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San Francisco Limo
Strategy and Implementation Summary
The sales and marketing strategy is to move as quickly as possible into the three designated market segments (Sight-seeing, Private School Transportation, and Elderly Transport) that represent excellent growth potential. It has been shown that these market areas are presently not being actively pursued by the competition.
The marketing thrust will consist of direct contact to the responsible person at selected private schools, the creation and distribution of color brochures to Inns, Bed and Breakfasts, Assisted Living and Retirement Communities, and direct mailing to new high worth individuals using the resources of a list company.
5.1 Competitive Edge
The major competitive edge that San Francisco Limo will emphasize is the high quality of its customer service. The company will differentiate itself through the courteousness and good people skills of the dispatchers and drivers, on time pickups and drop offs, and drivers who are highly knowledgeable of the local area. These efforts will generate good word of mouth among the targeted customer group. As the company grows, special efforts will be devoted to the customer service training of the new employees. ‘The customer is always right’ will be the core underlying concept of the customer philosophy of San Francisco Limo.
5.2 Marketing Strategy
The key element of the marketing strategy is to create a high quality color brochure. A properly designed brochure would be 8 1/2 by 11 inches, and folded in thirds for placement in racks at inns. The photography used would convey the desired image of the company and promote the suggested use. The photo of car and driver pointing a tourist’s attention to a well-known tourist destination would be placed on one third of the brochure accompanied by suggested destinations and trip durations. For example, “Cape Ann Circuit Tour” – three hours. Includes Gloucester, Rockport, Motif #1, etc. Another tour name might be called “Indian Summer” and involve an excursion to see the foliage. Four or five carefully thought-out tours with interesting highlights should be included with durations up to a full day. It would be this side of the brochure that would be folded forward and made visible to B&B guests. In similar manner the second section of the brochure would stress the Private School Transportation market and might show a San Francisco Limo with driver in front of the chapel at St. John’s Prep helping a student in a Lacrosse uniform with his luggage.
There should be no resistance at all in getting Inns and B&Bs to accept the brochures and to place them on display for their guests. There are no competing limousine companies who now do this, and a positive result can be expected immediately.
The private schools are more difficult to gain entry; however, once the company is established it would be difficult for a competitor to steal the business away. It will be necessary to call the schools and find out who the responsible person is. After sending a cover letter and color brochure, the responsible person should be contacted in person. Pingree, St. John’s Prep and Governor Dummer are the most attractive for San Francisco Limo. It is likely that the school will send a packet of information to parents of new students that will include a long list of services and costs including transportation off campus. The school will have a policy on who may pick up a student. San Francisco Limo’s name and phone number need to be included in that packet and the company needs to understand the procedure.
The third targeted new market segment for San Francisco Limo is elderly transportation. A list will be obtained of wealthy households in the area. There are 3,632 households within the 14 communities surrounding Burlingame that have incomes in excess of $150,000–26% of them are located in Burlingame alone. The names and addresses can be purchased from a list company such as Act One Mailing List Services, Inc in Burlingame. The cost would be about $300. The names and addresses can be bought as either self-adhesive labels, or as a file on disk. Postage franking can be done by machine. Cost of mailing the brochures would be about $.38 apiece and would include stamping, folding, addressing, and closing with a sticker. It is assumed that many of these wealthy families have children in private schools, so the direct mailing will serve a double duty of reaching the parents of private school students as well as reaching those who need transportation for an elderly family member.
Included in the budget for May is $6,500 to cover the costs of creating and printing the brochure. The printing itself for 10,000 color brochures comes to $2,369 for 80 lb cover stock paper. The rest of the money is for photography, mechanicals, and layout. The direct mailing could be done gradually in order to test the response rate, but the brochures definitely need to distributed by hand to at least 100 selected B&Bs and Inns as soon as possible.
5.2.1 Promotion Strategy
The brochure, described earlier in this business plan, plays a pivotal role in getting the word out concerning San Francisco Limo. Cards should always be made available to passengers. Small magnets can also be obtained at a nominal cost, and can be made in the shape of a limousine. These will help to keep the phone number of the company always handy.
5.2.2 Pricing Strategy
Pricing is more of a deciding factor in the sight-seeing market segment. A $45 per hour rate is reasonable and should not be a problem, especially as a small group of four could share the cost. San Francisco Limo is considering the purchase of a van to better serve this market sector as well as the transfer business of families.
In the private school student transportation market the clientele would more readily choose the limousine company that it has used before that recognizes the student and knows the way. Hourly rates could even move up to $48 or $49 per hour. This is also true of the elderly transportation market. Once an individual uses San Francisco Limo to pick up and transport his/her mother or other family member, he or she will not change limousine services to save a few dollars. Companionship and personal contact play an important role in these market segments thus making them less price sensitive. Charging an extra $10 per hour is unlikely to bring clients to price shop for a replacement sedan service.
5.3 Sales Strategy
Both partners in San Francisco Limo have excellent telephone and interpersonal skills; these are skills which have been useful in making customers comfortable while in the sedan. Keeping customers happy, we feel, is an implicit part of building a relationship that will encourage repeat business. Another helpful strategy to determine how effective our marketing strategies are is finding out how the customer came to call San Francisco Limo.
The new brochures will be available in the vehicles, and some amount of profiling should be carried out by the driver. If the client is being picked up for an airport transfer from a multi-million dollar estate on Burlingame Neck or Nahant, then the driver might look for an unobtrusive moment to ask if the client might have children in private schools or an elderly parent. Keeping a note of the name and address is useful and making sure it is added to a mailing list. An offer of an initial free hour or reduced rate for that elderly or student business might be considered.
Quiet moments should be used to market corporate accounts. A “no” answer does not mean forever. Being friendly, courteous and persistent pays off.
5.3.1 Sales Forecast
- CATA Sales. For the first three months of 1999, CATA sales figures are actual. This segment of San Francisco Limo’s business will decrease to make room for more profitable transfer and hourly chauffeur business resulting from the marketing plan. Assume that the CATA business will consist only of two round trips daily for the existing two rehab patients for whom the waiting period is only 10-15 minutes. These trips are daily, totaling 60 trips per month and generating revenue of $44 per trip–which takes one hour.
- Corporate Clients. Actual sales figures are used for the first three months of 1999. These clients are not much different from the credit card transfer type fares except they are on an open account basis with payment terms of 60 days. The projections for April through July will continue at the average of $1,000 monthly growing to $1,200 per month for the remainder of the year, and years 2000 and 2001 will be projected at $1,400 monthly.
- Transfer (credit cards). This represents the bulk of San Francisco Limo’s present business. Actual figures are given for January through March. Dramatic increases have already been felt as a result of the Yellow Pages ads appearing in May. Seventy-nine trips at an average of $42.30 per trip were performed in March. Assume trips to increase to 100 trips per month in May. June and July will see 120, increasing to 130 in August, 140 in September and October. One hundred and fifty in November, December and January 2000. February 2000 the monthly trips will increase to 160, at an increased average rate of $44. One hundred and seventy trips in June. Year 2001 will average 180 trips monthly, with average per trip price increasing to $48.
- Hourly Hire. This is the segment that is being especially targeted. Actual total for March was $1,617.19 representing 36 hours. Marketing efforts will result in steady increases in this segment beginning in May. We assume that new hourly business will be generated in the tourist, school, and elderly segments amounting to six hours weekly in May, growing steadily to 20 hours weekly in November. After a Christmas and New Year’s lull, hourly hire will pick up again in February 2000 and reach 25 hours/week in April where it will continue at that rate for the rest of 2000. The hourly hire is assumed to reach 30 hours weekly in 2001. We assume an hourly rate of $45 through year 2000. The rate will increase to $48 per hour in 2001.
|Transfers (Credit Cards)||$55,866||$86,865||$103,680|
|Direct Cost of Sales||1999||2000||2001|
|Transfers (Credit Cards)||$0||$0||$0|
|Subtotal Direct Cost of Sales||$0||$0||$0|
5.4 Strategic Alliances
There are no strategic alliances at the moment, however, there are possibilities of this in the future.
The most important marketing events, as well as their costs, are noted in the Milestones Table. The actual costs and the dates of implementation will be added when known. The figure of $13,382 is comprised of the down payment of $5,441 for each new vehicle plus the cost of paying off the remaining balance owed on one vehicle ($12,000) less the amount realized from the trade-in value of the two cars (estimated at $9,500). A third vehicle (trade-in value $2,500) will be traded-in in December with a down payment of $5,441 less proceeds from trade-in.
|Milestone||Start Date||End Date||Budget||Manager||Department|
|Design and Produce Brochure||5/10/1999||5/10/1999||$6,500||Peter||Marketing|
|Design Company Logo||5/10/1999||5/10/1999||$500||Peter||Marketing|
|Trade-in Two Vehicles||5/15/1999||5/15/1999||$13,382||Tim||Operations|
|Buy Address List/labels||6/1/1999||6/1/1999||$300||Peter||Marketing|
|Business Plan Creation||4/20/1999||4/20/1999||$1,950||Peter/Tim||Marketing|
|Trade-In Third Vehicle||12/1/1999||12/1/1999||$2,941||Tim||Operations|