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Borrow My Tools
Market Analysis Summary
Borrow My Tools has identified two distinct customer segments that will be the most attractive. The first segment is individuals who will be performing home improvement work themselves. The second is the handyman who will be performing a job in a client’s house and need to use tools which he/she does not own. The Market Segmentation section provides additional detail about the market segment including useful demographic data. This section is also supported by a table with additional detail about the two markets.
Borrow My Tools has identified two segments of the market that are most attractive to the tool rental/lease business model: individuals and handymen.
Individuals: This market segment is homeowners who are interested in undertaking a home improvement project but do not have the equipment to compete the project. They may already possess the skills to complete the job or have the aptitude to learn with a Borrow My Tools’ sales assistant’s help.
- The individuals have typically owned the home for one to three years, or for more than ten years.
- Ages 30-45
- 76% have undergraduate schooling
- 59% perform other forms of home improvements around the house
- Only 16% will be coming to Borrow My Tools for their very first home improvement project
- 43% will be having one of their more experienced friends assisting them with the project on hand
Handymen: This is the market segment of service providers who perform a wide range of home improvement services for customers. The average handyman does not have all the tools needed to complete a job. There are so many different tools out there and the industrial quality ones cost so much that is often not cost effective for a handyman to own all of the tools that he may need. Borrow My Tools will serve the handyman market well with high quality, good condition industrial offerings.
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Target Market Segment Strategy
Borrow My Tools has selected these two customer segments because they will provide the most revenue to Borrow My Tools relative to other customer groups. Individuals will be a significant revenue driver since they are all home owners who are looking to make improvements in their home. The unexpected costs of home ownership create a great incentive to pursue improvement projects themselves as a means of saving money. As long as the individual has the time (often what weekends are for) and a sense of adventure, they can go to Borrow My Tools, rent or lease tools, receive instructions on how to use them and complete the home improvement project on their own, saving significant amounts of money.
Knowledgeable friends and neighbors are often at the disposal of our individuals segment and this is great for Borrow My Tools’ business because it creates incentives for individuals to undertake projects a bit out of their skill range, feeling the comfort that they will have the help of a neighbor/friend to guide them through the project. Often the neighbor will tell then to go and rent a specific tool and that they will show them how to use it.
Handymen are also a great target segment because they are more likely to undertake the leasing option relative to the individuals. While many handymen have a significant collection of tools, it is difficult for them to have every tool since there are just so many. From a capital expenditure standpoint it makes sense not to buy every conceivable tool, but to rent or lease tools on an as needed basis. The handymen typically already have the skills to operate the tools, they just are being conservative with their limited capital resources. They will rent or lease the tool when they have a job that requires it. Having a leasing option significantly decreases overhead.
Service Business Analysis
The tool/equipment rental/leasing industry is a large, disperse industry. Some companies only lease high-end expensive equipment, such as equipment that is in excess of $100K. For lower priced equipment you see leasing as well as rentals as an option. Most companies in this industry compete on selection. Their philosophy is the greater the selection, the more competitive they are. This tends to serve a specific type of customer, someone who knows exactly what they want or need. When a customer enters the retail space of one of these companies they are shown a long list of available equipment and are asked to make a choice.
Borrow My Tools has decided to compete on different terms. Selection is not of primarily importance, but customer service and support are. Through a careful selection of the most important or used tools, Borrow My Tools has chosen a good selection of popular tools that are supported with a knowledgeable staff.
The following Competition and Buying Patterns section details the specific competitors that Borrow My Tools faces in the San Mateo market and provides the pro and cons of the different competitors.
Competition and Buying Patterns
A large, comprehensive rental company. Selection, not service is key here.
- Pros: Rents a wide range of tools and equipment including wood tools, machining tools, catering supplies, even pianos.
- Cons: The staff is not able to provide support for products.
The Tool Shed
A tool leasing company that leases a wide range of tools. The primary customers are contractors.
- Pros: Wide selection of high end tools, a lot of leasing options.
- Cons: Tool experts need only apply, this company does not hold the hands of beginners.