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6.1. Promotional strategy
The objective of our communication is in attracting potential residents for location within the site territory, which provide us with at least two constant sources of profit: rent payments and payments for services provided.
If we consider the local companies (whatever their size is), both advertising and public relations work efficiently for promotion. Another characteristic feature here is that we intend to spend less money on advertising, paying more attention to public relations, which comprise non-paid communication effort, such as press releases, speeches at industry seminars, appearances by firm executives on radio and TV, etc. These media are extremely influential with customers, and in case of proper organization may save a lot of money, resulting in the same effect for the site development.
As for foreign companies, the publicity vehicle is hardly applicable, since it needs a lot of time and effort on the part of a developer, the immediate presence (providing personal contacts at different levels of business and political communities) at the global market let alone. So, the main emphasis in this case should be made on all types of advertising (internet, specialized magazines and other infomercials) and on promotion by means of participation in exhibitions and conferences on the subject of industrial property, since these are often attended by potential site residents.
The main principles underlying the “Himgrad” Industrial Park promotional strategy may be formulated as follows:
1. it should be aggressive, speedy and efficient in order to leave the competitors behind, to gain the vacant market niche, and to persuade the target customers in all the benefits they may gain from accommodating at the industrial park territory, the location unfamiliar to them before;
2. not a single promotional strategy should be created, but at least a two-sided one, each part of which aiming at covering one of the groups of the target customers;
3. the basis of the promotional strategy is in underlining the rational benefits of the site as target resident possible location;
4. the promotional strategy should be comprehensive and all-penetrating;
5. stableness and sustainability should become integral features of the promotional strategies. The developer should bear in mind the necessity for the promotional strategy to inform the target customers and to keep the information up-to-date, constantly reminding the target audience of the site, its benefits and whatever else needed;
6. the intangible benefits should be put on one of the frontlines of the project positioning;
7. international experience of industrial parks operation and management should be scrutinized and taken into account, making stipulation to the local market peculiarities.
The recommendations on the promotional strategy may be tabulated, the stipulation made that we consider the two promotional sub-strategies, aimed at addressing two groups of target customers (see Table 2).
Table 2
|
| 1st Substrategy Local Companies | 2nd Substrategy Foreign/International Companies |
| Market | Small and medium-sized local companies, occupied in chemical and petrochemical industries, processing certain types of polymers, produced on the Republic of Tatarstan territory | Medium-sized and big international and foreign companies, occupied in chemical and petrochemical industries, processing certain types of polymers, produced on the Republic of Tatarstan territory |
| Mission | To attract residents to unoccupied land plots and premises | To attract residents to unoccupied land plots and premises |
| Message | “Himgrad” Industrial Park is one of the most convenient of all other locations for small and medium-sized companies occupied in chemical and petrochemical industries, because we provide the comprehensive services range along the entire customer value chain at comparatively low prices | “Himgrad” Industrial Park is one of the best possible locations for your company global expansion, providing the comprehensive services range along the entire customer value chain at comparatively low prices”. |
| Media | Media Advertising - TV - Radio - Newspaper - Specialized Industrial Magazines Direct Response and Interactive Advertising - Telephone - Broadcast media - Print media - Computer-related Place Advertising - Billboards - Posters Promotions - Contests and dealer incentives - Trade shows - Exhibitions, seminars, conferences Publicity and Public Relations | Media Advertising - Specialized Industrial Magazines
Direct Response and Interactive Advertising - Print media - Computer-related
Promotions - Contests and dealer incentives - Trade shows - Exhibitions, seminars, conferences |
| Money | approx. $150-250 thousand at initial stages then $40-60 thousand annually | approx. $200 thousand at initial stages then $60-90 thousand annually |
| Measurement | Attracted residents rents and service payments/amount of money spent on advertising for a period ratio; Number of applications for lease; Number of web-site applications | Attracted residents rents and service payments/amount of money spent on advertising for a period ratio; Number of applications for lease; Number of web-site applications |
The table may serve as a core element of the “Himgrad” Industrial Park promotional strategy and an assessment medium for the steps taken by the company specialists in that direction.
A very important point is that the division of the project promotional strategy into two substrategies does not mean their absolute separation from one another. All the marketing communications program should be unified in terms of style and general principles of execution.
The main thing in the two substrategies separation is to concentrate on the criterion, which is of high-priority to the target group. For potential residents it is the level of their convenience, first, and the economizing effect as well (saving on taxes, on utilities prices and on rent level).
Another point, obligatory to mention, is connected with the promotional efforts efficiency evaluation. The problem here is that we cannot assess the short-term efficiency of our efforts. The reason for this is, predominantly, the above described time gap between the point when the company realizes the requirement of location, relocation or further expansion and the point when the location decision is made by the company. Under such circumstances one cannot assess exactly which of the promotional efforts have led the potential resident to the site – it may be equally e.g. an advertisement in a last year’s special industrial magazine, a name card of the company representative with a note “important” or “interesting” found somewhere, a web-site, an article in a local newspaper, a meeting at a specialized conference, etc.
Thus, the provided in table measurement media have a relative character. Nevertheless, they may serve as indirect promotional strategy assessment ratios.
Generally speaking, the main thing about the market under analysis is a very high price for any mistakes in the project promotion. So, every step taken should be thoughtfully considered and assessed.
Furthermore, since the customer tends to search for information everywhere, the promotional strategy should be carried out by means of different media channels, including even such as rumours sometimes.
Considering the promotional strategy budget, the important point here is that due to the peculiar feature of the industrial property lease process, the general concept lies in attracting the customers, not in their further retaining.
So, the sums of money spent on promotion at the initial stages of the project development (2008-2009 financial years) are considerably larger than the following periods’ budgets.
Thus, we expect that on the first stages of the project development the promotional budget will amount up to $350-450 thousand per year. The supporting marketing strategy will cost $100-150 thousand per year.
6.2. Sales Strategy
With the forecasted market growth (see Graph 4, paragraph 3.4 of the current document) we plan to occupy the fourth part of Kazan industrial real estate market by the 4th year of project realization (600 thousand square meters of the forecasted 2 500 thousand sq.m total market capacity).
The real estate operations concept of the “Himgrad” Industrial Park comprises the three main steps:
1. new construction of industrial premises;
2. long-term lease agreements signing with site residents, and
3. optional buying the leased premises out, after expiration of the lease agreement at will of the residents.
The dynamics of these three types of real estate activity is presented at Graph 6. The positions of total square under operation and total square sold are cumulative.Graph 6
The rent rates policy of the “Himgrad” Industrial Park is based on our attempt to create favourable conditions for site residents. Thus, we have analyzed the Kazan real estate market rents (see Graph 7) and set the site rents at a level lower than the city average market rents.
Graph 7
In addition to premises lease and buy out, the “Himgrad” Industrial Park provides utilities (gas, electricity, water supply, heat supply etc.) and additional services (such as marketing services, consulting, law support etc.). The dynamics of providing both types of services directly depends on the amount of premises lease and buy out and will be examined in paragraph 7.2 of the current document.
7.0. Financial Forecasts7.1. Important Assumptions
While assessing the project financial data, some underlying assumptions were made:
1. inflation rate is taken 11%;
2. rent rates, utilities prices and additional services prices growth estimation is based on the specified inflation rate;
3. discount rate is taken 14%;
4. a growth trend in the Kazan real estate market is expected.
7.2. Project Earnings Structure
At Graph 8 the financial result of the main activity of the “Himgrad” Industrial Park is presented – that is real estate operations, including lease and real estate units buy out.
Graph 8
As we see from the graph, the positive financial result in this type of activity appears in the 5th year of project realization, after all the real estate units are put into operation.
Graph 9 represents the financial result of the utilities providing activity. The financial result here is the minimal positive. This is conditioned by the preferential utilities prices on the industrial park territory. One more circumstance restricting the utilities pricing policy is that this economy sector is controlled by the government and antimonopoly institutions. This type of activity is necessary for the residents, but non-profitable for the company. Nevertheless, low utility prices will provide the site with a greater customers’ inflow. Graph 9
Another profitable type of activity, except the real estate operations, is providing additional services (consulting, law support, marketing, technical permissions etc.). The financial result of this type of activity is presented at Graph 10.
Graph 10
If we consider the total project earnings structure, it will look as follows (see Graph 11).
Graph 11
The real estate operations form the bulk of the project earnings, comprising up to 80% of all earnings structure.
7.3. Net Present Value Analysis
The Project Net Present Value is presented at Graph 12. According to the Graph, the accumulated project NPV is $167 mln. by the 10th year of project realization. Net profit/sales are expected to be positive by the 7th year of project realization.
Graph 12
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