The limitation of “Himgrad” Industrial Park target customers to small and medium-sized companies occupied in chemical and petrochemical industries is made in order to single the project out of other industrial real estate complexes. The petrochemical utilities infrastructure present on the site territory allows increasing the efficiency of the mentioned companies business. The chart defining the target companies more precisely is presented at Graph 1.

Graph 1

The hatched segments of Graph 1 represent the “Himgrad” Industrial Park target customers. The reason for excluding big local companies is in their possessing own production facilities on the Republic of Tatarstan territory and, accordingly, enough space for further expansion. As for small foreign companies, they are not interested in global expansion or, to be more exact, have not sufficient financial resources to perform such an expansion. Big foreign companies' inclusion in our target customers may seem to be in contradiction with our strategic goals. Moreover, the site space of 131 hectares is not suitable for huge companies' location. But here we primarily have in mind the location of small and medium-sized production facilities of such companies, which is usually the starting point of global expansion of an industrial company. Nevertheless, to make the location of such production facilities possible, we should address the mentioned companies' headquarters.

To sum up, the project has two categories of target customers:

1. local small and medium-sized companies, processing certain types of polymers, produced on the Republic of Tatarstan territory, including the newly-established companies;

2. foreign medium-sized and big companies, processing certain types of polymers, produced on the Republic of Tatarstan territory.

3.2. Competitors and Competitive Advantages

The target customers have two-sided choice, deciding on their possible location.

First, they may locate within industrial premises of Kazan city. According to the market research http://www.arenda-kazan.ru/reseach, by the end of 2007 Kazan real estate market comprises office, trade and industrial stocks in the proportions, presented at Graph 2:

Graph 2

Kazan industrial stock comprises over 57% of all real estate premises available for lease, but only third part out of these 1 200 thousand sq.m is professionally developed (due to the above described reasons). But the site state prevents the immediate lease of all premises available. Hence, there exist opportunity for growth.

But the target customers may also choose some other industrial park out of those developing in Russia (see Fig 1).

Fig 1

Main competitors group in Moscow and St.Petersburg regions. Tatarstan is beneficially located in Russia, on the boundary of European and Asian parts of the country, being the logistics juncture of those. So, the location of our industrial park in Kazan forms one of its competitive advantages, especially taking into account the chosen industrial park profile connected with the republican economy peculiarities.

The location of “Himgrad” Industrial Park in Tatarstan - one of the leading Russian regions in chemicals producing and processing, automatically makes it close to Russian largest producers of polymers: Kazanorgsintez plant; Nizhnekamskneftekhim plant; Kazan Synthetic Rubber plant; Karpov Chemical plant; Nizhnekamsk Oil Processing plant; Nizhnekamskshina, etc. (see Fig 2)

Fig 2

Such a location forms an additional advantage for companies occupied in the target industries, since they tend to locate their production facilities close to processed raw materials producers, and the main raw materials processed by chemical and petrochemical companies comprise certain types of polymers (polyethylene, polypropylene, polystyrene, polycarbonate and some others).

Furthermore, the site logistics is perfect (see Fig 3). The industrial park is situated in the north-west part of the city, within close proximity to Kazan major traffic routes (highways and railway station (incl. railway lines within site territory). The site has convenient access approaches. The Kazan international airport is just 30 minutes away by car.

Fig 3

The last circumstance is of benefit in comparison with both local industrial property complexes and with other industrial parks in Russia (since not every industrial park or building has such a convenient location inside the industrial part of the city).

3.3. Target Market Segment Strategy

According to the real estate consultants data, residents usually chose the premises of any type to lease (office, industrial or warehouses) according to the “classical” model of consumer choice process. The real estate choice presupposes high customer involvement and rational evaluation of all the factors (“thinking” rather than “feeling”). Little emotionality is possible while choosing the premises for the company's headquarters or back offices, since these belong to the keystones of its future success and profit. The factor, intensifying the rationalist approach of the customer under analyzed circumstances to property choice, is the mentioned novelty of the product (service). A new buying situation (see Graph 3) here presupposes the customer's substantial search for the information on the project by means of any available sources.

Graph 3

“Himgrad” Industrial Park Development Project Business Plan

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In order to be a success, a developer ought to create an extremely attractive value proposition for the target customer, which should be based on the objective evidence (the site obvious advantages in comparison to other possible locations). Some of the “Himgrad” Industrial Park surface benefits include lower than the city average rents level, tax remissions, low utilities prices, etc.

Another peculiar feature of chemical and petrochemical industries is that during the company's location decision making process a huge number of technical details should be taken into consideration.

The situation is easier if we deal with small companies, since the Decision Making Unit there may be limited to one person or few ones. In case of medium-sized and large companies, the Decision Making Unit consists of different people, or even companies' departments, performing different roles in decision making process.

Thus, the location or relocation decision is generally initiated by the company's top management (which is mostly influenced by public relations media and is driven by brand and prestige); the deciders are commonly engineers and other technical specialists (which are driven by reason); the decision may be influenced by the company marketing or supplying department, which may assess the proximity to the company's partners for the most, etc.

Besides, there exist two time gaps in decision making process:

1. a gap between the point when the company realizes the requirement for location, relocation or further expansion and the point when the location decision is made by the company;

2. a gap between the point when the location decision is made by the company and the point when the location itself takes place.

The second gap is conditioned by the technical complexity of the industries' production facilities. As for the first one, the developer's task is to prevent the customer's withdrawal from the site, having taken decision in favour of some other location. And this becomes a challenging task, since the time gap may cover several months or even years sometimes. So, to make a bargain, the project developer ought to be able to answer the all departments' specialists' questions and satisfy all their needs and requirements.

Moreover, the decision making process here takes much more time, and becomes a step-by-step procedure, when the developer has to conduct a successive series of negotiations with different specialist.

When speaking about the second group of our target customers - foreign and international companies, we should bear in mind the necessity of keeping the services level to the international standards. Compared to local companies, having no choice of industrial parks in Russia, this group of customers is free to choose from other global locations - that is European, Chinese and American industrial parks and technoparks, having industrial premises. The competition on the global market is of a comparatively higher order than at the local one.

Besides, there is another intangible benefit - the brand name, the company reputation and some other points of prestige. E.g. the global company presence at the site to a great extent increases its attractiveness for other potential residents. The authority, prestige and influence of the first site resident set the project general tone. At present moment the negotiations with some leading world polymers processors are held and actually their entrance to the site is one of our main aims at the moment, able to increase the further promotional efforts.

The neglected state of the territory presupposes our obvious inability to attract the residents at the moment of the project's initiation. Hence, at the initial stages of the project development the site could not be developed according to “build-to-suit” concept, when the developer holds preliminary negotiations with potential residents, signs binding lease agreements with them and develops the land plots or buildings according to these very residents' requirements; it could rather be “spec building”, when no binding lease agreements are signed, and the developer improves the site state at his own expense.

3.4. Market Trends and Growth

To formulate a prospective business plan, we should assess the target market development trends. Russian economy today experiences rapid growth, the number of investment projects grows from years to year, and the corresponding investment amount increases as well. Thus, investment growth in 2007 exceeds 17.4% comparing to the previous year.

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