ASSIGNMENT 2
SPENNCON AS
Developing Marketing Strategy in the Construction Industry
Spenncon AS – Current Market Situation
Spenncon AS is the Norwegian subsidiary of Consolis, the largest manufacturer of prefabricated concrete elements used in the construction of buildings in Europe. As of 2001, the situation of Spenncon is one of the worse of all Consolis subsidiaries.
Indeed, the decrease of Spenncon’s profitability is worrying, in that it is a general tendency as opposed to a bad temporary current situation. Of course the very nature of the industry is at stake in the problems faced; yet there is a lot to say about Spenncon’s marketing strategy itself.
As a starting point the construction industry is very cyclical and not in a way that one could easily foresee. Nevertheless such an industry requires a lot of planning and organization and the cyclical nature of the industry combined with a poor timeliness entail volume uncertainties (Geyskens and Al 2002). When it comes to the competition it is both direct with traditional companies and lower companies and indirect with different types of substitute: on site production or alternative materials. Another aspect of the construction industry is the number of actors involved and how it hinders coordination or at least makes it very difficult. It looks like compost for behavioral uncertainties and opportunism. In spite of all the uncertainties described, Spenncon only uses market governance, guided solely by the price mechanism and short-term horizon (Geyskens, Steenkamp and Kumar 2006). It is even hard to “detect” repeated transactions, which could be the precursors of a relationship (Webster, Jr)!
Concerning the marketing strategy itself it is at least inappropriate if ...