The Market
Company’s Market
Angie’s List is located in all 50 states in the United States and several markets in Canada. Though they are located in every state but they are not in every market within those states. Many states are missing some key markets but that would be a potential growth opportunity for them in the near future. Even in the current markets, Angie’s List can still improve their overall market share. Though there is not a true competitor to Angie’s List, there is still market penetration within its current markets. With its current market base of 600,000 paying customers, there is still ample room of growth both within its current markets and any new markets.
Potential Market
When meeting with Angie’s List, they were able to help us define what the typical customer’s characteristics are. After looking through their website, you are able to see those characteristics through some of their marketing plans. A typical customer at Angie’s List is a homeowner, well-educated, has children and earns more than $100k in income. Those four main characteristics are very important for the growth at Angie’s List. With the company offering so many different types of services, the most frequent type of service would be those found around the household. A couple of different examples would include home contractors for home additions, lawn services, painters, and the list goes on and on. Many homeowner’s like to see personal reviews from other homeowner’s that have had both a positive and negative experience. I believe that the most important characteristic for Angie’s List is the household that earns more than $100k in income. The customer is more likely to pay the annual fees and pay for a higher quality of service. The chart below shows the income distribution of household’s in the United States. I believe this chart is very important as the number of household’s Angie’s List is targeting is limited to just about 15% of the total market. I believe that it’s very important for Angie’s List to understand that with a target market that is limited to just the top 15% the number of new customers is limited. As the economy is still trying to improve, new customers are hesitating to increase their yearly budget.
Current Market Trends
Over the past several years’ Angie’s List has seen an overall growth in business but that growth can be attributed to entering new markets. Without any public information, it’s hard to determine the overall growth between new markets and those markets that they have been in over the last several years. However, though many companies have struggle the last couple of years due to the downturn in the economy, Angie’s List market potential is definitely growing. With customers wanting advice they can trust, the company fulfills those needs by having the trust from complete strangers. The biggest struggle has with new potential customers is word of mouth. Those potential customers are still relying on neighbors and internet blogs for advice. One of the advantages that Angie’s List has those customers are willing to pay for recommendations from actual paying members. The internet blogs cannot be trusted because you have no idea who is making the comments for positively and negatively. Any company can make positive comments about their own company.
Market Risks
There are several market risks that Angie’s List has identified as critical to the company. Those risks would include internet growth, changing of the customer base, premium services, and overall trust of quality with the customers. When looking through these risks, we believe that the changing of the customer base will play in favor of future growth for Angie’s List. The chart below is a 2010 survey of percentage of age group that uses the internet on a weekly basis. Though the overall percente for age group over the age of 70 is fairly low, the most important part is two things. The first being that as the population ages more and more people are becoming internet savey. The second thing is more people are getting access to the internet. A major part of the customer base is the suburban areas and as more providers get access to these areas they will have more potential to grow in the future. Another concern that Angie’s List saw as a potential risk is keeping the overall trust with customers. This is important that Angie’s List ensures reliability of the reviews. If people don’t feel like they are gettting anything out of the premium service and the reviews are watered down, then Angie’s List is no different than any other free website.
Market Pricing
This is an interesting part of growth for Angie’s List because the company doesn’t have a true competitor so pricing becomes less important. Like many other services, competition drives prices. Without getting specific pricing, Angie’s List does adjust prices within those markets to suit the customer base. This is important to understand because customers in Indianapolis probably won’t pay for the same prices in the New York area. However, there probably isn’t much of a difference in total between the two markets. Another pricing model that is practiced at Angie’s List is using test-markets for new pricing stragey. This is more of a supply and demand type of pricing model. For Angie’s List to increase there customer base in new markets, they must penetrate the market by offering a discounted price. The chart below illustrates this type of pricing model. With both pricing models described above, Angie’s List values that quality is very important in attracting and keeping its customers. After the company feels that they have created a strong customer base, they will be able to increase there prices because the customers will continue to pay for the premium service. One of the downsides to this type of pricing is having one price for all customers. The company is limited to adding increntmential revenue to its current customer base.
Marketing Budget
A company’s marketing budget is very important for any company that is in a growth phase. With the internet age changing the way that companies are able to communicate with customers, companies are learning the best way to get the most out there marketing budget. Over the last several years, companies have quickley adopted to two different marketing plans. The first one would be marketing to an email database. I have been in there database for the last year with getting about an email a week from Angie’s List. I believe this is a very important stragey for them because many companies bombard customers email accounts with to many emails. As a potential customer, I’m more likely going to look at an email that I don’t receive that often compared to ones to receive each day.
When looking at the marketing budget, its important not to think about the dollars spent on marketing but looking at the marketing budget as a percentage of revenue. You can’t compare the marketing budget of a company the size of Google but you can compare to those as a percentage of revenue. The chart below looks at the list of Fortune 500 companies marketing spend.
What the Fortune 500 spend on sales and marketing
Percentage of revenues Percentage of 2010 Fortune 500 companies
Less than 1% 3%
1% to 5% 43%
6% to 10% 25%
11% to 20% 18%
21% to 50% 9%
More than 50% 1%

When analyzing the information, it’s important to understand that there are several different industries represented in this data. However, it does show that even as a Fortune 500 company its important to continue to market to new and existing customers.