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DWELL Business Plan

Week 4

Ryan T. Rasmussen

Department of Business, UMass Global

BUSU 640: Capstone

Professor Ginger Silverman

February 4, 2023

Section 6

Marketing Plan

Product Overview

Dwell is a general contractor located in Orange County, CA that specializes in prefabricated modular accessory dwelling units. Product offerings come in four model sizes utilizing single 8’ wide by 20’ and 40’ long shipping containers. The single studio unit (Cabin) is 160 SF and is available to customers with smaller spaces or those wanting a studio or office space only. Dwells second model utilizing two 20’ long shipping containers (Bungalow) is 320 SF and can be designed as a one bedroom, one bathroom, kitchenette floor plan which can also be used as office space. A third unit (Lodge) utilizes four 20’ long shipping containers and is 640 SF consisting of one bedroom, one bathroom, full kitchen & living room. A fourth unit (Ranch) is 960 SF utilizing three 40’ long shipping containers is Dwell’s largest product offering at two bedrooms, one bathroom, full kitchen with island, and living room. Floor plans for each product can be custom designed to the preferences and layouts of each customer. Interior and exterior finish options will be selected and offered in accordance with the USGBC’s LEED certification program. The below model diagrams provide initial standard floor plans designs for all four models:

Model 1 (Cabin)

Model 2 (Bungalow)

Model 3 (Lodge)

Model 4 (Ranch)

Innovation

Since the early settlers came to the United States, wood or timber has been the primary construction material for home construction. 90% of homes today are built with timber even though “scientists emphasize the importance of trees in capturing carbon and slowing climate change” (Semuels, 2021, para. 3). In a state that has seen record-breaking wildfires year-to-year, timber built homes are flammable, susceptible to termites, and are less sturdy. These trends are proving more and more important for builders seeking to evolve in ways to become more sustainable. As builders continue to chase building materials that are not sustainable and have seen lumber prices increase, Dwell provides its customers with structurally superior building materials that are reusable, fire retardant, and are proven to stand the test of time. Dwell follows Michael Porters product differentiation formulation by introducing a product that concentrates on “achieving superior performance” by making “products with the best components, put them together expertly, inspect them carefully, and effectively communicate their quality” (Kotler & Keller, 2016, p. 51).

Customer Problem

The COVID-19 brought many changes to how our world operates where it highlighted the feasibility of working from home. In addition, as the home became both living and office space, homeowners began looking for ways to create a space that was more enjoyable. After a year of working from home, an overwhelming amount of people resisted the desire to return to work based on commute times and the ease and productivity of remote working. Over the course of the pandemic, more and more people have appreciated their abilities to save money, flexibility, and time that has been enabled by working from home. Affordability has been another major factor for homeowners or renters looking to purchase a home in Orange County. With median home prices hovering just below $1 million and a continuous influx of new buyers flooding the market, home inventory has dropped 18.7% between 2020 and 2021 according to California.com. Dwell is posed to assist customers looking to enhance their existing homes or future properties based on concerns surrounding limited inventory and longer commute times all while opening doors for home work space, multi-generation housing, and short or long term rental income.

Mixed Media Marketing

As a new business, having the right marketing mix is imperative to reaching Dwells anticipated customer base. Dwell will seek a blend between more traditional media and modern media channels. However, digital channels such as a comprehensive website and social media channels not only promote name recognition but they can provide consumer behavior changes to ensure marketing efforts are aligned properly. As Dwell launches its initial marketing platform, the following exhibit highlights the efforts broken out by website content, search engine marketing (SEM), search engine optimization (SEO), social media, direct mail marketing, and trade events.

In today’s digital marketplace, search engine marketing (SEM) will play a significant role in how consumers find Dwells product. As one article points out, “search engines are becoming the primary way people find products, a strong search engine marketing strategy is becoming even more essential for a business success” (Hoory & Main, 2022, para. 3). Once Dwells website is operational, a budget of $1000 per month will be utilized for SEM and SEO marketing. This budget will be increased each month as revenues begin to increase. ADU searches on websites such as Google present an extensive pipeline of potential customers that Dwell hopes to market.

Social Media Marketing

Dwell understands that social media is the future with the majority of Americans having social media accounts. According to Redding (2022) as of 2019, “79% of Americans had at least one social account” (para. 10). Most importantly, Dwells focus on social media will be towards credibility as they move from a new start up to a well-known ADU contractor in Orange County and throughout Southern California. As a relatively inexpensive way of marketing its products, Dwell links its products on sites such as Facebook, Instagram, and YouTube. Social media sites such as Houzz which is based in California will also be utilized to post photos of completed project to boost awareness and engagement with homeowners unfamiliar with shipping container ADUs. As potential customers view each social media post, Dwell’s website will be linked in order to drive new business as well as provide customer service through direct messages. Initial social marketing campaigns will be sourced through an outside agency with a monthly budget of approximately $700. Dwell will not have an initial in-house marketing social media expert so the management will be obtained by a 3rd party. These marketing efforts will include up to 12 social media posts each month on sites such as Facebook, Instagram, and Houzz and will also include page monitoring and responding. The major advantage that social media marketing presents are audits that collect information, check relevancy of each account, analyze performance of posts, and generates a report that confirms potential growth opportunities based on customer preferences. As Dwells revenues increase, social media marketing will be an ongoing investment in order to create more exposure and engagement for those individuals looking to build an ADU.

GIS

Esri Tapestry Segmentation will be an instrumental tool as Dwell determines the specific neighborhood characteristics they will target. As these consumer markets are identified by specific socioeconomic and demographic variables, Dwell will have a broader view as it relates to consumer behavior patterns. When considering Dwell’s customer demographics, it is anticipated that the following LifeMode groups will be utilized as part of its initial marketing mix. Urban Chic & Pleasantville residents will be targeted based on their homes residing along the California coast, living a “green” lifestyle, while prioritizing home improvement projects. These life groups are generally married Generation Xers between the ages of 43 and 58 who are well educated and are not typically cost-conscious. Dwell will also target the Home Improvement residents that fall within the Family Landscapes LifeMode group. These neighborhoods are typically owner-occupied single family homes where homeowners find themselves working on home improvement or remodeling projects on the weekends. In addition, these residences typically have longer work commutes and enjoy working from home whenever possible. This specific group will be targeted specifically for Dwell’s Cabin model as an opportunity to provide these buyers with a remote office space. The Comfortable Empty Nesters which fall underneath the GenXurban LifeGroup are Baby Boomers between the ages of 50 & 65, have older homes with larger lot sizes making them a great candidate for ADU housing. GenXurban residences are the “second-largest Tapestry group” according to ESRI (2022) and with many households approaching retirement, multi-generational housing or rental opportunities can be anticipated. Lastly, Top Tier and Exurbanites residences with a median age of 47 fall within the Affluent Estates LifeMode. This consumer profile has a median household income of $173,200 and will be a critical market based on Dwells presence in Orange County. As the wealthiest market, these residents prefer self-employment and appreciate urban lifestyles while also achieving expansive home styles. This affluent market has the resources to implement an ADU for more square footage, a remote office space, home gym, or rental income. With the use of GIS, Dwell is better able to leverage potential buyer profiles by identifying where their market lives so that each marketing mix can be distributed appropriately.

PLC (Product Life Cycle)

As a newly formed construction company, Dwell will be entering the launch stage. As Dwell enters the launch stage they will test the market with their sustainable ADU designs. By doing so, they will begin to have a better understanding as to how their product fits their customer’s needs. There are four stages of the Product Life Cycle according to Swink et al. (2020) which include the launch, growth, maturity, and decline stage. With the understanding that there are other prefabricated ADU designs already in the market, Dwell will systematically utilize innovative building practices to gain market share. As sales are increased through consumer demand, Dwell will enter the growth stage. Through increased revenues, Dwell will enhance their initial marketing mix to gain traction and name recognition throughout Orange County and beyond. Initially, 8% of revenues will be allocated to Dwells marketing budget and is projected to increase as high as 13% as revenue growth is achieved. As Dwell moves into the maturity stage, sales will increase through word of mouth marketing. With ADU construction, repeat design is not anticipated but referrals to neighbors, friends, and family are anticipated based on Dwells reputation within the industry. During this phase, an increased effort towards streamline production processes, advertising, and innovations will be critical as new competition enters the market. The ADU market will indeed require continuous efforts towards sustainability and design aesthetics to prevent market decline. With an emphasis toward employee development, Dwell understands that their culture will foster innovative ideas where they will continuously seek improvements towards building processes and materials.

ILC (Industry Life Cycle)

Much like the PLC, the Industry Life Cycle (ILC) has four phases: introduction, growth, maturity, and decline stage. ADUs have been in existence since settlers came to the U.S. However, it hasn’t been till recently, that ADUs were given a boost by state and local agencies through legislation promoting these affordable housing solutions. ADUs are currently at the beginning of the growth stage which presents incredible growth characteristics for Dwell. With many homeowners unaware of ADU legislature, Dwell will position and market itself in an effort to grow the ADU market. With only 1.4 million ADUs built throughout the U.S., there is a sizeable market still to capture especially when considering the affordable rental market need in California. King (2022) goes on to state that only “about 100,000 ADUs are built each year” which does not keep up with the California’s housing shortage. With no end in sight surrounding California’s housing shortage, Dwell is positioned well to educate and capture its target market by developing and implementing its sustainable ADU designs.

Branding

Branding is an important component in how Dwell captures its target market and existing customers. Dwells branding will include logo designs on all company equipment as well as its corporate office and business documents. Based on the financial investments homeowners incur when developing an ADU, having a corporate office that exudes cleanliness, professionalism and Dwells corporate values will be important as clients interface throughout the design and construction phase. Dwell will also promote its branding via an interactive website where new and existing customers can visualize content, product aesthetics, client testimonials, and contact information. Dwell will also incorporate a slogan such as “Find your dwelling place with us.”

Dwell anticipates market entry in January 2024 in an effort to finalize warehousing, employee on-boarding, and equipment needs. With uncertainty surrounding the financial lending institutions and home building industry, Dwell will be utilizing this time to define their seven P’s which include product, price, promotion, place, packaging, positioning, and people. Competitive pricing will be a major factor for Dwell as they enter the marketplace. With supply chain constraints driving up material costs and a tightening labor market, Dwell will prepare pricing to account for reasonable profit margins.

Based in Santa Ana, Dwell will be centrally located as they offer their product to homeowners throughout Orange County. Known for older homes with larger lot sizes, areas such as Santa Ana, Orange, and North Tustin will be prime locations for ADU additions. Their primary focus will be affluent neighborhoods looking to add modular office and rental space. As a full-service contractor, Dwells focus will be providing their customers with exceptional value, impeccable performance as it pertains to schedules and costs. Dwell’s smaller ADUs will start at $425 square foot with the largest models starting at $300 square foot. With this competitive pricing, Dwell will provide lower pricing while providing finishes exceeding those provided by established contractors within the market.

With improved legislature towards ADU growth, Dwell anticipates steady increases in revenue over the next ten years. As Dwell enters the market, name recognition will become more and more important where initial revenue and margins are lower in the first three years. As Dwells operations enhance and productivity increases, Dwell projects a steady increase in revenue through year ten. Below is a graph indicating year to year revenue projections stemming between year one through ten:

The introductory stage forecasted by Dwell will occur between year one and three. Through brand recognition, Dwell will see growth at year four with steady upward growth beginning in year five through year ten. By year five, through increased profit margins, Dwell anticipates the need for larger warehouse space so that its operations can fabricate more builds at the same time. With sustainability at the forefront, Dwell will utilize operating capital during the growth stage to support R&D approaches in an effort to meet and achieve consumer demands and needs.

In most cases, Dwells customers will experience the First Moment of Truth (FMOT) through their initial interaction with its website, magazine advertisements, and design studio. Express Pigeon (2022) describes FMOT as “the moment when a customer first interacts with your product or service” (para. 1). With numerous ADU designs and build structures available throughout Dwells target market, design offerings will be crucial as potential customers decide to continue researching Dwells products. The Second Moment of Truth (SMOT) as described by Cohen (2022) is what “happens after the customer has bought your product and starts to use it” (para. 27). SMOT is absolutely critical to Dwells success where customers conclude that they received more than they had expected and are highly satisfied. These scenarios produce relationship building whereby customers begin to market products to their friends and relatives. All-in-all, satisfied customers promote brand identity which ultimately produces increased sales. Dwell understands the importance they have with each of their customers. To further enhance these relationships, Dwells customer service team will follow-up monthly during the first six months to ensure no issues exist with its product. In an effort to minimize warranty repairs, yearly phone calls to clients will be made to each client demonstrating its core values of mastery, integrity, and accountability.

Dwell understands the importance of customer service and the relationship management needed for long-term success and profitability. Unfortunately, building nightmares are common place in the construction industry where corners are cut and construction defects begin to occur. Dwell prioritizes customer relationships by maintaining quality, innovation, pride, and its commitment to its clients. These commitments are portrayed throughout Dwells entire organization. With a customer first approach, Dwell anticipates increased branding, higher customer capture rates, and increased word of mouth referrals based on its unwavering quality while providing the most innovative technologies on the market.

Section 7

Management Plan

As a small business, Dwell will not have a board of directors or any type of governing body initially. By moving out of the launch stage and into the growth stage, implementing an advisory board will be entertained as Dwells owners consider financial business decisions and growth opportunities. In addition, Dwell recognizes that board members can offer up new ideas and can redirect organizations to ensure they can predict future trends.

The ownership of Dwell will be guided by industry veteran, Frank Berry (CEO & Co-Founder) and Ryan Rasmussen (President & Founder). Mr. Rasmussen will initially oversee the daily project management and operations at both the field and office level. As a 50-year successful construction businessman, Mr. Berry will provide financial guidance and support to Mr. Rasmussen in various capacities as Dwell is launched. Dwells headquarters will initially include an office administrator, design coordinator, and warehouse superintendent. The warehouse superintendent will be supported by a field foreman and two laborers and will have a dual role overseeing customer service matters alongside its CEO. Through existing relationships, Dwells owners will oversee business development during the launch phase of the business. The following organizational chart is anticipated throughout years one and three:

Initially, Dwells employees will oversee several roles and with business growth, specialized positions associated with construction, accounting, purchasing, sales, marketing, and customer service will be added. This will be crucial for Dwells president to focus on product innovations and business development. As Dwell becomes more financially viable, a need for a controller will be imperative to ensure accounts payable, receivables, and billings are managed appropriately. Appropriate staffing will be crucial to Dwells future success. Establishing a balanced staffing structure will help ensure Dwell can manage existing clients while also having the capacity to reach, engage, and capture new customers moving forward. By year four, Dwell will transition its organizational structure as identified below:

The various department leaders will be led by Dwells president. The design coordinator will interface and work directly with each client selecting floor plan layouts and material finish options. The superintendent will be responsible for the management of the warehouse craftsman along with the site foreman overseeing the construction of the ADU utilities and concrete slab. This role will also be responsible for managing inventory and will work directly with the office administrator to ensure materials are purchased and procured in a timely manner. It is also important to note that construction capabilities will remain limited without the hiring of experienced contractors with modular space experience. As Dwells business continues to grow, it will be important to process financial data quickly and efficiently to ensure billings are processed timely to ensure liquidity. Dwell will seek out an experienced controller, preferably an individual with experience in the construction industry who will be supported by a staff accountant. In an effort to stay innovative, a purchasing manager and assistant will be necessary to ensure Dwell is using the most advanced and sustainable products on the market while ensuring these products fit within the budget. Through the addition and support of a purchasing, sales, marketing, and customer service team, Dwells owners will be provided the time needed to ensure they are meeting the trends today and tomorrow.

Dwell understands the importance of its people and that not all people are motivated alike. Through the owners’ path-goal leadership style, they understand that “designing and facilitating a healthy and productive work environment” is needed in order “to propel followers toward success” (Northouse, 2021, p.132). Taking this approach will be critical to employee retention, especially those where skills and goals are aligned. Fortunately for Dwell, being a start-up business presents new and exciting opportunities especially for those looking for a place of leadership and increased responsibilities in a niche market. Dwell will market these roles to future candidates who may have encountered limited growth in their existing roles with a more established builder.

As an innovative company with an interest in modern designs, Dwell places an interest on individuals with diverse ideas, backgrounds, and experiences. Dwell is seeking individuals who want to be involved which is a strong component of their talent management program. They understand based on research that employee’s satisfaction often resides on “favorable work environment and opportunities for career development” (Farrugia, 2022, para. 23). Dwell recognizes that employees today are looking for opportunities and by emphasizing a culture of recognition and growth, employee retention is possible. Communication is a key factor to driving retention where weekly team meetings will be performed to ensure each member has the right tools to be successful. These meetings will identify if additional training or coaching is needed and will provide an opportunity to offer personalized attention to those team members that need support. In order to be successful, Dwells leadership understands that all divisions of the organization will need to work together.

As the business matures, Dwell will begin to create specialized departments that will include support teams so that senior leaders can focus on business growth, new ideas, and team development. This growth is anticipated to surpass the organizational chart which was identified by year four. It’s understood that growth and opportunity do not solely bring in new talent. Compensation plans, health insurance benefits, vacation, and sick time are all factors that potential candidates are contemplating when accepting a job offer. As identified by Dwells initial organizational chart, Dwells compensation package is broken down below by position, hourly and salary wage, vacation time, and sick pay:

Position	Hourly / Salary Rate	Vacation	Sick
Office Administrator	$55,000 / Yr.	(2) Two Weeks Paid	(10) Ten Days Paid
Design Coordinator	$60,000 / Yr.	(2) Two Weeks Paid	(10) Ten Days Paid
Superintendent	$110,000 / Yr.	(2) Two Weeks Paid	(10) Ten Days Paid
Foreman	$35.00 / Hr.	(2) Two Weeks Paid	(10) Ten Days Paid
Laborer	$22.00 / Hr.	(2) Two Weeks Paid	(10) Ten Days Paid

In addition to Dwells starting salary and hourly wage, superintendents, foreman, and laborers will be offered up to 10% of their salary as a bonus by meeting yearly goals and safety guidelines. With field staff balancing several roles in the warehouse and at each project site, bonuses will be implemented as incentive programs based on hard work while practicing safe work practices.

As an employer, Dwell understands that contributions made towards health insurance premiums is crucial in attracting and retaining talent. In fact, employers on average “covered 83% of their employee’s self only insurance plans and 73% of employee’s family insurance plans” (Walker, 2022, para. 7). It’s important that Dwells employees are covered and can support themselves individually and their families with affordable health care. Dwell will offer PPO and HMO health and dental plans through BlueShield of California. Premium costs will be split between Dwell and its employees. Employees will have two choices when selecting their plans based upon an array of doctors and hospitals in their chosen network. As Dwell matures, vision plans will be provided through VSP eye insurance along with Accidental Death and Dismemberment (AD&D) insurance.

As a new business, Dwell understands that problem solving will be crucial and guidelines will need to be in place so that issues are addressed quickly and properly. Samuelson & Marks (2015) breaks down the decision making process into six basic steps: define the problem, determine the objective, explore the alternatives, predict the consequences, make a choice, and perform a sensitivity analysis. This decision making matrix is imperative for Dwell to improve future revenues by making the best decision that offers the most value. This framework can be utilized as Dwell contemplates when additional warehouse space is needed to increase ADU production in order to meet demand.

As Dwells marketing efforts begin to translate into new ADU contracts, the initial 5800 SF warehouse space will be unable to provide the workable area needed to keep up with demand. As demand increases, additional space will also be necessary to support new hires required to manage, design, and build each project. Dwell will need to predict future sales to determine when additional space is needed in order to maximize firm value.

The objective of adding more warehouse space is based on growth and future profits. There will always be uncertainty when predicting future market trends that would trigger upward growth. By implementing an effective decision making process, Dwell will utilize information gathered from each team member, outside market studies, and even supplier feedback to support a decision that would lead to building expansion. This feedback will be crucial to define whether or not Dwell makes the investment to forego profits t

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