New Product Development

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New Product Development

  1. 1. A & R LaundromatExploring the Outcome of a New Service in a Laundromat Syed Mohammad Ashiqullah BUS 785-001 - Spring 2011: New Product Development
  2. 2. 2 TABLE OF CONTENTExecutive Summary 3Introduction 5 Mission Statement 5Opportunity Analysis 5 Potential size of the Market 5 Competition 6 Resources 7 Corporate Policy 7 SWOT Analysis 8 Marketing Objective 8Proposed New Service 9Marketing Research Analysis 9Buying Incentive & Positioning 11Marketing Strategy 12Budgetary Priorities 13AppendixAppendix A – Survey Statistics 14Appendix B - Questionnaire 16
  3. 3. 3 Executive Summary The purpose of the paper is to explore the outcomes of introducing a new serviceamong the service entities of a Laundromat. The focus of business for the paper is A&RLaundromat, a fully card operated laundry service dedicating to meet their customers laundryneeds with an affordable and good quality service. A&R Laundromat presently operates in four locations in New York with large and cleanfacility and a wide variety of washing machines and dryers. Opportunity analysis for theLaundromat’s business portrayed heavy competition and limited scopes of differentiation ofservice. Thus for further expansion the Laundromat sets up the objective to introduce a newunique “Pickup & Delivery” service. The marketing analysis based on self administered surveys to 20 respondents revealedthree segments of their target market: Segment 1: Price Sensetive – This segment comprises a larger percentage of theLaundromat’s target market and are frequent users of the laundry Service. They look out forthe availability of the service with low price. Segment 2: Quality Hungry – This segment of the target market is likely to be loyal tothe Laundromat service if they are provided with the best quality of detergents which ensureslongevity of their clothes. Segment 3: Drifters - This segment makes up a minimum percentage to theLaundromats customer base. They normally have a busy lifestyle and convenience is the onlyidentifiable factor that drives their usage of the Laundromat’s services.
  4. 4. 4 Considering the marketing analysis the buying incentive of the customers focused onconvenience, low price and high quality. Thus to reflect the buying incentive of the targetmarket the following strategic positioning statement is defined for A&R Laundromat: : PICKUP & DELIVERY “We Guarantee Quality to Your Laundry at a Low Cost While You Relax at Home” On the basis of the buying incentive and positioning statement the following marketingstrategy was developed. Product: The service provided by a Laundromat is limited to very few unique features.Thus, introducing the new service “Pickup & Delivery” which ensures convenience with qualityfor customers is going to help A&R differentiate from competitors. Place: A&R Laundromat is already operating in four locations. In order to increase theircustomer base it is advisable to look for opportunities to expand in the Brooklyn area of NewYork City. Price: the Laundromat must maintain low price to maintain the largest possibleattraction from the target market. Promotion: Advertising in local newspapers emphasizing the Laundromats uniquelyquality ensuring service at a low price will aid to attracting customers. In addition theLaundromat is also going to display large posters surrounding the Laundry Premise.
  5. 5. 5 The service provided by the Laundromat in principle falls under the classification of aHomogeneous Service which is in its Growth stage of the product life cycle. Thus to successfullyutilize the new service to attract more customers and maintain their good image the budgetarypriorities are focused to assure competitive low price of its service to the customers. Thisincludes the pricing of their current and the new service which is being launched. Introduction A & R Laundromat is a full service card-operated laundry service dedicated toconsistently providing high customer satisfaction by rendering reliable machines and furnishinga clean, enjoyable atmosphere at a competitive price. Currently A & R Laundromat is running with four branches in New York (Jackson Heights– Queens, Hempstead, Richmond Hill – Jamaica, Hillside – Jamaica). The Laundromat boasts aclean facility and strives to ensures customer satisfaction in the most effective and efficientmanner. Mission Statement:“A & R Laundromat strives in providing the best in class laundry service by delivering superior quality &service.” Opportunity Analysis Potential Size of the Market Currently there are more than 35,000 Small Laundromat Business operating in UnitedStates. In New York the housing occupancy demographic states that 30.2% of the populations
  6. 6. 6are Home owners and the rest 69.8% are tenants (US Census 2010). Laundromat Business isvirtually found in every neighborhood across the United States and one of the key factors tosuccess to these businesses relies on areas which are densely populated with tenants. Withinadequate laundry facilities in most of the households in New York the demand forLaundromats are significant. Thus we can say that the market size grows proportionately to theincrease in population. Household Occupancy Home Owners 30% Home Owners Tenants Tenants 70% Source: US Census 2010 Competition As mentioned earlier every neighborhood has more than one Laundromat business catering to the needs of the customers who do not have the access to an adequate laundry service. According to the US Census 2010 the entire Population of Laundromats in the United States is more than 35,000. For A & R Laundromat the locations they are operating there are more than 10 Laundromats in each of the neighborhood. Thus the
  7. 7. 7key for A & R Laundromat would be to provide unique service with superior quality andcompetitive price. Resources Currently A & R Laundromat employs 4 full time managers for the four branchesit operates in New York. Apart from the full time managers there are 5 Supervisors whoworks in shift basis in each branches. So overall, the Laundromat has 20 supervisors in 4branches. The Laundromat provides service related to washing and drying with customerswho operate the machines using their lifetime membership card. The card can be filledwith dollar amount and the usage can be tracked through an automated integratedsystem the business runs on. The business also provides a Drop-Off Service forcustomers who want to leave their clothes to be washed and dried and to be picked uplater. Apart from the washing and drying service the Laundromat also provides sales ofsoaps and detergents at a competitive price. The Large facility in the Laundromat haswide variety of vending machines, internet access, sitting arrangement with televisionbroadcasting the local channels. Corporate Policy A & R Laundromat faces a lot of competition which is why satisfying thecustomers become a key ingredient to success. By providing the customers a large
  8. 8. 8 facility with a significant number of dryers and washers ranging in size the Laundromat tries to bring efficiency in their service. Providing a clean and healthy environment is also important for maintaining a good relation with the customers. Briefly, customers are provided with a homely and friendly atmosphere in the Laundromat with prompt and efficient service quality. SWOT Analysis Strength Weakness Large Facility Operating only in 4 location in New Significant numbers of washers & dryers York Clean & Friendly Environment No variation in service from other Parking Space Available Laundromats One Day Drop-off Service Word of mouth is the only source of Lifetime Membership Card for $1 Marketing Opportunity Threat Expand the Business in other locations of New York Large Competition Provide a Unique service to attract more Increasing costs & taxes customers – Pick Up & Delivery Marketing Objectives In a business that has large competition and little areas of differentiation in service A&RLaundromat does not want to keep any stones unturned. The business is already diverse in thesense that it is not coin operated but card operated. The card has no expiration date and can berefilled with dollar amount any time.
  9. 9. 9 To further attract customers and enhance the image of meeting with customer needsthe Laundromat wants to start a Pick-up & Delivery service for its customers. In addition A&RLaundromat is looking forward to expanding its business in Brooklyn, Manhattan and LongIsland areas of New York. Proposed New Service: A&R Laundromat strives to deliver the best possible Laundry service options to itscustomers. Thus in view of attracting additional customers and also keeping the existing oneshappy they have decided to launch a new Pickup & Delivery Service in addition to their dailyservices. With this service customers will have the luxury to cater their needs of washing dryingand folding their clothes by staying home. The Laundromat will have a dedicated employee whoupon a telephone call, will pick up the clothes from the customer and after completion of therequired service will also deliver the clothes back to their home. This service is attractive in thesense as it is convenient and hassle free. Therefore may it be for leisure or business, customerscan utilize their laundry time in other activities. Marketing Research Analysis To understand better about the outcome of introducing the new service in theLaundromat’s current service operation a marketing survey was done. The analysis of theresults (based on Survey Statistics Appendix A) helped the Laundromat recognize the possible
  10. 10. 10outcome and also gave them more information in order to cater the needs of their targetmarket effectively and efficiently. A self administered marketing survey was done with 20 respondents. The results asshown in the survey statistics were able to reflect three segments in the Laundromat’scustomer base: Segment 1: Price Sensitive. This segment makes up a large quantity of the Laundromat’s target customer. Thesegment has a family with household members of four or less which includes children under theage of 18. Their age demographic falls under 25 years to 30 years and with regard to theirhousehold structure they are frequent users of the Laundromat. The prime factor that keeps this segment from using a Laundromat’s service is the Price.They look for availability of machines which can give them the most economic value. In additionto price convenience plays some role in their purchase pattern. If the Laundromat is close totheir home and caters to their demand for low price they are likely loyal customers. Segment 2: Quality Hungry. This is a segment with a higher age demographic (above 30) and behaves in muchdifferent way than the previous segment. Although convenience is a common criterion thatinduces their purchase behavior when it comes to Laundromat service, they are moreconcerned about the quality of their clothes.
  11. 11. 11 With a family of household members of four or above this segment values the conditionof their clothes from the laundry service. They are thus very selective about the machineservice capacity and which detergent is being used for their laundry service to maintain thequality of the clothes. Segment 3: Drifters. This segment makes up a minimum percentage to the Laundromats customer base.They normally have a busy lifestyle and convenience is the only identifiable factor that drivestheir usage of the Laundromat’s services. Buying Incentive & Positioning From the marketing analysis with the aid of the survey statistics A&R Laundromat has toprovide the following buying incentives in order to reach out to their target market effectivelyand efficiently. i. Low Price: Introducing the Pickup and delivery service to customers with a low pricewill most likely have a very positive outcome. ii. Ensure Quality: Emphasizing to customers about the use of high quality detergentwhich will keep the quality of clothes at its best has to be a key consideration. iii. Convenience: Advocating the opportunity cost the customers are missing out due totheir time at the laundry will further motivate them to use the new service.
  12. 12. 12 : PICKUP & DELIVERY “We Guarantee Quality to Your Laundry at a Low Cost While You Relax at Home” Marketing Strategy According to the marketing analysis which helped the Laundromat depict the buyingincentive and positioning for the target customers, the following marketing strategy needs tobe implemented: Product: The service provided by a Laundromat is limited to very few unique features.Thus, introducing the new service “Pickup & Delivery” which ensures convenience forcustomers is going to help A&R differentiate from competitors. In addition quality needs to beof utmost importance in order to generate a healthy image and future loyalty. It is quite likelythat imitation of the service will soon be introduced, thus it is important for A&R to providespecial features in their current services. One such feature can be offering free soap and/ordrying minutes according to the purchase of washing machines for laundry. Place: A&R Laundromat is already operating in four locations. In order to increase theircustomer base it is advisable to look for opportunities to expand in the Brooklyn area of NewYork City. Price: To cater the maximum percent of the target market it is very important for A&RLaundromat to provide competitively low prices for their service. The larger segment of the
  13. 13. 13target group is very price sensitive and their loyalty is volatile. Thus the Laundromat mustmaintain low price to maintain attraction of this segment. Promotion: Advertising in local newspapers emphasizing the Laundromats uniquelyquality ensuring service at a low price will aid to attracting customers. In addition theLaundromat is also going to display large posters surrounding the Laundry Premise. Budgetary Priorities The service provided by the Laundromat in principle falls under the classification of aHomogeneous Service which is in its Growth stage of the product life cycle. Furthermore theanalysis suggested that the larger segment of customers for Laundromats are price sensitive,thus A&R Laundromat’s primary budgetary allocation should be to assure competitive low priceof its service to the customers. This includes the pricing of their current and the new servicewhich is being launched.
  14. 14. APPENDIX 14 Appendix: A – Survey StatisticsSurvey Respondents = 20 Number PercentageHow often do you use a Laundromat?At least Once a Week 7 35%At least Once every Two Weeks 8 40%At least Once a Month 4 20%Less Often 1 5%Which Laundromat do you use more often?A&R Laundromat 10 50%Laundromat close to the house 7 35%Do not remember the name 2 10%Any Laundromat that’s open 1 5%Why do you use this Laundromat?Do not have a washing machine 1 5%Walking Distance 13 65%Variety of Machines with Prices 4 20%Friendly Staff 2 10%What do you like most about it?Less waiting time 4 20%Open 24 Hours 6 30%Low Price 7 35%Clean 3 15%In what way may the service that was provided be improved to better meet your needs?Lower the price for Drop Offs 14 70%Bring more machines 5 25%Provide car parking facility 1 5%How interested would you be in using the new Pickup & Delivery service?Definitely Interested 2 10%Probably Interested 8 40%Might be Interested 9 45%Probably not Interested 1 5%Definitely not Interested 0 0%Why did you give the rating that you did?Convenient (Walking Distance) 3 15%Price concerns 13 65%Quality Concerns 3 15%Trust Issues 1 5%
  15. 15. APPENDIX 15What questions do you have regarding the servicePrice Query 17 85%Quality of detergent query 3 15%What are the changes or modifications that you would like to see to better meet your needs?Keep Low Price 17 85%Use of Quality Detergent 3 15%Age16 – 24 Years 2 10%25 – 30 Years 8 40%31 – 40 Years 9 45%Above 40 1 5%SexMale 2 10%Female 18 90%Marital StatusUnmarried 3 15%Married 15 75%Widowed 1 5%Divorced 1 5%Number of people in householdOne 0 0%Two 0 0%Three 0 0%Four 17 85%Five 2 10%More than Five 1 5%Children under the age of 18One 11 55%Two 1 5%Three 2 10%Four 0 0%Five 5 25%More than Five 1 5%
  16. 16. APPENDIX 16 Appendix: B – Questionnaire I am doing a survey concerning people’s likes and dislikes regarding Laundromats● How often do you use a Laundromat? At least Once a Week AT least Once every Two Weeks At least Once a Month Less Often● Which Laundromat do you use more often?● Why do you use this Laundromat?● What do you like most about it? In what way may the service that was provided be improved to better meet your● needs?
  17. 17. APPENDIX 17We are introducing a Pick Up & Delivery Service to cater your laundry needs. UponTelephone requests our employee will pick up your clothes from your house and aftercompletion of the service will drop the clothes back at your house.● How interested would you be in using this service? Definitely Interested Probably Interested Might be Interested Probably not Interested Definitely not Interested● Why did you give the rating that you did?● What questions do you have regarding the service● What are the changes or modifications that you would like to see to better meet your needs Age: Sex Marital Status: Number of people in Household Children under the age of 18 Thank You

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