These customers are the largest potential customers and the ones most willing to work with our company. There will not be a channel specifically geared to the individual homeowner, because of the difficulties in installing the barrier in an existing building, and the fact that the barrier needs to be installed by a professional in order to be under warranty. We have explored some options for distributing to the single customer market, but none have proven to be viable. At present, therefore, the only significant distribution channel will be direct distribution to contractors who have formed a business relationship with our sales representatives.
We control the channel -- but for access to the customers we have a team of sales representatives. These will preferably be people who are already involved in the industry and have good contacts. It is important to realize that by distributing through one channel to one specific target customer group, we are vulnerable. This business model does not feature much diversification, and so it is critical that the largest of our potential customers be captured. There is the risk that if we cannot capture the largest potential customers, we will not be able to generate enough volume from the remaining potential customers. In addition, all of our competitors will be targeting these same customers using the same sales methods and the same distribution channels. Only the product...
We will not have the volume initially to host our own trucking fleet to cover such a large geographic area as we intend to target. Therefore, it is essential that we have a good working relationship either with a large logistics firm or with several. We need firms that have experience in delivering to construction sites, because of the unique challenges associated with such deliveries (compared with a typical loading dock delivery to a business).
At this point, there are no plans to expand the business internationally. The U.S. eastern seaboard is a very large market and it could take two or more years just to build up a healthy market share there. After that process is underway, expansion to the rest of the U.S. would be a possibility. Long-run plans call for expansion to Canada and Mexico. Those will be done with subsidiaries, using the same manufacturing facilities the company already has, or new ones built for those nations. Any further expansion would likely be done with franchises or by licensing the product, but admittedly the company has not considered expansion beyond North America as this possibility is many years away and the company prefers to focus on building the local business first.
