PCCA Journal|1
st
Quarter 2011
22
In a cost-based pricing environment, you win market share
by being the lowest price. Being the low price, however, does
not guarantee a profit. How much marketing is required to
compete solely on price? The answer is not much. What hap-
pens in the recessionary environment is that some contrac-
tors eliminate marketing to eliminate cost, but that act does
not eliminate the need for such costs. You have two options
to survive and thrive in tough times. You can increase rev-
enue and gross profit or you can reduce cost. Marketing does
increase cost, so the marketing effort must be properly aimed
and productive in execution.
The problem in the construction industry is that you can-
not save your way to prosperity. Costs became costs in your
business for a reason. Not to say that all costs are good.
However, if you eliminate costs, it does not change the reason
or purpose that drove it to become a cost in the first place.
For example, cutting marketing expenses certainly eliminates
expenditures. However, what is the long-term cost of saving
those dollars? The dynamic friction between saving money
today and strategically investing in your business for tomor-
row creates some of the most difficult trade-offs our industry
faces. Many companies cut marketing and sales expenses
in economic downturns. The benefits of these expenditures
(brand recognition, differentiation, customer targeting, mar-
ket presence, etc.) disappear, but too often, the impact of the
cutbacks is not immediately felt. This gap can fool companies
into thinking that their marketing and sales efforts were not
generating results.
Marketing and Sales in the New Normal
The new normal offers fewer negotiated work opportunities.
The market has scaled back to the levels experienced in 2003
(as shown earlier in Exhibit 1) and is not expected to recover
to pre-recessionary levels for three to four years. Construction
will be out of the recession in late 2010 to mid-2011, but the
market will not return to 2007 levels for several more years.
Best-of-class contractors know local and regional mar-
ket trends. They have researched and explored emerging
markets. Their strategic planning efforts have given them the
insights needed to get a jump on market changes and find
niches that best fit their capabilities while providing profit-
able work.
These companies focus their marketing and selling efforts
on emerging markets (such as health care, assisted living, al-
ternative energy, LEED construction, etc.) and market niches
that provide the best potential. They realize that simply
bidding more work in existing markets is not the best answer.
In some cases, that type of bidding strategy can be the worst
possible answer.
Marketing and sales, working together, have four basic
objectives:
•
Retain existing clients
•
Engage new prospects
•
Create opportunities for higher profit potential
•
Increase the success rates on projects
Marketing means identifying the right opportunities within
the market you serve. It is about understanding your core
strengths and the real value of your products or services. It
is learning the needs of target customers, what drives their
decision making, finding sufficient potential projects, and
winning work. Proactively, a company evaluates its market
position and determines its best strategic moves.
You have to communicate effectively with your customers
if they are going to understand the true value you bring to
their organization and projects. Postcards about successful
projects, customer testimonials, press releases, and signage
are just some of the available communication vehicles.
Exhibit 2 is a list of marketing tools for communicating
market messages. Match the marketing tool to your market-
ing objectives. The goal is to gather the knowledge needed to
target customers, markets, and segments in which you want
to operate. Being clear and intentional on that is the simplest
way to ensure that your marketing investments generate the
highest possible returns.
Marketing
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