Phaethon's Chariot Restorations
Strategy and Implementation Summary
Image is a key factor in making inroads into the higher echelons of auto restoration. Phaethon’s Chariot’s strategy is to lift its image, through advertising in prestigious trade publications, networking with a Chamber of Commerce membership, and actively marketing to a select group of people located in and around the company’s target market area.
5.1 Competitive Edge
The company seeks to establish a competitive edge in its new target market segment by increasing the level of customer contact and service that other competitors seem to oftentimes lack. Additionally, Phaethon’s Chariot Restorations possesses the necessary skills to produce the high quality restorations that are needed in this field. The establishment of the previously mentioned work processes that will ensure greater service will strengthen the contacts that promote word-of-mouth marketing and networking.
Our competitive edge will come from hard work and customer satisfaction, we will only produce top quality work that is show ready when it leaves the shop. This will spawn good word of mouth, which will in turn generate work from past and present customers of our shop.
5.2 Marketing Strategy
As mentioned in the previous section, it is important to the marketing strategy to develop an attractive image to the trade. This can be done in a number of ways:
- Advertising. Most restoration shops interviewed suggested Hemmings Motor News as the best place to advertise. In the regional telephone directory Yellow Pages two classification are possible: Auto Restoration–Antique & Classic, or Auto Body Repair & Paint. These two publications both have directories. In Hemmings, a color 1/4 page ad would run $1,700 per month for a year if signed by December 1, 2004, which provides a 15% discount. This averages out to $1,411 per insertion, even less for black and white. A quarter page ad in the Yellow Pages runs $1,200 a year.
- Join The Chamber of Commerce. The image of Phaethon’s Chariot Restorations would be elevated by joining the Chamber of Commerce. This would cost only $300 per year. Advertising on their electronic sign alongside the Interstate is free for 90 days. At present the sign would give 100 impressions per day to the shop. We expect this to increase Phaethon’s income by about 10% during that 90-day period.
- Advertising. Development of a top quality logo and photography which can be used in ads, brochures, name cards, etc. Not counting printing costs, which vary by quantity and quality of paper chosen, the design costs for this would run about $1,500. A day’s photography would be an additional $850-$1,600.
- Participation in Car Shows. Another image-building marketing tactic is participating in local car shows. These car shows are held just for the fun of it. This would require time and effort, but not much in the way of money. This should be coordinated to insure compatibility with the show’s concept and our image. If we attend a show out of the local area, costs would increase due to the expense of food, lodging, and protected transportation of a finished car to the show. A photo album can never compete with the real hardware.
In addition to the above-mentioned activities designed to elevate the company’s image, it is essential to market directly to the selected target clients who all go to local car shows. Success in making inroads into these names would set the stage for entry into the more prestigious auto restorers guild.
Marketing these prime prospects must be carried out in a thoughtful organized way. Color literature including the newly designed logo should be completed as a first step. When marketing these prospects it will be important to present a portfolio of Phaethon’s Chariot’s most innovative work. A relaxed face-to-face meeting, resulting in good communication between Phaethon’s Chariot and the project car’s owners, should be all that’s needed to generate a first order.
Networking is also very useful. It is important, once the logo and artwork materials have been completed, for the owner to make a point of introducing herself to important players in the restoration world surrounding Centerton. Good contacts include hot rod businesses, parts stores, custom car clubs, suppliers of paint, etc.
5.3 Sales Strategy
The marketing strategy discussed previously in this business plan will generate the desired sales. These sales will begin with our website, and the Chamber of Commerce. It is a stated objective to transfer the administrative burden away from the owner, freeing up his time to meet with clients, to network at car shows and events, and to market the shop to prospective clients. This means that someone else will be answering the incoming calls. This person must be carefully trained to recognize who must be called back immediately by the owner. The shop owner needs–and expects–close contact with the shop foreman. The shop is under pressure to produce the highest quality work possible, for example, a car that’s going to shows is going to foster sales. The owner must be armed with a cell phone and a pager. The important caller should be told that the owner will “call right back.” The more successful the marketing strategy is in making inroads into our share of the restoration market, the more important this communication response will become.
In respect to the prospect list of clients, it is essential that a “salesman’s” approach be adopted to insure an organized, orderly approach to each prospect. Notes need to be kept on each client. Follow-up and persistence will pay off.
5.3.1 Sales Forecast
The Sales Forecast is divided up into the major categories of restoration work, paint work and service. Unit sales includes the yearly forecast of each per category, based on an average of 40 labor hours per item and forecasted capacity given the personnel changes mentioned in the Personnel Section. The category prices reflect the average cost per category, based on past pricing strategies. Since the company deals with providing custom services, this can vary wildly between jobs. Due to target market, estimated increase in category price is reflected in years 2004 and 2005. Direct category costs reflect direct costs in producing the items but does not including labor.
It is estimated that by FY 2006, revenues will reflect a 10% market share of the local restoration market, and that we will be completing one full restoration each month. As our market share becomes established we believe we can raise our shop rates from $45 to $50 and then to $55 per hour in years two and three of this plan. We will still be priced below the current rate charged by other area shops.
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||Year 1||Year 2||Year 3|
|Subtotal Direct Cost of Sales||$66,540||$101,869||$132,203|
The milestone table is set up as a flow-chart. The milestone table is specific in detail, allowing for the smooth flow of functions that are necessary to set up the restoration shop on schedule for the Grand Opening. Each function is timed to coincide with the proper execution and time needed to complete each task. Each manager has specific duties assigned specifically to his area of expertise. The end of the milestone table also shows the beginning of the 2005 marketing plan.
|Milestone||Start Date||End Date||Budget||Manager||Department|
|Business Plan Review||5/1/2004||8/1/2004||$0||Isoroku||Finance|