Marketing Plan

Morgan Hunter Homes

Marketing Plan Contents

1. Introduction and Background.…………………………………………………….

Current Situation and Challenges………….…..….……………………..………

2. Goals and Objectives …………….………………………………… ……………

3. Competition…….. …………..………………….…………………. ……………..

4. SWOT Analysis ……….……………..……….………….……………………..

5. Marketing Mix Analysis ……………………….………………….……………..

7.0 External Marketing Environment………………………………………………

8.0 Recommendations …………………………………………………………...

9.0 Summary …………………………………………………………… ……… …

10 Bibliography ……………………………………………………………. ………
Modular Homes Design Company

1. Introduction and Background

The economy of Biloxi, Mississippi (MS) was in much need of stimulation following the devastation caused by the Katrina and Rita hurricanes nearly two years ago. Homelessness, illness, hopelessness, and despair are all remains of the wreckage.

There has been rampant unemployment in the region; consumer debt has been on the rise. This has fueled the initiative for relief programs, attempts to bridge the gap of governmentally funded programs and the shortcomings of the locally and state-funded offerings. One federal initiative allows Mississippi Home Corporation to offer below-market mortgage rates.

Rebuilding has been slow due to the lack of skilled construction workers. Displacement of workers and limited education/training are major causes for the deficiency.

Building permit requirements have been made more stringent. Insurance settlements, or lack thereof, have left many homeowners striving to locate stable housing. Some of these homeowners have turned to government programs such as the Hurricane Katrina Grant Program.

Insurance premiums skyrocketed for homeowners and business owners alike. In June 2006, Mississippi’s Governor Haley Barbour set aside $50 million in state-administered federal grants to offset anticipated insurance premium increases for consumers under “wind pool” policies. The actual “wind pool” is an underwriter of insurance for what are deemed “last resort” policies, ones that no other insurance companies will touch, ones deemed to be extreme risk potential. Governor Barbour’s purpose in providing this funding is to discount premiums by utilizing reinsurance and federal grants statewide.

Most insurance companies that want to conduct business – write policies – in southern Mississippi pay into the wind pool, but the backlash was that, although premiums were somewhat decreased in the hazardous southern areas, those in the north were getting hit with an increase in premiums. The insurance commissioner is hoping to stimulate competition and increase the availability of affordable insurance.

This region is ripe for rebuilding. The majority of residents wish to return to their home geographic areas. They are eager to work. They want to rebuild, and it is in the region’s – and nation’s – best interests to commence progress. Progress in this case begins with fulfilling the consumers’ most basic needs: safety, security, and shelter.

2. Current Situation and Challenges
Morgan Hunter Homes is a LifeStyle Design Company that uses “Modular Technology” to create a home to satisfy our customer’s desire for quality while fulfilling the needs of their individual lifestyle.

In a place and time where the need for cost-, time-, and labor-efficiency is at its peak, Morgan Hunter Homes is positioned to offer land owning residents what they need now: safety, security, and shelter in the form of affordable, attractive, and expeditious housing.

3.0 Goals and Objectives 1. To help eliminate the current stigma associate with modular technology while develop and elite brand of home design. 2. To ensure sound construction for families to be safe in unpredictable weather conditions. 3. To provide a cost effective alternative to traditional stick-built homes.
Business Philosophy: To design a product that our company knows we will sell and that our clients can appreciate.
Modular technology is a growing industry that has great potential to be a leader in community development. With numerous variations in design; our company can foresee the huge potential in modular home popularity. Continuing to strive for the best home possible at the most reasonable price will give this market the edge over other types of home design, such as manufactured and stick-built properties.
Morgan Hunter’s strengths include lean production of pre-designed homes, increased productivity of workers, and environmental waste reduction, such as the excess of scrap wood and material that often gets disregarded in on-site or “stick-” built properties. The price of a modular home is about 15% lower than the cost of traditional housing. The product meets or exceeds state government standards.
Legal form of ownership: Limited Liability Corporation

The market research that has been conducted has indicated that heads of household, ages 25 to about 54, with families of three to five, would be a prime target market for our product. Additional research revealed that the majority of this market would prefer single-family dwellings and may be apprehensive about purchasing housing that survived the impact of the storm. New housing is most desirable, and while traditional on-site or “stick-built” homes are desirable, they are in short supply due to lack of construction labor and materials.

Modular homes, efficiently produced in a climate-controlled environment in Indiana (IN) and shipped 95% complete to their final destinations, are assembled onsite and provide long-term solutions to the current housing shortage in Biloxi, MS.

Balance Sheet Analysis; Analyze each business unit or line of business to determine if one line is more profitable than another. Focus on core competencies; analyze the operating income data across several product lines to ascertain profitability of the individual lines.

4.0 Competition

Morgan Hunter Homes offers our clients superior service accompanied with state-of-the-art analysis and design capabilities. We will offer three-dimensional visualization services to reduce the possibility of spatial conflicts with architectural elements and other engineering disciplines. In comparison, our competitors rely mostly on two-dimensional models.

We will implement a quality assurance and control program for all projects undertaken. This document will serve to focus on the standards and a means of measuring performance. We will also deliver our homes 85% complete to the site; transportation is included in our base fees.

• Nationwide Custom Homes 1100 Rives Road Martinsville, VA 24115 Phone: 800. 216. 7001 Fax: 276. 666. 2537 o Offers homes between 1,270-2,878 sq. ft. o Offers multi-family property including ▪ Duplex ▪ Triplex ▪ Quadplex ▪ Townhouse o Homes are delivered up to 90% complete. o Homes are subjected to 300 quality inspections and third-party inspections to ensure the highest level of quality. o Homes qualify for all types of mortgage programs. o Nationwide provides their own transportation department and their own setting crew to deliver and place the unit on its foundation. o Contracts with Phoenix Building and Development in Biloxi, MS. ▪ Can build multi-family units to comply with wind rating of up to 175 mph. Additionally the units are designed to be built on pilings up to 20 ft. high. ▪ Units qualify to be financed and insured the same as any site-built home.

• Lite House Design and Construction Ocean Springs, MS Phone: 228. 257. 3887 o Authorized builder of Nationwide Custom Homes. o Focuses on Mississippi’s residential needs. o Home selling prices start at $85,000. o 70-plus standard plans are offered. o An architect and an engineer run company.

• Champion Enterprises 2701 Cambridge Court, Suite 300 Auburn Hills, MI 48326 Phone: 248. 340. 9090 o Provides manufactured and modular homes. o Builds house sizes ranging from 800 sq. ft. to more than 2,400 sq. ft. o Every home comes with appliances.

Sunrise Homes o Average home price starts at $160,000 o Offers smaller homes between 1,500-1,800 sq. ft. o Marketing & Relocation Assistance - Knowing how valuable a commodity time is for today's real estate professionals, Sunrise Homes' in-house production and printing department offers a variety of time saving services designed to help you sell more homes. From creating and delivering custom presentation and relocation packages, to e-mailing your customers digital photographs or virtual tours, we provide a variety of proven professional sales materials at no charge to agents. o Demographics & Economic Data - Appraisals, Community Statistics, Historical Appreciation Rates, and Average Commutes - everything your customers need to make an informed decision. It's all available from Sunrise Homes. o Education & Training Opportunities - From day-trips to supplier manufacturing plants to hands-on seminars with our superintendents, Sunrise Homes offers a variety of educational opportunities throughout the year. o Professional Sales Team - Members of the Sunrise Homes sales team are some of the best trained "new construction" specialists in the industry. From foundations to financing, you'll get the help and support you need to take care of your customers. o Exceptional Quality & Service after the Sale - In today's competitive business environment, a company that can't provide outstanding quality and service doesn't last very long. After more than 40 years in business, Sunrise Homes has made a science of delivering quality products and unparalleled service after the sale. o Thorough Closing Support - As almost any seasoned agent will tell you, getting the contract signed is only half the job. Quite often, bringing a sale to close takes more time and effort than finding the perfect home in the first place. Sunrise Homes' fully staffed closing department takes care of all the details (processing, loan tracking, scheduling etc.), while keeping you informed every step of the way. o Offers $1300 in closing incentives

Substitutes – mobile homes, existing housing, built-on-site housing, rental property
Mobile Homes (“Trailers”) • Financing on mobile homes is more difficult to qualify for and is offered at a higher interest rate than standard housing. • Mobile homes are not considered real estate until a subsequent purchaser assumes the residence. • Mobile homes depreciate in value.

[DOUG – please insert mobile home dealer info]

Chamberlain & McCreery (site or “stick” builder)
8195 Dexter Road
Cordova, TN 38016
Phone: 901. 794. 2156
Fax 1: 901. 794. 7590 or 7609

• Building timeframe is approximately 120 days, weather permitting. o Average home cost is $200,000 o Partnered with ReMax Realty; establishes relationships with consumers but increases the overall selling cost. o Advertises heavily on local television stations.

Rental Property

While some may opt to rent housing, they tend to be in the minority.

5.0 SWOT Analysis

Strengths • Cash investment of $75,000. • Moderate risk. • Lean production environment eliminates waste and increases productivity. • Low cost – the price of a modular home is at least 15% lower than traditional, “stick-built” housing. • Strong quality – the product meets or exceeds government standards. • Low infrastructure – the product can be installed on pilings or on concrete slab. • Easy exit – outsource warranty and depart. • Staffing – marketing expertise and award winning architectural design expertise. • There is great need and demand for housing in the Gulf Coast region. • Morgan Hunter Homes is a family-run business. • Passion. • Vision.

Weaknesses

• Low working capital. Limited financial resources –only have $75,000 to work with; prospects of getting additional finance are poor. Credit has not yet been established for loans. • Lack of expertise/experience in managing a business. • Unestablished – business has not made a name for itself, therefore suppliers may not extend the amount of credit to someone new to the industry. • Marketing is weak and has very limited role/ influence. • Management is removed from the marketplace. Business is situated in the Gulf Coast area; owners are from the North. Extensive travel to the area will be costly. • No down time for owners. New businesses require unremitting attention. • Limited word-of-mouth advertising with a new business. • Internet advertising is not widely established and utilized in the Gulf Coast region. • No established brand awareness, image, or reputation exists for Morgan Hunter Homes. • High freight costs will be incurred from production location Indiana to ultimate destinations in Mississippi. • There is an existing modular home provider on the Web; poses potential confusion among consumers - http://www.morganusa.com/commbldg/index.htm

Opportunities

• Approximately 60,000 houses in the Gulfport area are currently uninhabitable. • Biloxi residents are landowners seeking housing. • Many Biloxi residents are accustomed to living in 500-900 sq. ft. housing, some of which lack air conditioning. • Local military base provides a lot of turnover, new home buyers. • Offering a quick alternative to on-site building. • Overcome the stigma that results from confusing modular homes with mobile homes and trailers. • Capitalize on the fact the there is not a lot of labor available • Engage outside people such as insurance agents and political figures to help promote the product’s potential. May be a way to gather group sales in addition to individual sales. • Get involved in the local recovery efforts become a known part of the community, if not yourself, through respected individuals in the area. Choose your associations wisely. • Offer solutions for overdue insurance claim payouts; helping the victims will build relationships that will enable prosperous outcomes for all involved. • Set up seminars in the surrounding areas. • Contact and become involved in local government and political agencies (e.g., AARP) that are trying to offer solutions. • Offer seminars to aid in the education process. • Establish relationships with mortgage brokers. • Be positioned to take advantage of the brief time remaining for FEMA housing recipients’ benefits. • Recognize and understand government assistance programs designed to get people back into permanent housing, e.g., Katrina Homeowner Grants, a needs assistance program, as well as tax incentive programs.

Threats

• People in this region have been negatively exploited in prior rebuilding experiences. As an out-of-state company, there is particular need to establish trust, competency, and longevity. • Modular home quality and structure are often confused with that of mobile homes. • Crime rates in the area are higher than average for desired living communities. • Insurance claim resolution is slow, complicated, and frustrating for the hurricane victims. • Insurance premiums are rising, making it difficult for people to afford the insurance needed to rebuild and sustain a new home. • Interest rates are likely to rise, making the costs of long-term financing rise. • Building materials are in short supply.

6.0 Marketing Mix Analysis
Analysis of the Marketing Mix (Four Ps)
[Dawn Baxter – please review and then complete this section]
[Product, Price, Promotion, Place]

The products offered by . The product assortment is a mix . Morgan Hunter Homes has adopted a sales-oriented pricing objective and is focused more on selling than an actual profit margin

MorganHunter Homes LLC offers complete structural and design services. We will focus on buildings with the following use and occupancies: • Residential. • Commercial. • Industrial.
The company is project oriented where each project involves: • Renovations. • Rehabilitation. • Additions. • New construction.
We offer innovative and economical design services, maintaining state-of-the-art design technology. We meet client needs on projects of all sizes as well as smaller, special design projects.

Our service descriptions follow:
Project Consulting: Proposed and billed on a per-project and per-milestone basis, project consulting offers a client company a way to harness our specific qualities and use our expertise to develop and/or implement plans, from conceptual planning to turnover. Proposal costs will be associated with each project.
Project Management: Our project management services include defining client needs, preparing bid documents, construction review, payment certification, contract administration, and warranty inspections. Projects include new facilities, renovations, and remodeling.
Home Inspections: We will provide prospective homeowners with an assessment of the various systems in a residential home, including foundations, framing, building envelope and efficiency, mechanical systems, electrical systems, and general safety issues. We provide a photographic record as well as a thorough written report.

Suppliers needed to complement the project are as follows:

• Concrete supplier • Masons • Plumbers • Electricians • Landscapers • Realtors • Mortgage brokers • Sales team

A brochure system, which covers a broad spectrum of the target market segment, will be developed during the initial year of operations. Brochure inserts will be maintained as individual sheets to facilitate their assembly in any custom situation.
Our website will be developed the first year of operations and will include a description of our services, the areas which we plan to serve, contact information, a list of representative projects, and a brief biography of the company principals. An Internet domain name has been reserved for this purpose: http://www.morganhunterhomes.com.
A series of templates will be developed for project proposals. The format for all proposals will include: • Cover letter. • Scope of services for each project. • Fee (if requested). • Firm's qualifications to provide services (overview). • Project team (describes each person's tasks and qualifications). • Philosophy of design approach. • Relevant experience. • Schedule to provide services.
Future services will include the following:
Quality Control and Assurance: Serving the needs of the modular home industry, we will ensure that all of our partners and future partners will be certified firms and their employees certified contractors as well.
Fabrication and Detailing Drawings: Serving the special needs of steel and concrete construction, MorganHunter Homes will be working toward offering these services to contractors in the future.
Toll-Free Communications: We will provide our partners and clients a toll-free number to access 24 hours a day in the second year of operations.

7.0 External Marketing Environment Based on employment information from the Bureau of Labor Statistics (http://www.bls.gov/webapps/legacy/cpswktab2.htm), the following graph illustrates the pertinent age ranges of working adults in Biloxi, MS. These numbers include both genders and represent the following populations: Caucasian, African American, Asian and Hispanic.

[pic]
The largest segment of the Biloxi population falls between the ages of 25 and 54. Typically, people in these age ranges tend to be involved in child rearing and home ownership. The following table depicts a breakdown by gender and race, earnings per year.

|Employed People - Ages 25 and Over |
|2006 |
| |Male Headcount |Earnings per Year |Female Headcount |Earnings per Year |
|White |44,171 |$42,692 |32,605 |$33,280 |
|African-American |5,336 |$32,240 |6,036 |$28,340 |
|Asian |2,541 |$48,152 |1,976 |$37,804 |
|Hispanic |8,477 |$27,612 |4,905 |$24,128 |

Referring to http://www.trulia.com/real_estate/Biloxi-Mississippi, the following insight was derived in 2006-2007:

Median family income $ 45,079 Median home price $126,500 Median age 32.9 years Some college education 56.5%

The following places of business are located within 15 miles of Biloxi, MS, and will likely attract and retain families to this area:

• 449 restaurants • 32 bars • 15 public golf courses • 13 libraries • 5 movie theaters

The employment rate in the Katrina-ravaged region is expected to increase, especially in the construction industry. This stirring of the economy will likely increase wages and subsequently disposable income. Although inflation rates increased as a result of soaring energy prices, it has been slowly receding as reported in the consumer price index; the wage increases have outpaced inflation.

As of March 29, 2007, the current interest rate for a 30-year fixed mortgage is 6.160%. For a 15-year mortgage, the current rate is 5.86%. Within the suggested target market, the Biloxi consumer’s greatest interest is in 3-bedroom, single-family house.

8.0 Recommendations • Seek out landowners and first-time buyers in the age range of 25-54. • With average income levels between $40,000 and $50,000, and average selling price for a three-bedroom/two bathroom property is $125,000 - $150,000, Morgan Homes’ pricing strategy should reflect this demographic data. • Position the company with local governmental officials who can aid in the regulatory and compliance process as well as be vocal supporters of this affordable and timely option for their constituents.

9.0 Summary
Morgan Hunter Homes LLC will be formed as a design firm specializing in modular design technology. A home office will be located in Biloxi, Mississippi, with partners at Admiration Builders in Indiana. This partnership allows our company to keep costs low while being able to provide the quality and lifestyle that our customers expect.
The founders of the firm are professional persons with backgrounds in architectural design and marketing management. Our architect has fifteen years of progressive and responsible experience. Initial start-up capital is $75,000. Of this total, $60,000 is required for start-up expenses while the balance is to be placed in the company accounts as working capital. Projected sales and profits for the first three years of operation are summarized below:
|Year |Sales($) |Profits($) |Sales/Profit(%) |
|1 | | | |
|2 | | | |
|3 | | | |

The firm will specialize in providing three dimensional modeling and visualization to our clients. State-of-the-art analysis and design tools will be an integral part of the business plan. Implementation of a quality control and assurance program will provide a focus for production work.

Bibliography

Perreault, W. D. & McCarthy E. J. (2003). Essentials of Marketing, A Global-Managerial Approach. McGraw Hill; New York.

Horngren, C.T., Harrison, W.T., & Smith Bamber, L. (2003) Accounting, Sixth Edition. Pearson Prentice Hall; Upper Saddle, New Jersey

http://www.bplans.com/spv/3382/2.cfm

http://www.lite-house.net/Home.html

http://www.morganusa.com/commbldg/index.htm

http://www.nationwidecustomhomes.com/modular.html

http://www.phoenixbldg.biz/