Marketing Architectural

ServicesAmerican Institute of Architects

Lubbock ChapterOctober 10, 2007

Bob McDonaldRawls College of Business

Texas Tech University

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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

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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

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Profession

Requires the ability to apply scientific principles to solve a problem

Skill based on theoretical knowledge

Developed through education & training

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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.

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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

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Differentiation Non-commoditization

Value Added

Sell a credible promise Capable of designing project more effectively

and efficiently than competitors

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Credible Promise Existing clients

Rely on trust earned through experience Relationship marketing

New clients Rely on cues

Reputation Track Record Staff, offices

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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

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Conceptual Framework

External RelationalFactors

Interaction TiesTrust & Commitment

Internal RelationalFactors

Trust & Commitment

Operant Resources/ Capabilities:

Market SensingCustomer Linking

Marketing Strategy MakingMarketing ResponseProject Development

SuccessfulProject

Marketing

McDonald and Madhavaram 2007

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External Relational Factors Traditional Long-Term Relationships

Core of successful marketing strategy

Successful projects demonstrate value Projects inherently long and intense

relationships

But…

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External Relational Factors II Projects are lumpy

Likely to be long gaps between projects

Results in “sleeping relationships”

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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

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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

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Internal Relational Factors Within Firm: Principals often find leads for

each other

Within Network: Engineers, consultants, contractors, financiers, real estate brokers

Expand business network

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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

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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

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Market Sensing Capability II Tie into large institutional and government

capital improvement plans

Capitalize on personal connections

Cannot wait for the RFP

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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

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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

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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

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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)

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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

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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

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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

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Marketing Response Capability Promotion

Public Speaking Seminars Technical Symposia Project Postcards Christmas Cards Hire market consultants, e. g., minister Newsletter Awards

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Project Development Capability

Raison d’etre

Conceptual, Technical & Human Skills

Coordination of multiple consultants

Contract Management

Code Knowledge

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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

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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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