Renovation Nation
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Marketing Plan
Denise CookAllison MacDonald
Tara McKayBrian Ramos
Betty Seed
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
2 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Executive Summary
Founded in 2004, Renovation Nation operates as a successful tool rental business in the Boston-metropolitan area. With three locations, we gross $1.5 million in revenue per year. We have achieved success in this market by offering specialty products, providing exceptional customer service and serving a local clientele. We are a proud member of the American Rental Association (ARA).
Renovation Nation is guided by our value proposition: convenience, value and expertise. We provide our homeowner and contractor customers with delivered rented tools at a reasonable cost, in-home consultants to help plan projects, in-store and online courses to learn new skills, and licensed handymen.
Renovation Nation supports the community through several partnerships including donations to Habitat for Humanity and our own Renovation Nation Foundation which donates 2% of net revenue to hurricane relief efforts in the United States.
Renovation Nation plans to expand to the Raleigh, North Carolina metropolitan area – an area of projected growth with a significant percentage of homeowners. One of our principals will relocate to the area to oversee the purchase and development of three stores in Raleigh, Durham and Cary to mirror the success of our Boston-area stores.
Introduction
The home center and hardware store industry (home improvement retailers) includes about 30,000 stores with combined annual revenue of about $200 billion. Major companies include Home Depot, Lowe's, True Value, and Ace Hardware. Home Depot and Lowe's account for more than half of overall sales in the United States.
In 2007, the U.S. general tool market generated $8.8 billion in revenue. In 2008, revenue declined 3.8% as a result of the contracting construction market to $8.4 billion. According to a recent report, the general tool segment averaged a compound annual growth rate of 9.4% between 1998 and 2008. By 2009, the general tool rental business was $8.8 billion in the U.S.. General tool rental has been the fastest growing U.S. market segment during the past decade, with 11.6% compounded annual growth from 1998-2007.
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
3 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
The West South Central region saw double-digit growth in 2008 as hurricane recovery efforts required large amounts of tools. Continued rebuilding in 2009 will hold losses in the region well below the national average, but in the long run, the fastest growth will revert to the Pacific, Mountain, and South Atlantic regions.
The share of the market attributable to do-it-yourselfers fell from 47% in 2007 to 44% in 2008, as residential improvement activity lagged from falling home values and tighter credit. However, recent reports forecast more revenue declines in 2010 and 2011 before rebounding strongly in 2012 and 2013.
Home remodeling, repair and new homebuilding drive demand. The profitability of individual companies depends on low-cost purchasing, effective merchandising, and competitive pricing. Large companies can offer wide selections, supply high-volume goods to builders, and have advantages in purchasing, finance, distribution, and marketing. Small companies can compete by offering specialty products, providing superior service, or serving a local market. Competition includes building supply distributors and wholesalers, mass merchandisers, warehouse clubs, and internet retailers.
Situation Analysis
Market Summary
Market Demographics
The current industry is made up of three nationally recognized competitors: Home Depot, Lowe's, and True Value. They have smaller subsidiary companies that specialize in tool and equipment rentals. The subsidiaries are: Sunbelt Rentals (Lowe’s 90 stores), Taylor Rental (True Value 400 stores) and Home Depot (500 stores). All have stores located throughout the United States and carry strong name recognition.
Marketing Trends & Growth
Growing do-it-yourself Market
With the growing popularity of home renovation television shows (HGTV), the do-it-yourself market has expanded. Consumers are willing to attempt renovations from painting to installing plumbing. In addition, do-it-yourself projects can be more cost effective than hiring contractors for small projects.
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
4 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
South-Atlantic Region
Research indicates that the South Atlantic region is a growth area with families relocating at a rapid rate.
North Carolina Real Estate Market
North Carolina’s real estate market has experienced slower growth compared to the past ten years. Since homeowners are staying in their homes longer or can’t sell their homes, many are renovating to meet their needs.
Information about Renovation Nation
Mission Statement
Renovation Nation is a complete tool rental company providing products and services to meet the needs of homeowners and construction professionals. Our goal is to provide the highest level of service and expertise in the home improvement business. Through our Renovation Nation Foundation, we fund many local activities that support social and economic growth.
Value Proposition: Convenience, Value & Expertise
Our direct market research indicates that by focusing on convenience, value and expertise, we are able to meet our customer’s renovation needs.
Objective
Renovation Nation's objective is to serve as a resource to new homeowners, do-it-yourselfers, and contractors in the community. We provide customers with tools, expertise and resources.
Strengths & Weaknesses
Renovation Nation has a well formulated strategy with a proven management team thatprovides customers with convenience, value, and expertise. We successfully operate three retail locations in the Boston-metro area. One of our principals is relocating to the new market area and will oversee implementation of the expansion.
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Renovation Nation understands that there will be challenges in hiring and training consultants and management staff to translateOther concerns to be addressed includeunderstanding the market and
Market Share
In 2009, the general tool rental business generated $8.8 billion in revenues in the United States. Renovation Nation aims to capture 2.5% of the market share by targeting local customers and promoting our core competencies. By staying true its value proposition, Renovation Nation can be successful competing withcompetition.
SWOT Analysis
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Renovation Nation understands that there will be challenges in hiring and training nts and management staff to translate our service philosophy to this new area.
to be addressed include lack of name recognition, start-up costs and market and culture of the South.
In 2009, the general tool rental business generated $8.8 billion in revenues in the
n Nation aims to capture 2.5% of the market share by targeting local customers and promoting our core competencies. By staying true its value proposition, Renovation Nation can be successful competing with big-box
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Renovation Nation understands that there will be challenges in hiring and training our service philosophy to this new area.
up costs and
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
6 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Competition
Home Depot The world’s largest Home Improvement chain store. Represents 44% of the tool rental market.Strengths: Rents a wide range of tools and equipment including wood tools, machining tools and small power tools.Weaknesses: Staff may have limited knowledge or training in the use of tools and may not be able to provide expert support for all products. Tool rental departments are not available in all locations.
Lowe’s The second largest Home Improvement chain store. Represents 2% of the tool rental market.Strengths: Sunbelt Rental owns and operates the tool rental department in 90 Lowe’s locations.Weaknesses: Primary customers are contractors.
True Value Represents 33% of the tool rental market.Strengths: Able to rent heavy equipment to as well as home renovation tools.Weaknesses: Diverse rental service. They offer a wide range of rental items including party supplies, tents, tables and chairs.
Critical IssuesThe critical issues for Renovation Nation’s success are:
Hiring knowledgeable and enthusiastic staff. Offering top of the line tools that are meticulously maintained. Offering innovative communication technology to customers. Provide competitive rates relative to big-box retailers. Sub-contract only with Handymen who are licensed, reliable and reputable. Create an aggressive marketing and advertising campaign to gain visibility.
Pricing StrategyProducts available in this type of business include electric power tools; ladders, lifts and scaffolding; painting and decorating; manual tools and home and garden equipment.
Setting the right rental rates require fine tuning of time and dollar utilization. Time utilization calculates how long the item will be rented while dollar utilization is calculated by dividing twelve months of revenue by the acquisition costs. Rental terms are usually a minimum of four hours but can be daily, weekly or longer.
Other costs that need to be examined are fixed costs, labor and equipment costs, competitor pricing, and overhead. Still another set of costs to be considered are the expected lifespan of the equipment and maintenance costs.
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
7 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Using a combination of these factors depends on the size of your business and your position in the marketplace.
It is recommended that prices not be discounted. Generally, discounting is only done when a piece of equipment is being rented weekly or longer. Supply and demand should be factored into the decision to discount an item.
Keys to Success
ConvenienceMaintain optimal inventory levels to meet demand. Hours of operations will meet the needs of customers and will include evening and weekend hours. Renovation Nation is unique in that we offer on-site delivery. According to our research, customers’ needs will be met by offering multiple methods to communicate with us (e.g. phone, online support, iPhone application).
ValueRenovation Nation offers quality rental tools that are competitively priced.
ExpertiseStaff is extensively trained in the areas of customer service, tool usage and the renovation process. Staff is knowledgeable in best practices in completing both large and small projects.
Marketing Strategy
Marketing Objectives
Renovation Nation has the skills, knowledge and products to exceed the needs of the growing number of do-it-yourself homeowners as well as contractors. Competition is strong in this market.
The objective is to reach the identified target segments by emphasizing the unique attributes of Renovation Nation. The marketing strategy and plan must be creative and innovative, providing each segment with something unique while focusing Renovation Nation’s value proposition; convenience, value and expertise.
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
8 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Target Markets
Demographics
The Raleigh/Durham/Cary, North Carolina area has a combined population of approximately 750,000 permanent residents. The population swells during the school year when colleges are in session. The population between 25 and 64 years of age in Raleigh is 55%, Durham is 53.7% and Cary is 59%.
The median income for the area is as follows: Raleigh $46,612, Durham $41,160 and Cary $89,702. Approximately 50% of residents in Raleigh and Durham are homeowners. The number of people who own their own homes in Cary is significantly higher at 73%.
Marketing Research - Survey Results
In July of 2009 Renovation Nation conducted a non-scientific market research survey and received 230 responses. Results show that most respondents have completed at least a couple of home improvement projects. Only 9.6% of the respondents identified that they did not complete a project. Of the projects attempted, painting and gardening/landscaping were at 80.4% and 75.7% respectively.
When asked if they experienced any problem or challengesduring the project, not having the right knowledge/skills was number one at 46.2%, not having enough time was second at 43.9% and not having the proper tools/equipment was third at 40.8%.
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
9 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Strategies
This plan will require different strategies targeted to the specific segment. In addition to the standard marketing methods i.e. direct mail, a newsletter, advertising in print media and directories, the plan is to offer services and expertise not offered at other places.
Homeowner Marketing Plan
Web Site – create and maintain web site that would offer online assistance in addition to a complete listing of services.
In-Home Consultants – heavily advertise that Renovation Nation will supply in-home consultants.
Create “DIY” DVD’s – customers could take them home at the time of rental or view online.
New Homeowner Packet – send new homeowners a welcome packet and include a small gift or discount coupon.
Partner with Realty Company – obtain referrals for handyman services. Community Involvement – renovation “how to” workshops at local schools and civic
organizations. Business Networking – participate in Rotary Club and other appropriate
organizations. Articles – write advice articles for local papers discussing home renovation. In Store Workshops – create “how to” workshops also develop specific workshops
for woman and families.
Contractors Marketing Plan
Advertise in trade journals. Participate in local and regional trade shows. Offer after work workshops on new equipment – bring in vendors to provide training
and “free” gift.
Break-even Analysis
Renovation Nation has contracted to purchase a three store chain located in the identified demographic area. The current owner is financing the purchase to be paid back over a five-year period. Based on financial projections, our new venture will break-even in the second quarter of year two (2011). At this point, Renovation Nation will be positioned to capitalize on the projected growth of the tool rental industry and the rebounding real estate market.
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
10 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Appendixes
Sources of Information
Ace Tool Rental [http://www.toolrental.com] All Seasons Rental [http://allseasonsrental.net] American Rental Association [www.ararental.org] Business Nation [http://www.businessnation.com] Financial Statements [http://moneycentral.msn.com] First Research [http://www.firstresearch.com] Home Depot Tool Rental [http://www.dexknows.com/business_profiles/the_home_depot_tool_rental-b897063]
Lowe’s Tool Rental [http://findarticles.com/p/articles/mi_m0VCW/is_8_26/ai_62597811/?tag=content;col1]
North Carolina tax information [http://www.ncse.org/?pd=pagedata-building-cost&key=business]
Rental Management Magazine [http://www.rentalmanagementmag.com] Salary Information [http://www.cbsalary.com] Solon Hardware [http://www.solonhardware.com] Taylor Rental [http://www.taylorrental.com] U.S. Bureau of Labor Statistics [http://data.bls.gov/cgi-bin/print.pl/oco/ocos117.htm]
Break Even Point $771,964
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$200,000
$400,000
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2010 2011 2012 2013 2014
Break Even Analysis
Revenue Fixed Costs Total Costs
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
11 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Financials
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
12 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
13 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
Website
Fitchburg State CollegeMaster of Business Administration
Marketing Management Final
14 | P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed
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