Marketing in the Project Driven Organization

To the realistic manager, winning new concepts is the lifeblood of any project-oriented business. The practices of the project-oriented company are, however, substantially different from traditional product businesses and require highly specialized and disciplined team efforts among marketing, technical, and operating personnel, plus significant customer involvement. Projects are different from products in many respects, especially marketing. Marketing projects require the

Figure 1-15. Decision-making influence.

ability to identify, pursue, and capture one-of-a-kind business opportunities, and are characterized by:

• A systematic effort. A systematic approach is usually required to develop a new program lead into an actual contract. The project acquisition effort is often highly integrated with ongoing programs and involves key personnel from both the potential customer and the performing organization.

• Custom design. While traditional businesses provide standard products and services for a variety of applications and customers, projects are custom-designed items to fit specific requirements of a single-customer community.

• Project life cycle. Project-oriented businesses have a well-defined beginning and end and are not self-perpetuating. Business must be generated on a project-by-project basis rather than by creating demand for a standard product or service.

• Marketing phase. Long lead times often exist between the product definition, start-up, and completion phases of a project.

• Risks. There are risks present, especially in the research, design, and production of programs. The program manager not only has to integrate the multidisciplinary tasks and project elements within budget and schedule constraints, but also has to manage inventions and technology while working with a variety of technically oriented prima donnas.

• The technical capability to perform. Technical ability is critical to the successful pursuit and acquisition of a new project.

In spite of the risks and problems, profits on projects are usually very low in comparison with commerical business practices. One may wonder why companies pursue project businesses. Clearly, there are many reasons why projects are good business:

• Although immediate profits (as a percentage of sales) are usually small, the return on capital investment is often very attractive. Progress payment practices keep inventories and receivables to a minimum and enable companies to undertake projects many times larger in value than the assets of the total company.

• Once a contract has been secured and is being managed properly, the project may be of relatively low financial risk to the company. The company has little additional selling expenditure and has a predictable market over the life cycle of the project.

• Project business must be viewed from a broader perspective than motivation for immediate profits. Projects provide an opportunity to develop the company's technical capabilities and build an experience base for future business growth.

• Winning one large project often provides attractive growth potential, such as (1) growth with the project via additions and changes; (2) follow-on work; (3) spare parts, maintenance, and training; and (4) being able to compete effectively in the next project phase, such as nurturing a study program into a development contract and finally a production contract.

Customers come in various forms and sizes. For small and medium size businesses particularly, it seems to be a true challenge to compete for contracts from large industrial or governmental organizations. Although the contract to a firm may be relatively small, it is often subcontracted via a larger organization. Selling to such a diversified heterogeneous customer is a true marketing challenge that requires a highly sophisticated and disciplined approach.

The first step in a new business development effort is to define the market to be pursued. The market segment for a new program opportunity is normally in an area of relevant past experience, technical capability, and customer involvement. Good marketeers in the program business have to think as product line managers. They have to understand all dimensions of the business and be able to define and pursue market objectives that are consistent with the capabilities of their organizations.

Program businesses operate in an opportunity-driven market. It is a common mistake, however, to believe that these markets are unpredictable and unmanageable. Market planning and strategizing is important. New project opportunities develop over periods of time, sometimes years for larger projects. These developments must be properly tracked and cultivated to form the bases for management actions such as (1) bid decisions, (2) resource commitment, (3) technical readiness, and (4) effective customer liaison. This strategy of winning new business is supported by systematic, disciplined approaches, which are illustrated in Figure 1-16.


Figure 1-16.

The phases of winning new contracts in project-oriented business.

Figure 1-16.

The phases of winning new contracts in project-oriented business.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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