Marketing Masters 04.17..2016
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Table of Contents Overview…………………………………………………………………...2
1 Mission & Vision………………………………………………………..2 On-demand Industry Research……………………................3 5-Forces Model of Competition………………………………..11 S.W.O.T. Analysis……………………………………………………...12 Competitive Advantage……………………………….……………13 Business Model Canvas…………………………………………….14 Proposed Strategy……………………………………………….……15 Personas ………………………………….……………………………….21 Journey Maps…………….…………………………………………......23 Reflections………………………………………………………………...26 Bibliography……………………………………………………………...29
Overview The on-demand economy has seen a rapid increase in the past ten years due to technological advancements and the changing landscape of the business world. Low
2 cost computing power, cloud-based services, and ubiquitous communication are leading the trend of the peer-to-peer business model we call the on-demand economy. Today, the workforce is home to more freelance workers than ever before, who are available at a moment's notice. This presents a huge opportunity for growth within the home service industry. The rapidly growing on-demand economy presents a way to connect the people with time but no money, to the people with money but no time. Essentially, we can all trade with each other, sharing resources and services, and creating valuable transactions.
Mission Statement The mission of Valpak is to help people save, businesses grow, and neighborhoods thrive by: â—? Embracing creative solutions to develop new technology â—? Promoting economic growth and activity while maintaining community ecosystem â—? Ensuring safe, efficient, and effective connections between small business owners and customers
Vision Statement To position Valpak as a leader in the on-demand economy through innovative and creative enrichment of the small business community by utilization of revolutionary technology.
On-Demand Industry Research Analysis Competitors
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❖ ❖ ❖ ❖
Many competitors in the home-service industry Almost all use some sort of mobile app Majority have review systems Majority are available nationwide, some still growing
Major Leaders in the Industry Amazon ❖ Offer hundreds of service options (wide variety) ❖ Package services with products sold on Amazon ❖ Guarantee customer satisfaction with every service
4 ❖ Utilize local businesses in the customer’s area ❖ Meticulously vetted
Angie’s List ❖ ❖ ❖ ❖ ❖
Paid subscription Directory of local businesses Crowd-sourced reviews Allow businesses to have paid advertisements Annual revenue over $315 million
Handy ❖ ❖ ❖ ❖
Offer 100% money back guarantee for all work Vetted professionals Limited amount of services No review system
HomeAdvisor ❖ ❖ ❖ ❖ ❖
Wide variety of service options Partnered with Google Connects consumers to local service providers Free to use - Charges service providers to be part of its vetted network Annual revenue over $205 million
Yelp ❖ ❖ ❖ ❖
Publish crowd-sourced reviews about local businesses 135 million monthly visitors Free to use - requires subscription Annual Revenue over $375 million revenue
(On-Demand) Home Services Industry Data Although exact estimates of the size of the on-demand industry are hard to find due to the nature of the industry, many different sources have tried to quantify sections of the booming on-demand economy. ❖ Using reported and leaked financial data, actual 2015 on-demand industry revenues were estimated to be $18.5 billion across all categories. (LODE in 2015)
5 ❖ In 2014, 50 million people were estimated to be participating in sharing in the on-demand economy. (Owyang) ❖ Around 25% of revenues (Madden) go into the pockets of the intermediaries of on-demand transactions, an approximation corroborated by a 2013 estimate of $3.5 billion in on-demand industry profits. (Lush) ❖ Investments in the industry have quickly increased, nearly tripling from $0.5 billion in 2012 to $1.3 billion in 2013. (Noorani & Pishevar) Additional data shows investments at $4.12 billion in 2014 and $3.78 billion in the first few months of 2015. (“‘On-demand’ startups”) ❖ One source puts the estimate of the size of the on-demand home services industry at less than 2% of the total home services market, or around $8 billion. (Carney)
As for the home services industry, more data is available to determine the size of the market and the potential for disruption through shift to on-demand services. ❖ Total home services revenues are estimated to be more than $400 billion. (Stout) ❖ An analysis of various IBISworld industry reports shows an average 5% profit margin and 1% of revenues being spent on marketing. This leaves billions of dollars of profit available to direct home services marketing companies like Valpak. ❖ Private spending on home remodeling is estimated to reach $160 billion in 2016. (Khedr)
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Opportunities On-demand brings experts in local services to a marketplace where homeowners can: ❖ interact with those experts ❖ directly order the service ❖ build trust with an expert that can solve their problem The average person already checks their phone over 150 times per day (every six minutes) (Hackett) This opens an opportunity for Valpak to market directly to consumers and give their customers the ability to view deals/order services instantly. Valpak has an opportunity to target their 37 million households that already recognize them as a brand, and trusted expert for the best deals in their area.
Best Practices in the On-Demand Industry/ Economy Excellent Customer Service: in an on-demand economy/industry customer service is a major key to retaining customers. Provide an excellent experience and make it right if anything goes wrong. Employee Compensation: higher wage compensation to keep qualified experts servicing on-demand consumers. Create Raving Fans: provide value to employees first so that they become an advocate, then provide value to your customers who will becoming your raving fans. You want employees to project the attitude that “everyone is in this together, the server and the served.” (Solomon)
Trends In On-Demand Customer Demographic Mike Jaconi, in his Business Insider article written in July of 2014, address the market conditions in the on-demand industry where exponential growth is becoming more apparent. He contributes these conditions to an “...increase in the number of smartphone users, simple and secure purchase flows, and location-based services...” and doesn’t see growth slowing anytime soon. There are several trends among customers who are using on-demand services: ❖ Consumer Motivations
7 ➢ Convenience: According to a study done in 2014 by Nielsen, the majority of smartphone users are 18-44 years of age. This report also states “smartphones have become the staple of everyday life and the on-the-go tool of choice for consumers…” The importance this demographic is placing on services that comply with their lifestyle lends to the rise we are seeing in the on-demand economy. ➢ Speed: Not only are consumers of on-demand services looking for convenience, but also to receive ordered services in a timely fashion. ➢ Simplicity: It is important for consumer to use a service that is efficient and convenient, as well as simple. Consumers must be able to interact with a service that integrates the first two motivating factors and has low barriers to receiving their purchases as quickly as possible.
Marketing & Customer Service Communication Marketing has been relatively motivated by the identified consumer motivations mentioned previously (Convenience, speed, simplicity). Other marketing positions listed below. ❖ Marketing Positions ➢ Safety: Many on-demand services operate by letting service providers interact with personal property, such as entering someone’s home, without the umbrella of a physical location to provide a certain level of assurance that the individual, who will be performing the service, is a professional. To compensate for this, on-demand services require several levels of verification of the service provider, including a background check. To give consumers peace of mind, on-demand services make it a marketing focal point to address the concerns that a consumer might have regarding verification of the service provider. ➢ Price: Several on-demand services are emerging with more companies projected to enter this industry. As multiple business providing the same services begin to enter a market, companies will start competing on price. Companies are starting to put emphasis on the price of their product or service as the on-demand industry grows.
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Valpak Consumer The Valpak consumer consists of the franchise owners and the small (local) business owners.
Valpak Franchise Owner Profile ➢ Age Range: 40-55 ➢ ➢ ➢ ➢
Primarily males Focusing on acquiring new franchisees with digital backgrounds Mostly single location owners About 10% own their own office space
Franchise Owner & Small Business Consumer Segments ➢ ➢ ➢ ➢
Bargain-hunting moms Boomer homeowners Mindful matures Tech-savvy millennials
On-Demand Industry Consumer ➢ Smartphone users ➢ Tech-savvy millennials ➢ People looking for a certain good/service -Convenient -Speed ➢ Young urban professionals
On-Demand Industry Employee
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Gender
Ethnicity
Average Age
Relationship Status
Education Level
Media Service Attitudes Locally and Internationally ➢ 81% of on-demand economy providers plan to work with their primary ondemand partner 12 months from now.
10 ➢ 63% of on-demand economy providers are happier now that they are working with an on-demand partner. ➢ 91% of on-demand economy providers like controlling decisions about where, when and how they work. ➢ 58% of on-demand economy providers enjoy the social opportunity that working with an on-demand economy partner offers.
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5-Forces Model of Competition The five forces model of competition is used to analyze the main competitive pressures on a company. According to the framework, these five forces are: (1) competition from rival sellers, (2) competition from potential new entrants to the industry, (3) competition from producers of substitute products, (4) supplier bargaining power, and (5) customer bargaining power. The five forces model can be used to determine, depending on the strength of each pressure, whether profitability can be easily achieved within the industry.
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S.W.O.T Analysis The S.W.O.T analysis is a tool that identifies internal strengths and weaknesses of the company and the external opportunities and threats of the company.
Strengths ❖ ❖ ❖ ❖
Strong user base and customer loyalty 37 million customer base Cox Target Media Capital backing potential
Weaknesses ❖ Slow to realize technological opportunities ❖ Small target market (Pigeonhole) ❖ Narrow franchise owner demographic
Opportunities ❖ Broader target market ❖ Technological advancements ❖ Going Green (paperless)
Threats ❖ Competitors ➢ Amazon ➢ Angie’s List ➢ Handy ➢ HomeAdvisor ➢ Yelp ❖ Technological issues ❖ Legal issues (employee vs. contractor) ❖ Losing current target market
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Competitive Advantage Currently, Valpak employs an overall low-cost provider strategy relative to their end customers and the homeowners using the Valpak coupon envelope. The low-cost provider strategy is aimed to be the overall lowest cost provider of a service or product for a wide range of customers. Relative to the small business owners, another section of their “customer” base, Valpak employs a focused differentiation strategy by providing a differentiated service to a narrow segment of the market. There are two types of competitors in the industry; the companies with large brand recognition but limited connectivity to small businesses, and the companies with limited brand recognition but high connectivity to small businesses. Valpak’s advantage is that they currently possess both of the facets. ❖ ❖ ❖ ❖ ❖
Large user base ( Valpak mailers reach 37 million people) Established network of providers Established relationships with small businesses Trusted franchisees History of past business transactions
Strategies and Initiatives to Support Current Competitive Advantage ❖ Providing more value through: ➢ Excellent customer service ➢ Convenience ➢ Exposure for businesses ➢ New outlets of on-demand services
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Business Model Canvas A business model canvas is a tool to organize ideas when planning a business model. The canvas is a visual representation of how each segment of your business interacts with the others. In developing a business model, you begin with isolating the the value proposition. Next you identify your key activities, resources, and partners, determine your customer segments and the channels through which you will create relationships, and pinpoint where your revenues will come from and go towards within your business. The end goal of creating a business model canvas is to evaluate your idea and identify whether or not it is viable in the real world.
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Proposed Strategy for Entering the On-Demand Home Services Market As previously stated, Valpak has an identifiable competitive advantage in the ondemand home services industry. However, due to Valpak’s entrance into an existing market, they will need a plan that will position them not just as an industry competitor, but also an industry leader. Our solution is to create an multi-sided online and mobile platform that will be paired with in-home sensor technology, what we call the Smart Home Repair System. The SHRS will detect certain issues when they arise in the home. It can then automatically select the appropriate service provider from the Valpak ondemand home services platform, reference your calendar, request an appointment with your preferred service provider, and then send you a push notification on your smartphone to confirm. To implement this new strategy we would first build out the dual-sided platform starting with the website & mobile application. Then we would start planning out a strategic rollout to supply all Valpak users with home automation hardware, educational materials on how to setup the hardware, and plan for home installation of hardware in the next 24-36 months. Essentially, we would be a fast follower in the industry with the implementation of the basic on-demand platform, and attempt to leapfrog the competition with the implementation of the sensor system within the next 5 years. The purpose of this implementation will be to serve Valpak in gaining market share in the on-demand home services industry now and to set them up for future success. Through development of the sensor system, Valpak will target the younger, more technologically savvy generation and continue to be a player in the home services market.
16 Existing Technology ❖ Notion: “Home awareness, simplified” ➢ Monitors your home appliances using sensors ■ Can sense 8 different senses to be used on a wide variety of appliances
➢ Connects all monitored appliances to a central wifi database hub located in your home
➢ Our proposal builds on this framework
17 Details of the Proposal ❖ Dual sided platform ➢ Mobile/Online Platform ■ Free to use general on-demand home service app ■ Users can see and schedule repairs with “out-of-network” providers as well as “Valpak approved” providers
Users of the free Valpak Home Services App can view deals and schedule services all in one click ➢ Premium ‘Valpak Smart Home’ platform ■ Membership-based ■ Integrated sensor system ● Once the sensors have been purchased and properly placed in the home, the user will have access to the Smart Home Repair System
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Valpak Smart Home subscribers will have access to the VSH App that continuously monitors all appliances with the self-monitoring sensors that are synched to a central wifi database. Users with the mobile app will be able to view all appliance performance levels, diagnostics reports, and past repair history.
19 ➢ Small Business Owners ■ Open platform for any providers to use but for small businesses to be a part of the Valpak Smart Home System, they will need to be Valpak approved ■ To be listed on the platform as a Valpak approved home service provider, the small business will have to pass a review process and then pay a fee or can earn it by maintaining a certain customer approval rating over time
❖ Technology ➢ Buy/receive sensors to monitor appliances in home ➢ Sensors detect problems with appliances, auto-requests appointment with preferred service provider ➢ Schedule integration with user’s iCal/Google calendar/etc. ➢ VSHS sends notification to the user that a repair is needed and appointment has been auto-requested, allows user to accept/change/reject the appointment
❖ Pricing ➢ Valpak Smart Home Sensors can be purchased in three packages ■ $129 for one sensor ■ $199 for two sensors ■ $269 for five sensors ● Each additional sensor after purchasing a package of five is $79 ➢ Additionally, users will pay a $49 monthly fee to be part of the Valpak Smart Home System
❖ Follow-up with customers ➢ In-house monitoring system contacts customer through Valpak Smart Home App notifying customer a request has been sent for a specific repair. ➢ If the customer does not respond to the notification within a certain time period then: ■ An automated call will be sent to the customer asking if they would like to confirm, deny, or change the repair request OR ■ Customer service representative will call customer asking if they would like to confirm, deny or change the repair request
20 Extra Information and Added Features ❖ Landlords can use sensors in rental homes, cutting down on need for landlord to be physically present at the home ❖ Ability to set up recurring appointments (lawn care, pool cleaning, etc.) both on the free platform and within the SHRS ❖ Track where users stop interacting with the application - send out emails/alerts/etc to users that have stopped using Valpak to see why/get feedback on how Valpak can improve the platform ❖ Can be updated to evolve with technology - robots in home, wearables, etc. ❖ Sensor system is SMS compatible, allowing appliances in rental/seasonal homes to remain monitored by sending SMS messages to your app for any detected problem
Performance Measures - to be evaluated on a weekly basis ❖ Churn rate ❖ ROI ❖ How many coupons are used ❖ Customer Lifetime Value
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Personas ❖ Christine is a 27-year old University of Florida graduate. She has been working full-time as an insurance sales agent in Tampa for 3 years and also works as a server on the weekends to make extra money. She considers herself a moderate spender, she enjoys going out to eat with her friends and values being able to spend money on things she wants. She currently makes $70,000 a year but a good portion of that goes to paying down her student loans. She has just purchased her first home and does not know much about home repair. When it comes to hiring someone for home services she prioritizes cost, convenience, and her own safety. She is an avid reader of online reviews and values highly the opinions of her friends and family when making decisions. “Life may not be the party we hoped for, but while we’re here we should dance.”
❖ Megan is a stay at home mom to her daughter, Stella. Megan makes $20,000 a year running a cooking blog. Her husband makes $175,000 a year as an attorney and has no time to make small repairs around the home. Megan values her own and her daughter’s safety when choosing a home repair provider. Price and convenience are less important to her. Megan is an avid user of all types of technology and is an early adopter. Outside of raising Stella and spending time with her husband when she can, Megan is an avid runner and volunteers with her local Boys and Girls Club. She is a light spender, placing more value on experiences rather than things, but does not need to shop around for the lowest prices on services.
22 “Whatever you are, be a good one.”
❖ Francisco is 36 and married with two young children at home. He is a general contractor who makes around $100,000 a year. He values spending time with his family and working hard to support them. Aside from his family, Francisco likes to go to the gym and is an advocate of living a healthy life. Francisco hopes to expand his business and acquire a larger customer base. He wants to hire even more employees once his company has more financial support. “Work, family, and a healthy lifestyle is all you need to succeed.”
❖ Nigel is single, 47 years old, and is a franchise owner of Valpak. He is making around $90,000 a year and considers himself a moderate spender. Nigel owns his own home which he is currently still paying off and is thinking about purchasing a jet ski. Nigel describes himself as a hard worker but is looking forward to retiring and the opportunity to travel. Nigel values quality and the nicer things in life. If he needs something to be done around the house, he will call someone else to do it.
“A successful life is a happy life.”
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Journey Maps A journey map is a tool used by companies to show exactly what the customer goes through during their experience with the provider. Touchpoints and feelings are shown by incorporating the interactions a customer has from the initial contact to developing a strong long-term relationship with the provider. With a journey map, a company is able to see what motivates the customer and how they react to positive and negative touchpoints. â?– Christine
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â?– Megan
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â?– Francisco
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Student Reflections â?– Lauren Before taking this class I never really thought about what strategic planning was or how it was incorporated in the business world. I have discovered that in any venture in business a strategic plan will be used. Whether a business needs a problem solved or to launch a new product, they will need to devise a strategic plan in order to do so. This class is very beneficial to the students, teachers, and companies involved because they are all benefitting from each others ideas and knowledge. Our group worked hard to provide Valpak with a solution to getting their home-services industry in the on-demand sector. Having representatives from Valpak come and discuss with the class what exactly they were trying to achieve helped us shape a strategic plan specifically for their needs. For students taking this class in the future, my advice would be to meet with your group often and be open to all ideas that are laid out on the table. Our group worked so well together because we all had great ideas and were accepting to all of them. Thinking outside of the box really helped us get to our goal and what we were trying to achieve with this project.
â?– Katie Throughout this course, most of the skills I learned related to working on a team. As a person who usually takes the lead in group projects, this semester was a good opportunity to step back and letting others take charge. Group 6 is fully stocked with confident, intelligent leaders, and I was comfortable allowing my team members take the leadership role and make their ideas come into being. This allowed me to learn how to be a good subordinate team member, but I still feel most comfortable being in charge. The most concrete topic I learned was about the different tools for strategic management and planning, like the journey maps, the five forces model, and the business model canvas. Additionally, I learned a lot about innovation. Through the project and my work with my entrepreneurial peers, I developed an ability to think
29 outside the box, embrace new ideas, and most importantly, I allowed for creativity. In my core accounting courses, everything is black and white, and working on a project where creativity is almost required really took me outside of my comfort zone. For future students, I would greatly advise them to keep an open mind. It’s easy to think that if you’re an accounting or finance student, this course does not apply to you. The reality is that even though you may not do anything related to consulting, the soft skills you learn during the course will serve you well throughout whatever career you pursue. Being able to work on a team, accept different viewpoints and solutions, and think creatively are skills that every good businessperson needs, no matter their job title.
❖ Lauren This class has introduced me to some different ways to approach strategic planning and decision making that have been very helpful in my own business as we continue to grow. I have been a big fan of the business model canvas for years now, so, to see it being used in a non-Entrepreneurship class was great. During the entire semester I think we excelled as a team, this group 6 team is built like a machine and we all worked together to make sure all the work was being accomplished on time, organized and to produce some high quality work. I really enjoyed being able to show our group members convergent and divergent thinking, creative problem solving skills, facilitating new ideas to solve the problems of our client ‘Valpak’. For Future students, I recommend you come into this course ready to do some work. There is a lot of it, but it teaches you how to stay accountable for a project, while working with other people on a problem, and provide deliverables each week. Just like you would in the real world.
❖ Dylan Before taking this class, I didn’t fully understand what strategic management was. Throughout this semester I’ve been able to build the knowledge about how organizations use strategic management in order to make decisions to better prepare them for the future.
30 My biggest takeaway from this class has been the ability to be creative and build something with other group members. Learning from all other group members has been an important part of the process as we’ve all been able to use critical thinking in order to build our project. Our group excelled in our weekly meetings. We’ve all been able to share things with each other and build our project in a collaborative way. Another positive of taking a class like this was the ability to build and structure a professional presentation. Additionally, learning about all aspects about the growing on-demand economy, as we did during this semester, will be important when entering into the business world. My recommendation for future students is to meet regularly and work ahead as much as possible. The project might seem like a lot of work, but doing it one section at a time is a good way to structure the overall workload.
❖ Lance The knowledge that I have accumulated during this project is rich. The tools that were introduced to me (Porter's 5 Forces, etc.) are now resources that I will continue to use. My team has been excellent and has been eager and flexible to help in anyway possible. This was an important factor that directly played into my enjoyment in this class and thus a better learning experience. No project or class will ever be perfect. With that said, I consider one the greatest values that I found was our groups ability to adapt and progress when challenging situations would arise. The concept of design thinking is something new to me and I enjoyed exploring this approach to business and this project. Having theory paired with tangible application through the Valpak project helped further deepen my understanding of what I learned in the class.
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32 Owyang, J. (2014, March 02). Sharing is the New Buying: How to Win in the Collaborative Economy. Retrieved February 12, 2016, from http://www.slideshare.net/jeremiah_owyang/sharingnewbuying Solomon, M. (2015, February 5). Millennials And Other On-Trend Customers Demand An Authentic Customer Service Style. Retrieved February 12, 2016, from http://www.forbes.com/sites/micahsolomon/2015/02/05/become-the-ungrey-poupon-the-importance-of-customer-service-style-with-todayscustomers/ Stout, H. (2015, April 12). Amazon, Google and More Are Drawn to Home Services Market. Retrieved February 13, 2016, from http://www.nytimes.com/2015/04/13/ technology/amazon-google-and-moreare-drawn-to-home-services-market.html