Introduction
Home Health Plus is a new service based company. Till date the service offerings available in the retired and old age service market are limited. There are very few healthcare providers offering quality services, and there are very few products catering to the needs of the retired people. Home Health Plus plans to offer some unique products in this market. Currently, the services available for old age people are mainly provided if a person stays in an old age home or community.
Services like light housekeeping, laundry services, preparation of meals and snacks are offered at reasonable price only at old age homes. However, there are thousands of retired people staying in their own place, and they cannot afford to have those services rendered at their door step. Home Health Plus plans to offer packaged services and customized services to all those people who are in need of it. There is a huge aged population residing in and around Palm Coast, Florida. As per the population demographics, the average age of the region is expected to grow in the coming future. Furthermore, more and more people are shifting to this place post retirement to stay in this region. Home Health Plus believes that there is a huge market for its products in Palm Coast. This essay will discuss about the product offerings, population demographics, market research findings and finally a marketing plan for the product launch of Home Health Plus.
Product or Service Concept
Aging makes a person become infirm and less mobile than before. Additionally, they encounter a lot of health related problems. This is a natural phenomenon which happens with all of us at old age. The needs for aged population are unique. For example, an aged person likes to have a person helping him to cook his meal or clean his house. Some of them may need assistance in laundry services or grocery shopping. These needs create a unique market for companies to offer their products. Currently, most of the services offered in this space are separate and discrete. For example, for laundry services a person needs to call a company which is separate from a company offering meal services. Home Health Plus understands the market need and has come up with a wholesome service offering that is more organized than any other existing service offering.
The product being launched by Home Health Plus has three features which make it unique than others. Firstly, all the products and services will be offered to the doorstep. Any person, irrespective of staying in his individual house or old age home, will be offered the desired service at his doorstep. Secondly, a more compact packaged service will be offered. Customers will be offered an array of services in a product bundle. For example, a common bundle may include light housekeeping, laundry services, preparation of meals and assistance with medication. If somebody opts for a packaged deal, then he will avail it at a discounted rate which would be more cost saving than individual services. Furthermore, Home Health Plus is planning to offer customized services. As people have different needs, the service customization would help Home Health Plus offer unique services. For example, someone may take a standard package of four services but may opt for assistance in bathing and dressing rather than assistance with medication. The package cost will remain same. This product will be easy to market against the existing products as more than one service requirements will be offered from a single platform. The bundled service offerings will also be offered at a discounted rate which would give the company an edge over the competitors.
Target Market and Segmentation
The place where Home Health Plus is planning to start its business is Palm Coast, Florida. Palm Coast has been chosen as the business destination because of many reasons. The primary reason for choosing Palm Coast is its large retired population. The average age of palm Coast is almost 4 years more than that of the average of Florida. Florida has a median age of around 41.3 years while Palm Coast has a median age of 45.1 years (City Data, 2013). The median household income of this region is around $45,889, more than the median income of Florida which is $44,299 (US Census Bureau, 2013). This means that there is a large aging population in this region with more money to spend. This makes it even more lucrative for any business to start offering product or services. Added to that, Palm Coast is one of the fastest growing cities in whole of the United States. It has been growing at a rate of 100% for the last two decades (US Census Bureau, 2013). After the recession hit the US economy in recent times, many left Palm Coast in search of work elsewhere.
As there are many vacant homes present for purchase and rent in this area, many retired people are buying houses and settling in Palm Coast. 23% of the population in Palm Coast is above 65 years of age, and it is estimated that the percentage of population over 65 will remain at around that figure for many more years to come. Among the total population, white population was 79.9% in 2010 (US Census Bureau, 2013). Unlike other parts of Florida, Palm Coast has a very small African American and Hispanic population. There are more than 8000 veterans living in Palm Coast alone or with family. Most of these veterans live a secluded life here after retirement from service. The average family size in Palm Coast is 2.74, but there are more than 16,000 houses occupied by a single inhabitant (City Data, 2013).
There are three main target segments for the product offerings of Home Health Plus. The first target population is the people living alone in their houses, either retired or close to the retirement age. The second target population is the families where couples, both retired or close to retirement age, live together. Finally, the third target population is the caregivers of the elderly. These are the families where both husband and wife work and old parents either stay with them or live close by. This target segment will be willing to buy products of Home Health Plus for their parents.
Market Research
A market research was conducted between 19th Jan, 2014 and 23rd January, 2014. A survey was conducted among 100 potential customers mostly in and around Florida and Ohio. These two states with their large aging population represent the target population fairly well. Some of the respondents were also chosen from other parts of the country to understand the diversity or commonness of requirements. The first thing that came out from the answers was the care needed by the potential customers. Light housekeeping, preparation of meals and snacks, laundry services, assistance in bathing and administration of medication were the top five cares identified by the customers. Other services like assistance in toilet, running errands and friendly companionship were also identified by a lot of responders as services required. Furthermore, 79% people indicated that they would like to use these services now or sometime soon. Only 6% of the total respondents said that they were not likely to use the services. When asked whom the services will be required for, around 60% of the population said that they would require it for the loved ones. 34% of the respondents indicated that they would require the service for both themselves and loved ones. 84% of the people who participated in the survey said that they might require this type of services at some point in their life. 64% of the respondents indicated that they needed customized services in accordance with their needs, and they should be freely able to pick their choice from an array of service offerings. 46% indicated that the package services were a good value for money option.
The secondary research shows that Palm Coast is dotted with senior housing and assisted living facilities. However, people who avail these facilities often complain that they cannot continue to live in their homes or places they would like to live in after retirement. The service choices are limited as there are no companies rendering services at their door step. There are few nonprofit organizations like ElderHelpers and APlaceforMom helping the elderly in need of help, but the services are sporadic and unprofessional (Desjardins, 2013). The amount of services needed vs. available is inadequate. This makes the product offering a unique and lucrative one for the potential customers. Since most of the buyers of the service buy it for their loved ones, adding a unique useful feature to the package deals would help the product launch even more. For example, Home Health Plus will offer a package for the elderly consisting of laundry services, meal services and housekeeping. It will offer a free car detailing with pick and drop facilities to the buyer of the services. It will attract more potential customers because in the process of buying something for their loved ones, the buyers are also getting something for themselves.
Pricing Strategy
The base product will consist of three basic services; meal services, laundry services and housekeeping. Over and above this base package, more services like assistance in medication and bathing, companionship and so on can be added.
Meal services will be offered through mobile meal delivery. It will be offered twice per day, once for lunch and once for dinner. Home Health Plus will only change a delivery fee over and above the actual price of the meal ordered. Transportation changes per delivery will be higher when the volume will be low but as the volume goes up, transportation cost will come down because of economies of scale. However, Home Health Plus can charge $1 for all the deliveries to start with. Laundry services typically entail two costs. First part of the cost is washing and drying cost, and the second part of the cost is the pickup and delivery cost. Typically, Home health Plus will offer once a week laundry service in the basic bundle. If Home Health Plus uses a standard Laundromat for washing and drying, it will cost around $1.50 per load (Trent, 2011). In fact, it may get a discount by partnering with some Laundromats as it will bring in large volumes of clothes. Possibly, the cost of Laundromat for Home Health Plus will be $1.50 per pickup or per week. The transportation cost will not be considered as in any case they will visit the house for meal services. Finally, housekeeping will be offered twice per week. Typically, a housekeeping service would cost around $20 per hour in addition to the expense of travelling. If the housekeeping person has to be paid $40 per week for two hours of service in addition $10 for the cost of travelling, then the total cost for Home Health Plus will be $50 per week (Care, 2013).
As we can see that the basic package offered by Home Health Plus costs around $266 per month. In fact, the cost will become less as the volume of services goes up. Then because of economies of scale, the transportation cost per order will come down. Furthermore, as the volume of services goes up, Home Health Plus will be able to bargain more with the service providers for giving discount on the services. For example, if the volume goes up, then Home Health Plus can easily bargain with the Laundromat to get a rate of around $1.00 per load. This will save $2 per order per month. Furthermore, Home Health Plus can bargain with companies like care.com to get a rate of $15 per hour rather than $20 per hour if demands increase. This will give Home Health Plus an instant saving of $40 per order. However, to begin with Home Health Plus can offer this base package to the retired people at a cost of $300 per month. As there is a lack of equivalent competitive services, the pricing will be well accepted. Pricing the product at a lower price of $250 or $260 will not attract extra customers, and hence pricing the product at $300 will not make much difference as there is no competitor in the market with similar product offerings. Although the initial profit margin is only around 10%, but when the volume goes up a little the profit margin has the potential to go up by 30%. This will also help cover up some of the initial investments necessary to start the business.
The initial investment capital will be used for mainly three purposes. Firstly, a majority of the money will go in buying the things required to start the business. For example, 3 fully modern and equipped delivery trucks will be purchased for $70,000. An office building will be rented.
The deposit money will be of about $10,000 with a monthly rent of $3,000 for the office rent. An expenditure of $20,000 will be used to set up the office and office supplies. Around $100,000 will be used as working capital to run the business as revenue will not be realized immediately. This money will be used to pay the delivery truck drivers, Laundromats, housekeeping agency and meal suppliers. This will also be used to pay the office rent and the salary of office employees. Rest of $100,000 will be used for sales and marketing effort for the first year. As this is the first time the company will be launching its product, the sales and marketing budget is kept high. Once the brand establishes itself, the marketing budget may come down.
Sales and Marketing Strategy
The requirement of the product is very basic and is always required. This makes it easier for the operating department to continue the supply chain. However, one must first sell the product to the right people to reach that point. There are various ways Home Health Plus can advertise its product offering. Advertisement through television has the maximum potential to reach a large number of people but it is the most costly one. We ought to first take a look at the CPM (Cost for reaching 1000 people) of each type of advertising method.
CPM for broadcasting television is estimated to be around $10.15. Mainstream magazines cost around $6.98. Local cable channels cost around $5.99 and newspapers cost around $5.50. Radio is one of the cheapest media with a CPM of $4.54, and billboards cost around $2.26. Online advertising is the cheapest mode with a CPM of $1.5 (Provencher, 2009).
The target audience size is around 20,000 people but to reach that the media probably needs to reach a population base of 75,000 people. As most of the potential buyers use internet and as through internet most targeted marketing campaign can be done, it should be the first choice of marketing for Home Health Plus. Home Health Plus can collaborate with Facebook to advertise its product to users based in Palm Coast. They can run the advertisement campaign for few months. This campaign probably will get around 20,000 hits, costing Home Health Plus $30,000. The second most effective media will be billboards. Home Health Plus can place billboards all across the city. If they continue the campaign for few months, it will cost around them $20,000. However, billboard is a less effective medium than online campaign to reach people. Finally, Home Health Plus can collaborate with the local cable TV to launch an advertising campaign which can run in prime hours for months. However, this probably will cost Home Health Plus more than $40,000. Rest of the money in sales and advertising can be used to create some buzz in newspaper and distributing handbills.
A tagline is very important for any marketing campaign. Home Health Plus can use the tagline “live your life every day, you way”. This will give the customers a sense of freedom they are likely to enjoy by utilizing the products of the company.
Conclusion
Home Health Plus is trying to launch door to door services for products often required by retired people. Currently, the market does not offer all the services from a single platform. Home Health Plus can provide packaged and customized services to the targeted customers. It can collaborate with housekeeping agencies, meal providers and Laundromats to offer a single platform based service at a reasonable cost. Pricing of $300 per month for the base package probably will be a good price to start with for both customers and Home Health Plus. A marketing campaign is absolutely necessary to make people aware of the product offering. A mixture of online advertising along with TV advertising will provide the best coverage. With minimal competition in the market, the product is likely to become a success if the service quality is good and the marketing campaign is able to reach the intended audience,
References
US Census Bureau (2013). State & County QuickFacts : Palm Coast (city), Florida. US Department of Commerce. Retrieved on 30th January 2014 from <http://quickfacts.census.gov/qfd/states/12/1254200.html>
Zillow (2014). Palm Coast Demographics. Retrieved on 30th Jan, 2014 from <http://www.zillow.com/local-info/FL-Palm-Coast-people/r_26366/>
Desjardins (2013). Retirement Product Guide. Retrieved on 30th January 2014 from <http://www.desjardins.com/en/particuliers/evenements/planifier_retraite/reer/gpretrai.pdf>
Fidelity (2013). What will you spend in retirement. Retrieved on 30th January 2014 from <https://www.fidelity.com/viewpoints/retirement/what-to-spend-in-retirement>
You are stupid if you do your own laundry (2012). Wealthy Single Mommy. Retrieved on 30th January 2014 from <http://www.wealthysinglemommy.com/you-are-stupid-if-you-do-your-own-laundry/>
Trent (2011). A Cost Comparison of Home Laundry and Laundromats. The Simple Dollar. Retrieved on 30th January 2014 <http://www.thesimpledollar.com/a-cost-comparison-of-home-laundry-and-laundromats/>
Care (2013). Cost of Care: How Much Should I Charge for Housekeeping Services?. Retrieved on 30th January 2014 from <http://www.care.com/housekeeping-cost-of-care-how-much-should-i-charge-for-housekeeping-services-p1017-q14556.html>
Marketing Metrics Made Simple. Cost per Thousand (CPM). Retrieved on 30th January 2014 from <http://www.marketing-metrics-made-simple.com/cost-per-thousand.html>
Provencher, S. (2009). CPM of Various Media Advertising. Retrieved on 30th January 2014 from <http://sebprovencher.com/2009/04/23/cpm-of-various-media-advertising/>
Simmons, J. (2013). Palm Coast begins rebuilding, calls in FEMA. Retrieved on 30th January 2014 from < http://www.palmcoastobserver.com/news/palm-coast/Front-Page/121820138461/Palm-Coast-begins-rebuilding-calls-in-FEMA?page=5>
Appendix: Survey Results
