the case

(Exhibit 4). They also have a subscription model where customers can pay 50 per cent of the charges upfront and the remaining 50 per cent at the end of their monthly plan.

For their commercial segment, the pricing was customized based on the ticket size and the add-ons required. For example, the spas wanted their towels and bed sheets to be especially scented, the resorts wanted a special sanitized packaging for their bath and hand towels. The commercial business was generated from seven spas, four hotels and resorts and seven student hostels having 2,700 students.

According to the founders, Financial year 2016-2017 was a very special year as we have completed one full year of our operations of PKC Laundries. Learnt a lot of things and a big thanks to all our vendors, suppliers, customers and especially our team who made us successful.

Costs and operating margin

At PKC, 60 per cent per cent of the revenue collected was the expense incurred for payments to the vendors for processing the clothes. Another 15 per cent was spent on salaries, rents, electricity, website maintenance, internet charges, fuel, vehicle repairs and other similar overheads. A major direct cost in this was that for pickup and delivery calculated at Rs 100 per order amounting to another 10 per cent of expenses. As such all these expenses left PKC Laundries with a gross margin of 15 per cent only (Exhibit 5).

Opportunities and challenges

Laundry business is considered to be one of the best ideas for a start-up owing to its nominal investment, low entry barriers, huge markets and good returns. But it comes up with its own set of challenges. At present, the laundry market is dominated by many offline players; majority of whom are unorganized. The pricing by the unorganized sector is perceived as affordable by the middle class and upper middle class consumers. On the other hand, organized players mainly cater to the need of premium segments and offer only premium services. These price points are not acceptable to the larger masses. Hence, start-ups in the online laundry business are trying to fill this gap by offering comprehensive solutions at affordable prices (Choudhury, 2015).

Challenges faced by PKC Laundries

As the on-line laundry business can be built up with nominal capital and has a huge neighbourhood market, it offers reasonably good returns which makes the business lucrative. Even then, PKC has to sail through a large number of challenges, some of them are as follows:

• The main challenge in the retail segment is to find a customer base that is ready to pay a higher price for convenience and in the commercial segment is to find customers which have high volume business. This is because, though the customer prefers higher quality laundry services and likes to have the laundry delivered to their homes, their willingness to pay extra for it is unlikely. The enormity of this challenge to PKC promoters is reflected in their oft repeated quote Its easy to impress anyone with words but its hard to show them the reality of a high quality good service.
• The business is dependent on aggregating the local vendors, who appear demanding and exploitative at times. Consolidating and attracting the local dhobis to tie-up with the on demand laundry services is a herculean task. Apart from that getting skilled labour is also a major challenge.
• The laundry business requires managing of many processes that cannot be isolated from human intervention and high customer expectations. Hence customizing the services and making them error free is a great challenge.
• Handling the daily pick up and drop is a nightmare in logistics. The most common problems faced daily are heavy traffic, customer not at home during delivery or pick up, insufficient delivery team and time management.

Strategies adopted by PKC

In our two years of operations so far we have adopted many strategies and made many tie ups with various entities like Villas, Gated communities, Spas, Boutiques, Commercial services. Every experience has empowered us and taught us many lessons; some even costly but our motivation has not faltered and now we are coming up with a strategy that is already in place in a new way just like Old wine in a new bottle.

Traditional laundry business is a labour- and capital-intensive business with high expenses of operations and logistics. Hence, investors shy away from investing in this industry and those who had invested also burnt their hands and came out of the business at the earliest. In contrast, PKC Laundries, as an on-line start-up is slowly picking up and making a profit of around Rs 100,000 per month. As of now, the company is exponentially growing without seeking the help of any venture capitalist (VC) and eagerly waiting to launch its business in other states.

PKC which gives utmost importance to quality strives to see a happy customer. PKC believes that to run a successful laundry business, it is important to listen to your customers requests patiently, and act on them quickly as this will ensure the growth of the company (Kumar, 2016). PK says that delivery executives are the face of the company as they are the ones who interact with the clients. The company ensures that these executives are well groomed and attend to their clients needs with utmost care. They make their customers feel like a king. This strategy has helped PKC Laundries to grow organically, owing to the word of mouth marketing.

Growth strategy and concerns for the road ahead

During a review meeting, PK and Chaitanya were discussing the future of their business. Chaitanya suggested scaling up the operations, getting funding through Series-A fund (Series-A fund is given when the new venture starts generating revenue from its business model) which would enhance their technology and also strengthen their back-end operations by asset creation of a fully automated factory with imported machinery and equipment. With detailed calculations, he tried to convince PK of the benefits this decision would bring including growing the business at least ten times the current turnover and a higher gross margin of 25 per cent as against the existing 15 per cent gross margin.

PK however had ideas of his own. He was in a hurry to see the business grow and expressed that funding and setting up a processing plant would require two to three years, and they would lose advantage to other existing start-ups and new competition that was bound to come up. He felt that the way forward was with aggressive marketing and strengthening the existing back-end model of conducting the business. He was not averse to getting some funding but opined that this money should be spent on a marketing campaign and growth into other cities. He argued that rapid growth could be achieved just as Pick My Laundry had done. He stated market acquisition was the only way forward even if profits had to be sacrificed and cited the example of Uber cabs, Flipkart and Amazon as giants who were getting funding solely on the strength of their market size and had yet to turn in profits. To emphasize his point of view PK also suggested that within no time they could be selling their franchises to other budding start-ups and earns additional revenues from that as well.

With no concrete decision taken, the meeting was inconclusive.

Q Discuss the various marketing management issues such as segmenting, targeting and positioning?