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

2. 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. 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. 4 Profession Requires the ability to apply scientific principles to solve a problem Skill based on theoretical knowledge Developed through education & training

5. 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. 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. 7 Differentiation Non-commoditization Value Added Sell a credible promise Capable of designing project more effectively and efficiently than competitors

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

9. 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. 10 Conceptual Framework External Relational Factors Interaction Ties Trust & Commitment Internal Relational Factors Trust & Commitment Operant Resources/ Capabilities: Market Sensing Customer Linking Marketing Strategy Making Marketing Response Project Development Successful Project Marketing McDonald and Madhavaram 2007

11. 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. 12 External Relational Factors II Projects are lumpy Likely to be long gaps between projects Results in “sleeping relationships”

13. 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. 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. 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. 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. 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. 18 Market Sensing Capability II Tie into large institutional and government capital improvement plans Capitalize on personal connections Cannot wait for the RFP

19. 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. 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. 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. 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. 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. 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. 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. 26 Marketing Response Capability Promotion Public Speaking Seminars Technical Symposia Project Postcards Christmas Cards Hire market consultants, e. g., minister Newsletter Awards

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

28. 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. 29 Success Journey not destination Hard work Internal & External Relations Operant Resources (Capabilities)  Market Sensing  Customer Linking  Marketing Strategy Making  Marketing Response  Project Development

30. 30