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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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