Place and significant of marketing within project management12 The extent to which marketing is beneficial for the different stakeholders within the whole construction supply chain14 The extent to which marketing is beneficial for the different stakeholders within the whole construction supply chain14 How Marketing might be improved in the Construction industry17 References19 Introduction The movement of materials as they flow from their source to the end customer is called supply chain.
Supply Chain includes purchasing, manufacturing, warehousing, transportation, customer service; demand planning, supply planning and Supply Chain management. It is made up of the people, activities, information and resources involved in moving a product from its supplier to customer. UK construction industry includes a lot of these supply chains. To manage and develop such industry, some strategies need to be used. All the members of supply chain have to work together in order to achieve the goals set out by industry.
A logical approach is to identify a need, evaluate the scale of the need and the likelihood of satisfying it at profit, plan how demand can be satisfied and implement the plan is called marketing. This is one of the strategies that companies use in a every day running of their company. In 1990 report introduced by Morgan & Morgan, they concluded that marketing within construction industry is still a new concept, as well as Morgan & Burnicle (1991) mentioned that UK construction has been very slow in regard of adopting the require marketing mechanisms.
Large numbers of organizations still believe that marketing is just handing out brochures and advertising, therefore they do not follow the plan and therefore they miss out on their goals. Construction industry is in severe recession, construction corporations are actively considering new strategies and marketing techniques to face the issues. Professions were starting to come forward with strategic practices as the industry has a growing workload and still very small profit margins. So it can be observed that there are still huge numbers of improvements that the industry can achieve.
The Latham and Egan reports have started moving the industry to perform better and these essential reports have accelerated the development of the industry. “As part of this renaissance of the industry, clients became more powerful arid better informed, and more knowledgeable about commissioning, owning and operating their buildings. ” As a response, constructors and professions in the industry should start to act strategically rather than opportunistically. Some of these strategic plans are mentioned below: •Partnering •Strategic alliances •Supply chain management Lean construction •and so on have all been part of the plan of change. These plans are different control and marketing mechanisms that are used in the world of economics, marketing, management, politics and the hope of this paper is to connect those mechanisms and the industry and maybe add to the current research on the subject. Role of marketing Within the Construction Industry marketing The role of marketing within construction industry is huge. In some cases, they argue that no project in construction industry will be successful if no marketing was used.
They argue that for selling any kind of building or wining any tendering, some marketing mechanism have to be used in order to achieve the goals. However, as there is no long time connection between the parties involve in a single project. E. g. client will use different contractors for different project or different suppliers supply the material for different project and therefore no need for any kind of marketing within the industry. This evaluation however is not very academic and is used generally; there are simple marketing skills that are used daily in any project.
So it can be concluded that marketing is playing a very big role within the construction industry, the idea of new project it self is a strategic marketing plan. The two diagrams below show the general (basic) and more specific marketing systems that are used in construction project. Basic Marketing Diagram 1: Basic Marketing Components Diagram 1 shows some basic marketing that is used in the construction industry is shown. Specific Marketing Mechanism •Construction supply chain management •Relationship marketing •Knowledge Transfer Partnership •PEST analysis • SWOT analysis • Marketing Mix
The data above just shows some of the marketing systems that are or can be used in any project. The practice of these strategic marketing practices needs to be shown and explained to contractors from professionals. So the contractors will have the require skills to apply those in practice. Lastly, challenges set to the construction industry will require the use of today and tomorrow to think strategically about the future directions of their organizations and how to introduce marketing strategies into construction projects. This takes the role of marketing even further within the construction industry.
Marketing is an under developed function within SMEs and some believe that “unless the construction companies start seriously analyzing their own marketing environment and aligning their pre-project and project performance with the clients’ needs, they will create their own decline” . Marketing strategies and policies for construction Projects A whole range of factors within the environment of the construction industry has changed over the last 20 years in such way that the combined effect has been for construction firms to move away from their traditional modes of operating to a more business like approach.
Therefore, new set of Marketing strategies and policies introduced to help the industry to achieve a more business like approach. Some of those marketing mechanisms are explained below: Knowledge Transfer Partnership The Knowledge Transfer Partnership provides the project with: •Allows the client or the company to reflect on past contracts, analyze the strengths and weaknesses as well as analyses of the external environment affecting the project. •Quick understanding and developing of new business ideas •Assessment of all organizational and support systems, leading to the completion of new and improved project management systems.
However, the uptake of KTPs within industry appears to be declining. PEST Analyses The PEST analysis is used to understand the big picture of the environment and economy in which you are operating, and the opportunities and threats that lie within it. The hope of PEST analyses is to understand the issues and therefore try not to face them as well as understanding the opportunities and take advantage of them. Table 1 below shows the pest analysis which is later argued in more depth: Table 1: PEST analysis
Political FactorsEconomic Factors (Short and Long term)Social FactorsTechnological Factors Stability of political environmentInflationReligionTechnological room for improvement in price or quality Government’s policyInterest rateRoles of men and women within societyHow is supply changed by new technologies Government’s position on marketing ethicsGross Domestic ProductTime consumers have for leisureDoes technology offer companies a new way to communicate with consumers Does the government have a view on specific matterExchange rateDo the population have a strong or weak opinion on sustainability Influence of government policyHow long are the population living SWOT Analysis
Strengths and Weaknesses Diagram 2: Strengths and Weaknesses of UK and general construction industry Threats •The UK construction industry is very fragmented compare to other industries. Therefore the opposition in industry is high as well as having very low margins within the industry. •Banks and shareholders mainly own the UK construction industry. Those parties do not try and perform new techniques and therefore they are underachieved most of the times. •UK construction industry is use to choose the contractor with least price, this trend can put pressure on firms and individuals within the industry. •“Some suppliers exert power over the contractors they supply. •One of the main threats to construction industry is international competition, in the long run this can led to a failure of an industry. Opportunities •New international markets to be explored by UK companies due to recent activities of EU and other nations in this regard. •Companies that provide finance can move into countries that are developing and require a lot of capital for their infrastructure.•Privately financed construction and infrastructure is the way forward for UK construction industry. •Attracting the clients back to investing in the industry by introducing urban regeneration, however this may need a lot land reclaimation and reconditioning. Environmental policies to give incentive to companies and individuals to reuse material and try to find new sources of materials. However these policies may result opposite if wrong policies are chosen. •Customer orientated companies can get more jobs from clients as the expectations of clients have changed. •Higher barrier of entry can be achieved by large firms due to higher client expectation, higher finance and better design. •EU and UK government working together to create enough research agendas to fulfil the industries need. •Usage of principle of Lean thinking by UK companies. Marketing mix Diagram 3: 7 P’s Forces within Marketing Mix Relationship marketing Relationship marketing is the connection between all the different parties involved in supply chain.
It divides into business-to-business relationship marketing (when the buyer is a company) and business to customer relationship marketing (individual is a buyer). On the other hand, some define relationship marketing as a link between the quality, customer service and marketing. Example of relationship marketing within construction would be the connection between client and his contractor as they were working together for number of projects. The relationship will automatically help the two parties to achieve a single goal that is beneficiary for both sides, as they would be cleared with their job and all other processes. As a result the project will have so many less issues in comparison to a project that a client and the contractor are new. Place and significant of marketing within project management
The role of marketing has been explained above; but now the question arise, how would significant can marketing involve within the project management? For this to be explained, firstly the understanding of project management should be in place. Many people misunderstood the definition of project management. Duncan (1996) in his article ‘A guide to Project Management Body of Knowledge’ defined project management as “Project management is the application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project” this instantly point out that marketing plays important role in implementing relationship between stakeholders.
For this to happen, project managers are assigned to implement more relevant strategies. Diagram 4 below shows the relationship between project management and other management discipline. Each management processes interlink each other, this shows the close relationship between members of management. Diagram 4: Management Mixes Duncan (1996) added that “Project management is designed to make better use of existing resources by getting work to flow horizontally as well as vertically within the company” However, in the context of ‘make better use of existing resources’ definition is vague. In my point of view, existing resources means whatever you have; but how about other resources that has not been implied.
For instance, a company will only use their own existing programs rather than buying more new and improved programs; in other words, there are other programs which are available and excess able. Now we can say that Project management is designed to make better use of ‘available’ resources. According to Kerzner (2009) mentioned that PMBOK® Guide, 4th Edition highlighted that most companies have six major resources namely; Money, Equipment, Manpower, Facilities, Materials and Information/Technology. The aim of project manager is to control these resources. To achieve this, project manager has to have a well establish relationship within the stakeholders (e. g. banks and companies which loaned them). It is clear and precise that marketing enables company to identify their aim and objectives, strategy in terms of market sector.
With the help of marketing, it makes it a lot easier to identify opportunities by market information. A good example would be a marketing management oriented contractor would raise the profit margin if the other contractor who usually win awards of tender and already been awarded to their fullest potential project. a wider picture would be say for example, Contractor A can only cater 6 projects at a time and if they already won their sixth project, Contractor B can now raise their profit margin in a sense that they still could win the project with a bit higher profit. To impose marketing oriented management system, the company has to plan ahead their work to be more sustainable and efficient; thus, proved to be cost-effective.
More often marketing may identify other business possibilities in more advantageous sectors. Generally, marketing orientated management companies will intend to promote their service by standing out with their so-called one and only tailored services. This helps them to stand out from other competitors. The extent to which marketing is beneficial for the different stakeholders within the whole construction supply chain Marketing to its extent would provide benefits to the stakeholders when it is being well practiced. When marketing strategies are implied within the whole cons
truction supply chain may increase credibility and communications skills between parties. Christopher et. l (1991) highlighted that “The benefit of establishing a good relationship within the supply chain is that your value added is respected and this can be beneficial for references “ For example in construction industry, it proves that it is important that contractors have a good relation with suppliers. Suppliers are part of the “stakeholders”. According to Walker (2009) “The definition of ‘stakeholders’ is less than clear… Other definitions are more prescribed, including only those with the capacity to influence the project directly” . However, this definition is not clear without understanding the criteria or categories of the stakeholders.
Some may identify their stakeholders as individual within the supply chain, this include client, project team, contractors, suppliers and etc. To be precise, According to Olander (2006) “There are essentially two categories of stakeholders: Internal, who are those actively involved in project execution; and external, who are those affected by the project”. This is then supported by Kotler and Kevin (2009)stated in their book that, stakeholders consists of Project Managers, Clients, Performing Organisations, Project Team Members and Sponsors. There are vast stategies that can be implied within the construction industry it self. some may use different approach within different arena. arger construction companies intend to provide their own marketing department. Morledge (2002) in the International Journal of Construction highlighted that “The shape and character of the industry suggests that marketing improved processes will be a difficult problem requireing innovative solutions in order to be successful”. this shows that the need of major improvement in construction via marketing improved processess. he also suggested that “the cross-industry marketing strategy is needed in line with the policy statements set down and already agreed. ” indeed this suggested that marketing plays important role in construction industry as well. ut the question is to what extent does marketing benefit different stakeholders?
To answer this question firstly, using Olander (2006) illustration of stakeholders are divided into two catergories, i) External stakeholders; ii) Internal stakeholders. by this we can identify which type of stakeholders can be categoriesed as External or internal stakeholders. Table 2 below shows the different type of stakeholders and their benefits gained from implementing marketing improved processes to their construction management. Table 2: Benefits of Stakeholders StakeholdersBenefits External StakeholdersGovernmentWith having marketing management in place, a good relation will build up between clients and contractors.
The government as the major client in this industry, should have a good relation with their contractors; this is to ensure that contractors can provide more ‘willing’ or ‘trust worthy’ end product. in other words this relationship with customers or suppliers should be well established. this is supported by Kotler et. al (1999), where he explained that “The process of creating, maintaining and enhancing strong, value-laden relationships with customers and other stakeholders” this process is called Relationship Management (RM) or Customer Relationship Management (CRM). the benefit for implementing such strategy is that the customer loyalty and retention may be achieved. this will prolong quality construction within the community/area. End Users Local Neigbourhood Local Community
Internal StakeholdersProject ManagersDifferent companies applied different types of marketing strategies. Project Manager as one of the stakeholder has the reason to engage more projects in the future and are looking forward to persude regular clients. their relationship with othe stakeholders are essentually relevant to there specific stratergy. but the aim is to understand, implement and deliver their marketing strategies. having said that, the benefit would be having a good relationship with more clients and engineers to ensure ties for future projects. there are many reasons to keep existing clients, and one of the reason is that satisfied customer are more willing to pay subsequent price.
Design TeamAlthough this type of stakeholder are more contractual, creating better working environment and good communication with other teams can not only gain loyalty and trust from the customer but also will prolong competitive advantages with the others. This is supported by Bruce and Roy (1993) when they explained that “The development of a coherent design and marketing philosophy is essential to the achievement of a longer-term competitive edge. ” ContractorContractor and Sub contractors should build up mutual long term relationship with customer or suppliers. However, substantially, the senario has to start from the begining. this will then build up trust between parties.
This is supported by Rahman and Kumaraswamy (2002) in the ‘International Journal for Construction Marketing’ highlighted that “ The trust, smoother communications and faster problem solving achieved through partnering will considerably boost transactional efficiencies and lay firm foundations for mutually beneficial longer-term relationships”. Sub contractor Suppliers How Marketing might be improved in the Construction industry “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. ” The industry has to use their required marketing skills, so it can develop any further.
Some of these marketing mechanisms are more important than others in the aim of improving the industry. The technique of how to implement these strategies with construction requires its own planning that has to be done by teams employed by clients. Some of the ways that the construction industry can be improved is mentioned below: •Companies have to start working with parties that will improve the strike rate, e. g. preferred design consultants by key clients. •Making the organizational plan very clear to the entire employee as well as making sure those plans are kept and everyone is working towards the goals.
•Building partnerships with people who can get the company, right clients. Industry should be concerned regarding customer satisfaction as it has been relied about 80% satisfaction on intangible assets compare to only 20% on tangible elements. •Managing customer relationships effectively in a hope to increase the size of order book. •Continuous research and development has to be done on the subject as well as permanent implementing those new marketing mechanism within construction industry. It should be mentioned that using some of these marketing tools would not be effective. The marketing strategies mentioned, will improve the industry if to be implemented fully and correctly. However, continuous research and making use of those developments require a very precise planning as well as regulations to make sure industry is performing at its best.
It can be concluded that UK construction industry will not see much improvement in the short run as they are all upgrading their organizational plans, but in the long term much improvement should be seen in UK industry. Project management requires marketing strategic mechanism to ensure that there are mutual relationships between parties to ensure product ‘confidence’ and ‘trust’. Christopher et. al (2003) has identify 11 major roles and responsibilities of a business development manager. From my point of view, these roles and responsibilities are also being implemented into project management with marketing oriented. these 11 roles and responsibilities are:- •Develop and manage new business opportunities •Develop, build and maintain customer relationships Develop alliances, joint ventures, partnerships and teaming arrangements
•Develop business strategies, Win Plans and Closing Plans for target prospects •Assist in strategic Planning and analysis of target markets, customers, prospects and opportunities •Co-ordinate and manage all internal prospect and bid approval requirements •Lead commercial and technical proposal preparation •Manage assigned customer accounts •Prepare management information, presentations and briefing materials •Provide input to management information system and business reports •Provide after sales support to customers. The aim of marketing is to identify possible business opportunities that focus on more profitable sectors. The implementation of marketing into project management may find cause to change the mind set of traditional contractors. Nowadays larger scale contractors aim to forecast the upcoming available project to maximize their profit.