Executive summary
The project is aimed to assess the construction structures presently used in Saudi Arabia and to introduce a new structure company, which offers residential and commercial building solutions to the Saudi Arabian economy. The study was conducted in association with Modern Walls Company and was designed to create a marketing plan for the company to adopt an innovative structure. Saudi Arabia has become one of the leading construction markets over the past few years and the government takes supportive action towards the implementation of newer technologies in the construction industry. The proposed new company can offer lots of advantages like reduction in cost, saving of time…etc.
Introduction
Modern Walls Company is dedicated to the design, development, manufacturing and installation of residential and commercial building solutions. This destination company offers the advantages of providing structures specifically designed for home structures. Modern Walls Company has the following objectives:
- To provide calm and comfortable accommodation for people.
- To provide less costly houses for people.
- To provide an easier and faster construction process.
Current Market situation
Market description defining market and market segments
Modern Walls Company has given support to the people of middle and lower income groups for constructing less costly houses. It mainly concentrates on the people in the age group of 30-40 years, and also focuses on fresh graduates. It can construct commercial and residential buildings by using synthetic composite materials. The target market is mainly concentrated on the above stated category of people. Based on the target we can divide the entire market into different segments. The following are the different segmentation strategies based on the behavioral, demographic, geographic and physiographic characteristics of people.
Behavioral segmentation is the nature or habits of the user towards particular product. Here, the people in the age group of 30-40 years have different perceptions regarding the efficiency of Modern Walls Company’s product. They require not only the least cost product but also it should meet all their behavioral concepts of a house.
Based on the geographic segmentation, the major houses manufactured by the company are well planned and properly designed because the weather in Saudi Arabia is stable and suitable for building any type of house.
Demographic segmentation includes the major factors which affect the entire life cycle of people. It mainly refers to age, sex and family background of people. Here, Modern Walls Company has to consider the entire factors such as age group, life style of the people etc…
Physiographic segmentation represents all the physical factors, which affect the continuity of a product or service.
After dividing the entire segments, the company has to give major preference to satisfy the needs and perceptions of existing customers. The company has designed and developed its home structure to provide peaceful accommodation facilities to the people. It does not require steel or cement to construct the buildings. So it can have economic cost of production by using synthetic materials. The absence of heavy equipments will be helpful to avoid uncontrollable cost of production. There is no use of special skilled people to maintain the overall functioning of the project. By adopting several ideas and newly developed technologies the company can achieve maximum customer satisfaction and economic cost of production.
Environment Analysis
It is not an easy task to set up an organization, especially if the organization is planning innovative ideas. Different external factors are to be considered while setting up such an organization. Here in this case, now traditional products and methods are used in the construction industry in Saudi Arabia. The new company namely “Modern Walls Company” is planning to introduce new method of house construction, which suits the budget and needs of the average people. The external factors that are to be considered are explained below.
- Political factors and legal factors: The political factors have significant influence in the construction industry of Saudi Arabia. There are no political parties or election in Saudi Arabia. The country is ruled by King and follows Islamic law. Unlike in other countries, the powers of the rulers are restricted, as they have to strictly follow and act according to the Islamic rules. The Government gives full support for the development of the construction industry in the country. The new rules announced by the government are favorable for the proposed modern way of construction. The legal system in Saudi Arabia is supportive to those who plan new companies. Moreover, the government supports foreign investment in the country in different industries. (Editor Campbell, & Campbell, 2007).
- Technological factors: Saudi Arabia is always keen to watch the technological changes in the world and implement the new technologies for boosting the country’s development.
- Natural Factors: There is influence of different natural factors in the construction industry. The companies in this field must consider the environmental issues that may arise due to modern method of construction.
- Social and Cultural factors: Social and cultural factors have significant influence on the construction industry. The society may oppose if introduction of new idea or technology negatively affects the society. In addition, it requires great effort to convince the society about the new method of construction.
Product review; sales and prices of major products
InnoVida is the advanced technology which is used for the purpose of construction. With InnoVida it is very easy to develop, design, manufacture and install commercial and house-hold buildings. InnoVida mainly consists of three types: InnoVida Panels, InnoVida Resin, InnoVida Bond which are all made using proprietary synthetic composite materials. These materials are similar to those which are used in aircraft and marine industries.
So there is no doubt about their strength. InnoVida Panel is made up of polyurethane. “Polyurethane is an incredibly resilient, flexible, and durable manufactured material that can take the place of paint, cotton, rubber, metal, and wood in thousands of applications across all fields. Polyurethane might be hard, like fiberglass, squishy like upholstery foam, protective like varnish, bouncy like rubber wheels, or sticky like glue.” (What is polyurethane, 2009, para.1).
These panels are available in different thickness such as 104mm, 64mm and 44mm and also in different shapes and dimensions. InnoVida Bond and InnoVida Resin are used in roofs. These are completely non-flammable, water proof and resistant to fungus. It requires no cement, steel or wood at the time of construction. Also it does not require any heavy material and no special skill is required. InnoVida offers water treatment system for each of its products. The aim is to reuse the wastewater. This is achieved by including water filtration units with a closed loop system. This eliminates the need of having extra water treatment plan.
The InnoVida products have been tested under different circumstances. InnoVida Panels are waterproof, inflammable and can resist wind up to 300km/h. These panels can have load bearing capacity up to 50tons/m2 for a vertical compression and 2tons/m2 on horizontal panels. The fire test has been conducted; the panel corner has been burned at 1250 degree Celsius. The fire does not spread all over.
The InnoVida panel can load weight up to 2042kg. It has been tested with 5 persons and 2 rolls of fiber glass. As far as the price is concerned, the customer will be benefited at the end as maintenance cost will be very less compared to other products as the InnoVida products will last longer and they will degrade very slowly. The long term guarantee up to 30 years is given for each raw materials used. So house or any kind of commercial buildings will last for generations. The customer has to pay service, training and inspection charges when they buy InnoVida products for housing solutions.
Review of competition
Review of competition helps to identify major competitors and assess their market positions and strategies for product quality, pricing, distribution, and promotion. Building and construction sector is the third largest sector in Saudi Arabia, which has shown a tremendous growth over the past few years, and it is anticipated to stay vibrant for the next five years. The target market is mainly Jeddah, Riyadh, Al-Khobar, Yanbu and Hail. Some of the construction companies which use the normal construction materials in Saudi Arabia are Alfares Scaffold, Ghassan Felemban Architectural Consultants, Sormat and Rashed Al Rashed & Sons etc.
Another main competitor is InnoVida Holding, an innovative construction company which uses proprietary synthetic composite resources apart from the traditional construction materials like cement, steel, bricks etc and follows the processes of nautical and aircraft construction. Usage of these materials lead to strong, lighter and flexible construction, protecting against noise, hurricane etc. About the maintenance of product quality of the company, InnoVida has a library containing designs for homes, schools etc. Maintenance of the quality of construction materials of required panel strength is made through fire test and strength test.
The pricing of the construction companies is according to the city and construction area i.e. with square feet and square meter which could be affordable to the customers. For example “Al-Kaheel is a $1.6 billion Dirham Project offering 400 beautifully-built residences in a preserved desert landscape surrounding Dubai land’s Eco Zone.” (InnoVida and Al-Kaheel announce US$60 million contract to build various real estate projects, 2009, About Al-Kaheel, para.2). The construction companies do the promotion activities by increasing luxury facilities in the current and future projects, thus attracting more and more customers. Also online advertisement and promotional campaigns at the hypermarkets, participation in trade shows, television and journal ads are used for promoting the business.
Review of Channels of Distribution
A Channel of Distribution is the medium through which a manufacturer markets his product through different sources and communicates the product information to customers. Channels of Distribution are the methods used by the manufacturer to make sure that the product is delivered to the customers at the right time and at the right place. Distribution Channels are influenced by the type and size of the business.
Types of Distribution channels used in construction industry
Direct Mail: This method involves sending mails to prospective customers to inform them about the product. This method can help to achieve sales on local, national and even global level. This method involves sending leaflets, brochures and catalogues informing the potential customers about the product or service. Interested customers would make an order through the contact details that would be included in the mail. One should be very careful while sending mails as poorly targeted mail shots can damage the image of the business.
Telemarketing: Telemarketing is the method of informing the customers about the product through means of phone calls. Potential customers are identified and they are informed about the product by giving calls to them. Professional service providers can be consulted to carry out the task. Cost will be more with the time and distance of phone calls.
Internet or E-Commerce: E-Commerce is the method of doing business through internet. In this method a website is created which gives details of the particular product to the customers. Customers can view or purchase products online through this method. (Distribution channel, 2008).
Trade Shows
Trade shows is an exhibition organized by manufacturers to showcase their products to potential customers. Trade show is a meeting point of manufacturers and potential customers. Customers can know more about the product. Customers’ queries regarding the product will be addressed by company representatives who in turn will increase the sales of the product.
Reference
Distribution channel. (2008). Biz Help. Web.
Editor Campbell, C., & Campbell, C. (2007). Legal aspects of doing business in the middle east. Web.
InnoVida and Al-Kaheel announce US$60 million contract to build various real estate projects: Notes and media contacts: About Al- Kaheel. (2009). AME Info: The Ultimate Middle East Business Resource. Web.
What is polyurethane. (2003). Wise Geek. Web.