Industry and Target Market Feasibility
The paper focuses on the feasibility of the childcare industry and the opportunities available to penetrate this market. The growth in the population of children has caused a surge in the childcare industry. Entrepreneurs are looking to exploit this market by analysing the competitor’s costs, customer satisfaction levels, and the services they offer. Evaluating the rivals ensures that the upcoming firm’s plan is effective enough to work in the market. The marketing aspect of the business idea follows. Here, the entrepreneur defines their product clearly outlining the advantage it has over others in the industry. The location of the business is another vital factor as it affects consumers access to the product. Competitors and the economic climate influence the price of the service provided. Lastly, there is the advertising of the service to the public.
Abstract
Industry Analysis
The child care industry offers educational and supervisory programs for young children. The American economy is witnessing a growth in the number of women and single parents in the workforce which is creating a demand for quality childcare. Currently, there are about 13% of families that fit the traditional spectrum of the father being the breadwinner while the mother takes care of the household (Workman & Jessen-Howard, 2018). There are various forms of childcare services but the focus is on the formal sector. It is a booming industry that is made better by the ever-rising number of children in society. According to Workman and Jessen-Howard (2018) parents that use centre-based care face the brunt of expenses as it costs 760$ a month for a preschool child, 910$ for toddler care and 1200 $ for infant care.
The younger the child is the more the expense as it includes diapers and infant milk formulas. It is an industry that attracts a host of other professions. Even with the high costs, the demand is high and the sector could generate up to 50 billion dollars a year in revenue for the country (Workman & Jessen-Howard, 2018). If exploited well it has the potential to increase the number of job opportunities by thousands. Teachers, nurses, child entertainers, hairstylists, shop owners all benefit from child care services as they provide a majority of the services on behalf of the parents.
Impact of the Growth of the Industry on Complementary Products
The industry has observed a decline in the sales of traditional complementary products that were expected to rise with the increase in demand for child care. The disposable diaper manufacturers are having a difficult time staying afloat with the popularization of cloth diapers. The cloth diapers are cost-effective as they are re-usable they only need some washing after the child soils them. For any parent looking for a way to reduce their child care expenses, this is the way to go. Although the cloth diapers do not have a huge audience there is the risk that it will increase especially with world shifting into a more environment-oriented way of living. Since these types of diapers are re-usable it reduces the impact they have on the environment.
The second product that is feeling the effects of the growth in the child care sector is the infant formula manufacturing sector. The sector has gone through several hits especially with the Center for Disease Control and Prevention center (CDC) urging mothers to exclusive breastfeed their newborns exclusively for 9 months. Nevertheless, the industry has managed to withstand through all these due to the childcare services. These firms take care of children as young as a few months also, not all mothers can express milk in sufficient quantities to keep their toddlers full as they have too many responsibilities. As such the growth of the child care sector ensures that the infant formula production grows as well.
Target Market
The firm takes care of children’s needs on behalf of their working parents. They help the children learn how to walk, talk, cut their hair, feed them to provide the guardian’s time to perform other activities. Therefore, the target market for this business is parents. Parents of infants up to 5-year-olds in employment require such services they make up the largest group of consumers to this service. They seek such services so that they can maintain their position in the workforce which ensures that they can provide for all their families basic needs.
Single parents are also part of the potential consumers. As opposed to family units with both parents single ones have bigger challenges in maintaining a balance between work and family. Most often than not have a small support system as such they cannot depend entirely on friends or family for alternative child care services. Having a reliable service provider that is close to both their work and home whose costs are affordable gives the parent a much-needed break. At times a single parent can fall sick or get an emergency and have no one to entrust with the care of their young ones this program helps to bridge this gap.
Competition Analysis
Competitor analysis helps the entrepreneur to form a marketing plan as they evaluate their rivals strengths, weaknesses, threats, and opportunity as defensive and offensive business strategies. The probe of competitors gives the entrepreneur an advantage when they set up shop in the industry. The child care provider with the largest consumer base and revenue is KinderCare Learning Centers they are a for-profit organization that offers services for children between six weeks and 12 years. The wide age range spreads its consumer base further when compared to other competitors in the industry. Social media is providing a platform where businesses can analyze their competitors it gives information on support issues and consumer engagement. However, for an entrepreneur going through their rival’s social media accounts does not provide conclusive information. The costs of having a child in a KinderCare learning facility is approximately 350$ a week not counting the registration fee and the135$ for before or after school care services (Yale University, 2020). Most middle-class parents in America will find these figures to be too high hence, they are the audience to target with the new child care service plan. An analysis of the consumers shows that a majority find satisfaction with the care provided to their children as the environment is safe and conducive for learning and growth. The same does not apply to all parents as social media reviews by Better Business Review (2020) depicts a string of negative comments on KinderCare Learning Centers; discriminatory acts and lack of proper care to some children. Before embarking on the business plan one must ensure that their policies protect children from discriminatory acts. The weaknesses or failures of this business are a learning opportunity for the entrepreneur. It also provides an opportunity to swoop in and convince the disgruntled consumers that your firm is the better choice for their young ones. The childcare center has over 1500 locations in the United States which covers most of the states that make it a very influential competitor. They also offer attractive discounts for the young ones of their employees which ensures that the staff remain dedicated to the success of the programs. Additionally, if a parent enrolls more than one child then the eldest is given a 5% discount and priority is given to those with siblings in the learning centers. Finally, after analyzing the competitors one needs to come up with mock scenarios to break the barriers that they may face it helps to stimulate the entrepreneur’s mind.
Marketing
It involves the identification of consumer needs and finding a way to provide for them. Product, place, price and promotion are the four pillars that any marketing strategy should have to increase their potential of effectiveness. Implementing the four P’s will ensure that consumers have information on the benefits of the product or service which in turn increases the sales. An entrepreneur should note that there is some difference between marketing a service-oriented business and a product-oriented one. In the case of child care services, the difference is that neither the young one nor their parent can return the service if they feel dissatisfied. The second difference is that its services are intangible thus one cannot compare the quality of such services. The differences point out that when marketing a service-oriented business the strategy has to be more in-depth to eliminate all the consumers’ worries over dissatisfaction.
Product
A product is anything that a business gives to a consumer that satisfies their needs or wants. In this case, the product is the child care service. It is the most essential aspect of the marketing mix because without it the firm cannot exist. It has to be one that satisfies a large consumer base. It also has to have some uniqueness when compared to other products or services of the same nature. To market the child care service in a way that sets one out from the competitors one has to advertise on the benefits acquired from them utilizing the service (Kildare County Childcare Committee, 2020). It offers 24-hour services at reduced costs that are affordable to a significant number of middle-class parents who are still grappling with other expenses. The business will have petting zoos and outdoor activities incorporated into the education curriculum as proposed by the state in which the center is located. The product should also cater to parents as they are the main source of business having malls and stores in the premises where they can shop after work as they pick up their young ones is a desirable feature to use. All these unique factors of the product will attract consumers to try and use the service to determine the level of satisfaction.
Place
In this industry, the location can make or break a business. For a product to be of convenience to the client it has to be easily accessible (Kildare County Childcare Committee, 2020). Unlike most sectors in the business world today social media does not influence consumers if the location does not expose the service to its customer base. The target market for this business is working parents who are looking for affordable child care services if the location of the firm is out of their way then the consumer’s expenses increase. This does not work in favor of either party as the business loses the consumer at the same time the consumers forgo the services no matter how cheap they are as what they should save will be taken up by the travelling costs. Therefore, to discern the best location one has to first identify the geographical location of the consumers, as well as their places of work. The placement of competitors businesses also plays an important role as the business idea is new and being in the same location might negatively impact the consumer base. This is because when it comes to child care parents tend to go for the familiar. A site in a new location further from rivals is best so that one has the opportunity to entice their customers and form a lasting relationship with them which will facilitate growth in the future.
Price
Here there is the determination of the value of the service in relation to the location, target audience, competitors, and economic status. The price has to generate returns and at the same time, it should not put a huge dent on the consumer’s pocket. After all the business hopes to gain a competitive advantage by being cost-effective. Therefore, pricing is both an art and a science that requires careful analyzation to avoid damaging the product’s brand.
Promotion
It is essential as it helps consumers to know about your brand. Organizing and boosting sales through advertising, sales promotion and public relations all constitute the promotion process Kildare County Childcare Committee (2020). The business world today utilizes technology in their day to day operations. In this industry, it works best as a site for promoting the product. When advertising through the various channels it is essential to include; the childcare service name and its logo, the age bracket of the children the firm caters too, the prices, the various programs/activities offered and the firm’s contact information. Advertisements are expensive and they limit them to basic information when funds are scarce, however, it is better to include the mission, vision, a culture the firms wish to develop, and most importantly the morals that guide their activities. The aesthetic look of the business, the attitude of employees, service delivery, and their qualifications are all factors that play a vital part in the promotion. The business needs to sell itself by providing adequate and consumer-centred services. Entrepreneurs understand the need for networking in the course of their lives. `Networking provides mediums for business to market themselves better giving it a bigger audience.
References
Better Business Review. (2020). KinderCare Learning Centers LLC. https://www.bbb.org/us/or/portland/profile/child-care-centers/kindercare-learning-centers-llc-1296-65000100/customer-reviews.
Kildare County Childcare Committee. (2020). Advertising & marketing. https://www.kccc.ie/Business-Development/Setting-Up-a-Quality-Childcare-Service/Advertising-Marketing.
Workman, S., Jessen-Howard, S. (2018). Understanding the True Cost of Child Care for Infants and Toddlers. Center for American Progress. https://www.americanprogress.org/issues/early-childhood/reports/2018/11/15/460970/understanding-true-cost-child-care-infants-toddlers/.
Yale University. (2020). KinderCare learning center – New haven. https://your.yale.edu/kindercare-learning-center-new-haven.\