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Marketing The Key To Recovery

MARKETING budgets are set to increase in 58% of construction supply chain companies, says a recent survey, while 33% are expect to raise their headcount.
Recruitment and retention of staff’ has also become top of the strategic agenda. The information features in a state of the industry barometer, completed recently by senior executives from across the construction supply chain for construction market research specialist Leading Edge.
The research also indicates that 57% of companies expect to see no change in their marketing headcount, with 10% expecting to make cuts.
Mel Budd, director at Leading Edge comments, ‘the findings show most companies planning to increase marketing spend, although they are more cautious about additional recruitment’.
In terms of sales performance, 49% of companies expect sales to continue to grow until the autumn, but the findings highlight less optimism compared to the previous quarter.
Mel continues, ‘London and the South East remain the regional engines for growth through 2014, but the rise in expectations for Scotland seen last quarter have not continued. The other regions, such as the Midlands, are expecting some growth, but less than previously expected.’
Key issues: When asked what the key issues were for companies going into 2015, ‘recruiting key staff’, ‘breaking into new markets or regions’ and ‘managing cost rises’, are the three strategic areas with the highest growth rate compared to 12 months ago.
Mel adds that ‘aggressive low prices remain common with 50% of companies saying this would impact on their chances of winning work over the next six months. Also, 39% of companies believe a lack of key staff is likely to restrict sales growth’.
The number of firms citing managing cost rises as a concern more than tripled in this survey compared with a year ago. On the other hand, there was an 88% fall in the number of respondents that said adapting the business to falling demand was a concern.
He explains: ‘Prices, wages and materials cost are increasing but contractors cannot necessarily raise prices by the same amount. People are reasonably positive, but margins being squeezed is becoming an issue.’
But the barometer’s findings also indicate that the recovery is still in its early stages, firms are still fighting for work and some are feeling the effects of cutbacks in the recession. For example, half of respondents said the main thing that would prevent them winning work over the next 12 months was aggressive tendering from competitors, while 39% cited not having enough resources to meet demand from their clients.
n Rise in sales: On average the firms surveyed saw a 5.5% rise in sales in the year to Q1 2014, which was down from the 7.4% reported three months earliwer, though the previous figure was the highest since the survey began in Q1 2008.
There was also a drop in the number who thought sales would grow in the next six months from 79% in Q4 2013 to 49% in Q1 2014, and there was also a small rise in the number who were not confident of a rise in sales from 16% to 31%.
Optimism cools: This easing in expected rises in current and forecast sales and expected marketing spend are an inevitable adjustment after the big rises seen in previous quarters.
For a full copy of the report contact Leading Edge:
T: 01252 279990
www.lead-edge.co.uk
E: mel.budd@lead-edge.co.uk

This article has been reproduced from the Contract Flooring Journal. You can find them at www.contractflooringjournal.co.uk.