The proposed Building Material Website and App will be an online based business in the form of a website that will enable Saudis to review the construction material available in the market with the prices and all the hands required for constructions. Thus, any contractor will log in to the website and look for all the materials, tools, and hands required for construction. Within the website, customers will be able to choose the price by putting their budget limit, required material, location of the stores selling the materials, the day of the delivery, and whatever design they like. The format of the business will be a partnership involving four friends who will contribute equally in financing and managing the online-based business.
The entire business is based on the ability to simultaneously coordinate the online ordering and timely delivery of the materials to the customer through coordination with the actual stores. The motto of the company is reliability and hustle free location of different construction materials against prices and availability just by a click of a button. The vision of the business is to be a leading reliable online platform for verifying and ordering construction materials at the most affordable price. The mission of the business will be growing the online business platform to cover specific demands for construction contractors by rolling out an easy to access, use, and personalized website.
The business intends to increase its visibility within the next three years through digital marketing and website optimization. Since the business will be online-based and operating in the conservative Saudi society, the challenge of acceptance may hinder the growth of the business since this society is still suspicious of online businesses. Besides, the business may face the challenge of a potential competitor since the current market is still underdeveloped.
The strategic goal of the business is to be the market leader in the online construction material information market segment that targets contractors within the expansive Saudi Arabia industry. The business also aims to build a successful customer referral business model by ensuring that the level of customer satisfaction at any time is maximum to ensure that the annual expansion by 20% is maintained for the next five years.
The business goal is to raise at least 150,000 AED within the next two months for a start-up. The business will also strive to increase its profits by 20% each year through the expansion of market coverage. The business will focus on product differentiation in the form of three categories of services it offers to the clients. The first category will be premium services consisting of ordering and delivery of materials for the mega construction projects. The second category will be the regular services consisting of ordering and delivery of materials to large construction projects. The third category will consist of ordinary services for clients who are looking for high-quality construction materials for small projects or home usage.
The Saudi contractors are known for their attachment to different designs and sizes of construction materials since it is part and parcel of their dynamic work culture. Construction materials are part and parcel of a contractor’s job description. Making the materials easily accessible for contractors would translate into efficiency and reliability in their construction activities. Therefore, the demand for a reliable and easy to use the website for reviewing and ordering construction materials is very steady since the service will reduce the hustle these constructors are subjected to in selecting the necessary materials.
In order to establish the potential market share for the proposed business, a research survey was rolled out, and the results are summarized in the table below.
|Category of customers||Market share (Percentage)|
|Small contractors and private builders||25%|
The business targets to reach 6,000 customers in the first year, 9,000 customers in the second year, and 12,000 customers in the third year, totaling 27,000 successful orders and deliveries at the end of the third year in the Saudi market. The business will target three types of customers, which are large, medium, and small contractors. Further, the customers will be segmented into regular clients and the first time clients in order to ensure that the needs of these segments are customized on the basis of the level of loyalty.
The main value drivers that the business will use in reaching out to the three customer segments are the current demand for flexible, fast, affordable, and easy to use shopping methods to buy building materials. Besides, the business will consider specific needs of customers in terms of design specifics, colors, and size of each material to create a need-based marketing strategy through proactive customer participation in information search and product acceptance. This means that the entire business platform will be based on promoting the satisfactory value of each service offered online and coordination of actual delivery of the materials to ensure that customer behavior is positively skewed towards the business.
Strategic distribution system
Outsourcing the distribution and delivery aspect of the business to an already established business will give the company a competitive advantage of reliability since the owners of the construction material stores already exist in the Saudi market. This means that the business will benefit from being a reliable venture that does what it promises the customers.
Strong brand name
Since the website will be called the Saudi Build Center, customer will not have difficulty in locating it online or associating it to the construction industry. This means that the Saudi Build Center name will be easy to sell since it is already associated with the products the company wants to specialize in.
Provision of variety of services
The business is positioned to gain from different customer segments since the online platform has been positioned to serve interests of all customers through provision of stratified services that matches the demands of these clients. This means that the business will gain from self competition and may even grow further as the product lines are embraced by the targeted clients.
Diverse service branding offers
The business will produce online construction material magazines that will help in self promotion among the targeted clients, thus, increasing the market coverage at a very low cost. The success of the e-magazine may increase the number of referral customers interested in the services that business will offer. The business brand is aimed at providing excellent services to the customers. The business has well established differentiated strategy that distinguishes its services from competitors. Moreover, the business has adopted flat decentralized structures that ease management and reduces costs. The business also enjoys a strong reputation within the market because of quality, reliability, and exemplary services offered to its clients as the first of its kind in this form of business.
Disjoint between product virtual and actual availability
Since the business is online, there may be challenges on the side of the customer in getting the materials despite being visible in the virtual spectrum. This may increase the cost of doing the business and if frequent, may motivate the customers to from a negative opinion about the business. This might affect the sustainability of the business, especially when such instances are common.
Delay in delivery
Since the delivery of the materials ordered by customers will involve movement from the independent stores to the location of the customers, there might be delays especially when customers made urgent delivery request during peak hours. Frequent delays may lead to loss of business, despite being just a coordinator between the contractor and the actual stores selling the materials.
Single market focus
The emphases on the construction segment leave the firm susceptible to several possible large-scale economic downturns. In addition, the single market focus on building material setting reduces the firm’s competitive edge. Moreover, the growth and expansion of superfluous similar services offer alternative services to the targeted clientele.
Difficulty in convincing the customers
Many targeted customers have had bad experience with online services since there are many scammers and false advertisers who do not adhere to the ethical code of remaining faithful in representing the product as it is reality. Despite the fact the proposed website will be based on sincere business, it may take a very long time to convince the suspicious Saudi contractors that the proposed business is different. The suspicion because the business is based online may negatively affect expansion and penetration strategy for the online-based business.
Limited access to customers
The entire business platform depends on the ability of a potential customer to access the internet. This means that many potential customers who do not have access to the internet will be locked out. Currently, only 35% to 55% of the potential customers within the Saudi society have access to the internet or are literate in its use. Locking out nearly half of the contractors because the business is based online may affect the future expansion strategies since they are limited within half of the contractor population who has access to the internet. As a result, expansion of the business will not be as fast as that of a potential traditional or hybrid business offering the same services. This means that the business is likely to lose to such competitors.
Integrated technology as an expansion tool
Since the business is based online, there is unlimited opportunity for creation of a mobile app that can be used to access the website from mobile handsets since majority of the targeted clients have Smart phone. Besides, the business might benefit from integrating technology further in tracking the delivery schedule through pop up messages to ensure that customers can follow up the progress of their order through the mobile phone. In addition, the business might create an SMS service to check prices and product availability for customers who cannot access the website. Through this, the business has opportunity for expansion beyond the current target market.
Growing current target market
The most probable opportunity is the vibrant growth in the medium and small contractors’ market segments. In addition, developments in economic conditions and infrastructures that support the growth and development of businesses as well as growth in the Saudi construction industry presents new opportunities for the business. The growing purchasing power in the Saudi real estate sector, which is regarded as the most active customer demographic, presents new opportunity for the business to exploit.
Attractive online modeling to increase product visibility
The business has opportunity of increasing the visibility of current services it offers through search engine optimization to ensure that the website is very easy to access. The search engine optimization is strategic in increasing the traffic of customers who visit this website. When the search engine optimization is integrated as part of the marketing communication strategy, the visibility of the services that are offered by the business will increase beyond the targeted market.
Increased customer loyalty through quality brand
The business has a potential of maintaining good reputation among its clients since the entire venture is based on reliability, affordability, and usability of the website. Through provision of high quality services, the business may track the reputation of its clients through their feedbacks in order to make adjustments to guarantee sustainable customer satisfaction levels.
It is easy for new competitors to enter this market with similar services and brand. The new entrants pose a potential threat to proposed construction website. For instance, the competitors may ape the business idea or roll out a better strategy for reaching customers to the disadvantage of the venture. Another threat is losing staff as some competitors might try to attract them by offering higher salaries and allowance.
Economic swings in the construction industry
The probable economic slump, that has greater effect on the business conditions and consumer confidence, presents a greater threat to the operations of the business. These economic swings might affect the purchasing power among the targeted clients, thus, reducing the demand for the services that website offers.
Changed customer preference
The entire business platform operates on the customer preference since the construction materials are used by all contractors. Therefore, any negative change of preference among the customers would translate into loss of business, especially now that business has a virtual perspective attached to it.
Since the market is relatively underdeveloped, there is no major competitor that may threaten the existence and survival of the website. However, if the business ideal becomes a successful venture, there might be local and international competition from companies selling construction materials in the Saudi community and beyond. In order to survive the potential threat of competition in the future, the business will adopt the product and market positioning strategies such as multiple-pricing and high quality of services (Rhim and Lee 167).
The multiple-pricing strategy will be applied through differentiating the online services by grade and assigning different prices for each category of customers. This means that the company will serve the high-end, mid-end, and low-end customers without locking any potential client out (Bowden 73). Besides, the website will have series of services that customers can choose from in reviewing availability and prices of different materials and tools. This means that the business will create an environment of own competition by locking out any competitor who might want to benefit within the unexploited customer segment.
The proposed website will be committed to the provision of superior client contentment through offering comprehensive information about building materials and exceptional services to the consumers in the form of linking them to the stores retailing these materials. The website is considered as a full-service online construction materials shop. As such, the firm will provide a variety of excellent services and quality products that satisfy the needs of consumers by utilizing the services of its proficient and qualified personnel. Additionally, the website will provide customers with a relaxed and pleasant environment for shopping for construction materials just by a click of the button. Moreover, offering high and superior services as well as client fulfillment at apposite prices will be emphasized by the business through provision of alternative packages to clients (Rhim and Lee 167).
The website will provide information about each tool or material with different price tags that are different from the traditional hardware stores. Each service that will be chosen will include a free service form. For instance, customers who want a variety of items above AED 150,000 will be accorded the personalized service of free delivery as pre-negotiated with the stores selling these items. Further, affable, just, and inventive customer relationship management atmosphere that values multiplicity, thoughts and professionalism will also be core aspects of the firm.
The business plans to create a strategic and affordable delivery system through contracting a delivery firm to do the product delivery to customers within specifications of the contract. The outsourced delivery service will be integrated into the business model to ensure that lapses or customer feedback are tracked in real time. This will protect the business and the customers from any mistakes or underperformance by the contracted product deliverer.
Besides, the business will not need to spend so much on advertisement since the contracted distribution agency will do the face-to-face advertisement on behalf of the business. Since the entire business platform is based online, the website will be designed to capture the right colors and images of the materials as they are in the real world (Kotler and Keller 25). The design of the website will be done in colorful and classy design to appeal to the taste of the targeted clients. Besides, the packaging of each product will be done in branded logos that are designed to engage the imagination of the contractors towards associating with idealness.
The main objective and goal of this marketing plan is to penetrate the contractor shopping market through the company website. The website promises a guide to the best building material deals, genuine tool parts, and servicing of the machinery at a discount. Through rebranding and increasing the visibility of the website, this market segment is projected to increase their preference of the above services. Since the target market is specific, the success variable for the market share expansion strategy will be measured through an increase in the number of customers in need of the building material information services (Bowden 71). The other objectives include:
- To offer unique online information services dissimilar from those of rivals to capture bigger market proportion as well as increased profit.
- To gain net revenue above forty percent by the end of the first year of operations.
- To increase net proceeds by over thirty percent of sales in the second year of operation.
- To augment the firm’s sales to thirty percent in the second year of operation.
- To attain customer satisfaction through the provision of services that exceeds customers’ expectations.
The long-standing objective of the firm will be;
- To attract numerous and new clientele.
- To build comprehensible client acquisition processes.
The success of the above objectives will be measured in terms the presence of a well established marketing network since it is the only company that will specializes in online information services in the real estate sector in Saudi Arabia. As a result, the company will be able to reduce cost of advertisement since it will depend on referrals from the satisfied customers and free information services to widen its catchment.
The threat faced by website in executing the proposed marketing objective is stiff competition from dealers of other building material brands who often recommend specific hardware stores to customers. The current opportunity available in execution of the marketing objective is advancement in technology and information in reaching the market by integrating different aspect of marketing communication tools. The main impediment facing the website is the challenge of continuous expansion in the backdrop of customer concerns on efficiency of the services offered (Cheverton 19). In order to accomplish the above objective, the website will be positioned as the first of its kind in the Saudi Arabia real estate market. As the first player for this kind of specialized online information services, it will be easy to project a steady market share gain within fifteen months after implementation of the marketing management.
Psychographics refers to “the study of the values, personality, attitudes, opinions, lifestyles, and interests” (Cheverton 26). Purchasing trends continue to progress proportionately to evolving psychographics. Consumer behavior is increasingly being influenced by a host factors including; wealth propensity, behavioral proclivities, globalization, cultural discernment, and enhanced education. This has driven the acceptance of branding and particular store brands as people become aware of their value.
They are willing to evolve their lifestyles more to sample store brands as much as national brands. In the context of the proposed website, psychographics refer to the data on the lifestyles of its customers, which they use in creating customer profiles. This information is important to the company, especially when it comes to market segmentation. In particular, the company will use this information in market segmentation on the basis of lifestyles, social class, and personality attributes. The target market is divided into corporate and individual contractors.
The strategy entails active marketing the website services to the companies in the construction industry since they form almost 70% of the target market. Through the digital marketing strategy that stresses on proactive connection to customized information search on all building materials and other services, the proposed website will be in a position to penetrate this market without having to alienate other customers. The corporate customers are easy to reach and a series of memorandum of understanding documents will be signed to sustain this market.
This group consists of individual contractors and home users of building materials. This group is ethnically diverse. This group will form the highest number of individualized services since their needs are diverse. Therefore, e-marketing strategies will be effective in reaching this segment to promote the website and product information in the real estate sector.
Creating brand awareness or a positive image of the product/service in the minds of the customers against the competitor product/service is the positioning of that product/service. After defining the market segments and the target market, the services in the website will be positioned perfectly in the hearts and minds of the targeted customers by formulating differential advantage for each targeted segment and winning the loyalty of the customers. The strategy of positioning the product would focus on serving the customers with the service they desire the most with exiting offers and meaningful explanations on the building material services (Mariotti 38). The following bases are used to position the website.
- Attribute: The unique attribute of our service such as the ease of accessing a lot of information on products and services within the construction industry at anywhere at any time without any hassle of rushing to the actual stores, multiplexes and malls.
- Benefit: The advantage of this innovative service is the easy availability of the mobile app to save time. Moreover, it is also used as a cost-effective solution.
- Occasion: Positioning the website service in the minds of the people such that they tend to use the service whenever they want to make reference or confirm prices of different products.
- Price and Quality: The website aims at providing the best information experience which includes costing, availability, and alternative materials for each building tool or machinery in Saudi Arabia as summarized in appendix 1.
- Against a competitor: The positioning strategy would also be against a competitor as it has competitive advantage against traditional stores retailing the building materials.
The above factors would enable the company to create meaningful, credible, and sustainable positioning strategy and would help in excellent implementation using a marketing mix.
In order to ensure that the proposed website is successful, the business will be marketed via a mixture of traditional and social media in order to penetrate the expansive Saudi Arabia market and reach the targeted customers. The marketing strategy for the proposed business will consider the aspects of product, place, price, and promotion as discussed below (Rhim and Lee 167):
The website is an ideal online platform for shopping for different designs, colors, and sizes of the building materials. The website will incorporate a series of services such as the material select button, view different options button, customize order button, make order button, select region of delivery button, and make follow up button. This means that the aspect of comfort and proper time management is guaranteed as opposed to making series of trips in the market to look for these materials (Bowden 71). Customers will also have a variety of choices in payment and product grades.
The business will create a watertight distribution strategy to ensure that the orders placed online by customers are delivered as promised. The distribution program for the business will be carried out through the companies that are selling these materials to guarantee efficiency and reliability. The selling of the products will be done via an online portal through the business before the distributor is contacted to do the delivery. The materials will be sold directly to the customers just by a click of an order button and confirmation of the same within six hours after placing the order (Osterman 407).
In the first year of operations, the business will be proactive in using social media and website through search engine optimization to roll out the e-commerce portal for customer within Saudi Arabia. The online portal will be expanded during the second year of operation to cover other regions within the Gulf countries as a market expansion strategy. Besides, the website will be able to collect and analyze responses from the customers in real time to ensure that the recommendations or complaints by the clients are addressed within the shortest time possible.
The website will also have an icon for online chat with the support staff as part of the short term and long term customer relationship development and management strategies. In addition, customers who are not satisfied by the online chat service will be allowed to request the support staff to call them at a toll free rate. Each support staff has been trained on proper communication etiquette to ensure that the level of satisfaction among the clients is optimal.
The business will use social media and website optimization to promote the services that are available at the website. Under social media, the business will build Facebook and Twitter fan pages to allow the clients to interact freely and share their experience or requirements for different products. Through client-business interaction through these sites, the customer base for the website will grow within a very short time since the fans pages are ideal for building community following.
The social media sites will allow the business to directly reach the customers by the expensive traditional alternatives such as print media. The second strategy that the business will use to promote the website will be through search engine optimization. This strategy will be carried out through installing series of plugins with features such as thumbnail, page customization, and page navigation (Rhim and Lee 169). The plugins will consist of a customizable client account that will serve as the platform for shopping, making modifications, and ordering different products. The button categories that will be optimized include ordering menu, brochures, request confirmation, approval of product after delivery, and feedback placement.
The multiple-pricing strategy that will be adopted for the business will address the objectives of profit maximization, increasing market share, meeting sales targets, guaranteeing return on investment within the second year of operation. The three alternative price lists for each product depending on availability will allow the customers to make choices from a variety of alternatives that are pocket friendly (Cheverton 55). This is a guarantee that the business will serve the pricing needs of the lower and upper economic ends to match the status of each category of clients.
After situational analysis and market analysis, the implementation of the marketing strategies using the 7 P’s of the marketing mix would clearly achieve the goals and objectives of launching a new innovative idea of online information website for different building products and services as discussed below:
- Product: The concept of online information service in the Saudi real estate sector is an innovative idea to deliver unparalleled experience to the contractors. This concept also enables the projections of pricing, corporate presentations to a focused group, advertisement of an upcoming technology.
- Benefits: A fusion of varying concepts by mobilizing different construction items and making them readily available for the contractors for use or awareness purposes. Accessible and adaptable nature of the website makes the service more popular and usable by many.
- Physical Evidence: Assuring the targeted customer and market segments about the service and its offering by the use of effective website, advertising and promotions, and 24-hour customer support service would ensure tangible presence of the company services. These are the physical evidences that attract the attention of many customers and develop their interest in using the service.
- Price: Although price is a key element in determining the revenue generated by a company, but reasonable and effective prices are a means to increase the customer base and offer them with this unique concept of mobile cinemas and screenings. The pricing strategy is highly dependent on the variable of the customer’s value perception for that service. In short, it is the perception of the customers as to how much price they can affordably and easily pay for this service. Thus, a cost-effective pricing strategy would be adopted.
- Place: The proposed online service is intangible and the stages of production, distribution and usage cannot be separated from each other. Thus, direct selling approach is the best to be used for selling the service to the targeted customers. Direct selling approach reduces the cost of the service and it can be used at the initial launch of the service.
- People: The business will undertake extensive training program for its employees so that each employee is a master in selling his/her service to new customers and retaining the existing customers. The employees will be required to observe, relate and predict the attitudes and behavior of the customers, in turn predicting the use of the service by its customers. The technical staff will be trained to communicate and solve technical queries of the customers.
- Promotion: An effective promotional strategy binds the customers with its services at the first instance. To promote the online service, the business will deploy many advertisement mechanisms like word of mouth, publicizing through pamphlets, online advertisement through website, and announcement of different promotional offers.
- Process: The process is an activity that ensures maximum availability of the service to the customers as well as guarantying them with the best quality service. To keep pace with the rising demands of the customers, a strategy that would deploy the reassurance of the quality and availability of the actual materials to maximum targeted customers will be applied.
The proposed online platform for information search in the construction industry in Saudi Arabia is a relatively new concept in this region. The currently available information search is limited to the products that each company is stocking. At present, there is no company that offers information search for all building materials or tools in the Saudi market. Thus, the proposed business will be the first of its kind in the Gulf region.
Cash Flow Projections
Cash flow projections are critical in estimating the net present value of the business against future projections. This is indicated in the table below.
- Total revenue (P * Q) = total cost [Variable (C *Q) + fixed cost]
- Price per unit of service (P) = 110 AED
- Units produced (Q) = to be estimated
- Total fixed cost = 34,000 AED (as shown in the table below)
|Item||Annual costs (000 AED)|
|Salaries and wages||21,000|
|Total fixed costs||34,000|
Before deducting expenses. The Saudi Builder Website Business. Balance sheet statement. As at 31 December 2018.
|Long term assets||23,000|
|Total current liabilities||18,000|
|Additional paid up capital||16,000|
|Total stockholders’ equity||10,000|
|Total liabilities and stockholders’ equity||91,000|
The Saudi Builder Website Business. Income statement. As at 31 December 2018.
|Cost of sales||9,083|
After deducting expenses
The Saudi Builder Website Business. Balance sheet statement. As at 31 December 2018.
|Long term assets||10,000|
|Total current liabilities||10,000|
|Ordinary common stock||1,000|
|Additional paid up capital||10,000|
|Total stockholders’ equity||13,416|
|Total liabilities and stockholders’ equity||40,416|
The Saudi Builder Website Business. Income statement. As at 31 December 2018.
|Cost of sales||9,083|
|Income before taxes||19,166|
The Saudi Builder Website Business. Statement of changes in equity. As at 31 December 2018.
|Common stock||Additional paid in capital||Retained earnings||Other comprehensive income||Treasury stock||Total stockholder’s equity|
- Return on investment = Gains – Investment costs
Return on investment for the business
- Gains 160,000 AED
- Investment cost 120,000 AED
- Gains – Investment costs = 40,000
- Therefore, return on investment is 40,000/120,000 = 37.5%
The promoters are assumed to be in the 9-10 (25%) score while the passives are assumed to be in the 7-8 (55%) score. The detractors are assumed to be in the 0-6 (20%) score. Thus, the Net Promoter Score will be +5 for the business plan within the UAE market. Therefore, the satisfaction score is estimated at 90% while the recommendation score is estimated at 80%. In addition, the social conversation score is estimated at 80%.
Market share table
|Market share growth||10.4%||19.59%||21.3%||23.4%||25.3%|
The formal controls proposed for the website as a business will include a success evaluation channel and systematic objective tracker that will review the functioning of the venture against the initial objectives.
The business will hire four sales persons to participate in the social medial marketing for ease of market penetration within the Saudi community. The business will develop a flexible implementation module that is expected to be operational within the first month of establishment up to the end of the second year (Mariotti 59). The marketing activities will then be done regularly but at a lower cost.
The business will create a dynamic communication system that has live feedbacks to ensure that the support system between business and the delivery channel are balanced. There will be series of periodic systems for tracking the success of the business after every three months and at the end of each marketing strategy for the next two years in the Saudi market (Rhim and Lee 173).
Bowden, John. “The Process of Customer Engagement: A Conceptual Framework.” Journal of Marketing Theory & Practice, vol. 17, no. 1, 2013, pp. 63-74.
Cheverton, Philip. Key Marketing Skills: Strategies, Tools, and Techniques for Marketing Success. Kogan Page, 2014.
Kotler, Philip, and Kevin Keller. Marketing Management. Pearson Prentice Hall, 2013.
Mariotti, Steve. Entrepreneurship: Starting and Operating a Small Business. Prentice Hall, 2015.
Osterman, Paul. “Job Design in the Context of the Job Market.” Journal of Organizational Behavior, vol. 31, no. 2, 2010, pp. 401–411.
Rhim, Hosus, and Chan Lee. “Assessing Potential Threats to Incumbent Brands: New Product Positioning under Price Competition in a Multi Segmented Markets.” International Journal of Research in Marketing, vol. 22, no. 1, 2013, pp. 159-182.