Business Plan for a Smart Parking Application Parkaid

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Business Plan for a Smart Parking Application Parkaid

1. Executive Summary

Parkaid is a smart parking application that helps drivers to solve parking issues by using real-time parking data and GPS technology. Its main purpose is to improve parking efficiency, optimize the use of available spaces and minimize the impact of parking on traffic and environment. With the implementation of big data and intelligent algorithms, we dedicate ourselves to provide our users with an enjoyable and less stressful parking experience.

Parking inefficiency has been a common metropolitan area issue. With the crowd and busy traffic as well as vehicle overcrowding and a demand for a more efficient smart parking system, our company aims to start from a busy downtown Vancouver area and estimate our main market size based on the lower mainland (the Greater Vancouver area). We will get first-hand technology information, experienced personnel and fast-changing market indication with this premier location to support our first-stage growing period. Due to the region characteristics, Parkaid targets working professionals as our key customer segment. With high exposure to high-tech products, we believe our smart parking application will appeal to them. Moreover, busy-scheduled working professionals highly value time and convenience which are primary aspects in line with our value proposition.

In terms of the marketing plan, Parkaid plans to integrate social media into our primary marketing campaigns by strategically focusing on platforms such as Facebook, Twitter, Instagram, and Youtube. We will also introduce a referral program for Parkaid customers that are brand loyalists and love to share their experience with family and friends and various time-limited coupon promotions to all users from time to time. We will evaluate the effectiveness of the marketing strategy and the receptiveness of our social media presence on a regular base and make corresponding changes for future business operations.

In order to establish our market position and capture sufficient market share, at Parkaid, we differentiate ourselves from competitors by focusing on a streamlined process from accurate, real-time information to having secured payment options. There are no smart parking technology companies with real-time guidance in British Columbia up to now and we hope to utilize this first-mover advantage to establish strong brand recognition. However, we need to pay close attention to the company which provides parking information and payment options yet does not have real-time guidance, since they may decide to expand their business to a larger scale.

After going through a successful six-month testing phase, our team is looking for funds to support our initial stage development which will be mainly used on research and development and marketing campaigns that will enable us to reach out to our target customers and our market position. As a return for our investors, Parkaid will strive for the dominant position in the market by consistently devoting to technology updates and improving customer experience. We show our sincerity not only by offering equity in the company, but Parkaid is better protected with vesting schedules which prohibits a co-founder from leaving the company with a large piece of the pie.

Overall, we are a team of six that cover both technology and financial sides, we hope to recruit a few right veterans on the team which can bring us more insightful market information for further growth. Parkaid is a young and lively technology company that advocates work-life balance, being mindful and open communication company culture. In the start-up stage, instead of rewarding our employees with cushy benefits, we offer a promising future return though share company ownership.

2. Company Introduction

2.1 Who We Are

Parkaid is a smart parking application that helps solve parking issues by providing users with real-time guidance to the nearest available parking.

2.2 Services Provided

For most drivers circling for parking can be a headache but this is not just of personal inconvenience, it also fills the streets with avoidable pollution and makes stores and restaurants less appealing to potential customers. Parking in crowded areas can often take 10 minutes or more according to customer discovery and every extra minute spent searching for places to park means more traffic stress and frustration, burning more gas, producing more emissions and most importantly causing more congestion in the city. Therefore, we should move towards a more sustainable city and find ways to minimize the impact of parking on traffic as well as optimize the use of available spaces.

Parkaid is the parking solution that helps drivers, cities and the environment solve parking issues by providing real-time guidance to the nearest available parking. Users simply enter their destination into the application to be routed to the nearest parking space available in the area with our built-in GPS navigation system. Parkaid also includes rules of parking facilities so users will receive notifications not to exceed the limit. Additionally, Parkaid offers secured in-app payments so users can park and walk away instead of fussing at the pay station with coins or a credit card. If users have specific parking preferences, for example, the size of the parking space, maximum hours of parking, or the price, they can use the filter option to only show parking spaces that meet their requirements. To find the best parking and provide real-time data for users Parkaid has installed in-pavement sensors and cameras in various parking facilities that track exactly where and when spaces become available. We also developed proprietary algorithms that utilize hardware data with software analysis to power our quick, simple and painless smart parking application. By downloading Parkaid users can enjoy time and fuel savings, more convenience and a reduction in stress, frustration, and unpredictability with finding places to park.

2.3 Company Culture

The culture at most technology companies are working long hours, having intense competition, and little time for reflection, however, at Parkaid we work towards having a healthy work-life balance, being mindful and open communication. During our startup stage, want employees to work hard but also live well. We also want to have a diverse and open-minded workforce where everyone is treated with respect. To achieve this we plan on surveying our employees anonymously at the end of every month to know what is working and what is not so that we can do something about the things that are not working.

3. Market Size Analysis

Industry experts reported that the global smart parking systems market size was valued at USD 3.9 billion in 2019 and is expected to grow at a CAGR of over 17.4% in the next 7 years. (Grand View Research, 2020). It also worth highlighting the following four factors that are contributing to the growth of the global smart parking market:

Increased adoption of smart parking sensors
Growing adoption of intelligent transportation systems
Advanced analytics on telematics to reduce traffic congestion
Growth of the automotive industry

We believe within this promising blue sea industry and favorable market trends, we have a huge growth potential and market to generate profit.

Parking inefficiency has always been an issue in busy metropolitan area. With the increasing population in the Greater Vancouver area and the speeding up of city constructions, with potential future vehicle overcrowding and parking difficulties, a more efficient smart parking system would be in high demand.

Our company starts from busy downtown Vancouver area estimates out market size based on the lower mainland. We identify all the drivers within this area could be our potential market. Based on the data from ICBC of BC active driver license holder number, we estimate 60% of this population would be the active driver, given the fact that some driver license holders may not currently drive, rather they keep a driver’s license a form of primary identification. Within that range, we estimate 60% of the potential market would be our available market which contains people who have interest, income, and access to our app. By using a conservative assumption, assuming 20% of them will consume the premium model ($49.99 per year) and 80% would pay a 3 months fee ($4.99 per month), the potential and the available market is estimated to be $26 million and $20 million per year respectively (Appendix 1).

3.1 Target Market

Parkaid plans to target working professionals as our key customer segment, due to the size and affluence of this market. In general, working professionals consist of mostly Baby Boomers and Millennials who hold significantly higher purchasing power and disposable income compared to students who tend to belong to the Generation Y or Z cohort. Also, working professionals can be classified as “tech-savvy” because most either grew up using wireless technology or were young adults when wireless technology was introduced; making them an attractive market for our parking solution. Another characteristic of working professionals is that they greatly value time and convenience which corresponds to the value proposition that Parkaid offers. With similar levels of purchasing power, homemakers are another customer segment with great potential for our company to target however, those who belong to that segment seem to have plenty of time to shop and hang out with friends as well as pick up their kids. From our customer discovery, we found that those who fell in the homemaker segment do not see as much value in the amount of time saved to find the nearest available parking compared to students and working professionals, therefore, our smart parking technology delivers the most value to students and working professionals however, our company will not be as profitable if we were to target students due to their low level of disposable income and purchasing power. Working professionals will be our most profitable segment to move forward with and as we grow we will be able to generate more revenue streams from different customer segments.

Given our target customer is working professional, we estimate the population by narrowing 60% of the available market would working professional and around two-thirds (70%) of them would be potential users and this yield to our target market. Currently, we expect the target market size of working professionals to be about $6.3 million per year in the Greater Vancouver area (Appendix 2).

3.2 Key Metrics to Reach Revenue Projection

In order to push our business moving forward smoothly and be able to go through the early valley of death stage for startups, we identify the following key metrics and will keep track on these data to compare whether we meet our expectations.

Customer acquisition cost (CAC): This is being measured as divide our sales and marketing costs, by the number of customers we picked up for each month. An efficient marketing plan is vital for our business to capture a sustained growing user base which is the key to drive our revenue and gain market share. Especially we devote a significant amount of money and effort into marketing, we need to inform ourselves whether these campaigns are working and whether marking plan is efficient and profitable.
Active users: we need to keep track on our customer’s engagement through daily active-user number and the trend of this data. This data provides a lot of information such as during what time of the day our app is being used for a high frequency, the location, and busy areas that our users demand the help provided by the app. These figures and trends can help us better understand our users in order to focus on future design improvements which can attract more users.
Conversion ratio: this would be calculated by using the number of customers who have downloaded the app and have paid for the premium model divided by the total number of total users who have loaded the app. This metric is a key driving for generating revenue and meeting our expected growth projections. A monthly data trends also indicate how our product is well-designed and are able to gain a sufficient amount of market share, we need to do further customer discovery and redesign our pricing model if we see a significant drop in this trend or an underperforming number on this ratio.
Retention ratio: Our company intends to make a significant effort on maintaining a loyal users base. The profit margin from new user acquisition is much lower than maintaining current users based on cost components. Further customer discovery is necessary to find out why users have stopped registering in the membership program.

4. Business Model and Marketing Strategies

4.1 Branding

Two key traits our target reported in valuing businesses during our customer discovery are integrity and innovation, which is aligned with Parkaid’s value of building a relationship of integrity with our users through innovative technology. By using accurate, real-time information and our proprietary algorithms, Parkaid will help users reduce the stress with finding open spaces along with unwanted emissions and enjoy time and fuel savings.

Prior to our official launch, Parkaid will host a focus group to gauge market receptiveness and feedback. The focus will test our smart parking application and provide recommendations for improvement. Our team seeks to include primary consumer feedback to predict market acceptance post-launch and when we will be able to successfully cross the “chasm”. We believe by introducing Parkaid as a “trendy and tech savvy” solution, we can increase market acceptance because our target market grew up in a digital world or were young adults making the Internet a big influencer on consumer behavior. Due to our target audience being Millennials and Baby Boomers we need to rethink how to appeal to both demographics. We plan to integrate social media into our marketing campaigns by strategically focusing on social media platforms such as Facebook, Twitter, and Instagram and creating unique sharing opportunities around news and trends related to our smart parking technology. Our plan for Parkaid to become a trend is to first strike a deep emotional chord with consumers by demonstrating how our solution is right for them and how it improves their lifestyles, then ignite a community of social influence as the latest Trust in Advertising report states that 84% of consumers trust and are influenced by their friends, family and colleagues when making purchase decisions (The Nielsen Company, 2013). We will also be providing guides, FAQ’s, and testimonies to create consumer trust. Because we have a target market characterized by many time constraints and values convenience, Parkaid offers simple queries and search options along with in-app payment option that allows for easy navigation and minimize steps needed to find available spaces.

4.2 Referral Program

Our target audience consider themselves as brand loyalists and returns to brand offering positive experiences. They also love to share and recommend products to family and friends. Introducing a referral program for Parkaid users to receive 5% off every referred sale will incentivize consumers to share the positive features of Parkaid and how it has improved their parking experience. Like a snowball effect, as more consumers are incentivized to share Parkaid within their personal networks, the more word of mouth we will receive and that word of mouth generates sales.

4.3 Coupon Promotion

Research shows Millennials love bargains and are heavy users of digital coupons (Littleton, 2017) whereas if Baby Boomers are provided with a coupon or loyalty discount they are three-times more likely to purchase a product (Bedgood, 2016). To capitalize on their purchase behaviour, we have two strategies in place to capture the available market. Offline, Parkaid will provide 5% off coupons through direct mail and print brochures sent to the homes of our target audience whereas online, we will be giving out customized coupon codes to our target audience via targeted social media advertisements. With customized codes, we can track the effectiveness of online coupons and the receptiveness of our social media presence.

5. Competitor Analysis

The global smart parking industry continues to grow and offer opportunities as more driver licenses are being activated in British Columbia every year (ICBC, 2020). Across the globe, various companies are developing smart parking technology Parkaid, however, is differentiated from competitors by focusing on a streamlined process from accurate, real-time information to having secured payment options.

5.1 Direct Competition

As of today, there are no smart parking technology companies with real-time guidance operating in British Columbia which allows Parkaid to become a first-mover business in empowering drivers, cities and businesses in B.C with real-time parking data. By being first companies are typically enabled to establish strong brand recognition and customer loyalty before other companies enter the market. From a global perspective, there are a few other competitors namely Streetline, Smart Parking Technology, and ParkiFi with similar parking solutions as Parkaid, however, comparing the features of every technology, Parkaid reigns supreme (Appendix 3). Parkaid is user friendly, it allows users to set detailed preferences, has a secured payment option, includes rules of every parking facility, and most importantly provide reliable data which are all basic features a user would expect in this type of technology however, some of our competitors lack these features. Although some companies may not have the features Parkaid has, it is also beneficial to learn from competitors because their decisions may reveal