Hanger Cleaners Company
Executive Summary
This paper aims to analyze the competitive environment of a small company in the market. This is a case analysis in which a small business is taken into the consideration. The business is about the Hangers Cleaners Company. The company aims to provide the environment-friendly laundry service as its unique service; however, P&G stands as the major competitor for the business. So, this paper proceeds by identifying and analyzing the various critical success factors of the business. Various critical success factors are identified that are very essential for the business. Then, the paper supports the existence of the business with its mission. The critical success factors are identified to be important, and the mission justifies it. The paper then provides various decisions and actions that need to be taken to service in the market.
Introduction
The mean of competitive advantage for the Hangers Cleaners Company would be its ability to provide environment-friendly laundry services at affordable costs and attractive offers (Investopedia, 2007). The analysis of the competitive advantage of the Company can be made on the basis of the effects that the absence of this Company may have on the general laundry industry in the present context. The current brand equity and the positioning of the Company could also be analyzed.
Critical Success Factor of Hanger Cleaners
The following could be the KSFs (Key success factors) of the Company (Businessdictionary.com, 2016):
Capturing the key demographics:
It has been well mentioned in the case that Hangers Cleaners is serving the declining market of laundry business; however, if it is about the sustainability of Hangers Cleaners’ as a brand, they should make an attempt to target the market segment that is in the phase of growth. The younger working segment is a very crucial demographic measure that has not yet developed the loyalty towards any brand. They are yet to establish some degree of brand loyalty towards any of the laundry brand available in the area. This segment has a higher preference towards the quality of work done. Thus, it would only be correct to say for the Company that it has captured a key demographic.
Growth and Sustainability prospects
With about 4-5% growth rate, the laundry segment is in consistent growth and has promising prospects of the expansion in the future. To achieve the sustainable profits for each company, it is a very important task and strategy to enter and capture that has scaled and growth perspective.
Distribution Benefits:
The Company will be able to capture the shelf space on the outlets of retailers, as there is an expansion in the product and service line. The focus of the retailers towards the brand also upsurges due to the diversification of the product and also because the Company will now be delivering that has the higher trend in the market.
Entering the unidentified market segment
There is plenty of proof that there is an untapped market where the Company can play. There is a big population segment that would like a laundry service that suits their preferences.
Industry Phase Diversion
The detergent industry is now in its saturation phase, entering into decline phase, with only limited services. If the Hangers Cleaners Company continues with only one type of service, it is bound to decline and close one day. With the new type of customers and competition coming in, it is necessary to introduce new services, when the brand name is still accountable and popular. The brand name can be easily leveraged for the success of new services, given the awareness and association level among its target customers and also the potential younger customers.
Feasibility Analysis of Mountain Man Light:
The feasibility of Hanger Cleaners as a Company for the long term should be made taking into account the vital information and facts available for the industry.
There are still a few problems remaining to be fixed if we see the financial position and performance of Hanger Cleaners. Despite all those problems, the ventures taken on by the Company seem to be feasible ones for the Company.
Mission
The Company's mission is to maintain a standard of laundry in such a way that maximum customers are attracted to the offer and the Company in the most profitable way possible.
The rate of cannibalization from other competitors in the market can be expected to range from 5 percent to 20 percent. This means that in the best case scenario the cannibalization will be as low as 5 percent and in the worst case, it will be as high 20 per cent. However, the scenario of cannibalization is dependent on the ways in which the Company can position and present itself.
If the best scenario is achieved, there will be great results to the income statement of the Company. At 5 percent cannibalization rate, the Company will not have to wait long for the Company to have profits flowing within two years, with a brand awareness of about 60 percent. Even if it is a worst case scenario, it is still going to be a profitable deal; however additional efforts would be required. If the cannibalization rate is higher, there would be higher marketing expenditures required for the brand to increase awareness and achieve a higher share of the market.
The Company has a system of selling most of its products at off-premise locations, almost 70 percent. There may be two cases, which will be determined by the way the company positions and delivers itself. The first is that the retailers will take the same amount from the Company and pretend to keep selling, which will further increase self-cannibalization and the other is that the retailers may take the product line expansion seriously, and there may be additional promotion spaces and promotion for the new services. It all depends on the way the Company follows positioning of its new product.
Decision and Actions Recommended:
As in any industry, the laundry and detergent industry is shifting. The consumer's preferences and tastes are shifting with time, along with the demographics of the industry. So, these changing parameters have forced the companies to remain updated if they wish to remain competitive in the market. This is the opportunity to Hanger Cleaners to grab that opportunity by introducing new and competitive services. If there are any traces of confusion, then there is always a pilot test that can be executed in one or other parts where confusion exists.
The existing product present in the market is unable to satisfy the needs of environmentally conscious customer segments. By executing the strategy of product differentiation, the company can expand its market line, which will ultimately enhance the appeal of the company's service in the growing market segment. The current image of Hanger Cleaners may not, however, be relatable to the certain generation. Thus, it is very important to land with new marketing techniques that can help market the brand image of Hanger Cleaners. There may also be the different name used for introducing the new branches or services, so as to avoid the cannibalization problem from other tough competitors.
The given MAS tools serve a common purpose for the Company; making the Company services more accessible and relatable. The use of the given tools can help the Company a lot in assessing its competitiveness, the market segments, target customers and the overall market structure.
Strategic planning can help understand where the Company has been lagging and placing the Company in such a way that the growing competition from the big competitors can be well tackled.
Budgeting will help the Company in keeping track of the monetary expenses that need to be made for sustaining in the market. It also provides the Company the opportunity to explore the alternatives of promotion without worrying about over-expenditure.
Since the market is quite dynamic and uncertain, the use of flexible budgeting helps alter the budgets when there is a need. It also allows a Company to understand that the loopholes in budgeting should be well tackled (AccountingCoach.com, 2016).
The allocation of overhead costs will be very helpful to the Company in terms of analyzing the “per unit costs” associated with the offers and discounts that the Company has been providing. It also helps allocate substantial budget for contingent situations.
The variance analysis helps in understanding the factors that cause a change in the business and keeping a track of those factors. This allows for the Company to track the factors, which cause a favorable change in the business and the same can be implemented.
Conclusion
The CVP analysis helps in understanding how the costs and profits are divided in a deal per unit. It helps assess the situation where volume changes are based on the costs and profits changes.
Target costing will be helpful to the Company regarding understanding how the competitors are planning their prices. It also helps the Company take into account the way in which their pricing strategy is being planned and whether this pricing helps meet the stipulated revenue and profit growth.
Since the business is growing and will see a future, Capital Budgeting Techniques can help the Company choose what businesses get involved in. This will help choose the best revenue generating activities and functions for the business (AccountingCoach.com, 2016).
References
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