Phaethon's Chariot Restorations
Market Analysis Summary
The type of customer who will be interested in the services of Phaethon’s Chariot are predominantly male, and in the age range from 30 to 65 years. The majority will have an income in the $100,000 and up range. Some customers in the lower income ranges are interested in specific services, interior restoration, or paint work and parts sales rather than full restorations.
The customers who Phaethon’s Chariot plans to target want :
- Quality full restoration or custom services, including engine, custom body work and paint.
- Timely completion of the work on their cars.
- Competitive rates.
- Close attention to detail, and commitment to quality.
- Ability to offer ideas for alternatives and close customer services.
Phaethon’s Chariot has the ability to meet all these demands. The owner has a long work history in this field, and has extremely high standards in regards to the shop’s work. The owner and the foreman will make sure that the shop’s employees meet these standards. The owner also understands that, not only quality work, but the attention and care bestowed on the customer and their cars will result in a good reputation.
There is no specific geographical location for potential customers. They are located all over the United States. They send their cars to whom and where they feel will do the best job, based on reputation. This reputation comes largely from “word of mouth”, i.e. seeing the quality of a car that was restored by Phaethon’s Chariot at a show, and referrals by others in the business. We feel that eventually 50% of Phaethon’s Chariot’s customers will come from out of state.
This is a large market that has seen an upturn in the last few years. All indications are that this will continue for many years until leveling off at possibly double or triple the current market. One company in this area, Car Barn Renewals, has a waiting list of three years. They not taking any new business at this time. The owner of this shop is well acquainted with the quality of work that will be preformed by Phaethon’s Chariot and has indicated to Mr. Isoroku Tarnmaclahan that he would refer anyone inquiring about new services to Phaethon’s Chariot. This will not only increase the number of potential customers for Phaethon’s Chariot in the start-up phase, but will provide a valuable word-of-mouth reputation for them.
There are two other companies in the Centerton area that offer services similar to Phaethon’s Chariot’s. One has been in business for 40 years and has an extremely high reputation within the restoration community. They currently have more work than the shop can handle and has a waiting list of three years. They are not taking any new customers. They also usually has one or more cars in most shows. The owner of Phaethon’s Chariot worked for them while learning his trade.
The other shop has been in business 15 years. They currently have a wait of 160 days for any new work. However most of their work is new business (first time customers) as their reputation in the community is not good and they rarely have repeat business.
Phaethon’s Chariot’s labor rates will be $45 per hour. Both of the other shops charge $65 per/hr. Phaethon’s Chariot feels that this is a competitive rate and will not impact the bottom line in a negative manner.
Phaethon’s Chariot has a modest program of marketing its services that include the following:
- Newspaper and magazines ads
- Press releases and magazines articles
- Car shows
- Local radio stations
Each of these marketing approaches has the advantage of being low cost and creating service awareness. The company is also considering the possibility of having a grand opening program that would feature discounts, food, a local radio disc jockey and other promotional ideas.
We feel that the company website is one of our best marketing strategies. It is linked to City Search.com and many other classic car restoration oriented websites and portals. The site has news about our business, answers to FAQ’s and pictures of cars we’ve restored and the process of the restoration.
4.1 Market Segmentation
The market for auto restoration reflects the buyer’s income bracket and standard of living in much the same way that the restoration market is segmented. Below are listed market segments based on size of pocketbook and quality of production:
- Material Outlets. Suppliers of auto body and paint supplies, interior supplies and mechanical parts.
- Simple jobs. Simple repair jobs and service are the next level in our sales chain.
- Paint. Custom paint work such as murals and flames, will provide some income.
- Restoration. Complete restoration jobs, and complete paint work.
- Custom Work. Custom body work such as, top chops and channels, this would be considered our high end of work.
The average age of our customers is 30 to 65 years old with an average income is $60,000 per year, with most full restoration customers having incomes of over $100,000. The gender is predominantly male, with a college education, and coming from Centerton county and surrounding areas. Some of the more recent trends come from the increasing coverage of our industry on television, with shows such as American Muscle Car, Dream Car Garage and the like. These types of shows have helped auto restoration to grow to a billion dollar a year industry in the United States.
|Year 1||Year 2||Year 3||Year 4||Year 5|
|Males 30 to 65 years old||70%||20||34||58||99||168||70.24%|
4.2 Target Market Segment Strategy
Our target market segment strategy includes the use of local radio and television stations to convey the word about our business. We also plan on using advertising in publications such as Hot Rod and Super Chevy magazines. These publications are distributed to a wide variety of people who are all interested in old American cars, and muscle cars. Our strategy includes using people’s emotions to persuade them to restore an old car if they have one. We’re not limited to just a couple of different types of advertising, we also us flyers, discounts, newspapers, press releases and magazine articles. Our website, which is a well designed, and cost effective way to tell people about our shop and it’s services, Phaethon’s Chariot will use every way within it’s means to convey our message to the public.
Our market strategy is to flood the magazines and air waves with our shop’s advertisements, doing radio ads during morning and afternoon drive times. This is due to the fact that more people listen to the radio during these time frames, so if you have a really catchy ad during these time it’s probable that you will gain some customers from it. The magazine publications go out to hundreds of thousands of people every month, so all we need is to convert a small percentage to sales and we’ll achieve our success. But we don’t stop there, we are also joining the chamber of commerce to network our business. We will use flyers at the car shows to promote or shop, and of course business cards.
4.3 Service Business Analysis
In setting a foundation on which to build a suitable market strategy for Phaethon’s Chariot, some of the other local industry players were contacted by phone. These players are located in the greater Centerton area.
We called Classy Chassis and posed as a potential customer with a 1969 Z/28 Camaro for a full restoration project, and from this call we discovered that their labor rate runs at $65 per hour, and it would take about 600 hours of labor to restore the car plus parts. The labor before parts were added worked out to $39,000. This is for a frame off restoration, rebuilding the entire car from ground up. We also discovered that it would take about 160 days to get the car into their shop to start the project.
We have also talked to Khamm Zhaapht from Car Barn Renewals, and have discovered that he’s running the same shop rates as Classy Chassis, but he has a three year waiting list for his shop services, Khamm only does the highest quality work, having cars in most of the shows at one time or another, Car Barn Renewals is very well known both in and out of Ohmstate.
4.3.1 Competition and Buying Patterns
The general nature of competition in this business, and how the customers seem to choose one shop over another can be measured by customer loyalty and positive word of mouth. Customer loyalty and shop preference come from developing a trust between the customer and the business. To be successful in the automotive restoration business, one must truly believe in the old American cars and love them. The customer must truly be made to feel welcome and cared for. The trust that a customer feels, is based upon the business’ ability to recognize what it takes to please a customer, and then is built upon by continuously delivering to that customer at, or above, the that they expect.
The level of attention and care that our staff bestow upon our customers sets us far above our competition. We also have extremely high standards for professionalism in the shop. Cleanliness, adherence to all shop rules, and efficiency are constantly applied. Prices are reasonable, and are perceived as being an exceptional value. Our shop offers the highest quality restoration work available today, we use only the highest quality parts and supplies on all of our jobs. All of this can be found in a professional shop environment, and very comfortable for our customers.