Masonry Magazine February 1993 Page. 13
Contractor Marketing Plan
Key to Construction Work
There's still a tendency by construction contractors to begin selling something-anything-without a marketing plan in place.
POOR REAL estate investments (and construction associated with these projects) have been singled out as some of the major causes of today's banking and savings and loan crisis. Also, lending institutions have tightened up requirements for speculative construction and real estate to the point where most projects, unless owner financed, can't get funding.
Among other construction marketing trends are the following: Lack of differentiation is still the plague of the contractor, regardless of type or size. Universally, contractors promote quality, excellent service, skilled people, and on-budget, on-time delivery. Buyers who can't tell the difference between the final candidates end up buying on price.
Net changes in non-farm employment, either up or down, continue to drive most residential markets. Residential, in turn, is the main catalyst for nonresidential activity.
Marketing remains foreign to many contractors. However, those surviving the current downturn often tend to have marketing and business development functions firmly in place. Once the marketing plan is established, the focus moves to sales, negotiations, and presentation skills.
Contractors get serious about actively marketing and selling construction services after they repeatedly lose contracts to companies doing a better job communicating with the end buyer. Even market leaders complain about being outsold by smaller, more aggressive competition.
One significant change in this tight market is that many business developers and salespeople are keeping their jobs. Past recessions tended to wipe out these positions because they were considered expendable. As companies mature, the work acquisition process is considered critical for survival.
Bid chasing continues to drive margins down. The alternative is selling negotiated work based upon expected benefits. On the other hand, truly negotiated projects are becoming harder to find. Negotiations skills are critical in maintaining this type of project.
Select bid in the private market is taking on more hard bid characteristics. Projects with three to six bidders in the mid-1980s may have as many as ten to fifteen active competitors today.
Hard bid in the public sector with complicated projects is often taking on select bid characteristics where a history of poor contractor performance is involved.
Public relations, when properly managed, continues to be effective with contractors. One controversial trend of last year deals with contractor corporate brochures. Generally, these promotional pieces appear to be a waste of company time and resources.
Target marketing remains extremely effective for contractors and distributors of all sizes. Employee involvement is critical in identifying ideal customers, markets, and project types. The single biggest complaint about target marketing is that management alone cannot clearly identify and prioritize projects.
Targeted databases are effective at keeping marketing costs down by selectively aiming repeated messages at decision makers.
The difference between marketing and sales remains a confusing issue with many contractors. There is still a tendency to begin selling something anything-without a marketing plan in place. This normally wastes time and money.
Specialty and general contractors are still using estimators for the sales function. This can work to obtain repeat business from established customers, but it is normally a poor strategy for creating new business.
The greatest progress for women in construction related companies continues to be in marketing and sales. Manufacturers are slowly finding women breaking into branch, district, and regional sales management positions.
Companies with marketing and business development functions are increasingly requesting outside help to evaluate effectiveness of current efforts and expenditures.
Product manufacturers continue to correct the size of operations to be more conservative than they were in the mid-1980s. Unprofitable plants are either upgraded or closed. As sales have dropped from the 1985-1988 peak, reorganizations have become commonplace, often negatively affecting long term employee morale. This short term outlook and bottom line obsession of many product manufacturers are opening the doors wide to aggressive foreign competition committed to research and development over the long term.
Contractors get serious about actively marketing and selling construction services after they repeatedly lose contracts to companies doing a better job of communication with the end buyer-Even market leaders complain about being outsold by smaller, more aggressive competitors.
FMI IS THE NATION'S largest management firm exclusively servicing the construction industry. Principal services are marketing, crisis planning, improving productivity and quality, facilitating mergers and acquisitions, and corporate evaluation and planning. Contact FMI headquarters at Raleigh, North Carolina.