Efficient project marketing toward third parties in a project network

Doctoral Candidate, Researcher, MSc (Eng.)
Tampere University of Technology, Department of Industrial Management

Miia Martinsuo

Professor, D. Tech.
Tampere University of Technology, Department of Industrial Management

Abstract

Project networks involve multiple companies, and the relationships between companies are typically formed already during the early project phases of project marketing. In construction projects, the direct relationships between contractors and clients are linked with component manufacturers and various third parties whose relationships and role in project marketing have not yet been studied sufficiently. This study is concerned with the construction component manufacturers’ interest toward constructivist project marketing, and their possibility of influencing third parties in the project network. The purpose is to develop a framework on factors associated with efficient project marketing that leads to successful third-party influence in the specifications and material choices in project networks. Interviews with architects and structural engineers as third parties revealed awareness of the product, added value to the project network and central position in the project milieu as the key drivers of efficient project marketing. Propositions were developed on these factors as well as seven relevant activities in third-party oriented project marketing. The framework is intended to be tested in a forthcoming hypothetic-deductive study. Further implications to constructivist project marketing in complex project networks emerge.

Keywords: project marketing; project network; third parties; construction projects

Introduction

Companies delivering solutions to customers operate in project networks that engage multiple company partners in creating value for customers (Hobday, 2000). When complex projects are designed and implemented, project network companies work together in relationships that may vary from very tight to very loose (Hellgren & Stjernberg, 1995).The discontinuities between projects generate challenges for creating, maintaining, and adapting relationships between companies in a project network (Hadjikhani, 1996).The capability to sell and market projects has become pivotal (Jalkala, Cova, Salle, & Salminen, 2010) and is particularly challenging in complex networks, but the academic interest toward project marketing has been surprisingly scarce (Crespin-Mazet & Ghauri, 2007).

Project marketing research emphasizes the role of relationships and networks (Crespin-Mazet & Ghauri, 2007), and the relevant actors that constitute the project’s “milieu” (Cova, Mazet, & Salle, 1996). A distinction is often made between the project-specific network and the more stable actors of the milieu (Cova et al., 1996; Dubois & Gadde, 2000). Skaates and Tikkanen (2003) remind that some actors in the milieu may be influenced directly by project marketing firms, whereas others may be reached through indirect relationship and reputation effects. Still, the project marketing literature has mainly concentrated on the marketing activities and a dyadic relationship between the project supplier and buyer. There is little research about the types of relationships and marketing activities that the suppliers should develop toward other network actors influencing the buyer’s decision making.

The construction industry is a typical example of project-based organizing where multiple suppliers are linked into the same project deliveries in a project network. The use of designers, consultants, advisors and other supportive stakeholders is very typical in project networks (see, e.g., Bresnen & Marshall, 2000; Cova & Hoskins, 1997), and the variety of innovation actors who collaborate together, making innovation decisions before and during project execution (Hobday, 2000). Kolltveit and Grønhaug (2004) address the importance of the early phases of a construction project because they influence project performance dramatically. In the innovative preparation phase, the project customer and experts such as architects and structural engineers define the project proposal according to the customer’s needs and local building codes. The planning phase starts after the project proposal has been finished (Kolltveit & Grønhaug, 2004), and then the conceptual ideas are converted into design specifications by architects and structural engineers. These design specifications affect other project participants widely because the specifications are used as a guideline for constructing the building. Still, there is only limited research about the selection and specification of construction components as part of the project network. (Emmitt, 2006)

Manufacturers of construction components are among the most neglected categories in research in the construction sector. The role of the construction component manufacturer as a project supplier is different from other construction project suppliers because they are product, not project-orientated. (Larsson, Sundqvist, & Emmitt, 2006) Still, the manufacturer’s product sales are dependent on the decision makers in the construction projects (Emmitt & Yeomans, 2008). Recently, manufacturers have started to offer integrated solutions that force them to adopt project-oriented working methods in the delivery. Therefore, the importance of project marketing capabilities is spreading beyond the traditional project-based companies (Jalkala et al., 2010). In order to be successful in project marketing, the manufacturer should understand the decision making process in the early project phases. Many manufacturers fail in their marketing attempts because they do not understand the behavior and motivation of designers who influence decision making significantly (Emmitt & Yeomans, 2008).

Recently, Jalkala et al. (2010) have called for more research about different types of project marketing situations, postures (deterministic, constructivist), orientations (project oriented vs. customer oriented), and logics (upstream, upstream-downstream). We answer this call by studying project suppliers’ constructivist marketing approaches toward architects and structural engineers that are considered as relevant network partners and third parties. The novelty of this research lies in the fact that we are analyzing project marketing activities of suppliers who are trying to influence customer decision making indirectly, through third parties. The purpose of this study is to develop a framework on factors associated with efficient project marketing that leads to successful third-party influence in the specifications and material choices in project networks. Our intent is to identify factors and develop propositions based on qualitative research, to be tested and verified in further research. We focus on the following research questions:

Research question 1. What is considered as efficiency in a supplier’s project marketing toward third parties?

Research question 2. How, through what kinds of factors, is efficiency of project marketing achieved in project networks?

Research question 3. How can third parties influence the efficiency of project marketing?

This study is delimited to the front end of construction projects and the efficiency of its project marketing. In particular, the focus is on the specific project marketing involving construction component manufacturers and their relationship with architects and structural engineers. Other stakeholders are excluded, although the general assumption is that construction component providers and designers operate in a complex network involving others as well.

Literature review

Project marketing and project networks

Researchers in the field of project marketing have identified a need to depict the unique features of project marketing in relation to other types of industrial marketing. These features are discontinuity, uniqueness, and the complexity of projects (Mandják & Veres, 1998). Project marketing research has increased understanding about what is happening before and after the call for bids in order to help project-selling firms escape the trap of the competitive bidding process (Cova & Salle, 2007). Project marketing takes place in various steps, some of which are company-level general marketing activities and others pre-tender project-based activities and tender preparation activities (Cova, Ghauri, & Salle, 2002).

Companies may adopt two alternative marketing postures in their project seeking activities: constructivist or deterministic posture (Skaates & Tikkanen, 2003). Current marketing strategies in project business mostly aim to construct the demand instead of reacting to calls for tender (Cova & Salle, 2005), and Jalkala et al. (2010) say that the deterministic posture is not an option for many project business companies any more. Therefore, we concentrate solely on project marketing activities in the constructivist posture. In the constructivist posture, the supplier aims at an active co-construction of project demand with the customer and other relevant network partners (Cova & Holstius, 1993). The marketing activities happen before the invitation to tender.

Crespin and Ghauri (2007) have conducted a case study about a contractor’s constructivist marketing approach. In the first case, the contractor suggested codevelopment in the project but did not succeed in convincing the customer and architect. The reasons were different opinions about project complexity, lack of interorganizational relationships, and lack of trust. The second case is a good example of a contractor’s successful constructivist project marketing. The contractor was recommended to a customer by an engineering firm with whom they had successfully carried out several challenging projects in the past. The contractor suggested that they should conduct a feasibility study together with the engineering firm. During the feasibility study, the contractor managed to develop trust and an inter-organizational relationship with the customer. After the feasibility study, the customer selected the contractor without competitive tendering (Crespin-Mazet & Ghauri, 2007).

Project marketing research emphasizes the role of relationships and networks (Crespin-Mazet & Ghauri, 2007). Many authors (e.g. Cova & Salle, 2008; Jalkala et al., 2010; Skaates & Tikkanen, 2003) highlight the importance of identifying actors, their relationships, their roles, and their influences in the project network. A supplier should also identify its own position in this network. Cova et al. (1996) develop the concept of project “milieu”, to help understand and analyze the project network context. Milieu is the network of focal actors, and a distinction is often made between the project specific milieu and a more stable milieu across different projects (Cova et al., 1996; Dubois & Gadde, 2000). In the milieu, the supplier needs to achieve credibility in order to be considered as a potential supplier by important actors, especially the customer. It is not enough for the supplier to concentrate on marketing activities toward the customer, because customers have many social and informational links to third parties (Skaates & Tikkanen, 2003). In one way or another, these parties influence the customer’s decision making (Cova & Salle, 2008).

Skaates and Tikkanen (2003) remind that some actors in the milieu should be influenced indirectly, whereas others should be influenced directly. Earlier research has suggested several marketing activities that project suppliers could use in order to enhance project sales. These activities are services (Cova & Salle, 2008), interpersonal relationships (Cova & Salle, 2008; Crespin-Mazet & Ghauri, 2007), references (Skaates & Tikkanen, 2003) and visits to facilities (Salminen, 2001). Especially, services are now an important part of many project suppliers’ offerings (Jalkala et al., 2010). By offering services, the suppliers try to differentiate themselves from competitors and also maintain a relationship with the customer after the project. Offered services have mainly supported the product or the customer’s process. These marketing activities are intended toward customers, but they can be applied to other actors in the project milieu, too. Suppliers can cocreate value with network actors and also offer services to them. In order to do this, the supplier should identify important actors from the project network and set up a marketing approach toward each of them. (Cova & Salle, 2008) So far, the research about marketing activities toward other network actors has been scarce.

Indirect influence through third parties in construction projects

In construction projects, customers are linked with third parties such as architects and structural engineers that are involved in the project very early and participate all the way through the project (Jalkala et al., 2010). These designers participate in the decision making in the early project phases by initiating or kicking off a project, defining a project, setting up a purchasing procedure, determining specifications and selecting suppliers (Cova & Salle, 2008; Kolltveit & Grønhaug, 2004). Some authors argue that these third parties are less active in the early project phases than before. The reason behind this is that the design process is increasingly being led by the contractor and the customer in co-operation (Jalkala et al., 2010; Winch & Schneider, 1993). In the construction sector, this phenomenon is called partnering. According to Crespin-Mazet and Portier (2010), there is some reluctance of construction customers toward project partnering, and, therefore, partnering has not diffused extensively in the construction industry.

Manufacturers of the construction components have marketed their products to the third parties for decades (Emmitt & Yeomans, 2008). Still, only a limited amount of research has been published about their marketing activities. Identified marketing activities from earlier research fall into three categories: promotional literature, trade representatives, and services. Promotional literature includes articles and advertisements in trade journals used to raise awareness about the manufacturer’s products within the industry. Earlier research has noticed that the most designers obtain information about manufacturers and their products through trade journals. During product selection, designers take contact to manufacturers that they are aware of (Barbour Index, 2006; Emmitt & Yeomans, 2008). Also Peat (2009) recommends manufacturers to use advertisements in popular trade journals. Some authors consider the lack of technical information as a main problem in promotional literature (Emmitt & Yeomans, 2008). Designers are not able to use the manufacturer’s products in their specifications based on advertisements only, but they have to search for more technical information about the products. More technically oriented content about the manufacturers’ products is featured in product catalogs and the manufacturer’s websites. Recently, Emmit and Yeomans (2008) have noticed in their qualitative study that the quality of a manufacturer’s technical literature affects designers’ product decisions.

Manufacturers’ products and materials are widely marketed through the trade representatives. Although trade representatives’ importance as part of project marketing has been acknowledged, it has received only a little attention in the literature (Prior, 2013). Earlier research suggests that the behavior of trade representatives defines the successfulness of the marketing activity. Sales-oriented trade representatives are regarded as a waste of time, whereas knowledge-oriented trade representatives are sometimes able to convince designers to use a certain product (Emmitt & Yeomans, 2008; Prior, 2013). Also services have become an important part of manufacturers’ offerings in many industries (Kujala, Ahola, & Huikuri, 2013), also in the construction industry. Construction component manufacturers can offer different kinds of services (e.g., technical advice, provision of free drawings, details, specifications and schedules, and provision of CAD files) to third parties, to promote their product use as part of construction designs. Designers also appreciate the services provided by the manufacturer. Some of them even regard services as equally important as the characteristics of the product. (Emmitt & Yeomans, 2008)

Emmit and Yeomans (2008) have noticed that manufacturers’ marketing activities in construction projects are not as efficient as they could be. The main reason is that manufacturers do not understand designers’ needs and behavior in the design phase. Designers usually need information and assistance from manufacturers during specifications, may search for information about products, and are in an active-awareness state. The problem for manufacturers is that the active-awareness state prevails for only a very limited time. Otherwise, the designer is in a state of passive awareness, and it is much more difficult to reach the designer because of the professional service firms’ gatekeeping procedures that control the information flow from manufacturers to designers. Therefore, manufacturers need different marketing activities in the passive and active states of designers. It is important for both parties that the communication channels are efficient. Manufacturers want to sell their products and designers want the information and assistance to be at hand when it is needed as part of construction design (Emmitt & Yeomans, 2008). The manufacturers need an efficient project marketing approach toward third parties.

Efficient constructivist project marketing toward third parties

Successful project marketing has, so far, primarily been considered from the perspective of a dyadic setting and in terms of the contracts reached and continuity of buyer-supplier relationships. Skaates, Tikkanen, and Lindblom (2002) define project marketing success as work in subsequent project phases as well as a facilitation of subsequent project acquisitions. They illustrate that the identification of relevant actors and management of relationships influence success in project marketing. In order to be successful in project marketing, the supplier should generate credibility among the relevant actors of the milieu, that is, achieve a central position in the milieu (Skaates et al., 2002).

In constructivist project marketing, the general assumption is that “the customer and various stakeholders in the project should work together to define the optimum solution and that the contractor is one of the key players in this process” (Cova & Hoskins, 1997).The question is clearly about the wish of the contractor to influence the technical, commercial, financial, and relational dimensions of the project. If successful, the contractor can feature its strengths and capabilities into the final tender, and be part of creating the project (Cova & Hoskins, 1997).

Because of the discontinuities of project business, a clear indication of successful project marketing is that a contract is reached between the network parties and a relationship is either begun or continued from a previous project history (Hadjikhani, 1996).

Because constructivist project marketing requires resources and features risks (Cova & Hoskins, 1997), our interest is in understanding how it can be made efficient for construction component suppliers. When looking at a construction component supplier’s constructivist project marketing toward third parties, the expected success is achieved if the supplier’s components are included in the contractor’s or customer’s project contract and purchasing decision. Therefore, we will discuss efficiency from three perspectives: material choice, supplier choice, and high benefit-cost ratio of marketing activities.

Material choice implies that the supplier’s components are included in the design specification of the building. Architects and structural engineers create design specifications (Emmitt & Yeomans, 2008; Wastiels & Wouters, 2012) that the project contractors use in their project proposals. Specifications are written documents that describe the requirements to which the service or product has to conform, that is, its defined quality (Emmitt & Yeomans, 2008). The specifications of construction components are very important to the manufacturers and suppliers because they have a significant influence on the buyer’s decisions. Although some construction contractors have their own designers, they or their customers frequently subcontract some design work to independent architect and engineering offices.

Supplier choice means that the supplier is nominated as a prospective subcontractor in the project proposal. Particularly in discontinuous project business, supplier choices may be affected by the established relationships that companies have had over time, and trust that has developed into the relationship in earlier projects (Hadjikhani, 1996; Smyth & Edkins, 2007). According to Martinsuo and Ahola (2010), supplier selection is among the central supplier integration practices that contractors must pay attention to in complex projects. Their two-case study showed that companies may rely on historical knowledge and future-oriented cooperation intents quite differently in their supplier choices. The study of Ruuska, Ahola, Martinsuo, and Westerholm (2013) among the first-tier suppliers in the shipbuilding industry suggests that supplier capabilities need to be understood coherently by the supplier and buyer, in order for the buyer to make justified supplier choices. In construction component supply, suppliers’ relationships to designers are likely to be transactional and weak and, therefore, creating in-depth trust and relationships may be a challenge. Construction contractors may have their preferred suppliers, which may cause difficulties for new suppliers. Therefore, designers may be a possibility to influence contractors, customers, and their decisions indirectly and proactively. In their case study, Crespin-Mazet and Ghauri (2007) show that an engineering firm had an influence on the customer’s supplier choice. The engineering firm proposed a contractor with whom they had successfully carried out several challenging projects in the past. As a result, the customer chose the proposed supplier without tendering.

High benefit-cost ratio of marketing activities means that the resources, time, and money spent for project marketing activities toward third parties delivers expected benefits for the supplier. Although the ratio of benefits and costs is an ordinary measure of efficiency, it has not been covered in recent project marketing research.

In this study, we define efficient project marketing toward third parties as supplier-favoring material and supplier choices in design specifications, and high benefit-cost ratio of supplier’s marketing activities. As little research has associated third-party oriented project marketing activities with efficiency measures, we want to develop a framework and propositions on factors explaining efficient project marketing toward third parties, to be tested in forthcoming research.

Research method

This study follows a qualitative, constructive research strategy, to extend previous theories of project marketing to that concerning suppliers’ project marketing toward third parties. The focus is on construction project networks in Finland, with construction component manufacturers as the project suppliers with an interest toward constructivist project marketing. Our starting point was the need to develop a framework for efficient project marketing toward third parties by three component manufacturing firms.

The manufactured components are high-quality materials sold to large industrial construction contractors or indirectly to consumers, through wholesales dealers as distributors. In Finland, the construction industry, similar to other Nordic countries, is responsible for about 10% of the gross national product (GNP). Construction projects typically are led by a main (project management) contractor and they involve complex multi-partner subcontracting networks. We focus on architects and structural engineers as third parties because of their significant role in construction projects (Gil, Tommelein, Kirkendall, & Ballard,, 2001; Voordijk, de Haan, & Joosten,, 2000) and, particularly, their potential effect on the main contractors’ and customers’ decision making. Also, other kinds of third parties such as wholesale dealers, transportation companies, consultants, other subcontractors, and local and national authorities, are involved in construction project networks, but they are not covered in this study.

We collected data through semi-structured interviews with structural engineers and architects as relevant third parties to develop content for the framework of efficient project marketing in construction projects. In Finland, architects and structural engineers are employed by small and medium-sized private design and engineering offices whose services are procured on a project-basis by the construction contractor firms or the customers directly. Neither architects nor structural engineers have official power in the projects due to their consultant role. We will refer to them jointly as designers, if there is no need for distinguishing between structural engineers and architects.

The interviewees were selected using a purposive heterogeneous sampling strategy to achieve information richness. One criterion for interviewee selection was their specialization in different kinds of construction projects (residential, commercial, industrial or public buildings). Renovation and infrastructure projects were excluded. We wanted to include employee and managerial level interviewees from small and big offices and, therefore, further selection criteria dealt with the interviewee’s job title and firm’s size. Also, we sought for an equal share of architects and structural engineers among the interviewees, to enable comparison between the two groups. Altogether, 22 interviews were considered as manageable and sufficient in achieving a broad overview to project marketing efficiency with third parties; different project types were included and we were able to observe data saturation during the early stages of the analysis. Interviews were conducted as individual meetings except one pair interview with architects and one pair interview with structural engineers. More detailed information on the interviewees is presented in Table 1.

The interviews were conducted using a semi-structured interview protocol. The interview outline included questions related to the following themes: general information about the respondent and company, material and component selection in construction projects, expectations of third parties toward project suppliers, and collaboration between third parties and project suppliers. In addition, some direct questions regarding the three component manufacturers were included. The interviews lasted between 41 and 74 minutes (average 52 minutes). The interviews were recorded and fully transcribed.

Architects Structural engineers
Number of interviewees 11 11
Interviewee’s position CEO (5) CEO (1)
Partner (3) Middle manager (5)
Architect (3) Structural engineer (5)
Number of personnel in company
1-30 9 4
31-100 2 2
Over 100 0 5

Table 1: Background information on the companies and interviewees.

The interview data were content analyzed, using an abductive approach. We initially scanned the interview data to identify relevant project marketing tactics as expected by the architects and structural engineers. We elaborated the coding scheme then through reviewing previous literature and identifying relevant activity categories and coded the tactics systematically. Then we sought the efficiency-oriented justifications of using such tactics, based on the interviews. They, too, will be considered in light of earlier research. Based on the reflections between interview data and previous literature, we finally develop propositions about the factors related to the efficiency of project marketing toward third parties. As a main implication, we will develop a framework about the issues that suppliers should take into consideration when developing their constructivist project marketing approaches. Later on, we intend to test the hypothesis with a quantitative survey.

Results

Based on the interviews, two primary steps can be identified in the customers’ purchasing decisions, with significant influence by architects and structural engineers. The first step is material selection, which is done during the design phase of the construction project. The second step is supplier selection, which is planned during the design phase, but the final decision is usually made only during the execution phase of the construction project. We define efficient project marketing toward third parties as supplier-favoring material and supplier choices in design specifications, and high benefit-cost ratio of supplier’s marketing activities. From the interviews, we identify factors associated with project marketing efficiency and related manufacturers’ project marketing activities toward third parties.

Factors associated with project marketing efficiency

Interviews revealed that the designer’s earlier experience and awareness about the materials and products influence their proposals for material and supplier selection. Designers tend to select reliable and tested solutions that they are familiar with. According to one architect respondent, “only seldom we select new solutions that we are not aware of before.” The primary reason for this behavior is the designers’ liability for the selected solutions, and their unwillingness to take risks in such choices. We also noted that this awareness is a prerequisite for some of the manufacturer’s project marketing activities. Some interviewees said that the manufacturer’s trade representatives are allowed to visit in the design office only if the designers are already interested in the product. Some designers also mentioned that they make contact with familiar manufacturers proactively when they face problems during the specification work.

A clear lesson from the interviews was that the manufacturers should offer some additional value to third parties and the customer, besides offering commercial information about their products. This way a manufacturer can differentiate positively from competitors and be efficient in project marketing. One interviewee mentioned that ”it tempts to use the manufacturer’s product if he can provide additional value to the customer or designer.” Another designer said: “Of course I know that the manufacturer’s interest is to sell their products to us, but if it happens by bringing additional value to us, it is a brilliant way to act,” The interviews exposed some potential ways for manufacturers to offer additional value, further explained below.

In the interviews, we asked how some manufacturers can differentiate positively from their competitors. The most common answer was that some manufacturers have a central position in the project market and are, thereby, more easily available for customers. One interviewee explained: “Because of their central market position, the manufacturer has its own traditions and skills, and it is easier to ask various general things from them, like ‘can you do this’ or ‘how could this be done.’ They do not only sell one precise solution, but they are also willing to develop solutions further and seek applicability to our problem-solving task.” A designer also mentioned that manufacturers with a central market position are usually proactive toward designers and maintain good relationships with them, which is why such manufacturers are easy to approach. It is also easy to justify this kind of manufacturer’s products to the customer and other network actors, as they all know the manufacturer beforehand. One architect told an example of a kitchen furniture manufacturer with a central market position. Although the manufacturer’s products had poorer features and quality than those of the competitors, the designers specified its products into construction designs because they were easy to justify to the other network actors. During the interviews, we noticed that the manufacturers can get their products to the project proposals also through contractors’ and customers’ direct demands. These actors often suggest their preferred suppliers into the project proposal, which again highlights the importance of the manufacturer’s central position in the project milieu.

Manufacturers’ project marketing activities toward third parties

During the interviews we inquired what kinds of needs and expectations third parties have toward manufacturers’ project marketing activities. Most of the designers expect the manufacturers to offer some design assistance to them and have extensive product information easily accessible. Design assistance includes design booklets, ready-to-use CAD pictures and 3D objects, and design software. By extensive product information interviewees meant that manufacturers should have all the necessary product information via clear websites and product brochures. Both of these activities bring added value to third parties by making their work easier and faster.

Almost a half of the interviewees expected that a manufacturer should offer technical support, and the manufacturer’s trade representative should visit and demonstrate new products to them. Interviews revealed that the designers often need the manufacturer’s support during the specification work. Designers work under time pressures, which is why quick and professional technical support brings added value to them. Interviewees had both negative and positive experiences about product demonstrations. The negative experiences mostly related to the low degree of technical experience of the trade representative, or the repeated calling even if the designers would not have had interest toward the product. Some positive experiences related to the additional value that the product demonstration brings to the designers. Such additional value can enhance the designer’s topical problem solving issues, for example, by offering relevant product information, bringing the product along, and showing references about the product in actual use.

A few interviewees mentioned that manufacturers can differentiate from competitors if they can offer additional value to the customer (i.e., the contractor or user). One designer told an example about a firm that produces energy panels for construction projects. The firm calculates the energy savings for the customers if they choose their unique energy panels instead of some competitors’ panels. This clearly brings valuable information to the customer’s decision making. Another way for adding manufacturers’ value to customers is to help the designer take the maintenance of the product into consideration during design, and also to guide customers about maintenance issues.

Designers usually face different kinds of problems, and they may identify development proposals during the design work. Some of the interviewees expected that the manufacturer would be ready to help them in problem-solving situations and highly appreciate if the supplier develops products based on their development proposals. Interviewees said that there are two kinds of suppliers: suppliers that do not have the capabilities or the willingness to solve problems, and suppliers that are motivated to solve problems and find out new ways to use their products. Interviewees said that they wanted to cooperate with the second kind of suppliers, and such cooperation usually continues in following projects.

Discussion

Conceptual framework

Based on the analysis, we have developed a framework for efficient project marketing toward third parties and state 10 propositions to be tested with this framework (Figure 1). We identified relevant project marketing activities from earlier research, and the list of activities was completed based on the interviews into the following categories:

  • Manufacturer’s information (promotional literature; technical literature)
  • Trade representatives
  • Services (services supporting the customer; services supporting the third parties)
  • Interorganizational relationship
  • Cooperation.

The interview results revealed that such factors were linked with third parties’ increased awareness of the manufacturer, added value experiences in the project network, and experiences of centrality in the project milieu, as shown in Figure 1, which, in turn, are considered as relevant prerequisites of project marketing efficiency.

Earlier research has showed that designers consider earlier experience, supplier reputation, product reputation, technical properties, price, quality, and environmental friendliness while selecting products and materials (Emmitt & Yeomans, 2008; Wastiels & Wouters, 2012). We assume that these issues moderate the efficiency of the marketing activities. In the following sections, the propositions and constructs behind the framework are explained in depth.

Conceptual framework of factors explaining efficient project marketing toward third parties

Figure 1: Conceptual framework of factors explaining efficient project marketing toward third parties.

Although we anticipated that the efficiency of project marketing toward third parties would appear also in the form of the benefit-cost ratio of marketing activities, neither earlier research nor our interview data revealed this perspective. It is likely that our interview setting, focusing solely on the third parties’ perspective, did not enable the exploration of efficiency from the benefit-cost-ratio perspective. It is likely that this viewpoint would have appeared clearly if we had used interview data from the sales and marketing personnel of the construction component manufacturers. This, however, will be left as a topic for a further study.

Propositions on efficient project marketing

Designers look for technical and product information and take informal contact with familiar manufacturers when they are choosing materials and products for their designs (Emmitt, 2006). The Barbour Index report (2006) supports this idea by reporting that designers are familiar with manufacturers and products in over 80 percent of the specifications. This means that designers look for information or make contact with unknown manufacturers very rarely. Our empirical results lend support to these earlier findings and suggest that product awareness is a prerequisite for some of the manufacturer’s project marketing activities. We argue that in order for a component manufacturer to be considered as a potential supplier in a project network, the designer has to be aware of the manufacturer and its products.

Proposition 1. Designers’ awareness of the product is a prerequisite for a manufacturer’s project marketing efficiency.

It is widely accepted that suppliers or manufacturers can differentiate from competitors by offering added value to customers (Artto, Wikström, Hellström, & Kujala, 2008). Our results supported this view because designers said that they prefer to use the manufacturer’s products if they can provide additional value to the customers. Interviews also suggested that manufacturers can get their products into specifications more often if they can bring value to third parties. Manufacturers could bring added value to third parties by making their work easier or faster. Emmit and Yeomans (2008) support this by saying that making designers’ work easy and quick is an effective method in helping the designers to adopt a particular product over that of a rival manufacturer.

Proposition 2. Offering added value to network partners is a prerequisite for a manufacturer’s project marketing efficiency, particularly in terms of differentiation from competitors.

Project marketing research has shown that suppliers can favorably differentiate themselves from their competitors by developing a central position in a project milieu. Supplier in the central position may be able to influence network actors so that the next project will not be submitted for open tender (Ahola, Kujala, Laaksonen, & Aaltonen, 2013). During interviews, we noticed that manufacturers can get their products to project proposals through designers, the contractor or the customer. The contractor and customer often suggest their preferred suppliers in their project proposals. In a similar way, designers have some suppliers with whom they like to work, which was supported also in the questionnaire study by Emmit and Yeomans (2008). Therefore, we argue that a manufacturer in a central market position gets its products into project proposals more often than manufacturer in a weaker position.

Proposition 3. A central position in market milieu is a prerequisite for a manufacturer’s project marketing efficiency, particularly in terms of differentiation from competitors.

Propositions on the practices enhancing project marketing efficiency

Construction component manufacturers have advertised their products to designers for decades and continue to do so. Constant bombarding of design offices with mails and calls is regarded as a highly inefficient strategy because of gatekeeping procedures (Emmitt & Yeomans, 2008). According to Barbour Index report (2006) and Peat (2009) the primary source from which designers become aware of new products and materials is trade journals. Emmitt (1997) discovered that articles and advertisement that designers read during a passive awareness state affect designers’ material and product decisions. Peat (2009) also noted that trade journals can pass the gatekeeping procedures of design offices. Our interviews lend support to earlier research, as there were lots of trade journals in the design offices visited as part of interviews and every interviewee mentioned that they read trade journals regularly. According to the interviews, the Internet has become a more and more important source of information for designers in the past few years. The Internet is also a cheaper marketing channel than trade journals and it is easier to link technical information and references to advertisements. We argue that trade journals remain a very efficient way to raise awareness of new products and materials.

Proposition 4. Trade journals and the Internet promote the designers’ awareness of new products.

The second widely used method for marketing the manufacturers’ products and materials is the trade representatives. The problem with trade representatives is that they have to pass the gatekeeping procedure of design offices (Emmitt, 2001). According to the interviews, trade representatives pass this gate only if the designers are already interested in the manufacturer’s product. This usually requires that the design office should have some project where this product could fit.

The behaviors of trade representatives affect the possibility of efficient project marketing. Sales-oriented trade representatives reduce this possibility because they are regarded as a waste of time (Emmitt & Yeomans, 2008; Prior, 2013). The interviews pointed out that architects and structural engineers do not like “being sold to” and they question the technical knowledge of sales-oriented representatives. Designers need technical information and knowledge from manufacturers to be provided quickly and usually for a very specific purpose. This means that trade representatives who can answer technical questions and have empathy toward designers’ concerns are valuable to designers. (Emmitt & Yeomans, 2008) It is very important to designers that they can feel the actual product and see it in use before making a decision. This is why trade representatives should bring added value to designers by showing the product and references about it in use. The importance of references has been acknowledged also in project marketing literature (Skaates & Tikkanen, 2003).

Proposition 5. Knowledge-oriented trade representatives bring added value to designers.

During the specification work, the designer needs a lot of information about the products they are considering as part of complex solution designs. Interviewees said that too often the manufacturers’ product information is either insufficient or difficult to find. In these cases, the designers often select some other manufacturer’s products. The reason behind this behavior is that designers are usually working under time pressures (Lopez, Love, Edwards, & Davis, 2010). This is why we argue that manufacturers can make designers’ work faster by making it easy and quick for the designer to specify the manufacturer’s product into construction designs. Emmit and Yeomans (2008) say that manufacturers can offer standard details and specification clauses into project information. Manufacturers can make this more efficient by designing product details so that by selecting a manufacturer’s detail, the designer is also confirming his or her choice of the product (Emmitt & Yeomans, 2008).

Proposition 6. Extensive and quickly accessible product information brings added value to designers by making their work faster.

Services have become an important part of manufacturers’ offering in many industries (Kujala et al., 2013). One of the reasons behind servitization is marketing services can be considered as a way to differentiate from competitors, and services have been found to have a positive impact on the customer’s decision making (Baines, Lightfoot, Benedettini, & Kay, 2009). In projectized business, services are usually considered as a means for providing additional customer value (Artto et al., 2008). Manufacturers can provide customer value by embedding services and products into solutions or by offering product-related services. These services may cover the whole life cycle of the product (Kujala et al., 2013). Our results indicated that manufacturers can bring added value to customers by providing valuable information to the customer’s decision making, or by helping in maintenance-related issues.

Proposition 7. A manufacturer’s services to customers (i.e., contractors or users) can bring added value to the project network.

Project marketing literature acknowledges the complexity and fragmentation of a buying center. This means that many third parties around the customer are involved in decision making. As discussed earlier, literature has mainly considered services that bring additional value to customer. Only a few authors have suggested that suppliers should also offer services that support the customer’s network actors (Cova & Salle, 2008). In the construction industry, the manufacturers of construction components have noticed the importance of services supporting customer’s network actors. Emmit and Yeomans (2008) noticed that manufacturers offer different kinds of services to designers that are regarded as the customer’s network actors and third parties. Designers also appreciate the services provided by the manufacturers. Some of them even consider the services as equally important as the characteristics of the product (Emmitt & Yeomans, 2008). Services were discussed in the interviews as a way for manufacturers to bring direct added value to designers. Interviewees said that manufacturers can bring value to them through design assistance (such as provision of guidance, CAD pictures, 3D objects, and even design programs) and technical support. In technical support, the speed and quality of the response is what matters.

Proposition 8. A manufacturer’s services to third parties can bring added value to the project network.

The position in a network is an outcome of a manufacturer’s relationship with other network actors and the offerings that have been developed, marketed, and purchased in them (Haimala & Salminen, 2006). Project marketing literature highlights the importance of interorganizational relationships (IORs) (Cova & Salle, 2008; Crespin-Mazet & Ghauri, 2007). The main objectives for developing IORs are to ensure future projects from previous customers and secure access to suppliers’ resources (Ahola et al. 2013). Earlier research about IORs with third parties in project network is scarce. Based on interviews, the cooperation between a design office and a manufacturer is usually resulting from an IOR between firms’ employees. Personal relationships are seen as a result of interactions between firms (Haimala & Salminen, 2006). That is why we argue that manufacturers should focus project marketing activities into the development of IORs with design offices. From literature, we have identified visits to facilities (Salminen, 2001), services (Kujala et al., 2013), trade representatives (Emmitt & Yeomans, 2008), and seminars (Kujala et al., 2013) as ways to increase interactions between firms. The interviews additionally revealed that manufacturers should have specific contact persons for architects and structural engineering offices to enhance interpersonal relations with them.

Proposition 9. A manufacturer can develop a more central position in the project milieu by developing interorganizational relationships with third parties.

Projectized businesses are moving away from traditional tendering toward codefining the project very early (Jalkala et al., 2010). In this transition, the ability to cooperate and solve problems with customers and third parties seems to be essential. The design of buildings is rarely a standard procedure, and it is likely that designers will face an unfamiliar problem that cannot be resolved by applying tried and tested solutions only (Emmitt & Yeomans, 2008). Facing unfamiliar problems can act as triggers for cooperation from a third-party’s side. Peat (2009) has discovered that designers often make informal contacts with manufacturers when faced with specification problems. Our results support this and indicate that designers make contact with manufacturers who are motivated and capable to solve problems and find out new ways to use their products. It became also evident that designers expect that manufacturers in a central milieu position are capable of solving problems with them. That is why we argue that manufacturers should develop cooperation and problem-solving capabilities in order to achieve a more central position in the project milieu.

Proposition 10. A manufacturer can develop a more central position in the project milieu by cooperating with relevant third parties.

Conclusions

Contributions

This study was motivated by the construction component manufacturers who are trying to influence the customer’s (i.e., contractor’s or user’s) decision making indirectly, through third parties, and the limited earlier research on manufacturers’ project marketing activities. We conducted interviews with architects and structural engineers as relevant third parties to discover the behavior and motivation behind their material and supplier selection. We defined efficient project marketing toward third parties as supplier-favoring material and supplier choices in design specifications, and high benefit-cost ratio of supplier’s marketing activities. The purpose of this study was to develop a framework on factors associated with efficient project marketing in project networks.

The results have offered important knowledge about the factors associated with efficient project marketing and needs of third parties toward a supplier’s project marketing activities. Based on earlier literature and our interview results, we have developed a framework of factors relevant to project marketing efficiency toward third parties. In the framework, we have proposed three factors associated with efficient project marketing and seven project marketing activities related to these factors. These propositions could be developed further and tested in a hypothetic-deductive study. We have also identified issues that moderate the efficiency of the supplier’s constructive project marketing approach toward third parties.

Managerial implications

As managerial implications, the study suggests practical marketing activities for construction project suppliers to take action toward third parties in a project network. This study has provided knowledge about designers’ behavior during the specification work and proposes ways in which construction component manufacturers can enhance the efficiency of their project marketing in complex networks. This knowledge and the framework could be used to increase efficiency of construction project suppliers marketing activities.

Limitations and ideas for further research

The study is limited by the choice of architects and structural engineers as the target group. We are aware that there are other relevant third parties in construction project networks: consultants, logistics providers, retailers, installers, and so on. It is evident that the construction component manufacturer’s own viewpoint on project marketing, as well as those of the main contractor and the client, may differ from that of the designers. These further perspectives are relevant, too, and should be studied in future research.

The context of the study is construction projects in Finland. The context sets limitations to the applicability of the results. We acknowledge that architects and structural engineers have slightly different roles and statuses in different parts of the world and, therefore, the results cannot be directly generalized to other countries.

The interview-based data collection approach as well as the sampling has limitations. Although qualitative interview-based studies suit well in exploratory studies like this, its validity is limited. To improve the validity of the research, we sought for different types of respondents and companies in order to achieve sufficient variety and data saturation.

The data were collected on the basis of a fairly general idea of suppliers’ third party relationships, and the project marketing perspective was not intentional. However, the data appeared as suitable to such an exploration. We are aware that further studies are needed, with interview outlines directly designed for project marketing efficiency.

To activate further research, we propose a quantitative study about project marketing efficiency and third parties’ influence on the final purchasing decisions. In such a setting, our propositions should be tested in a hypothetic-deductive study, and also other stakeholders’ perspectives could be included. Furthermore, as we did not gain evidence about the benefit-cost level of constructivist marketing activities from the third parties’ interview data, further research is needed on the internal experiences of sales and marketing personnel in construction component manufacturing firms to gain a more thorough picture of efficient project marketing toward third parties in a project network.

Acknowledgements

This study has been conducted as part of the Future Industrial Services research program, funded by Finnish Technology and Innovation Agency Tekes, companies, and research institutes and coordinated by Finnish Metals and Engineering Competence Cluster (FIMECC). We gratefully acknowledge the support of the financiers, the participating companies, and the research consortium of this study.

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Rami Sariola (MSc, Eng.) is a doctoral student at the Department of Industrial Management, Tampere University of Technology, Finland. His field of research and teaching is industrial management, particularly in projectized business. His research interests deal with project networks, triadic relationships in projectized business, and industrial product-service systems.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

©2014 Project Management Institute Research and Education Conference

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