Marketing Segmentation for Rental Business

Topics: Marketing, Strategic management, Household income in the United States Pages: 5 (1377 words) Published: August 6, 2010
Running head: Marketing Plan

Marketing Segmentation & Product Positioning for
Koolie Kool Rental Services

Koolie Kool Rental Services
Koolie Kool is a retailer of refrigerators, which holds inventory from manufacturers until such time as it is sold directly to customers who visit our retail locations. However, from such time as inventory is obtained until it is sold, Koolie Kool has no return on investment. As Koolie Kool holds all of the risk by buying the inventory, it is incumbent on the company to examine ways of mitigating this risk.

The core of this marketing plan is that Koolie Kool creates a pre-sales rental market for its refrigerators. In doing so, Koolie Kool will achieve two goals. Firstly, it will obtain revenue from refrigerators that would not otherwise have been sold. Secondly, it will increase the total return on investment (ROI) from each refrigerator; even though the retail price of a pre-rented refrigerator will drop, being able to rent such a fridge even a few times before sale will increase the ROI per unit. Marketing Segment

The segment to which Koolie Kool is targeting its rental services is twofold: (1) middle and lower-middle class families who cannot afford to own a refrigerator outright, but who can pay modest rent-to-own installments on a refrigerator; (2) more well-off but cautious buyers who wish to test a refrigerator in their homes before making a commitment to buy it. Target Market Analysis

Segment (1) is growing every day, as the cascading results of the global recession have lowered household wealth in general. Segment (2) is smaller, but has still grown in response to the recession; even wealthier buyers have adopted a more cautious stance with regards to their purchases, and therefore need to be wooed with more inventive strategies. Both of these segments will be targeted for the simple reasons that they are large, hold a great deal of buying (or renting) power, and are underserved by the current model of refrigerator sales, in which the paradigm is buy-only.

Assuming that the average price of a refrigerator is well over $1,000, it is worth taking a closer look at the American market in order to examine how the economic dynamics favor the marketing plan advanced here. According to the U.S. Census Bureau’s latest numbers, American households have taken an economic battering from 2007 onwards. Moreover, given that 2008 was the first full year of the global recession, the 2009 numbers when they are released are likely to be even grimmer. Consider the following table of household income in America in 2007 and 2008, the percentages by which income has dropped in every single category (U.S. Census Bureau 2009, p. 17): [pic]

This research demonstrates that the number of middle and lower-middle class households in the U.S.; first target market is growing at a rapid rate. In terms of the second target market, that of more affluent consumers made cautious by the recession, Warner and Laurence (2009) note that the number of such customers is also growing (p. 11), although, in the refrigerator market, there is no research dedicated to capturing the risk aversion of wealthy consumers. However, based on the data marshaled by Warner and Laurence (2009), it is a fair bet that a lot of high-flying consumers’ appetites have been tempered by the recession.

These proof points establish the viability of the target markets. The question now is how to frame and execute the marketing plan. SWOT
|Table 1: SWOT ANALYSIS: Koolie Kool | |STRENGTHS |OPPORTUNITIES | | | | |Established retail presence, including high visibility...

References: Fields, B.R., Wilder, S.K., Bunch, J., and Newbold, R. (2007). New York: Morgan James
Schenck, B.F. (2005). Small business marketing for dummies. New York: For Dummies Press.
U.S. Census Bureau. (2009). Income, poverty, and health insurance
coverage in the United States. Retrieved April 24, 2010 from
Warner, R. and Laurence, B. (2009). Save your small business. San Francisco: Nolo.
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