HOP has identified two distinct customer segments, with one of the two being further divided into two subgroups. Each customer group will be addressed individually. HOP's competitors operate in the larger office equipment rental marketplace. HOP will be the first company that will be concentrating specifically and exclusively on projector rentals.
4.1 Market Segmentation
House of Projectors has identified three fairly distinct market segments. The first segment is entrepreneurs, the second and third are small and medium size companies.
Entrepreneurs This segment contains people who have an idea and are attempting to create a business around their new idea. People in this market segment typically use projectors for presentations seeking funding (both angel as well as venture capital). Less often the entrepreneurs will be using the projectors for building sales. Projectors are very useful for presentations. Generally the presentations are done in PowerPoint or Excel. The entrepreneurs that use projectors are fairly sophisticated. They recognize the need for a projector for both the appearance of professionalism as well as the need to communicate information, typically in a graphical format.
Small size companies For small size companies, with less than 15 employees, projectors are typically used as a sales tool. The projectors are not used all that often, and therefore are not cost effective to purchase. If the presentation is a one on one presentation a projector would not be needed as the presenter can just let the other person see the screen themselves. But for presentations where the audience is two or more people, then a projector is an effective communication tool.
Medium size companies This customer segment is similar to the small sized business, just differentiated by the size of the company, between 15-50 employees. The medium size businesses use projectors for sales presentations as well as for other internal events such as board meetings, HR presentations, training seminars, and other company events. Although the medium size companies would not have difficulty springing for the expense of a projector, they would really need to use it quite often to make the purchase cost effective. By saving the capital expenditure up front, they are able to hold onto the cash, and not have the expense of maintenance. Additionally, every time they use the equipment, they are getting a relatively new, top-of-the-line unit.
Small size companies
Medium size companies
4.2 Target Market Segment Strategy
HOP has targeted the previously named market segments for two interdependent reasons. The first reason is the need for the services. The three targeted customer segments all use projectors. As computers and laptops have increasingly become more and more commonplace and indispensable in modern business transactions, projectors have become a useful communication tool. While the projectors are not yet ubiquitous, they are quite useful. Price however, has kept purchase rates a function of cost efficiency relative to how often the projector is used.
Price then is the second reason why the chosen target markets are so attractive. The projectors are quite useful to the customers, but they don't use the equipment often enough to justify the expense. Rentals therefore are an attractive alternative, providing a service that is highly valued and not likely to decrease significantly anytime soon.
4.3 Service Business Analysis
HOP is operating within the larger industry of office equipment rentals, which includes copier machines, computers, and other assorted office technological equipment. Companies that operate in this industry offer rentals as a service. The rentals can be as short as a day or for a long term of weeks or months. The type of businesses that participate in this industry are both franchises such as IKON Office Systems and individual companies.
Most rental companies do not rent projectors. This can be explained by the fact that the cost of the projectors and their technological support needs are high. This is not to say that there is not a huge market in need of projector rentals, it more accurately reflects the needed dedication of technical expertise in support of the equipment investment. For this reason there are not a lot of companies that rent projectors. For companies that offer a wide range of rentals, there is a higher return on investment if the equipment does not require too much time or energy in support or maintenance. This logic only applies to companies that have full service rental facilities. For a company such as HOP that only rents projectors, the cost of serving a customer is drastically reduced when there is only one type of hardware rented out.
4.3.1 Competition and Buying Patterns
House of Projectors faces three different local competitors that rent out projectors.
IKON Office Systems: This a franchised company that offers a wide range of business equipment rentals. While IKON rents the units, they are not all that helpful in terms of hardware support, it becomes a bit of a struggle for the customer to deal with configuration issues specific to their type of computer.
Reliant Office Rentals: This competitor offers a range of different equipment rentals. They offer a total of three projectors. Customers do not have a choice of the unit that they rent, it is first-come/first-served.
AA Office Equipment: This is a retail sales operation that also offers rentals. Their rental options are not comprehensive. The rental department appears to be run as a source of supplemental income to their retail sales. Support is quite limited. Because the rental business unit appears not to be an independent unit, but just supportive of the sales, it gets little attention.
Buying habits of customers are generally based on convenience. Customers are unable to significantly shop by price because the three competitors (excluding HOP) charge about the same rate. Customers make the rental choice based on availability and convenience.