"This growth is filling the backlog of work for many contractors and providing an opportunity for many to improve their operating margins from the down years between 2001 and 2003," said Chris Bell, construction and engineering market manager for Primavera Systems, which sells project management software. The strongest growth lies in the residential, education, retail, office and health care segments, he said.
Still, Hurricane Katrina and its siblings will create significant shortages of manpower and materials, and likely put a strain on residential construction as well as on the entire construction industry, said John Favalo, managing partner of the b-to-b practice for marketing communications agency Eric Mower & Associates Group.
"Some 200,000 New Orleans homes may need to be replaced in the wake of Katrina-which was the total number of new homes built last year in Atlanta, one of the hottest housing markets in the country," Favalo said. "With some 300,000 dwellings or more driving immediate demand, builders are already working with suppliers to lock in supplies. And in fact, many builders are introducing more escalation clauses in their contracts to accommodate price increases due to material shortages."
Procurement practices may also change dramatically because of price hikes and supply instability, Bell said. "Low price may not be the determining factor for selecting a contractor, materials supplier or technology vendor," he said. "When signing contracts, capacity, responsiveness, timeliness and level of trust become of much higher value than actual price."
Many opportunities exist for marketers that can offer products and services to help contractors offset rising material and energy prices. "Equipment manufacturers and distributors that position their products as a means to improve productivity or to get more done in less time are winning market share," Bell said.
Despite all the changes and advancements in the construction industry, traditional marketing techniques remain the status quo, said FMI Senior Consultant Clark Ellis. "Suppliers continue to rely on trade shows, local sales forces, Web sites and brochures to get their message out to the industry," he said. "These techniques continue to deliver steady, predictable results."
However, Ellis said, savvy marketers are moving up the construction supply chain and working with their customers' customers in an effort to create demand for their products.
Williams Scotsman Inc., a marketer of space solutions for commercial builders and contractors, is one marketer that has responded to this opportunity. "We see the beginning of movement from `push' to `pull,' and are investing in customer relationship management and e-enablement of our Web site to take advantage of this trend," said Michelle Cunningham, VP-marketing and business development.
Ellis has also seen successful marketers moving beyond sales into a consultative relationship with suppliers. "Suppliers that transcend the product-pushing mentality and devise a solution to a construction problem will prove to be successful over time," Ellis said.
Another increasingly important facet of successful marketing to the construction industry is customer service, Favalo said. "Suppliers that can help builders and contractors deliver higher customer satisfaction will get attention, even over hot new products," he said. "It's the entire value package, including availability of materials, on-time delivery, costs and terms, marketing support-the works."
Online marketing goes a long way to support solid customer service, Favalo said, and construction industry buyers are demanding more from a supplier's Web site.
"Many want it all-product data, how-tos, tips, decorating/application ideas, installation and troubleshooting, tech support, pricing, delivery and shipping status-online, in some cases to the exclusion of personal selling. I heard one architect say that any manufacturer that didn't have a robust Web site would not get much `shelf space' in his firm."
Recent research confirms the demand for online marketing. At the American Housing Conference, Paul Tourbaf, VP-sales and editorial for Hanley Wood e-Media, said, "90% of building pros use the Internet to get information on building products and services, and 60% cite the Internet as their favorite source for researching product information."