Marketing Plan
Goals and Objectives
- Createproduct awareness and a positive reputation for ROAD RUNNER Archetype 2000, ensuring a successful market introduction for future ROAD RUNNER products.
- Establish feedback channels that will allow ROAD RUNNER to determine purchaser satisfaction and opinions.
- Use creative advertising (baseball caps, T-shirts, bumper stickers)
- Utilize promotional activities to persuade our customers (wholesalers) to purchase ROAD RUNNER. Determine market demand for further ROAD RUNNER products.
- Institute a three phase promotional strategy consisting of sales promotion, education, and advertising.
- Survey the market and determine potential demand for a smaller, less expensive recovery system, and a refrigerant recycling system.
- Provide demonstration and educational seminars with wholesalers and technicians.
ROAD RUNNER's marketing strategy is based upon in-depth interviews, surveys and information provided by the company's sales representatives. This provided ROAD RUNNER with concise knowledge of the refrigeration industry. Each of these sources was extremely helpful as the information was used as validation for the product design and concept. This continual validation prompted ROAD RUNNER to switch from prototype production to full scale operations late in the winter of 1992.
Experts Provide Information
The initial phase of our research consisted of a series often (10) in-depth interviews with wholesalers and service technicians. As the first phase of the research effort, ROAD RUNNER gathered information on trends in the industry, current manufacturers of refrigerant recovery systems, and consumer product preference. Both the wholesalers and technicians concurred that recovery systems on the market at that time were of poor quality. Another frequent complaint centered around the lack of service and assistance provided by the manufacturers. Additionally, wholesalers indicated that many technicians planned on postponing a recovery system purchase until the Environmental Protection Agency began stringent enforcement of the law, and the quality standards of the recovery systems increased to acceptable levels. The information from these interviews served as the foundation for the marketing strategy and product development for ROAD RUNNER. Although the government drives the demand for refrigerant recovery systems, the consumer must also demand the unit in order to ensure product sales and success. The service technician must purchase a recovery system, but has several product options. Hence, by incorporating several useful product features, service technicians will choose the ROAD RUNNER over existing competitors.
Service Technician Survey Shows Viability
A survey of 114 residential and commercial air conditioning service technicians took place. The results of this survey provided an abundance of information that served as an integral tool in the product design of the ROAD RUNNER. This information helped to determine the wants and needs of service technicians in refrigerant recovery. Additionally, the survey provided an outlook on industry market share and extent of demand within the recovery industry.
Key Competitors and Market Share
The survey of 114 technicians also provided ROAD RUNNER with and estimate of the market share each of our competitors has captured. These numbers were validated at the International Refrigeration Industry Trade Show (Evanston, IL) in June 1994. Although minor discrepancies occurred as to the exact percentage captured by each competitor, ROAD RUNNER survey results were fairly accurate. The discrepancies are due mainly as a result of fluctuating sales intensity of different refrigerant recovery systems in different regions of the country.
Road Runner Targets Enormous Market
ROAD RUNNER's overall target market focuses on residential and commercial air conditioning service technicians governed by the Clean Air Act. More specifically, ROAD RUNNER targets residential and commercial technicians in need of a portable recovery system. Secondary research estimates this target to be $724,000,000. Within this target, ROAD RUNNER directs its efforts at the informed purchaser. This includes technicians who have learned about refrigerant recovery systems through trade shows, product literature, personal use, and the "grapevine." The largest portion of this segment, seventy percent, consists of technicians who have not purchased a refrigerant recovery system. The smaller portion of this segment, ten percent (10%), centers around technicians who purchased an inferior refrigerant recovery system that malfunctioned in the field. Victims of product failure, these individuals know exactly what features they require in a recovery system for optimal field performance. The remaining twenty percent (20%) of the informed segment is composed of technicians who purchased a competitor's system and technicians who will avoid the requirements of the Clean Air Act.
ROAD RUNNER's target market and segmentation scheme were selected based on several factors. The impact of the Clean Air Act focuses its attention at commercial and residential technicians. Before the legislation, the presence of refrigerant recovery systems in the field appeared scarce. According to sources within the industry (trade magazines, wholesalers, and manufacturers) it is estimated that approximately 132,311 registered refrigeration service contractors operate in the United States. Each of these individuals employs between 3-7 service technicians, on average. This presents ROAD RUNNER with an opportunity to initially sell 661,500 units to our specific target market. Additional sales opportunities will be available in the replacement market (exact numbers will depend on product breakdown and obsolescence).
Road Runner: the High Quality System
The ROAD RUNNER will be sold to service technicians through refrigeration supply wholesalers. Wholesalers, as an industry standard, act as intermediaries between manufacturers and technicians. ROAD RUNNER will position itself as the highest quality and performance system in the light-weight niche of the market. ROAD RUNNER'S positioning strategy also places great emphasis on a comprehensive service and support program that will solidify the ROAD RUNNER as the premiere refrigerant recovery system.
ROAD RUNNER'S triple benefit positioning strategy centers around the results of market research. This research indicated that service technicians need a recovery unit with powerful and durable compression, rapid operation, and light weight. Taking this into consideration, the components and system design were carefully chosen and assembled in an effort to satisfy the needs of the service technician.
Road Runner Utilizes National Distribution Strategy
There are thirteen thousand (13,000) wholesaler/distributor (w/d) outlets in the United States which sell a variety of refrigeration related products in their stores. The geographic distribution area for ROAD RUNNER will encompass the entire United States. The ROAD RUNNER is designed to fit the demanding needs of the Southwest technician who will operate the machine in extreme temperatures. Because of this durable design structure, the ROAD RUNNER will, without question, serve technicians in other parts of the country with cooler climates.
The composition of the w/d portion of the refrigeration industry consists of four tiers:
National Wholesalers - This tier is composed of large companies who have outlet stores located all around the country. Because they have such immense size they enjoy economy of scale advantage. They account for over sixty percent (60%) of w/d sales. A few major players on this level include: Palmetto Air (270 stores), Rhinestone Supply, Ashby, and Burton.
Regional Wholesalers - These businesses typically consist of five (5) to fifteen (15) stores in two or three different states within the same geographic region. This portion of the industry has fifteen percent (15%) to twenty percent (20%) of the sales. Companies such as Frozen Stock Distributors (FSD), Williams Engineering and Nevada Refrigeration Company are regional wholesalers that operate in the Southwest.
Statewide - This tier is composed of companies that operate two (2) to five (5) stores within the same state. Wholesalers such as this account for eight percent (8%) to thirteen percent (13%) of sales. Faulkner Refrigeration Supply, McAdoo, and Moultrie's act as examples of w/ds who operate on the third tier.
Sole Proprietorships - Sole Proprietorships account for approximately four percent (4%) to eight percent (8%) of industry sales. Often times they find it difficult to compete as their larger competitors dominate the market and have more bargaining power with suppliers. Consequently they can obtain inventory at a lower cost.
Because of the highly concentrated (national w/d) make-up of the w/d structure, ROAD RUNNER's distribution strategy will place an emphasis on national and regional wholesalers. The majority of these companies have an established purchasing department that makes the inventory selection for all of its stores. A sale to the purchasing team will directly translate into a sale to each of the company stores nationwide. It has been determined that over seventy-five percent (75%) of ROAD RUNNER's recovery system sales will involve national and regional w/ds.
Road Runner Attracts Experienced Sales Reps
The Production Workers National Association (PWNA) will represent ROAD RUNNER. John Caleb, Vice President of Marketing, selected sales agents who are specialized in the air conditioning industry and have established rapport with key members in distribution channels. Because of this, ROAD RUNNER will gain tremendous exposure. The sales representatives were selected on a basis of:
- Knowledge of the refrigerant recovery industry
- Number of products currently represented
- Past sales record
- Access to distribution channels
Currently ROAD RUNNER has twenty (20) sales representatives working for the company. These individuals are strategically placed in specific geographic regions across the entire United States. PWNA representatives will receive seven percent (7%) commission of ROAD RUNNER sales. These sales representatives handle a large portion of promotion, as they provide direct contact to the wholesalers. Furthermore, they will educate and attract the wholesalers who will, in turn, pass information on to service technicians. This develops an efficient "push through" marketing and promotion strategy for ROAD RUNNER.
Promotion Strategy Creates Awareness
The promotion strategy for ROAD RUNNER has two main goals. The first goal focuses on building consumer awareness for the ROAD RUNNER Archetype 2000. The second orients itself on creating extensive awareness and recognition for the company throughout the industry.
ROAD RUNNER's promotional strategy utilizes three phases: personal selling, product emonstrations, and advertisements.
The first phase of our promotional strategy centers around personal selling. Our sales representatives will make an appointment to meet with the wholesaler's purchasing agent. The first sales call lasts approximately an hour and includes a product demonstration. The second phase, advertising, will take the form of brochures, point-of-sale advertisements and wholesaler initiated mailers to technicians. All promotional activities will be implemented and monitored by John Caleb, Vice-President of Marketing. The third phase, product demonstrations and sales seminars, occurs after the wholesaler has purchased the ROAD RUNNER. Atthis point, ROAD RUNNER's service and support team will hold all-day demonstrations of the system in the wholesaler's showroom. The service and support team will consist of Real Manufacturing staff, along with the sales representative responsible for the sale. The support team will teach the wholesaler's sales staff how to use and sell the ROAD RUNNER. This adds value, as ROAD RUNNER's competitors do not offer this service.
Promotional Budget (Year 1)
| Advertising | |
| Brochures (36,000 at .35 per) | $12,600 |
| Point of Sale Displays (1200 at $1 per) | 1,200 |
| ROAD RUNNER Baseball Caps (4800 at $1.50 per) | 7,200 |
| Trade Magazine | 2,000 |
| Demonstrations | |
| 140 at $60 (set-up cost) per | 8,400 |
| Travel expenses | 19,000 |
| Trade Shows | |
| 2 shows at $2000 per | 4,000 |
| TOTAL EXPENSES (year 1) | $54,400 |
