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Steam Your Ride

Bus 311

12/9/2014

Daniel Klein, Erik Price, Luke Scurich, Linda Gernholz, and Lukas Schied

Steam Your Ride1

Table of Contents

Executive Summary……………………….…………………………….……….2

Company Summary…………………..………………………………………….3

Products & Services……………………………………………………..………4

Service Package………..…………………………………………………6

Market Analysis………………………………………………………..…………7

Industry Analysis…………………………………..………………………7

Target Market……………………..……………………………………….7

Competition…...……………………………………………………………8

Porter’s Five Forces……………..………………………………………10

Competitive Advantage……………………………………...…………..10

Strategy and Implementation…………………..……………………………...11

SWOT Analysis…………..………………………………………………12

Start Up Funding Needed…..………………………………………………….13

References………………………………………………………………………15

Steam Your Ride2

Executive Summary

Problem & Solution

Imagine being a busy working professional and having to take two hours out of your day to get

your car washed or detailed.  Would you be willing to drop everything and get your vehicle

washed? Alternatively, would you be more likely to put the cleaning off and try to get it done

another day?  What if you didn’t have to choose? What if there was a car wash service that came

to you and all you had to do was step outside hand over your keys and get back to what you

really need to focus on. When you're ready to go home, you have a clean car at the day’s end,

with none of your precious time wasted. Steam Your Ride does just that and we steam clean each

car using only five liters of water or less per car wash!

Competitive Advantage

Steam Your Ride’s convenience gives them a distinct advantage over competitors. SYR offers a

high quality detailing service that arrives at the client’s front door or office. With SYR,

customers can go about their day with minimal interruption, there is no more waiting around

when it comes to getting a car washed. There are currently no other car washes in the Monterey

area that offer an identical service, creating an opportunity for Steam Your Ride to be first to

market, and thus creates the opportunity to control the market. SYR’s unique water delivery

system via steam, paired with our customer value proposition of convenience creates a unique

opportunity for our business to stand out from other businesses during this year’s California

drought.

Why it is time to launch

2013 marked California’s worst recorded drought in history. Therefore, several counties all

throughout California have or will enact water restrictions in order to mitigate the effects of the

Steam Your Ride3

drought. The State of California is forcing counties and municipalities to revise distribution of

water to its constituents. Consequently, businesses and consumers will need to find ways to

reduce consumption or face heavy penalties. Although rival car washes could duplicate our

business model, SYR would be first to market leveraging its water saving process. Our value

proposition, attentive customer service, and convenience all reinforce the reason why we should

start our business now.

Company Summary

“Have you ever desired a quality car washing and detailing service willing to come to

you?” The service our company is offering is a mobile steam cleaning car washing and detailing

service. By leveraging an appointment system, customers with busy schedules can receive a

detailing and/or car wash and we will come to them. Our product will be environmentally

friendly by using steam cleaning which uses less water than regular car washing. Our service

uses only five liters of water per car. SYR provides a valuable service as we will not be using the

client’s valuable water resources because the vans are self-contained cleaning units.

We will provide a car wash service that is unlike any other in the Monterey area. Rather

than forcing the customer to drive out of their way and wait an hour for their car to get washed,

SYR travels to the customer allowing them to proceed with their day. To conserve California’s

precious water we use steam to wash our customers’ cars reducing water waste by the gallon. We

provide a unique service to our customers compared to competitors by being the most convenient

and sustainable option in Monterey. “If you want to clean it, steam it!”

Steam Your Ride4

Products and Services

Product

We will offer a variety of different car wash services including everything from a basic

car wash to a high quality deluxe detail. Our service will be high end and personable. A typical

hand car wash takes about an hour to perform. Therefore, over the course of a year an individual

utilizing SYR could save up to 33 hours a year (Carsdirect.com, 2012). This gives the customer

time to put another check mark on their “to do list” rather than wait around at a car wash

watching time pass for an entire hour. SYR will take no more than 5 min of the customer’s time

to retrieve the keys from his/her home or business. Besides making a car shine like new, SYR is

providing a convenient service that will benefit every customer. Additionally, SYR will provide

a vehicle safety check for every car. If the routine safety check reveals a problem with the

vehicle, the customer will be referred to a local repair shop. In return for the referrals, the repair

shop will provide SYR with discounted coupons to give to the customer.

Finally, SYR seeks to be the most sustainable car wash in the market by using an

unconventional approach to the car wash. Using steam will limit our water usage to 4 liters per

car wash opposed to the average 23 gallons used on a basic car wash (Brown, 2002).

Steam Your Ride’s branding strategy will be primarily focused on convenience and

sustainability. SYR will be seen as a sustainable company by limiting water usage and saving 22

gallons per car wash by steam cleaning cars (“Steam Car Cleaning”, n.d.). SYR is more than

simply a car washing service; ultimately every customer is aiming to correlate SYR with

sustainability and convenience.

Steam Your Ride5

Services

SYR offers a service for every customer’s car wash need. Whether it is a quick wash or a

full detail the customer will need to look no further once they find Steam Your Ride. The basic

car wash will be $42, which is almost $10 more than a typical car wash. The expensive price

reflects the valuable time saved by using SYR’s mobile service and we believe the target market

will be willing to pay for the convenience. Charging extra requires the quality and consistently to

be superb. The quality control checklist that has been developed will ensure the quality of each

car detailing meets and exceeds the local existing car wash/detail establishments within the

Salinas to Carmel Valley area.

In spite of the higher prices, SYR’s customers will continue to come back because their cars

will continue to get dirty. The sandy dunes and wind along the coast of Monterey causes a lot of

day-to-day build up on vehicles. Sea spray, sand, and agricultural fields combined with rapid

temperatures changes because condensation and compound the grime build up on vehicles. SYR

prices are comparable to competitors’ pricing models but at a premium. The prices for various

SYR car wash packages are as follows:

Basic Wash: $42

Wash & Wax: $90

Interior Detail: $160

Complete Detail: $250

Interior Shampoo: $75

Leather Cleaning: $75

Steam Your Ride6

Service Package

The service package for Steam Your Ride consists of five features: supporting facility,

facilitating goods, information, explicit services, and implicit services. The supporting facility

for SYR is a relatively small facility in the Monterey area where the van is kept and dispatched

to the proper location. The facilitating goods for SYR are the vans that contain the water needed

to properly steam and detail a vehicle. The information section of the service package is the

appointment schedule made available to potential customers. Since SYR only has one van to

start out with, keeping the customers informed on when their vehicle can be cleaned is crucial.

The explicit services of SYR can be defined as simply having a spotless, clean vehicle, inside

and out, all while not having to drive to a location to get it done. Finally, the implicit services is

the satisfaction one feels after having a clean vehicle, as well as feeling good about yourself for

having your car cleaned in a very environmentally-friendly manner.

Steam Your Ride7

Market Analysis

Industry Analysis

Companies in this service sector usually provide washing, cleansing, and waxing services

for cars, trucks, trailers, and vans. The industry consists of full-and self-service car wash

facilities. Demand is driven by growth in consumer spending and new car sales. The profitability

of the company is dependent on efficient operations and favorable location. In the Monterey

region very few car-washing establishments similar to SYR exist. Steam Your Ride’s main

purpose is to fill a need in the area by catering our service to busy professionals and the

surrounding community. We want to cater to our customers by bringing the car wash to them.

Target Market

Geographic segmentation

The car wash & auto detailing industry is our beachhead market. SYR’s target

geographical region will be residents living in the Monterey Bay region, specifically cities in

between Salinas and Carmel Valley. To reduce fuel costs we will not attempt to cater to a larger

geographic region, because we are driving to our customers.

Demographic segmentation

The busy working professionals and parents are the primary target market. We are

specifically targeting young and modern individuals who own a car between the ages of 25 and

40. The target market must have a disposable income as they have to be able to afford the service

offered. As an added benefit Steam Your Ride will also market our service to companies who

would like to offer car washes as part of their employee benefits packages. Marketing to

property managers is another beneficial opportunity because SYR cleaning vehicles reduces a

property’s water usage. The cleaning vans have self-contained recycled water thus reducing

Steam Your Ride8

property management water usage. Business customers could also be taxi cabs and bus-

companies like the MST.

Psychographic segmentation

Those that will use SYR’s services must also be environmentally conscious and educated.

These are the customers that will appreciate our sustainable service the most. The target market

is extremely busy and does not want to spend a lot of time in car wash as their job is time-

consuming. Besides, they have little leisure time which they enjoy. The target market will not

consist of car owners seeking bargains or the lowest price.

Based on 2011 estimates Carmel, CA has an income range of $75K-$100K. This earning

income being its largest percentage of residents, while being primarily employed in professional

services (“Carmel, CA”, n.d.). With a median community age of 52, it is not likely Carmel

residents are washing their own vehicles (“Carmel, CA”, n.d.). SYR will be targeting this

wealthier market as well as the business offices and private golf courses of Monterey. Although

Salinas has a significantly lower income level, we cannot ignore this segment of the market

because Salinas has considerably larger population. Carmel and surrounding areas will be our

primary purchasers, but ignoring Salinas as a market would be foolish due to its number of

residents.

Competition

Currently there are a few direct competitors that offer a similar service to Steam Your Ride,

alongside general car washes in the area which include:

Brightstar Mobile Auto Detailers.

Peerless Mobile Detailing

Steam Your Ride9

Brightstar Mobile Auto Detailers is our primary competitor. Of the mobile car wash services

in our region they have become the most successful. Brightstar offers a mobile car wash service

in Salinas and Monterey. They come to the customer and offer several car wash packages from

hand wash to complete detail service, therefore similar to what SYR offers. Brightstar has proven

the business concept works and it will be our responsibility to push our sustainability as well as

our extraordinary customer service. Bright Star is a threat to our company but the environmental

sustainability and great service of SYR gives us an advantage. Brightstar has become the top

mobile car wash service in our region, but SYR plans to change that (Brightstar Automobile

Detailers, 2014).

Traditional Car Cleaning (Indirect Competition):

El Estero Car Wash

Del Rey Car Wash

A Bay Mobile Detail Car Wash

Steam Your Ride’s indirect competitors are the car washes who offer close substitutes to the

services we provide. Our indirect competitors in the car wash market are El Estero, Del Rey Car

Wash, and A Bay Mobile Detail Car Wash. These car wash services are the most recommended

car wash services on Yelp in this area. From the above listed traditional car cleaning services

the business with the most public visibility is El Estero due to its excellent physical location on a

main road artery that many tourists pass on their way to Cannery Row and Fisherman’s Wharf.

El Estero has been in operation for over 50 years, they have repeatedly won “Best Car Wash in

Monterey” and they have a loyal customer base that keeps them busy every weekend. Another

competitive advantage El Estero has is their relationships with some major companies in the

area. They are affiliated with Monterey City, Pebble Beach Company, Granite Rock, and CAT.

Steam Your Ride10

The testimonials for the company praise the customer service and attention to detail. (Yelp Inc.,

2014)

Porter’s Five Forces

Analyzing Porter’s Five Competitive Forces model for SYR below reveals opportunities in

the market. The industry is attractive because we will be the first car wash in the region to offer

an environmentally friendly approach to car cleaning.

The threats of substitutes in the industry do pose as a moderate risk for SYR. The most common

substitute used by consumers is the home wash method, which requires the labor and resources

of the consumer. Another substitute available is the local fundraising car wash, often run by

school clubs and youth organizations. This is a great way for consumers to support their

community while cleaning their car at the same time. These substitutes have their benefits;

however neither provides the quality of a professional car wash service and the environmentally

friendly method SYR offers.

Finally, the competitive forces that bring the lowest risk are the threat of new entrants and

bargaining power of suppliers. The addition of SYR and its mobile aspect will make it even more

difficult for future competitors to enter the market. The power of suppliers is very low in the

industry due to the many different suppliers and amount of products available to car washes.

Porter’s Five Forces model proves that SYR has the potential to succeed in the Monterey area car

wash industry. If SYR can successfully differentiate themselves from the existing competitors, it

will surely thrive in the industry.

Competitive Advantage

Steam Your Ride’s convenience provides a distinct advantage over competitors. With

SYR, customers can go about their day with minimal interruption; there is no more waiting

Steam Your Ride11

around when it comes to getting a car washed. There are currently no other car washes in the

Monterey area that offer an identical service, creating an opportunity for Steam Your Ride to be

first to market, and thus creates the opportunity to control the market. SYR’s unique water

delivery system via steam, paired with our customer value proposition of convenience creates a

unique opportunity for our business to stand out from other businesses during California’s

extreme drought.

Strategy and Implementation

Strategic Positioning

SYR will position itself to be the convenience and sustainability leader in the market.

These characteristics will best satisfy the target market and ultimately consumers will correlate

convenience and sustainability with the name Steam Your Ride. The goal for SYR is to expand

on customer relationships to the extent that each customer feels as if the staff is part of their

neighborhood or business community. In the service industry being personable and reliable is

pertinent to creating a strong brand. SYR must create brand association; potential customers are

supposed to think of SYR every time they need a car wash.  This takes time but through a

personable staff and excellent steam cleaning wash it will only take one service before SYR

creates this association with each individual who has a car serviced. In order to maintain a

positive image SYR needs to continue to stay innovative and learn from customer’s experiences.

To become the best car washing service in the area SYR must take the critique from our

customers and learn the preferences of each individual.  Each customer may want something

unique done to his or her car and it is our job is to make sure we learn those preferences in order

to create brand loyalty. Once we make connections with customers, we are confident that the

Steam Your Ride12

emotional connection we will have with these individuals will ensure our branding strategies are

successful.

SWOT

Strengths

The strengths of Steam Your Ride include the unique steam cleaning process, the mobile

aspect of the business and utilizing the safety check system. The steam clean and mobile aspects

have already been discussed, but the vehicle safety check is an aspect that will put SYR to the

top of the market. By locating any safety problems and providing a discounted repair service,

customers know that SYR truly cares about them and their safety.

Weaknesses

SYR is a company offering a new and unknown service that the public has not heard of,

this is a potential weakness for the business. Another possible weakness is the difficulty of

managing time. SYR is limited to how many customers they can serve by the hours of the day.

Because of the travelling aspect, SYR must utilize efficient routes and time management to serve

as many clients as possible.

Opportunities

SYR is a unique service in the area, providing a great opportunity to penetrate the market.

California is in one of its worst droughts in history so people are more conscious in their water

usage than ever. The sustainability of SYR’s service will be appreciated because we use such

little amounts of this precious resource.

Threats

The biggest threat to Steam Your Rides business is the amount of possible substitutes.

People can choose to take their car to a hand wash facility, a self-serve facility, or they could

Steam Your Ride13

wash their car at home using their own resources. Finally, there is the option of never washing

your car at all and hoping for the rain to clean it for you.

Start-up Funding Needed

Capital Equipment

Since SYR travels to its customers, there is no need for a large car wash facility. SYR

employees will work from home and will need some office equipment. This will consist of a

computer, a telephone to take appointments and a table with some chairs. Next, SYR will invest

in machinery, which includes a vacuum, a steam cleaner, a washer and dryer as well as a van to

get to customer with all the necessary equipment to clean the cars. The area where SYR will be

spending most of its money is the prepaid insurance for workers compensation which sums up to

a total of $50,000. All in all the total capital startup expenses will cost approximately $100,000.

Advertising

SYR plans to spend $1,000 on advertising in the first month. This advertising will include

fliers, radio station ads and local newspaper ads. Conducting marketing research will help reveal

which specific advertisement reaches the target market most effectively.

SYR will be spending the majority of startup expenses on inventory. There will be 55-gallon

drums full of interior and exterior supplies that will all be green products. SYR will be spending

$2,000 on interior supplies and $2,000 on exterior supplies. To ensure adequate inventory, the

first month’s shipment will be higher than the following months. SYR anticipates washing very

few cars the first few months of operation; however, SYR’s supplies need to be stocked with

enough products to allow for busy days from the first day of operation. If SYR end up not using

enough of supplies the first months, costs will be cut down on inventory in the future until units

of sales go up.

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Sources of Capital

Steam Your Ride has decided to acquire the needed startup capital by taking out a loan.

By financially leveraging the company in this way, the founders will maintain the majority of

ownership through debt in the form of bank loans. SYR will have a loan of $78,002.25 from

Bank of America. This will be our primary and only loan we plan on utilizing. We will be

structuring our loan to be paid over a 5-year period with a 3.25 percent rate of interest. This will

result in an annuity payment schedule of $1,525.48 per month. The owners of SYR will be the

bearers of the debt through a percentage basis. The owners hold 20 percent each of the company.

Personal assets, including the homes and property of the owners, will be used as collateral to

relegate the loans. SYR plans to grow quickly. After reaching fiscal goals and profitability for

some time, SYR’s goal is to franchise the company and spread to the surrounding areas.

Steam Your Ride15

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