Business proposal of a pet care shop, Financial Management

With the advent of globalization there had been much importance which is being given to the issues related to the general health of pets and other associated services as the people all over the globe have now become more conscious. Basically in countries like United States, Great Britain, France, Japan and now even in Singapore there is a huge demand for the products and services associated with pet care. (Tanikawa, 2004).

Background: A fact to be noted that the services are not cheap and considering the target consumer segments just a simple grooming session might cost as much as $100. (Loh, 2010). The competing firms are in a constant lookout for producing more products which will cater the needs of the pets in more delicate and sophisticated manners. In the year this special service sector, in United States the pet service industry amounted to about $32.4 billion in the year 2003. (Tanikawa, 2004). Th industry is constantly growing and this market constitutes of selling of live animals, caring services and other associated product supply. According to the reports of the American Pet Products Manufacturers Association, in the year 2004 the figure reached the amount $34.3 billion. (Tanikawa, 2004).  This shows the growth potential of this unique industry.

Elasticity of Demand and Market Structure: According to the industry level specialist it is the specific demographical trends of some matured society which is actually stimulating the growth of this industry. The aging societies with single homes are what are driving the industry even further. The combined affect of all the aspects are the factors which are making the industry so profitable and most importantly it is becoming a pull industry rather than a push product. As the people over a specific income group is focusing on pursuing this kind of services the industry is mostly recession free and that is another lucrative point for the new entrants. (Tanikawa, 2004).   The single families constitute a major portion of the target consumers as the feeling of companionship along with the urge of caring acts in the favor of the industry. Thus the demand of this kind of services is mostly income inelastic. This is because the demand is mostly dependent on the social trend and not on the income of the mass. For that reason the demand is likely to grow despite of the change in income level of the mass.

Business Model: The main aim of the marketing and promotional program will be to establish long term relationship as this kind of services is most likely to fetch constant revenue and even on the daily basis. The most advantageous point of the industry is that the target consumers are well identified and predefined. It is basically a niche market in which the industry operates and for that reason the initial setup location becomes an important aspect. Long term relationship with the clients is the main revenue generating medium. The long term relationship will not only fetch maximum return but at the same time it will fetch new clients for the company.

Profit maximizing quantity for this kind of business can mainly be determined by the number of quality customer account managed by the firm which actually covers the fixed and the variable income. (See Appendix A for the initial setup expenses and Appendix B for the regular forecasted expenses). The marginal cost for increasing one account of customer will be negligible as care services will be aimed at many pets at a time. The only cost that will be incurred is of the support staffs that need to be recruited once the number of accounts increases to a certain extent. On the other hand the growth of marginal revenue will be much more with one additional account added to the company's portfolio. Thus the profit maximizing chances are huge.

The location should be chosen where there are considerable number of apartments and flats owned by high net worth individuals and also professionals. Now the question is it is also important to obtain a data regarding the number of people who are having pets. A door to door promotional offering by providing booklet is ideal as the people who are dealing with pets will only be ready to listen. Leaflets and pamphlets can also be provided to the people who can be traced at the early hours of the morning taking their dogs out for a walk. In this way initial level of contact can be established which is necessarily the foundation of the future long term relationship. Capturing the initial level of regular client is important for the growth of the firm. Without proper information it is definitely somewhat difficult for the firm

Marketing Mix: As mentioned already, according to the demand of the market, the business will be an all-in-one service center which will provide wide range of services like grooming, training and will also sell pet related stuffs. The focus is more given on the place and the promotion the price factor should ideally match the industry level and it is definitely not an obstacle, as far the target consumer segment is considered. In fact if the services are priced lower than the general industry standard the consumer may have some genitive perception regarding the services which are being provided and this will more likely to hamper the potential business. The product and service mix are standardized without much variation but what actually matters is the kind of relationship the business shares with the consumers. It is this relationship and personalized services which will ensure the long term success of the firm.

In order to stop new entrant in the market the company will try to capture as much market share at the initial stage, starting from local level to the regional level. The penetration will from the micro-level and also connections will be made with various pet clubs where potential clients will be present.

In order to minimize cost of operation, packaged solutions will be introduced wherein there will be lesser variation of the services which are being provided and the costs can be estimated in advance. But these will be done at a later stage, as the initial aim of the business will be to capture more market share.

Posted Date: 3/1/2013 6:32:31 AM | Location : United States

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