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Commercial Challenges in the Construction Industry 2020

Commercial Challenges in the Construction Industry 2020

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Home Vendor News Commercial Challenges in the Construction Industry 2020
In 2020, the construction industry will be facing bottlenecks in installation, and with high demand and full order books, the focus for manufacturers will have to shift to finding the optimal way to serve customers. The Construction Industry Practice Simon-Kucher & Partners has identified three commercial opportunities for supplying companies in the construction value chain:
1. Omnichannel strategy: The internet gives customers more options than ever to find solutions. Instead of relying on established distribution, they can fulfill their needs by going to platforms, buying directly from manufacturers, and buying through DIY or other specialized channels.
Sebastian Strasmann explains: “The internet has been redrawing the routes to market for a couple of years now. The customer is the one dictating the move toward omnichannel thinking. We advise companies to take four steps to capitalize on their omnichannel presence: Directing the channel strategy toward what products or solutions customers want to buy and their channel preferences, choosing and targeting the right customer segments, differentiating similar solutions by using different brands, products, and prices to preserve channel integrity and prevent demand from leaking to low-cost or lower-quality suppliers, and establishing a system of trade terms and incentives so that the manufacturer and channel partners’ interests remain aligned on serving the customer. But let’s be clear about the ongoing role of traditional wholesale: The wholesaler plays an important role as an aggregator, and many installers and end-users with complex jobs will still see wholesale as their most efficient partner. Therefore, wholesale channels and online channels can coexist.”
2. Sales excellence: The bottleneck through high utilization at installer level causes an optimization challenge, especially in Sales. It is not about more, but better selling.
Dr. Andrea Maessen points out: “The solution lies in better cross-selling, better pull-selling or spec-selling on the jobsite, and more precise and forward-looking sales steering. Few companies already succeed in true sales excellence. If not doing so already, companies now need to better identify, support, and capture market and value opportunities. Digital support tools such as effective customer relationship management (CRM), market intelligence databases, data analytics, and real-time data access help to optimize sales activities and outcomes. The internet and real-time data has granted sales teams a mind-reading “superpower” that never existed before. They just need to use it. Greater knowledge of customers and their journeys allows sales teams to “hunt” projects by understanding what installers or other decision-makers need and giving them the right package.”
Strasmann adds: “Push vs. pull matters here as well. Pull-selling is now more feasible than ever because of the increased knowledge and the ability to planning. Today’s technologies enable companies to configure and optimize a project in such a way that decisions on business partners are set before a tender process normally would start.”
3. Vertical integration… with focus on the commercial side: The lack of a skilled workforce, as well as new technological opportunities in prefabrication and solution offerings in the short- and mid-term make M&A activities and vertical integration an integral part of business strategies for construction companies.
Dr. Maessen predicts: “Apart from cost-cutting and consolidation in order to achieve synergies, post-merger integrations will need to focus much stronger on value creation on the commercial side going forward. The combined operations moving toward complete, seamless solutions achieve gains through addition rather than subtraction or cutting. Defining the future positioning and aligning the commercial strategies and processes accordingly will determine the success of future deals.”
Simon-Kucher & Partners, Strategy & Marketing Consultants:
Simon-Kucher & Partners is a global consulting firm with more than 1,400 professionals in 39 offices worldwide focusing on TopLine Power®. Founded in 1985, the company has more than 30 years of experience providing strategy and marketing consulting and is regarded as the world’s leading pricing advisor.

 

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