Strategy and Implementation Summary
The following areas will be monitored to evaluate the business performance:
- Monthly and annual sales
- Monthly and annual profit
- Repeat business
- Customer satisfaction
The business success will depend on quality and convenience of the service, customer opinions, and competitor response.
The business provides a new door-to-door dry cleaning, laundry, and alteration service in Hillsboro that will surely attract customer attention. Working customers may find this service is convenient for them and want to try it. If they are satisfied with the service quality they will likely become repeat customers. When the patronage happens continuously, they become loyal customers of the service. These customers will recommend Columbia Cleaners to their friends and coworkers. As more and more customers use this service, Columbia Cleaners’ image is enhanced and we will gain more and more market share.
If we attain monthly and annual sales at least as forecasted, total costs and expenses, including any unanticipated charges, will not exceed our estimates and therefore the monthly and annual profit will be satisfactorily achieved.
Difficulties and Risks
Columbia Cleaners is a start-up and as such has less experience and begins with no market share at all. Assertive, effective initial marketing efforts will be necessary to gain a customer base. If existing competitors see us as a major threat and they resort to overtly aggressive and debilitating actions it will be very difficult for us to become an established player in the marketplace. Risks caused by competitors are possible, therefore the business has to monitor and evaluate its performance frequently, and collect customer evaluations and suggestions in order to continually improve.
Worst Case Risks
The worst case scenario would be that the business cannot support itself on an ongoing basis. The costs of doing business may be under-estimated, or sales and profit may be less than expected, making the business difficult in finance. Moreover, in case of social economic recession, political changes, or inflation, the business may perform even worse than has been forecasted.
5.1 Competitive Edge
As the U.S. economy recovers and quality of life is increases, people tend to spend more time and money in leisure activities rather than doing their house work. They prefer that someone else does the cleaning work for them. Hillsboro has a population of 70,000 served by seven dry cleaning and laundry shops. These existing shops wait for customers to bring their garments in and pick them up later. Customers have to drive cars to town, find parking places, carry their clothes or large items, such as curtains, blankets, etc. to the shop, and wait to be served. Then they must repeat this boring process when they come to collect their items. Moreover, these shops are only open from 9am – 6pm, and close on Sunday, which are almost the same working hours of offices; most inconvenient for customers especially those with full-time jobs.
By understanding and addressing this need, our new dry cleaning, laundry and alteration service will be established, providing door to door service free of delivery charge. We make our customers’ lives simpler by saving them time, and eliminating waiting in queues, parking problems, forgetting to collect clothes, missing meals, and going home late.
The following is the SWOT analysis for Columbia Cleaners:
- We offer a relatively new, door-to-door service for dry cleaning, and laundry, providing another choice for customers.
- We provide quick and convenient service in order to save customer’s time.
- Competition from already established competitors in Hillsboro.
- Starting at no market share at all.
- Less experience than competitors.
- Expenditures on clothing is increasing, including expensive clothes; therefore the demand for taking care of clothes also increases.
- There are more and more women – who traditionally have done 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, both men and women.
- Average income of Hillsboro 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.
5.2 Marketing Strategy
Place: Dealing directly with customers, conveniently in the customers’ houses in Hillsboro. We are choosing to not rent a shop in the town center, thereby reducing costs. Columbia Cleaners will receive clothes from and return them to customers’ houses. Requests for urgent situation pickups and deliveries will be accommodated, and a nominal fee charged.
Product: Free home pickup and delivery service, coming to customers’ houses between 6 pm – 9 pm three times per week. We provide convenience and high quality dry cleaning, laundry, and alteration services.
Price: Normally, new businesses set their initial prices lower than their competitors. In our situation however, the business has higher costs for our delivery service and promotions to increase customers’ awareness and establish our brand name. We will set our prices to match those of our competitors. The pricing scheme is based on a per service price. Moreover, the business targets working and professional customers who often pay less attention to price than the quality and convenience of service. Kelvin Clancy (in Kotler, 2003) shows that only between 15 and 35 percent of buyers are price sensitive. People with higher incomes are willing to pay more for features, customer service, quality, and convenience.
- Advertise our new service in the local press, the Internet, public areas such as buses and train stations, shopping centers and supermarkets etc., and drop advertising material into families’ mailboxes.
- Offer 10% discount as an incentive for customers who sign one-year contracts.
- Issue coupons with lower price for loyal customers.
5.3 Sales Strategy
We will start off my matching our main competitor’s prices and we will be closely monitoring our financials to make sure that we develop a sustainable business without heavily discounting our services to win customers. All sales inquiries will be initially handled by the business owner. We will also train all our employees, especially those facing the customers, in customer service to make sure that our customers are fully satisfied, as such customers will not only stay longer with us but will also refer other customers to us. We will offer limited discounts to our customers with large recurring orders and also provide incentives for new customer referrals.
5.3.1 Sales Forecast
The sales forecast gradually increases over the year 2005 and comprises total sales of $324,700. However, in the last three months, October, November and December the sales remain almost level due to possible seasonal factors. Yearly forecasts are summarized in the table below.
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||Year 1||Year 2||Year 3|
|Subtotal Direct Cost of Sales||$35,652||$46,348||$60,252|