Entrepreneurship happens when someone sees a market need and has an idea that will satisfy that need. The entrepreneur follows up, explores and develops the idea into a real product or service. In post-war Britain, in the late 1940s and 1950s, Donald Shepherd saw that there was a need for simple, easily made, portable buildings. These had the potential to provide all sorts of accommodation. Donald worked on his concept and began production of the first Portakabin buildings in 1961, registering the Portakabin trademark in 1963. Today, Portakabin provides modular and portable buildings for many uses. These include offices, nurseries, classrooms, doctors” surgeries and airport buildings.
Portakabin is the UK market leader in modular construction. Its products meet the accommodation needs of many different customers. It delivers products and services tailored to individual customer requirements. Portakabin is a well-known brand and most potential customers already know the company's name. Portakabin promotes its business in ways that clearly distinguish its products and services from those of its competitors.
This case study explores how Portakabin promotes its brand. The starting point is a market analysis to identify the key reasons why customers buy its products.
Market analysis to plan promotion
A market is where buyers and sellers come together to exchange products for money. Physical markets take place every week all over the country. In business, the concept of a 'market' applies to any product or service for which there are buyers and sellers.
There are two main types of market that reflect the type of customers the market serves. There are markets where the customers are individual consumers. These are known as B2C (business-to-consumer) markets. There are also markets where the customers are businesses. These are called B2B (business-to-business) markets.
Portakabin deals exclusively in B2B markets. It sells to organisations such as schools and hospitals. B2B markets have different characteristics to B2C markets. For example, business customers often buy in bulk to get good deals on price. Most businesses have a specialist centralised buying function which allows them to negotiate the price. Specialist buyers carefully assess the options and never make 'impulse' buys. Understanding how B2B markets work helps Portakabin organise its promotions in the right way.
An important indicator of the value customers give to a range of products is market share. Portakabin is the leading supplier in its market sector. This means that Portakabin has a greater share of sales than any other brand supplying this market. The Portakabin market share is currently 15%. (As a comparison, Sainsbury has around 16% of the UK supermarket market.) The market share is arrived at by this calculation:
To understand why it is the leading supplier and to maintain its position, Portakabin undertakes market research. There are various ways of undertaking market research by questionnaire, by telephone survey, by focus groups.
Delivering on quality and providing customer satisfaction is vital in retaining customers.
- Its research shows that customers return to Portakabin because of the quality and reliability of its products. The key Portakabin message is: Quality this time next time every time. This message always accompanies the Portakabinbrand name.
- Portakabinalso states that it will be “on time, on budget our promise”. These are explicit statements about reliability and quality. They provide a focus for staff and reassurance for customers.
- Customer satisfaction is crucial. Portakabin has a customer satisfaction index. This currently scores 9/10, which means that customers have had positive experiences in their whole dealings with Portakabin.
These are important considerations when Portakabin plans promotional activity. Marketing specialists use a mix of tactics to attract and keep customers. These involve balancing the four Ps of the marketing mix.
- For product, this includes introducing new products or enhancing existing products or packaging
- For price, this might involve special offers or discounts
- For place, a company might look to use different ways or channels to reach customers, for example, through the Internet or high street retailers
- For promotion this includes many different ways of communicating sales messages to customers to buy products or services
Promotion is an important part of the Portakabin marketing mix. For Portakabin, all promotional activity should reinforce its brand messages of quality and customer satisfaction. The function of promotion is to send out consistent positive messages to existing and potential customers.
Promotion is not just advertising it is a planned series of activities. These must relate to the business's objectives. For example, a business might want to increase its market share, it might want to widen its customer base or increase the number of repeat purchases. Before starting a promotional campaign, there will be:
- a set of clear objectives
- an intended target audience
- staff to work on the campaign
- a budget, based on costs for the work identified
Above-the-line promotion involves the use of advertising to reach a mass audience. It is mainly used to reach consumers but it can be used in B2B markets. Advertising creates general brand awareness. Various media can carry the advertising message. These have different strengths and weaknesses:
- Television and radio can reach a wide range of consumers. Portakabindoes not use these media for promoting to businesses. It is difficult to measure responses. It is also expensive a typical television advertising campaign might cost £500,000.
- The national press and consumer magazines are aimed mainly at consumers. As market leader, Portakabinhas high brand awareness. It does not need to promote widely to this audience. It is also difficult to measure responses from newspaper and magazine advertising.
- Trade journals target a business audience. Portakabin places articles or advertorials in selected trade journals when it needs to highlight its products and services to other businesses. It also does this to differentiate its brand from competitors. This is known as 'brand defence'.
Portakabin only uses above-the-line methods in limited circumstances. Instead, it usually relies on below-the-line promotion. This involves a range of methods over which the business has more direct control and which can be targeted at specific groups of customers.
These offer customers incentives to encourage them to buy goods and services. In B2C markets, typical sales promotions include:
- BOGOF (buy one, get one free) offers
- price discounts (10% off this week)
- competitions to win holidays or cash prizes
In most B2B markets, however, these offers would not be relevant to the people who make the purchase decisions. Portakabin customers are making large investments. They require unique products to suit a one-off purpose. Portakabin offers solution and value-based benefits, like adding in air conditioning to a building.
This enables a business to target existing and potential customers with its sales messages. Portakabin uses this method of promotion extensively, sending out leaflets and brochures to maintain brand awareness. This means the company remains in its customers' minds the next time they need to make a purchase. Direct mailing is a productive way of promoting to existing customers for several reasons.
- Portakabin already has the names of contacts in existing customer businesses. In addition, it can easily access the names of people from other parts of these businesses who have expressed interest in Portakabinproducts, such as people who have signed up for its newsletter.
- The company can measure the response rate from a direct mail campaign and can follow up enquiries
This is used to enhance the image of a company. It involves communication with groups outside the company, such as customers, shareholders, government and the public. This can take different forms.
- Product launches businesses invite the press to the launch of new products. This may lead to free, and hopefully favourable, publicity.
- Sponsorship large companies provide finance for events such as Formula One or the Olympics in return for the right to promote their brand names during the event.
- Charitable donations businesses may participate in fundraising events like Comic Relief or Children in Need. This provides an opportunity to put the company name in front of very large television audiences.
- Press releases companies issue short news stories about their operations, which may then appear in television reports or newspaper articles. Portakabin has issued press releases announcing that it has helped create nursery accommodation at a hospital in Salford, provided a building for an incubator unit at the famous Papworth hospital in Cambridgeshire and supplied a new teaching block at York St John College in Yorkshire. These are commercial sales, but they are also good public relations stories that attract newspaper interest. The resulting articles name Portakabin, acting as free advertising and product endorsement.
Customer newsletters and magazines
These also provide strong communications channels. Portakabin can include information for customers about the market and the company. Portakabin shares information with its customers to show it is a knowledge-based business. This means that it appears open and trustworthy. These publications feature case studies highlighting products that serve particular uses. These demonstrate how Portakabin products can meet different customer requirements.
This is increasingly used by Portakabin in its promotions. Email is an inexpensive way to send product updates and news alerts. The Portakabin product range grows rapidly and email can keep customers up-to-date. Portakabin tracks every enquiry and response, and follows up potential sales leads. Research shows that 72% of business buyers rate the web as their top source of information.
The Internet is also important for Portakabin. Portakabin uses 'search engine optimisation' web tools to ensure that its website shows at the top of every relevant search results page. Portakabin also uses paid-for web advertising, such as pay-per-click on Google, to profile its business to prospective customers.
The overall aim of all Portakabin promotional campaigns is to generate enquiries and sales. Portakabin sets a target of how many enquiries it wants to achieve for each campaign. It can then measure responses to assess whether the campaign has been a good investment.
- Portakabinrecords the number of enquires during and after a campaign. This is known as the response rate. Each campaign has a code, so it is possible to identify which campaign generated each response.
- The number of enquires together with the number of orders they generate tells Portakabin whether the campaign has given a good return on investment (ROI).
This is calculated by:
For example, if Portakabin spends £15,000 on a promotional campaign that generates £45,000 worth of orders, the return on investment would be:
Before each new campaign, Portakabin looks back at the effectiveness of previous promotions to help it decide which type of campaigns give the best return on investment.
Promotional campaigns use a range of channels to help businesses reach customers with their messages. In business-to-business (B2B) markets, sales promotions techniques and above-the-line campaigns are not used extensively. Portakabin does not invest in television campaigns, radio adverts or big newspaper adverts. Its promotion works around the needs of large-scale professional buyers. These customers need information about Portakabin products and the benefits these can offer their organisations. They need confidence that the company is reputable and can deliver on its promise. Portakabin focuses on providing customers with accurate and timely information through its own magazines and its website. It takes care to develop promotional campaigns that target customers through direct mail and email. Portakabin assesses its promotions carefully. It measures the volume of business generated by each promotional campaign to evaluate whether it has met its targets.