A & R Laundromat

Exploring the Outcome of a New Service in a Laundromat

Syed Mohammad AshiqullahBUS 785-001 - Spring 2011: New Product Development

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TABLE OF CONTENT

Executive Summary 3

Introduction 5

Mission Statement 5

Opportunity Analysis 5

Potential size of the Market 5Competition 6Resources 7Corporate Policy 7SWOT Analysis 8Marketing Objective 8

Proposed New Service 9

Marketing Research Analysis 9

Buying Incentive & Positioning 11

Marketing Strategy 12

Budgetary Priorities 13

AppendixAppendix A – Survey Statistics 14

Appendix B - Questionnaire 16

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Executive Summary

The purpose of the paper is to explore the outcomes of introducing a new service

among the service entities of a Laundromat. The focus of business for the paper is A&R

Laundromat, a fully card operated laundry service dedicating to meet their customers laundry

needs with an affordable and good quality service.

A&R Laundromat presently operates in four locations in New York with large and clean

facility and a wide variety of washing machines and dryers. Opportunity analysis for the

Laundromat’s business portrayed heavy competition and limited scopes of differentiation of

service. Thus for further expansion the Laundromat sets up the objective to introduce a new

unique “Pickup & Delivery” service.

The marketing analysis based on self administered surveys to 20 respondents revealed

three segments of their target market:

Segment 1: Price Sensetive – This segment comprises a larger percentage of the

Laundromat’s target market and are frequent users of the laundry Service. They look out for

the availability of the service with low price.

Segment 2: Quality Hungry – This segment of the target market is likely to be loyal to

the Laundromat service if they are provided with the best quality of detergents which ensures

longevity of their 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 drives their usage of the Laundromat’s services.

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Considering the marketing analysis the buying incentive of the customers focused on

convenience, low price and high quality. Thus to reflect the buying incentive of the target

market the following strategic positioning statement is defined for A&R Laundromat:

: P ICKUP & D ELIVERY

“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 marketing

strategy 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 quality

for customers is going to help A&R differentiate from competitors.

Place: A&R Laundromat is already operating in four locations. In order to increase their

customer base it is advisable to look for opportunities to expand in the Brooklyn area of New

York City.

Price: the Laundromat must maintain low price to maintain the largest possible

attraction from the target market.

Promotion: Advertising in local newspapers emphasizing the Laundromats uniquely

quality ensuring service at a low price will aid to attracting customers. In addition the

Laundromat is also going to display large posters surrounding the Laundry Premise.

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The service provided by the Laundromat in principle falls under the classification of a

Homogeneous Service which is in its Growth stage of the product life cycle. Thus to successfully

utilize the new service to attract more customers and maintain their good image the budgetary

priorities are focused to assure competitive low price of its service to the customers. This

includes 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 to

consistently providing high customer satisfaction by rendering reliable machines and furnishing

a 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 a

clean facility and strives to ensures customer satisfaction in the most effective and efficient

manner.

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 United

States. In New York the housing occupancy demographic states that 30.2% of the populations

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are Home owners and the rest 69.8% are tenants (US Census 2010). Laundromat Business is

virtually found in every neighborhood across the United States and one of the key factors to

success to these businesses relies on areas which are densely populated with tenants. With

inadequate laundry facilities in most of the households in New York the demand for

Laundromats are significant. Thus we can say that the market size grows proportionately to the

increase in population.

Home Owners

30%

Tenants70%

Household Occupancy

Home Owners

Tenants

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

Source: US Census 2010

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key for A & R Laundromat would be to provide unique service with superior quality and

competitive price.

Resources

Currently A & R Laundromat employs 4 full time managers for the four branches

it operates in New York. Apart from the full time managers there are 5 Supervisors who

works in shift basis in each branches. So overall, the Laundromat has 20 supervisors in 4

branches.

The Laundromat provides service related to washing and drying with customers

who operate the machines using their lifetime membership card. The card can be filled

with dollar amount and the usage can be tracked through an automated integrated

system the business runs on. The business also provides a Drop-Off Service for

customers who want to leave their clothes to be washed and dried and to be picked up

later.

Apart from the washing and drying service the Laundromat also provides sales of

soaps and detergents at a competitive price. The Large facility in the Laundromat has

wide variety of vending machines, internet access, sitting arrangement with television

broadcasting the local channels.

Corporate Policy

A & R Laundromat faces a lot of competition which is why satisfying the

customers become a key ingredient to success. By providing the customers a large

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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

Significant numbers of washers & dryers

Clean & Friendly Environment

Parking Space Available

One Day Drop-off Service

Lifetime Membership Card for $1

Operating only in 4 location in New

York

No variation in service from other

Laundromats

Word of mouth is the only source of

Marketing

Opportunity Threat

Expand the Business in other locations of

New York

Provide a Unique service to attract more

customers – Pick Up & Delivery

Large Competition

Increasing costs & taxes

Marketing Objectives

In a business that has large competition and little areas of differentiation in service A&R

Laundromat does not want to keep any stones unturned. The business is already diverse in the

sense that it is not coin operated but card operated. The card has no expiration date and can be

refilled with dollar amount any time.

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To further attract customers and enhance the image of meeting with customer needs

the Laundromat wants to start a Pick-up & Delivery service for its customers. In addition A&R

Laundromat is looking forward to expanding its business in Brooklyn, Manhattan and Long

Island areas of New York.

Proposed New Service:

A&R Laundromat strives to deliver the best possible Laundry service options to its

customers. Thus in view of attracting additional customers and also keeping the existing ones

happy they have decided to launch a new Pickup & Delivery Service in addition to their daily

services.

With this service customers will have the luxury to cater their needs of washing drying

and folding their clothes by staying home. The Laundromat will have a dedicated employee who

upon a telephone call, will pick up the clothes from the customer and after completion of the

required service will also deliver the clothes back to their home. This service is attractive in the

sense as it is convenient and hassle free. Therefore may it be for leisure or business, customers

can utilize their laundry time in other activities.

Marketing Research Analysis

To understand better about the outcome of introducing the new service in the

Laundromat’s current service operation a marketing survey was done. The analysis of the

results (based on Survey Statistics Appendix A) helped the Laundromat recognize the possible

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outcome and also gave them more information in order to cater the needs of their target

market effectively and efficiently.

A self administered marketing survey was done with 20 respondents. The results as

shown in the survey statistics were able to reflect three segments in the Laundromat’s

customer base:

Segment 1: Price Sensitive.

This segment makes up a large quantity of the Laundromat’s target customer. The

segment has a family with household members of four or less which includes children under the

age of 18. Their age demographic falls under 25 years to 30 years and with regard to their

household 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 addition

to price convenience plays some role in their purchase pattern. If the Laundromat is close to

their 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 much

different way than the previous segment. Although convenience is a common criterion that

induces their purchase behavior when it comes to Laundromat service, they are more

concerned about the quality of their clothes.

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With a family of household members of four or above this segment values the condition

of their clothes from the laundry service. They are thus very selective about the machine

service capacity and which detergent is being used for their laundry service to maintain the

quality 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 drives

their usage of the Laundromat’s services.

Buying Incentive & Positioning

From the marketing analysis with the aid of the survey statistics A&R Laundromat has to

provide the following buying incentives in order to reach out to their target market effectively

and efficiently.

i. Low Price: Introducing the Pickup and delivery service to customers with a low price

will most likely have a very positive outcome.

ii. Ensure Quality: Emphasizing to customers about the use of high quality detergent

which 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 to

their time at the laundry will further motivate them to use the new service.

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: P ICKUP & D ELIVERY

“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 buying

incentive and positioning for the target customers, the following marketing strategy needs to

be 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 for

customers is going to help A&R differentiate from competitors. In addition quality needs to be

of utmost importance in order to generate a healthy image and future loyalty. It is quite likely

that imitation of the service will soon be introduced, thus it is important for A&R to provide

special features in their current services. One such feature can be offering free soap and/or

drying minutes according to the purchase of washing machines for laundry.

Place: A&R Laundromat is already operating in four locations. In order to increase their

customer base it is advisable to look for opportunities to expand in the Brooklyn area of New

York City.

Price: To cater the maximum percent of the target market it is very important for A&R

Laundromat to provide competitively low prices for their service. The larger segment of the

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target group is very price sensitive and their loyalty is volatile. Thus the Laundromat must

maintain low price to maintain attraction of this segment.

Promotion: Advertising in local newspapers emphasizing the Laundromats uniquely

quality ensuring service at a low price will aid to attracting customers. In addition the

Laundromat 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 a

Homogeneous Service which is in its Growth stage of the product life cycle. Furthermore the

analysis 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 price

of its service to the customers. This includes the pricing of their current and the new service

which is being launched.

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Appendix: A – Survey Statistics

Survey 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%What questions do you have regarding the service

APPENDIX

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Price 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%

APPENDIX

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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?

APPENDIX

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We are introducing a Pick Up & Delivery Service to cater your laundry needs. Upon Telephone requests our employee will pick up your clothes from your house and after completion 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 bettermeet your needs

Age: Sex

Marital Status:

Number of people in Household

Children under the age of 18

Thank You

APPENDIX