Dog Grooming Business Viability Case Study
The good news in this analysis is that there is only one other dog grooming business currently in Chipped; however if the travel radius Ogle cites is true, then our competitive rivalry is significant. In addition to there being quite a few competitors already operating locally in this industry, one of them, Petcock, is a dominant player in the industry according to Fishbowls. Now that we understand the existing amount of competition, we must also consider how likely it is that additional competitors will enter the market in the future.
According to the attest Fishbowls industry report, “barriers to entry are low since there are no formal industry licensing or training requirements, and the costs of establishing an at home or mobile service are relatively low as well” (Competitive Landscape). In addition to the ease of entrance to this market, we also learned from Fishbowls that “companies are still entering the industry due to rising demand” (Competitive Landscape). It appears we could enter this market relatively easily; the question to ask ourselves now is if we could secure enough of the available market to have a successful business.
Securing market share in an industry with high competition is always challenging, but may be even more challenging in the pet grooming industry. We not only need to worry about other businesses offering the same service, but we also need to consider if there are any substitute products available which would impact our ability to be successful. In the pet grooming industry, the substitute products or services are the consumer’s ability to groom their own pets at home.
We must consider whether or not there is a rise in consumer’s appetite to groom their own pets or if the demand for professional grooming services is increasing. Although the threat of substitutes does exist, we are confident this threat would not have a dramatic impact on our ability to be successful as the industry revenue is “forecasted to grow at an annual average rate of 5. 4%” (Fishbowls, Industry at a Glance). Finally, we must also consider how much bargaining power the supplier and customers have within this industry.
Dog owners are generally not driven to a particular grooming establishment solely based on price. Most dog owners feel their dogs are a part of the family, Owners are more likely to consider factors such as how well their dog is reared while being groomed, how good their dog looks after grooming and how clean is the establishment. This leads us to the conclusion that we would not likely face significant competitive challenges based on price. Suppliers do not hold significant perform dog grooming and there are many types of these products available to groomers.
Recommendation for Strategic Change The target market we are pursuing is the portion of those dog owners who follow the recommendation of grooming their dog every 2 to 6 weeks. These potential customers realize the value of having their dogs professionally groomed. By following the recommendation outlined this dog grooming company will be profitable as well as a sustainable. We would first recommend that the number of staff be reduced until the business is well established and the customer base is increased. After reviewing the financial and taking the start-up cost into consideration we are recommending that the staff is reduced by 2.
This is an annual cost savings of $50,000. 00 as the average salary of a groomer in the Chipped area is $25,000. 00. As the business begins to grow the staff members can be increase as the need arises. We have carefully analyzed the market and have determined that there is a potential to gain a customer base of at least 270. We are taking into consideration that not every one of these potential customers will be there on day one of the business opening. Our analysis indicates there are several competitors which are already established in this area.
The research shows that people are willing to drive at minis too groomer. This establishment would be the twelfth one to enter the market therefore we are recommending that you offer services other than grooming such as pet sitting and specialty cuts. We are also recommending selling doggy treats and supplies. This will give your company an additional reason for customers to visit thereby increasing your customer base and revenue. We are also suggesting that you create a mobile division to service a greater area of the dog population. This will assist the name recognition.