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Affordable house Construction Companies in UK :-
Affordable housing is a term used to describe dwelling units whose total housing costs are deemed "affordable" to those that have a median income. The construction sector is very important for the UK economy. It accounts for 10% of the UK's GDP and employs 1.5 million people. The construction industry is large, complex and diverse and covers a wide range of business interests and activities, united by their common usage and development of land. The major player are Denne Constructions, McNicohlas, Higgins Constructions , Mansell Construction Services Ltd . From above companies Higgins Constructions have been selected for the study of marketing mix and consumer buying behaviour.
About Higgins Construction PLC :-
For almost 50 years, Higgins Construction PLC has built a reputation as one of the most forward thinking construction companies in the UK. Part of Higgins Group PLC, it is currently chaired by Richard Higgins, whose father, Derek Higgins OBE, FCIOB, founded the business back in 1961. Higgins is the one of the leading community contractors in London and the South East. Today, the company has established itself as a leading contractor of community building projects and has a unique relationship with its clients.
What company do:-
Company deals in Buildings, bricks, blocks, bins and bikes, badgers, bats and birds. From Off Site Manufacture (OSM) technologies to Sustainable Urban Drainage Systems (SUDS), they are investing resources to develop this all important aspect of construction. Higgins Construction PLC is confirmed as the main contractor for London and Quadrant Group's GBP 9.5 million development of exactly 103 new affordable mixed-tenure homes in the London Borough of Bexley. Timber-frame from Pace of Milton Keynes is the Modern Method of Construction applied to all the houses and three-storey apartment blocks, to be clad with lightweight brick slips, cedar and render. An existing community centre is being demolished for replacement elsewhere on the three-hectare site, according to a scheme designed for this special London and Quadrant Construction Services project by architects Hunter and Partners. CSR is about understanding of the business impact on the modern world and they have made a number of positive changes in recent years to demonstrate our commitment. By working with their clients, employees and communities, they have developed a CSR policy that's based on 6 core principles: Environment - taking responsibility for the mark we make on the environment. Health & Safety - developing policies and procedures to protect people. People Development and Training - committing to our people's personal and career development. Community Involvement- engagement with and creation of opportunities for the communities in which we work. Customers and Supply Chain- promoting greater efficiency with our partners. Social Responsibility -devoting time and energy to charities. Higgins has made a pledge to innovate and continue to lead the industry in this all important area. Higgins Constructions have been awarded with the award for Best Community Regeneration Project to Market Estate project, which was carried out for Southern Housing Group. Seven years ago, a series of criminal incidents on the notorious north London estate near Caledonian Park, incited the local residents to voice a need for change in their community. Dark, secluded areas of this post-war development had become havens for gang crime and vandalism.
Marketing Mix (Construction Industry) :-
Marketing mix involves 4 P's of marketing i.e. product, price, place and promotion. The marketing mix of a construction company has been explained.
In Construction industry the total product includes services offered by the contractor in the support of the core product i.e. physical product. For the construction industry products are:
Physical: houses, public and commercial facilities infrastructure & building products.
Service: expertise consultancy & design
Persons and reputation: example- hafeez contractor
Ideas and proposals: urban regeneration, regional development and competitions
Essentials: water gas electricity telecommunication, transport facilities
Highly desirable: schools, hospitals, shopping complexes, leisure centers
Desirables: environmentally secure, adaptable.
In the Housing industry:
The core product consists of : permanent accommodation / living space. The format product consists of : locations, utilities, electricity, brand name, availability of schools and hospitals nearby.
Product has to reach the ultimate buyer so the company works with its intermediaries to bring to bring their product to the market. Marketing channels perform work of moving goods from the producer to the consumer. In the housing and the construction industry construction cannot be transferred but here intermediaries transfer information of distinct places about the availability of accommodation so that not having any idea about these constructions get to know about it. In this industry distribution is done through real estate agents, who act as connecting tool between the consumer and the provider.
Agreeing the price for a piece of work seals the relationship between contractor and the client. It is the central feature, and reflects the value placed on the relationship. Prices is based on the combination of:
What the market expects
What the client can afford
The nature of competition in the sector
What the contractor can afford to work for
Any specific factors concerning the particular job e.g. location material used
What is being agreed and paid for- whether completion of a bldg or wider process offered supported by maintenance, pre sale and after care agreements?
Pricing considerations :-
For housing a construction industry there are many considerations:
Ideally the price also makes a contribution to the fixed costs of the contracted org. It is also necessary to consider charges incurred by the contractors as the result of having to underwrite the project from inception to delivery & from the need to acquire any specialists' equipment and expertise necessary.
Building products are priced so that an individual perception of quality value and service are at a level that the size and nature of the can sustain. It is also increasingly common to find differentiate pricing approaches as competitors seek real and perceived price advantages.
The construction industry is concerned with following forms of production:
The promotion of its capabilities and expertise to client and potential client.
The promotion of its finished products to the community and society at large
The promotion of professionals within the industry to each other promoting specific general and continuing inter relationships and confidence between architecture, contractor quality surveyor planner other consultant civil engineers and sub contractors.
The promotion of general confidence, public sympathy and support for activities.
The overall purpose of promotion is :-
Promotion activities of the construction industry can be divided in following:
Direct sales :
It involves opening up client face to face contact with those commission work and inviting tenders and presenting the distinct expertise on offer in the client's best interest.
Targeted direct market :
If this is to be effective it requires knowing who the people with influence are promotional material, brochures, and achievements can then be arranged and presented and if necessary specially prepare on client or sector specific basis.
Marketing under this sector is done through various mediums such as:
Advertisements in newspapers and magazines, television and radio and also through e-mails and websites
Sole selling agencies: These are agencies that are given the contract of marketing the product who are responsible for the sale of the product.
Hoardings: These hoardings are put up at the site and contact numbers are given. Hoardings are also put up at railways, roadways and on BST buses, etc.
Marketing through Estate agents: These estate agents also called as consultants act as middlemen between the customer and the builder. They are provided with brochures and site maps.
Consumer Buying Behaviour :-
What do households want?
As an integral part of their business planning, housing developers carry out research into what homebuyers want from a home. According to a survey conducted by The Housing Corporation and CIH in UK (Housing Corporation's Centre for Research and Market
Intelligence (CRMI) and carried out by the Centre for Housing and Planning Research, Cambridge University) following are the important factors which effect the consumer buying decision in today's households:
Property size :-
The Small flats are the unpopular because they have too little space, and they are seen as likely to border on areas of crime. However, affordability constraints have created demand for very small flats. While the demographic profile of flats varies, it is clear that older people can be attracted to single-floor living in a flat, provided that lifts are included; they also prefer blocks specially designed for them, with good security measures and effective management.
Preference is strongly influenced by family circumstance and life stage. Most people prefer detached dwellings, but research has shown that middle income households prefer new developments within older terraced style housing. 49% of first time buyers are prepared to live in terraces, and 30% in flats (Nathaniel Lichfield 2005).
There is a significant demand for larger rooms, often in preference to a larger number of smaller rooms, though as people use their homes for a wider range of activities there is also continuing demand for specialised small rooms for home working, study or utility spaces. Families want more separation between adult and child areas; others are more amenable to open-plan living. Roof spaces with usable lofts and basements are sought after and with households and developers both looking at maximising living space within existing properties, modification of existing structures remains popular (CABE, 2005).
While increasing density of housing remains a priority in local development frameworks, it is clear that households do not want to see this at the expense of outdoor living space. Garden size is important for all life-stage groups and dwelling types, but especially for families. 75% of those surveyed preferred private over shared or communal space. Communal spaces are preferred where they are shared only with other similar households (e.g. older people). They are often criticised by residents for poor design and being merely decorative.
Kitchens and bathrooms. :-
These two key internal spaces remain important considerations in consumers' housing choices. As a result of the emphasis placed on kitchens, it has become almost standard practice for developers to offer not only a fully-fitted kitchen, but also a hob, cooker and all white goods. In contrast with the social housing sector, the provision of an ensuite bathroom in two bedroom private dwellings is becoming widespread, with the provision of two ensuite bathrooms in properties over 1,000-1,200 square feet. Many ensuite bathrooms in practice contain a shower rather than a bath, for space and increasingly for environmental and lifestyle reasons.
There is a growing interest in environmental sustainability of housing, both for new build properties but also what can be done to retrofit existing homes. Recent research by Commission for Architecture and the Built Environment (CABE), World Wide Fund for Nature (WWF) and Halifax Bank of Scotland (HBOS) revealed that 87% of buyers want to know if their homes are environmentally friendly, with 84% willing to pay 2% extra on the purchase price for an Eco-home (Sustainable Development Commission 2005). New government initiatives delivered through the Energy Savings Trust are also seeing householders able to access grants and support for improving insulation and installing new energy-saving technologies.
This is one area where developers appeared to be unaware of specification issues that are now familiar to social housing landlords. The switchover from analogue to digital television signals will require not only new aerials/receivers on apartment blocks, but also new wiring to individual apartments. Social housing landlords are currently debating the appropriate technology and service charge implications of this change, but developers (who seldom retain the ongoing maintenance responsibility) appear unaware of this issue. With an increasing number of householders looking at home working options, modern telecommunication facilities are also becoming an important consideration.
Householders' considerations when looking at a home are driven not only by the quality of the property and affordability, but also by wider social drivers such as local schools, shops, and their overall impression of the community. The presence of local shops is highly valued. Being able to walk around the neighbourhood was cited as a benefit especially when it was perceived as engendering a sense of community (CABE, 2005). Problems with a neighbourhood can outweigh all other factors in choosing a home (Cole and Robinson 2003).
Lack of car-parking in developments based on Planning Policy Guidance (PPG3)
principles were the most frustrating aspect for many residents: 45% complained about
it spontaneously (CABE, 2005). Oddly, consumer surveys rank parking as a very low
priority in selecting a dwelling.
A key driver in housing choices is the quality and aesthetic of the property. Good quality design and respect for the local vernacular remain important with people stating clearly that they do not want to live in 'featureless boxes'. Good quality landscaping can also play an important role in improving not only the perception of the house but also that of the neighbourhood (CABE, 2005).
Marketing strategies followed by the company for expansion :-
A market entry strategy is the planned method of delivering goods or services to a target market and distributing them there. The decision of how to enter a foreign market can have a significant impact on the results. Expansion into foreign markets can be achieved via the following four mechanisms:
Licensing essentially permits a company in the target country to use the property of the licensor. Such property usually is intangible, such as trademarks, patents, and production techniques. The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance. However, because the licensee produces and markets the product, potential returns from manufacturing and marketing activities may be lost.
Joint Venture :-
There are five common objectives in a joint venture: market entry, risk/reward sharing, technology sharing and joint product development, and conforming to government regulations. Other benefits include political connections and distribution channel access that may depend on relationships.
Such alliances often are favourable when:
the partners' strategic goals converge while their competitive goals diverge;
the partners' size, market power, and resources are small compared to the industry leaders; and
partners' are able to learn from one another while limiting access to their own proprietary skills.
Foreign Direct Investment :-
Foreign direct investment (FDI) is the direct ownership of facilities in the target country. It involves the transfer of resources including capital, technology, and personnel. Direct foreign investment may be made through the acquisition of an existing entity or the establishment of a new enterprise.
Direct ownership provides a high degree of control in the operations and the ability to better know the consumers and competitive environment. However, it requires a high level of resources and a high degree of commitment.
Comparison of Foreign Market Entry Modes
Conditions Favouring this Mode
Import and investment barriers
Legal protection possible in target environment.
Low sales potential in target country.
Large cultural distance
Licensee lacks ability to become a competitor.
Minimizes risk and investment.
Speed of entry
Able to circumvent trade barriers
Lack of control over use of assets.
Licensee may become competitor.
License period is limited
Large cultural distance
Assets cannot be fairly priced
High sales potential
Some political risk
Government restrictions on foreign ownership
Local company can provide skills, resources, distribution network, brand name, etc.
Overcomes ownership restrictions and cultural distance
Combines resources of 2 companies.
Potential for learning
Viewed as insider
Less investment required
Difficult to manage
Dilution of control
Greater risk than exporting a &licensing
Partner may become a competitor.
Small cultural distance
Assets cannot be fairly priced
High sales potential
Low political risk
Greater knowledge of local market
Can better apply specialized skills
Minimizes knowledge spillover
Can be viewed as an insider
Higher risk than other modes
Requires more resources and commitment
May be difficult to manage the local resources.
PESTEL analysis :-
In this we will discuss about the PESTEL analysis in the construction industry in UK. Describes a framework of macro-environmental factors used in the environmental scanning component of strategic management.
Typical PESTEL factors to consider include:
e.g. EU enlargement, the euro, international trade, taxation policy
e.g. interest rates, exchange rates, national income, inflation, unemployment, Stock Market
e.g. ageing population, attitudes to work, income distribution
e.g. innovation, new product development, rate of technological obsolescence
e.g. global warming, environmental issues
e.g. competition law, health and safety, employment law
Higgins construction strategy in light of the external environment, to identify future market needs. By linking Higgins competencies and technical knowledge to future market needs, they must develop products that give the company a competitive advantage in construction. PEST analysis is a powerful tool that can be used to help analyse the external construction environment. This analysis involves examining the current situation with regard to the following factors:
UK Government policy and EU directives, for example, planning and environmental issues including sustainability affect the construction industry.
The health of the economy and interest rates affect demand for commercial and residential property. The UK government is using taxation as a means to encourage improving environmental performance e.g. The Climate Change Levy, Aggregates and Landfill taxes. The construction industry is increasingly interested in whole life costs of the building, which includes initial capital costs, operating and maintenance costs - understanding how better design can improve all these costs.
Changes in the birth/divorce rates and the average number of people living in a household affect the demand for housing. Increasing crime, ageing population, and people's well-being are part of the social dimension - research shows that the highest number of disagreements amongst neighbours is due to car parking.
New construction technologies affect working practices in the building industry, constructing more component systems in factories rather than on the building site.
The UK and European governments believe the construction industry is highly fragmented and the only way to improve the performance of the industry in terms of safety and environmental performance is to increase legislation.
Two of the main issues here are meeting the Kyoto Agreement in production of Carbon Dioxide from the burning of fossil fuels and waste going to land fill.
The factors identified in the analysis are concerned with the current situation. However, to get first mover advantage it is essential to plan for the future through forecasting events over the next 20 years using the factors from the PESTLE analysis. This is partly due to the need to have accreditation for products. This is a testing regime carried out by an independent body against relevant British/International standards and building regulations. On successful outcomes of the tests, a performance certification is issued for the specific product in the specific application - generally stating structural, fire, acoustic, thermal and durability performance of the product. This is important as the Construction industry is generally very conservative and hence, to introduce a new product, it is essential to have third party validation that the product will perform as the manufacturer states. Achieving this accreditation can take up to a couple of years to get, and it then takes a substantial amount of time to develop the product for today's construction industry.
Higgins Constructions should go for licensing and joint venture, as they are core competencies in New build, brown field , green field residential schemes, Residential refurbishment, Decent Home programmes, Comprehensive Estate redevelopment and regeneration programmes, Care homes, Special needs accommodation, Community buildings, Alterations and extensions, Listed buildings, Education and Sustainable Construction they have been awarded with the award for Best Community Regeneration Project to Market Estate project, which was carried out for Southern Housing Group. For over 40 years, Higgins Construction has built a strong track-record as the leading name in community construction in London and the South East. From Cambridge in the East Midlands to Brighton the Sussex coast, the quality and scale of our construction projects is unrivalled. With the PESTEL analysis Higgins Construction can improve in the product by identifying the wants and desires of its customers. Thus we can say that Higgins Construction is a major UK construction company that puts the community at the core of its business.