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Business & Technology Practicum Report
MECB/MECT 2008 Business & Technology Practicum Report 2009-2011 M.Sc in E-Commerce Dublin City University (DCU) www.dcu.ie By Aodhagán Grisewood - 52857529 Paul McGowan - 53414868 Charilaos Sideris - 57210566 30/07/2008 Declaration: We the undersigned declare that the project material, which we now submit, is our own work. Any assistance received by way of borrowing from the work of others has been cited and acknowledged within the work. We make this declaration in the knowledge that a breach of the rules pertaining to project submission may carry serious consequences. Acknowledgements We would like to take this opportunity to thank Dr. Hyowon Lee, our technical advisor, for his advice, time and support while developing our practicum report. His support and humour was greatly appreciated. In addition we would also like to thank our business supervisor Des McLaughlin for his guidance. We are also grateful to Dr.Theo Lynn and Dr. Teresa Hogan who allocated time to discuss issues with us at short notice. Last but not least, thanks must also be given to fellow class mates and friends who made this experience enjoyable despite the long hours! -1- Table of contents ACKNOWLEDGMENTS <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<< 1 CONTENTS <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<< 2 LIST OF FIGURES <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<< 5 LIST OF APPENDICES ................................................................................................................ 6 CHAPTER 1 EXECUTIVE SUMMARY........................................................................ 7 Introduction............................................................................................. Company Offering................................................................................... The Market.............................................................................................. Company Strategy.................................................................................. Staffing.................................................................................................... Financial Overview................................................................................. 7 7 7 8 8 8 BUSINESS STRATEGY......................................................................... Vision...................................................................................................... Mission.................................................................................................... Values..................................................................................................... Strategies................................................................................................ Strategic Model....................................................................................... Short-Term Objectives............................................................................ Long-Term Objectives............................................................................ Customer Relationship Management..................................................... Homefootprint S.W.O.T Analysis............................................................ 9 9 9 10 10 10 10 11 12 13 14 SERVICE OVERVIEW............................................................................ 15 General Description................................................................................ Key Features And Benefits..................................................................... Products And Service Search And Comparison Facility......................... Home Energy Audit/ Dashboard............................................................. Building Energy Rating (BER) Facility.................................................... Targeted Advertising............................................................................... Homefootprint Community Blog.............................................................. Informative Content................................................................................ 15 15 15 16 16 17 17 18 BUSINESS MODEL............................................................................... 19 Advertising Model................................................................................... Threats Of Using The Advertising Business Model................................ Advertising Banners................................................................................ Affiliate Model......................................................................................... Advantages Of The Affiliate Pay Per Click (PPC) Model To Merchants.. Threats Of Using The Affiliate Business Model...................................... Community Model................................................................................... Threats Of Using The Community Model............................................... Pricing Plan............................................................................................. Advertising Pricing Plan.......................................................................... Affiliate Pricing Plan................................................................................ Competitive Analysis.............................................................................. 19 20 21 22 22 23 24 25 26 26 27 28 INDUSTRY OVERVIEW......................................................................... 38 Self-Developers Of New Homes............................................................. Overview Of The Self-Developer Residential Construction Market........ 38 38 1.1 1.2 1.3 1.4 1.5 1.6 CHAPTER 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 CHAPTER 3 3.1 3.2 3.2.1 3.3 3.4 3.5 3.6 3.7 CHAPTER 4 4.1 4.1.1 4.2 4.3 4.3.1 4.3.2 4.4 4.4.1 4.5 4.5.1 4.5.2 4.6 CHAPTER 5 5.1 5.1.1 -2- 5.1.2 5.1.3 5.2 5.2.1 5.2.2 5.2.3 5.3 5.4 5.4.1 5.4.2 5.4.3 5.4.4 5.5 5.5.1 5.5.2 5.5.3 5.5.4 5.5.5 CHAPTER 6 6.1 6.1.1 6.1.2 6.2 6.3 6.3.1 6.3.2 6.3.3 6.3.4 6.4 6.4.1 6.4.2 6.4.3 CHAPTER 7 7.1 7.2 7.3 7.4 7.4.1 7.4.2 7.4.3 7.5 7.5.1 7.5.2 7.5.3 7.5.4 7.6 7.6.1 7.6.2 7.7 7.7.1 7.7.2 7.7.3 7.7.4 7.7.5 7.8 CHAPTER 8 8.1 Market Trends......................................................................................... Estimated Market Size............................................................................ Home Owners......................................................................................... Overview Of The Home Owners Market................................................. Market Trends......................................................................................... Estimated Home Owners Market Size.................................................... Home Owners And Self-Developers Estimated Target Market.............. External Environment Analysis............................................................... Political And Legal Factors..................................................................... Economic And Social Factors................................................................. Technological Factors............................................................................. Environmental Factors............................................................................ Industry Competitiveness....................................................................... Rivalry Amongst Existing Competitors.................................................... Threat Of Substitute Products................................................................ Bargaining Power Of Byuers.................................................................. Bargaining Power Of Suppliers............................................................... Threat Of New Entrants.......................................................................... 39 40 41 41 41 42 43 44 44 46 48 49 50 50 50 51 52 52 MARKETING PLAN............................................................................... 53 Search Engine Optimization...................................................................... Internal Optimization................................................................................. External Optimization................................................................................ Blog Marketing.......................................................................................... Advertising and promotion......................................................................... Industry Related Conferences And Fairs.................................................. Banner Exchange...................................................................................... Implementations Of Word Of Mouth Marketing......................................... Switching Costs......................................................................................... Branding.................................................................................................... Homefootprint Brand Importance.............................................................. Why Homefootprint?................................................................................. Brand Favicon........................................................................................... 53 53 53 54 56 56 56 56 57 58 58 58 59 TECHNOLOGY MAP............................................................................. 60 Overview Of IT Infrastructure.................................................................. System Development.............................................................................. System Architecture................................................................................ Development Toolkits Utilised................................................................ Presentation Tier.................................................................................... Logic Tier................................................................................................ Data Tier................................................................................................. Technologies Utilised.............................................................................. Asp.Net Architecture............................................................................... C#........................................................................................................... MSSql (Microsoft Structured Query Language 2000)............................ My SQL................................................................................................... Infrastructure Capacity............................................................................ Web Hosting........................................................................................... Scalability............................................................................................... Key System Features............................................................................. Organization And Categorization Of Information.................................... Structuring Of Data................................................................................. Personalization....................................................................................... Blog Publishing System: Wordpress....................................................... PHP......................................................................................................... Security................................................................................................... 60 60 60 63 63 63 64 64 64 64 65 65 66 66 66 67 68 68 69 70 70 73 ORGANIZATION AND MANAGEMENT............................................... 75 Legalities................................................................................................. -3- 75 8.2 8.3 8.4 CHAPTER 9 9.1 9.2 9.3 9.3.1 9.3.2 9.3.3 9.3.4 9.3.5 9.3.6 9.3.7 9.3.8 9.3.9 9.4 9.4.1 9.4.2 9.4.3 CHAPTER 10 10.1 10.2 CHAPTER 11 11.1 11.2 CHAPTER 12 Virtual Office........................................................................................... Management Structure........................................................................... Board Of Directors And External Consultants........................................ 76 77 78 FINANCIAL OVERVIEW........................................................................ 79 Introduction................................................................................................ Funding Requirements.............................................................................. Financial Assumptions.............................................................................. Revenue Projections................................................................................. Profit Projections....................................................................................... Cost Of Sales............................................................................................ Salaries...................................................................................................... Rent, Rates, And Other Offices Costs....................................................... Professional Fees...................................................................................... Marketing................................................................................................... Bank Interest And Charges....................................................................... Currency.................................................................................................... Financial Statements................................................................................. Balance Sheet........................................................................................... Profit And Loss Projection......................................................................... Cash Flow Statements.............................................................................. 79 79 80 80 80 80 81 81 81 81 81 81 82 82 83 84 FUTURE BUSINESS DEVELOPMENT POSSIBILITIES......................... 87 Building Energy Rating: Tender management service.............................. Data exploitation........................................................................................ 87 87 FUTURE SYSTEM DEVELOPMENT POSSIBILITIES............................. 89 Cost per click billing................................................................................... Maximum cost per day for listing merchants............................................. 89 89 APPENDICES........................................................................................ 90 -4- List of figures FIGURE 1 FIGURE 2 FIGURE 3 FIGURE 4 FIGURE 5 FIGURE 6 FIGURE 7 FIGURE 8 FIGURE 9 FIGURE 10 FIGURE 11 FIGURE 12 - Residential Construction In Ireland Since The Year 2000.............................................. New Houses Completed By Type 2000-2004................................................................ New Houses Completed By Type 2005-2008................................................................ Total Potential Target Market Of Home Owners In The Republic Of Ireland................. Residential Sector Total Final Energy Consumption By Fuel; 1990 To 2006................ Homefootprint System Architecture................................................................................ Information Organisation User Case Example............................................................... Example Of Organisation And Categorisation Of Information........................................ Personalisation Solution................................................................................................. Wordpress Tables Created In My SQL Database.......................................................... Organisational Structure................................................................................................. 3 Year Revenue Breakdown.......................................................................................... -5- 39 39 40 42 47 61 67 68 69 72 77 80 List of Appendices APPENDIX 1 APPENDIX 2 APPENDIX 3 APPENDIX 4 APPENDIX 5 APPENDIX 6 - APPENDIX 7 APPENDIX 8 APPENDIX 9 APPENDIX 10 APPENDIX 11 APPENDIX 12 APPENDIX 13 APPENDIX 14 APPENDIX 15 APPENDIX 16 APPENDIX 17 APPENDIX 18 APPENDIX 19 APPENDIX 20 - Advertising Solution User Case Diagram...................................................................... Google Estimated Average Cost Per Click................................................................... Premium Advertising - Estimated Cost Of Reaching Users.......................................... Competitor Listing Rates............................................................................................... Competitor Advertising Rates........................................................................................ List Of Companies Approached Regarding Listing Their Products With Homefootprint.Info......................................................................................................... Build.Ie Google Analytics Statistics (UK & Ireland)........................................................ Breakdown Of Irish Residences By Dwelling Type (2006)............................................ Breakdown Of Dwelling Construction Period................................................................. Consumer Sentiment Index January 2000-January 2008............................................. Index Of Current Economic Conditions January 2000- January 2008.......................... Index Of Consumer Expectations January 2000- January 2008................................... Price Of Natural Gas...................................................................................................... Household Electricity Prices.......................................................................................... Price Of Gasoline........................................................................................................... Broadband Penetration To December 2007.................................................................. Profit And Loss Account Year One................................................................................ Profit And Loss Account Year Two................................................................................ Profit And Loss Account Year Three............................................................................. Example Of Building Energy Assessment Certificate.................................................... -6- 90 91 92 95 97 98 99 100 101 102 102 103 103 104 105 106 107 108 109 110 1. Executive summary 1.1 Introduction Homefootprint is an online portal, providing a two sided network to consumers and merchants, whereby users can avail of a product comparison facility, a service locator facility and personalised information and tips regarding improving their residential energy efficiency. Merchants will benefit from being able to utilise Homefootprint’s offering to target a specific market grouping. Homefootprint will be founded as a business in the Republic of Ireland in 2009 and will operate from Dublin. Initially Homefootprint will concentrate on marketing the services in Ireland while further possibilities for market expansion are investigated. 1.2 Company offering Key features of the Homefootprint portal are: • Product comparison facility Site users will be capable of comparing a vast array of products based on different criteria. Benefits to merchants from this service are that they will be provided with an efficient means of uploading their products to the Homefootprint web application, while they will be able to target a specific demographic of users. • Home energy audit The home energy audit will add value for registered Homefootprint users by providing a personalised tips and home energy efficiency monitoring facility. This facility will be capable of gathering a vast amount of user data and will be utilised to make further site improvements in the future. • Targeted advertising solution Homefootprint will offer a highly targeted advertising solution to merchants. Data gathered from users will be exploited to enable this. In addition, Homefootprint’s market is very specific and will result in a well defined user demographic. • Service locator facility Users will be able to utilise the Homefootprint portal to locate a registered building energy assessor. • Community facility A dedicated community area will be included in Homefootprint’s offering where users can discuss topics of interest. This community area will enable Homefootprint staff to monitor popular topics and amend the main site content accordingly. 1.3 The market There has been a growing trend towards home improvements and renovations in the area of energy efficiency. This trend coincides with government regulation on the construction of new homes and Building Energy Rating (BER) regulation on the sale or letting of homes. Operating in the green residential industry, Homefootprint’s target market consists of two different market -7- segments: (1) existing home owners who reside in homes that are not energy efficient and (2) self-developers of new homes. The overall total potential target market is equivalent to just over one million total potential users. Estimated three year market penetration Year One Two Three % target market 2.56% 5.13% 7.69% No. of site users 27,000 54,000 81,000 1.4 Company strategy Homefootprint will penetrate the market and exploit untapped market space by offering a solution that currently does not exist in the form of a residential energy efficiency product comparison tool. Aggressive marketing strategies will be utilised to build a critical mass of both users and merchants. Switching costs will be built with both merchants and users in order to minimise the risk involved with running an online business. 1.5 Staffing For the first three years of operations, Homefootprint will operate with its founding management team of three employees. This will be possible as the company will be operating as a virtual business and outsourcing many business support services. 1.6 Financial overview In order to establish the business, funding of €100,000 will be necessary. It is envisaged that this will be sourced in the form of a loan from Bank of Ireland. In addition, on overdraft facility will also be necessary to ease cash flow difficulties in initial years of operation. A cash injection could also suffice to stabilise the company during early growth. Three year financial projections Variable Revenues Net profit Year end cash Year one €58,385 -€124,551 -€18,920 Year two €181,548 -€23,293 -€51,076 -8- Year three €288,513 €75,131 -€3,030 2. Business strategy 2.1 Vision Homefootprint’s vision is to become the leading online home energy product comparison portal in the home improver and residential self-developer target markets. Homefootprint will provide a two sided network online where users can locate products and services concerned with energy efficiency in their home and where suppliers can locate their potential customers. The portal will consist of a product and service comparison facility and user tools to enable improved residential efficiency. 2.2 Mission Homefootprint offers a unique online location for both home owners and new home developers, where users can compare prices and characteristics of products and services concerning energy efficiency in the home. Information on products and services provided by merchants and service providers will be available in a central directory, thus reducing consumers’ online browsing time. This central directory will provide an unbiased location for its users to locate and gain information on residential products and services. Users will benefit from personalised tips tailored to their home’s needs. Homefootprint’s community focus will enable users to view ratings and comments on products from other community members. In addition the company will provide a powerful targeted advertising medium online for merchants to pursue their potential customers, while a service will be provided to Building Energy Rating (BER) assessors whereby they can avail of an assessment service. -9- 2.3 Values Homefootprint is guided by values that represent the company as a whole and the company’s founders. Company values will be leveraged to all dealings with both users and partner merchants. • Passion: Staff members will be passionate about their work and passionate about creating a more environmentally friendly situation in the residential sector. • Leadership: We aim to be the leaders at what we do. • Quality of our work: Whatever we do we will do it well. 2.4 Strategies Homefootprint aims to penetrate and achieve growth in the marketplace by means of the following strategies: • Exploit untapped market space online by providing a medium whereby both users and suppliers can be located together in the form of Homefootprint’s portal. • Initiate business in the Republic of Ireland before investigating expansion in other markets. • Use aggressive online marketing and advertising in order to achieve a critical mass of users. • Exploit the Homefootprint targeted advertising solution and attract a large number of suppliers to utilise the website. • Build switching costs for both suppliers and site users to reduce the risk of future threats from new market entrants. 2.5 Strategic model Homefootprint will achieve competitive advantage in the marketplace by exploiting the current market situation where a vast amount of home energy efficiency products and services are offered, a high degree of competition exists, and buyer power is high. As there is currently no resource to compare and contrast the products and services on offer, Homefootprint will offer a unique location where home improvers and self-builders of new homes can benefit from such a resource. In addition, by offering informative content and tips specific to individual users, it is expected that Homefootprint will differentiate itself from other market players and build a critical mass of users. - 10 - 2.6 Short-term objectives • Gain first mover advantage Although switching costs are low online, it may be possible to benefit from first mover advantage if Homefootprint can become the first product and service comparison portal for residential energy efficient products. Competitive advantage can be protected by building switching costs amongst users and suppliers. • Target market penetration Achieve market penetration of 2.5% in year one, equivalent to a user base of approximately 27,000 website users. • Achieve brand awareness and recognition The importance of achieving brand awareness and recognition will be critical for the company to build its user base and develop. Many techniques will be utilised to achieve this short-term objective. These techniques are discussed in section 6. • Exploit a niche in the market-place As there are few close competitors in the target market place of residential self-developers and home improvers, it is a fundamental short-term objective to exploit this niche in the marketplace and achieve rapid growth before new competitors enter the market place. While competitors offer a very broad offering it is hoped that by focusing on a target niche within the overall market Homefootprint will realise this goal. - 11 - 2.7 Long-term objectives • Build on existing brand awareness It is essential that the company continues to expand and enhance its brand awareness so as to become a market leader. By ensuring that this is a long-term objective it will remain a major focus of the company. • Exploitation of data gathered and development of new solutions This objective will not be achieved in the short-term as data gathered initially will not be very beneficial until a substantial user base has been established. As data is gathered from users, a large collection of valuable information will be stored and mined. It is hoped that by utilising this data, new and more attractive tools will be developed and provided to users. The majority of data will be gathered from the interactive dashboard tool. • Market expansion: gain a global reach Homefootprint will look to expand its market base in the long-term. After year three, if the situation is viable, investments will be made in infrastructure, human resources and technology so as to achieve this expansion. This will begin with expansion in both Northern Ireland and the rest of the United Kingdom as they are the most similar market places to the Republic of Ireland. Whilst expansion within different markets will require increased staffing levels, as Homefootprint is an online company it will still be possible to be based in Ireland so as to benefit from the low corporate tax level available. As long as market expansion is successful, Homefootprint will continue to enter new markets provided that environmental conditions are positive in this regard. The Homefootprint team benefits from having team members with language skills in Greek, Spanish and French which will ease the market entry difficulties in countries where these languages are the native tongue. • Return On Investment It is a primary goal of the Homefootprint team to provide an excellent return on investment to its investors in the long-term. As any profits will be reinvested in the short-term this is a long-term objective. - 12 - 2.8 Customer relationship management Homefootprint’s customer service will be concerned with delivering a high quality of service to both merchants (including BER assessors) and website users. Strategic concerns will relate to both groupings: Users: • Ensuring customer satisfaction with aspects of the site; monitor and respond to customer comments. • Use of customer feedback to enhance website quality, content and offering. Merchants: • Use of merchant feedback to enhance solutions provided. • Ensure establishment of excellent relationships with merchants and BER assessors. - 13 - External origin Attributes of the environment Internal origin Attributes of the organisation 2.9 Homefootprint SWOT Analysis Strengths • Service available 24/7 • Many automated solutions on the site means maintenance is significantly lower than other sites • Substantially reduced initial assets, personnel and infrastructure costs and requirements • Passionate and enthusiastic management team • Language skills of team members means that initial costs of market research regarding certain countries will be substantially reduced. Weaknesses • Lack of significant start-up business experience • Will need to source funding • Reliance on merchant partners to provide accurate and up-todate records • Must build brand awareness and customer base from scratch • Lack of large initial revenues from advertising • Necessity to achieve a critical mass of users for the company to be profitable Opportunities • Governmental incentives for residential green products are increasing public demand • Increased public concern regarding climate change has resulted in consumers making lifestyle changes with an increasing trend towards the usage of energy efficient products and services • Introduction of government legislation regarding Building Energy Regulations • Build switching costs for our users with the dashboard and community aspects • Target market remains a niche market at present • Strong ability to gather valuable user data that will enable the company to store and mine user data to make further developments within the web application • New technological advances with API technology and XML may allow the site to update immediate price changes for comparison Threats • Downturn in the Irish economy (See industry overview: also represents an opportunity as consumers are becoming more concerned with rising residential energy costs) • Possible reluctance of users to share personal energy consumption details through our dashboard service • Threat of new entrants to the marketplace • Threat of increased competition from already established competitors • Significant developments by competitors utilising a brokerage business model forming discount agreements may impact on potential revenue - 14 - 3. Service overview 3.1 General description Homefootprint is a portal targeted at the market of self-builders of new homes and existing home owners, offering a product and service comparison facility, enabling users to search through an aggregated list of products and services concerned with energy efficiency in the home. Users will benefit from the ability to search through an un-biased product directory, view past customer ratings and reviews on products, and search for products based on their specific requirements. Homefootprint will offer its users an environment whereby through information gathering techniques, personalised tips regarding improvements will be directed at the registered users. The site will also offer general informative content regarding specific to the target market, such as information and details of BER (Building Energy Rating) assessors. Furthermore the site will offer a community blogging facility where users can discuss topical issues with resident energy efficiency experts. 3.2 Key features and benefits 3.2.1 Products and service search and comparison facility Homefootprint will facilitate a two sided network for merchants and customers in its product search and comparison facility. This facility offers potential benefits to both site users and merchants. • Users: Site users will be able to compare different products and services and search for products based on different criteria. In addition registered users will benefit from the ability to rate and comment on products or services based on their past experience. The main benefit to users is that the site will offer an unbiased location where products and services can be contrasted against each other, whilst also benefiting from fellow community member’s experiences with products. • Merchants: Suppliers of different products and services will be provided with an efficient means of adding their product or service to our listing. Merchants will be able to upload details including a detailed description of their product/service along with a product image and company logo. Merchants will be provided with restricted access to our database where they will remain responsible for the accurate display of their offerings (price, description, etc). This removes a large degree of the content management responsibility. Benefits to the merchants will potentially be increased sales leads. - 15 - 3.3 Home energy audit/ Dashboard The Home energy audit/ dashboard facility within the site will enable users to enter residential information, details on energy usage, and appliance usage information. Registered users will benefit from personalised tips specific to their home and behaviour. Tips will be targeted at making improvements on their residential energy consumption and bettering their appliance usage behaviour. The facility will be provided so that they can continuously monitor their energy consumption. Data will be stored and anonymised with a view towards producing informative content that could further enhance the existing dashboard. The main benefits of the dashboard are: • Users will be able to monitor their energy consumption using a personalised graphical interface (will be integrated in the future) and benefit from advice and tips to better their energy efficiency. • Homefootprint will benefit from data gathered within the dashboard and can build targeted content within the website accordingly. • Homefootprint will exploit the data it gathers from its dashboard facility to provide a facility to merchants to direct extremely targeted advertising at Homefootprint’s users. In addition, Homefootprint will investigate sources to whom the data gathered could be valuable. 3.4 Building Energy Rating (BER) facility Since 2007, all newly constructed homes in Ireland require a BER. A BER provides a rating on the overall energy efficiency of a home, taking into account all factors that contribute to the total energy efficiency of the dwelling. This legislation applies to all new dwellings for which planning permission was applied for since the 1st of January 2007. The legislation also applies to nondomestic buildings for which planning permission was applied for after the 1st of July 2008. In addition, from 1st January 2009 all properties (residential and commercial) will have to obtain a BER when being offered for sale or for rent. • Homefootprint will offer a quick, easy and efficient way for users to locate a BER assessor based on the location of their home. Revenue will be derived from each lead provided from the Homefootprint webpage. • In addition a further service will be offered to the assessors whereby they can avail of an assessment. This service, offered at a premium, will entail random sampling of past building energy assessment projects. The benefit to assessors from this service is that they will profit from an additional rating and comments section within both the assessor search and assessor details page within the website, whilst also building up a trust and performance rating. The rating would consist of ratings and reviews from past home owners. There is currently no transparency when comparing assessors and it is extremely difficult for home owners or developers to know which assessor is reliable or not. This additional service - 16 - would also provide further income to Homefootprint and would enable the company to build switching costs for assessors. Switching costs could be built as assessors with good ratings would be keen not to lose their position and would thus be tied to Homefootprint. It will be necessary for assessors to ask for permission from home owners to pass their details to Homefootprint for assessment. 3.5 Targeted advertising Homefootprint will benefit from being able to offer a highly targeted advertising solution to merchant partners. This will be possible for two main reasons: (1) Homefootprint’s target market is very specific. (2) The home energy audit facility will gather a vast amount of data on registered users. This data will be exploited to offer an advertising solution capable of directly targeting specific users. 3.6 Homefootprint community blog A community blog area within the website will enable users to contribute to the already existing content and discuss topics of interest. Guest contributors will be invited to post content on the blog whilst users will be able to discuss areas of interest. The facility to monitor discussions will be enabled so as to prevent abusive content appearing whilst also enabling Homefootprint staff to conduct market research on topical issues. Postings on issues regarding residential energy consumption and energy efficient home development techniques will be conducted on a regular basis. Blog marketing techniques will be utilised in tandem with other search engine optimisation techniques to increase the visibility of the site. Major benefits are: • Provision of a community area for members to access and discuss topics of concern. • Content within the blog can be monitored enabling identification of potential niche areas or growth opportunities. • By using the blog as a marketing tool Homefootprint can draw users to the main site. • By using guest experts to contribute to the community blog this will add a level of prestige, differentiate the Homefootprint brand from potential competitors, whilst also increasing brand awareness. • Increased search engine optimisation. - 17 - 3.7 Informative content Homefootprint will also offer information on issues specific to its target audience. This information will include: • Content concerning the benefits of renewable energy to existing and newly constructed homes. • Information relating to each different form of renewable energy for residential usage and information on the different products available. • Information regarding the different grants available to home owners and new home developers will be provided. • Information on potential improvements that can be easily made in the home. - 18 - 4. Business model As Homefootprint is an online company it is possible to operate utilising an amalgamation of different business models. A combination of the online advertising, affiliate, and community business models will be used. • Both the advertising and affiliate models will contribute to revenue generated. • The community aspect of the overall model will be geared towards ensuring a critical mass of loyal users is built and that many of these users contribute to the overall value of the site. 4.1 Advertising model A website advertising model is an extension of the traditional media advertisement model. Usually, websites provide a mixture of content and services to attract users to a website and monetise these users by means of selling web advertisements. There are a number of reasons as to why the advertising business model is suitable to Homefootprint: • Specific target market: Homefootprint’s target market consists of a specific grouping within the overall residential construction and home improvement industry which will result in a well defined user demographic. The possibility of reaching users will prove attractive for potential advertisers. • Targeted advertising medium: Homefootprint will gather a considerable amount of data on its registered users by means of registration information, the dashboard/home energy audit facility and monitoring of user behaviour. This dashboard facility will gather user details, detailed residential information, energy expenditure information, appliance usage information and changes to this data over time. In addition registered user behaviour within Homefootprint will be monitored. This will result in a detailed profile on each registered user. This will enable merchants to benefit from extremely targeted advertising, rather than utilising broad advertising as is used in many competitors’ web sites (See appendix 1). • Advertising space: Advertising space is an easy addition to web pages and in the context of Homefootprint’s offering it may add value to the users’ overall experience. • Competitiveness of the marketplace: The competitiveness of the marketplace for merchants selling products and services at present contributes to the potential of the targeted advertising solution. Merchants will be attracted by a solution that offers a direct medium where they can advertise to potential customers. • Source of revenue: The value to merchants of advertising on Homefootprint will increase in tandem with increases in the number of site users (both once off and recurring). In this regard, the advertising revenue generated will be correlated to the ability of the site to build a mass of users. - 19 - 4.1.1 Threats of using the advertising business model While the advertising model will be incorporated into the overall business model it is also accepted that there will be a number of threats to using this model. • Critical mass: In order for the advertising business model to provide a substantial stream of revenue, it will be necessary to build a critical mass of users. If there are few site users it will be very difficult to attract advertisers. • Increasing threat of ad blocking software: With recent developments of plug-ins from web browser developers, web surfers have the ability to download browser software plugins which prevents many banner advertisements from appearing. While this does not pose a great threat at present, should wide spread adoption of ad blocking software occur then this would pose a substantial threat to Homefootprint’s advertising business model. Firefox Ad block Plus is an example of one such ad blocking software plug-in. • Negative effect on user experience: The use of an online advertising business model incurs the risk that ads will have a negative effect on user experience. This is especially the case with heavy banner advertisements. Despite this threat however, it is envisaged that advertisements will contribute to the overall user experience as advertisements will be customised for registered users. • Low advertising fees: As Homefootprint is a start-up, the company cannot expect to command very high advertising fees initially. The threat in this regard is that the company may not achieve the critical mass of users it needs to acquire high revenues from advertising fees as soon as expected. - 20 - 4.2 Advertising banners Homefootprint will provide banner advertising space to advertisers. Two main options will exist throughout the Homefootprint website. A premium banner of 602x100 pixels size will be available throughout out the website, except on the homepage. A template of the banner size is depicted below. Premium banner template (602x100 pixels) In addition a smaller rectangular banner of 130x70 pixels will be available to advertisers throughout Homefootprint’s website. Rectangular banner template (130x70 pixels) - 21 - 4.3 Affiliate model The online affiliate business model is concerned with gaining revenue by means of driving traffic from one site to another for a financial incentive. Homefootprint will gain revenue in the form of listing fees and revenue derived from the pay per click solution. There are a number of reasons why this model applies to Homefootprint’s offering: • Pay-per-click: Until Homefootprint gains a large user base it will be difficult to ensure streams of revenue derived from advertisements. The affiliate system of pay-per-click will enable merchants to advertise with Homefootprint without risking poor return on investment in advertising banners or advertising space while there is a small user base. Merchants will only be charged based on traffic directed to their website. • Additional revenue source: As Homefootprint does not act as a reseller or online shop, revenue derived from listing fees and driving traffic to external sites will offer an extra source of revenue. • Value added: As the affiliate model drives potential customers to the merchant websites this adds value to affiliate partners. Furthermore, value will be created for users as they will not have to search for the merchant website should they wish to examine a product or service. Rather, they can be directed to the specific page from the Homefootprint website. 4.3.1 Advantages of the affiliate pay per click (PPC) model to merchants Major advantages to merchants and BER assessors: • A low fee of €0.25 will be charged for click through. This is a significantly lower price than the average cost per click by means of search engine advertising, e.g. Google Adwords, (SEE Appendix 2). • Merchants and assessors will only have to pay when users click through on their listing and not when users view their listing. • Total cost control with PPC: Merchants and assessors will be able to track the exact amount spent each month • Easily track which products or services attracted the highest traffic - 22 - 4.3.2 Threats of using the affiliate business model Similar to the advertising business model, while the affiliate model will be incorporated into the overall business model, it is also accepted that there are a number of threats: • Click fraud: Affiliate websites run the risk of click fraud. While it is evident that this occurs, it is extremely difficult to prevent. • Threat of poor click-through rates: While the service is offered to draw users to affiliate partners websites, the threat remains that there could be a poor click-through rate. • Threat of poor conversion rate: If leads generated from Homefootprint do not result in a substantial percentage of converted sales for merchant partners, then the attractiveness of the model will be reduced. • Business model easily copied: There are numerous companies operating utilising an online affiliate model. The business model is easily copied. - 23 - 4.4 Community model The community business model is concerned with building user loyalty whilst generating revenue by means of ancillary services. In the case of Homefootprint, revenue generating ancillary services will consist of advertising and affiliate linking. In addition the community model is connected with bringing people together with a common set of interests; this is intrinsic to what Homefootprint will do. As Homefootprint will differentiate itself from other competitors in the marketplace and bring users with similar requirements together in its two sided network; the community model is suited and will play an important role in developing a critical mass of users. There are many aspects as to why the community business model will be adopted by Homefootprint: • Contribution of users: Users will play an important role in enhancing the product and service search and comparison facility. By benefiting from user feedback and contribution, the overall value to users will be enhanced. Examples of benefits to the site from user contributions are: o A user feedback rating will be enabled for all products. User ratings and comments will be displayed so that other members of the community will be able to gauge the perception of the community towards products and services. o Addition of a ‘user favourites section’ which will list the most popular products. o Users will be able to enhance their search by searching for a product based on user rating. o User contribution to the blog aspect of the website will enhance the content whilst also enabling Homefootprint staff to conduct market research by means of observation. This could potentially lead to improvement of content in the Homefootprint webpage. • Word of mouth: The community business model is associated with the word of mouth effect. If consumers feel that they are part of a community then it is likely that the word of mouth effect will apply. • Building of switching costs: As the community business model provides a user with a sense of importance, should Homefootprint be able to build trust with the user then it is likely that the community business model will succeed in building switching costs with those users. - 24 - 4.4.1 Threats of using the community model • Spamming: While use of community aspects such as a blog or community board can increase the level of interactivity for users, it can also lead to spamming of the blog by outside parties. This threat has been taken into consideration as a filter facility whereby all blog activity will be monitored will be utilised to prevent such occurrences. • Negative comments on merchant products/ service providers: While a goal of Homefootprint is to enhance product and service comparison for users, the fact that registered users are able to comment could have certain negative effects. This could be the case were a user to post a negative rating or comment about a product or service, thus reducing the credibility of that merchant. This is a risk that merchants will take when listing their products or services with Homefootprint. • Difficulties in building a successful community: Establishing a community is not a simple task. In order to attract users Homefootprint must ensure that value is created for users. - 25 - 4.5 Pricing plan 4.5.1 Advertising pricing plan Premium advertising pricing The premium solution is targeted at companies who are not concerned with the geographic location of their prospective customer. The solution will consist of prominent banner adverts shown throughout Homefootprint’s website. The banner advertisement will be linked to the merchant’s dedicated webpage. In addition, smaller banner advertisements will also be displayed on the right side of each webpage. By means of Homefootprint’s targeted advertising capability, companies availing of the premium solution will be able to define their customer demographic. Based on this, specific advertisements will be automatically shown when this selected demographic is logged in to the site. • Year one cost of € 800 per month which represents an estimated average cost of €0.09 to reach customers. • Year two and three cost of € 1000 per month representing an estimated average cost of €0.02 and €0.01 respectively to reach customers (See appendix 3) Bundle advertising pricing The bundle offering will entail the display of advertisements throughout the website on the left side of each webpage. This advertising bundle will also allow advertisers to define their specific customer demographic; thus while registered users are logged into the Homefootprint website specific advertisements will only be displayed if registered users meet the advertisers requirements. • Year one cost of € 200 per month. • Year two and three price of € 250 per month. - 26 - 4.5.2 Affiliate pricing plan Merchant Listing fees Yearly listing fees will apply for companies to register their products or services with Homefootprint. This listing fee will enable companies to add as many products as they desire. In addition companies will benefit from a dedicated page for each product. • Yearly listing fee of € 50 per company Merchant Listing: Cost Per Click pricing Companies listing their products with Homefootprint will be charged € 0.25 for each click through from Homefootprint to their website. Building Energy Assessors Building Energy Assessors can avail of two different pricing plans: Premium listing Premium listing is charged at € 15 per month. The following will be included in the premium listing facility: • Impartial assessment by Homefootprint of the assessors past home energy assessments. This will be done by means of random customer sampling and gathering of customer ratings. • Additional rating and comments section display, based on Homefootprint’s impartial assessment. This will differentiate these assessors and increase transparency. • Premium location within the assessor search facility. • Users will be able to search by “rated assessors” in the future. Standard listing • While standard listing is free, each request sent through Homefootprint to the assessor or each click through from Homefootprint to the assessor’s homepage will be charged at €0.25 per click or request for information. Assessors availing of the standard listing will not benefit from an additional comment and rating section in the display. The pricing plan was developed based on analysis of competitor offerings and takes into account expected site user statistics. Appendix 4 and 5 demonstrate the listing and advertisement pricing plans of Homefootprint’s main rivals. CPC pricing takes into account competition from Search Engine advertising and offers a very competitive alternative. - 27 - 4.6. Competitive analysis There are a vast amount of companies providing different home energy efficiency related products and services online; however, not all of these companies are viewed as being direct competitors. Rather, it is hoped that many of these companies will become advertising partners or merchant affiliates by enabling their products and services to be added to the Homefootprint database so that their products or service offering could be searched for through Homefootprint’s website. Feedback from a number of merchants was very positive in this regard (See Appendix 6). Homefootprint’s main competitors are companies currently operating online in the green business sector and the home improvement sector. There are a number of companies that compete directly with Homefootprint. - 28 - 4.6.1 Enerfina: www.enerfina.com Enerfina operates as an independent green energy broker for green technology products to both the residential and commercial markets. Enerfina is a primary competitor as they offer many of the offerings Homefootprint hopes to provide. Strengths Internal origin Attributes of the organisation • • • • • • • Weaknesses The website provides strong informative content Energy audit services are available A savings calculator tool is offered that enables users to calculate potential savings from changes they may make. Operating as a broker, Enerfina enables site users to apply for a quotation for a product Ratings for products exist and are based on feedback from suppliers, installers and customers and they take into account discount levels. Installation of products is arranged with Enerfina partners. Separate domestic and commercial sites are offered. • • • • Opportunities External origin Attributes of the environment • • • • • Limited list of products and partner merchants. Enerfina is largely limited in this regard due to its brokerage business model by which it forms agreements with different merchants. Biased product advice as the company has vested interest with its suppliers. Recent entrant to the market so as yet has relatively poor brand awareness and a weak foothold in the marketplace. Poor search engine optimisation. Threats Increased number of people concerned with environmental issues. Growing trend towards usage of energy saving products in the residential sector. Relatively few competitors in the marketplace. Can grow while there are few market entrants. Political incentives such as renewable product grants for residential use are causing an increase in demand for renewable products. Can increase its product offering as the discount incentive offered may prove a differentiating factor to the competition. - 29 - • • • • The downturn in the Irish economy may contribute to less consumer spending. Very low barriers to enter the marketplace mean the threat of new entrants is high Established competitors and new entrants compete in the marketplace. The recent migration of greenpages online could pose a large threat Business model could easily be copied and a competitor could outperform by having a better marketing strategy. Competitive assessment Differences in Enerfina’s offer from Homefootprint’s is that they install products through their partners, they incorporate financing packages by partnering with Permanent TSB and they offer discounts on specific products by means of pre-arranged agreements with their partner merchants. Homefootprint significantly differentiates itself from Enerfina by incorporating: • Unbiased comparison facility for products and services • Personalised environment through the dashboard facility • Ability to offer a highly targeted advertising facility to merchants • Community aspect: Ability for registered users to comment on products and services, visit the blogging facility and discuss issues with our resident experts • Target market consists only of the residential market • Clear and consistent webpage layout for users to navigate • Business model is primarily advertising, affiliate and community based in comparison to a brokerage model • Homefootprint will strive to build a large product listing and will not be restricted by agreements formed with suppliers in this regard. - 30 - 4.6.2 National Green Pages: www.greenpages.ie National Green Pages is a close competitor. At present they are the only national directory of verifiably green products and services and in 2009 will distribute over 450,000 copies of their printed directory to homes nationwide. However, their online presence, Greenpages.ie is a very recent entrant to the marketplace having been launched as an online version of their printed directory in June of 2008. Their business model is primarily advertising based while they have also incorporated a shop facility into their online presence. Strengths Internal origin Attributes of the organization • • • • • • • • • External origin Attributes of the environment • • • • Weaknesses Green Pages offers both a printed book (similar to yellow pages) and an online version of their directory. The printed version of the product is widely distributed with 250,000 copies distributed nationwide in 2008. Vast amount of product suppliers/ services listed in the directory Good categorisation of products Enables ratings and reviews of products by registered users Professional appearance of web page Informative content: Offers articles, videos, pod casts, news, and upcoming events Online shop and carbon calculator facility Some community aspects: can become a member and gain discounts, add ratings and gain a free printed directory Strength of the brand name is growing in the marketplace Opportunities • Can offer a more attractive option to merchants for the online listing of their products Can develop strong brand awareness in the marketplace before similar new entrants appear Can increase its online shop facility to incorporate a vast amount of products (it currently only sells a few devices) Improve on current poor web heuristic issues and enhance its search engine optimisation • - 31 - • • • • • • Doesn’t offer a comparison facility between products High cost to merchants for the listing of products and services Some minor web design heuristic issues with listings Listings are by suppliers rather than by product type Online directory is poor in comparison to the magazine, e.g. description of products and listing display/ lack of images for numerous products Cannot directly contact the service providers by means of web forms (something that we are capable of doing). Poor search engine optimisation Threats • • • Weakness in their business model leaves them exposed to new entrants into the market. Business model can be easily copied Threat of a competitor offering a more competitive pricing scheme is high Increasing number of competitors in the online market Competitive assessment A major differentiating factor between Greenpages and Homefootprint is their offer of a printed directory. In addition they also incorporate an online shop facility. Greenpages has an established brand name in the green marketplace from their extensive delivery of their printing edition catalog. Recent radio advertisements have also been produced in order to drive their online campaign and to encourage new users to visit their website. Despite Greenpages obvious strengths it is expected that Homefootprint could easily compete. While Greenpages is focused on a very broad target market, Homefootprint focus on a specific grouping within the overall market and offer services that are geared at building switching costs for both customers and merchants alike. Homefootprint differentiates its offering from Greenpages by: • Offering an extensive product and service comparison facility • Offering an interactive community aspect through the dashboard facility and blog • Personalised tips based on information gathered in the dashboard facility and the ability to monitor energy efficiency performance over time • Focusing on a narrow target market as opposed to the whole green market • Offers the facility for extremely targeted advertising for merchants to display their adverts • Offers a more user friendly website • Homefootprint builds switching costs for both merchants and site users - 32 - 4.6.3 Allaboutenergy.ie: www.allaboutenergy.ie Established in 2007, Allaboutenergy defines itself as being Ireland’s newest and most effective one-stop-shop energy related portal. The company follows an advertising business model, targeting the residential and commercial industry. Their target customers of home owners, apartment owners, business owners, public building owners, and developers are directed to the merchant sites of green products and services. They offer an additional educational environment which is targeted at young internet users providing information, resources and links related to energy efficiency and green product usage. Furthermore, the company offers a recruitment section within the website where companies can search for employees interested in positions in an energy related career. Strengths Internal origin Attributes of the organization • • • • • • Weaknesses Consistent webpage layout with clear web page navigation Strong tips through use of articles. Developing a strong brand name Clearly defined target market (home owners, apartment owners, business owners and developers) Excellent branding scheme Large breakdown of product and service categories • • • • • Opportunities External origin Attributes of the environment • • • • • Poor community aspect where users can state their opinion and communicate with other users. No product or service comparison facility. Poor search engine optimisation Their products and services are listed according to supplier, rather than by product type, price and other characteristics offering the user a poor search interface No ability for registered users to rate specific products, or for new users to search for products based on rating Threats Can integrate a community aspect to the webpage in the future. Can offer price comparison facility. Consumer trends towards energy saving products and environmental issues is increasing The company could improve on its product and service search facility The company could integrate a product and service rating facility - 33 - • • • • The company business model is very easy to copy No real distinctive features to the website that differentiate it from its competition There are no facilities that build switching costs. The company is recently established has no means of preventing the threat of new entrants to the market is high Competitive Assessment Allaboutenergy tries to differentiate their offer from that of their competitors by offering an additional educational web site specifically addressed to the young population and students. While many aspects of their website are impressive, Homefootprint significantly differentiates its offer from allaboutenergy: • Focus on a clear target market of home developers and home improvers rather than targeting a broad target market • The blogging facility offers a community aspect to increase the loyalty of users and to encourage higher website traffic. • Homefootprint also offers a far superior advertising medium due to the ability to offer extremely targeted advertising solutions. • Homefootprint builds switching costs for both users and merchants through its BER premium service, the product rating facility, the dashboard facility and through the personalised tips provided to users. - 34 - 4.6.4 Build.ie: www.build.ie Build.ie offers a directory and search engine for all products and services specific to the construction industry. While they are not in direct competition with Homefootprint they advertise many of the products and services that Homefootprint also hopes to offer. Build.ie follows an advertising business model. They offer their services in Ireland and the whole U.K. region. Inclusive in their offering is industry news, a recruitment section and a vast breakdown of product and service categories. They offer a dedicated directory for self-builders within which certain product and service offerings will fall into competition with Homefootprint. See appendix 7 for site traffic). S.W.O.T ANALYSIS (build.ie) Internal origin Attributes of the organization Strengths • • • • • • • Weaknesses Extensive list of companies registered and advertised in their website Low cost structure of the site Specialisation on building companies, products and services Premium construction directory in Ireland Offers daily updated information, jobs, company, and product and service information. Well established website Strong brand reputation and recognition • • • • Opportunities External origin Attributes of the environment • • • • Poor user interactivity: no reviews or comments section means that users can only browse by name and cannot know whether a supplier/merchant is reputable or not No community aspect incorporated into the site Reliance on advertising and revenue from recruitment alone Poor search engine optimisation Threats Incorporate a community aspect on their site The company could optimise product search so that products could be listed rather than just their suppliers Introduction of a rating system could tie merchants to the system The company could expand their focus to niche markets. - 35 - • • • • • Low barriers for possible competitors to enter the market Easily copied business model Company has built few switching costs with its users and merchants A more user friendly search facility or product comparison facility could pose a threat Downturn in construction will greatly affect site profitability. Competitive assessment While Build.ie is considered a competitor, they are not a major threat to Homefootprint. Homefootprint’s offering could represent a potential threat to Build.ie’s category of self-builders. It is believed that by focusing on community issues and trust issues that Homefootprint’s offering could eat into Build.ie’s market share in this regard. In addition, build.ie does not have switching costs built up that could prevent this migration of both users and merchants. Homefootprint is differentiated from build.ie by means of: • Engagement of users: personalised information/tips based on every individual needs. • Community aspects: Blog, dashboard and ratings engage users and encourage users to return and contribute to the site • Targeted advertising solution: While build.ie offers an attractive advertising medium to merchants operating in the construction industry they do not offer as highly targeted a solution as that which will be offered by Homefootprint. • Products comparison: Build.ie only offers a listing of companies that offer a specific product without any reviews or recommendations about the quality of the product or the service of the supplier. - 36 - 4.6.5 Google AdWords: www. adwords.google.com Google’s advertising program “AdWords” is considered to be a major competitor for Homefootprint since it offers a pay per click model and a targeted advertising solution to its users based on queries and keywords used. In addition, based on Alexa1 statistics Google is the most popular search engine in Ireland. Therefore, a significant amount of residential users searching for energy efficiency related products or services will initially use Google for their searches, unless they know about or are drawn to Homefootprint when browsing. Major advantages of Google’s Adwords program: • Pay per click: Merchants pay only when a users click on their ad. They do not pay when a user only views an ad (unless the Cost Per Impressions model is used). Pay per click is considered a cost-effective and efficient way to reach users online. • Bid for placement and per keyword: AdWords allows merchants to specify the amount of money they want to bid for a keyword based on cost per keyword. Thus, when a merchant bids for a term or phrase, the Adwords tool is notified of the maximum amount he/she is willing to pay per click against other merchants who have bid on that term. The higher the bid for a term or phrase the higher the positioning of merchants ad in the sponsored links will be. • Maximum cost per day: Merchants can specify an amount of money they are willing to pay per day for their campaign. After a lot of activity Google may not display merchant’s ads until the following day. • Protection against multiple clicks from the same user: Google’s system offers protection against multiple clicks from the same user. • Targeted advertising for specific keywords used: Ads are highly targeted to users. Keywords and phrases used result in higher conversion rate of displayed ads. • Fast and easy implementation: Merchants can quickly set up their own AdWords campaign. • AdWords offers geographically based advertising: Merchants are able to specify that their ad appears only to users from a specific geographic region. Geotargeting significantly helps local, small businesses to reach only their specific area. 1 http://www.alexa.com/site/ds/top_sites?cc=IE&ts_mode=country&lang=none, 18/07/2008 - 37 - 5. Industry overview Homefootprint essentially operates online in a market segment of the overall ‘Green residential’ industry. Within this industry, Homefootprint’s target market consists of two groupings: (5.1) Self-developers of new homes (5.2) Existing home owners living in residences that are not energy efficient, which were constructed before stringent building regulations regarding energy efficiency came into place in 1996. 5.1 Self-developers of new homes 5.1.1 Overview of the self-developer residential construction market The self-developers market refers to developers of a once off residence; that is people who are building their own home or have contracted the building of their home to a developer. There are a number of assumptions made about this segment of the market: • Self-developers conduct research over the internet when considering the construction of a self-built home. • Self-developers will search for advice on green products, services and information before they set about building their own home. The current outlook in Ireland for the self-developer target market is not as attractive as previous years due to an unpleasant cocktail of different factors including rising energy costs, constant inflation pressures, currency appreciation and rising interest rates amongst other factors. Presently the construction industry in Ireland finds itself experiencing a downturn in residential construction. 2007 National Accounts data demonstrated an 18.3% contraction in overall residential construction2. This downturn which has been evident since the middle of 2007 has led to the first decline in residential construction since 1993. Estimates by Davy stockbrokers demonstrate that housing starts fell by 70% year on year in March, resulting in the largest annual decline on record. They also estimate that there will be approximately 45,000 homes constructed by the end of 2008. This slump in construction is expected to continue through to 20093. Figure 1 demonstrates the performance of the residential construction industry since the year 2000. 2 2008 construction index, Construction policy and NDP coordination unit, Department of the environment heritage and local government, DKM economic consultants. 3 Economic Indicators, May-June 2008, Bizplus Magazine. - 38 - Figure 1: Residential construction in Ireland since the year 2000* No. of homes constructed Homes constructed since the year 2000 100,000 80,000 60,000 40,000 20,000 0 2000 2001 2002 2003 2004 2005 2006 2007 Year Total home completions Private house completion Source: Department of the environment housing statistics, 2008. * Total home completions are inclusive of local authority housing and voluntary non-profit homes developed. 5.1.2 Market trends • Downturn in residential construction Figures 2 and 3 demonstrate the number and types of home constructed since the year 2000 and also reveal the downturn in construction since 2006. In 2007 the number of private homes completed was 71,356, down from the peak of 88,211 the previous year. Statistics from the first five months of 2008 demonstrate that only 23,569 private homes have been constructed and this slump in residential construction is expected to continue4|5. Figure 2: New houses completed by type 2000-2004 New houses completed by type 2000-2004 40,000 No.of houses 35,000 30,000 Bungalow 25,000 Detached 20,000 Semi detached 15,000 House terraced 10,000 Flat/apartemnt 5,000 0 2000 2001 2002 2003 2004 Year Source: Department of the environment housing statistics, 2008. 4 5 Prelim Construction forecast for 2008, Department of the environment, heritage and local government Department of the environment; housing statistics 2008 - 39 - Figure 3: New houses completed by type 2005-2008* New houses completed by type 2005-2008 No.of houses completed 60,000 50,000 40,000 Idividual house Scheme house 30,000 Apartments 20,000 10,000 0 2005 * 2006 * 2007 * 5 mths 2008 * Year Source: Department of the environment housing statistics, 2008. * The classification used for the type of dwelling used up to 2004 was no longer available. * Data sourced from the ESB: • Individual house refers to a new connection being established to a new detached house. • • Scheme house is where a new connection was provided to two or more houses. Greener home construction by self-developers There has been a growing trend in recent years towards the construction of more energy efficient homes by self-developers. This is primarily due to EU and local government legislation such as the EU sustainable development strategy, Building Energy Ratings (BER) and the building regulations (2000). However, there are other external factors that are driving the trend towards energy efficiency in the home. The rising fuel costs are a major contributing factor towards this trend along with developments in home building techniques that can also greatly improve the energy efficiency of a home. 5.1.3 Estimated market size While national data on residential construction is available, available data concerning the number of homes that are developed does not elaborate on the number of homes that fall into the category of self-developed residences. Information in such detail is not freely accessible. Despite this difficulty it was possible to source 2007 information from Cork County Council and Meath County Council. - 40 - For the purpose of estimating the market size it is assumed that this data is representative of the whole country. Based upon that assumption the potential target market of self-developers was equivalent to approximately 18,700 in 2007. It is difficult to estimate the market size in 2008 due to the residential downturn. However, it is assumed that the market size would have substantially decreased since 2007. 2007 Market size 2007 Meath Cork Ireland (estimated) Self-built homes 1,076 1,763 18,687 Total population 162,831 481,295 4,239,848 Data was sourced from discussions with county planning officials. Population data is based on 6 the 2006 census . 5.2 Home owners 5.2.1 Overview of the home owners market The home owners segment of the target market refers to the grouping living in residences that are not sufficiently energy efficient, built before the stringent building energy efficiency regulations came into place in 2006, who are looking to making improvements to their home so as to reduce their home energy consumption. A number of assumptions are made: • This grouping will conduct initial searches over the internet with regard to different improvements that they can make to their home. • This grouping will utilise the internet to locate providers of products and services that may improve their home. 5.2.2 Market Trends There has been a growing tendency towards home improvements and renovations in the area of home energy efficiency. This trend is based on numerous factors7: • Increasing costs of home heating fuels • Increasing cost of electricity • Growth in awareness of green issues and eco-friendly issues • Developments in home insulation and energy efficient products for the home • Government legislation 6 7 http://www.cso.ie/statistics/popofeachprovcountycity2006.htm : Accessed 15/07/2008 Speech by Duncan Stewart and Minister Eamonn Ryan, Green Energy Fair, 18/07/2008. - 41 - 5.2.3 Estimated home owners market size The most recent housing census which was conducted in April 2006 determined that there were 1,462,296 private households in permanent housing units in Ireland (See Appendix 8 for a breakdown of housing by type). An important factor for Homefootprint is that approximately 50% of these homes were built before the initial thermal energy insulation requirements were formally introduced in 1979. In addition only dwellings constructed since 1996 (28% of the total residences) have been subject to stringent building regulations regarding energy efficiency (See appendix 9 for a breakdown of construction periods). This suggests that the total potential target market of existing home owners is 72% of all homes, as it is assumed that these homes can make a substantial improvement in their energy efficiency (unless homes have already made such adjustments). This results in a total potential market size of over 1 million homes. This estimation of potential market size is supported by the energy minister Eamonn Ryan’s assessment of homes in need of investment in energy efficiency8. Figure 4: Total potential target market of home owners in the Republic of Ireland Total potential target market 409,443 1,052,853 Available target market Unavailable target market Based on 2006 CSO residential data and SEI 2008 report: Energy in the residential sector 8 http://www.dcmnr.gov.ie/Press+Releases/New+Home+Energy+Saving+Scheme+launched+by+Minister+Ryan.ht m - 42 - 5.3 Home owners and self-developers estimated target market Based on analysis of the market and assumptions on potential market reach, the table below demonstrates the potential revenue, estimated target market reach and value of a user for year one. This is inclusive of users from both the self-developer and home owner groupings. Estimated target market: Year one Variable Estimated number of likely prospects Value of a typical prospect Estimated revenue Pessimistic Optimistic Most likely 24,000 30,000 27,000 €1.53 €2.72 €2.16 €36,810 €81,580 €58,384 - 43 - 5.4 External environment analysis 5.4.1 Political and Legal factors Analysis of the present political and legal environment demonstrates that the current scope for Homefootprint’s prospective offering is very positive. There are numerous political and legal factors that contribute to a potentially positive business environment: • Local and international agenda There has been a noted increase in both local and international agenda pushing greener behaviour. This agenda has been enforced on governments due to the due to the increasing pressures derived from climate change, global warming, pollution and the rapidly increasing energy prices. The following are examples of such political agenda: The Kyoto protocol (Ireland has committed to reducing greenhouse gas emissions by 13% over 1990 baseline emissions by 2012), the 2008 EU sustainable development strategy (renewed on the 2001 strategy), the EU 2020 framework (geared towards ensuring that 20% of energy comes from renewable sources by 2020), the 2003 EU Energy Taxation directive (discourages energy pollutant behaviour), the 2005 EU biomass action plan and Building Energy Rating legislation coming into place within numerous European countries (inclusive of Ireland). These positive agenda all contribute to the increased acceptance of green issues and tendency towards greener thinking. • Government funded residential grants and subsidies (Ireland) The Irish government has encouraged the use of renewable energy products for the home through the allocation of grants and subsidies. There are numerous grants available through the greener homes scheme. These grants are mainly heating related and are available for the purchase of wood pellet burners and stoves, solar heating products, heat pumps (soil), biomass boilers and possibly wind turbines in the future as these are also grant funded in Northern Ireland. The Pilot home energy saving scheme introduced by Minister Ryan in April 2008 is another example of encouragement for improvements on the estimated one million homes in Ireland that would greatly benefit from investment in their energy efficiency. • Green party election to government The election of the green party to government in 2007 has greatly contributed to the overall positivity of government decisions regarding the environment. The party’s election to government has meant that there has been an increased focus on environmental issues with an increasing demand for renewable development and encouragement to the residential sector to better their home energy efficiency evident. - 44 - • Building Energy Rating (BER) legislation BER legislation has come into place that ensures a high degree of energy efficiency in the residential sector. A BER provides a rating on the overall energy efficiency of a home, taking into account all factors that contribute to the overall energy efficiency of the dwelling. This legislation applies to all new dwellings for which planning permission was applied for since the 1st of January 2007. The legislation also applies to non-domestic buildings for which planning permission was applied for after the 1st of July 2008. In addition, from 1st January 2009 all properties (residential and commercial) will have to obtain a BER when being offered for sale or for rent. A major benefit of the BER legislation is that it places an emphasis on the development of new energy efficient homes. This legislation comes into place from the EU Directive on the energy performance of buildings and was adopted into Irish law in 2006. • Building Control Act 2007 (Updated on 1990 Act) The Building Control Act passed in 2007 is concerned with ensuring that a high degree of standards are followed in constructing new buildings in Ireland. The act takes into account issues concerning energy efficiency. • SEI.ie / Change.ie/ Powerofone.ie The Irish government has established three main online presences focused at informing Irish consumers about important environmental issues that concern them. Change.ie is the government’s web presence representing the government plan on climate change. The site is concerned with informing consumers about the issue of climate change and greenhouse gas emissions and encouraging greener behaviour. Poweofone.ie is concerned with providing tips and suggestions to consumers about changes they can make to improve their energy efficiency. Sei.ie is the government energy agency concerned with promoting and assisting the development of sustainable energy resources in Ireland and assisting the deployment of superior energy technologies in each sector as required. SEI is funded by the National Development plan and the European Union. The establishment of these different mediums demonstrates the increasing importance the government is placing on environmental issues. - 45 - 5.4.2 Economic and social factors Despite the recent downturn in the economy, the economic scope for Homefootprint’s offering remains positive. It is evident that there is an increasing social trend towards the greener consumption of products and services. While the economic factors discussed represent major concerns for consumers they may present an opportunity to Homefootprint. As consumers look to tighten their belts on home heating, fuel and other energy costs, they may be drawn to Homefootprint as an information source on how to reduce their energy costs whilst benefiting from the product price comparison outlet. Economic and social factors of interest are: • Current recession: Drop in Irish consumer sentiment The latest consumer sentiment report produced by the Irish Economic and Social Research Institute (ESRI) demonstrated that Irish consumer sentiment continues to drop. The index demonstrates that in June of 2008 the index was at 42.2. The corresponding figure for the same month in 2007 was 83.2. The index of consumer expectations also demonstrated that consumers are not expecting their future financial situation to be too bright with a drop to 26.4 in June from 32.6 in May. These drops in consumer confidence have largely been brought about by the increases in fuel, food and borrowing costs as well as the drop in employment. Despite the current recession however, the ERSI forecast a growth in consumption by 1% in 2008 and 2% in 2009 9 (See appendices 10, 11 & 12). In its Quarterly Economic Commentary, the ERSI is also forecasting a contraction in the economy to continue through to 2009. With both GDP and GNP down by 0.4% in real terms, the ERSI forecast that Ireland will experience a recession for the first time since 1983. This is reflected in their forecast for an increase in both emigration and unemployment in 200910. • Residential construction downturn (Discussed in section 5.1.2) • Increasing energy costs The rising energy costs represent a major challenge to the Irish economy. With the price of oil having reached $145 for the first time and current oil prices fluctuating between $140 and $145 there is increased pressure on consumers and businesses alike11. Appendices 13, 14 and 15 demonstrate the increasing energy costs in recent years. While the increasing energy costs indicate a major threat to businesses and residential consumers alike; this threat can be transformed into an opportunity for Homefootprint. As consumers become more concerned with the rising energy costs it is likely that they will try to reduce their energy consumption. This is 9 Economic and Social Research Institute, June 2008 Consumer Sentiment Index report. Quarterly Economic Commentary, Summer 2008, ERSI. 11 Yahoo finance: http://biz.yahoo.com/ap/080703/oil_prices.html : Accessed 09/07/2008 RTÉ Business: http://www.rte.ie/business/2008/0709/oil.html : Accessed 09/07/2008 - 46 10 especially important when the current trends for home energy expenditure are taken into consideration. Figure 5 demonstrates 2006 consumption patterns for home energy and illustrates the increasing usage of oil, electricity and gas. Derived from these increased patterns of consumption and increasing fuel costs it is clear why the increase in energy costs (especially oil, electricity and gas) is of major concern. Based on current evidence it is likely that consumers will begin to focus on making changes in their behaviour and residential energy consumption. This represents a substantial opportunity for Homefootprint. Figure 5: Residential sector total final energy consumption by fuel; 1990 to 2006 Source: SEI, Energy in the residential sector, 2008 report • Increase in public concerns regarding environmental issues There has been an evident increase in public concern regarding environmental issues. This growth in concern has been mainly due to scientific evidence of the effect of global warming. As people become more aware of environmental issues a new industry centred on energy efficient products and renewable products has emerged and grown at a rapid rate. The growing acceptance and willingness to make changes with regard to energy efficient products, especially with regard to energy efficiency in the home represents a positive opportunity for Homefootprint. - 47 - 5.4.3 Technological factors Technological factors are very positive. As Homefootprint will operate as an internet based company the issue of internet access is very important. Despite the fact that Ireland has a relatively low broadband penetration in comparison to other OECD countries the internet is widely used with an overall penetration rate of 50.1% of the population in 2007 12 (See appendix 16). Whilst the issue of broadband uptake in Ireland remains important, Homefootprint will operate utilising a relatively static website so broadband will not be necessary and dial-up internet access will suffice. With regard to other technological factors there have been great improvements in the technologies being used in the ‘green industry’. Technological developments have enabled innovative products to be developed ranging from environmentally efficient cars, advanced solar panel technologies and other renewable energy products, to building materials and bio fuel products. Of major interest to Homefootprint are the technological advances in residential construction. The continuously developing technology advances are an aspect that Homefootprint will benefit from. It is envisaged that a vast array of products and services will be aggregated into category groupings within the site which will enable users to search for products based on their category. 12 Internet world statistics, Usage and population statistics: http://www.internetworldstats.com/top25.htm, Accessed 10/07/2008. - 48 - 5.4.4 Environmental factors Scientific evidence of deteriorating environmental conditions worldwide has led to changes in behaviour both by governments and consumers. Issues such as climate change, greenhouse gases, global warming, energy efficiency and environmentally friendly human activity are all growing in importance and becoming daily issues both for governments and individuals. There has been an increasing tendency towards the greener consumption of products and services, in tandem with an improved awareness regarding the environment. While environmental conditions have been deteriorating globally, this places pressure on both consumers and governments to make changes. With regard to Homefootprint’s proposed offering, this bodes well as it provides an opportunity to the company; a paradoxical situation whereby global overuse and waste of limited energy resources has led to a focus on environmental issues augurs well for companies operating in the “green sector”. This is especially true in the residential construction and residential improvement industries as home owners move towards becoming more energy efficient and dwellers move towards the consumption of renewable and more eco-friendly products. - 49 - 5.5 Industry competitiveness 5.5.1 Rivalry amongst existing competitors: Rivalry amongst existing competitors is high: • Industry becoming saturated with merchants: A significant number of merchants offering products or services relating to residential energy efficiency are currently operating in the industry. Many of these companies are competing for the same customers. However, there are not many direct competitors for Homefootprint. • Fast market growth: The market for residential energy products and services is expanding greatly. This is extremely important for Homefootprint since it can aspire to rapid growth because of the expanding market. • Relatively low fixed costs: For companies operating online there are relatively low fixed costs. This can lead to an increase in rivalry amongst competitors as the low fixed costs may lead to competition by price. As Homefootprint will not sell products and will offer a product and price comparison solution, the company will not be affected by this issue. • Low switching costs: Customers can easily switch from the one company to another. This significantly intensifies competition and can diminish their percentage of market share rapidly. Homefootprint will try to counter this industry trait by building switching costs with both merchants and customers. • Low levels of product differentiation: Active competitors in the market offer similar products, services and offerings, thus rivalry is intense. Homefootprint will avoid this intense competition by focusing on a specific niche within the market and by trying to create uncontested market space. 5.5.2 Threat of substitute products The threat of substitute products is high: • Numerous products and services: The industry is saturated with a wide range of products and services. While this is unattractive for some companies it is attractive for Homefootprint as this provides a wide range of merchants to approach regarding advertising and/or listing their products or services on the website. • Low switching costs exist in the industry: As low switching costs exist online, the threat from substitute products is greater than in other industries. Homefootprint will try to counter this trait by building switching costs and ensuring that users are satisfied with the web offering. The community aspect of the web offering has been incorporated to increase the likelihood of this. • Increasing demand for home energy products: Increasing demand combined with the wide availability of substitute products increases customers’ alternatives. This adds to the degree of rivalry in the industry. - 50 - • Competition by price: The advent of the internet has made information regarding products widely available. This has led to competition by price. Competition by price increases rivalry within the industry. However, this is beneficial to Homefootprint as the product comparison facility will enable a vast range of products and services to be compared by price and other factors. As the threat of substitutes is high, this increases rivalry in the industry. Despite this, as Homefootprint gathers all competitors together, the company can benefit from the increased rivalry, while its differentiated status means it is concerned only with its own industry niche. 5.5.3 Bargaining power of buyers Due to the ever increasing number of products and services being offered, the bargaining power of buyers within the industry is high. • Similar products and services offered: There are an increasing number of products and services being offered to the green construction industry. This greater selection to choose from results in increased bargaining buyer power. • Low switching costs for buyers: Low switching costs in the industry increases buyer bargaining power. • Little differentiation between products: As there is little differentiation between products and services offered, this greatly increases the bargaining power of buyers. • Buyer incentives: Competition by price and increased rivalry has led to greater buyer power in the industry. • Substitute availability: The easy availability of substitute products and services in the industry has greatly increased buyer power in the industry. While the bargaining power of buyers is high in the industry, this is advantageous to Homefootprint as users will take advantage of a solution that enables product and service comparison, thereby increasing their buying power further. In addition, buyers will want to supply their products in a location used by users. - 51 - 5.5.4 Bargaining power of suppliers Bargaining power of suppliers in the industry is low due to the following reasons: • Standardised range of products and services: Many suppliers are offering similar products with limited differentiation between them. This reduces their bargaining power over buyers. • Increasing number of suppliers: A vast amount of suppliers continue to enter the market. While the market is expanding this is understandable, however as more suppliers enter the market this will reduce their overall bargaining power. While supplier bargaining power is relatively low, this represents an opportunity to Homefootprint as it will ease attraction of suppliers (merchants) to offer their goods and services on the product comparison section of the website. 5.5.5 Threat of new entrants The threat of new entrants to the industry remains very high: • No government barriers: The government does not impose any barriers to interested parties wishing to enter the industry. Rather, the encouragement by the government for home owners and building developers to use energy efficient products and services has resulted in an increased amount of companies entering the marketplace. • Growing market: The growing market has enticed numerous new entrants and new business start-ups to enter the market. The continued growth leaves the industry open to further new entrants. • Low barriers to entry: There are relatively low barriers to entry in the industry, depending on the type of business model companies choose, the products and services they offer, and the infrastructure they utilise. In addition, for online companies similar to Homefootprint, the barriers to entry are minimal. • Easy to copy business models: Many companies operating in the industry have a business model that is easily copied. • Low switching costs: As switching costs are low, this increases the threat of new entrants to the market place. • Internet effect: The internet provides easy access to customers. Companies that choose an internet based approach have easy access to the marketplace. The threat of new entrants poses a threat to Homefootprint. This is difficult to prevent, however measures regarding the building of switching costs amongst suppliers and customers will be utilised so as to minimise this threat. - 52 - 6. Marketing plan Building a critical mass of users will be critical to Homefootprint’s success. In order to achieve this mass of users many different techniques will be utilised: 6.1 Search engine optimisation With a low initial budget, a high ranking on the SERP (Search Engine Results Page) of search engines is important, since traffic from organic search results is free. There are a number of techniques to improve the ranking of a website, called search engine optimization (SEO). Search engine optimisation (SEO) is the process of improving the volume and quality of traffic to a web site from search engines via organic search results. Usually, the earlier a site is presented in the search results or the higher it "ranks", the more the site will be visited by users. Homefootprint will focus on SEO both internally as externally. 6.1.1 Internal optimisation Using a number of HTML tags, the internal structure of Homefootprint’s website will be optimised, making it easier for search engines to scan the content of the website, thereby improving relevance of search results for search queries. The three most important HTML tags are meta keywords, meta description and meta title.Meta keywords are keywords relevant for the webpage. The meta description provides search engines and searching users with a quick summary of the webpage. The title tag is important for SEO, since the information contained in the tag is displayed in both the browser as on the SERP. Internal linking is another way to optimise a website. For this reason, clear category names, listed on every page of the website, will be implemented. 6.1.2 External optimisation An initial stage of Homefootprint’s marketing campaign will be concerned with mailing a number of ‘green’ web sites, construction sites and other relevant blogs. By delivering an attractive, optimised, pre-formatted and relevant press release to these websites, it is hoped that publication of an article on the websites targeted will be achieved. The publication of the article will also mean inclusion of a link to Homefootprint’s web site. This will potentially increase traffic from external websites and will also benefit the Page Rank of our domain. Page Rank is one of the methods Google uses to determine the relevance or importance of a Web page. Page Rank is a vote, by all the other web pages on the Internet, about how important a Web page is. Any incoming links to Homefootprint’s webpage will count as a vote of support in this regard. - 53 - 6.2 Blog Marketing Homefootprint will implement a blogging section to its website where staff, resident guests or community members will discuss issues of concern, post their ideas and comments and avail of information relating to home development and improvement. The blog publishing system being used is “Wordpress”. A major factor behind the decision to avail of this publishing tool was the fact that Wordpress is already optimised for search engines. This means that its features and functions guide search engine spiders through the posts, categories and pages, ensuring that search engines can effectively ‘crawl’ through Homefootprint’s blog and gather the required information in order to be included in their databases. Major search engine optimisation tools that are included in Wordpress are: • Use of permalinks: The permanent urls of blog posts • Blogroll: List of links to various green energy and building blogs. • Pinging: Ping back will enable notification if someone linked to an article within the blog. If a user includes a link from blog posts to their posts then a notification in the form of a ping back will be received stating that someone was linked to a Homefootprint post. This will help linking to other people, thus connecting the links and increasing search engine favoritism. The more relevant and important the site that links to the Homefootprint page, the more the Homefootprint Page Rank will be increased. • SEO plugins: A SEO plugin will be utilised. This includes some important ranking factors like titles, descriptions and keywords for the blog. Relevant keyword optimisation techniques will be ensured so as to increase the likelihood of Homefootprint’s website appearing for specific keyword searches through search engines. Homefootprint’s blog will be an integral part of the marketing mix strategy. The blog will not be a replacement of traditional media in reaching our target market. It is considered to be an additional medium to reach potential new users and a community building mechanism. Major advantages of blog usage are considered to be: • Relationship building tool: The blogging section will enable the establishment of relationships through the use of informative and useful content whilst encouraging users to visit the company website. • Two way medium: Blogs are conversational mediums. Unlike traditional media (print, billboards, etc) blogs enable feedback, thus allowing immediacy of dialogue among online users. This can potentially add value to the users’ experience. - 54 - • Market research: The blogging facility will facilitate monitoring of public opinion, observation of brand image and recognition of potential growth areas. This will be an important tool for content development within the main site. • Search engine optimisation: Blogging will further improve Homefootprint’s search engine ranking with use of keywords rich text. • Inexpensive channel: While costs of online marketing can be expensive, the use of a blog will provide an inexpensive medium to reach Homefootprint’s target market. • Additional revenue: The blogging tool will add an extra location for further advertising or affiliate revenues. Included in Homefootprint’s blog marketing strategy are: • RSS subscription options: Users will be able to avail of immediately updated blog content. This will encourage repeated usage of Homefootprint’s blog and increase brand awareness. • Social bookmark links: The Homefootprint blog will be tagged in specific social book marking sites (e.g. delicio). This can potentially increase traffic to the main website. • Submission of sitemap to search engines: This will provide Homefootprint with better statistical information and will further help search engines to crawl our site, potentially resulting in a better search engine ranking. • Use of keyword rich text: Homefootprint will further research valuable keywords and develop a glossary using tools like SEOBook Keyword Research, Keyword Discovery and Google AdWords Keyword tool. • Guest bloggers: Homefootprint will invite topic experts to write on our blog. These guest bloggers will range from architects and building energy assessors to construction experts. It is envisaged that this tactic will significantly help to draw people to visit Homefootprint’s main site whilst further differentiating the brand from competitors. - 55 - 6.3 Advertising and promotion Advertising will play an important role in Homefootprint’s promotional mix and will be critical in ensuring that Homefootprint reaches its target market. Many different promotional techniques will be utilised. 6.3.1 Industry related conferences and fairs Participation in industry related conferences will further increase brand awareness and knowledge of the market at the same time. Fairs like the “Green Energy Fair”, “Building exhibition 2008” or “Irish Sustainable building show” are extremely targeted way of advertising in the industry. 6.3.2 Banner exchange Exchange of banners with industry related sites will be considered. By exchanging banners, links or further promotional materials with industry specific blogs and websites, the potential to attract users to the website increases. 6.3.3 Implementations of Word of mouth marketing Word of mouth marketing, also known as viral or buzz marketing is a reference to passing on information by verbal means, especially recommendations but also more general information. One individual is always the sender of this information; receivers are friends, colleagues, family, relatives or other acquaintances. Research has proven that this is one of the most attractive ways of online marketing today13. As the information or recommendations come from a trusted source, receivers of the information are more likely to believe the outspoken message. Based on this credibility, it is believed that this is a very powerful and effective marketing method. Word of mouth is traditionally considered to be a face-to-face spoken form of communication. However, with the world wide adaptation of the internet, word of mouth has also transformed to a more digital environment. Nowadays phone conversations, instant messages, texts sent via sms or email and web dialogues existing on online communities, profile pages, blogs and message boards can be used as new communication media transferring word of mouth. This most attractive marketing technique is used to promote the Homefootprint concept. Word of mouth marketing will be implemented both internally (on the domain) as externally (on other domains). 13 Using online conversations to study word of mouth communication, David Godes, Harvard Business Review, May 2002. - 56 - • Internal implementations to encourage word of mouth The community blogging aspect of Homefootprint’s website will be used to further create a positive brand image, spreading the word about the Homefootprint brand. Comment forms are offered to the visitors, enabling them to respond to submitted posts easily. Interesting posts can be shared easily with friends, family, colleagues and relatives using the “Recommend” function offered on the blog. This feature enables viral marketing with little effort required. • External implementations to encourage word of mouth. As mentioned previously, the blogs of relevant external parties will be used to promote the Homefootprint concept. 6.3.4 Switching costs • Users By means of the blogging and dashboard facility, Homefootprint will try to build up a trust community with subsequent switching costs for users. The switching costs that Homefootprint will build will not be monetary in nature. Users will not be charged or loose money if they switch to a competitors web site; rather the switching costs are psychological in nature. By providing a tool for registered users where they can monitor their energy consumption over a period of time, it is envisaged that switching costs can be built due to user information storage. Users will primarily have to register in our web site. By monitoring their energy consumption regularly a substantial amount of data will be collected on each registered user. It is expected that by storing the users’ data and providing a useful tool, switching costs can be built. • Merchants and BER assessors The building of switching costs is significantly important to the Homefootprint business model. The tool whereby registered users can comment and rate on products will create loyalty amongst companies who achieve a good rating. In addition, the same effect will also apply to BER assessors should they avail of the premium service, thereby building switching costs to both groups. This will increase the potential for Homefootprint to modify its pricing plan. - 57 - 6.4 Branding Branding is considered to be highly important for Homefootprint as it will differentiate the web site from the competition. 6.4.1 Homefootprint brand importance A well established trustworthy brand in the market place means significantly lower risk for users. Therefore, by building up a strong brand image focused on quality and professionalism, Homefootprint will further establish itself in the marketplace. Strong brand recognition and image will reduce the need for costly marketing and promotional costs. Branding may also help Homefootprint to further segment their market in the future. The Homefootprint brand name points the focus of the company towards the residential market. In the future the company can potentially leverage its brand to the corporate market (or other industry segments) by extending the brand, for example: “Corporatefootprint”. In such a case the credibility and quality of the company’s existing brand image could be transferred to the new market segment. 6.4.2 Why Homefootprint? The Homefootprint brand name was developed taking into account the company vision to become the leading online home energy product comparison portal in the home improver and residential self-developer target markets. Homefootprint is wordplay on “carbon footprint” and our target market of home users. Carbon footprint is a measure of the impact of human activities in the environment in terms of greenhouse gases produced. Therefore, the brand name is targeted at residential users with the goal of reducing their carbon footprint by benefiting from Homefootprint’s offering. The Homefootprint brand logo A professional looking logo may be a reason that a user will decide to visit the Homefootprint web site, thus it was important to create an attractive brand logo. Several different logos were tested that incorporated in a clear and dynamic way the Homefootprint company values. Finally, the brand logo above was chosen. The clear, professional font used depicts the professionalism of the company. The word home is in bold in order to depict the company’s focus on residential users. The brand logo represents the different steps users need to take in order to improve their home energy efficiency and reduce their carbon footprint. - 58 - This 2-color corporate logo is suitable for any promotional material. In addition, the logo is distinctive and will stand out. 6.4.3 Brand favicon A segment of the brand logo has been translated and used as a favicon. A favicon is a minilogo that helps users to remember and return to a website. It is a visual branding shortcut. Benefits of the favicon are: • Quickly identify and distinguish Homefootprint’s website in browser tabs. Users do not have to read the URLs address to identify our site • If a user bookmarks Homefootprint’s web site the unique favicon will help the website to stand out in their favourites list • Increases professional appearance of Homefootprint’s website. - 59 - 7. Technology map 7.1 Overview of IT infrastructure The objective of this system is to provide a fully functional interactive web application platform that enables site users to interact with the website. As Homefootprint’s main business revenue will be derived from advertisements, the web application will be capable of gathering, organising and categorising data provided by users so that a tailored advertising solution can be offered to merchants. Other aspects of note are that the web application platform will enable merchants to seamlessly upload product and company details to the website. Based on this, the application will enable site users to search for and compare different products and services. Registered users will be able to further interact and will be able to comment on and rate products, while they will also benefit from personalised tips generated automatically by the system based on each specific user’s stored details. Users will also be capable of searching for service providers based on location. 7.2 System development Due to the fact that there was a limited timeframe for the development of the web application the development of the system was divided into three stages. System development Initial Stage Development stage System testing Identification of system requirements User scenario evaluation Establishment of core functionalities Identification of system ad-ons System coding User interface design Content development User case scenario testing Usability tests 7.3 System architecture Homefootprint will be an interactive web application portal, meaning it will follow the three tiered web application architecture. Use of the three tiered architecture will enable the website to gather information from users, manage this data and display information based on data collected. - 60 - Figure 6: Homefootprint system architecture Presentation tier: The front end of our application is the user interface. This is the only tier that the user actually sees and as far as they are concerned about, it is the only tier. The primary function of the presentation tier is to decipher tasks requested by the user and display information to the user in a manner that they will understand. Users will navigate through the first tier by clicking on various hyperlinks and buttons. Unbeknownst to them, the logic tier is activated each time they click a button or click or a hyperlink. Logic tier: The logic tier is concerned with processing commands, calculations, and data. This tier also makes evaluations and processes data between the user interface layer and the database layer. This tier sits in-between the user interface and the database. Whenever a user enters information, uploads information or clicks on an image map or a button, this action will invoke the middle tier. Sometimes a method to go to a new page is carried out, other times a complex method to connect to the database and update or remove information is carried out. - 61 - The information that is retrieved from the database is stored in temporary variables and then displayed in tables or menus in the presentation tier. When a user enters in new details upon registration or carries out the home energy audit on the Homefootprint web page, all the values and details are stored in a string and then sent to the database for storage. Data tier: The third and final tier of the web application is the database, where all information is stored. All user details, building energy assessor details, product details and other information are gathered in our database. When information is requested it is passed from the data tier back to the logic tier for processing before appearing to the user in the user interface. Along with the many tables containing a wide range of data, there is also a large group of store procedures. These can be thought of in much the same way as a ‘method’ in JAVA or C# store procedures for carrying out a complex SQL statement or to retrieve a large amount of data. - 62 - 7.4 Development toolkits utilised 7.4.1 Presentation tier • Microsoft Visual Studio 2005: Visual Studio 2005 is very dynamic and allowed more freedom than other web design platforms such as Dreamweaver or Microsoft FrontPage. This tool was used for the development of the vast majority of the user interface. The application is Microsoft’s main IDE (Integrated Development Environment) and is not solely used for the development of websites but also used for GUI (Graphical User Interface) Design. The main advantage that Visual Studio provided for the design of the user interface was that it provided a multitude of tools to ease the design process. Visual Studio incorporates a very useful component, ASP.NET (Active Server Pages) framework. This allowed creation of web pages using the ASPX file extension, much the same as the HTML extension. This enabled creation of dynamic pages using the ASPX language. The .NET framework was central to the overall aim for the application. • Dreamweaver MX: It was necessary to avail of an image mapping tool in Dreamweaver as Visual Studio 2005 did not offer this application. The image mapping tool enables creation of a coordinate map over a normal picture. Visual studio only allowed you to type in the coordinates where as Dreamweaver permits you to click on the image and trace the outline of the shape or object you wanted to be clickable. Once these coordinates were obtained they were imported to Visual Studio. Image maps were incorporated in order to increase the level of user interactivity in the user interface. • Adobe Photoshop: Photoshop was used for image editing purposes and creation of images for use in the website. 7.4.2 Logic tier • Microsoft Visual Studio 2005: The logic tier was designed through C# programming language to allow communication to and from the presentation tier to the back end database. Visual Studio 2005 was ideal for this as it provided full compatibility with the front and back end of the Web Application. The built in code editor in Visual Studio has an inbuilt syntax-highlighting tool that enabled easier coding of the middle tier of the application. This tool greatly reduced the number of human errors made. - 63 - 7.4.3 Data tier • Microsoft SQL server Management Studio: The data tier was designed through Microsoft Structured Query Language (MS SQL 2000). The management studio is a tool that enables access, configuration, administration, and development of all components of a SQL server. The studio was used for the creation of tables and store procedures. 7.5 Technologies utilised 7.5.1 Asp.net architecture ASP.NET is the programming framework utilised for the development of our application. ASP.NET enables development of powerful enterprise class web applications. Benefits of using ASP.NET for the application development included: • Code requirement: ASP.NET greatly reduced the quantity of code required for the application. • Server side: As source code is executed on the server side this increased the flexibility of pages. Source code is compiled when the webpage is requested and the server stores the compiled page version for use on the next occasion that the page is requested. • Security: As the web server monitors the web pages, applications and components running on the pages, should any illegal software or other strange activities be noticed, it executes those activities and restarts. • Information validation: Information provided by users is validated without the production of code. • Scalability: ASP.Net applications allow excellent scalability, enabling large numbers of users to utilise the web application at the same time without a decrease in performance14/15. This was important for the scope of the application. 7.5.2 (C#) C# is a programming language utilised for the purpose of building applications to run on the .NET framework. The main reason for coding in C# was its compatibility with the Visual Studio package. In additional its human readable format was also a contributing factor. C# was used for the entire coding of the middle tier, which connected both the presentation and data tiers. 14 .NET framework developers guide, Microsoft Development Network library, http://msdn.microsoft.com/enus/library/xyahd8wh(VS.71).aspx , accessed: 20/07/2008 15 http://www.startvbdotnet.com/aspsite/asp/ , (ASP.NET), accessed: 20/07/2008 - 64 - 7.5.3 MS SQL (Microsoft Structured Query Language 2000) MS SQL is a relational database management system that is widely used. While MS SQL is not an open source database management system like MySQL, it was very reliable, provided excellent performance and allowed flexibility in the structure and design of the Homefootprint database. The high degree of compatibility between MS SQL and Visual studio allowed information to be fed to the database through store procedures that could be accessed from visual studio. This made maintenance and organisation of the database much easier as it was possible to work on the web application from one program, Visual Studio. 7.5.4 My SQL My SQL is a relational database management system (RDMS) written in C and C++. Usage of My SQL database was essential for installation and running of Homefootprint’s blog publishing system, Wordpress. My SQL is run on the Homefootprint hosting company’s server. The main advantages of using My SQL were: • Free open source software • Fast relational database management system. • Works on many different platforms (e.g. Linux, Mac OS X, Windows etc.) • Independency of application and data • Increased level of security: the administrator of the blog can easily limit the privileges and attributes of groups or individual roles. - 65 - 7.6 Infrastructure capacity 7.6.1 Web Hosting Hosting requirements for the Homefootprint web application consisted of the following: • ASP.NET support • MS SQL support • My SQL support • SMPT support (Simple Mail Transfer Protocol) • Live change facility • Storage scalability • Technical support • Web based file management • Blogging software support • Security: anti-virus protection and anti-spam protection Netcetera was chosen as a hosting company for the Homefootprint application as they offered support and met our requirements. In addition Netcetera offered 99.9% network uptime which was a final and critical requirement. 7.6.2 Scalability As Netcetera offered ASP.NET support this meant that our application scalability of our application would be possible. This was an important factor to consider based on projections for user growth. Netcetera also offered extra storage and support facilities. - 66 - 7.7 Key system features As Homefootprint was to be an interactive web application, this increased the importance of the MS SQL database. The reason for this increased role of the database is that users would be contributing data to the site in the form of personal information, housing information, appliance usage information, comments and ratings on different products and services; thus the ability to enable users to read from and write to the database was essential. Figure 7: Information organisation user case example - 67 - 7.7.1 Organisation and categorisation of information To support user interactivity, this required specific slots to be created in the presentation tier into which the user would place their data. This was necessary as otherwise users would have to upload HTML to be able to interact with the website, which was not a viable option. Categorisation of specific types of information provided an efficient means of operating and enabled sections of the website to be automated. This required users to make precise selections of the type of input that unbeknownst to them was being written to the database. In the presentation layer this categorisation of information was done by means of drop-down boxes, web forms and radio buttons. Each selection by the user related to a pre-defined information category. In addition, this also benefited the user by clarifying their thoughts and providing structure to the information provided. Figure 8: Example of organisation and categorisation of information 7.7.2 Structuring of data Structuring of data enabled specific types of requests to be made by users, thereby displaying only the information that they desire in a sorted and structured manner. Structuring of data in the database enabled functions to be built into the database queries enabling this to happen. - 68 - 7.7.3 Personalisation Homefootprint will offer a personalised solution to its registered users. Registered users will be able to receive personalised tips and advertising based on data that they provide upon registration, or from data gathered from the home energy audit. User details will be stored in Homefootprint’s MS SQL database and each time a registered logs-in, a unique user interface will be generated. The personalised aspect of Homefootprint’s website will enable: • Highly targeted advertising solution for merchants • Personalised interaction for Homefootprint’s users geared at building higher levels of user loyalty since content will be relevant to each user • Data storage and a facility for users to update their stored details Figure 9: Personalisation solution - 69 - 7.7.4 Blog publishing system: Wordpress In order to increase the interactivity level of the Homefootprint offering a blog publishing system was utilised. This system will be used for creating a brand community, while it will also be used for marketing purposes. The blog publishing system being used is Wordpress. (Due to technical issues with the hosting provider Netcetera, for the purpose of the practicum this blog is being hosted on an external website and not the web space purchased. Using the frameset element it was possible to make the blog appear part of the Homefootprint website). Wordpress is an open source, completely web based blog publishing system built on the scripting language PHP. Wordpress requires use of MySQL, therefore further to the MSSQL database; a separate MySQL database was required for management of Homefootprint’s community blog. This also necessitated support for PHP by the web server. 7.7.5 PHP PHP is a server-side scripting language specifically suited for web development. PHP was designed to create dynamic web pages. PHP code is taken as input and HTML web pages are created as an output. PHP runs on most web-servers, operating systems and platforms. Major advantages of using the Wordpress Content Management System: • The templating system: Wordpress software has been designed to be combined with templates. That means web pages are created in a formatted output ready to be used. This was extremely helpful for development of the Homefootprint community blog. A ready made template was chosen and adapted to suit Homefootprint’s needs (change of colors, logos, content, etc). CSS (Cascading Style Sheets) were amended so that the appearance of the blog would be similar to the main website. • Dynamic changes: Changes in content and template are immediately reflected in the blog without any need to regenerate static pages. • Integrated link management. Usage of blogrolling and pinging will further help to link with other people. Thus, the number of incoming links into our blog can be recognised by search engines. The more relevant the linking site, the highest the favoritism will be for the blog. - 70 - • Support for several plugins. Wordpress is supported by a huge database of plugins. Plugins are small files of code that add useful features to a blog. Homefootprint used three important plugins in order to further optimise and secure the blog. Plugins used were: “All in one SEO16”, an effective plugin that further increases search engine optimisation,“Akismet17”, a plugin that eliminates spamming, and Contactform-Akismet18 plugin. Contact form-Akismet is a “Contact Me” form that means that all received messages will be checked for spam before reaching the blog administrator, thereby effectively reducing spam messages. • Spam protection: Wordpress comes with an integrated blacklist and open proxy checker to manage and eliminate spam comments.. • Tag support: Several important keywords and terms have been used in our posts. This type of metadata will help draw users to the Homefootprint brand through the blog. Wordpress is widely used nowadays from either personal homepages to Fortune 5 blogs such as New York Times or eBay. Wordpress mainly focuses on aesthetics, web standards (W3C), and usability. 16 http://wp.uberdose.com/2007/03/24/all-in-one-seo-pack/, 11/07/2008 http://akismet.com/download/, 11/07/2008 18 http://www.bloggingexpertise.com/plugins/wp-contactform-akismet/, 11/07/2008 - 71 17 Figure 10: Wordpress tables created in My SQL database Source: Wordpress.org - 72 - 7.8 Security Security was critically important when considering the overall system design. Bringing together two different categories of users in the interactive web application (users and merchants) required numerous security measures to be implemented. • Authentication Authentication on the web is concerned with knowing who you are dealing with. With the range of sensitive information being stored in the MS SQL database, it was necessary to incorporate a solid security foundation into the Homefootprint application. • User roles Through visual studio, it was possible to assign different roles to users allowing different privileges to each user group. This allowed restrictions to be placed on specific applications within the application. Identification of different user groupings would occur upon login. • Administrative User Administrative users are allowed full access to information stored in the database. By empowering administrative users with the ability to read and write to the database, they can amend other user grouping details, delete and add different user groupings or remove other user grouping details. This provided an additional security feature to the application as it enabled administrators to ensure all content provided by other user groupings was correct and un-offensive. • Company User Company users have the ability to change and modify the product listings that are relevant to their company. They can change their company’s details, upload new products, remove product offerings or amend existing product details. The company user has full control over what content is displayed regarding their products as they are the ones who supply all the information. • Standard user A standard user has basic rights to the web application and to the material contained within. They are allowed to browse all the web pages. Standard users are not permitted to alter, remove or update information that does not belong to them. Each standard user is granted their own user home page upon registration. Users can modify all information that is stored (personal, residential and appliance usage information). - 73 - • Passwords Passwords enable user authentication within the application. When standard users register with Homefootprint they are required to provide a password for future reference. Merchants are also required to login using a password and user email address. The password provides access to the user’s data, thus it is used as a measure for authenticating that a user is who they say they are and allowing privileges based on user type. • Access Access controls enable minimisation of the threat that unauthorised users will gain access to certain areas of the website that they should not be able to view. Different sections of the website are limited to specific users. Once authentication has been achieved, access controls are enabled thereby reducing the threat of unauthorised users accessing certain areas within the site. • Data management As Homefootprint will be gathering confidential user data and company data the need to manage this data in a secure environment is important. While data within the company’s databases will be stored on the Netcetera server, regular backups of this data will need to occur. Netcetera provide this facility which will be availed of. This will ensure that a regular back up of data is stored in a secure location. • Three tier architecture Use of a three tiered architecture for the system ensured a greater degree of security. This was possible as security could be defined at each level. This result of this is that even if the presentation tier is compromised, the data tier will not be. • Information protection While information needed to be protected by controlling access, it was also important to consider issues that prevent the website from becoming an outlet for inappropriate material. Within the community blog this is prevented by providing access to the administrator to monitor all comments that are posted. If the content provided by users is inappropriate, then it will not be posted to the community board and it will be deleted. Within the main website the main area where abuse could occur is the product rating section of the website. In order to minimise this threat only registered users will be able to comment on products. If abuse is observed then the user will be removed. - 74 - 8. Organisation and management 8.1 Legalities • Company registration Homefootprint will be established as a private limited liability company (LTD) in January of 2009. The necessary registration fees of € 70 have been incorporated into the company financials19. • Trademark registration Homefootprint will register its brand name and logo as trademarks before initiation of business. This will provide the company will legal standing for ten years and will prevent the threat of impostors registering similar domain names and copying the branding scheme. Registering of these trademarks will ensure that the branding scheme can be used in company advertisements and dealings with merchants and customers. This will cost € 317 and has been covered in the company financials20. • Domain name registration Management currently hold the domain name rights to the www.homefootprint.info domain name. This domain name will be renewed annually for a fee of €10. • Virtual organisation and staffing Homefootprint will operate as a virtual organisation. This will enable staff to concentrate on the core aspects of the company’s development while support facilities are outsourced. Due to the automated nature of much of the online business, there will be little need for increases in staff numbers during early years. Use of virtual office service facilities will mean that the company will not need to extend its sales force or acquire additional customer service staff in the initial 3 years. In addition, Homefootprint will outsource the management of customer service and accounting services (call management, payroll, bookkeeping and auditing) which will enable management to concentrate on core competencies. It is estimated that staff numbers will remain at three persons until the end of year three when management will reconsider staffing levels based on potential for market expansion. 19 20 http://www.cro.ie/ena/downloads-fees.aspx: accessed 15/07/2008 http://www.patentsoffice.ie/en/trademark.aspx : accessed 15/07/2008 - 75 - 8.2 Virtual office Homefootprint will operate using a virtual office facility. This solution will be provided by Kendlebell virtual office solutions, located in Kandoy House, Dublin 3. Use of virtual office solutions will be provided for a fee of 130 per month21. Utilisation of a virtual office will allow Homefootprint the following benefits: Benefits from operating by means of a virtual office are: • Automated nature of much of the Homefootprint start-up means the business is suited to operating in a virtual environment. • Benefit from having a business address where business mail can be collected or forwarded from. This will increase trust levels which is important for online businesses. • Professional call handling system for effective merchant call management. • Monetary savings will be made at a time when cost minimisation is crucial. • Much communication between staff will be by means of telephone, email and teleconferencing. There is little need for an office environment during the initial business stages due to the automated nature of much of the business. • Employees will work from their homes during initial start-up and growth years. • A board room rental facility will enable business meetings to be conducted in a comfortable and professional location. • 21 Outsourcing aspects of customer relationship handling will be possible. http://www.kbell.ie/kendlebell/Main/Home.htm : accessed 20/07/2008 - 76 - 8.3 Management structure Figure 11: Organisational structure All Homefootprint founders are qualified with Masters of Science in Electronic Commerce from Dublin City University. Work experience to date amongst team members is in sales, account management and administration. All members of the management team are passionate about environmental issues and are keen to establish an online business. • Aodhagán Grisewood holds a B.Sc in International Business from DCU. He will hold overall responsibility for the successful running of the company. He will report to the board of directors and will contribute to business development. Aodhagán speaks Spanish and French and will investigate the potential for market expansion within countries of these native tongues. • Paul McGowan holds a B.Sc in Computer Science from DCU. He will be responsible for continuous development, management and maintenance of the website. He will be accountable for analysing all information and data gathered from the interactive tools on the website and will investigate the potential of new technologies to advance Homefootprint’s offering. Paul will be in charge of all IT personnel in the future. - 77 - • Charilaos Sideris will manage Marketing and Sales for the company. He holds a Bachelor of Business in Marketing and Administration from Northumbria University, Newcastle. In addition he has experience in account management for Chorus-Call Hellas, a multi-national teleconferencing and video conferencing solutions provider. Charilaos is a Greek national and will investigate the potential for expansion in Greece. 8.4 Board of directors and external consultants The board of directors will consist of the Homefootprint founder members and two additional members. In addition, the team will avail of technical advice relating to the development of the website from an expert in user interface design. • Des McLaughlin holds a B.SC and an M.Sc in physics from University College Dublin and has also qualified with an MBA from Fordham University in New York. Previously Des worked as the research affiliate for Eircom at MIT Media Lab in Boston and Dublin. He has also held roles including: Head of Business Planning in Eircom Multimedia; Senior Vice President Sales & Marketing Eircom USA; Change Manager in Eircom’s Business Process Re-engineering unit; and Head of Product Development. Des also managed the implementation of the Eircom’s Information Age project in Ennis and Eircom’s Information Age Schools project. Des will provide invaluable support and advice to the management team. • Additional member to be named An additional member of the board of directors will be named. The team hope to name a board member with previous expertise in the management of a web-based enterprise. • Technical advisor: Dr. Hyowon Lee Dr Hyowon Lee holds a Bachelor of Engineering in Computer Science from Soong Sil University in Seoul, an M.Sc in Information and Library Studies from Robert Gordon University in Scotland and a PhD in Computer Science from Dublin City University where he is currently working as a post-doctoral researcher since 2001. Dr. Lee is an expert in the field of Human-Computer Interaction and User-Interface Design. His expertise in this area will provide critical advice on technical and User-Interface design issues. - 78 - 9. Financial overview 9.1 Introduction In order to evaluate the potential of Homefootprint’s business model, financial projections were made for the first three years of company operations. The financial statements were developed to give an indication of areas where difficulties may arise and to demonstrate the financial requirements of the Homefootprint business model. They do not represent a prediction of Homefootprint’s future performance but rather demonstrate how the company could perform should a certain set of assumptions be reached. Revenue projections were made based upon competitor analysis, web statistics and assumptions of market reach. Expenditure was derived from expected costs of operating by means of the Homefootprint business model. It is evident that a major challenge for Homefootprint is the management of cash, as profitability will not be reached until year three of operations, thus necessitating an overdraft facility. This was a major contributing factor to the decision to operate as a ‘virtual’ business so as to minimise further expenditure. 9.2 Funding requirements In order to support cash flow requirements and finance the business during its initial development, funding of €100,000 will need to be obtained. It is envisaged that this will be gained by means of a loan which would be repaid over a five year period. Investigation demonstrated that this would result in monthly repayments of € 1,961.93, based on a current variable rate of interest of 6.65% offered by Bank of Ireland for business loans22. The company’s shares will be distributed equally amongst the management team. 22 http://www.bankofireland.ie/html/gws/business/finance_your_business/quick_quote/ : Accessed 25/07/2008 - 79 - 9.3 Financial assumptions 9.3.1 Revenue projections Company revenues will be derived from three main sources: (1) Listing fees and click throughs; (2) Advertising; and (3) BER Assessors. The first two sources will provide the vast majority of income to Homefootprint, while revenue from BER assessors is seen as a potential growth area in the future. Revenue projections demonstrated below are based upon market research by the management team. Revenue projections Total revenue from listings and CPC Total revenue from advertising Total revenue from BER Year one 19,388 37,250 1,747 Year two 42,488 134,063 4,995 Year three 56,588 221,625 10,294 Revenues from premium advertising, bundle advertising, and click throughs will be recognised on a monthly basis over the specific terms of the contracts signed with clients. Figure 12: 3 year revenue breakdown 9.3.2 Profit projections It is forecast that Homefootprint will achieve profit by year three when the company will reach profit of seventy five thousand euros. Losses would be incurred in the first and second year of €124,551 and €23,293 respectively. The cumulative Profit and Loss statement below demonstrates the projections for the three year period. 9.3.3 Cost of sales Cost of sales consists of the hosting services Homefootprint will use. Netcetera, an external hosting provider will be used for the primary operations period. A monthly cost of €17 is anticipated. - 80 - 9.3.4 Salaries Salary expenses represent total compensation for each anticipated employee. A total amount of €90,000 per year for the first three years is anticipated for the senior management team. After the three year period a substantial increase is anticipated. 9.3.5 Rent, rates and other offices costs The company anticipates using a virtual office for the first three years of its operations. The amount of €1,560 per year includes administration work. Other costs include, telecommunications, Internet, printing and stationery. 9.3.6 Professional fees Certain business services will be outsourced. In the accounting statements these are represented as professional fees. Professional fees include outsourcing of accounting, payroll and legal support services to 24/7 solutions. Initial investigation estimated €24,000 to be spent per year for the first three years on outsourcing professional services. 9.3.7 Marketing Marketing activities include, online and offline advertising, direct mail, participation in industry related exhibitions and travelling expenses associated with sales and marketing. Moreover, subscription to industry organisations (e.g. SEI), publications and other miscellaneous expenditures are included. The majority of the marketing budget will be spent on electronic marketing. Furthermore, the company will focus on building strong relationships with its merchant clients in order to develop its sales pipeline. 9.3.8 Bank interest and charges The bank interest and charges Homefootprint will have to pay for a period of 5 years, 12 monthly repayments per year is in the level of 6.65% (Bank of Ireland rates). 9.3.9 Currency The currency is in Euros (€) - 81 - 9.4 Financial statements 9.4.1 Balance Sheet Balance Sheet Homefootprint Year 1 Projected as of 12/31/2009 Year 2 Projected as of 12/31/2009 Assets Current Assets Cash in bank Accounts receivable Total Current Assets €0 €7,495 €7,495 €0 €18,641 €18,641 €0 €26,537 €26,537 Fixed Assets Machinery & equipment Total Fixed Assets €4,445 €4,445 €4,445 €4,445 €4,445 €4,445 €11,940 €23,086 €30,982 €15,515 €18,920 €17,931 €51,076 €18,389 €3,030 €94,468 €128,903 €70,925 €139,932 €47,382 €68,801 €0 -€124,551 -€116,963 €11,940 €0 -€23,293 -€116,846 €23,086 €0 €75,131 -€37,819 €30,982 TOTAL Assets Year 3 Projected as of 12/31/2009 Liabilities and Equity Current Liabilities Accounts payable Bank Overdraft Long-term Debt Bank loan payable Total liabilities Capital Reserves Invested capital Profit/loss A/C Total Owners' Equity - 82 - 9.4.2 Profit and Loss Projection Profit and Loss Projection (12 Months) Homefootprint Revenue (Sales) Total revenue from listings and CPC Premium Advertising revenue Revenue from bundle advertising € Estimated revenue from BER CPC € Premium BER fees @ €15 monthly per reg assessor Total Revenue (Sales) Cost of Sales Hosting Total Cost of Sales Gross Profit Expenses Salary expenses Payroll expenses Prof. services (legal, accounting) Supplies (office and operating) Web maintenance and repairs Advertising Car, delivery and travel Telephone Insurance Taxes (real estate, etc.) loan Interest Loan repayments Internet Initial advertising extras Exhibitions IT Rent Total Expenses Net Profit - 83 - Year one Year two Year three €19,388 €8,000 €29,250 €1,097 €650 €58,385 €42,489 €30,000 €104,064 €3,121 €1,874 €181,548 €56,589 €72,000 €149,628 €5,148 €5,148 €288,513 €200 €200 €58,184 €200 €200 €181,348 €200 €200 €288,313 €90,000 €9,675 €24,000 €1,080 €300 €14,596 €4,800 €900 €0 €0 €3,543 €20,000 €396 €6,000 €3,000 €90,000 €9,675 €24,000 €1,080 €300 €45,387 €4,800 €900 €0 €0 €3,543 €20,000 €396 €0 €3,000 €90,000 €9,675 €24,000 €1,080 €300 €72,128 €4,800 €900 €0 €0 €3,543 €0 €396 €0 €4,800 €4,445 €1,560 €182,735 -€124,551 €0 €1,560 €204,641 -€23,293 €1,560 €0 €213,182 €75,131 €0 €0 €0 TOTAL CASH RECEIPTS Total Cash Available (before cash out) €0 €0 €0 Rent Telephone Interest €4,845 €4,845 €327 €327 -€327 SUBTOTAL TOTAL CASH PAID OUT Cash Position (end of month) €94,828 €0 €0 €0 €0 €400 €0 €0 €0 €0 €0 €0 €0 €4,445 €0 Exhibitions €327 Initial advertising extras Other startup costs (registration, Name, legal fees) €0 €0 Internet Loan repayments €0 €0 Web maintenance & repairs Car, delivery & travel €0 Supplies (office and operating) Advertising €0 €0 Prof. services (legal, accounting) €0 €0 Payroll expenses (taxes, etc.) €0 Purchases (hosting) Salary expenses €0 Purchases (IT hardware & software) CASH PAID OUT €0 €0 Loan/ other cash inj. €99,673 €0 €0 €82,561 €13,962 €13,962 €0 €0 €500 €33 €1,667 €295 €75 €130 €400 €424 €25 €90 €2,000 €806 €7,500 €17 €0 €96,523 €1,695 €0 €0 €1,695 €94,828 €99,673 €0 Feb-09 Jan-09 Collections fm CR accounts PreStartup EST Cash Sales CASH RECEIPTS Cash on Hand (beginning of month) Year One: Cash Flow Statement 9.4.3 Cash flow statements €70,642 €14,077 €14,077 €0 €0 €500 €33 €1,667 €295 €75 €130 €400 €539 €25 €90 €2,000 €806 €7,500 €17 €0 €84,719 €2,158 €0 €0 €2,158 €82,561 Mar-09 84 €59,662 €14,391 €14,391 €0 €0 €500 €33 €1,667 €295 €75 €130 €400 €853 €25 €90 €2,000 €806 €7,500 €17 €0 €74,053 €3,411 €0 €0 €3,411 €70,642 Apr-09 €49,024 €14,504 €14,504 €0 €0 €500 €33 €1,667 €295 €75 €130 €400 €966 €25 €90 €2,000 €806 €7,500 €17 €0 €63,527 €3,865 €0 €0 €3,865 €59,662 May-09 €37,224 €16,118 €16,118 €1,500 €0 €500 €33 €1,667 €295 €75 €130 €400 €1,080 €25 €90 €2,000 €806 €7,500 €17 €0 €53,342 €4,318 €0 €0 €4,318 €49,024 Jun-09 €27,266 €14,731 €14,731 €0 €0 €500 €33 €1,667 €295 €75 €130 €400 €1,193 €25 €90 €2,000 €806 €7,500 €17 €0 €41,997 €4,773 €0 €0 €4,773 €37,224 Jul-09 €17,648 €14,844 €14,844 €0 €0 €500 €33 €1,667 €295 €75 €130 €400 €1,306 €25 €90 €2,000 €806 €7,500 €17 €0 €32,492 €5,226 €0 €0 €5,226 €27,266 Aug-09 €8,371 €14,958 €14,958 €0 €0 €500 €33 €1,667 €295 €75 €130 €400 €1,420 €25 €90 €2,000 €806 €7,500 €17 €0 €23,329 €5,681 €0 €0 €5,681 €17,648 Sep-09 -€567 €15,072 €15,072 €0 €0 €500 €33 €1,667 €295 €75 €130 €400 €1,534 €25 €90 €2,000 €806 €7,500 €17 €0 €14,505 €6,134 €0 €0 €6,134 €8,371 Oct-09 -€10,664 €16,685 €16,685 €1,500 €0 €500 €33 €1,667 €295 €75 €130 €400 €1,647 €25 €90 €2,000 €806 €7,500 €17 €0 €6,021 €6,588 €0 €0 €6,588 -€567 Nov-09 -€18,920 €15,298 €15,298 €0 €0 €500 €33 €1,667 €295 €75 €130 €400 €1,760 €25 €90 €2,000 €806 €7,500 €17 €0 -€3,622 €7,042 €0 €0 €7,042 -€10,664 Dec-09 €0 €25 €15,412 €26,837 TOTAL CASH PAID OUT Cash Position (end of month) €0 €15,412 SUBTOTAL €500 €33 €1,667 €295 Exhibitions Other startup costs (registration, Name, legal fees) Initial advertising extras Internet Loan repayments Interest €75 €130 Rent Telephone €400 Car, delivery & travel €1,874 Web maintenance & repairs Advertising €90 €2,000 €806 €7,500 €17 Supplies (office and operating) Prof. Services (legal, accounting) Payroll expenses (taxes, etc.) Salary expenses Purchases (hosting) Purchases (IT hardware & software) CASH PAID OUT Total Cash Available (before cash out) €7,495 €11,425 €0 Loan/ other cash inj. TOTAL CASH RECEIPTS €0 €7,495 Jan-10 €18,920 Collections fm CR accounts Cash Sales CASH RECEIPTS Cash on Hand (beginning of month) Year Two: Cash Flow Statement €15,943 €31,162 €15,943 €0 €33 €1,667 €295 €75 €130 €400 €2,905 €25 €90 €2,000 €806 €7,500 €17 €0 €11,618 €15,219 €0 €0 €11,618 Feb-10 €26,837 €16,080 €35,076 €16,080 €0 €33 €1,667 €295 €75 €130 €400 €3,042 €25 €90 €2,000 €806 €7,500 €17 €0 €12,166 €18,996 €0 €0 €12,166 Mar-10 €31,162 85 €16,216 €38,579 €16,216 €0 €33 €1,667 €295 €75 €130 €400 €3,178 €25 €90 €2,000 €806 €7,500 €17 €0 €12,713 €22,363 €0 €0 €12,713 Apr-10 €35,076 €16,353 €41,672 €16,353 €0 €33 €1,667 €295 €75 €130 €400 €3,315 €25 €90 €2,000 €806 €7,500 €17 €0 €13,260 €25,319 €0 €0 €13,260 May-10 €38,579 €17,990 €45,855 €17,990 €1,500 €33 €1,667 €295 €75 €130 €400 €3,452 €25 €90 €2,000 €806 €7,500 €17 €0 €13,807 €27,865 €0 €0 €13,807 Jun-10 €41,672 €16,627 €48,125 €16,627 €0 €33 €1,667 €295 €75 €130 €400 €3,589 €25 €90 €2,000 €806 €7,500 €17 €0 €14,356 €31,499 €0 €0 €14,356 €45,855 Jul-10 €17,014 €49,237 €17,014 €0 €33 €1,667 €295 €75 €130 €400 €3,976 €25 €90 €2,000 €806 €7,500 €17 €0 €15,902 €32,223 €0 €0 €15,902 Aug-10 €48,125 €17,151 €49,938 €17,151 €0 €33 €1,667 €295 €75 €130 €400 €4,113 €25 €90 €2,000 €806 €7,500 €17 €0 €16,450 €32,787 €0 €0 €16,450 Sep-10 €49,237 €17,287 €50,228 €17,287 €0 €33 €1,667 €295 €75 €130 €400 €4,249 €25 €90 €2,000 €806 €7,500 €17 €0 €16,997 €32,941 €0 €0 €16,997 Oct-10 €49,938 €18,925 €51,607 €18,925 €1,500 €33 €1,667 €295 €75 €130 €400 €4,387 €25 €90 €2,000 €806 €7,500 €17 €0 €17,546 €32,682 €0 €0 €17,546 Nov-10 €50,228 €17,561 €51,076 €17,561 €0 €33 €1,667 €295 €75 €130 €400 €4,523 €25 €90 €2,000 €806 €7,500 €17 €0 €18,092 €33,515 €0 €0 €18,092 Dec-10 €51,607 Total Cash Available (before cash out) €0 €17,698 €17,698 -€50,133 Other startup costs (registration, Name, legal fees) Exhibitions SUBTOTAL TOTAL CASH PAID OUT Cash Position (end of month) €0 €17 €7,500 €806 €2,000 €90 €25 €4,660 €400 €130 €75 €295 €1,667 €33 €18,641 -€32,435 TOTAL CASH RECEIPTS CASH PAID OUT Purchases (IT hardware & software) Purchases (hosting) Salary expenses Payroll expenses (taxes, etc.) Prof. services (legal, accounting) Supplies (office and operating) Web maintenance & repairs Advertising Car, delivery & travel Rent Telephone Interest Loan repayments Internet Initial advertising extras €18,641 €0 €0 Jan-11 -€51,076 CASH RECEIPTS Cash Sales Collections fm CR accounts Loan/ other cash inj. Cash on Hand (beginning of month) Year Three: Cash Flow Statement -€47,279 €18,694 €0 €18,694 €0 €17 €7,500 €1,075 €2,000 €90 €25 €5,387 €400 €130 €75 €295 €1,667 €33 -€28,585 €21,548 €21,548 €0 €0 Feb-11 -€50,133 -€44,221 €18,762 €0 €18,762 €0 €17 €7,500 €1,075 €2,000 €90 €25 €5,455 €400 €130 €75 €295 €1,667 €33 -€25,459 €21,820 €21,820 €0 €0 Mar-11 -€47,279 -€40,959 €18,830 €0 €18,830 €0 €17 €7,500 €1,075 €2,000 €90 €25 €5,523 €400 €130 €75 €295 €1,667 €33 -€22,129 €22,092 €22,092 €0 €0 Apr-11 -€44,221 86 -€37,494 €18,898 €0 €18,898 €0 €17 €7,500 €1,075 €2,000 €90 €25 €5,591 €400 €130 €75 €295 €1,667 €33 -€18,596 €22,363 €22,363 €0 €0 May-11 -€40,959 -€35,325 €20,466 €1,500 €20,466 €0 €17 €7,500 €1,075 €2,000 €90 €25 €5,659 €400 €130 €75 €295 €1,667 €33 -€14,859 €22,635 €22,635 €0 €0 Jun-11 -€37,494 -€31,452 €19,034 €0 €19,034 €0 €17 €7,500 €1,075 €2,000 €90 €25 €5,727 €400 €130 €75 €295 €1,667 €33 -€12,418 €22,907 €22,907 €0 €0 Jul-11 -€35,325 -€25,875 €19,602 €0 €19,602 €0 €17 €7,500 €1,075 €2,000 €90 €25 €6,295 €400 €130 €75 €295 €1,667 €33 -€6,273 €25,179 €25,179 €0 €0 Aug-11 -€31,452 -€20,094 €19,670 €0 €19,670 €0 €17 €7,500 €1,075 €2,000 €90 €25 €6,363 €400 €130 €75 €295 €1,667 €33 -€425 €25,450 €25,450 €0 €0 Sep-11 -€25,875 -€14,110 €19,738 €0 €19,738 €0 €17 €7,500 €1,075 €2,000 €90 €25 €6,431 €400 €130 €75 €295 €1,667 €33 €5,628 €25,722 €25,722 €0 €0 Oct-11 -€20,094 -€9,422 €21,306 €1,500 €21,306 €0 €17 €7,500 €1,075 €2,000 €90 €25 €6,499 €400 €130 €75 €295 €1,667 €33 €11,884 €25,994 €25,994 €0 €0 Nov-11 -€14,110 -€3,030 €19,874 €0 €19,874 €0 €17 €7,500 €1,075 €2,000 €90 €25 €6,567 €400 €130 €75 €295 €1,667 €33 €16,844 €26,266 €26,266 €0 €0 Dec-11 -€9,422 10. Future business development possibilities 10.1 Building Energy Rating: Tender management service In addition to the existing BER search function and assessment service already offered by Homefootprint, the possibility of offering a further tender management service will be investigated. Currently, once a building energy rating assessment has been conducted, home owners are provided with an energy rating of their property, which in turn is registered with Sustainable Energy Ireland, the state body that manages the national register of BER assessed residences (See appendix 20 for an example of a building energy rating certificate). In most cases an overview of the assessment is also provided to the homeowner by the BER assessor. It is then up to the home owner to make contact with individuals in the construction industry to ask for quotations and investigate the cost to improve the residence (if necessary). Based on assessment of the current process it appears that there is room in the market place for an intermediary which would link the two issues. The additional tender management service could potentially be offered by Homefootprint and would supplement the existing offering. • Proposed extension of service: Tender management Homefootprint could potentially offer an additional service whereby post BER assessment; individuals could post electronic copies of their home rating assessment and overview reports to the tender management system. This would then enable construction companies to provide quotations and make bids for tenders based on the reports provided. Homefootprint would act as an intermediary in this regard. A benefit of this additional service is that it would likely lead to increased revenue from both users and construction companies. Furthermore, the additional service could lead to a migration of users from competitors to Homefootprint. Further investigation will be necessary to determine whether the tender management service would be suitable as buy-in would be critical from the three core groupings of (1) home owners, (2) BER assessors and (3) construction companies. 10.2 Data exploitation Homefootprint benefits from the ability to gather and store vast amounts of data on registered users. It is envisaged that this data could be valuable when mined. If anonymised and legal position was gained, this could enable anonymised, sorted and specific data to be passed to external parties. Homefootprint will seek legal advice on this position in the future as it is likely that exploitation of such data will be subject to the EU Directive 95/46/EC- The data protection directive, as article three of the directive states that: 87 ‘This Directive shall apply to the processing of personal data wholly or partly by automatic means’23. • Potential partner for data Further to brief discussions with the Royal Irish Architect Institute (RIAI- the representative body for qualified architects in Ireland)24, the Institute Director, Mr. John Graby expressed that the RIAI would be ‘extremely interested’ in obtaining information specific to residential construction as currently, information is not readily available and existing sources of information do not provide a substantial degree of information regarding self-built homes, the degree of energy efficiency in homes, or the degree of sustainability. Homefootprint will investigate this issue further to determine the legal issues and potential monetary value that could be derived from forming agreements to provide data to third parties. 23 24 http://www.dataprotection.ie/viewdoc.asp?m=&fn=/documents/legal/6aii-1c.htm#1 : Accessed 28/07/2008 Brief communications over the period July 7th-July 28th. 88 11. Future system development possibilities 11.1 Cost per click billing Currently the system does not provide for measuring transactions on a cost-per-click basis. This functionality will be necessary in order to record the number of click-throughs for each listed company. In addition, a billing system will have to be developed whereby merchants or service providers can be billed on a monthly basis, either to a company credit card or by means of direct debit. This would require the development of a very secure system. It will be necessary for this system to be capable of exporting data in a human readable format as bookkeeping will be outsourced. 11.2 Maximum cost per day for listing merchants An important add-on to the system would be the added functionality which would enable merchants to set a maximum cost per day for click throughs from Homefootprint. This facility is offered by Google Adwords. 89 Appendices Appendix 1: Advertising solution user case diagram 1. Registration User registration User details gathered: o Name o Email address o Ph.no (voluntary) o County of residence Possibility to have location based targeted advertising. 2. Home energy audit Home energy audit User details gathered: o Residence type o No. inhabitants o Heating system o Urban/country o Lighting o o o o o o Water heating Glazing Roof type Insulation Ventilation Appliance usage Possibility to have very specific advertisements, directly targeted at the registered user. 3. Example of display for registered user 4. Non registered user advertisements The difference for non-registered users would be that advertisements would be generic and content based, rather than specifically targeted at their profile (i.e. stage 1& 2 would not apply). 90 Appendix 2: Google estimated average Cost Per Click Keywords wall insulation house insulation how to save energy energy assessors save energy home energy audit ways to save energy save on energy domestic energy assessors heat pumps home audit home water purification air to water heat pumps cavity wall insulation geothermal heat pumps ground source heat pumps water heat pumps air source heat pumps external wall insulation ground heat pumps central air heat pumps install heat pumps exterior wall insulation Average CPC Estimated Avg. CPC €1.10 €1.08 €1.23 €1.50 €1.33 €1.18 €1.10 €1.53 €1.66 €1.66 €1.32 €3.27 €0.55 €1.07 €0.85 €0.77 €0.77 €0.68 €1.11 €1.05 €0.05 €0.94 €0.96 €1.16 Based on Google’s keyword cost estimation tool. Keywords chosen relate to Homefootprint’s offering, 25/07/2008. 91 Jan Feb Mar Estimated total site Users 2250 4500 6750 Per month premium pricing plan € 800 800 800 Average cost to reach individual user € Month Year one May Jun Jul Aug Sep Oct Nov Dec End of year 800 800 €0.06 800 €0.07 €0.05 800 92 €0.04 800 €0.04 800 €0.04 800 €0.03 800 €0.03 800 €0.09 9600 9000 11250 13500 15750 18000 20250 22500 24750 27000 27000 Apr Appendix 3: Premium advertising - estimated cost of reaching users Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 93 Estimated total site Users 29250 31500 33750 36000 38250 40500 42750 45000 47250 49500 51750 Per month premium pricing plan € 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 Average cost to reach individual user € €0.03 €0.03 €0.03 €0.03 €0.03 €0.02 €0.02 €0.02 €0.02 €0.02 €0.02 Month Year Two (Increase in price based on estimated increase in user base) €0.02 €0.02 1000 12000 54000 54000 Dec End of year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec End of year 94 Estimated total site Users 56250 58500 60750 63000 65250 67500 69750 72000 74250 76500 78750 81000 81,000 Per month premium pricing plan € 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 Average cost to reach individual €0.01 €0.02 €0.02 €0.02 €0.02 €0.02 €0.01 €0.01 €0.01 €0.01 €0.01 €0.01 €0.01 user € Month Year Three Appendix 4: Competitor Listing Rates Company www.greenpages.ie Type of listing Directory listing Annual fee € 199 www.greenpages.ie Premium listing 299 www.build.ie Directory listing 180 www.build.ie Search optimised listing 375 www.build.ie By position 1,2,3: 750, 600, Category sponsorship 450 95 Included in listing Title, address, Phone no, Fax no, web link, email link, summary description, send to a friend, add to favourites, designation icon, ratings and reviews. Title, logo image, Address, Phone no. ,Fax no, web link, email link, summary description, detailed description, send to a friend, add to favourites, print, map, designation icon, coupon, ratings and reviews, photo gallery, contact form, video snippet. Single category listing with address and contact details with hyperlink. Multiple category listing with embedded logo adjacent to company listing serving as a hyperlink, up to 4,000 character search engine linked description fully enabling search facilities throughout the site. Category Sponsorship guarantees a Top Three Position* in a category. This ensures maximum visibility of listings. The category sponsorship will include Sponsored Link Logo and text or bullet points. Additional information Rates are only available to customers who are also booking a 2009 National Green Pages Directory advert or listing, i.e. a minimum extra of €250. A number of discounts are also offered for early booking and multiple bookings. Rates are only available to customers who are also booking a 2009 National Green Pages Directory advert or listing, i.e. a minimum extra of €250. A number of discounts are also offered for early booking and multiple bookings. www.allaboutenergy.ie Basic listing Company www.allaboutenergy.ie listing 200 Detailed company www.allaboutenergy.ie profile www.enerfina.com N/A 400 N/A Company and product name and location. Weblink, logo and list of services displayed. All company details, product details, product photos and a detailed company description section. N/A 100 96 Brokerage model Appendix 5: Competitor Advertising Rates Company www.greenpages.ie www.greenpages.ie www.greenpages.ie Type of advert Top Banner Content banner Buttons monthly fee € 2000 850 400 CPM 18 12 8 www.build.ie Revolving button www.build.ie Revolving banner 1500 No www.build.ie Featured company 1485 No www.build.ie Featured product 1485 No www.build.ie News sponsorship 1345 No www.allaboutenergy.ie Button advert 116 No www.enerfina.com N/A N/A N/A 360 97 No Additional information Displayed 22 per page on 40+ different sections comprising of 1000’s of web pages Displayed 2 per page, on 40+ different sections comprising of 1000’s of web pages Prominent home page advert which links to a dedicated page devoted to your company, including photographs and editorial, hyper links, logo and contact details. After your display period, content is archived and displayed permanently on the site in the featured companies directory. Prominent home page advert which links to a dedicated page devoted to your company, including photographs and editorial, hyper links, logo and contact details. After your display period, content is archived and displayed permanently on the site in the featured products directory. News Sponsorship will give your company branding of a news column, along with 200pixels x 200pixels advert within news stories. A text link advert will also appear within the daily news feed sent out from Build (18.5K subscribers). Button advert with link to homepage. Enerfina operates as a brokerage thus all details are not available. Adverts from external companies are not evident on the site. 45 Johnstown Road, Dun Laoghaire Tom Meacle Manolo Demery Dryzone Ltd Renewable Energy Systems Ltd. Irish Eco Heat Active Thermal Building Services Mark Lowen Glenn Ryan Robert Steininger Patrick Dyer Alan Mangan Medicos Ltd. Discreet heat Ireland Killure Eco Fuels Tim Cooper Michael Prendergast 59a Baldoyle, Dublin 13 5 Aston Quay, Dublin 2 Unit 5, Europark, Lathaleere, Baltinglass Co. Sandyford Road, Dublin 16 Cambridge Mews, Sandycove Avenue East, Dun Laoire. Killure House Goresbridge Co. Kilkenny Garden Pavilion, Powerscourt, Enniskerry Rathwire Killucan Westmeath Dale Roberts Pat McClean Address 19 Westmoreland park, ranelagh, Dublin 6 Contact Eoin McKiernan BE (Mech) David Tyrrell Coolpower products Eirenew Quinns of Baltiglan Keltic Water Systems Mecon water management Ltd. Clean Timber products Supplier name 98 059 64 51865 086 260 6803 00353 1 839 3918 059 977 5567 00353 294 1895 086 8472659 00353 16708922 872202000 353599157628 35312852332 044 9376797 087 0505 969 phone www.activethermal.ie www.res.ie www.eco-heat.net www.dryzone.ie www.medicos.ie www.homewise.ie www.killure.ie www.coolpower.ie www.meconwml.com www.kelticwatersystems.com www.eirenew.ie www.quinns.ie website Appendix 6: List of companies approached regarding listing their products with Homefootprint.info [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] - [email protected] [email protected] e-mail Appendix 7: Build.ie Google Analytics statistics (UK & Ireland) 99 Appendix 8: Breakdown of Irish residences by dwelling type (2006) Dwelling type 2006 no. 2006% of total Detached House 625,988 42.8 Semi-Detached house 398,360 27.2 Terraced House 257,522 17.6 Flat/Apartment 139,872 9.6 Bed-Sit 8,751 0.6 Not stated 31,803 2.2 Total 1,462,296 100 Source: Department of the environment housing statistics, 2008. 100 Appendix 9: Breakdown of dwelling construction period Source: SEI 2008, Energy in the residential sector 101 Appendix 10: Consumer Sentiment Index January 2000-January 2008 Source: ERSI, Consumer Sentiment Report, June 2008 Appendix 11: Index of current economic conditions January 2000- January 2008 Source: ERSI, Consumer Sentiment Report, June 2008 102 Appendix 12: Index of consumer expectations January 2000- January 2008 Source: ERSI, Consumer Sentiment Report, June 2008 Appendix 13: Price of natural gas Natural Gas price (excluding taxes) 16 € per Gigajoule 14 12 10 Euro 15 8 Ireland 6 United Kingdom 4 2 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: Eurostat Energy database, Accessed 09/07/2008 103 Appendix 14: Household electricity prices Household electricity prices: Euro per Kilowatt hr (excluding taxes) 0.16 € 0.14 0.12 0.1 0.08 Euro 15 0.06 0.04 United Kingdom Ireland 0.02 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year st Source: Eurostat Energy database, Accessed 09/07/2008. (Prices applicable on 1 of January each year) 104 Appendix 15: Price of Gasoline Price of premium unleaded gasoline per 1,000 litres (inclusive of taxes) 1600 € Price 1400 1200 1000 800 Ireland United Kingdom 600 400 200 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Source: Eurostat Energy database, Accessed 09/07/2008. The prices supplied to the DirectorateGeneral of Transport and Energy of the Commission by the Member States are those most frequently encountered at the 15th of each month. 105 Broadband penetration, Dec 2007 GDP per capita (USD P P P, 2006) B ro adband penetratio n (subscribers per 100 inhabitants, Dec 2007) Source: OECD Broadband Statistics 106 l k c d s y d c d y n a r nds land ay and l an rea d en urg ada dom iu m nce an ate ali a pa tria and lan pa in Ital bli uga ary e ce l an ub li rkey x ic o w r s o g o g t m l u a t a l n e o e r u J Au ea Ire S r l Ic e or er Fin K we mb Ca i ng Bel Fra erm S ust en ep Po Hun G r P Rep T M N i tz d A K Z S xe D the R G e t k d i h a te ew Ne Sw Lu ec Un N ov ni z U C Sl 0 5 10 15 20 25 30 35 40 OECD broadband penetration and GDP per capita Appendix 16: Broadband penetration to December 2007 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 €0 Taxes (real estate, etc.) Net Profit Total Expenses Rent €18,510 €16,831 €130 €4,445 €250 Exhibitions IT €500 €33 €1,667 Initial advertising extras Internet Loan payments €295 €0 Insurance loan Interest €75 €400 Car, delivery and travel Telephone €424 €25 Web maintenance and repairs Advertising €90 Supplies (office and operating) €2,000 €806 Prof. services (legal, accounting) €7,500 €14,181 €12,040 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €539 €25 €90 €2,000 €806 €7,500 €17 €2,141 Payroll expenses €17 €17 €1,679 €2,158 €17 €28 €750 €0 €1,363 Feb-09 €17 €1,695 Salary expenses Expenses Total Cost of Sales Gross Profit Hosting Cost of Sales Total Revenue (Sales) €0 €14 Premium BER fees @ €15 monthly per reg assessor €375 Estimated revenue from BER CPC € €0 €1,306 Jan-09 Revenue from bundle advertising € Premium Advertising revenue Total revenue from listings and CPC Revenue (Sales) Year one: Profit and loss Appendix 17: Profit and loss account year one €14,494 €11,100 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €853 €25 €90 €2,000 €806 €7,500 €17 €3,394 €17 €3,411 €25 €42 €1,125 €800 €1,419 Mar-09 €14,607 €10,759 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €966 €25 €90 €2,000 €806 €7,500 €17 €3,848 €17 €3,865 €34 €56 €1,500 €800 €1,475 Apr-09 107 €14,721 €10,419 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €1,080 €25 €90 €2,000 €806 €7,500 €17 €4,302 €17 €4,318 €42 €70 €1,875 €800 €1,531 May-09 €14,834 €10,078 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €1,193 €25 €90 €2,000 €806 €7,500 €17 €4,756 €17 €4,773 €51 €84 €2,250 €800 €1,588 Jun-09 -€9,739 €14,948 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €1,306 €25 €90 €2,000 €806 €7,500 €17 €5,209 €17 €5,226 €59 €98 €2,625 €800 €1,644 Jul-09 -€9,397 €15,061 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €1,420 €25 €90 €2,000 €806 €7,500 €17 €5,664 €17 €5,681 €68 €113 €3,000 €800 €1,700 Aug-09 -€9,057 €15,175 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €1,534 €25 €90 €2,000 €806 €7,500 €17 €6,118 €17 €6,134 €76 €127 €3,375 €800 €1,756 Sep-09 -€8,717 €15,288 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €1,647 €25 €90 €2,000 €806 €7,500 €17 €6,571 €17 €6,588 €84 €141 €3,750 €800 €1,813 Oct-09 -€8,377 €15,402 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €1,760 €25 €90 €2,000 €806 €7,500 €17 €7,025 €17 €7,042 €93 €155 €4,125 €800 €1,869 Nov-09 -€8,037 €15,515 €130 €0 €250 €500 €33 €1,667 €295 €0 €0 €75 €400 €1,874 €25 €90 €2,000 €806 €7,500 €17 €7,478 €17 €7,495 €101 €169 €4,500 €800 €1,925 Dec-09 €182,735 €124,551 €1,560 €4,445 €3,000 €6,000 €396 €20,000 €3,543 €0 €0 €900 €4,800 €14,596 €300 €1,080 €24,000 €9,675 €90,000 €200 €58,184 €200 €58,385 €650 €1,097 €29,250 €8,000 €19,388 YEARLY €6,094 €183 €110 Revenue from bundle advertising € Estimated revenue from BER CPC € Premium BER fees @ €15 monthly per reg assessor €0 Taxes (real estate, etc.) €16,176 -€4,574 Net Profit €130 €250 €33 €1,667 Total Expenses Rent IT Exhibitions Initial advertising extras Internet Loan payments €295 €0 Insurance Interest €75 €400 Telephone Car, delivery and travel €2,905 €25 Repairs and maintenance Advertising €90 Supplies (office and operating) €2,000 €806 Prof. services (legal, accounting) €7,500 -€4,163 €16,313 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €3,042 €25 €90 €2,000 €806 €7,500 €17 €12,149 Payroll expenses €17 €17 €11,602 €12,166 €118 €197 €6,563 €2,000 €3,288 Feb-10 €17 Salary expenses Expenses Total Cost of Sales Gross Profit Hosting Cost of Sales €11,618 €2,000 Total Revenue (Sales) €3,231 Premium Advertising revenue Jan-10 Total revenue from listings and CPC Revenue (Sales) Year two: Profit and loss Appendix 18: Profit and loss account year two -€3,753 €16,449 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €3,178 €25 €90 €2,000 €806 €7,500 €17 €12,696 €17 €12,713 €127 €211 €7,031 €2,000 €3,344 Mar-10 108 -€3,343 €16,586 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €3,315 €25 €90 €2,000 €806 €7,500 €17 €13,243 €17 €13,260 €135 €225 €7,500 €2,000 €3,400 Apr-10 -€2,933 €16,723 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €3,452 €25 €90 €2,000 €806 €7,500 €17 €13,790 €17 €13,807 €143 €239 €7,969 €2,000 €3,456 May-10 -€2,521 €16,860 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €3,589 €25 €90 €2,000 €806 €7,500 €17 €14,339 €17 €14,356 €152 €253 €8,438 €2,000 €3,513 Jun-10 -€1,361 €17,247 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €3,976 €25 €90 €2,000 €806 €7,500 €17 €15,885 €17 €15,902 €160 €267 €8,906 €3,000 €3,569 Jul-10 -€950 €17,384 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €4,113 €25 €90 €2,000 €806 €7,500 €17 €16,433 €17 €16,450 €169 €281 €9,375 €3,000 €3,625 Aug-10 -€540 €17,520 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €4,249 €25 €90 €2,000 €806 €7,500 €17 €16,980 €17 €16,997 €177 €295 €9,844 €3,000 €3,681 Sep-10 -€128 €17,658 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €4,387 €25 €90 €2,000 €806 €7,500 €17 €17,529 €17 €17,546 €186 €309 €10,313 €3,000 €3,738 Oct-10 €281 €17,794 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €4,523 €25 €90 €2,000 €806 €7,500 €17 €18,075 €17 €18,092 €194 €323 €10,781 €3,000 €3,794 Nov-10 €693 €17,931 €130 €250 €33 €1,667 €295 €0 €0 €75 €400 €4,660 €25 €90 €2,000 €806 €7,500 €17 €18,624 €17 €18,641 €203 €338 €11,250 €3,000 €3,850 Dec-10 -€23,293 €204,641 €1,560 €3,000 €396 €20,000 €3,543 €0 €0 €900 €4,800 €45,387 €300 €1,080 €24,000 €9,675 €90,000 €200 €181,348 €200 €181,548 €1,874 €3,121 €104,064 €30,000 €42,489 YEARLY €21,803 €21,531 Net Profit Total Expenses €4,390 €17,142 €130 Rent IT €400 Exhibitions Initial advertising extras €33 €0 Internet €295 €0 Taxes (real estate, etc.) Loan payments €0 Insurance Interest (6.65%) €75 €400 Telephone Car, delivery and travel €5,387 €25 Repairs and maintenance Advertising €90 Supplies (office and operating) €2,000 €806 Payroll expenses Prof. services (legal, accounting) €7,500 Salary expenses Expenses €4,594 €17,210 €130 €400 €33 €0 €295 €0 €0 €75 €400 €5,455 €25 €90 €2,000 €806 €7,500 €17 €17 Gross Profit €17 €17 Total Cost of Sales €21,820 €366 €366 €11,625 €5,000 €4,463 Feb-11 Hosting Cost of Sales €21,548 Premium BER fees @ €15 monthly per reg assessor Total Revenue (Sales) €352 €352 Estimated revenue from BER CPC € €11,438 €5,000 Revenue from bundle advertising € €4,406 Premium Advertising revenue Jan-11 Total revenue from listings and CPC Revenue (Sales) Year three: Profit and loss Appendix 19: Profit and loss account year three 109 €4,798 €17,278 €130 €400 €33 €0 €295 €0 €0 €75 €400 €5,523 €25 €90 €2,000 €806 €7,500 €22,075 €17 €17 €22,092 €380 €380 €11,813 €5,000 €4,519 Mar-11 €5,001 €17,345 €130 €400 €33 €0 €295 €0 €0 €75 €400 €5,591 €25 €90 €2,000 €806 €7,500 €22,346 €17 €17 €22,363 €394 €394 €12,000 €5,000 €4,575 Apr-11 €5,205 €17,413 €130 €400 €33 €295 €0 €0 €75 €400 €5,659 €25 €90 €2,000 €806 €7,500 €22,618 €17 €17 €22,635 €408 €408 €12,188 €5,000 €4,631 May-11 €5,409 €17,481 €130 €400 €33 €295 €0 €0 €75 €400 €5,727 €25 €90 €2,000 €806 €7,500 €22,890 €17 €17 €22,907 €422 €422 €12,375 €5,000 €4,688 Jun-11 €7,113 €18,049 €130 €400 €33 €295 €0 €0 €75 €400 €6,295 €25 €90 €2,000 €806 €7,500 €25,162 €17 €17 €25,179 €436 €436 €12,563 €7,000 €4,744 Jul-11 €7,316 €18,117 €130 €400 €33 €295 €0 €0 €75 €400 €6,363 €25 €90 €2,000 €806 €7,500 €25,433 €17 €17 €25,450 €450 €450 €12,750 €7,000 €4,800 Aug-11 €7,520 €18,185 €130 €400 €33 €295 €0 €0 €75 €400 €6,431 €25 €90 €2,000 €806 €7,500 €25,705 €17 €17 €25,722 €464 €464 €12,938 €7,000 €4,856 Sep-11 €7,724 €18,253 €130 €400 €33 €295 €0 €0 €75 €400 €6,499 €25 €90 €2,000 €806 €7,500 €25,977 €17 €17 €25,994 €478 €478 €13,125 €7,000 €4,913 Oct-11 €7,928 €18,321 €130 €400 €33 €295 €0 €0 €75 €400 €6,567 €25 €90 €2,000 €806 €7,500 €26,249 €17 €17 €26,266 €492 €492 €13,313 €7,000 €4,969 Nov-11 €8,132 €18,389 €130 €400 €33 €295 €0 €0 €75 €400 €6,634 €25 €90 €2,000 €806 €7,500 €26,520 €17 €17 €26,537 €506 €506 €13,500 €7,000 €5,025 Dec-11 €75,131 €213,182 €0 €1,560 €4,800 €396 €0 €3,543 €0 €0 €900 €4,800 €72,128 €300 €1,080 €24,000 €9,675 €90,000 €288,313 €200 €200 €288,513 €5,148 €5,148 €149,628 €72,000 €56,589 YEARLY Appendix 20: Example of building energy assessment certificate Source: Sustainable Energy Ireland (www.sei.ie) 110 111