Today, building industries have to accept that Information Communication Technology (ICT) is likely to evolve the nature of the industry over time; and for building consultants, the success of implementing technology depends on two integral strategy questions:
Not all building industries will need to significantly align strategy with the growing global economy, however. A company in a predominantly local business may prosper because of its superior local service and distribution. But a competitor may make a move that changes the industry fundamentally; effecting industries globally, as was the case with China’s Anhui Conch Cement acquisition last week. The arrival of emerging markets can present an economic threat to protected markets that suddenly face new rivals wielding a daunting arsenal of advantages: substantial financial resources, advanced technology, superior products, powerful brands, and seasoned marketing and management skills. Often, the very survival of local companies in emerging markets is at stake.
Change not only brings fear, it also brings the opportunity for new growth. The automotive, agriculture and other trade sectors are all showing growth through implementing ICT but what of the construction industry? It is hard to pinpoint innovation here because national market sectors are divided, and industries are still getting their bearings in the midst of this growth cycle. Due to the vacillating capabilities within the construction industry supply chain, there can be no across-the-board answer on how the digital age will affect construction but the formula is quite simple: technologies can provide the means to grow a business from a small back yarder to national or even global extenders.
Tilt: Shifting Your Strategy from Products to Customers author and Marketing professor Niraj Dawar stresses the importance of adapting to the new market environment in a Harvard study on Survival Strategies for Local Companies in Emerging Markets. By understanding where an industry falls within the technology flux, managers from emerging markets can get a picture of the strengths and weaknesses of their competitors, he says. The study, focusing on the automotive industry and how small businesses can compete with multinationals, also presents a paradigm for the construction industry, for which vital research is still lacking.
This study shows how the success of ICTs can be measured differently depending on the service capabilities within an industry’s supply chain. Most significantly, the study provides the principles of economic convergence that can be applied to building industries where their success turns on meeting the particular demands of local consumers. In bricklaying, for example, a consultant will not necessarily compete on a national or International scale, and so the company’s marketing needs will be very specific.
At the same time, bigger companies cannot compete by simply selling standardised products at a lower cost. Alternatively, high product costs and niche market suppliers may discourage the competitive online environment. Most companies lie somewhere in the middle of the spectrum. National sales bring some advantages of scale, but adapting to local preferences is also crucial. Managers from emerging markets can begin to get a picture of the strengths and weaknesses of competitors by considering where their industry falls on the spectrum. Equally, builders can think about where their service and product placement. These two parameters – the strength of globalisation pressures in an industry and the degree to which a company’s assets are transferable internationally – can guide strategic thinking. If globalisation pressures are weak, and a company’s own assets are not transferable, then the company needs to concentrate on defending its turf against incursion, says Dawar. He draws on a matrix illustration where a company employing such a strategy is referred to as a defender. Alternatively, a situation where globalisation pressures are weak but the company’s assets can be transferred, means the company may be able to extend its success at home to a limited number of other markets. That sort of company is an extender.
If globalisation pressures are strong, on the other hand, the company will face bigger challenges. If its assets work only at home, then its continued independence will hang on its ability to dodge its new rivals by restructuring around specific links in the value chain where its local assets are still valuable. Such a company, in Dawar terminology, is a dodger. If its assets are transferable though, the company may actually be able to compete head-on with the multinationals at the global level. Dawar calls a company in that situation a contender.
Dawar plots these four strategies on a matrix to help managers think about the broad options available.
Building consultants, once they understand their industry, need to evaluate: a) the competitive assets identifying their company’s distinctive products, b) where their market appeal lies and c) which advertising platforms will produce the most cost effective results. A successful defence of the home market, says online marketing expert Claire Wendell at Click Click Media, is to start off with a rich online presence, thereby forming the basis for expansion to broader areas.
“Creating a strong brand presence and purpose built website is the cornerstone to online success, a company can then use these marketing assets to expand into other markets, for example, by undercutting the price of tendering in other states. Or a company may use its expertise in quantity surveying to establish operations elsewhere. Assets that may seem quite localised, such as experience in serving hard-to-reach market segments, may actually travel well. By paying close attention to market conditions similar to theirs, managers may discover they have more transferable assets than they had realised. The more assets they have, the greater their chance of success beyond the home base,” said Ms Wendell.
To compete in the digital age, consultants must refine their digital strategy and learn how their unique selling points can be best presented online. By identifying the elements that appeal to audiences and the distinct product/service signifiers, the savvy entrepreneur can develop a strategy with branding. Companies need to think like brand managers and start building a mobile presence through the strategic use of images and social sharing. Next, they need to find out which platform will best suit their needs.
One benefit of this strategy is to open up new markets where builders can advertise at lower online marketing costs. Australia-based company Concrete by Keenan, for example, has gained over 15,000 followers by photographing and posting design images, connecting within his industry markets on Instagram (see the image below).
Online strategy is definitely the way of the future as more and more users seek services online. Having your work mapped out visually and discussed in a friendly and engaging conversation is the way to grow your business locally, but the potential for national growth is also available. Creating branding that is compatible across every online market platform can position small businesses as both defender and extender within the marketing mix, like Melbourne-based Hungry Wolf Studio.
To produce a culture of innovation, construction industries need to use technology for project management. According to research into the impact of technology changes in the construction industry by University of British Columbia project managers can complete construction jobs on time or can reduce the duration of projects. This is no new revelation but the Australian Construction Industry is lagging behind, with calls for a national agenda on this type of innovation and less of the political rhetoric that hampers the Industry’s potential to move forward and innovate says AusDilaps CEO Michael Burford. “Implementing new ICT tools or systems can be a complex process but these are the solutions the industry needs. New ICT systems help to streamline work processes by improving communication between project team members and by reducing many of the problems generated by fragmentation and more movement in this direction is what the industry needs.”
Builders can gain enhanced marketing reach through establishing memberships and strategic partnerships with the growing number of online service providers.
Australian building and construction industry association. Its primary role is to promote the viewpoints and interests of the building and construction industry and to provide services to members in a broad range of areas including training, legal services, industrial relations, building codes and standards, industry economics and international relations.
Specialised quotation services to homeowners and building consultants seeking council building permit. High focus on approvals through automation with the website set up to target users with the council paperwork preliminaries. Also a free portal for building consultants to build relationships and update client database.
Hipages caters nationally to all tradesmen, heavily advertised gaining frequent traffic.
The Australian Institute of Architects is the peak body for the architectural profession in Australia, representing 12,000 members. A portal heavily used by commercial town planners and councils.
Moreover, a recurring theme in these examples is the importance of flexibility in response to market opportunities. Moving forward adjusting marketing models toward global investment can provide low-cost avenues for local businesses seeking to position themselves as extenders and can expose building industries to new next-generation kinds of acquisitions.
Construction Industry Journalist, Renee Buckley