Background Summary
CareMax children’s center is a limited liability company (LLC) located in Hazel Green, Alabama, and operated by the George Williamson family. CareMax has largely concentrated its activities in the provision of daycare services for the Hazel Green community of an estimated 4,200 residents and 1,340 households as of July 2007 (City-Data.Com, 2010).
The center was carefully designed and developed after the realization that professional childcare is a necessity in every civilization, from small towns to large cities. From its inception, the center has been received warmly by the community especially due to its multifaceted nature and capacity to offer timely, flexible, and individualized day care services to the minors in different age categories.
CareMax Center officially opened for business in 2003, with a license to provide daycare services for thirty-five children. Presently, CareMax is licensed for seventy children aged six weeks to six years. 62 children are currently enrolled at the center, representing 88.6 percent enrollment level.
The center appreciates the fact that children need to be treated with warmth and respect. Its mission statement is to provide high quality childcare services with a bias on developmentally appropriate activities for the minors under our care. The key rudiments of CareMax’s business concern are as follows:
- Diversified services — the center has increasingly diversified its services to maintain competitive advantage while ensuring that parents of children with specialized needs benefit from our exceptional services.
- Convenient location — the center is located at the heart of Hazel Green community, and is easily accessible from all directions. Its magnificent buildings and stupendous age-appropriate play stations reveals the center’s dedication to the wellbeing and comfort of children, and also serves to instill a permanent unique image on the mindsets of parents about the center’s capacity to offer splendid services and care to their children
- Investment in employees — Given the labor-intensive nature prevalent in the industry, CareMax has invested heavily in the number and quality of its employees to keep in line with its tradition and mission of offering high quality childcare with a view of assisting the child attain the fullest potential during the formative years of development. The center has 10 full-time members of staff and 2 CPR certified supervisors. CareMax has also engaged the services of a nursing officer to cater for the health needs of children under our care. All our staff members have contributed individually and collectively to the success of CareMax.
- Quality services — CareMax is extremely aware that parents are increasingly relying on independent rating services or recommendations from friends about the quality of services offered by daycare operators (Lownes-Jackson, 2004). As such, the center has invested heavily in developing superior capacity to ensure daycare services are delivered in a highly efficient environment that ensure core values and procedures are stringently followed by caregivers in the process of satisfying customers’ needs. Quality services have enabled the center to retain its competitive advantage as the preferred daycare services provider in the wider Hazel Green’s area, Alabama.
- Strong financial muscle — CareMax has been able to maintain a strong financial might despite low levels in the industry occasioned by high operating costs. This has been primarily achieved by maintaining steady growth through aggressive advertisement and the admirable reputation the center has been able to create for itself. The strong financial background has enabled the center to continue offering quality services to preschoolers despite the high overhead costs.
Customers
The George Williamson family first initiated the child development center with a view of giving quality childcare to low-income families living within Hazel Green’s community, Alabama. The racial makeup within the community is predominantly white, with blacks accounting for less than 3 percent of the population in the area (City-Data.Com, 2010).
The original mission was to offer children from low-income families a stable, inspiring, and loving environment during their formative years of development. The perception that lower income parents could not afford to pay for quality childcare while they worked greatly influenced the philosophy and value system under which the center operated during its early years.
CareMax center has greatly evolved in its customer portfolio to serve all kinds of working parents with preschool children. However, the center still retains special fees structure for low-income families that may require its services. This has served to endear the center to the community, making it to become part-and-parcel of Hazel Green’s community.
Its major customers include parents working in organizations, hospitals, local and regional schools, government agencies, and other service-oriented firms. Some of the needs these customers have in requesting the services of the center include:
- Need to continue working while still nurturing a preschool child — statistics reveal that 65 percent of all mothers in the US with children under the age of five years are actively engaged in the workforce. These children require specialized services and attention, and CareMax center offers both.
- Security concerns — some parents are apprehensive about leaving their children under the care of nannies and relatives. At CareMax, the security of children is of paramount importance, and no incidence of inappropriate handling has been reported to the authorities for the eight years the facility has been in operation.
- Individual development of children — parents need their children to encounter experiences that will advance their physical, social, emotional, spiritual and cognitive development. Not only does the environment at CareMax guarantees all the above, but it also promotes independence, enhanced self-esteem, constructive problem solving, and positive feelings of self-worth among the preschoolers.
Products
CareMax center mainly concerns itself with offering products in terms of providing daycare services for children in the wider Hazel Green’s region, Alabama. The center offers unique and diversified services to children in three broad age categories, namely 6 weeks to 1 year; 1 year to 3 years; and 3 years to 6 years.
The services offered at CareMax includes not only the particular services presented for sale to parents with preschool children, but also the reputation, image, and other innovative services offered by the institution such as puzzle and coloring areas (Lownes-Jackson, 2004).
The main services of catering for the children’s individual development are tailored to meet the specific requirements of each age category and any other specialized requirements that may be dictated by the parents or guardians of children with special needs. The center provides entertainment and quality food to the children while they are in attendance. In addition to its core function of offering quality childcare, the center offers the following services to reinforce its earnings:
- Transportation services to and from the center for the children
- Specialized pre-arranged elderly care
- Operates an elementary school
- Pre-college counseling through its College Mentorship Programme
Matching the Products with the needs of Customers
CareMax center exercises an open-door business policy whereby all parents and guardians with children at the school are invited after every two months to give their views on how childcare should be offered.
Little children have very specialized needs, and thus the center benefits immensely from the frequent interactions between the parents and the administration, not mentioning the fact that such meetings offer a platform for the parents to expressively state their needs, and for the management to act decisively in developing products that will match up to the stated needs.
Such an interaction has greatly assisted the child development center to remain ever conscious of the ever changing business environment. The center is always prepared to alter its operations and change direction when the needs of its major clients – the parents – demands so.
Product Development
The center takes cognizance of the fact that it must continually develop new products and services if it is to remain relevant in modern-day competitive environment (Lownes-Jackson, 2004).
Towards this objective, the parents are involved in the development of new services for their children, and are adequately informed about the advantages and disadvantages of the new services in terms of assisting the children to develop healthily in all critical facets of life. CareMax takes extraordinary measures to ensure that new services are safe and of relevance to the children’s learning capabilities according to regulations stated by the authorities.
CareMax center is particularly keen to involve parents in the process of concept development since they form the center’s target market. The center is always keen to incorporate productive views presented by the parents and guardians especially in the features to be incorporated in the service (Ulrich & Eppinger, 1999).
This way, the new service is able to benefit the children in a more productive manner. In equal measure, the new product or service is expected to affect the parents in terms of pricing. The child development center therefore feels obliged to consult them so that their views and worries may be taken into account.
Pricing
CareMax children’s center realizes that the prices charged to its major clients, the parents, directly affect the performance and success of the institution (Entrepreneur Media, 2010).
As such, the center is at the forefront in attempting to maintain a pricing policy that is fair and commensurate to the services offered while ensuring that major operations, processes, and profitability of the enterprise are not put into jeopardy. The center constantly reviews the prices offered, adjusting them appropriately to satisfy the target market. This equilibrium in the business context is realized through the employment of the following procedures:
Pricing Strategy
CareMax center employs penetration pricing strategy to market its services to its customers. When new services are developed at the center, the introductory prices are always offered at a lower price than what is offered by other industry players for the same or similar service to attract more customers while allowing the existing customers to enjoy the entire promotional package (Lownes-Jackson, 2004). The prices may be adjusted later to reflect actual market trends.
It is within the mandate of the management of CareMax center to determine the specific prices for each of the products and services on offer. To determine the prices, the center always employs the following principles:
- All prices must have the capacity to cover costs and profits
- The most efficient way to lower prices is to lower operational costs
- Prices of products and services must be reviewed regularly to ensure they offer a true reflection of the dynamics of cost, competition, target market demand and profit objectives (Entrepreneur Media, 2010).
After objective considerations are made regarding the above factors, the child development center utilizes both competitive and markup pricing strategies for purposes of offering authentic pricing schedule, which is both age and needs specific. Competitive pricing is basically used to charge general accommodation charges for the children in line with the current prices at the market (Entrepreneur Media, 2010).
For example, last year, the center was charging $25 per hour for taking care of toddlers from 6 weeks old to 1 year. A market research initiated by the center for purposes of price appraisal revealed that all the other centers in Hazel Green were charging the same. As such, the center could not raise its fees.
CareMax center utilizes markup pricing strategy to price some of its value-added services. The center calculates its markup price by adding a set amount of money to the cost of the service. For example, the center offers specialized meals to children depending on the ability of parents to pay for the specialized services.
When charging for the special meals, the center adds a fixed amount of money to the actual cost of the meals to be charged to customers as the official price of the meals (Entrepreneur Media, 2010). In general, however, the center always reviews its prices:
- When a new service is introduced in the market
- When costs of operation changes
- When competitors adjust their prices
- When the state of economy experience either slump or inflation
Price position
At CareMax center, we greatly take cognizance of the fact that market demands and issues of supply and demand of our services institute real pressure on how we position our prices. As a small business, the center very much rely on issues of profitability, market value of services offered, and competitions to position prices according to the requirements of its target customers (Brand Positioning – price, 2006). Some of the objectives evaluated by the center while making decision on price position include:
Profit maximization – Economic conditions (elasticity, competition)
Market share – Government regulations and actions
Leadership – Social concerns (seasonality)
Service quality – Survival
CareMax center is always keen to maintain a perfect equilibrium between the price ceiling and the price floor of its major services to keep its customers under lock-and-key while at the same time guaranteeing the competitive advantage of the center. The equilibrium is achieved by undertaking extensive market research to shed light on industry patterns and current prices offered by competitors for similar services.
The center is vehemently aware that the demand of its services will decline if the price position stupendously moves towards the price ceiling (Diamantopoulos, 2003). At the same time, the center may fail to realize enough profits to boost its operations if the price balance plummets towards the price floor. As such, a perfect balance must be maintained to safeguard the interests of both the parents and the center. The figure below reveals a five-year average price position for toddlers under one year old.
Price Sensitivity
CareMax center is not often affected by issues relating to price sensitivity since its primary concern is the provision of affordable quality care to children in relatively dissimilar age categories.
The prices are flexible depending on the parent’s ability to pay, and in line with the center’s traditional philosophy of catering for low-income bracket in the community. In this perspective, while price is viewed as an important factor by parents in making decisions on whether to use its services, the center has resoundingly responded by making the prices and modes of payment as flexible as possible.
In this industry, parents have diverse reservation prices they are prepared to pay for services rendered (Diamantopoulos 2003). However, the center is purposing to standardize prices in the long-term to match particular age categories, leaving the flexibility clause to parents that are in need of services but are unable to pay using current market rates due to their social economic standing.
Place/Distribution
For a business offering childcare services such as CareMax, location is a major factor in any place considerations (Lownes-Jackson, 2004). CareMax center is located at the heart of Hazel Green Community, and is easily accessible any time of the day from all directions. Parents from the surrounding suburbs can easily access the facility for convenience, while a perimeter fence has been elected to ensure the safety of children.
Further, the center was purposely built in its present location, which is away from major traffic routes, to ensure the safety of children. This way, the parents, while undertaking the daily work-related activities, can be assured that their children are in one of the safest locations in Hazel Green.
The playing areas are magnificently designed, and buildings uniquely decorated with pictures of animals, plants, and maps that not only serve as major attractions for children, but also assist in the general learning process.
In addition, these designs leaves a permanent image on the minds of its target market – parents and guardians – that CareMax is indeed the place where their children can be assisted to gain maximum potential in this very critical phase of development. The location and design strategies are working perfectly well, and no major changes are intended in the near future.
Promotion
The child development center is fully aware that to break even in this industry, it has to continue persuading the parents, its target market, about existing and new services on offer for their children. Towards the realization of this noteworthy objective, CareMax utilizes both direct and indirect methods of promotion (Lownes-Jackson, 2004). In direct promotion, the center utilizes the following:
- Advertising
- Publicity
- Special events sales in thank giving days and open days.
The company also utilizes the following strategies in its indirect promotion programs:
- Public relations
- Customer relations
- Customer/client services
- Service packaging
Advertising
The center takes cognizance of the fact that advertising is particularly important if the promotional strategies are to achieve their intended objective – that of attracting new customers while ensuring that existing clients are not poached by competitors (Lownes-Jackson, 2004). New and exiting customers must be made aware of new services whenever they hit the market. In this perspective, CareMax center utilizes the following advertising mediums:
- Local newspaper
- Local and regional magazines
- Community radio
- Fliers and brochures
- Specialty items such as calendars
Market Research
From time to time, CareMax center undertakes market research with a view of evaluating and identifying key areas that need adjustments, specifically in marketing of services, target markets, and competitions (Lownes-Jackson, 2004). This information is fundamentally important as it assists the managements to identify:
- Groups to be included in the target market
- Demographic characteristics of new and potential clients
- Customer spending habits
Presently, the center is undertaking a primary market research to ascertain the reception and viability of a service package introduced last summer. The package, known as ‘the CareMax All Rounder’ was intended to make the parents pay for all the services rendered at a premium instead of paying differently as if there are two centers offering different services under one name. The package has not been received warmly by the parents, and the telephone survey has been instituted to establish the reasons why this is so.
Conclusion
The future of CareMax looks bright if recent projections and market trends are anything to go by. The child development center has been able to create a brand name that is synonymous to the quality and flexibility of services offered.
The heavy investments made by the institution in terms of staff members, children’s learning and playing areas, diversification of services to include transportation of the minors to and from school, and assiduous and conscientious management of the center has gone a long way in winning the hearts of many parents and guardians of children within Hazel Green’s community, Alabama.
The center has remained profitable despite huge overhead costs associated with the industry. Undeniably, catering for young children is a labor-intensive undertaking; but the center has continued raking considerable profits due to sound management principles. At CareMax center, we always shine…and shine above the rest.
Reference List
Brand positioning – price. (2006). Web.
City-Data.Com. (2010). Hazel Green, Alabama. Retrieved from <http://www.city-data.com/city/Hazel-Green-Alabama.html>
Diamantopoulos, A. (2003). Pricing. In: M.J. Baker (Eds). The marketing book. Oxford: Butterworth-Heinemann. ISBN: 0750655364
Entrepreneur Media, Inc. (2010). Pricing a product. Retrieved from <https://www.entrepreneur.com/encyclopedia/pricing-a-product>
Lownes-Jackson, M.G. (2004). Starting a child care center. London: A business of your Own. ISBN: 094326717X
Ulrich, K., & Eppinger, S. (1999). Product design and development, 2nd Ed. McGraw-Hill/Irwin. ISBN: 007229647X