SWOT ANALYSIS
Strengths
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- Company provides an extensive background of highly experienced personnel and owners who know cars very well in conjunction with keeping them clean.
- The visibility of the location proves to catch many potential customers waiting in the neighboring drive-through of a Dairy Queen and Zaxby’s where the average wait time is 3 minutes. Idle eyes will be seeing the operation and noticing the new activity. Similar to how gentlemen see the ads above a bathroom urinal.
- Only car wash with a fully operational website.
- Owners are very business savvy and appreciated in the local community. As residents of the local market, there will be improved word of mouth and feedback.
- Very high tech team solely focused on customer attention. Using internet resources such as Google Voice for voicemail translation to text message for immediate response. Artistic team with powerful knowledge of proper marketing tools.
- As part of a storage business, brand marketing is attached with the J&M Mini Storage and will increase tandem marketing.
Weaknesses
- The facility is approximately 14 years old and many cosmetic repairs are desirable, but expensive.
- Very small location may not be able to hold more than 7 cars at a time waiting for a wa
- Although it is currently operated without personnel, many issues can and will arise during the absence of on-site employees.
- As part of a tandem business with the storage, the high car wash customers could possibly deter storage customers due to lower security features.
- Vacuum islands need upgraded units with easier dials and new paneling for better usability.
- Reputation of poor function and repair issues will be difficult to overcome.
Opportunities
- Converting two car wash bays to automatic car wash bay will provide speedier washing options with wider vehicles.
- The far distance of the closest and newest car wash will bring in many customers in the beginning as customers see the proximity as an advantage.
- Providing cross marketing with local business owners, especially the two adjacent restaurants.
- Average income in 3 mile radius is above $87,000 resulting in higher volumes of luxury cars
- Dominate website for local search and provide advertising with auctioning companies, movers, real estate agents, and car repair shops. Sell space in car wash bays to drive in more revenues. All to a limit without looking like a baseball field wall and losing the touch of a mom-and-pop aura.
- Setting up a terminal for credit card usage and selling gift cards that can be used for the self service side of the business.
- Detail shop will be available to those who prefer a hand wash rather than machine wash.
Threats
- Huge financial gap from physical improvements and technological changes would be created between the money owed to bank and the current value of the business.
- Competition breeds improvement, but another car wash would put a dagger into our already sluggish sales. Economic conditions have driven sales down nearly 40%.
- County regulations restricting water use during any unforeseen summer droughts. Usually they do not shut down such operations based on the nature of the business, but dire conditions could hamper plans.
- County regulations restricting such improvements such as an automatic car wash or sign ordinance reducing the number of advertising banners required with the operation.
- Low level of on-site management could result in higher customer mistakes and be blamed on business operations due to lack of immediate customer service.
TARGET MARKET
The target market for the new product in an already situated customer base includes all categories of high school students, local business owners oriented within the car industry, doctors and other professional services who do not have much time to clean their own cars, busy parents who are similar in time constraints due to family and school activities, car enthusiasts who revel in keeping their cars clean and chrome wheels gleaming with pride, and finally senior citizens or handicapped individuals who are obviously incapable of cleaning their cars. This appears to a very wide array of potential customers, but the main focus will lie in saving time and receiving a service that is very competitive in pricing at a convenient customer time frame. Since the locale includes a high school, elementary school, and middle school a huge concentration will lie with targeting those with limited time and the desire to keep the car clean of all the snacks and foods in the minivan and dirt from after school events. The remainder of the resources will be focused on the secondary segmented target of time constrained individuals, but since the population of that particular segment is a niche, revenue potentials will not be as proportionally positive. Also, about 75% of the area is comprised of self-employed family who create the subgroups of business professionals and car enthusiasts (about 15% of that), which is evident in the fact that one out of every seven cars is a newer or luxury model vehicle worth at minimum of $20,000 used. The addition of the detail and automatic car wash will not be as detrimental to the self serve part since the other income category majority (>$45,000 annually) will gradually switch to the full service option. Leaving the self serve will offer the construction community still open to use the facility and has been calculated to control 20% of current sales.
COMPETITORS & SUBSTITUTES
Current competition is at an absolute minimal and is a highly advantageous characteristic of the marketing plan. There is one other self serve car wash about 20 years old and located in a very low traffic area and a small detail shop that has no curb appeal whatsoever and their clientele will be easy to convince just based on simple visual preference. On a more competitive level, there is a BP gas station across the street, which used to be operated by the same owners of this car wash, and the conjunctive decline in gasoline volume has reduced their car wash sales; furthermore, there is no street visibility and the Autec system they use is very outdated. Competing in a distance of 9 miles is a California style automatic car wash and since proximity will ultimately cost too much in order to extend arms into that plethora of customers, studies indicate the average customer does not want to travel more than 5.7 miles away from their home to wash their vehicle. The J&M Car Wash will distinguish itself by offering a variety of services from automatic, custom detailing, and self service operation. All substitutes will be offered in one location with the exception of the styles, similar to comparing toothpaste
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taste different, but still cleans the mouth. With the myriad of choices and options, the company marketing plan wishes to generate a large portion of the traffic from a seven mile radius of a population of approximately 4,000 of which there are 5,700 registered cars. Particular car model figures could not be ascertained and personal experience dictates the ratio to be analyzed which is heavy on the luxury end. Word of mouth will drive in out-of-towners and the unaware customers of the new renovations. More programs will be discussed later as to the exactitudes of utilizing all marketing money to its fullest extent. The company plan relies on the philosophy of speed and customer demands. Operational costs have proved to be very high according to many outsourced car wash companies especially from idle employees to inclement weather. Having more control over customer traffic will provide higher efficiency; it is an untested idea but the company feels by letting customer choose when they want to come and at what time, speed of service and special attention can be given to customers. Vicariously, this creates a more personal transaction rather than just a walk-in customer. In similar fashion, the silent message that the company is not after pure profits, but more of a community service, this normally micro-management style business can turn into a remote operation with worthwhile residuals. Due to sewer line restrictions and county water expansion pauses, future car washes cannot be expected in the next 5 years and thus a serious monopoly can be developed and this marketing plan hopes to regenerate the long term $125,000 renovation costs within 2.5 years.
PRICING
Two types of car wash systems were looked at, the rollover system and tunnel system. The tunnel (or California Style) has proven to the most efficient and profitable to its stability and curb appeal, while the rollover system will provide the same result; the smaller build out will show less curb appeal and can cost the most in the long run since the entire system rides on wheel base moving all the 2-ton unit back and forth constantly. However, due to the J&M Car Wash topography, the rollover will prove to be the most adaptable for traffic flow and installation. Some major changes, such as removing 2 self-serve bays and lengthening will have to be done in addition and the costs will be about $125,000 compared to the tunnel system costing almost $215,000 (both estimates inclusive of a $25,000 “worst-case-scenario” remodeling budget). Due to the impulsive nature of the business, prices will vary based on types of packages available for sale and its respective offerings. Closest competition ranges from $7 washes to $10 and each $1 increment increases the services rendered. Basic wash for J&M will include degreasers, soap agents, and multiple passes of the conveyer followed by a thorough rinse (same as competition). The next wash will offer more soap and adds a wax cycle and is finalized with dryers. The wash above this will offer tire and rim cleaner with additional protective chemicals; and the final wash will include everything stated above with additional runs to clean deeper. Essentially, each wash package will increase the number of passes and chemicals introduced to produce a gleaming car afterwards. The four packages will be named Express Clean, Deep Clean, Protective Clean, and the Extreme Gleam respectively. The names have been designed to market the reliability and durability of our chemicals against harsh weather to endure longer periods of cleanliness on the outside while defining the simplicity of the process. To separate from the nearest competition further, prices will be kept $1 lower for each package, additional passes will be offered, free vacuum, and the newer technology will push cars at higher frequencies to serve more volume. Credit card payment methods will be offered at the drive up kiosk, as well as a cash option, and on the other side a customer can walk up to purchase gift cards or reload their cards for later use. The automatic car wash will be the primary focus of the pricing strategy and the detail shop running adjacent will be the same pricing so customers have to the option of either method. For the hand detail, a larger overhead will be expected, reducing income after operations by nearly 30%, but gross margin utility will increase by 15% as less physical wear and tear occurs along with usage of soaps, chemicals, and utilities. After validating the numbers with Car Wash Services of Georgia, each car wash will produce a gross income at 75% of the sale amount. This will not include wear and tear or variable costs such as repairs and maintenance. For every $1 coming in, $.25 will go towards soaps and chemicals, water, electricity, and credit card fees. Insurance, real estate taxes, and associated depreciation costs will be incurred ranging anywhere from as low as 10% to 15% based on local ordinances for millage rates and sewer rates for that year. Future plans of installing a water reclaim system will be suggested to further lower utility costs, but can be implanted without interfering with daily operations. Finally, the pricing for loyalty packages will be a customer advantage of 20% and options ranging from gift card purchases to car wash packages will be offered. For every $25 put on a gift card, $5 will be given for free back onto the card. Customer who wish to wash more than one car and will frequent the location for at least 3 times a week (based on how many cars are at home) will be given the choice of receiving a complimentary Extreme Gleam car wash for every 7 purchases or a gift card of the same value for later use.
CHANNELS OF DISTRIBUTION
As provider of service instead of product, especially one that is not portable, J&M has focused energy into what avenues to use to not only promote the service but continually generate new customers and introduce it to the newer ones. For instance, J&M chose the target markets as delineated above and now the question will become how this target market will turn into market equity in the area. As defined earlier, the automatic car wash system will hold a very simple and to the point delivery method. Customer will merely drive into the facility; follow arrows painted on the ground and drive up to the purchase kiosk for their choice of car wash. Originally, a small bandwidth radio signal was to be developed so customers can listen on their car radio during the wash stages as they sit in their car wash, but wiring issues became an obstacle due to the rudimentary engineering compared to the high-tech innovations involved with the current model. Once the traffic light signals to exit, customers can utilize the free vacuum machine or just simply leave. Average time will be five to seven minutes per car wash, however, as the waiting line lengthens, wait times may increase and will be an untreatable problem for the short-term. The detail shop will still not be concentrated on as much, but provide the customer with the option of choosing it. Due to its very timely nature expectations are low, but it is a niche market that will not cost too much, but will serve the community who does not wish to see machines doing the car washing. Hopefully, these customers will turn to the automatic system
once they see the quality of cleanliness that is given whether it is “hands” on
or polyurethane rubber that scrubs the vehicle. Also, the same personnel will provide other quality control services for both service products and no more than two individuals will be needed on a daily basis. Digging into indirect channels, the company will utilize its website mainly to inform potential customers as well as provide ease of service for ordering. Customer can go online to purchase gift cards, sign up for monthly promotions, and even purchase car care products to be mailed directly to their house or ready for pickup at the car wash. Furthermore, by tying into Google for lead based advertising and finding car care product distributors, the company will broaden the spectrum for income. Customers can also sign up for internet newsletters that will contain local businesses for car maintenance or insurance services and even purchasing new vehicles. No promotional budget will be set here as it serve primarily as a value added privilege with no cost. Furthermore, since the owners have immense web knowledge and an already established website, simple adjustments will be made and the additional credit card fees will be the only operational budgeting for product purchases. Also, tied into this indirect channeling system, the company will invest time into working with local public facilities and institutions. Rather than promotional techniques, working with the community will serve to broadcast the new and upgraded car wash while providing something in return. PROMOTION Promotions are a short run solution to a long-term goal; the J&M Car Wash wishes to
constantly promote the services and will still begin with introductory techniques to “spread the word.” As suggested by Car Wash Services of Georgia, $1 car washes will be offered to all
customers for the first month. This temporary discount, which can be considered almost obscenely discounted, will be programmed and serviced by the local company aiding in the installation of the equipment
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Car Wash Services of Georgia. Since the financing option provided during new installation will include 6 months of no payments, this promotion will prove to be a huge success without the worry of cutting to deep into operational profits to meet the demands of debt and will be shown in the business budget accordingly. Cheap pricing is always a efficient way to promote a new service or product, however, to meet the needs of a small community and not rely on pure volume since the car wash does not have major road frontage, cross marketing plans will be worked with
Dairy Queen, Zaxby’s, Tire’s Plus, and the two local car insurance companies –
State Farm and Allstate. The restaurants have agreed to work with J&M Car Wash to distribute business card size coupons with any purchase offering customers half off any car wash and will continually do so purely based on proximity. The coupon will provide a discount, a guarantee of timely service (so by the time they finish their meal, their car is cleaned), and sample car care products. The phone number and website will be advertised as well.
Tire’s plus will be given a similar promotion style and their employees will be offered
one free car wash a month if they are able to refer 200 customers a month. The promotional card will offer customers half off after their car has been repaired and with a free one time use of the fragrance vacuum with deep shampoo clean. As most people know, these cars tend to be very dirty after service and a more detailed promotion is necessary to whet the appetite of a customer who does not want to enter their vehicle smelling like sweat and dark oil stains. On a final short term promotion, the two biggest car insurers in the area will receive promotional coupons that will offer new policy holders to receive their first car wash for free. This will not be a huge cost; however, seeing as to how this business is tied with the vehicle industry, it was prudent to make sure that as much as of the community is targeted. Finally, in the long run, the J&M Car Wash will conduct either annual or quarterly car washes for the local school system. Hence, promoting to the students and faculty by donating all proceeds (after operational costs are taken out) to the desired booster club or fundraising program they wish to improve upon. A similar program will be offered to the local sheriff department and public officials who serve our community
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about 50 cars a month. They will be given specialized loyalty cards that will be stamped after each use thereby limiting and controlling abusing of the privilege. All of the techniques mentioned will be of minimal costs and will be enumerated in the promotional budget; the long run promotional goals will be minute in comparison to the revenue generated by the word of mouth that is expected to return. Once again, given the climate of a small community, more attention to personal community members will work far better than newspaper ads, radio ads, or mass mailings. These promotions will target the customers the company is looking for - particularly those who have the capability of affordable luxuries such as car cleaning. Basically, the company will clean these cars in the hope of people asking how and where they got their vehicle so well cleaned; similar to free samples that many companies distribute before releasing new rollouts.
PROMOTION BUDGET
Website Enhancements (software tools) $50 Promotional Coupons Restaurants (5,000) $275 Tires Plus (2,400) $150 Public Official Passes $50 Sales Promotions (operating costs
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not actual sales costs) Restaurants $6,250 Tires Plus $3,000 Free Giveaways Public Officials (50 cars a month) $15,000 Car Insurance Agents (10 cars a month) $260 Local Public Fundraisers (1,200 cars) $4,800 TOTAL PROMOTIONAL BUDGET
$29, 835
This budget accrues costs mainly from promotional giveaways rather than actual cash spent on media channels, providing huge discounts and free services will be defined as promotional costs. All the figures above are based on a costs analysis of how much each promotional car wash will costs (assuming that all customers choose the Extreme Gleam package for $10) rather than treating the lowered annual gross sales as a costs. The six of months of free financing will save about $2,000 a month and will be leveraged properly to so that the residual income will sustain the remainder of the promotional budget plus daily operations.
REFERENCES
1
Jones, T. “2009 State of the Industry Report.” 15 December 2008
<http://www.moderncarcare.com/articles/2009-state-of-the-industry-report.html>
2
Carr, K., “Expand your horizons.”
Professional Car Wash and Detailing Magazine
vol 33:5 (2009) <http://www.carwash.com/article.asp?IndexID=6637201>
