ACKNOWLEDGEMENT - startupsristi1.weebly.com€¦ · Web viewCurrently the repair industry in India is highly unorganized and most of the repair work is done based on contacts obtained

BUSINESS CONCEPT

Householdpairs.c om

For requirements of the course

CINE: Understanding Creativity, Innovation,

Knowledge Networks and Entrepreneurship (2012-13)

INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD

Date of Submission: 30th August 2012

To

Prof. Anil Gupta

Submitted By

Maneesh MenonShashi Ranjan KumarSreejithRamachandran

ACKNOWLEDGEMENT

We would like to thank Prof. Anil Gupta, for providing us with an opportunity to

work on the assignment of preparing a business concept of our choice. We also want to thank

all those friends and family members who participated in the survey floated by us to gauge

the market for our product.

Indian Institute of Management | CINE

TABLE OF CONTENTS

ACKNOWLEDGEMENT............................................................................................................................I

Introduction...........................................................................................................................................1

Householdrepairs.com..........................................................................................................................1

Our Vision..........................................................................................................................................1

Our Mission.......................................................................................................................................1

Our Services.......................................................................................................................................1

MARKET ANALYSIS.................................................................................................................................2

Method..............................................................................................................................................2

Cost of repair analysis:.......................................................................................................................3

Frequency of repair (per year) analysis:............................................................................................4

One year cost of Repair Analysis:......................................................................................................5

Market estimation: Mobile................................................................................................................6

Market estimation: Computer/Laptop..............................................................................................6

Market estimation: Television...........................................................................................................7

Market estimation: Motorcycle.........................................................................................................7

Market estimation: Car/ Jeep / Van...................................................................................................8

BUSINESS MODEL..................................................................................................................................9

Expansion Model...............................................................................................................................9

Major Revenue sources...................................................................................................................10

Major Cost drivers...........................................................................................................................11

Financial Model...............................................................................................................................11

Primary Research (Fine tune the business model)...............................................................................12

What repairmen said?.....................................................................................................................12

Details of the Sample...................................................................................................................13

Key Hypothesis and results..........................................................................................................13

Critical attributes/concerns of repairmen....................................................................................13

Conclusions..................................................................................................................................14

What Customers Said ?....................................................................................................................14

Details of the Sample...................................................................................................................14

Key Hypothesis and results..........................................................................................................14

Critical attributes/concerns of repairmen....................................................................................15


Conclusions..................................................................................................................................15

HOUSEHOLD REPAIRS WEBSITE...........................................................................................................16

CURRENT STATUS...............................................................................................................................17

NEXT STEPS.........................................................................................................................................18

APPENDIX........................................................................................................................................19

1. Questionaire................................................................................................................................19

References...........................................................................................................................................21


Introduction

Home repair involves the diagnosis and resolution of problems in a home, and is related to home maintenance to avoid such problems. Many types of repairs are "do it yourself" (DIY) projects, while others may be so complicated, time-consuming or risky as to suggest the assistance of a qualified (www.usrepair.com)handyman, property manager, contractor/builder, or other professionals. Repair is not necessarily the same as home improvement, although many improvements can result from repairs or maintenance.

Currently the repair industry in India is highly unorganized and most of the repair work is done based on contacts obtained from word of mouth. With housing industry boom and greater focus on reuse the repair industry is set to boom. Though data on Indian markets is currently unavailable, we can use the US data as a proxy to determine the state of the industry in a developed nation. The U.S. home repairs industry is a gigantic business. American consumers love their homes and appliances and in 2002 they spent a staggering $121.5 billion to repair, maintain, and improve them.(Mcfadden,2008)

The lack of an organized industry and the growing demand makes it an ideal opportunity for entrepreneurs to exploit. The critical component here is to establish a sustainable business model with all stakeholders being happy. We completed extensive secondary research to determine the market details, primary research to determine the needs of customers and repairmen and developed a complete business model for the venture. We have also launched a full fledged website with facility to login and record complaints. A testimonial section and a fully active face book page is also added to keep the customers engaged to get continuous feedback about the service

Householdrepairs.com

Our VisionWe envisage ourselves becoming a complete home repair hero for the entire nation. We aim at establishing a national network of repairmen who aid us is making our homes better. In our quest to serve people by repairing products we aim to promote the culture of repair and reuse and do our bit in saving the environment(www.dreamrepair.com).

Our MissionTo provide the best home repair service, we will always strive to raise the bar and bring a new level of professionalism to the home repair industry by providing, honest, world class service to our customers, our community, and each other (Dream repairs)

Our ServicesWe aim at providing wide range of repair services ranging from appliance repair, carpentry, plumbing, electric fittings repair to anything that will make your home better.

1 Indian Institute of Management | CINE

http://en.wikipedia.org/wiki/Home_improvement

http://en.wikipedia.org/wiki/Professional

http://en.wikipedia.org/wiki/Independent_contractor

http://en.wikipedia.org/wiki/Property_manager

http://en.wikipedia.org/wiki/Handyman

http://en.wikipedia.org/wiki/Do_it_yourself

MARKET ANALYSISThe market of household repair is fairly large in India. Since there has not been any secondary study in India, we conducted the primary research, surveys to estimate the market. Since as a service provider, it’s very similar to provide repair services to Mobile, Computer and Laptop, TV, Motorbike, and 4-wheeler, we also estimated the market for repair of these assets.

Method94 respondents from three states, namely Bihar, Gujarat and Kerala were surveyed for the purpose of market estimation. The characteristic determined from the survey were applied to entire Indian market. Though we would have preferred more data, covering more states, however due to time and financial constraints, we have restricted ourselves to three states. Exhibit 1 gives the profile of respondents surveyed.

Exhibit 1: Survey respondents profile

Questions were asked to estimate the cost of repair per repair per household, frequency of repair per household and % of repair not done in service centre. The total repair market was estimated based on all these three parameters.

Cost of repair analysis:


In our survey, the home appliances included Air-conditioner, Air coolers, Microwave, Toaster, Washing Machine and Home Theatre while TV included LCD, LED, Plasma and Color TVs. The survey shows that spending on repair per repair is most for the 4-wheelers,followed closely by home appliances. Differences between in spending between high income group and other groups are large in home appliances segment, on account of both more number of appliances and more costly appliances high income households have. The difference in spending on 4-wheeler and TV is mainly due to expensive 4-wheelers high income families have, while spending on Computer, mobile and motorbike doesn’t show significant difference in spending between different income group.

Exhibit 2a: Cost of repair (income-wise)

Exhibit 2b: Cost of repair (state-wise)


Similarly when seen at state-level, there is hardly any difference between spending of different states. The one of probable reason for this trend is use of company service centres for repair, where prices are uniform across states. So, we have accounted for the % of repair done in the service centres.

Frequency of repair (per year) analysis:The study reveals that at national level, households repair some household appliance 10 times a year. This frequency is high for high income group (about 14 times) on account of higher number of appliances in the house. In other assets, frequency of repair is almost same for all the income class.

Exhibit 3a: Frequency of repair (income-wise)

- 2.0 4.0 6.0 8.0

10.0 12.0 14.0 16.0

HomeAppliances

Mobile Comp/Laptop

TV Motorbike 4-wheeler

Frequency of repair ( per year) - Incomewise

India >10 Lakhs 5 - 10 Lakhs < 5 Lakhs

Exhibit 3b: Frequency of repair (State-wise)

-

2.0

4.0

6.0

8.0

10.0

12.0

HomeAppliances

Mobile Comp/Laptop

TV Motorbike 4-wheeler

Frequency of repair ( per year) - Statewise

India Bihar Kerala Gujrat


Similarly, when seen at state-level, there is hardly any difference between states in reported frequency of repair for different assets. Bases on insignificant differences between states for cost of repair and frequency of repair, we conclude that the same result applies for all the other states.

One year cost of Repair Analysis:Based on survey, we also decided to only focus on the repairs not done in service centres. This, along with cost and frequency of repair gives the expenditure one typical household incur on the repairs in one year. Data is summarized in Table 4.

Table 1a: Cost of repair (per year) - income-wise

Income% non-service

centreHome

Appliances MobileComp/ Laptop TV Motorbike 4-wheeler

India 64% 9,202 880 2,178 1,675 1,639 6,027

>10 Lakhs 57% 17,052 1,096 2,548 2,468 2,195 7,661

5 - 10 Lakhs 67% 8,319 845 2,472 1,795 1,922 5,639

< 5 Lakhs 69% 5,439 768 1,753 1,106 1,137 3,700

Cost of repair ( per year) - Statewise

Table 1b: Cost of repair (per year) - State-wise

State% non-service

centreHome

Appliances MobileComp/ Laptop TV Motorbike 4-wheeler

India 65% 9,248 880 2,178 1,675 1,639 6,027

Bihar 77% 12,157 1,018 2,353 1,662 1,516 4,691

Kerala 54% 7,270 777 2,096 1,669 1,661 5,558

Gujrat 63% 8,551 834 2,074 1,688 1,751 5,784

Cost of repair ( per year) - Statewise

The cost of repair per year for a high income household is more than twice as that of other income groups for household appliances. Further survey reveals high income group and Kerala households are most likely to go to brand service centre for repair while other income group and households from Bihar doesn’t go to company service centre that frequently.


Market estimation: MobileBased on census data 2011, about 80% of total households had a mobile or a telephone in their home. (Census of India, 2011). The table below gives the statistics available for the major states in India which is a good representation of the nationwide status

Tota

l

Land

line

only

Mob

ile

only

Bot

h

NCT of Delhi # 3,340,538 90.8 5.1 68.3 17.4

Kerala 7,716,370 89.7 11.6 46.8 31.3

Chandigarh # 235,061 89.3 6 63.1 20.1

Goa 322,813 89.1 12.1 53.8 23.3

Himachal Pradesh 1,476,581 82.3 7.4 61.5 13.4Punjab 5,409,699 82.1 6.7 62.3 13.2

Haryana 4,717,954 79.3 4.5 66.9 8

Tamil Nadu 18,493,003 74.9 5.7 62.1 7.1

Uttarakhand 1,997,068 74.6 3.2 64.8 6.6

Sikkim 128,131 73 1.8 67.7 3.6

Total 43,837,218 80.5 6.7 60.5 13.4

Telephone/Mobile phone

India/State/Union Territory

Tota

l No.

of

Hou

seho

lds

(Exc

ludi

ng

inst

itutio

nal

hous

ehol

ds)

Market estimation: Computer/LaptopBased on census data 2011, about 13% of total households had a computer or a laptop in their home. (Census of India, 2011)

Tota

l

With

In

tern

et

With

out

Inte

rnet

Chandigarh # 235,061 33.2 18.8 14.4

Goa 322,813 31.1 12.7 18.4

NCT of Delhi # 3,340,538 29.1 17.6 11.5

Kerala 7,716,370 15.8 6.3 9.5

Haryana 4,717,954 13.3 5.3 8

Punjab 5,409,699 12.8 5.4 7.4

Sikkim 128,131 11.5 3.3 8.2

Uttarakhand 1,997,068 11 3.2 7.8

Tamil Nadu 18,493,003 10.6 4.2 6.4

Assam 6,367,295 9.4 1.6 7.8

Total 48,727,932 13.3 5.4 7.9


Tota

l No.

of

Hou

seho

lds

(Exc

ludi

ng

inst

itutio

nal

hous

ehol

ds) Computer/Laptop


Market estimation: TelevisionBased on census data 2011, about 71% of total households had a TV in their home. (Census of India, 2011)

NCT of Delhi # 3,340,538 88

Tamil Nadu 18,493,003 87

Punjab 5,409,699 82.6

Chandigarh # 235,061 82.5

Kerala 7,716,370 76.8

Himachal Pradesh 1,476,581 74.4Haryana 4,717,954 67.9

Uttarakhand 1,997,068 62

Karnataka 13,179,911 60

Andhra Pradesh 21,024,534 58.8

Total 77,590,719 71.4


Tota

l No.

of

Hou

seho

lds

(Exc

ludi

ng

inst

itutio

nal

hous

ehol

ds)

Tele

visi

on

Market estimation: MotorcycleBased on census data 2011, about 30% of total households had a Motorcycle in their home. (Census of India, 2011)

Goa 322,813 56.9

Punjab 5,409,699 47.5

NCT of Delhi # 3,340,538 38.9

Gujarat 12,181,718 34.1

Haryana 4,717,954 33.3

Tamil Nadu 18,493,003 32.3Karnataka 13,179,911 25.6

Maharashtra 23,830,580 24.9

A & N Islands # 93,376 24.7

Rajasthan 12,581,303 24.1

Total 94,150,895 29.9


Tota

l No.

of

Hou

seho

lds

(Exc

ludi

ng

inst

itutio

nal

hous

ehol

ds)

Scoo

ter,

Mot

or c

ycle

, M

oped


Market estimation: Car/ Jeep / VanBased on census data 2011, about 10% of total households had a Motorcycle in their home. (Census of India, 2011)

NCT of Delhi # 3,340,538 20.7

Punjab 5,409,699 13.1

Haryana 4,717,954 10.5

Kerala 7,716,370 10.2

Himachal Pradesh 1,476,581 8.3

Arunachal Pradesh 261,614 7.9

Nagaland 399,965 7.8

Jammu & Kashmir 2,015,088 7.5

Mizoram 221,077 7.3

Karnataka 13,179,911 6.3

Total 38,738,797 10.0


Tota

l No.

of

Hou

seho

lds

(Exc

ludi

ng

inst

itutio

nal

hous

ehol

ds)

Car

, Jee

p,

Van


BUSINESS MODEL

Our business model envisages householdrepairs.com as a portal that connects the customers to the service providers and monitors the service to ensure quality of service. The following are the few quality parameters to be focussed into in the short term during the initial stages of the launch(Housing Maintainence, 2009)

i. Quality of Serviceii. Punctualityiii. Police verification/background check of repairmeniv. Service management.

Expansion ModelIn the long run a decision needs to be taken with regards to the model to be chosen for scaling up. The following are the choices considered:

i. In-house backend development

In the long run, household repair.com can train and form its own network of repairmen employed on a salaried basis. The incentive of a fixed monthly wage is an incentive for repairmen who observe significant fluctuation in their wages. A in-house backend network can enable householdrepairs.com to scale up easily by transferring workmen from one location to


another during initial phases(Hom Improvement, USA, 2011). The disadvantages of this approach include

i. High initial capital cost of training the workmen.ii. Developing long term relations with repairmen to be difficultiii. Union/Labour issues will need to be dealt with.

ii. Franchising

Franchising is an attractive option for scaling up the business. The primary barriers to expansion are the lack of capital, shortage of managerial capability and paucity of time. Franchising allows companies to expand without the risk of debt or the cost of equity. Since franchisees provide the initial investment at the unit level, franchising allows for expansion with minimal capital investment on the part of the franchisor. In addition, since it's the franchisee, and not the franchisor, who signs the lease and commits to various service contracts, franchising allows for expansion with virtually no contingent liability, thus greatly reducing a franchisor's risk(WA, 2011).

The second barrier to expansion is finding and retaining good unit managers. All too often, a business owner spends months looking for and training a new manager only to see that manager leave-or worse yet, get hired away by a competitor(Seattle Home appliance, 2012).Franchising allows entrepreneurs to overcome many of these problems by substituting a motivated franchisee for a unit manager. Interestingly enough, since the franchisee has both an investment in the unit and a stake in the profits, unit performance will often improve. And since a franchisor's income is based on the franchisee's gross sales-and not profitability-monitoring unit-level expenses becomes significantly less cumbersome.

Finally, opening another location takes time. Hunting for sites, negotiating leases. arranging for design and build-out, securing financing, hiring & training etc are extremely time consuming tasks. The end result is that the number of units you can open in any given period of time is limited by the amount of time it takes to do it properly.

Major Revenue sourcesOn the customer front we plan to continue with our current model of revenue share with the repairmen. We believe that in the short run 60-70% of the revenue is expected to be generated from the repairman commissions. The major sources of revenue would be

i. Revenue sharing with the repairmenii. Advertisements on the repair website iii. Membership charges for registering on the website


Major Cost drivers

The following are the major cost drivers analyzed

i. Monitoring cost ( Monitoring all the service parameters declared above)ii. Website/Tele service set up &maintenance costs iii. Costs of adding and maintain relationship with repairmen ( Incentive schemes)iv. Marketing & Publicity costs

On analysis it was concluded that maintenance cost constitutes the major share of the cost involved in operating this business. A brief summary of the costs of monitoring the service is provided below.

Financial ModelBased on our analysis of three parameters the revenue streams, major cost drivers and expansion costs we have developed a financial model to project the profits over the span of next three years. Based on our initial market analysis we plan to enter the household appliances space to begin with and expand into other services once the model is proven sustainable. The adoption rates chosen in the model are conservative to begin with and commission is also taken at a low 1% rate.


Primary Research (Fine tune the business model)

In order to succeed in this business our goals needs to be in alignments with the needs and aspirations of our two main stakeholders

i. Repairmenii. End customers

We conducted extensive primary research to understand the both the repairmen and customers.

What repairmen said?Repairmen are mostly from the region of Vastrapur, Kalupur region. Contacts were obtained from IIMA repairmen. Old Ahmedabad region is completely ignored, but we believe that the current set of repairmen interviewed is a good representative sample.


Details of the Sample

Key Hypothesis and results

Hypothesis Results

Repairman will be think their business is in danger

89% of the respondents agreed. Most were reluctant to talk to us

Coverage of repairman is restricted to a local area/region

64% agreed. Some quoted that they found it difficult to increase business to nearby areas

There is huge supply demand mismatch with the gap widening

71% agreed that people sold a lot of their spoiled products

Critical attributes/concerns of repairmen

Repairmen (Ahmedabad)

Attributes ranked based on mean % respondents ranking attribute in top three

Profit 81%

Reach /access 62%

Nature of repair 43%


Number of respondents for survey: 14Age is not a critical criterionLocation: Metropolitan cities & Tier-1 citiesFemale percentage: 0%

ConclusionsLoss of Revenue and fear of technology are the two major constraints identified in building trust among the repairmen. Building a network of repairmen is essential for the success of our business, thus educating them about the benefit of the model is critical for success

What Customers Said ?

We spoke to around 12 households around Vastrapur and also floated an online survey to get idea of what the customers think about such a service. This research helped us identify the critical success factors from the customer’s viewpoint and helped us tweak our business to serve their needs.

Details of the Sample

Key Hypothesis and results

Hypothesis Results

Women are responsible for house hold repairs in homes

67% of the respondents agreed. Most repair happened during weekday

Repairmen are overpaid and service quality is very poor

64% agreed. Some quoted they are held ransom by them

Several products/appliances etc are not repaired and new purchases are made

71% agreed that repurchase easier than repair.


Number of respondents for survey: 9715-25 Age: 57%25-35 Age: 33%>35 Age: 10%Location: Metropolitan cities & Tier-1 citiesFemale percentage: 68%

Critical attributes/concerns of repairmen

Female ( Metro cities) Female ( Tier 2)

Attributes ranked based on mean

% respondents ranking attribute in top three

Attributes ranked based on mean

% respondents ranking attribute in top three

Quality of Repair 84% Quality of Repair 77%

Responsiveness 70% Responsiveness 65%

Reach/Access 60% Reach/Access 59%

Safety 38% Safety 47%

Cost 31% Cost 38%

ConclusionsWe observed that a significant majority of households valued quality of repair, responsiveness and accessibility to repairmen as the key factors. Cost was the least critical factor for majority of the households. This helps us make a decision on developing efficient systems to monitor the service provided. Possibility of premium pricing for the service is a further attraction.

HOUSEHOLD REPAIRS WEBSITE


We currently go by the name of http://ourhouseholdrepairs.webyana.com/ . The following are a few snapshots and brief about the features of our website.

Home Page

Testimonials

User login/Feedback


Testimonials are a critical part of our plan

as most repair takes

http://ourhouseholdrepairs.webyana.com/

CURRENT STATUSBased on the work split indicated in beginning of the report, the following is the status of different phases of the work.

Activity Status

Feasibility study Complete

Business model Complete

Web Development

( Tele services included)

In progress (60%)

Supplier contract In progress (25%)

Monitoring capability development In Progress (20%)

Marketing Campaign Design & Implementation

Yet to Begin

NEXT STEPS


We follow a simple register and use model. Once the address is stored the system can automate closest repairmen

Web development

Add registered tele-service/helpline number for direct call services

Testimonial database update and SQL search facility

Provision for repairmen to register on the website

Supplier Contract

Revenue sharing mechanism to be finalized

Incentives schemes for enrolling more servicemen to be finalized

Monitoring capability development

GPS based nearest repairmen position detection system development

Value added services – like smsetc to be added

Marketing Plan - Promotion

Word of mouth

Testimonials to be made available extensively

Repairmen referral awards to be introduced to accelerate pace of network development

Once critical mass is achieved, advertisements

Estimated time 4-6 months; TV adverts can be launched to establish national presence

Ads in yellow pages, etc to be added

Social media

Facebook page to be extensively leveraged to gain critical mass

APPENDIX


1. Questionaire

1. How long have you been residing in Ahmedabada. Less than a yearb. 1-3 yearsc. 3-6 yearsd. 6+ years

2. How often in a year do electrical appliances in your home malfunction?a. Atmost onceb. 2-3c. 4-8d. 8+

3. Whom do you give them for repair?a. Respective brand’s service centreb. Nearby repairmenc. I don’t generally get it repaired

4. If you get it repaired, how do you find the person required?a. Personal contactb. Through apartment’s maintenance servicec. Yellow pages d. Online websites like sulekha, justdial, etc

5. How many times in a year would you require plumbing service in your homea. At most onceb. 2-3c. 4-8d. 8+

6. Whom do you contact for plumbing repaira. Nearby plumberb. I don’t generally fix it myself

7. If you get it repaired, how do you find the person required?a. Personal contactb. Through apartment’s maintenance servicec. Yellow pages d. Online websites like sulekha, justdial, etc

8. How many times in a year would you require carpentry service in your homea. At most onceb. 2-3c. 4-8d. 8+

9. Whom do you contact for carpentry repaira. Nearby carpenterb. I don’t generally fix it myself

10. If you get it repaired, how do you find the person required?a. Personal contact


b. Through apartment’s maintenance servicec. Yellow pages d. Online websites like sulekha, justdial, etc

11. If there is a service to relieve you of the headache of any household repair – to direct you to the correct repairmen with the guarantee of satisfaction from the service – will you be willing to pay for that?

a. Yesb. No

12. What payment mode would you prefer?a. Payment per service requiredb. Monthly subscriptionc. Yearly subscription

13. Approximately how much are you willing to pay per month for this service?a. Rs 100b. Rs 300c. Rs 500d. Rs 1000

References


1. Housing Maintainence. (2009). Retrieved from Housing Maintainence: http://www.etcog.org/UserFiles/File/PIRS/Housing/Minor%20Home%20Repair%20and%20Maintenance%20Manual.pdf

2. Census of India. (2011). Retrieved Aug 25, 2012, from http://www.censusindia.gov.in: http://www.censusindia.gov.in/2011census/hlo/hlo_highlights.html

3. Hom Improvement, USA. (2011). Retrieved from http://www.mainehousing.org/programs-services/HomeImprovement/HomeImprovementDetail?ProgramID=33

4. Seattle Home appliance. (2012). Retrieved from http://www.seattlehomeappliance.com/

5. Dream repairs. (n.d.). Retrieved from http://dreamhomerepairs.com/system/en/ourmission.

6. Mcfadden, J. N. (2008). American homeowner study. Los Angeles.

7. WA, H. r. (2011). Retrieved from http://www.commerce.wa.gov/site/491/default.aspx

8. www.dreamrepair.com. (n.d.). Retrieved from Dream_Repair_details.

9. www.usrepair.com. (n.d.). Retrieved from US-Repair: www.onerepair.com


Documents

ACKNOWLEDGEMENT - startupsristi1.weebly.com€¦ · Web viewCurrently the repair industry in India is highly unorganized and most of the repair work is done based on contacts obtained