YHGP Market Size
Norwalk’s idea regarding his business’s target market includes primarily the consumers with a high level of income. To be more precise, only the households with about $100 000 annual income are planned to be targeted by YGHP (Your Home Is a Good Place, Inc. 325). In addition, Norwalk also noted that his business would operate in two counties in Michigan and five counties in Indiana. According to the reported provided by Census Bureau, median household income in the state of Michigan in 2015 estimates $49,576 and in Indiana – $49,255.
Also, the populations of the counties targeted by Norwalk vary from about 300 000 people to about 23 000 (Census Bureau). The percentage of households with income over $100 000 is about 2 or 3 which would give Norwalk a couple thousand potential consumers in larger counties and several hundred in smaller ones. For a firm working with large long-term construction and renovation projects, this is a small market.
The actual consumers ready to hire Norwalk would represent only a small percentage of the groups targeted by YHGP. The factors impacting their readiness to purchase YHGP services include seasons, consumers’ age, their homeownership status, marital status, and the need for renovation itself. These factors limit the viability of the selected target market increasing the likelihood and low demand.
Excluded Customer Groups
Norwalk is clearly omitting consumers from households with levels of income lower than $100 000. These households represent the majority of counties’ populations and could serve as sources of orders. At the same time, the consumers targeted by Norwalk represent a rather small base of consumers in the selected counties that may not generate stable demand, especially in colder seasons when construction businesses usually experience a slowdown.
In that way, there exists a potential threat to Norwalk’s business to face some quiet times of low or lacking demand during which they would need to search for alternative sources of income. As a result, Norwalk could benefit from expanding his target market to the consumers with average income levels. This could be done by means of adding low-cost services or service packages and offering additional products and services such as minor or short-term repair and renovation works, for example.
Recruiting Contractors
Searching for the professionals and business to collaborate, Norwalk engaged a wide range of contracting firms who benefited from cooperation with YHGP. The benefits received by the contractors included the promotion of their services, the improvement of the flows of orders and cash, and the opportunity to present their works and portfolios in the YHGP showroom. These activities helped the engaged businesses and workers to strengthen their brand reputation and attract new consumers. At the same time, there were direct competitors who did not wish to cooperate with YHGP.
Recruiting contractors for his projects, Norwalk would need to take into account their levels of excellence because one of his major goals is the provision of a good customer experience. In that way, contractors who are unreliable, messy in the workplace, lack construction site “etiquette” should be viewed as deal killers. Additionally, attempts to steal consumers from YHGP need to be seen as another immediate red flag.
Staffing of YHGP
YHGP has a rather small staff comprised of only six employees some of whom lack certain valuable skills that could definitely improve their performance (Your Home Is a Good Place, Inc. 325). The job performed by Rowdy, who lacks initiative, could be contracted out as it does not require any high-level skills. Most of the other employees could use some professional coaching and training in order to grow as professionals and eliminate the present weaknesses.
Moreover, the small team of six employees needs to be stable, loyal, and trusted by Norwalk, so it would not be reasonable to contract outcomes of these jobs. However, a couple of management and customer service coaches could be hired for a training program helping to improve the performance, approaches, and vision of the current workers.
Costs and Revenues
Norwalk estimated that the average total bill of $10 000 with a customer segment including only households with $100,000 of income was enough for YHGP to succeed (Your Home Is a Good Place, Inc. 325). However, he seems to miss several factors. First of all, in order to succeed with his established bill cost, he says to require a minimum of orders per month. This will give YHGP a total of $50 000 of monthly income which will have to pay for the firm’s needs and the employees’ salaries. Also, Norwalk would not be able to afford any additional costs, staff expansions, or emergencies.
As it was specified earlier, according to the Census data from 2015, the average annual incomes in the states of Michigan and Indiana equal about $49 000 (Census Bureau). This would mean that that the average monthly pay should be around $4000. YHGP’s estimated average monthly income would be $50 000, which will need to be divided among 7 major employees and leave each of them with an average salary and some additional maintenance costs. The level of profit for this income size would be minimal to non-existent in cases when YHGP would not be able to secure five orders a month which could be quite a common situation knowing that Norwalk only wants to target customers with the level of income higher than $100 000.
Approaching Female Customers as Decision Makers
Approaching female consumers as decision makers presents a limitation of Norwalk’s business by means of choosing a narrow focus. In this way, the target customer segment of YHGP that is already rather small and limited becomes even smaller.
By means of isolating female consumers from male ones, Norwalk risks to fragment his potential client base and alienate male customers. Even though a significant percentage of orders are made by women, it does not mean that male clients are interested in home improvement, decoration, and renovation. In fact, this could mean that the market of home-improvement has been orientated at female decision makers for a long time. Consequently, Norwalk could choose to pursue a different strategy by adding flexibility to his approach and engaging a larger base of consumers.
YHGP’s Brand Identity
In order to build a strong brand identity, Norwalk has to ensure that only the best contractors are engaged in the projects. This needs to be dome due to the high level of excellence and a good customer experience at which Norwalk aims. Satisfied customers would be likely to help promote the firm by recommending it to their friends and family members. Additionally, the firm leader has to compile an impressive portfolio to be used as evidence of its successful projects. Moreover, an active promotion and advertising campaign is required in order to keep the potential consumers aware of YHGP and the services that it provides. With a relatively small and limited customer base targeted by Norwalk, the firm cannot afford idleness.
Works Cited
Census Bureau. “QuickFacts”. Census.gov, n.d. Web.
“Your Home Is a Good Place.” Product Strategy, 2009, pp. 321-327.