WMBA 601 Strategic Marketing Planning

Introduction

Company Overview

Paws Spa was created in 2012 to provide a home away from home pet spa.  We staff only the best of the best pet lovers.  Our staff is fully qualified and trained to best fit customer and pet needs.  

 As a society, we are more concerned for the environment than we have ever been, and this concern has created a real need for businesses that are environmentally friendly, especially in pet care.  Pet ownership is on the rise and pet owners are spending more money on pets than before.  This is additionally fueled by the idea of “Fur Babies”.   Pets are no longer a means of protection or labor, they are family members and treated in the same, equal manner.  This has pushed the pet service industry into a service rated by quality.  Customers demand more attention and care for their pets just as they would for themselves.  This is the driving focus of Paws Spa.  We treat your pets as we would treat you, with love and kindness.  It is our goal to provide the best possible experience your pet can have while being groomed.  As our name implies we are a full-service spa for your loved ones. Just as you would treat yourself to a relaxing day at the spa, do the same for the special individuals in your life, even those with wet noses and muddy paws.

Mission Statement

Paws Spa is an all inclusive pet retreat providing shampoos, grooming, massages, socialization and daycare services for your loved companions. We give your fur babies the royal treatment in grooming and care using only organic products provided by a highly qualified and trained team.  Paws Spa is committed to providing a caring, pet-loving facility geared toward your pet and their every need to give you peace of mind.

Corporate Goals

Within two years we would like to expand to add one more location in the surrounding area and add mobile pet grooming services. Within five years we wish to build another facility to total three facilities in the Charlotte metro area and implement veterinary services to provide the full nose to tail experience.

Our Service

Paws Spa provides organic products, shampooing, grooming, massages, day care services and boarding services. We only use organic products on our clients.  This differentiates us from other pet grooming companies in Charlotte.  We only want the best for the pets that we care for and by offering only organic products; their skin will forever be in good hands.  Our customers will benefit the most by using our rewards program and us.  We offer a rewards program on all of our services.  We have punch cards and each time you purchase something from $20, more, or us a punch is received.  When the card has ten punches, the customer receives one free shampoo service.  We also offer mobile site pet services, which is also a competitive advantage for Paws Spa because other competitors in town do not offer this service.

Environmental Scanning and SWOT Analysis  

Sociocultural Factors

• A rising cultural trend among developed and developing countries of increased income and smaller families has lead to humanization of pets.
• Significant percentages of the population see pets as family members and some opt to forego children and fill the need with pets instead.
• As pets become increasingly humanized, consumers are willing to pay more to ensure a high quality of life for their furry family members (EuroMonitor, “Pet Humanization”).

Demographic Factors

• The KC Dog Blog cites the following demographic statistics from Mintel, a company that specializes in market information.
  • The age groups most likely to own a pet are 18-24 year olds at 58% of households. However, the percentages of age groups owning pets only varies by a couple percentage points from the ages of 25-54 with ranges from 41-56% ownership.
  • Populations over age 55 drop to 41% and over 65 to only 32%. While 46% of all households’ own dogs, this number is 51% for whites, 53% for Hispanics and 24% for blacks (Toellner, “US Pet Ownership Statistical Breakdown”).

Economic Factors

• US Pet industry spending has steadily increased over the last decade from $21 billion in 1996 to $66.75 billion in 2016 with the pet services of grooming and boarding holding $5.76 billion of the share in 2016 and an estimated $6.11 billion in 2017 according to the American Pet Products Association.
• The trend has been increased spending and projections show this trend will continue. This gives Paws Spa a good economic outlook on product and services demands.

Competitive Factors

• None of our competitors offer all the services in one location.
• We plan to implement a defensive marketing strategy with competitive pricing based on fees for services from our competitors.

Political Legal Factors

• The pet care industry is regulated by state law in North Carolina especially those that offer indoor kenneling. The regulation covers temperature control, ventilation and lighting, to name just a few. There is also additional regulation regarding disposal of pet wastewater. The regulations could become stricter in the future, which may require additional training or infrastructure.
• Businesses that offer kenneling services are required to obtain a license from North Carolina Animal Welfare Section, which currently costs $75.00 annually. The process is simple but they could add additional requirements in the future.
• The food and products used in animal care are required to meet FDA standards. As standards change for what constitutes as organic, so could the standards for pet food and products.

Competitive Advantage

• Paws Spa will rise above the competitors with an all-encompassing approach.
• Utilizing proprietary organic products
• Upscale daycare
• Mobile services
• Highly qualified staff
• Strategic locations to optimize our availability to appropriate population   demographics
• Competitive pricing

Consumer Analysis and Positioning

Market Segmentation

Possible Segments

• Charlotte, NC populations 18-24 years of age
  • Ages 18-24 are more likely to own dogs at 58% (Toellner, “US Pet Ownership Statistical Breakdown”).  
  • Urban populations are more likely to humanize their pets and pay more for pampering them. While rural pet owners do not humanize as much and tend to spend more only on quality foods (EuroMonitor, “Pet Humanization”).
  • Roughly 40,000 or around 7% of Charlotte population.
  • This age group has the highest bracket of incomes under $10K annually. Although, some in this age bracket range up to $100K annually (Charlotte, City Data).
• Charlotte, NC populations ages 25-44 years of age.
  • Ages 25-44 make up approximately 36% of the population, approximately 200,000 of the 500,000 total population (Charlotte, CLRSearch).
  • Ages 25-44 groups averages 49%-51% pet ownership (Toellner, “US Pet Ownership Statistical Breakdown”).
  • Higher percentage of this age bracket has income over $75K (Charlotte, City Data). Discretionary income in this age bracket ranges from $30K-$90K per year (Stoffel, “The Average American….”).
  • Urban populations are more likely to humanize their pets and pay more for pampering them. While rural pet owners do not humanize as much and tend to spend more only on quality foods (EuroMonitor, “Pet Humanization”).

Chosen Segment

• We chose Charlotte NC population’s ages 25-44 years of age. Even though ages 18-24 tend to have higher dog ownership at 59%, they lack the population size and discretionary income levels of the 25-44-age bracket. The Charlotte NC 25-44 age bracket represents a percentage of population with approximately 50% pet ownership, a larger percentage of the population, and income brackets with higher discretionary spending levels

Positioning:

Positioning Map

Positioning Statement

Paws Spa provides upper-middle income ages 25-44 with lower prices and more services than any other pet service providers in the Charlotte, NC metro area. We do this by keeping overhead prices low, strategic partnerships with pet supply product wholesalers, and guaranteed lower prices than any other dog service in the Charlotte, NC metro area.

Objectives and Quotas 

• Objectives
  • Average $6,000 per week on grooming services.
  • Create strategic alliance with quality organic producer of pet supplies for use and resale.
  • Average $500 per week in resale of organic pet supplies.
  • Average $4,200 per week in boarding services.
  • Average $3,000 per week in day care services.
  • Contract with local cleaning services to keep the facility clean and fresh.
  • Expand into mobile services at $40 average for grooming and $25 convenience charge for each trip within 6 months.
  • Increase the number of grooming services provided by adding 2 additional groomers for short Saturday shifts and cover breaks of other groomers to increase the number of clients serviced per week within 6 months.
  • Have 50% of Charlotte, NC metro dog services market share within 2 years.

• Quotas
  • Grooming- 5 groomers completing 6 grooming’s per day at $40 per grooming for a total of 150 grooming’s per week.
  • Organic products- Average $2,000 in resale of organic products per week at 25% profit margin.
  • Boarding- 20 10ftx10ft kennels at $40 per night at 75% capacity.
  • Day Care- 20 dogs per day in common areas (inside and outside) based on $30 per day and 8 hour days.
  • Full time Manager to oversee all facility functions and employees.
  • Full time Assistant Manager to help oversee all facility functions and employees.

Marketing Strategy and Tactics 

1. Product

• Product Category - Paws Spa’s category of new products should be classified as an improvement or revision of an existing product. The reason it is classified this way is because Paws Spa has expanded on grooming services to include daycare and boarding.  The latest product innovation has moved the company towards organic luxury spa treatments for your pets. Organic services for pets are currently in the growth stage of the product life cycle. Pampering your pets, in general, as a societal trend is on the rise and increased spending on these services is expected to continue to grow.  The trial and error of products in the introduction stage is behind us. The product has proven that it is desired and profitable.
• Product Life Cycle - The growth stage of the product life cycle suggests we should see rapid growth until the product reaches a plateau during the maturity stage. This will require significant consideration in terms of distribution strategy. The anticipated growth will make naive forecasting very unreliable. It will also create problems in maintaining acceptable stock levels and facility space accommodations. We will need to carry larger safety stock quantities to even out demand elasticity and have a plan for facilities expansion. This is counterintuitive to just in time supply practices. However, the increased carrying costs will be marginal when compared to potential loss of sales. Expanding the number of facilities we have will allow us to keep up with growth and expand distribution. Since our product is in the growth stage pricing will decline as more competitors enter the market. For this reason, we will need to find innovative ways to eliminate waste and streamline processes to maintain a competitive advantage in our pricing strategy of penetration pricing. We also expect significant buzz marketing, especially on social media platforms. As a service we hope to take advantage of the ‘service is inseparable from the provider’ aspect through excellent service and name establishment. Word of mouth advertising through current and past customers will also benefit Paws Spa so making sure that the customer experience is exceptional is extremely valuable.
• Product Characteristics - The five characteristics of a product that influence its adoption rate are relative advantage, compatibility, complexity, possibility of trial use, and observability. We can use these characteristics to determine the likelihood of our product being accepted. Our product shows a relative advantage when compared to local competitors because we offer lower cost services and offer more services. We also offer green alternatives and offer one of a kind luxury service. Our clients value the experience we offer to their beloved pets and appreciate the steps we take to be good stewards for our environment. This embodies the idea of compatibility with the values of our customers. Our intake process and appointment process is very user friendly. We have done everything possible to decrease the stress and complexity of using our services. We do not currently offer a free trial but we do allow new customers to observe our processes. Our product takes advantage of four of the characteristics that influence adoption rate. For this reason, we are certain that our product will continue to capture market shares.

1. Place

• Distribution Channel- The distribution channel that would be most adequate for our business would be producer to consumer. The consumer would be the owner of the pets. As a business we provide mostly services to pet owners. Only a small percentage of our business will be re-selling organic products that we use. The owners are whom we market for because they make the choices of their pets.
• Distribution Intensity - The distribution intensity of our company requires a selective distribution. Our product is a face-to-face service provided to our customers so they will only be available in selected areas and marketed to only pet owners and more specifically upper middle class pet owners.
• Where product is located - Consumers will buy our services directly from us. They can visit our storefront in Charlotte, NC. Our storefront offers the home away from home environment for pets. Many pets hate going to the veterinarian or to get groomed. At Paws Spa, we want to make pets feel they are at home when getting groomed.

1. Promotion

• Consumer Sales Promotion
• Punch cards- each time you purchase something from us, being a service or product over twenty dollars, a punch is received. When the card has ten punches, the customer receives one free shampoo service.
• Coupons- we will run monthly special coupons. These coupons can be found in local newspapers as well as on our website where the consumer can print them out. Coupons will include percentages off services.
• Trade Sales Promotion - We plan to offer some free services to local humane societies and pet rescue organizations that allow us to advertise in their facilities and refer clients to Pet Spas. This will also present Paws Spa as a socially responsible business.

Advertising

• Benefits
  • Paws Spa will offer a large variety of pet services with guaranteed low prices. Our daycare and boarding services will provide much needed pet care services to pet owners. Pet owners who have careers that take them away from their beloved pets for extended periods will have better options than leaving their pets alone without socialization and care.
  • Our grooming services will provide extra pampering using organic grooming products that can be performed during the same hours a pet may be at the facility for daycare and boarding.
  • The depth of services we provide will provide time and place utility for our customers.
  • Slogan- We treat your fur babies like our fur babies.
• Styles/Forms of Advertising
  • Distribute business flyers to local veterinarian offices, pet shelters, pet stores and animal hospitals. Introduce yourself and ask them if you can place your business card display in their waiting room or near their counter. Offer to display their cards at your grooming business in exchange.
  • Donate services to local animal shelter(s) to help establish brand (one per month for a full year)
  • Utilize the local newspaper and news stations to run a free press release about the business and do so about three times a year
  • Website that represents Paws Spa
  • Utilize Google Adwords via the internet to advertise to our target market

Multi-media Advertising Campaign

1. Price

• Pricing Objective - We plan to initially concentrate on a sales-oriented objective of sales maximization. By pricing Paws Spa services lower we will maximize our potential to gain new customers. Sales maximizing does not tend to perform well over the long run and does not provide long-term stability. We may be required to operate at lower profit margins, which could hinder capital investments to grow our business. Within 12-18 months we plan to move our pricing objective toward a profit orientation of profit maximization. Once we have established ourselves in the market we can gradually increase prices as we offer new services and gain name recognition. We will minimize our total costs by analyzing at what levels we need to add to our variable and fixed costs to maximize profit. For example, the costs of adding a new facility, expanding a facility or adding personnel to provide services.
• Pricing Strategy - We plan to use penetration-pricing strategy. There are multiple competitors in our chosen geographic area. Some of our competitors offer fewer services. A few of our competitors offer more services, like Paws Spa. In order to attract customers we feel it would allow us to gain market share from our competitors. When we can implement veterinary services and gain name recognition, we will re-evaluate our pricing strategy to accommodate the costs of more advanced and expensive services and plan to transition to premium pricing.
• Fine Tuning- We plan to offer quantity discounts to our customers. For those with more than one pet, they will receive a discount in daycare and boarding services for additional pets. Customers with multiple pets offer our business more opportunities so attracting these customers with discounts would add to volume for the business. We will also use quantity discounts to offer special deals on doggy day care. For example, pay for six days get one day free. We will utilize promotional allowances in order to offer a lower price than normal. For example, we may run a special buy one wash get a second wash for another dog, half off, etc.

Control plan

Effective implementation of marketing strategies and policies requires leadership skills along with the influence and control of the higher management over their employees. Monitoring and periodic assessment of performance of the organization is important to identify the gap to be covered in the future (Zairi, 2012). In the case of Paws spa, quarterly and yearly assessment will be implemented. Sales target will be set according to that. During assessment, achieved sales target will be compared with the desired target. Market share will be monitored by conducting survey research and other market report. It will enable the Paws spa to note whether their market share is meeting the target or not. Moreover, the acceptability of the service in the market can also be determined by comparing their market share with their rivals. Monitoring the market share will help the organization to improve their services according to the taste and preference pattern of the customers. Competitors’ analysis is another tool for monitoring the performance of the competitors and identifies the competitive advantages of them (Hollensen, 2015). Competitors’ analysis will help Paws spa to determine the areas where they are trailing behind their competitors. Competitors’ analysis will be conducted based on products and services of the competitors, price, policies, and marketing policies. These strategies will enable Paws spa to monitor their performance and implement new strategies accordingly.

Contingency plan

Organizations adopted contingency plans in case of any unwarranted mishaps. It acts, as the plan B in case of failure of the plan A (Pritchard & PMP, 2014). Paws spa will also have specific and effective contingency plans to counter any uncertainty. Paws spa will adopt two types of contingency plans. One will be repackaging and the other will be diversifying. If the service of the Paws spa cannot attract desired customers then the first factor to be determined is to compare their services with the expectation of the customers. Probably, the offered service is not meeting the demand or expectation of the customers. Therefore, improvement of the service according to the market demand and trend will help to gain the market share.

However, if this strategy cannot able to garner the desired result then diversification strategy will be adopted (Rothaermel, 2015). Implementing diversification strategy will enable Paws spa to diversify their services along the same line of service. Paws spa can offer customized service to the pet owners also. If the service quality can be satisfactory for the pet owners then they will receive positive word of mouth. It will help Paws spa to enter in to a new segments, which eventually reduce the business risks of them. Business risks of Paws spa will get scattered by venturing in different new sectors. Brand identity and exposure will increase due to catering to more number of diversified customers. Diversification can also help in increasing the market base and more audience. In case of any mishaps in their core line of business, they can easily move to the other sectors and adjust the incurred lose. Therefore, implementing or adopting contingency strategies will enable Paws spa to survive any uncertainties.

Resources Needed

• Facilities- Approximately 3500 sq. ft. to accommodate kennels, common day care areas and grooming areas to include at least 1,000 sq. ft. fenced outside areas. An insulated steel structure at approximately $40 per sq. ft. comes to approximately $140,000 for building. Commercial land of at least 1 acre in Charlotte, NC approximately 300,000. (Non-recurring fixed cost and can be depreciated over time)
• Fencing for kennel enclosures and outdoor enclosures approximately $3,000. (Non-recurring fixed cost and can be depreciated over time)
• 7 bathing stations and plumbing of the facility to include restrooms for customers and employees approximately $30,000. (Non- recurring fixed cost and can be depreciated over time)
• Electrical installation at the facility approximately $30,000. (Non-recurring fixed cost).
• Utilities expenses- power and water approximately $3,000 per year. (Recurring variable cost)
• 5 pet groomers at average salaries of $45,000 per year plus 30% for benefits on average (US labor statistics) are $292,500 per year. (Recurring variable cost)
• 3 dog sitters at average salaries of $21,000 per year plus 30% for benefits at $81,900 per year. (Recurring variable cost)
• Facilities manager salary of $60,000 plus 30% benefits at $78,000 per year. (Recurring fixed cost)
• Assistant Facilities manager salary of $40,000 plus 30% benefits at 52,000 per year. (Recurring fixed cost)
• Contract with local cleaning services at $100 per day is $36,500 per year. (Recurring fixed cost)
• Dell workstations at approximately $800 per station are $2,400. (Non-recurring fixed cost and can be depreciated over time)
• SAP Business One Enterprise Resource Planning software with integrated Customer Relationship Management software is $82.00 per month which is an annual cost of $984.00. There is also an additional one time licensing fee of $3,145.

Works Cited 

"Pet Humanization: The Trend and Its Strategic Impact on Global Pet Care markets. "EuroMonitor International. N.p., Oct. 2014. Web. 24 May 2017.

Toellner, Brent. "US Pet Ownership Statistical Breakdown." KC DOG BLOG. N.p., 12 Nov.Web. 24 May 2017.

"Pet Industry Market Size & Ownership Statistics." American Pet Products Association. N.p.,n.d. Web. 24 May 2017.

“Boarding Kennels,” North Carolina Agriculture & Consumer Services, www.ncagr.gov/vet/Licenses/bkennel.htm.

“Pet Food,” U.S. Department of Health and Human Services: Food & Drug Administration,September 2016, https://www.fda.gov/animalveterinary/products/animalfoodfeeds/petfood/ucm2006475.

"Charlotte, North Carolina (NC) income map, earnings map, and wages data read more: https://www.city-data.com/income/income-Charlotte-North-Carolina." City Data.N.p., 2015. Web. 05 June 2017.

"Charlotte, NC Population by Age." CLRSearch. N.p., 2012. Web. 05 June 2017.

Stoffel, Brian. "The Average American Households Discretionary Income, by Age and Pay:Where Do You Stand?" The Motley Fool. The Motley Fool, 01 Jan. 1970. Web. 06 June 2017.Stoffel, Brian. "The Average American Households Discretionary Income, by Age And Pay: Where Do You Stand?" The Motley Fool. The Motley Fool, 01 Jan. 1970. Web.06 June 2017.

Pet Business Dashboard, “No-Cost & Low-Cost Ways To Get A Ton Of New Grooming Customers”. Web. 2015 https://www.petbusinessdashboard.com/get-more-customers.html

Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Pritchard, C. L., & PMP, P. R. (2014). Risk management: concepts and guidance. CRC Press.

Rothaermel, F. T. (2015). Strategic management. New York, NY: McGraw-Hill.

Zairi, M. (2012). Measuring performance for business results. Springer Science & Business Media.