Marketing Management Final Paper MBA Program - August 2009

1. Marketing Plan
Denise Cook
Allison MacDonald
Tara McKay
Brian Ramos
Betty Seed

2. Fitchburg State College
Master of Business Administration
Marketing Management Final
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.
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3. Fitchburg State College
Master of Business Administration
Marketing Management Final
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.
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4. Fitchburg State College
Master of Business Administration
Marketing Management Final
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 that
provides 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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5. Fitchburg State College
Master of Business Administration
Marketing Management Final
Renovation Nation understands that there will be challenges in hiring and training
consultants and management staff to translate our service philosophy to this new area.
nts
Other concerns to be addressed include lack of name recognition, start-up costs and
up
understanding the market and culture of the South.
Market Share
In 2009, the general tool rental business
generated $8.8 billion in revenues in the
United States. Renovation Nation aims to
n
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
competition.
SWOT Analysis
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6. Fitchburg State College
Master of Business Administration
Marketing Management Final
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 Issues
The 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 Strategy
Products 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.
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7. Fitchburg State College
Master of Business Administration
Marketing Management Final
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
Convenience
Maintain 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).
Value
Renovation Nation offers quality rental tools that are competitively priced.
Expertise
Staff 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.
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8. Fitchburg State College
Master of Business Administration
Marketing Management Final
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 challenges
during 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%.
8|P a g e Denise Cook, Allison MacDonald, Tara McKay, Brian Ramos, Betty Seed

9. Fitchburg State College
Master of Business Administration
Marketing Management Final
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.
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10. Fitchburg State College
Master of Business Administration
Marketing Management Final
Break Even Analysis
$1,200,000
$1,000,000
Break Even Point
$771,964
$800,000
$600,000
$400,000
$200,000
$-
2010 2011 2012 2013 2014
Revenue Fixed Costs Total Costs
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]
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11. Fitchburg State College
Master of Business Administration
Marketing Management Final
Financials
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12. Fitchburg State College
Master of Business Administration
Marketing Management Final
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13. Fitchburg State College
Master of Business Administration
Marketing Management Final
Website
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14. Fitchburg State College
Master of Business Administration
Marketing Management Final
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