Executive Summary
The economic developments taking place in the KSA open up opportunities for businesses, especially those in the service sector. As people gain more disposable incomes, one of the most common items purchased is a vehicle. Commercial transport service providers also tend to purchase multiple vehicles. Today, there are millions of car owners in the country, which means that services related to cars are an interesting business opportunity. Car wash is a good business opportunity for a startup in the KSA. Most importantly, emerging techniques are making the industry an innovative one, including the steam car wash. This marketing report describes a business case for a steam car wash business to serve Saudi Arabia’s car owners. This methodology offers multiple benefits, which the company will make sure to communicate to the consumers. Additionally, an analysis of the market illustrates that there are several elements to consider, including mobile services and an online business model. In an age where technology is increasingly revolutionizing business, Mr. Steam will be best served by an online platform for connecting all customers to the service provider.
Company Background
Vision
Mr. Steam’s vision is to become the market leader in car detailing by offering the highest quality services to our customers. Car detailing is a field that is rapidly improving, where new techniques and methods are emerging. Some of the approaches help produce better results with car cleaning. Others are preferred for saving time and money and for environmental friendliness. Mr. Steam’s vision is to continuously embrace and deploy new technologies and techniques to become Saudi Arabia’s most innovative and highest-quality service provider.
Mission
The mission statement for Mr. Steam is ‘To give Saudi Arabia’s car owners the best car wash experience using the steam car wash techniques.’ This mission statement indicates that the long-term goal of the business is to embrace and develop new and efficient steam car wash techniques and tools that offer better results than ordinary car wash businesses. As one of the first businesses in the country to offer these services, the customer experience is embedded into the services provided.
Situation Analysis
Mr. Steam is a startup car wash business that is intended to be unique in Saudi Arabia. Car steam is an emerging concept in the car wash business, which means that an elaborate marketing strategy will be a necessity for the business to pick up and prosper. Many questions arise regarding the effectiveness of car steam wash; where some people are concerned with the effects steam has on both the interior and exterior of the car. Therefore, it can be argued that much of the marketing communication will revolve around educating the consumers on the benefits of these techniques and how they compare to traditional ones. Additionally, the startup will be expected to compete in a market saturated with many businesses that have already established their brands and positioned themselves strategically. The uniqueness of Mr. Steam’s business model will be a key selling point, where it can be expected that greater value and improved customer experience will propel the business to success,
It can be expected that progress might be slow without a comprehensive marketing plan. This argument is founded on some core marketing maxims, including the stages in the adoption of new technology or product. Car steam wash is considered to be an innovation, which means that there will be innovators, early adopters, early majority, late majority, and laggards. Therefore, the primary marketing objective will be to accelerate the adoption process to help shorten the break-even and enter a period of profitability as soon as possible. Figure 1 below indicates how the adoption will take place and the best-case scenario that Mr. Steam expects. For example, a higher number of innovators and early adopters will be targeted. The market saturation may not see the company mass 100% of the market because other businesses will likely start offering similar services. However, the saturation stage will see Mr. Steam become a market leader with the largest market share across Saudi Arabia.
Market Summary
The car wash and detailing business is largely dependent on the country’s economic growth and the number of vehicles that the citizens own. The Kingdom of Saudi Arabia (KSA) can be considered to be among the fastest-growing economies in the world. Massive developments are taking place, which means more people have larger disposable incomes. Significant amounts of these incomes are spent on such items as vehicles, either for private or commercial use. Additionally, the population of KSA has been on the rise, which means that the number of people who own cars is on the increase. The case of Riyadh, the capital of KSA, can illustrate this trend. For example, the population has been steadily increasing since 1968, from less than 2 million to over 10 million in 2016. The number of people who own vehicles has also risen to over 2 million. Assuming that all major urban areas follow the same trend, it can be argued that offering car-related services can be lucrative.
The percentage population that owns vehicles in KSA is approximated at 50%. In 2017, the estimate indicated 53.95%, while in 2018, the figures dropped to 49.03% (Statista Research Department, 2021). These percentages can be translated into millions of cars that will need services, including washing. KSA is predominantly dessert, which means that dust is a common occurrence. Therefore, it can be argued that keeping cars clean in KSA presents a valuable business opportunity. The rise in demand for passenger cars is a global trend that is not unique to KSA. Estimated show that the world will experience massive growth in the car wash market by 2016. These estimations are made in 2021, a period where the coronavirus pandemic has slowed down business. It can be argued that post-COVID-19 will be a prosperous period where demand for cars will continue to rise. Considering that the economy of KSA is experiencing an upward trend, car wash and detailing services should prepare to handle the growing demand for their services.
Another aspect of the car wash market to consider is the changes currently taking place globally. Even with the rising demand, businesses are experiencing such changes as mobile auto detailing, automation, online car wash services, and green car wash. Many companies have started building automated car wash businesses where drivers can easily drive their cars into a system that performs virtually all types of cleaning. It is not clear how many such businesses exist in the KSA, but it can only be assumed that a country that readily embraces new technologies will soon experience this dynamic. Mobile auto detailing can simply be described as businesses that offer door-to-door services where car owners do not have to take their vehicles to a car wash. Such a business model can prove extremely effective for small business owners whose flexibility allows them to meet customers at their homes or workplaces. The conveniences of such a model can give it a competitive edge and it is worth considering for new startups. A business such as Mr. Steam can choose to be fully or partially mobile depending on the success rate desired.
The rise of online car wash businesses is particularly interesting for the KSA because startups may be forced to adopt disruptive technologies. According to KenResearch (2019), the KSA is experiencing an evolution in the car wash and care business through the emergence of online mobile applications that work by connecting car wash service providers with the users. Major brands have already established themselves, including Car Hub, Morni, Car Spa, and Ezhalha. The rationale for considering these trends is that many technologies are disruptive, and they often force traditional business models to adjust to compete and survive. Additionally, it is extremely uncertain for potential startups to pursue the traditional models, and the key decisions are made based on what is happening in the market. In this case, Mr. Steam’s best chances for success will depend on what technologies are deployed and what benefits the selected business model offers the consumers as compared to competitors.
Lastly, the world is still experiencing the COVID-19 pandemic, which dictates how current businesses and potential startups operate. Safety measures are critical as all countries make deliberate efforts to contain the virus and prevent further infections. In the KSA, many businesses have resulted in using technology as their new business models and as an alternative operational mechanism to stay functional. Mobile applications remain the major trend across all global businesses. the key argument is that the current market conditions dictate how the business can operate, with all signs pointing towards an online establishment.
SWOT Analysis
SWOT analysis can be described as a framework for examining a business’s internal and external environment of a business to help make strategic decisions. Strengths and weaknesses are internal to a business and can be under the control of the firm. On the contrary, opportunities and threats are under the external environment and an entity has no control over what happens. In this case, the SWOT framework examined what a business has that can be used to give it an edge and what can be found in the external market. Similarly, the characteristics of a business that can be disadvantageous and those market aspects that can threaten the survival of a business can be explored and addressed accordingly. For a startup, SWOT analysis helps the key elements affecting its success both positively and negatively.
Strengths
Strengths are those properties of a business idea or venture that can offer massive benefits and aid in a firm’s success. Mr. Steam is a startup that does not have the luxury of a well-established brand. Therefore, the key strengths lie in the availability of adequate capital to sustain the venture through the initial development stages. Secondly, the company will be established as an online business, which means that it can use modern technologies to its advantage. Mr. Steam will not face the barriers that traditional business models face. Secondly, the use of social media marketing will help popularize the business brand, especially because of the timing. In other words, online car wash businesses are just starting to become popular, which means it is the right time for Mr. Steam to join the market.
Weaknesses
Even though the business acknowledges the existence of capital to take it through the development stages, some weaknesses can still be found. First, it is uncertain how long it will take for the business to pick, which means the company can only make short-term plans. Another weakness lies with the brand because the firm is just getting started. Therefore, the lack of a good brand image may limit its progress, especially with the market already dominated by stronger rivals. Additionally, the size of the business is also small, which means that it cannot compete well with larger corporations. Due to the nature of the services that have to be offered, the company can only manage to serve a smaller geographical location, at least initially, before expanding outwards to serve the rest of the KSA.
Opportunities
The key opportunity for Mr. Steam is the use of mobile applications to market its services. The nature of many mobile applications makes it possible to build a good relationship with consumers. The only thing that the consumers have to do is open an application and request service at the desired time and place. Mobile services are an emerging trend in the KSA, which means that Mr. Steam can exploit this opportunity and build a mobile car wash kit to accompany the online applications. Lessons can be learned from other industries, including ride-sharing apps, to help Mr. Steam build a competitive mobile app. For example, all that would be needed is for a customer to request a service and pin their location so that the mobile service providers can get to them. Lastly, new car wash technologies are also emerging, especially those that help minimize water usage. For a mobile car wash, carrying water may be a challenge, which means that Mr. Steam can exploit these technologies to help gain a further edge in the market.
Threats
The biggest threat to Mr. Steam is the presence of well-established brands that have already amassed massive numbers of customers. The ability of such companies to retain loyal customers means that Mr. Steam will have to deploy clever marketing strategies to attract consumers to its service. Legal frameworks for the country are also a major threat, especially at a time when the country is keenly pursuing sustainability. Mr. Steam needs to comply with various regulations, especially those that revolve around such aspects as water and energy usage.
Competition
The competition for the car wash business can be described as significantly high due to the large number of businesses offering this service. In many cases, the car wash is a service offered alongside other car care services and can be found even in car maintenance and fueling stations. Therefore, the businesses that offer car wash as an exclusive service may be disadvantaged since some car owners prefer more comprehensive packages. It is also important to acknowledge that some maintenance services are periodical, while a car may need more regular cleaning. In this case, car wash businesses can have a gap to exploit and make significant profits. The level of competition depends on the location where a business is set. For example, those businesses in major cities can enjoy a larger market. Such prospects attract more firms, which also significantly raises the level of competition. Those in remote areas or smaller urban centers can have fewer businesses and also a smaller market size to serve. However, the fact remains that car washing is a lucrative business in the KSA, which attracts many firms into the market.
It is important to narrow down the market served by Mr. Steam to help paint a clearer picture of the competition. It has been established that Mr. Steam will follow the recent trends and establish an online startup with an additional mobile car wash kit. In this case, the key competitors are those online businesses that have already established themselves. The examples mentioned earlier, including Car Spa, Morni, and Car Hub are the main competitors. Mr. Steam will lose a competitive edge if the services offered are inferior to these brands. Additionally, the service package will also be critical because a single service may not be adequate to offer a real threat to the market. Despite stem car wash, Mr. Steam can include other competitive services as described in the following section.
Service Offerings
The key service offered is a steam car wash, which simply means the use of modern steam technologies and equipment for the car wash business. Cleaning methods are often diverse; customers can select either one of them or just go with what the car wash service provider offers. The emergence of steam car wash means that businesses can market the uniqueness of the method in terms of its benefits compared to other methods. Therefore, the general service package is car cleaning, both interior and exterior.
Car cleaning can be broken down into smaller service packages. For the Steam car wash, these services include interior upholstery cleaning, dashboard cleaning, exterior cleaning, wheel cleaning, or engine cleaning. The need for this breakdown is that washing cars can be a comprehensive activity that demands attention to all car parts. Different customers may be able to demand specific packages depending on their pockets or the condition of the car. For example, a car that has been offloading could attract dust in both the interior and exterior, including wheels and the engine. On the contrary, a town car may have attracted mild dust on the exterior, which means simple washing will be adequate. All the packages can be priced individually to allow consumers to select a combination of car wash services that suits their needs.
It is also important to emphasize that Mr. Steam will deploy two operational models. These are physical locations or multiple locations where customers can take their cars and a mobile kit that allows the business to reach out to their consumers. The rationale is that smaller packages can be easily offered through mobile services. More complex packages can be provided in more specialized spaces and using specialized equipment.
As mentioned earlier, washing alone will limit the competitiveness of Mr. Steam since other businesses are offering more comprehensive packages. According to KenResearch (2019), there is a strong demand for luxury cars in the KSA, which means that car maintenance services will be desirable. In this case, the service offering should include car detailing, which can be described as a service that seeks to keep a vehicle in good condition. Cosmetic and aesthetic appeals are the key focus for many car detailers as opposed to mechanical, which can be offered by other service providers. In this case, Mr. Steam will offer a full car detailing package, which includes steam washing, waxing, and polishing.
Distribution
The main distribution channel for the business is the website or the online application developed and operated by the company. Mr. Steam will develop both a mobile app and a website where customers can be engaged and marketing activities can be conducted. Additionally, social media accounts have also proven critical for businesses because they provide an interactive platform for communicating with clients. As an online business, it is prudent that Mr. Steam uses all the possible tools to make the business a success. Facebook, WhatsApp, and Twitter are perfect examples of social media sites that have attracted billions of users. In the KSA, Mr. Steam should deploy those sites that have more users to facilitate a wider market outreach. However, it is important to acknowledge that the service itself is inseparable from the provider and the vehicles washed and detailed have to be accessed physically. Therefore, the online distribution channels are only applicable in the sales and marketing context.
A major distribution channel is car wash centers located across all major cities where the markets are wide enough to allow the business to prosper. A few cities in the KSA have populations of over a million people and an almost similar number of cars. The car wash centers can serve as distribution centers where each of them operates several mobile car wash kits. The rationale for this arrangement is that with the mobile kits, many customers would prefer services offered where their cars are parked for the day instead of taking them to the car wash. Only the major detailing services may require customers to take their vehicles to the car wash facilities, where specialized service packages can be offered. Steam car wash operates by a small, technologically advanced module that is easily transportable. As such, using several of them in a single city allows the company to access a large market.
Marketing Strategy
Objective
Mr. Steam’s marketing strategy seeks to make the company the strongest car wash and detailing brand in the KSA. Customer relationship management is the greatest strategic objective for the company to pursue. In this case, the company acknowledges that the best way to keep customers is by offering them the best services in the market and an improved consumer experience. Mr. Steam understands that many people in the KSA own smartphones and have easy access to the internet. Moreover, many people in the KSA already have positive experiences with online shopping, which means that they will readily embrace a new application that allows them to access or request car wash services at the convenience of their homes or offices. The short-term objective is to create an interactive platform that allows the company and the users to interact freely. In the long run, the objective will be to operate an online car wash business that is accompanied by the necessary physical infrastructure to offer customers the best possible experience.
Target Markets
The car wash business targets people and businesses that own vehicles. In this case, it is assumed that both personal and company vehicles will need washing and detailing services. Therefore, the three target markets emerge; personal individually-owned cars, company cars for employee use, and company cars for commercial use. However, there can also be another target market for people with luxury cars who will require more specialized and premium services.
The first target market comprises privately-owned cars for personal use. Millions of people in the KSA own cars, which means they demand car services regularly. It is important to emphasize that this target market comprises ordinary citizens, which excludes the ultra-rich or the millionaires and billionaires in the country. The consumers in this class can be classified as middle-income earners whose disposable incomes are not very high. Considering the social stratification of the KSA population, which also includes the massive number of foreigners living and working in the country, this could be one of the largest markets for Mr. Steam to exploit.
Many businesses own and operate cars for their employees, which creates a unique corporate consumer market for the car wash business. The class of vehicles in this context is those used by the employees to run company errands as opposed to those used in a commercial setting. In this case, Mr. Steam will be marketing its services to the companies and hope to gain lucrative contracts on a long-term basis. Additionally, some companies operate commercial vehicles, most of which are in the transport industry. These firms will also be considered to be a target market that can be exploited.
Lastly, there is an increasing market for luxury cars in the KSA, which means that it can be a lucrative venture to offer services to the rich car owners in the country. However, this market can be considered a premium because of the nature of their cars. The growing size of this market means it cannot be ignored and car wash and maintenance businesses have to find the right service packages for this market. Car detailing can be considered the best approach to this market because the focus will mostly be cosmetic and aesthetic.
Positioning
Mr. Steam will position itself as an all-around car wash business that handles all clients regardless of their classification. Therefore, the company will need to develop service packages designed for the different target markets. The online car wash business is an emerging concept in the country, which means that Mr. Steam can also position itself as a pioneer and market leader in the online car wash market. In a positioning map, the company will position itself as a high quality balanced with affordable prices. For the premium market, Mr. Steam will be positioned as a high-quality service provider charging premium prices. The key idea is that it is too early for Mr. Steam to consider specializing in any of the target markets without a better understanding of the market.
Strategies
Service
The service represents the main product offered to customers. Mr. Steam will be a unique online business that connects users with the company. The steam car wash is the main service offering, which should be augmented with additional packages to attract more consumers. Regardless of the market served, the service will comprise internal and external cleaning, including engine, upholstery, and dashboard. For the premium market, polishing, and even shampooing cars are added as part of the service package. Furthermore, the services will be offered through a mobile car wash easily transportable through town and to all the customers. The online services will focus majorly on engaging the customers, driving demand and sales, and responding to consumer queries.
Pricing
The pricing will be flexible due to the dynamic nature of the car wash market. Different target markets have varied features, which means that each will be offered different packages with different prices. However, the basic idea is that all markets other than the premium will be offered affordable prices. The pricing strategies can be selected based on what works best for the market. Due to the presence of many online and mobile car wash businesses, Mr. Steam can use penetration pricing, which should allow the firm to get a foothold. The prices can be lower than the competition, especially if the dominant businesses are offering premium prices. Most importantly, penetration pricing will help the firm build a pool of loyal customers who can keep it running in the long term.
The premium market can be approached differently because the service packages will be expensive. In this case, cost-plus pricing allows the business to cover all the operational costs and add a profit margin to the costs. While this approach may not result in loyal customers, it will help Mr. Steam access an exclusive and potentially lucrative market. Becoming a cost leader in the industry can be helpful because affordability may be subject to the overall operational costs.
Distribution
A key characteristic of services is that they are inseparable from the service prover. In this case, the car wash business means that the employees of the company have to physically clear the vehicle and conduct all other activities on the cars. However, the question of distribution can be addressed by considering the actual location where the services are offered. Mr. Steam will be situated across all major cities where the market is large and the customers can easily access the internet. It is also assumed that with millions now owning and operating smartphones keeping in touch with the urban population is easier. Across each of these cities, a car wash service center is developed to which several mobile units are attached. Simpler cleaning tasks can be done door-to-door, which means that cars can be cleaned wherever the customers have parked their cars.
Marketing Communication
As an online car wash business, marketing communications will be done through online platforms. As mentioned earlier, the mobile app will be interactive, which means that the users can easily communicate with the service provider. Notifications and adverts can be placed on the application to remind users of existing products or when new ones emerge. Additionally, the internet and social media are critical platforms for marketing communications because they reach a wider market.
References
Aldalbahi, M., & Walker, G. (2016). Riyadh transportation history and developing vision. Procedia – Social and Behavioral Sciences, 216, 163-171.
KenResearch. (2019). Saudi Arabia Online Car Wash Market GTV is majorly driven by the rising need for enhanced car wash and car care products, solutions and services. KenResearch.
Statista Research Department. (2021). Saudi Arabia: Do you have access to a car? Statista.