Midterm-Market Analysis and competitive survey: Students will complete a paper detailing the information that will later be used to implement and create a marketing plan. In order to have a marketing plan you have to gather and analyze necessary informati

2019

STRUCTURE CONVERTING

PLAN- - (SN to MC)

University of Southern California

Leonard Davis school of Gerontology

Executive Summary

Kingsley Manor is a, non-profit organization, continuing retirement community located

in 1055 N Kingsley Dr, Los Angeles and a pastiche of Hollywood grandeur and modern living,

six miles to Beverly Hills, ten minutes to Disney Concert Hall and LA’s best restaurant.

Source by Google Maps

Nowadays, Kingsley Manor is facing a dilemma that the skilled nursing facility is not

profitable, resulting from high costs in operation but with low revenue because majority of

clients are Medical citizens. Besides, two stories for SN, with 51 beds are provided to residents,

indicating that the provision of beds is limited which restricts KM in admission.

To deal with the issue, an idea of converts skilled nursing to memory care is present in

this market plan. Studies show that there are over 9.4 million American, age over 65, live with

dementia in 2015 and the number is estimated to increase by 13 million in 2050. The number

suggests that there is strong demand of care service for dementia older adults, moreover, the

provision of memory care is dramatically increasing in the last ten years therefore to rebuild a

structure is possible in practice.

Property Location

New memory care center will provide all critical aspects such as comfort and dignity,

meanwhile, maintain quality of lives for those residents who have memory impairment. Well-

training staff with skilled care and passion will deliver our mission which aims to enrich the lives

of residents and take care of family concerns in the first place.

Situation Analysis

Currently, there are three types of living options which consisted of IL-132, AL-96, and

skilled nursing-51 beds. And they are allocated in several major buildings, however, the skilled

nursing only gets the license to open on the second and third floor in the care center building.

The occupancy rate of KM is 100% along with a long waiting list. More than 300 residents are

living there and receive different services.

Types Quantity Monthly fee

AL Studio/ Shared Bath 45 $2850-$3360

AL Studio/ Private Bath 50 $3610- $3860

IL Suite 44 $3760- $3960

IL One Bedrooms 67 $4015 -$5705

IL Two Bedrooms 20 $8560 - $9180

Care Center Accommodations

TYPES DAILY FEE

Private Room/Private Bath $410

Private Room/ Shared Bath $390

Semi-Private Room $355

Mission and vision

Kingsley Manor will convert skilled nursing to memory care in the middle of this year.

The new KM aims to be an accountable and leading operator to provide memory care service to

older adults who live in Los Angeles. The new structure incorporates with home-like design and

security. KM hopes to create an environment where residents and employees can thrive and live

meaningfully.

KM views the increase of older adults with memory impairment as a challenge and has

passions to provide good service with respect to them. By understanding the need, KM also

notices that families are looking for quality of life. KM blenders good interior design with

insightful activity-based programs to promote residents’ wellness in the aging process.

Memory care

The idea is converted skilled nursing which located in the second to third floor to

memory care. The change can less high cost in operation and bring cash flow. On the other hand,

shutting down an SN will cause KM to disable delivering higher levels of care and to receive

medical reimbursement.

C A R E C E N T E R O U T L O O K

HA L LWAY SHARED-ROO M

The property has been used over 100 years, originally built in 1919, and interior

improvements will be initiated at the middle of 2019. The existing structure is shown above and

51 beds have combined by shared and private bed units. The redevelopment will integrate used

rooms into a dining and activity shared hall, moreover, it will transfer old units and hallways to

meet the memory care arrangement requirements. Construction is expected to complete by June

2020 and open for public in September.

SEC O ND AND T H I R D F LO O R I N C AR E C ENTER

A total of 32 units will build on two floors. Two dining-halls incorporate with an activity

rooms, highlight in the rectangle will build on the right side of both floors. Each unit is furnished

with a closet and a tiny bathroom along with a shower area so that residents can maintain

privacy. If residents need bathing service, the central bathing room is located on the south of the

building. Administration office, storage rooms, and a small movie theater are located on the

fourth floor.

SWOT Analysis

Strength Weakness

No entrance fee, clients don’t need to pay a

huge money once move in

The closet and bathroom are small

Memory care has lower operation cost

compare with Skilled nursing

Ineligible to collect medical reimbursement

Increase profit margin Hallway and room in memory care center

lack of residential feeling

One of the community of Front Porch.

Human resource and expanse are supported

by the home office

Restaurants are closed to KM which bring

bugs and flies problem

Strong brand recognition for local because it

has been opened for 100 years

Building are old and the latest refurbishment

was 10 years ago

Have beautiful patios where can see the

whole views of Hollywood

Space for activities in MC are too small

Well-trained program to enhance quality of

service

Limited car slots for family visitors

Opportunity Threat

Partnership with others MC community in

Front Porch to gain experience in managing

MC

Brutal competition in the market area

Partnership with USC to educate KM

employees about Alzheimer

Belmont Village offers fancy one-bed room

Develop a diverse population community

which match the Hollywood area

Pacifica Hollywood is a brand-new building

which offer memory care

Strong database from Front Porch can

support KM in training staff knowledge and

less expanse

Costumers might think MC is too new

compared with existing facilities

Market Analysis

Kingsley Manor locates in Los Angeles County where the economy is leading by

tourism, entertainment, and technology. Kingsley Manor primary market area is expected as a 5

miles radius which ranges from Hollywood Hills to Korean town. The location, household

income and quality of service determine market niche. KM targets middle-class, private pay,

older adults as it’ major memory care clients.

Population analysis

This paper focuses on population age over 75 because they are the most at risk of

Alzheimer population compare with other age groups. A study by Aaron Brown and associate

displays the proportions of Alzheimer’ population in Figure 1, indicating that 82% of individuals

diagnosed with Alzheimer are age over 75. In fact, moving in memory care is expensive and the

majority of householder have financial problem to live there. This market plan believes KM’

targets clients would be who have properly saving or stable annual income, at least annual

income over $25,000. Another study by Aaron Brown and associate investigate the percentage

who is age over 75 and has decent income in the nation, state, and primary market area, showing

that over 25% eligible individuals, represent 129,533 householders who live in Los Angeles

County, are predicted in 2019.

Source by AARON BROWN & ASSOCIATES, INC.

Source by AARON BROWN & ASSOCIATES, INC.

Demand and supply of Memory care in PMA

The increasing demand in memory care service is based on facts that increased

population diagnosed with ALZ plus studies from ALZ association and the US Census Bureau.

Wealthy individuals with annual income over $100,000 have various options in living and most

of them choose to age at home and poverty class, annual income under $25,000, are supported by

the government, however, the middle class are neglected and more attention should be put on

them. This paper has limitations on calculating the numbers of individuals who need memory

care, however, it inspired by some studies from Oregon and expected that the demand in Los

Angeles County by 2019 will be 4.5% over population of age over 75, middle class group, with

income from $25,000 to $99,999, which is 4.5% *129,533= 5,828.

To analyze the supply factor, the paper finds out numbers of competitors and their

monthly rental fee in PMA. There are 4 facilities offer memory care with residential home

settings. This paper investigates the units and occupancy level from it’ competitors, finding that

the total provision of MC units is 223 and the average occupancy rate is 89.4% which is shown

in chart 2. In addition, chart 3.1 to 3.4 analyzes the unit’ size and service fee by 4 competitors

and those data are instrumental in the goal and strategy section.

CHART 2 (Monthly Rental Comparison)

Number MC provider and

location

No. of

Units

Monthly rental

(SEMI-Private)

Monthly

rental

(Studio)

Present

occupied

Kingsley Manor 32 NA

1 Belmont Village

Hollywood Hills Los Angeles

38 $6,300 $6,930 97.4%

2 Pacifica Hollywood

Hills

10 $4,495 $4,945 NA

3 City View Villa

Los Angeles

40 $5,095 $6,195 90%

4 Silverado Beverly

Place

Los Angeles

103 $7,756 $14,722 80.6%

3.1 Belmont Village Hollywood Hills (MC)

Unit Types Unit Square Footage Range Unit Monthly Rent Range

Semi-private 360 - 380 $6,000- $6,600

Studio 360 - 380 $6,600- $7,260

Care/Service income $0- $805

3.2 Pacifica Hollywood Hills (MC)

Unit Types Unit Square Footage Range Unit Monthly Rent Range

Semi-private 720 - 720 $3,995- $4,995

Studio 386 - 452 $4,595- $5,295

Care/Service income $750

3.3 City View Villa Los Angeles (MC)

Unit Types Unit Square Footage Range Unit Monthly Rent Range

Semi-private 182 - 304 $4,895- $5,295

Studio 182 - 304 $5,695- $6,695

Care/Service income $0 -$2,100

3.4 Silverado Beverly Place Los Angeles (MC)

Unit Types Unit Square Footage Range Unit Monthly Rent Range

Semi-private 280 $7,452- $7,604

Studio 280 $14,418 - $15,026

Care/Service income $0

The number suggests that the memory care market is performing well, moreover, the

occupancy ranges from 80.6% to 97.4% indicates the market can support the high-end memory

service fee. However, the sample size is small only obtain from a 5-mile radius range, further

studies should also evaluate areas like Santa Monica and the San Fernando Valley.

A proposed schedule rent is used to calculate the average income needed. Proposed

schedule rent ranges from $4,495 up to $7,756. The analysis assumes 85% income is used in rent

and tax rate is 12%, besides, studies from Aaron Brown and Associates assume residents will

have home equity funds at a 4% return on home value and family contributions which accounts

for 5%. Studies by Zillow shows the median home value of Los Angeles County is $623,800

and predict the value will go up 2.9% within the next year. Numbers of adjusted annual income

in Chart (4) have proved that assumption of prospects are middle class older adults is correct.

Income needed chart (4)

Min. Rental Rate Max. Rental Rate

Monthly Fee

Monthly fee as a % of

monthly income

$4,495

85%

$7,756

85%

Monthly income needed

Annualized (x 12 months)

$5,288

12

$9,125

12

Annualized after tax income

Tax rate

$63,456

0.88

$109,500

0.88

Annualized before tax income

$72,109 $124,432

Less home equity fund

Less family contributions

Adjusted annual income

$24,952

$3,600

$43,557

$24,952

$6,221

$93,259

Goals and Strategy

Based on the situation analysis, it’s expected that 5,828 individuals, ages over 75, with

annual income from $25,000 to $99,999 need memory care service. Excluding competitors not in

the radius, such as Santa Monica and the San Fernando Valley, the provision of memory care,

233 units is far behind the need.

The market plan assumes PMA has 1725 older adults in demand of memory care; the

memory care market is still in the blue sky so it’s a good time for KM to enter; KM targets

clients who are over 75 with descent annual income. A total of 32 units of MC will be rebuilt

and completed by June 2020.

Goals: 1. Pre-sale sell at least 35% of the units

2. Maintain close rate at 75% and monthly sale rates at 20%

3. Achieve 70% occupancy rate by the end of 2020

Position model: The memory care in KM is built to meet the increased need of care service and

targets clients over 75 with annual income between $25,000 to $99,999 in PMA. Based on chart

2 and 3 series, the number illustrates competitors offer two types of units, studio and semi-

private. Studio units are preferable because they provide privacy and give prospects home setting

environment which will decrease agitation and confusion.

The market plan suggests KM should only provide studio and prize monthly rental and

service fee at $6,350 and $750 respectively, which will disrupt the market. Besides, it also

suggests that a no entrance fee policy for prospects to move in. The monthly rental and quality of

service are the advantage of KM. Reasonable monthly rental incorporates with studio space is

very cost-effective and equipped with great professional care service make KM outstands in

PMA.

Positioning statement: The new KM aims to be an accountable and leading operator to provide

memory care service to older adults who live in Los Angeles. The new structure incorporates

with home-like design and security, creating an environment where residents and employees can

thrive and live meaningfully.

Tactics

Memory care facilities in PMA offers mixed units and target different types of clients.

Based on chart 2 to series 3, data shows that competitors like Silverado targets on high-class

prospects and others concentrate on middle class where total monthly fee range from $5,750 to

$8,795. KM provides 32 studios at $7,100 rent is disruptive, what’s more, it has strong

experience in providing good service which can enhance product values and attract prospects.

Strategies in marketing: 1. Mailing Lists are purchased to deliver information to clients. Two

targeted demographics are considered for marketing, they are older adults over 75 and adult

children.

Details: I. Age over 75 with annual income between $25,000 and $99,999

II. Age 55- 74 householders with assets of $150k

2.Digital Strategy: i. Use CRM system to develop and track sales process. Data collected

by CRM can investigate clients need and track sale team performance. In addition, it serves as a

strategic management platform, recording units’ occupancy status, backing up communication

content with clients of all phases, and setting goals in certain courses.

ii. Search Engine Optimization: SEO tactics are used to raise KM’ website rank in the

search engine results. By using SEO, websites are more visible in the searching engine and SEO

maximize numbers of visitors to a site through organic search results.

3. Short-term pricing tactics: During the pre-sale stage, residents who have paid deposits

can get first three month at 30% off rent. Once the MC open, prospects move in the first two

month can get 12% off rent.

4. Utilize local print media in PMA to raise awareness of memory care service by KM

and enhance brand recognition.

5. Partnership with moving companies and provide benefits to prospects

Implementation

Financial plan: There are two marketing employees take charge of IL and AL so far and the

occupancy is 100%. In the early stage, they are reliable to handle the pre-sale of MC and

executive director will decide whether to hire a marketing assistant after MC open. Chart 5

shows a roughly budget on marketing, which includes several components, a new employee,

direct mail, digital strategy, SOE, and short-term pricing. Chart 6 shows move-in goals by 2020,

pre-sale starts and June and expect to attract 3 clients Facility is officially opened at September

and the market plan assumes one client move out every two months.

Financial Marketing Plan chart (5)

Marketing

assistant

(monthly)

Direct Mail CRM System

(Microsoft)

Short-term prizing SOE

Budget $6,500 $21,000 $6,000 $24,000 $4,000

Total:61,500

2020 Total Move-In Goals (6)

Kingsley Manor MC

Project Stage Remodeling Pre-sale Open

Memory Care Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct -20 Nov-20 Dec-20

Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget

Move Ins 3 3 3 4 3 4 3

Move Outs - - - 0 1 0 1

Occupancy 12 15 18 21

EOP

Occupancy %

37.5% 46.8% 56.3% 65.6%

Performance Evaluation

Tactics performances and effectiveness need evaluation and tactics are flexible to adjust

based on market conditions.

Tactics evaluation: i. Surveys are launch to move-in clients and families, asking them

how do they know KM memory care, to investigate which sources lead them to KM. ii. Evaluate

numbers of visitors to a site and the rate of turn into clients. iii. Evaluate the effectiveness of

direct mail and adjust budget monthly

Marketing Performance Evaluation: 1. Numbers of call and tour make every week.

2.Evaluate tours experience and times that marketing employees spend on clients’ interest. 3.

Evaluate the closing rate and find out the obstacles of selling MC units