Introduction
There is a business opportunity to establish a car wash business in Mooresville. The population of individuals owning cars has increased and there is a higher demand for people to have their cars washed. Mooresville is a fast growing city that has people increasing there level of income and buying cars for luxury and for comfortable transport (Adamson).
The problem of the report is that despite the increase in the number of people buying and owning cars, there are no enough car washes in Mooresville. People who own cars travel to the neighborhood town to have them washed (Hamel and prahalad).
The objectives of the report will be to determine whether there are enough car washes in Mooresville. It will also seek to establish whether two car washes are essential and to determine the two best locations for the two car washes to be established in Mooresville. It will also suggest whether there is a demand for an automated self service car wash.
The hypothesis of the study is that there are no significant car washes in Mooresville to meet the demand of the residents of the town.
The significance of the study is that the establishment of the two new car washes will help to reduce the cost the people meet in washing their cars and the time spent by local people when waiting to be served in the car wash.
The research design which was used in the study is a descriptive survey. This is because it describes the state of affairs as they exist. Descriptive studies are not restricted to findings, but may result in the formulation of important principles of knowledge and solution to significant problems. It involves collection of data, measurement, classification, analysis, comparison and interpretation of data. The secondary data was collected form books, journals and magazines (Kotler).
Main findings
There are no enough car washes
Mooresville is one of the fastest growing cities in the USA with many cars in the road and one car wash represents over 60,000 residents. This implies that the population of the people of Mooresville has increased and the living standards of the residents are high. The level of income of the residents has increased and that is why many residents have bout cars. That is why 60,000 residents are represented by only one car wash. The charges are high due to the rise in demand of a car wash. 75% of the residents travel to the neighborhood city to get there cars washed. This implies that only 20% get there cars washed in the nearby car wash (pie chart 1). It was found that out of the population of 60,000 residents; only 55% of the population had 2 or more vehicles. The other 45% of the population had only one car (pie chart 2).
The higher growth rate of the city has been due to the increase in income of the population. The people living standards have improved and their level of income has also increased. As the level of the population owning cars keeps increasing, there is only one car wash in the city of Mooresville. The higher population of the residents owning cars has led to increase in demand and the one car wash is charging exorbitant prices because it is a monopolist in the market. There is a large potential for a carwash business in Mooresville to meet their demand for a car wash. The study out found that 75% of the population travels to a neighborhood town for their cars to be washed. Many people get a car wash service outside the town. Therefore, establishment of two car washes in the town will be good business venture to meet the demand of the residents. It will also increase the revenue for the investor because of the population. They will feel relieved because the services will improve due to competition and also the prices will reduce. The establishment of more car washes will thus be an advantage to the population of the city of Mooresville (Levitt).
The study also established that over a have of the households that had cars had bought two or more cars. That 55% of the 60,000 households had 2 or more cars. This implied the number of cars were more than the population that owned them. This showed that there was a high potential for the customers of a car wash business. If every household wanted all the cars to be washed, then it meant that the one carwash in Mooresville will not meet the demand available to wash the cars. Despite the higher growth of the city and the number of cars being high, there is still a need to increase the number of cars being high; there is a need to increase the number of the car washes so as to meet the higher demand (Poerter).
The fact that Mooresville is a fast growth city implies that the levels of investment by companies will increase and the number of residents to be employed will increase. When the rises in the level of income of the residents increase, they will buy more cars for luxury and comfort. This will also increase the number of cars in Mooresville and the demand for the car washes will increase. This will in turn the business opportunity of a car wash and also improve the returns for the investors. There are future prospects of potential growth of the car wash business in Mooresville due to a high population of residents owning cars and the fast growth rate of the city (Hoinvile,G. , Howell, R and associations).
The two hottest locations
The established that Mooresville was one of the top 29 places to live in the USA, for the residential living based time magazine. It also established that the ratio of residual households to commercial buildings in Mooresville is 100:1. This implied that Mooresville is a prestigious city and is mostly composed of residential houses and a few commercial buildings. The residential house holds implies there are many high income earning people in the city. The presence of limited number of shops also implied that the people shop in further neighborhood town and that their cars have to be washed frequently. This has increased the demand for car wash services in Mooresville. The study also found that there are two major commercial districts in the east and west of the city. These commercial districts are the best for doing business because they are the areas where most of the residents of Mooresville own cars, they would also like their cars to be washed in the commercial districts when they go to do their shopping (Adamson).
The two commercial districts have a good potential for doing business because of the number of customers who visit the area. The fact that one shop will be built attached to the Wool matt will give it accessibility to those customers who come to buy goods using there cars. This is a strategic location of the car wash business and will keep it close to the customers and an exposure to the markets. The customers who come to shop in the Wool matt will know about the car wash and start bringing their cars to be washed. Those customers will also be able to involve there friends and this will increase the network of the customers for the business. The presence of the carwash next to the Wool matt will act as a subsidiary service for the customers who have cars. This implies that the demand to purchase goods from the Wool mart will lead to the demand for their cars to be washed. Therefore, the carwash to be located in the Eastern commercial district will be in a favorable location that is frequently visited by customers (Levitt).
The other shop will be located in an open area. This will make it identifiable by the residents and because there will be no abstraction from view. It will provide a humble parking area for the customers or residents as they wait for their cars to be washed or for the service. T Location of a business is important because it will determine its success. Ample parking space in the open area will attract customers for the carwash business that is to be established. The open area will be free from the traffic congestion that is popular in the city center and this will encourage an efficient and easy service to the customers and also ensure that there are no distractions or inconveniences caused to the public during the car wash business operation (Levitt).
Being situated in the commercial district will give the car wash business the accessibility to good and efficient communication services and infrastructure. This will include telephone services, information technology and also an exposure to advertising services in the town. When the two carwash shops are situated in the commercial districts in the east and west of Mooresville, it will ensure that there is sufficient supply of water and electricity which will be crucial for the operation of the business. Water will be useful in the washing activity while the electricity will be used to power office machines and also the machines that will be used for washing the cars. The location of the car wash in the open area and also attracted to the Wool matt will increase the resident’s awareness of their presence and this will increase the business potential and returns (Kotler).
The study established that the majority of the people reside in the residual household houses, and there are less commercial shops in those areas, it will therefore be difficult to get a house or a place to locate the car wash business. It is advisable to locate the car washes in the commercial districts where shops are many and can be available for rent when demanded. It will also not cause public disturbance or nuisance to the people in the residual households. It will be good to locate two car washes far away from the one in Mooresville to discourage competition and create a good operating environment. This will enable customers to make choice according to their tastes and prevalence’s in which they will visit the car wash to be served to satisfy their needs (Hamel and prahalad).
The commercial districts in the east and west will be more secure to operate a car wash business in Mooresville. This is because they will be close to administrative centers and security personnel who are both the government and private will be available all the time. Proximity to banking services in the commercial district will ensure that the money gained in the car wash business operations is deposited in the banks in the right time to avoid the risk of theft which may be common in the residential areas. These locations will be good because they have whole day security surveillance and are both secure to the customers, the workers and also the investors.
Two car washes are essential
The report established that there was a high demand for car washes in Mooresville. This is because there was only one car wash for 60,000 households of which 55% owned more than two cars. Considering the population that needed car wash services daily, there is a higher demand for more of the service. Therefore, two car washes which C&F investment wants to invest will not even satisfy for the demand that is in the market. It will be a booming business venture or C&F investment because the customers in the market are many thus the differentiation of the service and price will give it a market share and possibly to control and dominate the market (Poerter).
It is clear that when the company will start its operations in one business, the customers will presume that it is a startup company. Most customers will value a new company so as to have change and new services. Other customers are suspicious of a new company because they have not seen its services and have loyalty to the old businesses. However, with time they learn about the new business and start buying goods or services from the business. Starting a business with a one building particularly when it is small may give a bad image for the company and poor services will to the customers in a market like Mooresville where the demand is high. The car wash customers may lack parking space and get long delays queuing for services will leave them unsatisfied by the business operations of the car wash (Poerter).
Starting a business with two buildings will demonstrate that the company is well financially backed, experienced and creditable. Customers will start to have loyalty in the business because many will assume that because it has many buildings, it has a good service and financial strength. This will enhance there trust and loyalty to the business. They will also be expecting to get a quick and efficient service where there are many workers and a large space of the building. However, when you launch a business with more than two buildings it would be risky as the business will be exposed to higher cost of production which may be compared to the revenue gained from the business. A business has more operational cost during its launch and starting with more than two buildings will cause the business to incur higher costs (Kotler).
The labor, rent and maintenance level costs will be increased and the competitors will get alarmed and will intensify the competition. Showing strength by starting a business with many buildings will encourage the new entrants to the market when your company shows a good future growth. It will minimize revenues and may lead to decreased returns in the future. It is good to start the car wash in average houses that are easily manageable, and then increase their number in the long run as there are so many costs that are incurred in the short run and may reduce the revenue of the business if they are not minimized (Poerter).
There are higher taxes due to higher operating capital expenditure. Starting the business with two shops may be a risk to theft from the workers and the outsiders when they notice that large amounts of capital was invested in a business for the first when it was launched. A one car wash in the city has 10,000 clients implying that two car washes will have to accommodate more clients because 60,000 residual residences have cars. The car wash has higher chances to grow to the higher demand (Kotler).
Actual touch less car wash is the best
Automated car touch less car wash will smooth the operations and ensure that the clients are served fast and with efficiency. This is because it is fast and will save time for service and time of the customers. It will also give the company a fixed cost for maintenance and labor costs are minimized. The fixed cost will ensure that there ere no loses because it does not increase with production. Automated self service car wash is more user friendly to the customers and the operators. It will make car washing easier and done to the standard of the customers. It will ensure that consumer needs are met satisfactorily (Poerter).
The automated car wash service will reduce the costs of production and thus maximize profits. It will give customers a flexible hour of operation as it can be operated for twenty four hours. It will also eliminate human error and reduce insurable risk of damage which could be higher when car washing is done by human beings which is a liability because the customer has to be compensated incase of damages incurred in the car wash. The insurance premiums for risk will be reduced unlike when the car wash washing was operated by human beings because less damage will be realized (Levitt).
The automated self service car wash will improve the image of the company and enable it to have a large market share than the other companies which are using the human labor. The company will be distinguished for its excellent services by the customers and this will enable it to survive the competition in the market and thus promote its image. The automated self service carwash will give customers an exceptional service which will maintain a large customer base for the company and increase its operations by gaining new customers. The customers will feel secure to maintain the original paint of their vehicles because the automated carwash will ensure safety of their cars, thus an automated self service car wash will improve the competitive advantage of the company in the market (Poerter).
Conclusion
Mooresville city has a high demand for wash services because most of its residents own cars. Their increased demand for car wash services has increased the marketing potential for upcoming and existing companies for car wash services. Two car wash businesses will be essential because they will increase the returns of the business and therefore increase revenue and performance. Installing an automated car wash self service system will enhance performance of the business and improve its image and social responsibility. It will also ensure that a twenty four hour service to customers and improved business operations.
Locating two businesses in two different locations will improve the market potential of the car wash business. This will increase its returns and ensure it has a higher growth in the future. The higher population in the market will give yield higher returns to the investments in Mooresville. There are many cars in Mooresville which need car washing and the car washes are few thus increasing demand and prices of the service. Hence the future of the car wash business has a higher potential for development. The fact that Mooresville is a fast growing indicates that there are many people who are increasing their income every year and the will continue buying cars and this will increase the population of the cars in the residual households. This will also increase demand and the existing car wash companies will make more profits and grow after utilizing the potential market.
Recommendations
- There many cars in the market in Mooresville which have led to increased demand for car wash services. The report recommends that more car wash businesses be established to meet the demand it the market.
- People’s incomes are increasing every year. This has enabled them to buy more cars. The report recommends that good measures be taken in the future by the car wash businesses to ensure that they minimize the cost of insuring risks and damages to the customer’s cars. This could increase the costs of the car wash business and lead to low returns it the future.
- The study also recommends that automated touch less car wash machines to be used to increase efficiency and minimize costs. This will also increase the opening hours of the businesses.
- More suggestions are also made foe efficient regulation to prevent unfair competition in the market.
Mooresville city has a good potential for investment and many entrepreneurs. Setting up of a new carwash would help to reduce demand of service of the other carwash. It will also make car owners to stop taking their cars to other areas. This will help to bring about time utility and save car owners time. Setting up additional car washer will be an economically sustainable enterprise since there is a growing market for car wash services. With increasing growth in population density, the additional carwash is likely to generate enough revenue to sustain and run the project.
Recommendation
There is need to set up an additional car wash because the population density is increasing and there is a ready market for the car wash services. The car wash will have a ready market for its services. Setting up of an additional car wash would bring car wash services closer for the 75% of the population who take their cars for car wash in the neighborhood.
Bibliography
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- Hamel, G and Prahalad,C.K. Competing fior the future. Havard: Havard Business School Press, 1994.
- Hoinvile,G. , Howell, R and associations. Survey Research practice. london: Heinemmann, 1977.
- Kotler, P. Principles of marketing. 2nd edition. Englewood Cliff,New Jersey: Prentice-Hall, 1986.
- Levitt, T. Innovation in marketing. McGraw-Hill, 1962.
- Poerter, M.E. Competitive Startegy. The free press colier, Macmillan, 1980.