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IMS Live Case

April Vaughan, Aaron Roach, Tonoya Halder

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Agenda

  • Business Recommendation
  • Point of Entry
  • Industry Comparison
  • Data to Consider
  • Opportunities for European Expansion

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Recommendation: Create an App

“How can I couple calls and services needed for my house maintenance together? I want to be able to just call one person, one time a year, and be done with it"

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Point of Entry

Software Application

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Comparison

Residential Maintenance:

  • Bargaining Power of Suppliers: Medium
    • Threat of forward integration
    • Low switching costs
    • Many suppliers, but range in quality
  • Rivalry: High
    • Products lack differentiation, competes on price
    • Slow industry growth, rivals must take other rivals market share to grow
    • Provide perishable product
  • Costs:
    • HVAC education ($1200-$5000) per employee; Salary Avg: $38,000
    • Tools and equipment

Mobile App (Software Application):

  • Bargaining Power of Suppliers: Low
    • Little to no threat of forward integration
    • Suppliers would have to switch industries in order to compete directly with us
    • Many suppliers with very little differentiation
  • Rivalry: Low-Medium
    • High variety of mobile apps
    • Not many apps that connect consumers to service providers, also not many home maintenance apps
  • Costs:
    • App Development: $20,000, it is a one time payment
    • Sales team: 1-2 people ($35,000 base+ commission)

References: Jesse. (2019, July 21). How Much Does HVAC Training Cost? [2020 Updated]. Retrieved from https://www.vocationaltraininghq.com/cost/hvac-training/

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Marketing Efforts for the App

  • Media marketing through Facebook and Google
    • Google: roughly $8,000-$9,000 per month
    • Facebook: roughly $1,000 per month
  • Send out mailers to residential households with QR code attached to promote free download
    • Trial Cities: Frisco, Allen, McKinney
      • Total: 161,438 households
  • Postal Service: charges $0.35 per postcard
    • Send out 10,000 postcards to 10,000 households for a trial run
      • Total costs: $3,500

References: Williams, G. (2016). Uber-like app at your (home repair) service. Finweek, 10. Usps.com, friscotexas.gov, census.gov, The Comprehensive Guide to Online Advertising Costs. (n.d.). Retrieved from https://www.wordstream.com/blog/ws/2017/07/05/online-advertising-costs

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Why would a company advertise with us?

  • Would cut down on the need for them to advertise themselves
  • Would have access to our consumers, their “Ideal Customer Profile”

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Buyers

Who are they?

  • Residential homeowners or renters
  • Targeting Millennials (26-40) and preparing for Gen-Z (8-25), the next groups to become homeowners
  • Middle class

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Why would consumers download and use the app?

  • It’s FREE to download!
  • Detailed service record keeping
  • Bulletin Board feature
    • Service providers who are readily available can see posts and message consumer through the app
    • Eliminates calling multiple providers to try and book appointments
  • Easy payments, consumer pays through app
    • A survey conducted from 6,000 U.S. people said 66% of them reported using digital payments “whenever they can”
    • App will use a “code of conduct”, like Amazon uses with their third party sellers.

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Resources: Coupofy. (2018, June 28). Mobile Commerce Growing 300% Faster than eCommerce - Study by Coupofy.

Burden, M. (2019). Mobile app connects with customers: Service orders, inventory views, retention are up. Automotive News, 94(6900), S009.

GP. (2011). Retrieved from https://sellercentral.amazon.com/gp/help/external/G1801?language=en_US

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Examples:

  1. Mobile Dealer App (Nissan)
    • App has been able to book more service appointments and sell more vehicles
    • Helped retain customers by offering service appointment scheduling, coupons and click-to-call features for services
    • Steady 110 to 120 monthly app downloads
  2. Ex: Monzo (Mobile App)
    • Mobile based banking app
    • Popular in the UK, being valued at $2.7 billion
    • Popular among millennials because of simplicity and apps ability to track spending

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How to Make a Profit

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  • Advertising
    • Cost per click: $1 (Google ads charges $1-$2)
    • Banner ads: $10 per ad
  • Our profit (based off of similar apps currently on the market)
    • Calculations: ($1)*(100 providers)*(12 months)= $1,200 a month for each service provider
    • Our gauge: 500 service providers within the first year across a range of locations
  • Expected income
    • $1,500/ month
      • $1,200 monthly charge to service providers (CPC)
      • $300 expected charge for banner ads
    • $750,000/ year
      • $1,200 x 500 expected service providers

References: Williams, G. (2016). Uber-like app at your (home repair) service. Finweek, 10.

https://www.digitalinformationworld.com/2017/05/how-much-do-banner-ads-cost.html

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European Expansion Overall

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  • The European mobile apps market had total revenues of $80.9bn in 2018, representing a compound annual growth rate (CAGR) of 10.6% between 2014 and 2018.
  • The performance of the market is forecast to follow a similar pattern with an anticipated CAGR of 6.5% for the five year period 2018 - 2023, which is expected to drive the market to a value of $110.6bn by the end of 2023.

References: MarketLine Industry Profile: Mobile Apps in Europe. (2019). Mobile Apps Industry Profile: Europe, N.PAG.

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European Expansion Specific to Our App

  • Accessible market
    • As of 2015, around 90% of European households owned a smartphone, while 60% owned a tablet
  • According to a survey, the category our app is placed in ranked third in the most downloaded app categories
    • 3.) Maps/navigation/search
      • Our app will simplify a consumer’s need to browse/search for a residential maintenance provider.
  • Country of origin of the PSI mobile app developers
    • The US lead in Europe (26% of apps) followed by the UK (13% of apps). Other countries have less than 10% of the sample share. Among the countries with a strong visibility are Germany 9%, Russia 6%, Belgium 5%, and Switzerland and Australia with 4% each).

References: https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/621894/EPRS_BRI(2018)621894_EN.pdf file:///Downloads/PricingofPublicSectorInformationStudyPOPSIS-AppsmarketsnapshotD-finalreport.pdf

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Possible Next Steps

  • Move into Commercial Maintenance Sector
    • Ex: Apartment Management Companies