There are a number of reasons for choosing the dry cleaning, laundry, and alteration service industry:
Payment for the service is by cash, cheque, or credit card.
No capital stagnancy, receive payment every month, easy to get instant profit.
Capital requirement for purchasing commercial laundry equipment is minimal, therefore the risk of this business is low.
This service only requires a few staff.
Supplies needed service for customers’ frequent demand (laundry - clean clothes).
Customers use this service as there are few or no alternatives (dry cleaning, carpet cleaning…).
The demand for using service is increasing due to changing life styles, incomes, and the increase in clothing expenditure.
Source: "10 Reasons Why The Dry Cleaning Business Continues To Grow", http://www.mindspring.com/~jimgirone/cleanpage/howto.html
4.1 Market Segmentation
Table 1: Labour market
Proportion of males employed full-time 2001/2002
Proportion of males employed part-time 2001/2002
Proportion of females employed full-time 2001/2002
Proportion of females employed part-time 2001/2002
Table 2: Guildford economic change
Change in GDP per head (1995 – 1998)
Change in average gross weekly earning (1999 – 2002)
Change in total employment (1991 – 2001)
Sources: Local knowledge, Local futures http://www.guildford.gov.uk/NR/rdonlyres/1F571647-185A-4470-9D3F-06B31BB5D10A/0/GuildfordAuditReportfinal.PDF
4.2 Target Market Segment Strategy
Table 1 in the previous topic shows the percentages of males and females working full time from the period 2001 – 2002 which are a lot higher than that of those working part time. Employment, income, and GDP trends show an increase over the past several years.
These tables show that more and more people have money (standard of living increased) but have less time to do their housework (laundry) in Guildford. They are often tired after working all day and tend to spend money to hire someone else to do the housework for them. Moreover, the demand on clothes of these working people (particularly professionals) usually increases proportionately with their income. Buying more clothes, especially expensive clothes, makes them pay more attention to the care and cleaning of those clothes. With careful research, this business focuses on working and professional class customers as a target segment market.
4.3 Service Business Analysis
There are two competitors in dry cleaning, laundry and alteration services in Guildford: Trend Cleaners and Woodbridge Hill Cleaners and Launderers. They are both small-scale services but have quite a lot of customers (this information is collected by self research and observation). However, these shops do not provide door-to-door service free of charge for customers. Hereunder are the strengths, weaknesses, opportunities and threats pertaining to this business:
4.3.1 Competition and Buying Patterns
We offer a new service for dry cleaning, and laundry, providing another choice for customers.
We provide quick and convenient service in order to save customer’s time.
Strong competition from already established competitors in Guildford.
Starting at no market share at all.
Less experience than competitors.
Expenditure in clothing is increasing, including expensive clothes; therefore the demand of taking care of clothes also increases.
There are more and more women – who traditionally do the laundry and cleaning work in the family – going to work outside the home. The target market of this business is working-class and professional-class customers.
Average income of Guildford citizens is increasing.
People tend to spend more time on leisure activities rather than doing the house work.
Participation within a steadily growing service. The forecast of the dry cleaning and laundry service goes steadily up through 2010.
There is a high likelihood of repeat business.
The ability to decrease the fixed costs as the sales volume increases.
If the business is successful, there will be new competitors who supply the same kind of service.
New technology changes may bring out new family washing machines for dry cleaning.