Running Head: TRUSTY TECHNOLOGY SERVICES Case Analysis: Trusty Technology Services Case Analysis: Trusty Technology Services Maribel Mendez has been struggling with her technology business since she started it in 2007. Based in the resort town of Petoskey, Michigan, she has a year round area population of 10,000, growing to more than three times that during the summer months. Maribel planned to use her savings of approximately $15,000 as seed money to get the business started. Her lone area competition is Fletch Truman.
Fletch’s technology business is well established in the community, weathering the introduction of a national technology help company to the area. Maribel set a goal of $60,000 annual sales in order to provide her with enough profits to establish a household in the area. Maribel engaged in limited advertising and established a small customer base. Aside from short busy periods at the beginning and end of the vacation season, Maribel falls well short of her revenue target; sometimes grossing only $200 a week. Marketing Strategy
Maribel is engaging in a strategy of direct competition. She is trying to get to a targeted audience but using mass marketing techniques. Her strengths are competence in the subject area and an established need in the community for those types of services. Her weaknesses include a non-established customer base, an established, entrenched competitor, and a market that shows little opportunity for growth. Her opportunities are few. She could possibly find a niche market for her services, and promote the differentiation of her services over his competitors.
The threats she faces are loss of her savings and displacement from the area. I would suggest Maribel look to segment herself to target a specific market. Instead of attempting to be all things technology, she should specify a target customer base and work to cultivate that market. She should narrow her scope of services to specialize in a smaller area. Problems Maribel faces many problems, some of which are mentioned above. Her biggest problem is that she is engaging in head-to-head competition with a well-established competitor.
She faces an uphill battle not only for competition of any new market, but also the need to draw market away from her competitor. This would be easier if her competition was not popular or was alienating his own customer base, but he has established an almost unshakable loyalty in his customers. With this type of customer loyalty, it will be very difficult for Maribel to build a customer base. Maribel also is not targeting her marketing to her potential customers. Her choice of medium is far too broad.
The study does not mention if she purchased ad space in the local yellow pages. If her primary customers are the seasonal residents needing to re-establish their computer systems, her advertising should be targeted to publications that those people read. She should target her advertising to summer papers, beach circulars, restaurant ad space, and ads in papers where people have their permanent homes. Discussion and Policies Maribel has made some errors in setting up her business. I do not believe she has conducted any research before establishing her business.
Having worked for Fletch in the past, she should be familiar with his customer load. She should have asked herself if there was a customer need to be filled by another technology company. The demand curve will not tolerate an abundance of supply. If there were excess demand, Maribel would be able to absorb that demand with her new business. Fletch has a targeted customer base and has found a product (his service mix) that his customers want. Maribel should have looked at the national chain Fix-A-Bug when they tried to gain market share in the area.
Fletch was able to hold off their intrusion into his market, even through a policy of price cutting and the reputation that goes along with being part of a national chain. Even with the support of a national company, and the capital that it affords, new entries into Fletches market have not survived. Maribel had to realize that it would be extremely difficult for her to do better, given her limited start-up capital. As for Maribel’s financial planning, she is short on the startup and long in the expected first year revenues.
Her initial startup costs of approximately $11,000 is reasonable, but accounts only for the initial startup capital. Advertising has not been accounted for. This could pose a potentially huge cost, especially if it is necessary to dislodge an entrenched competitor. Her first year target of $60,000 in sales is also difficult to achieve. This works out to approximately $230 a day, 5 days a week for 52 weeks. She never reached this target except for her busiest days. As mentioned before, her marketing is not focused and is wasted on advertising that does not target her desired customer base.
Advertising on Craig’s List does little for a person whose computer is not working, and most people who are computer savvy are moving away from printed newspapers. Even the name of her company, Trusty Technology Services does little to tell prospective customers exactly what services she performs. Being the founder and sole employee, Maribel has little concerns when it comes to human resources. Solutions Some different courses Maribel could take are to move into a more specialized area of computer services. She could chose to specialize in a service that her competition is weak in, say network setups.
She needs to capitalize on her Navy experience as a computer network troubleshooter. It will be very difficult to displace a well-established competitor, so Maribel needs to find a segment that her competition is not filling sufficiently, or is weak in meeting. By doing this, she is pushing for market penetration into her competitors established customer base. Maribel also needs to target her advertising. People who need services performed will turn to the local Yellow Pages first, as the phone book is usually kept as a reference for services available.
She should also concentrate her advertising to her desired customer base rather than the entire town, in the case of the newspaper ad, or all of northern Michigan, in the case of the Craig’s List ad. Her advertising needs to target the summer resident computer user who needs to re-establish their system. She should also increase the available startup capital. While it is desirable to start a business without the need for a business loan, too often, embarking on a business venture without the required startup capital leads to a premature failure of the business.
Obtaining the required capital is not enough. Variable costs, such as advertising, need to be taken into consideration. Plan of Action I believe Maribel needs to specialize. Maribel needs to specialize in computer networks and change the name of her business to Trusty Computer Network Specialists. She should capitalize on, and advertise her Navy computer experience. Her advertising should be directed more towards her target customer. She should put an ad in the local Yellow Pages under computers and services and place newspaper ads in the major cities the summer residents travel from.
She could also advertise in local restaurants, and possibly rent ad space on a billboard. This is expensive in the short run, but is necessary to compete with a well-established competitor. She could also use Fletch’s own advertising. Accept his discounts or coupons. She needs to target her competitions customer base. Once she begins to establish a customer base, offer incentives to keep them. If she set up their computer, offer a discount for the breakdown at the end of the season. While difficult, it is not impossible to take market share in what could be considered a closed market.