Operating A Car Wash Services Center Marketing Essay
|✅ Paper Type: Free Essay||✅ Subject: Marketing|
|✅ Wordcount: 5104 words||✅ Published: 1st Jan 2015|
Financing to the amount of £25000 is required to fund the purchasing of the required equipment, machinery and consumables for the business’ daily activities. Maxim has already identified suitable premises for this venture, as well as having negotiated a renting agreement with the owner
Maxim car wash aims to be a premier car wash business serving the West Midlands. Maxim car wash is an expansion of Maxim Repairs, owned by Bob Ryan. Maxim Repairs had been in market for the past several years and has a good market reputation due to the quality of standards maintained at Maxim. Maxim Cars intends to provide its customers exterior car washing, interior cleaning, and car detailing. Maxim Cars has few competitors in a growing market that are trying to offer a quality service but at a very higher rate. Maxim Cars has planned to target individual car owners and leasers, car dealerships and local business community. Being in the center of a business hub, Maxim aims to fascinate the local businesses in the vicinity that have company cars and would need them washed regularly. However, Maxim will target at the most advantageous option i.e. the six different car dealerships that operate in the area.
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The marketplace of Maxim is characterized by broad ethnic and economic diversity. In order to make the most of these demographic factors and focus on the inimitable demands each group asks of the market, the facility will incorporate both a full-service tunnel operation (for those who wish to allow the service team to clean their car) and a self-service facility (for those who wish to take a more lively role in their car’s maintenance). Additionally, Maxim plans to provide an automatic dryer system (Eclipse) designed by the business itself for each self-service bay, which will increase customer liking by eliminating the need to hand dry an automobile after washing. Automatic dryers are a new and effective market modernization which currently exists in only one other car wash operation in the region.
Maxims’ ability to offer a worthwhile service, both in terms of the actual washing as well as customer service is all based on the ability to find the finest employees. Hiring the best employees is cost efficient because it decreases HR costs related with turnover and other employee costs. Hiring the top employees and making sure that they are well taken care of ensures that they in turn take care of the customers. Studies prove that a happy employee is far more likely to provide the utmost level of customer service in contrast to an employee who is not happy and feels that they are being taken advantage of.
The strength of Bob’s experience is Maxim’s competitive edge as well as a major asset. Bob has been involved in the car repair business for the last seventeen years. Bob has worked his way through the industry and has been the proprietor of the business. Before this venture, Bob received his MBA from London School of Business and Finance. With a significant time span invested in the community, Bob has generated significant value as a fair, active member of the community. Lastly, Maxim will be able to leverage several of the Bob’s for his business expertise.
Maxim Car wash will be operated by Bob Ryan, who had been serving the West Midlands area with a car repair and a sale/purchase business named as Maxim Cars for over 17 years. Bob will be leveraging the incredible goodwill of its relationship with the dealers in West Midlands and nearest purlieu and the brand appreciation of the Maxim Cars name to quickly gain market penetration.
The objective of Maxim Car Wash is to offer high-quality services in an efficient, effective and economical manner. This is the key to Maxim’s success which also differentiates the business from its existing competitors in the market.
Maxim’s mission is to be a premier quality car wash service for the residents and business owner in West Midlands.â€¯ Bob will strive to keep employees devoted and in high morale to ensure customer satisfaction.
2.3 Business Strategy
Maxim will be the only exclusive hand car wash in the West Midlands and estimates their market share on 25%. It is assumed that Maxim will achieve a 90% gross margin and 12% net margin after the first year, and a 21% net margin after year three. The business will reach a yearly net profit of £4000 by year three.
2.4 Sales Forecast
Direct Cost of Sales
Subtotal Direct Cost of Sales
2.5 Development Impact
The business, at this phase; has no employment equity plan and skills development plan but such a plan will be drafted in future.
An employment equity plan will be drafted following the Department of Labor’s Requirements.
The Department of Labor necessitates that an employment equity plan should cover the following
Goals for every year;
Affirmative action measures that will be employed;
numerical goals to reach this;
timetables and strategies
the duration of the plan (not shorter than 6 months or longer than 5 years);
Methodologies that will be used to monitor and evaluate the implementation of the plan;
Procedures to solve disputes about the plan; and
People liable for implementing the plan
A skills development plan, adhering to the following steps, must be drafted:
Step 1: Determining what skills are required in the business.
Step 2: Ascertain if the employees have the necessary skills required.
Step 3: Training employees for skills lacked by them
2.6 Legal Considerations & Agreements
Bob has rent the location nearest to Maxim repairs; the rent has been negotiated and will be £899 per month.
Maxim will be entailing the services of a contracting company to convert the use of the facility and to improve the customer waiting room facilities as it was previously used as a quick stop automobile service shop which has been agreed at £3000 including all equipment.
Legal arrangements have been negotiated with six different car dealerships operating within a five-mile radius which will require car washing services for the various fleets. Maxim will offer them all services at a pre-agreed fixed price.
3.1 Potential Customers and Geographical Area
Maxim Cars has planned to target individual car owners and leasers, car dealerships and local business community. The surrounding area is quite prosperous and consists of rich families. Majority of the residents earn an average income of over £85,000 a year. Consequently, they have nice cars and want them to look amusing.
3.2 Business Competitors
Currently, Maxim has few competitors in a rising market. The application of the Porter’s Five Forces Model would make the picture clearer.
3.2.1 Porter’s FIVE FORCES MODEL
Rivalry: Considering the current market, Maxim has few competitors which ultimately mean that Maxim is facing very little competition from its rivals. Since Maxim had been operating in the industry from the past 17 years and has a good corporate image, this would facilitate the launch of Maxim Car Wash and would place the business into a better position to compete against its rivals.
Threat of Substitutes: The threat of substitutes is very petite in this situation. This is because the majority of target consumers are rich, less price sensitive, hence would not be willing to switch due to trivial cost differences. Moreover, Maxim would be providing free pick and drop service of the cars to their clients to make the business more viable.
Bargaining Power of Customers: The fact that Maxim has planned to target a rich portfolio of consumers, it is highly unlikely that they would exercise their bargaining power. Furthermore, Maxim has made a legal arrangement with five different car dealers which would require car washing services for a various fleet of cars at a pre-agreed fixed price. This would secure a large chunk of revenue for Maxim Cars.
Bargaining Power of Suppliers: In order to prevent the suppliers from exercising their powers over the business, Bob has made a three year renewable contract with all of his suppliers.
Threat of New Entrants: The threat of new entrants is particularly low for Maxim Cars. This is because Bob has been operating in the industry from the past 17 years and has built good brand equity and a large number of loyal customers.
3.3 SWOT Analysis
Strengths, weaknesses, opportunities, and threats relevant to Maxim Cars are listed in the table below:
The chosen premises are well suited for the business ‘activities.
Native clients can provide a huge amount of repeat-business.
The region in which the business will ideally be located has volumes of traffic.
The labor component of the business is not high.
The entrepreneur’s practical know-how in business management.
Finance is required for starting and operating the business.
Bad weather can cause a slump in demand.
Additional services can be included in the service range or arrangements made with other services providers.
The entrepreneur anticipates obtaining a contract from the government garage.
A huge number and variety of clients can be served.
Support shown by car dealers in the purlieu
The enlargement of the business.
Competitors in the vicinity.
3.4 Critical Success Factors
Critical success factors pertinent to the key areas of the business are as follows:
High sales volume will be critical to making profits.
Maxim must seek to obtain a critical mass of clients to ensure profitability.
Gross margins should be sound and impact favorably on the bottom-line.
Capacity utilization will progress with the expansion of the services offered.
Quality standards are high and attract repeat-business.
Capacity utilization must be optimum.
The level of service exceeds customer anticipation.
Delivery times in terms of finishing a car wash are quicker.
Credit will not be provided to customers.
The financials of the business will be managed well.
All the transactions will be traced and an accounting firm will be hired to help with the financial and tax management of the business.
3.5 RISK AND ISSUES
Specific risks that Maxim faces include the risks of loss of customer, fast growth and liquidity, and tax management.
These risks may all have the effect of loss of reputation, loss of business, debt, and bankruptcy in an extreme case.
Maxim will have the following strategies in place to mitigate these risks:
Providing first-rate service to ensure continued customer support as well as providing customer interaction mechanisms to measure satisfaction and suggestions, e.g. a suggestion box.
Fast growth gives rise to the risk of running into cash flow problems. The business will obtain the services of a financial advisor to help them manage growth and liquidity.
The business will seek help from a certified tax accountant to avoid running a tax risk.
4.1 Market segmentation
We are extremely privileged that our service is not limited to a specific segment or group of the market. In our market area alone, there are nearly 400,000 automobiles, or an average 0.8 automobiles per person.
Luxury car owner: Maxim will focus on this segment for their premium hand wash service. Luxury car owner takes vanity in their cars and would probably become systematic customers over time.
Cost conscious car owner: Although Maxim will not focus on this segment; there are low-priced options available for those who just want an exterior quick wash. The core service for this segment will be the “Quick Wash” serve, which is the low-cost service.
Dealerships: The dealerships in the area will establish a large portion of the segmentation cake. Dealerships would want to keep their fleet of cars shimmering and spotless and Maxim hopes to fulfill that need.
Local businesses: Several local businesses have company cars that need to be washed frequently. Maxim will target these businesses and give them the choice to get discounts for regular washes.
Figure 1: Market Segmentation
4.2 Benefits of Service to the Market Segment
Maxim will provide the only full service facility within the market area. Moreover, the water reclamation system will provide an environmentally safe means for the customers to clean their cars. This is entirely different from residential car washing, where untreated wash water fills storm drains and ultimately empties into the waterways.
4.3 Advertising and Pricing Policies
The car wash will cost £10.00. It will involve a full exterior vehicle wash, as well as an interior service to include vacuuming, window cleaning, and dashboard cleaning.
We have investigated all available advertising mediums. After detailed consultations with a myriad of car wash operators in the area, we have decided to utilize the advantages of a variety of mediums. Primarily, Maxim will utilize cable television and radio spots, combining with newspaper advertisements, to announce the Grand Opening. Direct mail coupons will also be used to increase consumer awareness of Maxim’s existence. Furthermore, we will work cross promotions with businesses in the area as a means to tap the client base they have established.
Flyers and business cards: Flyers promoting the services, as well as specials, will be circulated along with business cards to clients. These items will invite clients to request services from Maxim Cars as well as giving them a hint of what the business has to offer at which prices. Flyers will be dropped in mailboxes as well as in parked vehicles’ windshield wipers.
Personal/direct Selling: The entrepreneur has already started visiting potential clients to collect letters of intent. These potential clients are now aware of the business and may provide word-of-mouth promotion concerning the business when it opens.
Newspaper advertisements: The owner intends to place advertisements in several local newspapers.
4.4 Sales Strategy
Maxim will offer discounts and special offers on Mondays to Wednesdays in order to enhance sales on those days. Bob will try to convince the business owner in the purlieu to sign contracts with rewarding benefits, and thus try to sell directly to businesses.
4.5 Sales Projections
Maxim has projected to wash 5550 cars during the first year of business.
4.6 Target Market Segment Strategy
After doing a thorough market research, Bob has found that Mondays, Tuesdays and Wednesdays are the sluggish days for a car wash. This could be due to the fact that various people wash their cars before they leave for a weekend away, afterward they return for a weekend away or merely has more time for things like washing the car during the weekend.
To pawn this effect, Maxim will target cost conscious customers during these days, by offering specials and discounts on Mondays to Wednesdays.
4.7 Customer Analysis
Maxim’s customer base will be made up of local residents, people who pass through the area, car dealerships, taxi operators and others.
The following is the business’ customer analysis as provided by Bob:
“Car hires agencies need cars cleaned regularly.
Garages and workshops often want to clean customer’s car after they have repaired and may not have the facilities themselves.
Second-hand car dealers will want a car to look impeccable before they try and sell it.
Elderly or disabled people would usually prefer to have someone else wash their car.
Owners of classic or vintage cars could be very loyal customers if Maxim proves that it can do a caring, quality job on their vehicles.
Government vehicles for instance police and hospital (ambulance) vehicles.”
4.8 Customers Buying Habits
In discussion with hundreds of people in our target area over the past one year, Maxim has determined there is a massive need for a car wash facility in this region. Currently, there is not a car wash facility within a 6.5 mile radius of the proposed site, and the proposal has received enormous support from both civic and government groups in the target market.
Business Operations :
Maxim Car Wash is environmental friendly business, and has concerns over minimizing the impact on the environment in terms of energy consumed; water used, and waste output. All the chemicals are biodegradable, so that they break down naturally and hence the environment remains safe.
The production process of Maxim as a whole consists of obtaining input materials, receiving customer cars for service, usage of the raw materials to wash, clean and vacuum cars, polishing the cars, and handing the car back to the client. Raw materials are used in the form of water, car shampoo, polish, and chamois products.
Cars will be washed with soaps and materials specially designed for them to avoid scratches on the surface.
A diagrammatic exposition of the process followed by Maxim is as follows:
Critical levels in the service delivery process involves using best quality input products designed for automobiles, tailored with the customer’s service requirement, and fast service times.
5.2 Services Offered
Maxim is considering making two teams headed by one full time car wash/detail expert and one part-time car wash specialist. Rotation of team members would be done on weekends and other peak times to manage the customer load. Extensive training would be given to all washers and detailers as to reduce all cushions of inefficiencies and providing the best quality and service at all times. Bob will hire an experienced manager for Maxim Car wash who would be responsible for all matters in the absence of Bob.
The proposed organogram of the business operations for the first year is as follows:
All employees will be encouraged to work with the business in the long term perspective and to deliver the best performance by the provision of being in a pleasant working environment, job satisfaction and market-related salaries.
The size of staff is dependent upon time of day, day of the week, and weather conditions. During traditional peak wash periods, four full time wash experts’ employees and three part time wash experts will be scheduled to work. During traditional off-peak times four full time wash experts and one part time wash expert will be scheduled to work. Maxim will remain elastic in the staffing policy in order to meet customer demands and most efficiently make use of the employees. The employee handbook will make certain that each employee understands the significance and applicability of a varied and flexible scheduling process. The plan is to ensure that each employee receives the training essential to be skillful in their assigned tasks. The training program will center on improving the employees’ operational understanding of the business as well as their interpersonal skills. The program is designed to ensure that the employee-customer relations are as optimistic as possible.
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Initially, the company will be run solely by Bob. However, after six months a supervisor/manager may be hired to assist with the day to day operations and maintenance. The aim is to develop management from within the company, thereby assuring that optimistic management policies and practices are sustained. Additionally, the policy of hiring from within provides Maxim a means to recognize outstanding work performance and to develop a solid management team critical to The Maxim’s success.
Through continuous research and development Maxim has led to new technologies and services including Unityâ„¢ chemical system and innovative products like Hot Shine® Carnauba Shield that gives a long lasting shine to the car in no extra time. Its growth has been amplified by investing in the best technology available, resulting in cleaner cars with an even deeper and richer shine.
Maxim aims to use energy efficient advanced water reclamation system to conserve water usage and to reduce discharge concerns or meet actual standards or regulations. Thus, the amount of water needed to clean each car would be minimized.
6.1 Automatic Dryer System
The Eclipse, an automatic dryer system which produces maximum output capacity of drying 40 cars per hour, more than any other equipment available in the market today. The Eclipse computer precisely determines the length and width of each vehicle as it enters, from the smallest cars to the long pickups to be safely dried.
It has a simple design which allows for only five moving components, adding to its longevity and minimal down time – a feature that is unmatched in the industry.
The Eclipse is also more visually attractive than ground-mounted machines, and the wall-mounted frame provides an open, spacious bay, creating more attraction for customers.
The Eclipse onboard dryer is a system which is fully programmable and offers three efficient turbines running at 3600 rpm for high volume, velocity and maximum air flow. It also uses less energy to operate, since no conveyor system is necessary for the Eclipse.
6.2 Wheel Scrubber
This feature will allow the customers to choose which type of wheel cleaning they prefer. This will increase the cleaning revenue in less time with this online system available in friction and touch free options. The wheel brush cleans the tires and all wheel outer faces when the friction option is chosen. For those customers who prefer touch free, Maxim can also offer that choice, improving tire and wheel quality, again adding to the revenue and satisfying another customer.
6.3 Tire Shine Applicator
Tire shine is an upgrade that our customers can opt to give that freshly-washed, shiny, finished look to their tires. It’s the last touch for particular customers who want their vehicle sparkling from top to bottom.
7.1 Financial Plan
Following are the projections of Maxim’s Financial Plan. Bob will finance the start-up expenses of Maxim, with a £25000 investment from his personal funds, and growth will be financed by cash flow. This will implicate a slow initial growth for the company, but Bob is reluctant to involve investors from outside and is concerned to exercise his control only over the direction of the company.
Fixed monthly costs for Maxim are estimated to be approximately £1,500, and break even monthly units are 304 units per month.
7.2 Statement of Comprehensive Income
Potential Unit Sales
Average price per unit
Potential Sales (turnover)
Cost of Sales
Net Profit before tax
7.3 Cash Flow Statement
Total cash received
Total cash payment
7.4 Statement of Financial Position
Provision for income tax
Liabilities and Equity
Accounts payable (income tax)
Total Liabilities and Owners Equity
Future Expansion Plan:
The following is Mr. Bob’s plans for future growth:
“I’m planning to buy a bigger and much better place than the one I’ll be using currently. I’ll be making maximum profit because I won’t be paying rent there since I would own the property. I’m going to make a Bigger and better car wash than my first one in terms of development. This area will be able to handle more cars on the washing bay and on the drying bay. It will be much more feasible for a carwash business than my initial one. I’ll be able to introduce new businesses into the market that would be ideal for my carwash. Businesses that would give people a reason to come to my carwash even when it’s raining; businesses like a Fast Food Franchise. Now introducing a business like this to my expansion area would contribute greatly to the Success of my carwash in West Midlands. From then, I’m planning to expand to other developing and well developed towns or cities and to other areas in the United Kingdom. I want to be one of the people who contribute a lot to the growth and development of England. Please note that this is not just a dream; I believe that it is my determination and my gift from God, because it’s my passion. I am very blessed and richly gifted business wise. I have the ability to predict change and Development before it comes to reality. Not in terms of spiritual prophesying but in terms of being a possibility thinker. I have the Ability to convert a disadvantage to an advantage. Where people see jeopardy, I see an opportunity and prosperity. I welcome problems; I reach out for them, I charge into them and then in my mind instantly change them to challenges.
I act local but I think global. This is the kind of attitude I’m going with to my carwash business.”
Appendices and References:
Catlin, Katherine and Jana Matthews, ‘Building the Awesome Organization: Six Essential Components that Drive Entrepreneurial Growth’, 2002 New York: Hungry Minds Inc.
Sahlman, William A., Howard H. Stevenson, Michael J. Roberts, & Amar Bhide, eds. ‘The Entrepreneurial Venture’, 2nd Edition. 1999, Boston: Harvard Business School Press.
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