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Marketing Architectural Services

Marketing Architectural Services. American Institute of Architects Lubbock Chapter October 10, 2007 Bob McDonald Rawls College of Business Texas Tech University. Importance. 2004: > $1 Trillion in construction in US Represents 4.7% of US GDP

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Marketing Architectural Services

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  1. Marketing Architectural Services American Institute of Architects Lubbock Chapter October 10, 2007 Bob McDonald Rawls College of Business Texas Tech University

  2. Importance • 2004: > $1 Trillion in construction in US • Represents 4.7% of US GDP • Impact on many aspects of society including housing, commerce, health care, education, worship, & entertainment

  3. Uniqueness • Marketing of architectural and other professional project services differs from marketing of other services: • Demand is discontinuous • Each product is unique • Projects are complex

  4. Profession • Requires the ability to apply scientific principles to solve a problem • Skill based on theoretical knowledge • Developed through education & training

  5. Product: Professional Services • Specialized knowledge and skills • Formal education • Supervised practice • Demonstrated competency via licensing examination • Enables architect to create complex, unique, highly customized product that satisfies clients’ needs and budget.

  6. Consequences of Licensing • Public protected from unqualified practitioners • Creates barrier to entry • Customers incapable of differentiating among licensed professionals • Difficult for professionals to differentiate themselves from other practitioners

  7. Differentiation • Non-commoditization • Value Added • Sell a credible promise • Capable of designing project more effectively and efficiently than competitors

  8. Credible Promise • Existing clients • Rely on trust earned through experience • Relationship marketing • New clients • Rely on cues • Reputation • Track Record • Staff, offices

  9. What works? • Research Project • Interviews with 9 informants • 7 principals, each > 25 years experience • 2 marketing directors, each > 10 years experience • All 9 work for highly successful firms • 3 firms, ranging from 25 to 150 employees • Each has been in business more than 20 years • Two firms are multi-disciplinary, one specialized • Same large city with > 200 firms

  10. Conceptual Framework External Relational Factors Interaction Ties Trust & Commitment Operant Resources/ Capabilities: Market Sensing Customer Linking Marketing Strategy Making Marketing Response Project Development Successful Project Marketing Internal Relational Factors Trust & Commitment McDonald and Madhavaram 2007

  11. External Relational Factors • Traditional Long-Term Relationships • Core of successful marketing strategy • Successful projects demonstrate value • Projects inherently long and intense relationships • But…

  12. External Relational Factors II • Projects are lumpy • Likely to be long gaps between projects • Results in “sleeping relationships”

  13. External Relational Factors III • Pursue clients with multiple small projects rather than fewer large projects • e.g., multiple remodel vs. build from scratch • May work better for smaller firms • Maintain contact between projects • One interiors firm touches base quarterly • Keep fingers on pulse

  14. External Relational Factors IV • Client following strategy • Go on the road • Establish satellite offices • Clients with multiple project types • Institutions, government, schools, hospitality • Referrals • e.g., Hi-rise residential  Cathedral

  15. Internal Relational Factors • Within Firm: Principals often find leads for each other • Within Network: Engineers, consultants, contractors, financiers, real estate brokers • Expand business network

  16. Operant Resources/Capabilities • Operant resources: dynamic resources that produce effects such as skills and knowledge, or organizational processes and core competences • Successful firms are market-driven • Leverage capabilities

  17. Market Sensing Capability • Systematically gathering, interpreting and using market information quicker and more effectively than competitors • Networking: Principals responsible for business development, i.e., sales, marketing directors focus on marketing

  18. Market Sensing Capability II • Tie into large institutional and government capital improvement plans • Capitalize on personal connections • Cannot wait for the RFP

  19. Customer Linking Capability • Creating and managing close customer relationships • Customers believe they have unique needs, especially as projects become more complex • Firms in large markets (> 500K) developing expertise in particular project types to compete

  20. Customer Linking Capability II • Market-Facing Studios • Health care, commercial, religious, interiors, public works • Understand customer’s needs better • Understand market better • Develop specialized knowledge and skills

  21. Customer Linking Capability III • Principals responsible for each studio must be passionate about the project type • Expertise in a project type differentiates the firm in the local, regional, and even national and global markets • Need to emphasize expertise

  22. Marketing Strategy Making Capability • Structure: Geographic &/or Project Type • Follow markets to anticipate change • Principals must keep fingers on pulse • Conduct a thorough market analysis • Marketing Directors and Principals • Analyze Failures • (Airport Garage)

  23. Marketing Strategy Making Capability II • Leverage expertise • Hi-Rise Residential  Long-Term Care • Pursue large, efficient projects • Interiors pursued 60 – 80,000 sq ft projects • Law, energy, accounting, consulting • Not many in Lubbock

  24. Marketing Strategy Making Capability III • Traditional Market Planning • SWOT Analysis • Segment market and choose target segments • Competitor analysis • Forecasting • Staffing: especially important in professional project services

  25. Marketing Response Capability • Must demonstrate “value-added” • Clients often view architectural services as commodities • Must be innovative • Develop new market offerings, e.g.: • Convert building plans to CAD • Market Analysis/Repositioning Projects

  26. Marketing Response Capability • Promotion • Public Speaking • Seminars • Technical Symposia • Project Postcards • Christmas Cards • Hire market consultants, e. g., minister • Newsletter • Awards

  27. Project Development Capability • Raison d’etre • Conceptual, Technical & Human Skills • Coordination of multiple consultants • Contract Management • Code Knowledge

  28. Project Development Capability II • Hire the best people • Use the best consultants • Continuous Training & Development • Organizational Values • e.g., Quality Drawings • Contractors value & can sharpen pencils • Hand Letter Example

  29. Success • Journey not destination • Hard work • Internal & External Relations • Operant Resources (Capabilities) • Market Sensing • Customer Linking • Marketing Strategy Making • Marketing Response • Project Development

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