Markam Driving School

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Driving School Business Plan

Market Analysis Summary

Just about every individual in this country needs driving education at one point or another in their lives. Therefore the potential market for MDS consists of every person age 15 and above in our geographical area of Seattle, WA. We segment this market into a series of groups based on their individual needs and different demographics. These segments are:

  • Beginner drivers.
  • Adult drivers.
  • Drivers under court order.
  • High schools.
  • Commercial drivers.

Each of these groups are mentioned in more detail in the market segmentation section. Although MDS does not offer services for commercial drivers just yet, since this will be part of our business in the future, it is included here.

Each group has different needs based on lifestyle and past driving experience. Many of our adult drivers are people with tight work schedules who can only devote time for driver education at lunch hours and in the evenings. They often need brush up courses or defensive driver courses. For these individuals MDS has compressed courses designed to get the driver back onto the street quickly but safely.

For our beginner drivers, the majority of whom are teenagers, we offer courses both in the summertime, after school and AT their school. These course are usually longer, and devote more time to the mechanics of driving than the adult classes.

Finally, our future commercial drivers segment will require courses that are more technical in nature, most detailed and last the longest. Furthermore, many of the students will be able to take the classes during normal working hours. For these students, a more detailed syllabus with the best instructors is necessary.

4.1 Market Segmentation

Each group has different needs based on lifestyle and past driving experience. Many of our adult drivers are people with tight work schedules who can only devote time for driver education at lunch hours and in the evenings. We have designed classes that meet such needs. In addition, unlike our young students, many of the adults are pre-existing drivers who either need brush up courses, defensive driver courses or are required to take a course due to traffic violations. For these individuals MDS has compressed courses designed to get the driver back onto the street quickly but safely. These courses concentrate more on the rules of the road than on driving skills.

For our beginner drivers, the majority of whom are teenagers, we offer courses both in the summertime, after school and AT their school. These course are usually longer, and devote more time to the mechanics of driving than the adult classes. The high school segment falls under this larger category. It is separated out from the others since they are "corporate" customers who often bid for and negotiate contracts. Please note that in the Market Segmentation table, the numbers for the category "High School" denotes the estimated number of students, not schools.

Finally, our future commercial drivers segment will require courses that are more technical in nature, most detailed and last the longest. Furthermore, many of the students will be able to take the classes during normal working hours. For these students, a more detailed syllabus with the best instructors is necessary.

Market Analysis
2002 2003 2004 2005 2006
Potential Customers Growth CAGR
Beginner drivers (non teenagers) 1% 80,000 80,640 81,285 81,935 82,590 0.80%
Adult drivers 1% 68,000 68,510 69,024 69,542 70,064 0.75%
Drivers under court order 2% 300,000 305,400 310,897 316,493 322,190 1.80%
High schools 3% 625,000 642,500 660,490 678,984 697,996 2.80%
Commercial drivers 3% 40,000 41,280 42,601 43,964 45,371 3.20%
Total 2.28% 1,113,000 1,138,330 1,164,297 1,190,918 1,218,211 2.28%

4.2 Service Business Analysis

This section is covered in the Competitive Comparison section of the Plan.

4.2.1 Competition and Buying Patterns

This industry is highly seasonal. Most of our students attend classes during the fall or spring, with winter being the slowest months. The summer sees a good number of students seeking our services, but not as many as in spring or fall.

Most customers of driver education services discover their provider through some form of referral, such as another education institution, the state DOT, or something else. For this reason, MDS and other providers seek to make as many contacts in the community as possible.

4.2.2 Main Competitors

As stated elsewhere, MDS's major national competitors are Sears Driver Education Schools and Defensive Driving, Inc. These companies together hold about 45% market share, while the rest is taken up by the "mom and pop" outfits.

4.2.3 Business Participants

As stated earlier, the driver education industry is fragmented into two different types of businesses. The largest group consist of the "mom and pop" type of company that is very local, with low capitalization, and ranges in quality of education from poor to excellent. 

The other group consists of a very few regional or national companies such as Sears driver Education School and Defensive Driving. These competitors are well funded, have excellent facilities and services and high quality. The two companies listed above are MDS's major competitors in the Seattle area. These companies often try to buy out smaller competitors and therefore consolidate the market.