1. CON 280: Source Selection and the Administration of Service Contracts
Market Research Exhibit
Landscaping/Grounds Keeping

2. Market Research: Landscaping/Grounds Keeping
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Market Research: Landscaping/Grounds Keeping
Key Market Research Topics
Data
Market Segmentation
Largest services segments: Lawn maintenance (40.8%), Basic Landscape Design and Installation (20.8%), and Lawn Care (13.2%)
Other smaller segments: Tree and Ornamental Care (7.1%), Snow and Ice Removal (4.9%), Irrigation (4.2%), and Other (9%)
NAICS code
Market Size
$59.2B market
Market Growth
From 2006 to 2011: -0.6%
Projected growth : 3.7%
Market Share
Over 350,000 businesses provide this service
The top 4 players account for 6.3% of the available market
Government Market
Government and institutional clients make up 3.9% of the market
Source: IBIS World; Censeo Analysis

3. Market Research: Landscaping/Grounds Keeping
ddd
Market Research: Landscaping/Grounds Keeping
Key Market Research Topics
Data
Value Chain
Basic services value chain, with inputs of Time, Knowledge, Equipment, and Systems
Cost Structure
Labor is the major cost component (34%)
The purchase of lawn care equipment and materials is another primary cost component.
Cost Drivers
Local and job-specific wage rates
Use of labor-saving equipment
Pricing
During the recession, industry operators have relied on price competition, leading to falling revenue
Firm fixed price contracts
Different response times and service levels are associated with different price points (i.e., higher service levels cost more)
Source: IBIS World; Censeo Analysis

4. Market Research: Landscaping/Grounds Keeping
ddd
Market Research: Landscaping/Grounds Keeping
Key Market Research Topics
Data
Small Business
86% of the businesses in this industry have fewer than 10 employees
Competitive Dynamics
Low barriers to entry
Light regulation
High level of competition
Market Trends
Low levels of technology change
Potential changes in regulations of chemicals used
Best Practices
Use of labor-saving equipment
Use of more eco-friendly chemicals
Industry is moving away from “scheduling” requirements (e.g., mow the lawn twice a month) towards “outcome” requirements (e.g., maintain the lawn to keep pathways clear)
Source: IBIS World; Censeo Analysis

5. Market Research: Landscaping/Grounds Keeping
ddd
Market Research: Landscaping/Grounds Keeping
Key Market Research Topics
Data
Performance Metrics
Generally based on:
Response time
Complaints threshold
Examples:
Response within 4 hours 90-95% of the time (examples vary)
No more than 0-2 complaints per quarter (examples vary)
Source: IBIS World; Censeo Analysis

6. Market Research: Landscaping/Grounds Keeping
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Market Research: Landscaping/Grounds Keeping
Key Implications for the Acquisition
In an industry with such a high percentage of small businesses, there may be political issues if small businesses risk being displaced by an IOSS contract
The industry is projected to be entering a period of recovery, so key players may be hungry for additional business
There is a high level of competition in the industry, which is generally good for potential buyers
If our required service levels are higher than average, we may be a more expensive customer to serve and should therefore consider changing our requirements to be better aligned with Industry