INTERNATIONAL CONSTRUCTION
MARKETS
MARKET SIZE
- Market size is a measurement of
the total volume of a given market. When determining market size, it is very important to
define the measurement as precisely as possible.
MARKET SIZE ANALYSIS
Total market potential:
- Existing consumption patterns:
Existing consumption pattern can be visualized by examining relationship among different
economic sectors in a country. Use of input-output tables to show the relationship of one
economic sector to another. Sectors are featured on both horizontal and vertical axes of
the table showing the production or output of one sector as the demand or input of
another. (e.g. steel output becomes an input to industry, government, and even to the
steel industry itself). Total volume of sales changes for a particular type of product can
be projected by comparing these tables with the economic projections as a whole.
- Data on other countries:
Collection of data on the consumption of a given product in countries with different per
capita GNP and then project sales at different income levels. Reasonably good fits for
many products have been found by using this method. However, it may not hold good for some
products in some countries (e.g. number of cars sold in Switzerland is lower than the GNP
per capita would predict).
- Time series data: Use of
series data enables to make future projections by examining the past trends. This is based
on the assumption that sales follow a pattern over time. Such analyses within an economy
are useful for predicting total demand and for identifying the economic sectors generating
this demand.
- Income elasticity: The ratio of
percentage change in demand for a product to the percentage change in income is a common
predictive method of potential demand. If the ratio is greater than 1, the demand for the
product is elastic (i.e. the sales are likely to increase/decrease by a percentage that is
greater than income change); if the ratio is less than 1, then the demand is inelastic.
This tool is useful for estimating expenditure for countries at different income levels.
- Regression: Regression
analysis is used to study how the distribution of a variable changes as a function of
certain conditions. Each unit in the study is described in terms of a certain value for
the conditions and a certain value for the outcome. By using data based on the historical
relationship between demand for a given product and economic or other indicators in a
given period of time, a regression equation may be constructed showing the demand
(dependent variable) based on level of the indicators (independent variables). The
technique can be used to predict demand resulting from changes in related indicators.
Gap analysis
- It is a tool used to find out why
the sales of a certain product are less than the market potential in a region (Gap =
Market potential - Actual sales). It may be useful to find out the factor that causes the
gap to exist.
- Usage: Less product sold by the industry as a whole compared to the market potential.
Requires intervention by means of persuasion.
- Product line: The gap may be due to a lack of product variation.
- Distribution: The gap may be due to a lack of proper geographic distribution
- Competitive: The gap may be due intense competition from other vendors.
Absolute measure
- Overall increase in growth of
market for a product measured from total value-added sales cost of the product in a region
over a particular period of time.
Relative measure
- Mean annual percentage growth of
market for a product measured from value-added sales costs of the product in a region over
the preceding year for a particular period of time.
RELEVANCE TO INTERNATIONAL CONSTRUCTION
- The role of marketing has seldom
been explored in international construction.
- Function of marketing research can
actually be gainfully exploited and employed in the context of international construction
to find out where the markets are in the world.
- Some researchers have used
absolute and relative measures for the purpose of analyzing international construction
markets.
- Market size analysis is necessary
in order to find out the attractiveness or otherwise of a regional market.
A METHOD OF REGIONAL SHARE ANALYSIS FOR
CONSTRUCTION
- Obtain the world value-added cost in construction for a specific
period of time (Gvalue)
- Obtain total regional value-added
costs in construction over that period (Rvalue)
- By dividing each regional growth
in volume by total global increase in volume, the percentage regional contribution to the
increase of global value-added in construction by region can be obtained [Percentage
regional share = (Rvalue/Gvalue)*100]
- If the increase in construction
volume of a particular region contributes a larger percentage share, then that region can
be said to offer a better market proposition for a global corporation.
DATA ON SOME INTERNATIONAL
CONSTRUCTION MARKETS
China
Singapore
Thailand