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The Analysis of Location Strategy of Domestic Worker Service Business in Thailand

In marketing mix, place or distribution refers to the activities that make the product available to consumers (Kotler, 2005).  For domestic worker business, place also refers to location or where the company is located physically.  Location is important because it affects directly from sales revenue, to indirectly brand image.  The company must pay attention to location carefully and take every little detail into it when crafting an effective location strategy.  This article principledly analyzed the location strategy of domestic worker service business in Thailand.  Considering the location for each and every single domestic worker companies in Thailand, there are three types of companies which are high-end, middle-class, and low-end.  Each type applies different location strategies depending on their purposes and objectives of the business.  Some companies focus on either employers or employees only while some companies try to focus on both at the same time.  The location strategy is hence different because of their purposes.  Additionally, during COVID pandemic while many companies engage in work from home, most domestic worker companies vastly receive impacts from it because this business by nature could not fully perform a work from home scheme due to the process limitations.  However, the companies must learn to adapt for a change because this work online way might be a huge opportunity to the business in the future.   

Importance of Business Location

            One leading Domestic Worker company in Thailand has revealed the fact that setting on the right location definitely has a significant impact on their sales revenue.  During the first three years of business, the company was located in suburb area next to Bangkok.  The company was doing well all along until it needs office expansion due to more employees adding in.  In the beginning of the fourth year, besides the office space expansion, the management also aimed for the company’s growth, so they made a decision to move to a more spacious space rental in the high-trafficked area in Bangkok, and the sales revenue has proven five times higher than before, within the first six months after the moving.  Under the same conditions and relevant factors, thus, the location apparently has a positive impact on sales. 

            In 2018, this company has decided to relocate the head office once again, from a 70-square-meter rental space to a 250-square-meter office building.  The new location is only 1 kilometer away from the previous one, but the sales have performed another 3 times even higher than before, and of course, everything is controlled under the same conditions and factors.  This has shown quite clearly that the location of a business is one of its most important factors for success.  The obvious performance index is sales revenue.  Particularly for small to medium enterprises like Domestic Worker businesses, the importance of the location strategy is important because it impacts whether enough profits will be generated to sustain the business.  The location of a business positions is not only to attract a customer base but also to attract the right sort of talent to make the business a success. A business’s location also helps create a brand and image. (Luther, 2019)

 

Domestic Worker Business Grouped by Locations

            Among countless numbers of Domestic Worker companies ever established and currently operated in Thailand, their locations can be conceptually categorized as per following.

  1. High-end:  Not only recruiting domestic workers but also white-collared positions in the companies.  Located in luxury office building in the heart of Bangkok.  Sizing between 51-100 employees.  Aimed at high-end consumers.
  2. Middle-class:  Proper office building scattered everywhere in Thailand, especially residential areas.  Sizing between 6-50 employees.  Aimed at particular target such as families.  Focused purely on domestic worker and all types of various cleaning services. 
  3. Low-end:  Home-based business with 1-5 employees, fully run by the owners.  Focused on wholesaling targets such as factories, hotels, construction sites, etc.  Positions include domestic workers to general labors working in any businesses.  Location has no specific pattern.  Not lawfully registered in Minister of Labor and Social Security, Thailand.

 

Descriptions

High-end

Middle-class

Low-end

Sizing

51-100 employees

6-50 employees

1-5 employees

Operational license

Yes

Yes

No

Registered company

Yes

Yes

No

Total number of companies in Thailand

60 companies

200 companies

Countless

Number of employers and employees

High

Medium to high

Low

Location

Downtown Bangkok

Residential areas

Randomly everywhere

Target market

Expats living in Thailand

Middle to high Thai families

Small business owners

Service Fee

High

Reasonable

Cheap

Credibility

High

Medium to high

Low

Risky level to customers

Low

Low to medium

High

Table 1:  Domestic Worker Business in Thailand, Grouped by Locations

Source:  Compiled by Author (2021)

 

Customers and Resources Are the Keys

            We all have learned the basic location strategy that the most important determinants of location strategy for every company are basically comprised of customers and resources.  In the world of Domestic Worker recruitment business, customers refer to employers, and resources refer to employees.  However, not all Domestic Worker business in Thailand is focusing on both determinants, this is depending on their business objectives. 

            High-end companies are aiming at high-end customers like corporate clients and expatriates living in Thailand, they tend to focus on employers only due to their high-end image.  They completely neglect the employees because they have effectively engaged technology to help them recruit high-end employees via online system therefore, they do not need the physical location to attract the employees offline. 

            At the other side, low-end companies tend to focus on employees only because of their limited resources such as investment and people.  Their prioritization is to collect many employees in database as many as possible, then wholesale to particular employers such as factories, construction sites, hotels, and so on.  This wholesaling strategy fortunately eliminates the process of attracting general employers and therefore, reduce company costs.  For examples, the companies receive the order of recruiting 100 cleaning maids from one hotel.  The companies then do not need a strategic location to attract general employers. 

            Last but not least, middle-class companies tend to balance the focus well on both employers and employees at the same time, they appear to attract and manage both employers and employees equally.  Their focus is both on appearing to employees as well as attracting to general employers since most middle-class companies tend to serve as many generic industry sectors as possible, no specific sector preference.  Their strategy and resources are also supporting reasons why they focus on both employers and employees. 

 

 

Location Strategies Analysis

 

Type of Companies

Location Strategies

PROs

CONs

High-end

Downtown Bangkok

  • Convenient to commute
  • Near expat zones
  • Far from residential areas
  • Bad traffic

 

Luxury office building

  • Good image
  • Easy to locate
  • Attractive to employers
  • High rental costs
  • Small space.  No place for temporary overnight stay.
  • Awestruck to employees

 

Middle-class

Residential areas

  • Right on target market
  • Easy to locate
  • Easy access for customers
  • Serving only to certain residential zones.
  • Not convenient to commute.

 

Professional office building

  • Good image
  • Easy access to employers
  • Professional and friendly atmosphere at the same time
  • Enough space to provide overnight stays for employees
  • Affordable rental costs
  • Medium image
  • Medium rental costs

Low-end

Everywhere.  No pattern.

  • Close relationship with employers (customers)
  • Difficult to locate

 

Small home office.

  • No rental costs
  • Friendly atmosphere
  • Cheap image
  • Small space.  No temporary overnight stay offered to employees.

Table 2:  Pros and Cons of Domestic Worker companies’ location strategies

Source:  Compiled by Author (2021)

 

What to Consider When Crafting Location Strategies

            To be clear, Domestic Worker recruitment service business is not like any other service business in Thailand.  Actually, this business is a hybrid business between selling products and offering services.  The product it is selling is a domestic worker, and the service it is offering is the replacement.  Customers expect both good workers and good replacements from a company.  The location strategies, therefore, need to cover both aspects effectively.  The location strategy needs to concern on where to recruit good domestic workers as well as where the base is, in order to be able to create good replacements to employers.  In summary, the entrepreneurs need to address on the following issues when they are crafting effective location strategies for their Domestic Worker recruitment service company. 

  1. Physical Location
  2. Appearance and Image
  3. Utilities and Amenities

 

Physical Location

            It is true that physical location is the first priority when any business owner concerns when crafting an effective location strategy.  It is also true that the company definitely targets at well-trafficked area first, when it comes to locating the new location.  Consistent traffic brings company sales revenue and ability to go on with current operations.  On the other hand, the same high-traffic areas may be expensive to locate in. The cost of paying the building’s rent may only add further to existing debt. Business owners will often try to locate a store in a more affordable part of town as a result.  However, the disadvantage of locating in less costly parts of town may include low traffic, sometimes owing to a lack of surrounding amenities that would otherwise help attract business.

            For Domestic Worker recruitment business, it is up to the location strategies whether the company is high-end, middle-class, or low-end.  For examples, if the location strategy is high-end, the location must be based solely on where the employers are.  If the location strategy is low-end, the company must locate the place where there are plenty of employees to recruit.  For the middle-class one, the company must locate the areas where customers (employers) and resources (employees) are in the same place.  By doing so, the company must start with where to locate employers and employees first, then see if any of these areas intersect at any points. 

            Location based on EMPLOYERS:  where the FAMILY is.

  1. Residential areas
  2. Educational zones
  3. Shopping/Community malls
  4. Recreational areas
  5. Hospitals

            Location based on EMPLOYEES:  where the LABOR is.

  1. Industrial areas
  2. Immigration offices
  3. Public transportation hubs
  4. Well known main areas + convenient to commute
  5. Employment offices

 

Appearance and Image

            Besides seeking for the right locations, the appearance and image of the location are also the important part that the company should also address towards the location strategy.  One leading domestic worker company in Thailand who has established for over 15 years and used to be number one in industry has set the location right next to the bus station with the heaviest traffic in residential area of Bangkapi district, Bangkok.  At first, this company was a super star.  Its advantage is obviously the office location which is super convenient for both employers and employees to come visit.  Customers could park right on the road which was only five steps away from the offices.  Workers could locate the company easily since it was right next to the bus stop where they got off the bus and there the company was.  As time goes by, this office building gets aged and shabby.  The traffic gets heavily jammed.  The parking on the road is no longer allowed.  This obsolete appearance of office building gradually brought the company’s image down and down.  The location is not considered convenient for both customers and workers anymore.  Not long, this company is not doing very well as it is used to be, and incredibly getting out of business very soon.

            It is unarguable that, besides the convenient location, appearance and image are crucial for domestic worker companies in Thailand.  Keeping the office tidy and always in good shape from outside in is one effective way to attract both customers and workers.  This is the easiest way to enhance the company a professional image which latterly elevate the company credibility and trust among customers and workers simultaneously.

 

Utilities and Amenities

            The company must consider whether the selected place has well equipped with utility services to run a daily operation, and amenities to offer to customers.  Utilities such as electricity, water, road, internet services, and so on.  Some domestic worker companies in Bangkok are focus firstly on the public transportation such as metro or subway.  Location that is next to public transportation is obviously convenient to commute around.  It is also easy for employers and employees to locate the business in case they need to visit the offices.  Employers prefer to visit the office to see how credible and trustable the company is.  Employees visit the office in order to apply for a job in person and get a professional training before taking a job.  Therefore, the convenient location is one of key location strategies.

            Moreover, all middle-class Domestic Worker companies in Thailand currently offer a job seeker a place to stay overnight, like a temporary hostel.  This is due to the fact that there are quite a lot of cases that employers are not ready to get a worker at the moment, so they paid a reservation fee to reserve this particular domestic worker beforehand.  The company must provide a place for these workers to stay and make sure they will not run away and turn down a job after the reservation has been successfully made by the employers.  These middle-class companies must, thus, consider the location where there is enough space to sleepover for a few days and even prepare all necessary amenities such as soap, shampoo, and even instant noodle for those sleepover workers.  While high-end and low-end companies do not bother to provide a sleepover service for employees, they do not have to concern about the location with enough space for the sleepover at all.  Their only concerns are mainly on the working space, not on other purposes.

            Additionally, other amenities in the surrounding area such as available parking space could be something the business owner consider about locations.  Other utilities such as internet are also one of crucial things for the company.  Only the right location alone could not represent the entire location strategy for the business, the company must integrate all three factors together in order to build the effective location strategy. 

 

Virtual Office, A Threat or An Opportunity?

            After we have been discussing about the right locations in this article for quite a while, however, there comes a time of COVID that influences the business world to change and adapt.  That change is virtual office. 

            Virtual office is basically opposite to physical office.  A virtual office is a company that operates as one unit and has a physical mailing address, but does not exist in one specific location (Kenton, 2020).  While physical office has the actual space where employees can sit in and work at a certain place, virtual office is completely the opposite.  For virtual office, employees are not presented at a certain place, instead they can work from anywhere in the world as long as they can check in with the internet.  Virtual office is basically the office in the internet world. 

            Since the pandemic in early 2020 has begun, a social distancing is necessarily considered.  As well as business sectors, companies are encouraged to employ social distancing by work from home.  Thus, a physical office has been continuously diminished little by little, and virtual office is becoming a major part to support social distancing. 

            Nevertheless, not all companies successfully employ the work from home scheme.  Domestic worker business is one.  Like mentioned earlier, one critical process of domestic worker screening is testing and training professional skills of the workers.  This process cannot be replaced by any other online method.  The testing and training must be held onsite one by one at the physical office.  The employees or domestic workers must be presented at the physical office only.

            On the other hand, the customers or employers and the process of selecting the workers can be done via online system.  As per many domestic worker companies in Thailand have been utilizing social media platform for quite a while nowadays, the employers can log into the company’s database system, and search for the domestic worker that they think perfectly fits their family.  The interview appointment can also be done online via chat function such as VDO call.  Then the final process of payment and contract can also be done online such as an e-signature.  In short, the employers can smoothly perform the entire selecting process online via social media platform, which is widely used nowadays, especially during the time of COVID.  As for customer-wise, there is no problem if the company is utilizing virtual office for their daily operations. 

            At this point, the conclusion has become clear.  Virtual office is not a threat.  Vice versa, it is an opportunity for domestic worker business to explore and take advantage of it.  The company can fully apply it to the entire process of employers such as selecting the worker, the interview, and the payment.  While it is rather difficult to apply virtual office in the part of employees, the company must not stop to explore the use of it.  Especially in the process of testing and training professional working skills of the workers, it would be wonderful if the company can invent the brand-new way of testing and training online, and also be certain that the workers who receive online training from your company will be performing domestic tasks very well at workplace.  This must be treated as a new business opportunity, not a threat.

            To add some thoughts regarding to the digitalization employee-wise, the company could replace the skill testing and training onsite with other effective processes such as online training, online survey questions, VDO clip presenting working skills, etc.  Even better, the marketing communication to manage customer’s expectation of domestic worker skills is another good idea.

 

Conclusion

            This in-depth analysis of location strategy for domestic worker service business companies in Thailand is by far the most completed location analysis of this business in Thailand.  It has provided many insights which are useful and can be applied to real business world.  As per previously mentioned, the location is one of four marketing pillars that every company must carefully consider since it is vital to determine whether the business can survive or not.  Each domestic worker company has different purposes, therefore, and opt to apply different location strategies that best suit its business.  Considered by locations, there are 3 types of domestic worker companies in Thailand: high-end, middle-class, and low-end.  This research has deeply analyzed each type one by one and found out that high-end companies are focusing mainly on employers, low-end companies are focusing on employees, while middle-class companies tend to focus on both equally.  Their location strategies apparently differ from each other due to their focused target.  This research also provided superior suggestions of the key factors the company should be considering when crafting effective location strategies.  Those factors are the right location, appearance and image, and lastly, utilities and amenities.  These key factors are neutral and can be applied to all types of domestic worker companies in Thailand.  Last but not least, this research discussed about virtual offices and work from home scheme which emerge significantly during COVID-19 pandemic.  This might be tough for domestic worker business in Thailand, but we should see it as an opportunity, not a threat.  Employee-wise, it is tough since most employees are preferred to present at the physical office for skill testing and training purposes.  Employer-wise, it is doable since most companies are already handling digital solutions quite effectively nowadays.  If only the companies further develop digitalization in employee-wise processes successfully or better yet specifically find other effective processes to replace the current testing and training at present location, the location of domestic worker business in Thailand will then be no longer needed.  Location strategy of domestic worker business in Thailand in near future could be a revolutionary. 

 

Article written by: Kaniya Nantamontry

References

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