Formulating a strategic marketing mix for quantity surveyors.
Among other things, a quantity surveyor provides cost advice to clients and is entrusted to keep a building project to within an agreed budget. The quantity surveyor sees the project through the feasibility study stage to completion. The services offered by a quantity surveyor are preliminary cost advice, cost planning, preparation of tender documents, advice on tender methods and contractual arrangements, negotiations with contractors, valuation of the works in progress and settlement of final accounts.
In today's competitive marketplace, quantity surveyors must now realize that their services, regardless of how good these are, simply do not sell automatically. Quantity surveyors can no longer wait for clients to come by. With improvements in education, advancement in technology and increase in affluence of society, clients have become more discerning as well as demanding on the quality and timeliness of the services they receive. Although aware of the need to improve the way their services ought to be promoted, many quantity surveyors still do not seem to pay enough attention to marketing. The most common reason cited by quantity surveyors for not adopting marketing systematically is that they have been doing well and believe that they will continue to do well without the need for market planning. However, most business enterprises who have undertaken marketing had achieved rewarding results. They realized that to be market-driven is to be client-driven (Crane, 1993).
In essence, marketing is a management function. It is concerned with satisfying clients' objectives while achieving organizational goals. It begins with an understanding of the needs of clients, the development of services to meet these needs, pricing these services effectively, informing clients about the availability of these services, delivering them efficiently, and ensuring satisfaction during and after the exchange process. Marketing is defined by the Chartered Institute of Marketing as "the management function which organizes and directs all those business activities involved in assessing and converting customer purchasing power into effective demand for a specific product or service, and in moving the product or service to the final customer or user so as to achieve the profit target or other objectives set by the company". Marketing should therefore be viewed as an essential ingredient in the building and maintenance of a rewarding and profitable professional quantity surveying practice. However, many quantity surveyors have misinterpreted what marketing is all about. Some see it as manipulative, wasteful, intrusive and unprofessional, while most will see it as plain advertising and selling. In recent years, marketing has slowly shed its old image and is increasingly accepted as one of the most important functions in meeting the objectives of a profit-seeking business. Traditionally, production and sales are the two most important functions of any business. In the early days, most entrepreneurs believed that the quality of their products or services is the only factor that determines sales. However, this may no longer be true in today's competitive marketplace. Production, sales and marketing should work hand-in-hand to yield the best results. Marketing should be seen as the bridge linking a business to its potential clients. It is the process responsible for identifying, anticipating and satisfying the client's requirements profitably. In this way, the firm is able to match its products or services to the client's needs instead of producing something and hoping that clients will like them.
With this background in mind, the two objectives of this paper are to:
1 Examine the attributes needed for marketing professional quantity surveying services.
2 Prepare quantity surveyors for the adoption and implementation of the marketing mix concept.
The fieldwork part of this study aims to primarily examine how the marketing mix concept may be used for strategic planning by quantity surveyors. Twenty quantity surveying firms registered with the Singapore Institute of Surveyors and Valuers were approached for this study. After interviewing three firms, a questionnaire was drafted, piloted tested and sent to other quantity surveying firms. Twelve firms responded positively to the questionnaire survey. After the survey results were analysed, five firms (chosen from among the 12 respondents) were also interviewed. The findings of this survey, as well as interviews, are discussed below.
History of quantity surveying
No one can actually pinpoint when the practice of quantity surveying began. When the Great Wall of China was built, there was someone to calculate the amount of materials and the manpower needed. Similarly, the Egyptians also appointed a person to act as a planner and estimator, someone who practised what the modern quantity surveyor is doing now, when the pyramids are built.
During the seventeenth and eighteenth centuries in Great Britain, the few prominent architect-builders (such as Sir Christopher Wren) acted as organizing contractors for their own designs, ordering materials and hiring local craftsmen. Measurers were employed to measure and value the work done by the craftsmen. They also prepared the final accounting statements for the architects for payment purposes. By the nineteenth century, modern Bills of Quantities (BQ) started when these measurers set up their own business to specialize in the preparation of tender estimates. By the second half of the nineteenth century, architects realized the importance of BQ as these can be used for the settlement of variations, final accounts and progress payments. In order to save resources and have standard BQ, they persuaded building owners to engage the services of quantity surveyors for their preparation, ready for issue to bidding contractors to submit competitive tenders. At around the same time during the Victorian era, there was a movement to unionize labour and to form trade guilds. The professional body, the Quantity Surveyors' Institute, catering services to building owners was formed when measurers took the opportunity to group together. Another body, the Institute of Quantity Surveyors, was formed later. Both bodies have now merged under the same professional organization known as the Royal Institution of Chartered Surveyors.
There was no mention of marketing quantity surveying services in the past. However, it was gathered that there is no need for marketing. In the past, measurements could be undertaken by architects and engineers. Measurers were additional and were hired only when they are required. Hence, the demand for measurers was not high and their work was never considered a profession. In the 1970s, the role of a quantity surveyor was defined to ensure that the resources of the construction industry are utilized to the best advantage of society by providing inter alia the financial management of projects and a cost consultancy service to clients and designers during the whole construction process. The distinctive competence of the quantity surveyor is a skill in measurement and valuation in the field of construction in order that such work can be described and the cost and price can be forecast, analysed, planned, controlled and accounted for. This definition emphasized that the distinctive competence or skills of the quantity surveyor were, in the wider context of the construction industry, associated with measurement and valuation.
In recent years, quantity surveyors have further extended their services because of the changing requirements of the industry. They are now also involved with manpower planning, resource control and in assessing the effects of time on construction projects. Quantity surveyors have also extended their influence in the fields of contracting, civil and industrial engineering, construction, mechanical and electrical engineering services as well as project management. There are occasions where a quantity surveyor is also appointed as the project manager for a building project from inception to completion, and to co-ordinate the work of the design team, main contractor and sub-contractors. The duties of a quantity surveyor in different stages of a construction project are summarized in Table I.
Table I Duties of the professional quantity surveyor Stage Duties of the quantity surveyor Feasibility study Initial cost indications based on similar and recently completed buildings Cost implications of site conditions Outline proposals Preparation of rough estimates based on client's requirements Assist client in setting cost limit or budget Preliminary design Preliminary estimates and preparation of initial cost plan Group element cost targets established Comparison with client's cost limit or budget Detailed design Detailed estimate Preparation of elemental cost plan and amplified cost plan Elemental cost targets established Comparison with client's budget and earlier estimates Cost checks to obtain best solution in each element as drawings are produced Final design Preparation of tender documents Continue cost checks and obtain quotations from specialists Pre-tender estimate Tender period Attend to tenderers' queries Issue corrigendum Tender evaluation Evaluate tender Prepare reconciliation statement and compare tender sum with estimated costs Advise on course of action to be taken Prepare cost analysis Award of contract Prepare letter of acceptance after client has approved tender Compile documents and prepare for contract documentation Construction Prepare valuations for payments on account at the intervals stated in the contract and agree with contractor's quantity surveyor Plot payments on account on "rate of spend" graph and report to architect on any significant divergence Advise architect, if requested, on expenditure of provisional sums, measure and value work carried out by the main contractor against provisional sums (except where lump sum quotations have been accepted) and adjust Prepare estimates of likely cost of variations on receipt of copies of architect's instructions Later measure and value, check and price daywork voucher Advise architect, if requested, on expenditure of prime cost sums, check nominated subcontractors' and nominated suppliers' final accounts and adjust contract sum accordingly Prepare financial reports for architect and client at the same time as interim payments Check main contractor's claims for increase in costs of labour, materials, levies, contributions and taxes, etc. if applicable. Alternatively, apply price adjustment indices to amounts included in interim valuations Measure projects based on schedules of rates or on bills of approximate quantities as the work proceeds, either on site or from architect's drawings, and value at contract rates Advise architect, if requested, on contractor's claims (if any) for loss and expense payments If accepted, negotiate claims with contractor Completion of Advise on extension of time and imposition of project and liquidated damages defects liability Finalize project accounts period Feed back on cost data and prepare cost analysis of completed projects. Contribute to cost database for use in future projects
Attitudes towards strategic planning
All the 12 respondent firms, except one, indicated that there is no written marketing plan within their organizations. Interestingly, a medium-sized quantity surveying firm is in the process of drawing up a marketing plan. This was, however, undertaken by the firm solely to secure ISO 9000 certification for its quality management system. The usefulness of this marketing plan is still unknown.
The main reason given for not having a written marketing plan was because of the fast changing market environment. The respondents claimed that before actions can be taken, changes take place again. Drawing up a plan requires time and financial commitments. Hence, it will be wasteful if the plan is not useful. The respondents also felt that a written marketing plan is not practical. One quantity surveying firm claimed that jobs are secured through personal relationships rather than on corporate matters. This finding contradicts the general belief that a marketing plan can be used to delegate, control and allocate resources within an organization. In particular, larger firms would need to plan more than than their smaller counterparts because of the complexities commonly faced by the former.
Nevertheless, in the absence of a written plan, all the respondents do, however, have their own informal marketing plans. These are usually prepared by the partners or directors. With an informal and unwritten marketing plan, these firms have actually only complied with part of the requirements for strategic planning. Without a written format, these respondents will find it difficult to keep track of deviations from their informal marketing plans. However, they claimed that regular meetings are held on either an ad hoc or weekly basis to monitor progress.
The factors which affect the formulation of a marketing plan for the larger quantity surveying firms are uncertainties in the target market, clients' needs and requirements as well as the difficulties posed in identifying potential clients. The primary concern of the smaller quantity surveying firms rests, however, on the availability of resources within their organizations. Larger firms are obviously more able, to some extent, to satisfy their clients' needs without worrying too much about the constraint of limited resources. The quantity surveying firms interviewed have no future plans to improve their marketing plans. They felt that their present approach is fine because clients still come to them.
The strategy frequently adopted by most of the respondents is through communications, both through people and through the media. Some respondents in fact claimed that this strategy actually starts all the way from one's school days. The classmate whom you know may one day become the future managing director. Clients would prefer to work with somebody whom they already know or on the recommendation of someone whom they know. The usual practice is to play golf or to have lunch with potential clients. Because professional quantity surveyors are not allowed to advertise blatantly, consultancy firms can only hand out company brochures to clients during meetings and to put up signboards at their construction sites. From the interviews conducted, it becomes apparent that there is a trend which traces the marketing strategy commonly adopted by quantity surveying firms when marketing their professional services. This trend is shown in Figure 1.
[Figure 1 ILLUSTRATION OMITTED]
Attitudes towards the marketing mix
The marketing mix concept was explained to those respondents who have not heard of it before. The extended marketing mix for services consists of seven Ps (Borden, 1965; McCarthy, 1960). These are the product, price, promotion, place, people, physical evidence and process. Some smaller quantity surveying firms have never heard of the seven Ps before and are obviously not clear of their importance to their respective organizations. However, from the field study, it became clear that different firms have different levels of emphasis on each of these elements in the marketing mix.
Table II shows the importance of each component of the marketing mix as indicated by the 12 responding firms. It can be seen from Table II that most respondents felt that product, price and people are the three most important components of the marketing mix. Each of the seven marketing mix components is discussed below:
Table II Responses of quantity surveying firms to the seven Ps Product Price Place Promotion Firm 1 * ***** * **** Firm 2 *** ** ** *** Firm 3 *** *** ** **** Firm 4 ** *** * ** Firm 5 **** ** *** ** Firm 6 *** **** ** * Firm 7 *** *** * **** Firm 8 ** ** ** *** Firm 9 *** **** ** * Firm 10 **** ** *** ** Firm 11 *** ***** *** ** Firm 12 ***** ***** ** **** Physical People evidence Process Firm 1 ***** ** ** Firm 2 **** * * Firm 3 ** ** * Firm 4 *** *** ** Firm 5 **** * ** Firm 6 ***** ** *** Firm 7 **** ** * Firm 8 ** ** **** Firm 9 ** * ** Firm 10 **** **** ** Firm 11 *** ** *** Firm 12 *** *** ***
Key: ***** Very important **** Important *** Slightly important ** Not very important * Can be ignored
1 Product. The objective of most quantity surveying firms is to satisfy their clients' needs. Hence, the right types of services have to be developed. Firms of different sizes have the same view concerning factors affecting the services offered to their clients. These are:
* Quality and quantity of services. In order to provide quality services, quantity surveyors must be accurate and reliable in their work, be able to solve the client's problem and not disregard their responsibilities as well as to provide continuous information updates for clients. Owing to the characteristics of their services, quantity surveyors use BQ and specifications as tangible products to show to their clients. Quantity surveyors may also need to be well versed in all the services shown earlier in Table I in order to offer more services. The larger firms may have a greater ability to provide more services than their smaller counterparts because the former may provide relevant training for their employees. However, in deciding on the services to offer, the availability of resources within the organization will need to be considered.
* Time frame for producing the service. Meeting deadlines is important because a delay will cost the client money, Clients will inevitably be worried when they get no responses from their quantity surveyors, especially when the deadline for a project is near. They will feel that their quantity surveyors are not taking their jobs seriously.
* Clients' confidence. Quantity surveyors must have the integrity and professionalism in handling all projects to gain their clients' confidence. Clients may also use past track records as a guide when choosing the quantity surveying firm for their building projects.
2 Price. Price is the means of setting the exchange value between two parties. The professional fees charged will vary from firm to firm. Although recommended scales of fees are available, some quantity surveying firms may not want to adopt any of these scales. Hence, other basis like the level of competition, nature and size of projects and the types of services to be provided are used to set professional fees. The fees to be charged can also, almost invariably, be negotiated. The larger quantity surveying firms are usually able to give a discount because of their economies of scale. However, from the survey, the lowest fees which one quantity surveying firm was willing to offer is 0.76 per cent. Some firms who are unable to offer lower fees would try to attract clients by differentiating their services from their competitors. Some clients are willing to pay more to engage a firm of good reputation. Hence, it is not fees alone that will attract clients. The image perceived by clients is also of great importance.
3 Promotion. As noted earlier, what most of the quantity surveying firms have been doing is only promotion. The extent of promotion also varies from firm to firm. Smaller firms may not want to spend too much on promotion due to their limited budget. In addition, some of the quantity surveying firms also take part in seminars to make themselves known, provide eye-catching logos, build up the firm's reputation through consistent and efficient work and a proper compilation of the company's profile and previously completed projects.
4 Place. Most of the larger respondents claimed that the location of the firm is not an important factor as clients do not frequently visit them. However, a few of the larger quantity surveying firms are located in the central business district. Hence, they must be able to afford higher rentals to be located in more prestigious locations. As they are now located nearer to their clients, they will be able to save on the costs and time of travelling. Some of the respondents felt that Singapore is easily accessible and travelling is relatively easy. Hence, it does not really matter where their offices are located. They will rather pass on the savings to their employees than pay higher rents.
5 People. All the respondents felt that people is one of the most important elements in the marketing mix. As the services are despatched through their quantity surveyors, they are in fact the firms' most valuable assets. Hence, the criteria of most firms when selecting new employees are qualifications, experience and working attitude. A probation period is imposed on new employees to try out their performance. In the case of quantity surveying, larger firms tend to have more opportunities to hire more capable employees as more people would tend to apply for a job with them. Training is still needed to upgrade their staff so that they will be able to deal more efficiently with their clients. The senior staff or partners can choose a topic for presentation to employees on the standard procedures for undertaking a given task. Even the smaller firms are providing training of this nature because it is inexpensive to mount. The frequency of training is, however, dependent on the firm's policy towards staff training.
6 Physical evidence. This marketing mix element is not determined by the firm's size. Some of the firms felt that this is not an important factor in the marketing mix because clients will usually place emphasis on delivering the BQ on time rather than on the presentation of the BQ. Other quantity surveying firms, however, felt that it is important because this helps to reflect the professionalism in the services they have to offer. Furthermore, BQ are used every month for progress payment purposes. Hence, their format must be presented in the same sequence as the construction process. If clients are clear of where cost figures are to be found, they will be more confident with the results delivered by the quantity surveyor. The physical office environment of the quantity surveying firm is also important. With a more pleasant office environment, not only the clients will have a good impression of the firm, employees will also be comfortable and motivated to produce better results.
7 Process. Some of the respondents felt that there is no need to have standard operating procedures as every project has different requirements. The quantity surveyor will usually use his experience to advise clients. If a standard procedure is to be followed, the quantity surveyor may feel very restricted. Nevertheless, other respondents felt that procedures are important as these provide clients with a tangible source of assurance of consistency in the services provided. Consistency will enhance the corporate image of the quantity surveying firm as perceived by clients.
It can be seen from the field study that the emphasis placed on the seven elements of the marketing mix is different. Some quantity surveying firms do not see the need to place any emphasis at all on the seven elements of the marketing mix. This is a lacuna which will need to be filled for marketing success. The marketing mix concept is a useful model for devising appropriate marketing strategies to ensure success.
Marketing mix for quantity surveyors
To achieve a successful marketing strategy, the firm has to provide not only a target market but also a marketing programme. This programme plans how each of the seven marketing mix variables (i.e. the seven Ps) can be used as a guide to arrive at the competitive position that the firm wants to occupy in the target market. The marketing mix used by a particular firm will vary according to its resources, market conditions and changing needs of clients. The importance of some elements within the marketing mix will vary at any one point in time. Decisions cannot be made on one element of the marketing mix without considering its impact on other elements. Details of how each of these seven Ps can be adopted by professional quantity surveyors are discussed below:
1 Product. The product is actually the services to be provided by the quantity surveying firm. It varies from firm to firm. The firm is using its services as a vehicle to meet the needs of clients. In this case, the basic services offered by quantity surveying firms are feasibility studies, financial management, cost valuations and project management. It is also important to distinguish between what the service organization offers and what benefits consumers derive from these offers. Quantity surveying firms may offer a wide range of services but clients may only need advice on project management. The quality and quantity of the service are of fundamental importance. They will affect the volume of demand for that service and the position of the firm compared to its competitors. In order to, for example, deliver quality service, the firm has to look into the accuracy and reliability of cost figures given by the quantity surveyor in feasibility studies. The style of presenting these figures to clients is also of importance. To deliver quantity, the firm has to look into the volume, timing and flow of the services it provides.
2 Price. The price is the fees charged to clients by quantity surveying firms. Quantity surveying firms used to have precise scales of fees for their clients. Presently, fees are, however, frequently charged based on the nature and size of the project. In addition, the fees charged will be higher for a more complex project compared with the construction of a simple building structure. There is still room for negotiation after the fees are quoted by the quantity surveying firm. Generally, the basis which firms used to charge fees will vary from firm to firm. With increasing competition, quantity surveying firms are now more cautious in setting their fees. These should be consistent with the firm's objectives, for example, profit maximization and repeat business from satisfied clients.
3 Place. Firms should also be concerned with how accessible their services are to their clients. Channels are designed by firms to deliver their services more effectively to clients. If the firm's target segment is in the central business district, a head office is best located in the same area. If the firm is dealing with a large project which will last for a substantial period of time, the firm may want to set up a temporary office on site.
4 Promotion. The purpose of promotion is to sell a firm's services through informing, persuading and reminding the market. These are achieved through advertising, personal selling activities and other direct forms of publicity and indirect forms of communication such as public relations. For firms which choose to advertise, an advertising programme will need to be drawn up to meet professional requirements and at the same time, portray the firm's desired corporate image. Personal selling frequently mixes pleasure and selling together. Top management may interact with existing and potential clients at restaurants, country clubs, alumni gatherings, trade associations and other places where they can, at the same time, enjoy themselves. This form of selling can be time-consuming and costly. Hence, a limit on capping personal selling may be required. Some of the public relations tools used may include brochures, newsletters, information sheets and sponsorship of conferences and exhibitions. When using these tools, quantity surveying firms must consider their functions and costs.
5 People. The service personnel are the people who provide the quantity surveying firm's services to its clients. They are the professional quantity surveyors. They are important because they represent the firm and form the firm's image through their behaviour and attitudes. If service personnel are cold or rude, they can undermine all the marketing work done to attract customers. If they are friendly and warm, they can increase customers' satisfaction and loyalty (Kotler, 1982). Clients' perceptions of the quality of services can also be influenced by other clients. There are a few ways in which firms may maintain and improve the quality of their personnel as well as their performance. These are:
* careful selection and training of service personnel;
* activate an awareness towards marketing within the organization;
* using practices to achieve consistent behaviour from employees;
* ensuring consistent physical appearance;
* reducing the importance of personal contacts;
* careful control through an internal service personnel audit.
6 Physical evidence. Physical evidence can help to create the environment and atmosphere where the services are performed and to influence clients' judgement of the firm. They can include components like the physical environment (for example, furnishings, colour, layout and noise), the facilitating goods that enable the services to be performed (for example, specifications and BQ) and other tangible clues (for example, brochures). It is difficult to measure, define and control the image that is perceived by the client as image can be very subjective. Hence, there is a need to manage physical evidence to ensure that the image conveyed conforms with the image desired.
7 Process. Clients are not only interested in the end results from the quantity surveying firm, they are also interested in the process of how services are delivered. Clients judge services by the efficiency and effectiveness of the service process, including the policies and procedures adopted, the degree of mechanization used in the service provision, the amount of discretion employees have, the client's involvement with the process of service performance, the flow of information and service, the appointments and waiting system and the capacity levels available.
For a marketing programme to be successful, there is a need to have the right strategy and effectively execute it. Quantity surveying firms have traditionally placed a lot of emphasis on execution rather than on strategic planning as they felt that only action will make things happen. These firms should now realize the importance of planning and to put more efforts into planning. Nevertheless, there is still a need to strike a balance between planning and acting.
This paper presents the results of a study into how quantity surveyors perceive the marketing mix concept. It also recommends how the seven elements in the marketing mix may be activated to help quantity surveying firms market their professional services more effectively. The development of a marketing orientation should be the very first mission of a professional service organization seeking to become proficient at marketing. It is about being conscious of a client's needs and caring for these needs. It is about identifying customers and their needs as well as deliberately directing the firm's resources to satisfy them. A marketing-oriented quantity surveying firm can be identified through the helpfulness of its quantity surveyors in solving its clients' problems.
For quantity surveying firms who have not already practised this, the process of becoming a responsive marketing-oriented organization can take a long time. It will also be difficult to educate experienced professional quantity surveyors to make fundamental changes to the way they deal with clients because they may feel that their ways have worked in the past and therefore do not see a need for change. In addition, they may be afraid to make mistakes when they are unfamiliar with a different approach. It may also be difficult to persuade the less experienced quantity surveyors to contribute to marketing efforts because they do not yet have strong long-term commitments to their firms. They would prefer to focus their energies towards developing their skills in quantity surveying rather than on developing marketing skills. Achieving a marketing orientation calls for several measures to be taken. These measures are:
1 Top management support. The firm is not likely to develop a strong marketing orientation until top management believes in it and wants to create the climate for marketing by talking about and encouraging it. Top management should then win support from lower management to influence other quantity surveyors within the organization towards marketing.
2 Effective organization design. A professional quantity surveyor who is much respected and well versed with marketing should head the company's marketing function. A simple organization structure should be retained to keep the function effective.
3 In-house marketing training. Seminars, to be conducted by top management, should be presented to all staff so that their understanding of marketing can be enhanced. The topics covered should include market identification, market segmentation, market targeting and positioning, market planning and control, fees setting, selling and marketing communication. The firm should also provide an internal marketing newsletter to update employees on the implementation of marketing.
4 Improved personnel practices. The provision of training to staff will only instil the right attributes in them but may be unable to develop the relevant marketing skills. In order to rectify such a situation, the firm can try to hire more client-centred and marketing-oriented employees. Some individuals are naturally more service minded and approachable than others and this can be a criterion for employment.
Finally, rewards can be given to motivate employees to be more marketing-oriented. Although there is a risk in that employees may only concentrate on getting these rewards, with no intention of being genuinely marketing-oriented, this appears to be by far the most effective method for quantity surveying firms.
Borden, N.H. (1965), "The concept of the marketing mix", in Schwartz, G. (Ed.), Science in Marketing, John Wiley & Sons, Chichester, pp. 386-97.
Crane, F.G. (1993), Professional Services Marketing, The Howarth Press.
Kotler, P. (1982), Marketing for Non-Profit Organisations, Prentice-Hall, Inc., Englewood Cliffs, NJ.
McCarthy, J.E. (1960), Basic Marketing: A Managerial Approach, Richard D. Irwin Inc., Homewood, IL.
Low Sui Pheng School of Building and Estate Management National University of Singapore, Singapore
Kok Hui Ming School of Building and Estate Management National University of Singapore, Singapore
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|Author:||Pheng Low Sui; Ming Kok Hui|
|Publication:||Marketing Intelligence & Planning|
|Date:||Jun 1, 1997|
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