Bubblepark Car Wash Case Study

Contents

1. Business Overview

1.1. Products/Services

2. Market environment

2.1. Legislation

2.2. Poor-quality of current services

2.3. Motor Vehicle Density

2.4. Competitors

2.5. Climate

2.6. SWOT Analysis

3. Business strategies

3.1. Target market

3.2. Penetration Pricing Strategy

3.3. Differentiation Strategy

3.3.1. Advertising and promotion

3.4. Financial strategy

4. Financial Performance

5. Conclusion

6. Appendices

7. References

1. Business overview

BubblePark is a dedicated Car Wash company that aims to provide the ultimate car wash experience to its customers. The Company is known for delivering speed, quality and value for money satisfying even to the most demanding customers. BubblePark's new plant incorporates the latest technological advances in the car wash industry offering state-of-the-art services. The Company focuses on providing a modern, professional and high quality car washing environment that features high-tech, reliable and customer friendly services at very competitive prices. BubblePark's car washing plant consists of:

Six easy-to-use self-service bays featuring pre-soap wash, spot-free rinse and wheel and tire shampoos as well as powerful vacuum cleaners for the car's interior. The self-service bays are open 24 hours a day and cost £6.90 (€7.80) including VAT.

A modern fully-automated bay offers touch-less wash and wax as well as detailed interior cleaning; this service costs £11.50 (€13.00) including VAT.

2. Market Environment

The owners of BubblePark observed that Car Wash market in Cyprus was suffering from supply side shortages leaving excessive demand unsatisfied. The Company owners recognised that under these conditions there is a great potential for penetrating the market. As a result, even though the Company is headquartered in London, UK, its main operations are in Limassol, Cyprus. The owners based this decision on a number of reasons:

2.1. Legislation

Cyprus' severe water shortage forced the government to introduce strict legislation on water usage. Consumers are forbidden by law to wash their cars at home and in effect monopolising the Car Wash Industry. However, under this strict legislation, water usage and operation permits proved to be expensive. In the light of this, the Company implemented an environmentally-friendly approach recycling 75% of its water consumption and using bio-degradable shampoos and waxes.

2.2. Poor-quality of current services

Given the introduced legislation, the Car Wash market in Cyprus is experiencing excessive demand that cannot be satisfied by the current suppliers. Research in the area has shown that most of the customers consider current Car Wash services unsatisfying and overpriced.

2.3. Motor Vehicle Density

The island's poor public transport infrastructure forced Cypriots to rely almost exclusively on private transport. In fact, research indicated that there are 450 motor-vehicles per 1000 people, placing Cyprus in the top 20 globally (NationMaster.com 2011). The partners acknowledged that the economic downturn, the increasing oil prices and increasing government spending on public transport can potentially affect demand for motor vehicles; however, they believe that the effect on the Car Wash market will be insignificant.

2.4. Competitors

BubblePark Car Wash has no true competitors that offer modern, state-of-the-art car washing services at reasonable price rates. However, the Car Wash business operates on the basis of loyal returning customers and therefore attracting customers from competitors will be challenging. The owners believe that the low satisfaction rate on competitors' services offers an opportunity to penetrate the market. In the light of this, the owners followed a number of strategies to establish BubblePark as one of the leading supplier of Car Wash services in Limassol.

2.5. Climate

The climate in Cyprus is characterised by long and sunny summers with temperatures averaging 33oC in July and mild, rainy winters. Even though car washing is not a seasonal business, the owners expect demand for car wash to peak during summer periods.

2.6. SWOT Analysis:

Strengths

* "Cash only" means no trade receivables to chase

* High-tech car wash plant

* Easy to operate

* Self-service operates 24 hours a day

* The diversity in services provided (automatic is more effective but self-cleaning is cheaper)

* No inventory

* Not a seasonal business

* Broad target market - all car owners Weaknesses

* The lack of experience of the entrepreneurs in this sector

* Extensive marketing is needed to initially attract enough customers in order to cover the operational costs

* The small number of administrative staff may deter very efficient back office support

* The proximity to the suppliers (chemicals and maintenance)

Opportunities

* The Cypriot legislation that prevents people from washing their cars at home

* The excessive demand for automated and quick Car Wash businesses

* The lack of competitors in a radius of 3km

* The large capital introduced by the owners offers many possibilities