Competitive Advantage

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JourtMl of Marketing Managemenl. 1993, 9, 105-121

Bernard Cova and
Karin Holstius*
European School of
Management, Paris, and
IRE, Lyon, France, and
*Turku School of
Economics and Business
Administration, Finland

How to Create
Competitive Advantage in
Project Business
The Tnarketing of projects was studied separately from the seller's
and from the buyer's points of view. The txm research approaches
were then combined and e model for intemational project marketing was developed.
First it was demonstrated how the different stages in the buying
process are related to the seller's project marketing cycle. Then,
two separate empirical studies were conducted. In the first, three
key succes factors for project business were isolated. These factors
were then combined with six major action variables identified in
the other study. The resulting model shows how the marketing of
projects overlaps all corporate functions, and if is proposed that
this model can be used for creating competitive advantage in
project business.

Introduction
Background

Project marketing is quite a new subject which still lacks its own theorefical corpus
of original concepts validated by research. It has received little attenfion in marketing research, although projects have become increasingly important, particularly as
an intemafional business ojjerafion and as a strategic choice. Project business is
essentially different from tradifional trade with goods and services, and considering it as a strategic choice therefore requires organizafional readiness and a new
managenient approach.
The big advantage of project business is that the new demands in intemational
markets do not necessarily require the development of original new products. The
ability to combine and restructure existing or expandable product and service
potential can provide firms with new opportunifies and relafive sujjeriority in
project business not only in relafively new market areas such as the oil-exporfing
and developing countries, but in industrialized countries as well.

T/ie Purpose ofthe Study and the Research Method
The purpose of this article is to establish some key success factors for creating
competifive advantage in project business. The arficle is based on research about
the seller's project markefing process and the stages in the buying process. Two
empirical studies were conducted in order to idenfify
(a) factors which influence the seller's success in project business, and
(b) variables which are relevant to the project buyer.
0267-,257X/93/0201054-17 S08,00/0

© 1993 Academic Press Umited

106

Bernard Cova and Karin Holstius

A concept analytical research approach is used in an attempt to combine the
empirical findings into a project marketing model, A final conceptual synthesis is
strived for in order to illustrate that project business differs from the tradifional
industrial markefing concept.
The angle of approach in this study is the intemational marketing of projects,
although most of the findings also seem applicable to acfivifies in the seller's home
market.

Theoretical Background
Project: Clarification of a Concept
There is no universally accepted definifion of a "project", and the situafion is
further complicated by the fact that different terms are used about this type of
business. However, there is a common feeling shared by some European researchers that it does need a specific markefing approach (Bansard et al. 1990),
beyond the limited approaches of compefifive bidding models (Boughton 1987;
Allen and Cova 1989),
Of several suggested tjrpologies for differenfiafing projects from other goods and
services, the transaction/producfion typology (Vasconcellos e Sa 1988), which is
described in a matrix (Figure 1), seems appropriate.

Unit

Maas

Production

Highly
complex

Industrial
goods

f Consumer N
y services J

Highly
simple
Marketing spreading

Figure 1. A transaction/production typology.

How to Create Competitive Advantage in Project Business

307

"Projects" occur at the most specific and most complex point, at the other
extreme from mass marketing approaches to consumer goods (Figure 1). They
feature high transacfion complexity (sf>ecific investments, the importance of the
purchase, perceived uncertainty) and are produced in units or specific batches.
This is the latest point reached in markefing theory, in the eighfies and early
ninefies (Heap and Campbell 1990; Rudelius et al. 1990), having evolved for industrial goods in the sixfies and for services in the sevenfies, A separate marketing
theory is needed for "projects" to avoid the erroneous direct application of industrial marketing concepts, just as a consumer goods marketing approach was
applied to industrial goods two decades ago.
From this typology arises the following proposal for a definifion of a project: "a
complex transacfion covering a discrete package of products, services and other
acfions designed specifically to create capital assets that produce benefits for the
buyer over an extended period of time". This definition encompasses the marketing of both extensive and parfial projects, such as some subcontractors' deliveries.
A suitable starfing point for constructing a model for project marketing is the sixstage project cycle used by developmentzd and financial insfitufions (Baum 1982):
(1)
(2)
(3)
(4)
(5)
(6)

idenfificafion;
preparafion;
appraisal;
negofiafion;
impiementafion and supervision;
evaluafion.

The development of this cycle to suit the marketers of projects will first be
presented as it emerged in earlier research (Holsfius 1987), Then the cycle will be
elaborated from the seller's as well as from the buyer's points of view in order to
create an interacfive project cycle.

The Project from the Seller's Point of View
In a study covering the most important Finnish project exporters (Holsfius 1987), a
project marketing cycle was constructed and validated, A concept-analytical model
based on a literature survey was tested by means of interviews which concentrated
on the marketing of projects and the concepts involved. The resulting project
markefing cycle is presented in Figure 2,
—The first phase is called the search phase. It consists mainly in scanning the
environment and identifying project opportunifies.
—The second phase is the preparation phase and focuses on a suitable project to
exert influence not orsly on the buyer, but on all the enfifies involved, in order
to get informafion and to obtain tender specifications which are favourable to
the company.
—The third phase is the bidding phase and consists in setfing up the proposal
after receipt of the invitafion to bid,
—The fourth phase is the negotiation phase, which starts at the opening of the
bids and finishes with the signing oiF the contract,
—The fifth phase is the implementation phase, which includes supervision to

108

Bernard Cova and Karin Holstius
A. Search

B, Preparation

I
1

C, Bidding

D, Negotiation

I

E, Implementation

F, Transition

Figure 2.

Source: HOLSTIUS (1987).
Tbe project marketing cycle.

ensure the achievement of agreed objecfives and the maintenance of a climate
of cooperafion between buyer and seller in the identification and solving of
problems arising,
—The final phase is the transition phase and involves evaiuafion of the project
and the building up of knowledge and experience for future use.
This cycle can be said to be self-renewing in much the same way as the project
cycle is self-renewing from the point of view of developmental and financial insfitufions. Each phase of the project—the project cycle as well as the marketing
cycle—leads to the next one and the last phase produce new approaches and ideas
and result in the identificafion of new projects.

The Projectfrom the Buyer's Point of View
In a study of the project buying process (Cova 1989), three different cases were
invesfigated in Southem Europe according to the inductive approach known as
Decision System Analysis,
The combinafion of the diagrams resulting from the three cases led to a general
model of the project buying process. The project buying cycle presented in Figure 3
is a summary of this model.
This project buying cycle may be distinguished by the following,
A Long-lasting, Negotiated and Interactive Process. The project buying cycle is a long-

lasdng one with many phases. Negotiation is a major component of these phases.
It occurs before the setting up of the bidder's list and requests for proposals.

How to Create Competitive Advantage in Project Business

109

Need awareness

i
i
i
1
i
i
i
i
i
i
i
I
i
i

Research on suppliers and contact for advice
Specifications
Bidders list

Request for proposals
Exchange of information*
Analysis of proposals
Shortlist
Negotiation

<

New proposals
Possible loops

Analysis of new proposals

Negotiation
Final assessment
Final selection

Figure 3.

Contract
Source: COVA (1989)
•Between suppliers and the buyer's network.
Tbe project buying cycle.

between invitafions to bid and bids, between first bids and new bids and before
final selections.
These negotiafions permit the buyer to adapt his demands according to the
informafion he may have collected from different bidders; in the same way, he may
express his requests more specifically to the bidders. Negotiation seems to be the
necessary medium for informafion in the buying of projects because of the direct
interacfion it involves.
A Request for Interfirm Linkages. Each of the three cases included requests for indus-

110

Bernard Cova and Karin Holstius

trial or financial interfirm linkages between the buyer (or an enfity of his network)
and the supplier. These ranked from the tradifional countertrade agreement to the
setting up of technology transfer agreements, licensing and joint ventures,
A Coming-into-play of Interpersonal Relations. Each of the three cases involved a high
level of interpersonal reiafions between buyer and bidders. These reiafions play an
informafive role as informafion is transferred from the buyer (or an enfity of his
network) to the bidder in order to help him better to meet the requests, or from the
bidder (or a member of his network) to the buyer in order to make him better aware
of the seller's capadfies.
Great Importance Given to Relational Criteria. At each phase of the process, relational
criteria seemed to play an important role. Being a current or a back-up supplier, or
having local fadlifies, seemed to be as important as sound references, a good
reputafion and technical capacity at the pre-selecfion stage. For final selection, the
quality of countertrade agreements and other interfirm linkages seemed to be as
important as price or technical quality; this was obvious in one case in which the
successful bidder's price was 10% above the lowest price for the same technical
quality,
A Large Set of Choice Criteria in the Various Phases. Price is no longer the sole
criterion. Other criteria are used in the selecdon process, such as the relafional ones
mentioned above, plus warranty, reputafion, norms and standards and, of course,
quality and delivery fime. These criteria are of two types:
—those used to establish the bidders' list;
—those used to evaluate the proposals.
The Management of the Buying Centre Through the Combination "Buying + Engineer-

ing". Regardless of how many people participate in the selecfion process, it is
actually managed by the combination "Buying -(- Engineering", The responsible
buyer and a specialist technician call on members of other departments or other
enfifies to assist them in the process. This duo is the bidder's contact group in the
buyer's organizafion; the CEO is usually present during some phases of the selection process.
Towards an Interactive Project Cycle
The seller's and the buyer's perspecfives, as they emerge in previous research, can
now be combined into a framework in which the interacfion between the two
parfies is emphasized at each phase of the project cycle (Figure 4),
Indeed, each one of the first four phases is concluded by an act of the buyer and
is connected with the advancement of the supplier in the buying process,
—(A)
—(B)
—(Q
—(D)

contact for advice from "potential" suppliers;
bidder's list of "approved" suppliers;
shortlist of "efficient" suppliers;
final selecfion of "partner" suppliers.

Each phase involves numerous exchanges between the buyer and the bidders in
order to match demands and offers.
In fact, the best approach is to focus on the buyer-seller transaction and on the
transaction cycle, rather than to tackle the problem from the buyer's or the seller's

How to Create Competitive Advantage in Project Business
Seller's side

Buyer's side

A - Search

Need awareness

111

i

Research on suppliers and
Contact for advice
B - Preparation

C - Bidding

D-Neg otiation

i
1
Bidder's list
i
Request for proposals
i
Exchange of information
Analysis ofi proposals
i
Short-list
i
Negotiation
Specifications


New proposals

1
i
Negotiation
i
Final assessment
i
Final selection
I
Contract

Analysis of new proposals

f

E — Implementation
F - Transition

Figure 4. Towards a general model of tbe project marketing cycle.
point of view. The object of project markefing is the transacfion, i.e. the area of
interaction between buyer and seller; the transacfion cycle is therefore an interacfive one and is the subject of study in this research.
This project marketing or transacfion cycle is also a means of differentiating
projects from industrial goods and services. The scope of marketing is more limited
for a firm dealing only in goods and services, and wider when project business is
involved.
The stages in the project marketing cycle relevant to all industrial marketers are

112

Bernard Cova and Karin Holstius

bidding (C) and negotiafion (D), and that is the way standard products are marketed. As is known from previous research (HSkansson 1982, 1987), most industrial goods and services need an interacfive approach between buyer and seller and
therefore some of the aspects of preparafion (B), implementation (E) and transifion
(F) may also be relevant when the firm provides goods and services. Projects,
however, always have to go through the complete range of the cycle, from A to F,
The widening of the marketing scope when a firm proceeds from goods to
projects is illustrated in Figure 5, This interpretation is supported by an analysis of
A

A, Search
B, Preparation

z

C, Bidding
D, Negotiation
E, Implementation

rB

-E
-F

F, Transition
Goods

* Projects

Figure 5. Types of activities and marketing scope.
the new European direcfives for public procurement. These propose the use of a
wide range of buying procedures, the shortest and simplest ones for standardized
supplies, and the longest and most complex ones for projects indicating that the
supplier has to pass through all the stages of the cycle suggested above.
Finally, it can be observed that the interacfive project cycle is consistent with
cycles suggested in some earlier work carried out in Sweden (Jansson 1989) and in
France, parficulariy by Duroure and Fraisse (1981), regarding a "business cycle"
consisting of the phases: search (including preparafion), study, negotiafion, realization, follow-up.

Empirical Findings
The research method used throughout this study approaches the concept of project
business in two different ways and in two different geographical areas, Northem
Europe and Southem Europe, In the first empirical study, some factors are identified which further the seller's success in project business. In the second, major
acfion variables are identified when the seller's bidding behaviour is related to
phases in the project cycle.

Key Success Factors in Project Business

Previous research results suggest that factors that might infiuence the internafiortalizafion process of the product range towards projects are: an adequate

Ho w to Create Competitive Advantage in Pro/ect Business

113

markefing organizafion and competent marketing personnel, arrangements for
project financing and buy-back services, the capability of analysing the compefifive
situafion and the relevant risks (see Holstius 1989, Kosonen 1984, 1990, Penrose
1959, Roman 1986, v, Troil 1986),
When the idea of entering project business is introduced and accepted in a firm,
we are—in Penrose's terms (Penrose 1959)—dealing with an entrepreneurial service. On the other hand, the concept of intrapreneuring, as developed by Pinchot
(1985) is also relevant in connecfion with a firm's entering intemafional project
business. The role of the tradifional as well as these intracorjjorate entrepreneurs is
to recognize opportunifies to make better use of the firm's technology and knowhow, and to suggest new means of satisfying customer needs. The services that a
firm's entrepreneurs produce are dependent on their versatility, ingenuity and
ambifion and the quality of their entrepreneurial judgment (Penrose 1959).
From the above, it is hypothesized in the first study that the process towards
project exports is facilitated by the following factors.
(a) entrepreneurial qualities in those who run the business;
(b) the encouragement of an entrepreneurial and innovative spirit among intrapreneurs;
(c) organizational readiness for project business embodied in the marketing organization;
(d) intemafionally-oriented personnel engaged in markefing;
(e) the capability of exploifing special financial arrangements for project business;
(f) the capability of evaluating projects and assessing their risks;
(g) readiness to respond to countertrade demands.
Furthermore, it was hypothesized that an extension of the concept of marketing
furthers project business: when bidding and negofiafion are preceded by search
and preparafion, and followed by impiementafion and transifion, this is expected
to enhance success in project business. The hypotheses are summarized in Figure
6,
This preliminary model for project marketing thus consists of three kinds of
variables: independent variables, one intervening and one dependent variable. The
model also comprises the concepts production capacity, technology, experience in
export management and financial background, which are seen as necessary precondifions for a company embarking upon project business. These concepts were
not operafionalized in the study.
The independent variables are the seven concepts derived from literature and
hypothesized to promote project business and further the company's success in it:
entrepreneurial qualifies, intrapreneuring, organization, markefing personnel, risk
management, countertrade and financing arrangements.
The scope of markefing—consisfing of the six different stages: search, preparation, bidding, negofiafion, impiementafion and transidon—may tum out to be
an inferred variable or theorefical construct with no independent role, thus only
comprising and summarizing the contents of the seven independent variables. On
the other hand, it might be an intervening event or variable with its own effect on
the company's success in project business.
The dependent variable is success in project business, which in this study was
defined as volume of projects in money. To test the model empirically, one group
of projects was chosen, namely machinery and equipment. To ensure a high

114

Bernard Cova and Karin Holstius

Nenssary
di

EntrepreiKurial
qualities

Organization

Marketing
perwmnel

Productioii
capacity
Experience
in exports
Technology
_L
Financial
background
Intrapre neuring

Scope of
marketing

Figure 6. A preliminary model for intemational project marketing.
response rate, the empirical study was conducted only in Finland on a sample of 34
persons in charge of marketing projects in Finnish export firms. The rate of response was 82%,
With correlafion analyses it was clearly demonstrated that the wider the marketing scope A-F and the better the overall organizafional readiness—comprising
seven concepts—the more successful the companies were in their project business.
The general impression from the review of the literature and the construcfion of
the theorefical framework was that, in pracfice, a clear distincfion cannot be made
between different funcfions in project business. Therefore, there might be some
overlapping and the data gathered may also include traits which are traditionally
regarded as part of the administrafive or financial funcfion rather than the mcirketing funcfion. Thus it was to be expected that factor analysis would shed some light
on these quesfions,
A further reason for conducfing a factor analysis was to find out if new combinatorial informafion could be created, i,e, if the original set of seven independent
variables could be reduced to a smaller set which would account for most of the
variance in the initial set,
A principal components analysis was chosen. The rotadon procedure employed
was VARIMAX, which was appropriate as there was no theorefical expectadon of a
general factor. When three factors were considered, the total value for the loadings
on the factors consfituted 60% of the total variance (see Table 1),
Factor 1 contains "organizafional readiness for project business" and "capability
of exploiting special financial arrangements". This factor appears to stand for an
administradve dimension of the data. Organizafional readiness for project business
requires administrafion which favours collaboradon between profit centres and
between product line organizafion and project organizafion. As far as financial
arrangements are concerned, it was pointed out in validadon interviews that
financing and management should be regarded as integrated parts of project busi-

How to Create Competitive Advantage in Project Business

115

Table 1. Factor Loadings
factor 1

Factor 2

Financial arrangements
Organization
Entrepreneurial qualibes
Risk management
Intrapreneuring
Marketing personnel
Countertrade

0-853
0-000
0-742
0-000
0-000
0-777
0-000
0-633
0369
0-615
0-000
0-000
0-000
0-000
Loadings of less than -2500 were replaced by zero,

factor 3
0-000
0-000
0-000
0-000
0-000
0-788
0-766

ness. The organizafion should also have its own high-class financial expert familiar
with project financing at an intemafional level. In view of the adniinistradve
aspects of this dimension,/acfw I was called administrative effectiveness.
The variables "entrepreneurial qualifies of those who run the business" and "a
company culture that favours intrapreneuring" were factored together. The third
variable included in factor 2 was "risk management". In the vahdadon of the model
it was also pointed out by interviewees that the risk concept is closely interrelated
with entrepreneurship, Pactor 2 can be called entrepreneurial culture.
The third dimension comprises the variables "marketing personnel" and "readiness to respond to countertrade demands", Markefing personnel included all those
who parficipate in the various stages of project marketing. This concept comprised
these people's knowledge of languages and target country cultures, their internafional orientadon and intemafional contacts. As marketing personnel should
also be knowledgeable and fiexible enough to engage in negofiadon with customers about countertrade possibUifies, factor 3 was called personnel readiness.
The role of the variable "scope of markefing A-F" was also explored by calculating correlafions between the independent summary variable "orgardzadonal readiness" and project volume while keeping the variable A-F constant. The correlafion
was negadve when A-F was not developed, and highly posifive where 1 or 2
phases were added to the scope of marketing. These results confirm that project
markefing is basically different from the tradifional marketing of industrial goods
and services.
In project business, it is neither feasible nor interesfing to make clear disfincfions
between the funcfions of the firm. Indeed, funcdons overlap and success in project
business is much more linked with the totality of the firm's qualities (cf, the factors
identified) than with the performance of a specific funcfion.

Major Action Variables for the Marketing of Projects
On the basis of the conceptualizafion of the project marketing cycle described
earlier, a second empirical study was conducted. The bidding behaviour of a
successful French aerospace supplier was examined using a Etedsion System
Analysis approach (DSA; Capon and Hulbert 1975), which was specially developed
for use in industrial buying behaviour surveys (see MoUer 1986; and especially
Woodside and Vyas 1987, for full details of this method). This analysis gave rise to
a definifion of the major acfion variables in project marketing at each phase of the
project marketing cycle.
A French landing gear supplier, Messier-Hispano-Bugatfi (subsidiary of the

116

Bernard Cova and Karin Holstius

French public sector firm SNECMA), provided the opportunity for an in-depth
analysis of three typical cases of intemafional compeddve bidding for projects.
The first case concerned the supply of landing gear for the CN 235, a commuter
aircraft developed by Casa in Spain and Nurtanio in Indonesia, The second case
was for the supply of landing gear for the ATR 42, a commuter aircraft developed
by Aeritalia in Italy and Aerospadale in France, The third case was more complex in
nature. It dealt with the supply of main landing gear for the AMX, a fighter aircraft
developed by Aeritalia and Aermecchi in Italy in assodafion with Embraer in
Brazil,
On the basis of these three case studies, six major variables and their subvariables (underlined) were identified:
—"Promodon" of the firm, its technologies, its experiences with other projects;
—"Reladons" with the buyer, or a member of its network, at an interorganizational level and at an interpersonal level;
—"Sales force", with the intemational salesmen and the local agents;
—"Corporate linkages", with the setting up of industrial and financial interfirm
agreements;
—"Price" with the escalation formula and the terms of payment;
—"Offer", with its tradidonal consfituents Technology/DesignlDelivery time but
also Norms/Warranties/Logistics.
These variables and sub-variables are combined with the three phases following
the emergence of a project (A): the preparafion phase B, the bidtUng phase C and
the negodadon phase D,
Table 2. A Matrix for tbe Intemational
Marketing of Projects
Phases

B

C

D

Variables

Preparation

Bidding

Negotiation

Pramotion
Relations
Sales force
iCL
Price
Offer

X
X
X

X
X
X
X

X
X
X

In the first stage—preparadon-—the emphasis is centred around promofion, i.e.
the firm's capacity to use its references, and on networking, i.e. the firm's capacity
to identify potenfial partners who will guarantee award, either through their technical/intemadonal recognifion or their influence in the local context.
In the second stage—bidding—the emphasis shifts to value/cost analysis, quality and time span. This emphasis however, decreases if the bidder can demonstrate
that the industrial process involved could be transferred to provide the local context with a greater degree of industrial integrafion between the indigenous private
and public sectors. It is important, therefore, at this stage, to ensure that the
concept and impact of the industrial process have been fully understood by the
decision maker, who is often neither the direct user nor the implementor of
Government policy.
The third stage—negodadon—is totally directed to the aspects of co-operation.

How to Create Competitive Advantage in Project Business

1 ]7

technological build-up and the definidon of requirements in the transfer stages. It
is important for the pardes involved to be able to identify and andcipate the
numerous restraints that can be encountered in this area. This implies that all
companies have an excellent understanding of the availability of qualified personnel and of management pracdces. They also need to be fully aware of the expectadons of the local Ministry of Industry in the industrial integradon process that
has been identified for the indigenous manufacturing sector.
It should be noted, too, that these variables extend beyond the marketing funcdon to the entire firm. This strengthens the case for a combinadon of the seller's
and the buyer's points of view. The combination of variables and phases leads to
the following matrix for the internadonal marketing of projects.

Conceptual Synthesis
Towards a Winning Marketing/Management Model
Combining the two studies is not an easy task, and the emerging sjnithesis should
rather be regarded as a hypothesis to be validated by further research than a
normadve model for project business success.
The focus is now on the combinadon of the three key success factors of the factor
analysis and its original seven sub-factors with the six major action variables and
their fourteen sub-variables. These are synthesized into a model for the successful
markedng and management of projects. This synthesis can be achieved through
the division of the factors and variables into sub-factors and sub-variables in order
to facilitate the discovery of probable linkages (Figure 7),
Certain linkages are evident, such as the combining of "financial corporate linkages" and "capability of exploiting special financial arrangements". Others might
appear somewhat forced, such as combining "offer" and "entrepreneurial qualides
of those who run the business", and should be further verified. However, as the
concepts entrepreneurial qualides and intrapreneuring stand for perception and
the acceptance of new ideas, there is an obvious link between the idea of entering
project business and the promotion and offering of projects,
A company is able to exploit special financial arrangements if it has a high-class
in-house expert, or group of experts, who are familiar with internadonal project
financing, and consequently can create and profjose original forms ot financial
linkages,
A prerequisite for orgardzadonal readiness for project business is co-operation
between the product-line organizadon and the project organization. The importance top management attaches to the project organizadon and the collaboration
between profit centres is also a measure of organizadonal readiness. Finally, in
order to cope with local requirements, beyond its boundaries, an organizadon
must indude agents and logistics systems in the targeted countries, and must be
ready to cope with internadonal technical norms.
Risk management can be operationalized as the number of different kinds of
project risks that are analysed, and the readiness to evcJuate risk probability and to
choose the appropriate strategies. This applies especially to the financial risks
linked with price, escalation formula, terms of payment and warrandes.
Whereas the measurement of entrepreneurial qualides concerns versatility.

118

Bernard Cova and Karin Holstius

Key BuccesB factors
(and sub-factars)

I

Capability ore]q>loiting ,
special flctancial
arrangementB

• Organizational
readiness for
project busineBs

Action variables
(and Bub-variablee)

Financial linkages

' Local agents
• Logistics
- Norms

• Risk management

Entrepreneurial
qualities
' Intrapreneuring

Price
> Escalation formula
* Terms of payment
> Warranties

Promotion
Design
Technology
L Delivery time

Readiness to respond
to counter trade
demands

Industrial linkages

Marketing
personnel

International sal^-force
Interorganizational and
interpersonal relationships

Figure 7. Coupling tbe two approacbes.
ingenuity and ambidon in those who run the business (qualides which are translated and transmitted to the customer through communicadon and offering), the
occurrence of intrapreneurship is dependent on a corporate culture which encourages the entrepreneurial spirit of intrapreneurs.
The readiness to respond to countertrade demands can be inferred by the very
existence of a separate trading department, or by the number of employees specialized in countertrade and offset agreements.
The internadonal orientadon of the markedng personnel can be operadonalized
as their familiarity with the target-country language, culture and legisladon. This is
valuable not only for the sales force, but for all employees in contact with the client:
those in after-sales, design, R&D, finance and production,
A further development of the conceptual synthesis is presented in Figure 8. The
central element of the project transacdon, the "offer", is now placed in the centre
of the hypothesized "project winning triad" (Figure 8). This conceptualizadon
shows how the marketing of projects overlaps aU corporate funcdons.
Consequently, the whole firm and not only the marketing department pardd-

How to Create Competitive Advantage in Project Business

119

Personnel readincBS

• Delivery time
• Warranties
• Technology
• Design
Escalation formula
• Terms of payment

Administrative
effectiveness

Figure 8. Tbe project winning triad: key success factors and marketing variables atid
sub-variables.

pates in the "project scanning system" (for the concept "Project scanning system",
see Boughton 1987, and Seiirat/Rougeaux 19W), The same is true for the implementadon of the "Reladons" variable, which affects all departments and goes
beyond the traditional boundaries of the firm.

Conclusion
Two different research approaches to defining key success elements for project
business were developed on the basis of a central concept in the marketing of
projects. This concept is the project markedng cycle with its six phases: search/
preparadon/bidding/negotiadon/implementadon/transidon. The first empirical
study made it possible to isolate three key success factors for a firm engaging in
project business: personnel readiness, administrative effectiveness and entrepreneurial culture. The second study resulted in the idendfication of six major acdon
variables for the marketing of projects: promodon, reladons, sales force, corporate
linkages, price and offer,
A conceptual combinadon of these two sets of factors resulted in a hypothetical
project-winning model. This model, like other proposidons, now needs to be
validated.
The results presented in this study highlight two major characterisdcs of project
markedng:
—the buyer/seller interacdon at each of the six phases of the process;
—the overlapping of all corporate funcdons in the marketing process.

120

Benard Cova and Karin Holstius

These two characteristic features, together with the details of the phases in the
project marketing cycle, support the idea of specificity in project markedng compared vnth the tradidonal marketing of industrial goods and legidmate the creation
of the "European network on project markedng and systems selling" that groups
the researchers implicated in this field.
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