Market research assignment

Precision Landscape Group Inc. (Precision) was established in 1992 as a university students’ summer business that sprouted into a full-time venture and passion for founder Kent Peddie. Precision operates within a dual-focused strategy dedicated to the design, construction and maintenance of landscapes in the spring, summer, and autumn months, and a focus on clearing snow during the winter months. The company is committed to excellence and strives to be the Industry leader in snow removal in Ottawa’s urban neighbourhoods. With the goal to continually raise the bar in every aspect of business operations, Precision aims to provide the best possible snow removal service to ensure the success and well-being of clients and the company. (Precision Snow Removal, 2010) Precision has dedicated many years to researching the most durable and innovative techniques for constructing landscapes. The company recognizes the importance of using proper snow clearing equipment, particularly in the management of snow removal from difficult driveways and parking lots, often found in some of Ottawa’s older neighbourhoods. (Precision Snow Removal, 2010)

Size of Company

Precision employs approximately 6 people during the spring/ summer/ fall seasons and over 25 people in the winter season to clear snow. (Precision Snow Removal, 2010) Many of the employees within the company have a formal education background in areas such as horticulture, as well as years of experience in landscape design and construction. In addition to using the industries finest tools and equipment, the highest standards are maintained through continuous learning and updating of employee skills and industry knowledge. (Precision Snow Removal, 2010)

The company is a member of The Snow and Ice Management Association (SIMA), a non-profit organization providing support and networking opportunities for those in cold weather management positions (Snow & Ice Management Association, n.d.), as well as the Greater Ottawa Water Garden Horticultural Society, a non-profit organization focused on the enjoyment, education and promotion of water gardening. (Greater Ottawa Water Garden Horticultural Society, 2016) Beyond being fully insured, Precision has achieved a top rating with the Worker's Safety and Insurance Board of Ontario. (Precision Snow Removal, 2010)

According to the 2015 Snow Industry Benchmark Report, 33% of snow removal managers indicate that Sales and Marketing is the business function they would most like to improve. (Hindsight, 2015) At Precision, these functions are a priority for the business and are effectively organized in a geographic sales structure. The smaller size of the company, manageable focus on two service offers - spring/summer/autumn landscaping and winter snow removal, and ability to apply these services in a consistent manner, regardless of location, make the geographical sales structure the most appropriate fit. Under the strategic guidance of the Sales Director is the Sales Manager who has direct responsibility for four territory sales representatives (each with subsequent responsibility for the sales function within a number of Ottawa wards. The territory representatives maintain knowledgeable about the communities within the wards, public spaces/parks, and road infrastructure for their respective territories. Territory representatives are fully trained on the variety of services provided by Precision including landscaping and snow removal. While supported by Precisions’ account managers (with expertise in either residential contracts or commercial contracts), qualified horticulturalists, and skid-steer operators to scope out sales pitches and ultimately fulfill sales contracts, the territory representatives are ultimately responsible for generating new sales leads, preparing responses to requests for services and maintaining existing client relationships.

The Marketing and Communications Manager, along with the Marketing and Communications Assistant are responsible for the entire portfolio of services offered by Precision. They are responsible for planning promotions, website content, public relations and media activity, and conducting market research on brand awareness and customer satisfaction.

According to a recent SIMA report focused on the private snow and ice management industry in the United States and Canada, the current market size is approximately $23 billion (USD) (or $29 billion in Canadian dollars) combined. The report revealed that there is a lack of essential information about the size and scope of the industry and the economic impact of the industry in each country, however it did uncover that the industry itself is fragmented, with the top four largest operators accounting for less than 5% of overall revenue. The size of the industry is estimated to be made up of more than 22,000 different companies. (Tirado, 2016)

Canadian market research reports conclude that there are no companies operating with a dominant market share in the landscaping and snow removal industry. As of April 2016, a total of 17,063 such businesses were registered in Canada, employing more than 56,000 people. The market size was approximately $10 billion (CDN) and showed annual growth of 1.3% per annum between 2011 and 2016. (IBIS World, 2016) Within the Ottawa region there are over 400 licensed snow plow contractors. (City of Ottawa, n.d.) Within a 40 km radius of the City of Ottawa specifically, there are 30 snow removal service companies which are accredited by the Better Business Bureau. (Better Business Bureau, 2016)

Precisions snow removal services are targeted to private citizens and business customers residing in the City of Ottawa. With a specialization in managing particularly tricky driveways and narrow laneways, Precision is ideally suited to operating in both the older urban areas of Ottawa and newer neighbourhoods. Many home owners require snow to be cleared from their driveways and local businesses have larger car parking lots that also require swift clearing after a snow fall. In Ottawa, there are approximately 6,290km of roads, 2,175km of sidewalks, and 233km of transit ways and highways emphasizing the importance of snow removal in the City during the winter months. (The City of Ottawa, 2014)

Recognizing the market opportunity of working with the public sector given the number of number of roads, sidewalks, transit ways and highways in the Ottawa region, municipal government has been identified as a lucrative area of focus for Precisions snow removal services. The City of Ottawa is responsible for the removal of snow from city streets and in 2015, spent $67.4 million to clear this snow and apply salt to the roads and sidewalks, making this one of the largest customers for snow removal services in the region. (The City of Ottawa, 2014)

The City of Ottawa’s transportation system provides more than just links from one area of the city to another. The road networks affect the economic vitality of the city and businesses operating within it, as well as the quality of life of residents. (City of Ottawa, 2015) The City has a responsibility for ensuring safe and efficient roads for motor vehicle drivers, cyclists, and pedestrians, as well as building roads and maintaining the transportation network. Road services include clearing snow as needed to ensure they are safe and convenient to use.

The City of Ottawa is guided by the Maintenance Quality Standards for roads, sidewalks and pathways. (City of Ottawa, 2015) These standards include the grouping of all city streets into classes which are used to prioritize the frequency in which the roads are plowed and how snow is removed. High priority roads are plowed first and residential roads will be plowed to a snow-packed surface. The City sets a standard that residential roads will be cleared within 10 hours from when the snow stops falling and bus stops are cleared within 24 hours. (City of Ottawa, 2015)

Due to the amount of snowfall that occurred in 2015, the City of Ottawa over-ran their budget on snow removal services by $7.6 million dollars (CDN). According to the City Treasurer, winter 2015 saw crews clearing city streets and sidewalks every other day (for a total of 33 days in January and February alone). (Pearson, 2015) The factors affecting road maintenance costs in the winter include the severity of the weather, types of roads needing to be maintained, and service level standards. The City spends over $4,000 per km of road, compared to a median cost of only $2,652 among other municipalities of a similar geographical size and scope of Ottawa. (City of Ottawa, 2015) Factors contributing to the higher winter maintenance costs in Ottawa include the large volume of snow that needs to be removed, the cold temperatures which precludes the accumulation of snow, and proactive measures to prevent ice accumulation. (City of Ottawa, 2015)

Between November 2015 and April 2016, a total of 203.3 cm (80 inches) of snow fell in Ottawa. (Environment and Climate Change Canada, 2016) In addition to the necessity for snow removal in order to keep the city flowing, under the Municipal Act, section 44(9), the City may be held liable and grossly negligent if someone walking on a city sidewalk slips and falls due to ice or snow. (Yu, 2014) Time is a critical factor in such cases as the City must respond to reports of dangerous sidewalk conditions; failure to do so can result in a ruling of gross negligence. Services must be in place to react quickly to all dangerous snow and ice conditions.

There were highly publicized failures in the 2015 winter season for city snow removal to occur within the specified service parameters. According to City Councillor Rick Charelli during major snow storms in the City in 2015 clearing equipment was not dispatched at the required accumulation of 5 cm, but rather the snow had reached a depth of 9 cm before plows were dispatched. (Cobb, Pilieci, & Spears, 2015) Furthermore, the city’s newly released “Where’s My Plow?” mobile app failed to live up to citizens expectations as a result of technical difficulties and poor tracking capabilities. (Cobb, Pilieci, & Spears, 2015) This indicates that there is a need for a faster, more efficient, trackable service to meet the City’s needs.

The City of Ottawa’s administrative function is headed by the City Manager who leads management and staff to implement decisions made by City Council. Within the City Managers remit, programs and services are delivered to citizens through departments grouped into two portfolios: City Operations and Planning and Infrastructure. The City Operations portfolio is led by the Deputy City Manager and includes Public Works, under which the Roads Services Branch Manager leads services related to the maintenance of roads in the city, including snow removal. The City Manager’s office also includes the Finance Department, headed by the City Treasurer, under which the Supply Branch administers purchasing activities in accordance with the City of Ottawa Purchasing By-Law and established policies and procedures. (City of Ottawa, 2012)

Influencers

Within the City of Ottawa procurement decisions are influenced from the top down as, ultimately, City Council holds the purse strings on department budgets. One influencer is the head of the Council’s Transportation Committee, Keith Egli. The Committee is responsible for overseeing all issues related to transportation planning and infrastructure and plays an advisory function to the Council on issues related to road services. (City of Ottawa) A second influencer in the Buying Centre is the City Treasurer, Marian Simulik. The City Treasurer oversees the City’s spending and provides opinions to Council regarding the awarding of contracts, from a budgetary perspective. (Legal Services Branch City Clerk and Solicitor Department, 2015) A third influencer in the Buying Center is the City Clerk, Rick O’Connor, who ensures that all statutory obligations are administered to comply with legislation, including procurement contracts. (City of Ottawa, 2015)

Deciders

As long as spend is within the budget allocated, the purchase decision (including the awarding of contracts) will generally sit with the City Manager, Steve Kanellakos. The City Manager has the authority to instruct department directors (e.g. the City Treasurer responsible for the Finance Department and the General Manager responsible for the Public Works Department) not to award contracts, to place additional restrictions on procurement, and he can submit recommendations to council for approval.

Another purchasing decision-maker for the City is the Chief Procurement Officer, Will McDonald. The CPO, as head of the City’s Supply Branch, is responsible for staff that perform the purchasing services of the City and for providing professional procurement advice and services to department directors, and for monitoring compliance with City of Ottawa Purchasing By-Law. The CPO has the authority to reject any proposed action of a Director on matters specified in the Purchasing By-Law requiring a joint director and Supply Branch decision. (Legal Services Branch City Clerk and Solicitor Department, 2015)

Department Directors, such as City Treasurer, Marian Simulik, who is responsible for the Finance Department and the General Manager of Public Works, Kevin Wylie, have responsibility for procurement activities within their department and branches. Directors are appointed by the City Manager and are given the authority to award contracts of a certain value. In some instances, the Director works in conjunction with the Supply Branch to ensure contract pricing represents fair market value. (Legal Services Branch City Clerk and Solicitor Department, 2015)

Purchasers

The individuals who act as purchasers for the City of Ottawa sit within the Supply Branch, which administers purchasing activities on behalf of the City. Individuals such as the Strategic Sourcing Manager, Mary Larkin, and the Professional Services Senior Policy & Purchasing Officer, Joanne Graham, are responsible for posting new Requests for Suppliers and negotiating the terms of purchases and contracts awarded. (City of Ottawa, 2015)

Precision Landscape Group Inc. is currently in its eighteenth year of business. Precision offers four-season services including the design, construction, and maintenance of landscapes and snow removal services in the urban Ottawa area. With over 500 landscape designs and builds in our portfolio and extensive experience in snow removal, particularly on narrow and difficult to access laneways, Precision is ideally placed to undertake a snow clearing contract with the City of Ottawa.

Information that customers such as the City of Ottawa may require when making a procurement decision for snow removal services include the following:

Equipment and Expertise: Precision uses a fleet of skid-steer loaders, called ‘Bobcats’, traditional snowplough trucks, dump trucks, and walk behind snow-blowers to clear downhill sloping drives and walkways and to manage difficult driveways and parking lots in Ottawa’s older neighbourhoods. Precision has particular expertise in managing the narrow drives, tight parking areas and limited snow stacking locations in the city centre. Servicing all areas of the City of Ottawa, Precision managers and staff maintain a geographical knowledge of the city (including high traffic areas and critical routes) that is necessary in order to execute swift and effective snow removal. Current services contracts include private home driveways, shared driveways, apartment building lots, condominiums, and commercial business lots and churches. (Precision Landscape Group Inc., 2010)

Planning and Preparation: A communication plan is critical for keeping all customers informed and up-to-date as weather conditions change and snow accumulates. Precisions communication plan includes call tress that provide a layer of communication, as well as onsite visits, automated phone calls, email alerts and real-time GPS tracking of service vehicles. (Precision Landscape Group Inc., 2010) A reasonable expectation for clients is to know when their property will be serviced after a snow fall.

Response Plan: A response plan is implemented on an event-by-event basis with skid-steer operators and snow-blowing crews dispatched at various times depending on the type and speed on a storm and time of day (e.g. a storm at midnight may require a different response than a storm at rush hour). Service is monitored in real-time by Precision staff and managers via GPS tracking.

Insurance: An important operating criteria is being adequately insured in order to mitigate claims for injuries and property damage. Precision is a fully insured service provider with Comprehensive/Commercial General Liability insurance coverage subject to a limit of a minimum of one million dollars (CDN).

Materials and Equipment: Snow and ice removal may necessitate the use of chemicals, plows, shovels and other equipment. Precision does not rely upon one method of snow removal, but rather, uses a variety of tools to maintain the safest conditions possible. In addition, Precision prides itself on its environmental policies and initiatives, which extends to the fleet of equipment used. Excess shop lubricants are recycled, and skid-steers and plow trucks are monitored by GPS for excessive idling.

As risk managers, Precision is prepared for the worst case scenario, whether it snows or not. Snow and ice management materials are pre-purchased before the season begins, providing assurance to customers that their property will be serviced during each storm. As the cost of salt and sand (used for snow and ice management) may have implications on supply during the winter season, an up-front pre-season purchase investment is made to ensure the quantity of materials needed for the season is readily available. (Snow & Ice Management Association, n.d.)

Service Contracts: Precisions service contracts are only undertaken after a thorough review of the client’s requirements and site inspections; this is to ensure Precision is the right company for the job. Upon initial contact, Precision develops an understanding of the prospective clients’ needs and requirements. A site visit and inspection by an account manager and skid-steer operator follows to record any unusual or difficult areas or circumstances that need to be accounted for any response plans formulated. A contract proposal is then prepared and if accepted, final preparations commence before the winter season sets in. In early November, properties are once again inspected by a manager and skid operator. Where needed, driveway markers will be installed to assist crews and special signs indicating where snow can be piled or restrictions on this, are installed in parking lots to avoid confusion and to adhere to and manage expectations. (Precision Landscape Group Inc., 2010) Precisions services are competitively priced, in line with fair market value.

Service Standards: Precision typically clears snow from any storm that incurs 5 cm or more of accumulation, as well as several ‘flurry-type’ events that leave an accumulation of 5 cm or greater. For some commercial, condominium and multi-resident property clients, snow removal is offered for 2-3 cm. Crews are dispatched when the snow has stopped falling, which usually occurs when 5-12 cm of total snowfall is expected. When heavier snowfall is predicted, crews are dispatched earlier. Standard contracts for the winter cover a total accumulation of up 250 cm of snow. After this point, extra time charges will apply and are calculated based on the original value of the contract (at a rate of x% of the value, per additional cm)

Accreditations: Precision is a member of The Snow and Ice Management Association (Precision founder Kent Peddie acts as a member of the Board of Directors), as well as the Greater Ottawa Water Garden Horticultural Society. (Precision Snow Removal, 2010)

Strength, Weakness, Opportunities, Threats (SWOT) Analysis

A SWOT analysis of the current situation in which Precision is operating allows the company to identify the forces influencing the business and aids in the development of a strategy or actions to address any weakness or capitalize on strengths and potential opportunities. Threats can be noted and initiatives established to manage these.

Alongside snow clearing, in the winter months Precision offers complimentary services including salt/grit applications and ice removal, as well as filling salt bins. In the spring/summer/autumn seasons, Precision offers landscape designs, construction, and maintenance services. These services could be extended to the City for a full-service, annual road, property and park maintenance package.

The City of Ottawa must take into consideration the geographic size and location of the municipality, expectations of the public, service level standards, weather patterns and volume of expected snowfall and other winter conditions, traffic volume, age of infrastructure, mix of roads (arterial, collector, local roads, highways), budgetary constraints, and best practices in both removal services and risk management. (City of Ottawa, 2015) In order to address all of these needs, the City would consider service proposals from snow removal businesses in the local area. This would include major competitors including Capital Services and Appleseed Snow Blowing Service.

Capital Services

Like Precision, Capital Services is a full-service maintenance company that specializes in snow removal and lawn care. However, unlike Precision, Capital Services focuses primarily on Kanata and Stittsville. However, this well-established company with over 30 years’ experience in property maintenance (first in Montreal, then in Ottawa) does pose as a strong competitor in the market. This company offers environmentally-friendly fertilizers and natural insect control for lawns in the summer months and biodiesel to fuel their snow removal tractors in the winter. Their equipment includes patent-pending snow blowers and GPS tracking devices. (Capital Services, 2016)

Appleseed Snow Blowing Service

Appleseed Snow Blowing Service is Ontario’s largest residential snow removal company with franchised offices throughout the region and Canada. As a snow blowing service, Appleseed does not use more traditional equipment such as a steel blade plough, but rather uses plastic bottom snow blowing equipment which cause less damage to roads. In business since 1987, Appleseed Snow Blowing Services focuses exclusively on snow removal during the winter months and sister company, Appleseed Lawn, offers landscaping and lawn services during the summer months. (Appleseed Snow Blowing Service, 2014)

Given the high number of snow removal businesses operating in the Ottawa region (over 400), there is no one company that holds dominant market share. Given the comparable size of each firm (Precision, Capital Services, and Appleseed Snow Blowing Service), their longevity in the market, and well-established territories of operation, it is likely that as the ‘bigger players’, each, including Precision, potentially holds approximately one to two percent market share.

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