begins with an idea, and ends with the product that will be sold, satisfying the needs of the customer.
Marketing is a managerial process where decisions have to be made, on a particular marketing mix of the four P's, product, price, place, and promotion in the firm.
Marketing involves its managers planning and insuring sequenced activities are carried out in order that the marketing strategy is successful.
A marketing strategy is successful when a firm satisfies the needs of the customer, and in turn achieves its own goals.

Different approaches to marketing

Marketing concept. This approach stipulates that the product is moulded around the customer's wants, making the customer the reason for the company's existence. Subsequently, this concept requires that the company thoroughly researches the customers' wants, and then develops a product that meets these requirements, which can be sold at a profit. This approach implies that the customer is King, and goes hand in hand with the company's goal, which ultimately is to make a profit and stay in business, whilst purveying a caring image.

Product concept. This approach states that the ultimate consideration is geared around the product itself, taking into consideration the products competition, and then designing it better in quality with more features, which will out-perform that of its competitors. The concept therefore directly if not indirectly ignores the customers "want satisfaction".

Production concept. This approach states that the product will sell well if it is well made and low in price, displaying value for money to entice the customer. In this concept the emphasis is directed towards the company's activities, Involving improved

manufacturing techniques and the cost structures of the business, rather than the customers "want satisfaction".

Selling concept. This approach concentrates on developing sales techniques to try and entice customers into purchasing the company's product, whether they want it or not. The emphasis therefore is placed on the customer, but not necessarily on the customer's "want satisfaction".

Societal marketing concept. This approach is a fairly new idea combining the objectives of the marketing concept, and incorporating social awareness into the equation, emphasising environmentally friendly issues, such as the use of recyclable resources and tackling the problems of pollution, involved in manufacturing the product.

Assessing the Company's Potentials

Before deciding a marketing strategy, it is important to carry out a marketing audit. This is a process of collating data to determine the company's current position, and review its policies. This could be carried out using the S.W.O.T. analysis procedure, which assesses the company's strengths, ...

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Assessing the Company's Potentials

Strengths.

Expertise in the House-building sector which will give flexibility if product design restructuring is called for.
A good reputation as a builder and employer, - the company has many satisfied customers and a labour force that likes working for the company.
A reliable Labour Force.

Weaknesses

The company is suffering from an external restraint, of the current housing project not producing adequate customer interest, almost certainly due to the company's' marketing policy.
The workload is variable and solely reliant on house sales.
The Land acquisition for the current project was in reflection too expensive, resulting in the finished house prices being above competitors' equivalent products.

Opportunities

The current housing project itself could hold a number of opportunities, its land for instance; being such a rare and costly commodity should be utilised to its full potential. Currently the development is predominantly a four-bedroom plan with high-pitched roof designs that could easily be upgraded to five bedrooms, utilising the loft space at relatively little cost compared with potential return, also giving the development added features compared with the competition, thus exploiting a niche in the marketplace.

Threats

The current marketing policy does not emphasise sufficiently the company's excellent reputation.
Cash-flow problems ultimately mean when the product is not selling, all activity stops, losing the firm money, resulting in having to lay off valuable work force with essential expertise.

Corporate image

Corporate image defines the public awareness of the company itself. A successful corporate image makes the company a household name, and an ultimately successful Corporate image can actually convince the customer to substitute the products name for the company's name, for example, JCB, Thermos, Hoover, and Biro, all have experience of this. Not just big firms can benefit from corporate image; it can benefit firms of all sizes. Small local firms can adopt logos and symbols to enhance public awareness, which can be used in advertising, sign written firms vehicles and the firms' stationery also local sponsorship schemes and charity events can raise awareness and goodwill of the community towards them. Logos may contain symbols to enhance the message the company wants to convey, for example "Barrett" have an oak tree in their logo, which conveys an image of strength, tradition and stability. The company must apply these different considerations when trying to evolve a viable corporate image. The company image must reflect quality, - the biggest purchase in a person's lifetime will probably be the home, and therefore the customer will want reassurance that he or she will be purchasing a well-built, durable product. This should be reflected in advertising material, quality brochures, emphasising the company's' quality brand image at every opportunity. For example reflected in the company logo, staff, vehicles, machinery and premises. A comprehensive advertising plan should be implemented involving local press, national magazines, brochures, quality show houses with hospitality, open days including wine and cheese parties and barbecues, all emphasising the company image creating interest, which means sales. All of these points raised may also be considered as controllable tools of the promotional Mix, the uncontrollable tools may be considered as; word of mouth, brand heritage, and the public's perception of the product.

It is useful not to get bogged down by all the different activities of a complex sales plan. We can do this by a communications appraisal, in which three questions may be answered.

1. What is the message the company is trying to get across to the customer in its promotional material?

2. To whom should this material be channelled to make full economic use of advertising resources?

3. What would be the expected outcome, for example what would be the company's goal?

A company should be able to identify the customers needs. Segmentation may be applied to try to find different potential customer needs, by splitting them into different groups, considering their social background, and then the different groups can be targeted by different sales plans. The more the company can define its customers, the more relevant the promotional mix. Besides the customer requirements when developing a marketing strategy, it must be established how the product compares with its competition, and emphasis can then be given to where it compares favourably.

Differentiation

This is a way of instilling the firm's characteristics into a product to differentiate it from its competition, and if we can translate this into an advantage over the competition, we have created a competitive differential advantage.

Research orientation

In this case, research will start with the site itself. What are the national and regional characteristics of the economy, which effect the site? For example, the infrastructure, schools, population trends, employment patterns, also the levels of government aid. With this general background information we must establish whether the immediate locality matches the general trends for the overall area, and if this is not the case we must find out why. In examination of the geographical and social factors, we can examine census information, the local authority planning register, as well as informal meetings with local authority officers who could prove to be a valuable source of information. Survey's can determine the attitude and preferences of potential customers, which can orientate design flexibility of the product to facilitate the customer's needs.

Considerable company data exists, and is accessible to the public making competitor research possible. Also the local authority may have records from studies trying to encourage investment.

The Census information is conducted every 10 years and includes age, sex, marriages, working wives, housing statistics, which will help to build a picture of a potential customer base, but consideration must be taken of the information's age, accurate research will contain up-to-date information. Ultimately, the research will contain survey's, these are best carried out by professional agency's, who are experienced in this highly specialised process, if accurate results are to be achieved, and who are sensitive to such anomalies which the research may produce.

Sales and Promotion

Sales and promotions can be categorised into two different areas:

"Being made aware and Being persuaded to buy."

Being made aware

There are different ways to get the Public's attention in which we can publicise the project, for example news media, posters and billboards, TV and radio, and the Internet.

Newspapers, magazines, property newspapers, free local newspapers and specialist magazines with good local publication, all of which have different reader types, allowing segmentation and targeting the defined segments with the appropriate sales material.

Direct mail could be used to target potential customers who have shown interest.

Posters and billboards could be used at or in the surrounding area of the site, also where they can be seen by a large number of people, for example, railway stations and busy roads.

TV and radio. Many local businesses make use of commercial radio, proving it to be an effective and economic advertising tool.

The Internet may be used as an excellent way of promotion, with well thought-out sites which can advertise a great deal of information for relatively little cost. It is very effective when used in conjunction with other forms of advertising, which can be used to entice the customer on to the Internet site. It is also excellent for customer contact through e-mail, and as a research tool with customer questionnaires.

Being persuaded to buy

There are many established ways of enticing the customer. A house for example is a very complex product, with many different features appealing to different customers. Segmentation is important in channelling the right information to the right customer. The complex product is not always a drawback, a house for example as many areas of flexibility in its design, which when exploited will make a wider range of product features for the different customers segments, which may be regarded as incentives. A choice in design of kitchens, gardens, carpets, tiles, and appliances for example, could swing a sale. Other incentives may include part-exchange, mortgage arrangements, or even the whole package from finance to removals, taking the stress out of moving house.

Staff incentives could also be introduced to make the workforce perform better, with team or individual bonuses, and holidays for achieving predetermined targets. This can encourage the marketing theory to be instilled in every job from the top down, provoking questions like "how can I do my job better" and "what will please my superiors", and applying the marketing philosophy to virtually any activity.

An Outline Marketing Strategy to sell 50 homes

Positioning. Our product being 4/5 bedroom detached houses in a select suburb of which we can emphasise the products prestige.

Segmentation. A market sector will predominantly be two parent families both of which will be working professionals, who may have increased their family and need extra living space.

Customer We have established that the predominate target customer as a professional couple with a family. The age spectrum could range from late twenties to early Forties. Style will be an important consideration with any young couple, attention being paid to the latest trends etc. There will probably be his and hers cars, so space for parking and garages will have to be provided for. With both parents working, time for household chores will be limited, therefore labour saving appliances and low maintenance may be appealing. As earlier mentioned, good schools and crèches in the area should be highlighted as well as excellent roads.

Product. Our product must be flexible enough to appeal to this broad market sector, with a lot of different options and specifications that caters for the customer wants as well as needs.

Selling We must be able to spot a potential customers psychological profile and use the appropriate sales arguments.

Pricing. Pricing must be seen to be keen compared with the competition utilising every potential design feature our budget will allow. Every effort should be made to make productivity as efficient as possible without the work standards and quality dropping.

Volume At the moment, our market share is comparatively lower than that of our competitors, yet our product is not inferior. Using all the points raised earlier, I am sure we can significantly increase our share in the market, once awareness of the project has been raised, and I am confident that the second phase of the development will be released at the end of the summer.

Case study

This case study is a comparison of two different companies selling a similar product. Midland and General homes and Longden Homes.

Midland and General have proved to be highly successful in selling homes at their latest site, even though the site is approached via an industrial estate.

Longden offer their similar product in much more idyllic surroundings, which would seem on the surface to be a better proposition, but after talking to a Midland and General sales adviser it would seem that their houses fall in a catchment area of a school, which has one of the best national academy achievement records. This would appear to prove that schools are a very important factor when selling houses, this has further endorsed in the sales literature when visiting sides. Longden Homes have a much more comprehensive sales literature package, with high-quality brochures with pullout folders. In the case of Midland and General homes customers are greeted with a less aggressive simple leaflet, as the area is making their houses much sought after.

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