Executive Summary With over 30 years of experience and ten years of owning and operating a licensed construction company, Tom Amaral has built his company from ground up and is a proud contractor in the Alameda County area. His diverse background and ethical professionalism has been the result of his company to market itself though the “word of mouth” since it began; however, due to the down-slope of the economy in the recent years, his company revenue has come to a halt forcing him to seek other methods of increasing his market share.
As part of a group, we took the task upon us to create a marketing plan which will attack the question: how can Amaral Remodeling increase its revenue through a new marketing strategy? Throughout this document, we will analyze and explore all potential means of achieving our objective. The external environment has changed the landscape of the construction industry. Contractors face economic, legal and technological challenges. The prices of homes have decreased, the building of new homes has slowed, and there have been an increased number of foreclosures.
Contractors are being out priced by unlicensed contractors who do not have the overhead costs related to being licensed. The use of the internet has changed how contractors advertise and their communication between possible customers. EXTERNAL ENVIRONMENT. The state of the economy since the 2007 recession has had a lasting effect on the environment of the construction industry. There has been a higher rate of unemployment and a greater number of people have less disposable income. This has reduced the size of possible customers.
The situation that the housing market is in today has also changed the demand of the industry. The price of homes has declined, the building of new homes has slowed down, and the number of foreclosures has been high over the past couple of years. People who are looking for a home are looking at lower priced homes and foreclosures that might need work instead of building new homes. Foreclosures have at times been trashed or stripped down by the previous owners and need a lot of work. Overall, the current condition of the organization’s external environment has greatly impacted demand and sales.
Contractors require a license and a license bond to work. Contractors are also required to get proper building permits through the county and have inspections performed to approve that their work is built to code. Licensed contractors are facing competition from unlicensed contractors who out bid them. Licensed contractors face the problem of losing business because some customers choose have an unlicensed person do the work who does not take the proper route to performing within legal guidelines because they are cheaper.
Unlicensed contractors don’t have the overhead of paying for permits, worker’s compensation, and commercial general liability insurance coverage. Technological advancements have created new machinery, equipment and tools. These newer offerings have the potential to make work faster and more precise, but it costs more to keep up with the latest equipment. At the same time with the new developments owners face obsolescence of old machinery, equipment and tools. Technological advances have also affected this industry with respect to communication and advertising. Technology, the internet in particular, has changed the way people consume.
People now have exposure to companies through the internet and at times it can be the first contact point with customers. Consumers research and compare companies online, for example when choosing what company to call for a bid. Customers also look for references and feedback about companies to aid in their decision of choosing a contractor. Companies today must consider their reputation and image through online outlets. INDUSTRY ANALYSIS. As there may still be uncertainties within the housing market, more and more people are opting to remodel their existing homes or improving them for the time being.
Homes are being foreclosed due to subprime mortgage loans or the rise in unemployment. Most of the foreclosed homes are often left too damaged to be “moved-in ready”, leading realtors to search for contractors to repair the homes for sale. Since there is more of a need to maintain or upgrade the quality of one’s home, people turn to contractors, such as Amaral Remodeling Company. The construction industry tends to be very broad in general. It covers a wide range of contractor in areas from commercial to residential.
It can also go into specifics, such as, multi-family to single-family home contractors, garage door remodeling contractors to insulation contractors. Amaral Remodeling operates with a B-General Building Contractor license. The lines of business they conduct are single-family housing construction and have been a part of it since 1976. Some of the services offered by Amaral Remodeling are: bathroom and kitchen remodeling, additions and alterations to existing structures. According to the U. S. Census Bureau, the value for residential remodeling, in terms of dollars (in millions), has increased from 2002 to 2007 by 16%.
44% of contractors carry out new construction and remodeling projects, while 27%, exclusively, contracts to do remodeling, and 29% contracts to do new construction projects only. In this economy, people are searching for more ways to make the most out of their homes versus having to put in a huge amount of funding into purchasing a new home. COMPETITIVE ANALYSIS. Amaral Remodeling Company provides services to Dublin, Livermore, Pleasanton, and Tracy. Being that it covers a few cities and the construction industry is so competitive, our team has narrowed it down to five competitors from each city.
All the companies we evaluated are in the same licensing category as T. Amaral’s, although, area of expertise may vary. Pricing of the services are really competitive because some contractors’ projects goes through the bidding process. The strengths found in the competitors are the areas they specialize in. In addition to everything Amaral Remodeling covers, the competitors also do cabinetry, carpentering, decks and porches, garages, entertainment centers, fireplaces, crown molding, tiles, windows, and front doors.
The competitors also utilize more methods of advertisement rather than just sticking to the old method of “word-of-mouth”. They use social media networking; provide better “before-and-after” photos in their galleries, easier access to information about their businesses, and more. The weakness that lies within the competitors is the lack of experience and quality they possess. Because they cover so much more areas, they are not focus on the little details that tends to matter to customers. Hamid’s part will be here OBJECTIVE.
After carefully examining all of the aspects of the company, interviewing the owner, and researching companies in the same field to get a more detailed overview of the company, our group has concluded that the primary objective for the marketing plan is to increase the company revenue by at least 10% within the first twelve months of implementing the proposed marketing plan. MARKETING STRATEGY &TACTICS. Our core marketing strategies are networking and focus towards the target market. According to Gruenberg, networking is described as the process of being and staying connected within a market.
There are three types of people that this company must concentrate on placing in its network; paper-past, present, and future. Paper-past are the people that the company has worked with in the past, present are the people that the company is currently working with, and future are the people that the company wants to work with in upcoming projects. The networking goals for the company are first to be remembered in a positive way, placed at the evoked set within the service category, and easily recommendable by individuals who have used the company’s services previously. The second strategy is for the company to focus on its target market.
After doing extensive demographic searches, the marketing team has concluded that the target market is a household consisting of a married couple who have above 80 thousand dollars of income, giving them room to have disposable income for renovation of their home which they have lived in for at least five years or a couple who has just gotten married and is seeking to buy a house at a lower price and modify it to their desires. Some might assume that this target market is too narrowed; however, the team feels that the more focused the company is on its potential customers, the better results it will see at the end.
Moreover, focusing on a specific target market will eliminate any clutter allowing the promotions to be more efficient. The company will save thousands a year just by narrowing their target market and only marketing to them in various ways. For this company, we segmented our market into residential remodels, residential additions, new residential construction, public works, and new multifamily construction. MARKETING MIX. For this team, creating an idea marketing mix for a construction company was very crucial because three out of the four elements within the mix are always going to be different.
The product within the marketing mix is simply the service that is being provided for the different tasks performed by the contractors and hired associates. The company services consist of different types of remodeling and renovating projects for both residential and commercial properties. It will to the company’s benefit to be flexible in the types of services it offers to customers. To ensure a satisfied service for the clients, the company must know what variety of individuals it hires. There should be a set requirement for every potential worker based on the specific project that the individual is being hired for.
The pricing strategy in this particular market will vary based on each specific project and the detail it requires. In addition, price should be the most flexible part of the marketing mix. Overhead cost should be considered at all times when creating an estimate for a project. Knowing the client’s budget as well as the competitor’s quote will give this company an advantage to offer the best assessment as to what the price should be for a certain project. These factors are extremely important to know as well as keep away from competitors.
Keeping the estimate information undisclosed from everyone will prevent any of the counter offers from competitors to be accepted. Overhead cost, location, job size, and the amount of workers needed for a particular project are all key factors in determining the price within the marketing mix. The place for the company is very flexible because each job will have its own required work area. The website of the company indicates all of the cities in which services will be extended to; therefore, there isn’t one particular fixed place that the company will perform its services.
Some nearby cities are Fremont, Hayward, San Leandro, Dublin, and other cities within the Alameda County. A geographical expansion should be considered if the company wants to grow and branch out into different locations; however, this marketing plan strictly focuses on the present state of the company. This brings us to the final piece of the marketing mix which is promotion. It is definitely the main portion that the company is lacking which is the main reason they hired our group. Our task here is to distinguish the most efficient way to advertise Amaral Remodeling Company.
As stated above, our strategy is to network with other businesses and individuals as well as stay focus on the mentioned target market. Our team recommends the company to network with real-estate agents, companies that perform complementary tasks to the services provided by Amaral Remodeling such as roofing, and also the past and present customers of the company. The company has been using the “word of mouth” strategy since it began and it hasn’t had any public attention as far as advertisement.
Tom Amaral has over thirty years of experience and has been Managing Amaral Remodeling for the past ten years. He has gained a number of loyal clients and has been doing quite well, but now he needs to step out of the “old” strategy and allow his company to take the spotlight into the new marketing world. After intensive research, our group has recommended the following promotion plan: Network with real-estate agents and have them recommend potential clients who are buying a house or leasing a commercial property, and are seeking to make some internal or external changes to it.
In turn, the company will recommend its clients to the real-estate agents. Network with companies that perform tasks in the same market. For instance, a company that builds swimming pools, or specializes in roofing can recommend Amaral Remodeling and vice-versa. Network with past clients and seek referrals based on their personal testimonies about the company’s performances in previous projects. Testimonies of past clients are essential when an individual is seeking a reliable company to perform small as well as large alteration tasks to the home or the business.
Based on our research about the demographic, we can easily conclude which cities have the higher household income giving us an idea of the amount of disposable income, and focusing heavy marketing on those areas. At the beginning of this document, we ask the question how we can increase the revenue of Amaral Remodeling Company through a new marketing strategy and here we answer this posed question. We truly believe that the recommended marketing plan will increase the business revenue if
implemented within the first twelve months. This is a new direction for the company to market itself and it will benefit the company in the short-run as well as long-run. ?Read more at Suite101: Your Marketing Plan – Segmentation: Segmenting Your Market | Suite101. com http://brenda-keener. suite101. com/writing-a-marketing-plan—two-a6237#ixzz1tZZamoC4 http://www. constructionbusinessowner. com/marketing http://www. alrahmanigroup. com/epc. html http://www. amaralremodeling. com/about. html