This project requires me to produce an imaginary business. To do this I must research into all aspects of a business, using books, people, and computer resources.
Introduction
This project requires me to produce an imaginary business. To do this I must research into all aspects of a business, using books, people, and computer resources. To help me do this I will create action plans that I will evaluate and redesign as I proceed during the project. The reason for the action plan is to help keep track and organise what I am doing, it also shows points that I must cover for my business to be successful. In this project there are certain parts of the project that can be decided before I created a action plan these are:
What will I sell- I will sell electrical goods like televisions, videos, and hi-fis
My shop name- I will call my shop "RPES" (Raj Popat's Electrical Goods Store.)
After a lot of thinking I have decided to place my shop in Wood Green shopping Centre. The cost of rent in the particular shop I have decided on is £36,000 per annum.
From what I already know I have decided to make my business a sole trader operation, as these are the easiest to set up. Also in a sole trader business I will get to keep all of the profits. Also as I am a sole trader business there are fewer regulations that I have to comply with. As a sole trader I do not have to make my business accounts available to any one except the Inland Revenue. This is useful as it saves me time, and it keeps my business dealings secret to the public.
What is the aim of " RPES "
The aim of " RPES " is primarily to be able to compete with other companies in the local area. Also to break even, but provide a high quality service to the public. Then it is to make a profit. For the first year the aim of my business will also be to become a well-established business, and to remain open (not be forced to close due to lack of business).
What is a market?
A market is where the sellers meet the buyers to exchange money for a product of service. The term "market" is actually used to describe the people whom the product is sold to. This does not always involve face-to-face selling; it could sell over the television. For a shop there can be different markets, e.g. domestic, and business.
My market- my market is going to electrical goods sold to domestic customers.
Product-oriented vs. Market-oriented business
a product-oriented business is when the product is produced first, then a market is found. Business rarely uses this type of marketing. Companies that use the type of marketing, usually make basic products needed for life. In some cases though a product must be made first before a person realises that they need it. This is normally the case when new technology is involved.
A market-oriented business is when a business will find what product people want and then sell it to them. This normally involves market research. This is where the business will identify what the customer wants. These types of business normally survive longer, as they are able to adapt to what the customer wants.
My business strategy- I will have a product-oriented market, as I will be selling new technology that is constantly changing. This is because people do not normally realise they need a new television, videos, or Hi-fi until the product is made. This method has a lot of risk involved, as there is no guarantee that a person will want my product.
What laws must I comply with? - The laws that effect my business and I must comply with are:
968 Trade description act- This stops a business from not supplying the right information about a product on purpose
974 Consumer credit act- This means that when people take up a credit agreement they get a copy of it. This is so that they can see how much they have borrowed, over how long and how much interest they will pay.
979 Sales of goods act- this is a very important law as it makes it does not allow:
The selling of faulty, dangerous products
the selling of products that are fit to use for the required task. This means selling a wood glue to a person who wants to glue plastic
The selling if products that do not do what they are clamed to be able top do
987 Consumer protect act- This stops people from using misleading pricing claims, e.g. saying a product is at a reduced price when it is at the same. It also makes the supplier responsible if faulty goods are sold then the supplier can be sued for the cost of the damage caused.
These are the laws that I must comply with when selling goods but there are also other laws. These laws ate here to protect the employees from unfair treatment at work. Employees are protected from:
Discrimination
Poor working conditions
Wage protection
Discrimination
the laws prevent there from being unfair discrimination at work. They can not discriminate on the basis of:
Disability
Age
Religion
Race
Gender
The laws that were passed are:
975 Sex discrimination act- This stops discrimination on the basis of gender, or marital status.
976 Race relation's act- thus stops discrimination because of race.
944 Disabled persons employment act- this applies to large firms over a certain size, this act means that 3% of their work force are registered as disable.
Working conditions
their laws that stop the miss treatment of the workers. The makes it the law for a worker to have:
Breaks when working very long shifts
Provide safe, and clean working conditions
Provide a workplace that is of a reasonable temperature
Provide cleaning facilities and toilets
Protection from dangerous machines
Wage protection
This gives the worker the right to be paid for the work that they do. This also gives the employee the chance to a contract of employment. This contract sates:
Job
Wage rate to be paid
when they will be paid
any deductions that will be made
that the minimum wage is paid £4.10 as of 1st October 2001
Marketing
What is marketing
Marketing is not advertising, it is actually finding out who wants to buy your product. Marketing is finding out what a customer wants, and then giving them that. The goal of marketing is to predict what the customer wants in the future, by looking a past trends, and carry out market research. The goals of marketing are:
? Increase sales
? Increase market share
? Improve image of business
what is the point of market research?
A business must find out how many people there are who will buy its product. This is where market research is used, market research is used to find out:
* What parts of the product do people like or dislike
* If people want the product
* How much would they pay
* Who, and where will they buy the product
* Competition
* What promotions to use
What do I want to find out- I want to find out:
* Are people thinking of buying electrical goods
* competition in the area
* What prices
* Who will buy the product
The information can be gathered by two methods:
Primary research
This is where the data is collected for a specific purpose, this involves going out and carrying out questionnaires, and interviews. This method of research can be expensive and time consuming. There are different primary research methods these are:
* Questionnaires
* Interviews
* Observations
* Experiments
Each method of primary research has advantages, and disadvantages these are:
Questionnaires
These are the most common method of primary research as it is the easiest.
Advantages
* Detailed information can be gathered
* Customers options can be obtained
Disadvantages
* To carry out a questionnaire it will take time, then it will also take time to analyse the results obtained.
* The questions must be well thought out, other wise the results will be misleading
Interviews
This is when a person asks questions to a person.
Advantages
* Questions can be explained if the interviewee does not understand the question
* Very detailed information can be gathered
Disadvantages
* Interviews are very time consuming
* The interviewer may lead the interviewees answer to the questions
Observations
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* To carry out a questionnaire it will take time, then it will also take time to analyse the results obtained.
* The questions must be well thought out, other wise the results will be misleading
Interviews
This is when a person asks questions to a person.
Advantages
* Questions can be explained if the interviewee does not understand the question
* Very detailed information can be gathered
Disadvantages
* Interviews are very time consuming
* The interviewer may lead the interviewees answer to the questions
Observations
Observations can be in many forms these are:
Recording, a example of this is monitoring how many papers you buy
Watching, a example of this could be you watch how many people ride a bike, past a certain point
Audits, a example of this is counting how much stock there is.
Advantages
* Does not cost much to gather information
Disadvantages
* the information is not very detailed
Experiments
the best example of this type of research is when a supermarket gives out free samples of a product.
Advantages
* This is very easy to set up, and you get a customers reaction quickly
Disadvantages
* People may lie so not to hurt your feelings
* You only get the opinions of a small number of people
Secondary research
This is research that has been gathered for a other reason, and is available for anyone to use. This type of research comes in two forms external and internal.
Internal sources
this is information that has already been collected by your business, and available for other departments to use. As the information has already been collected, it is easy and cheap to use.
External sources
this is when the information is gathered outside the business. There are many sources, but they vary according to what you are researching. This data has not been gathered for any specific purpose, so it is very general.
External sources are:
* Trade associations
* Specialist magazines
* Reports
* Newspapers
* Governments reports
* Media reports
this method of research is very cheap, but as it does have limitations is not always the best.
Secondary data Vs. Secondary data
what is the difference?
Primary data is data that is collected just for that specific purpose. While secondary data is data that was collected for another purpose.
Which is better?
Primary data is better as it normally more accurate, and as it has been carried out just for your purpose it will have more specific information. Also the information that is collected is of a neutral viewpoint.
Primary data or Secondary data- I will use primary data in my project as it will be more accurate, and will be will be of a neutral viewpoint.
Random or quota sampling?
Random sampling
this is when every one in the country has an equal chance of being picked. People are picked at random often by computer to complete a survey. The advantage of this is that very one has an equal chance of being picked, but there is there a chance that some of the people that are picked do not use your product or service.
Quota sampling- this is where peopled picked to do a survey because they meet certain characteristics. These characteristics can be:
* Age
* gender
* Ethnicity
* Where you live
This is useful as the person characteristics find out what a certain group thinks, a bout any topic.
My method of research- the method that I will use is random sampling in the local area. This is so that I can see what a wide range of people think and want in the local area. This is so that I get data that is relevant to me. I will use primary research, in the form of questionnaires. This is because the primary research will be accurate, and more relevant, as it is being carried out for a specific purpose. The reason that I am using a questionnaire is that it allows gathering very detailed information. There some limitations to my research methods, the major one being that it will take a long amount of time.
This is very important as this affects most aspects of my business. When I say, "what market aims I aiming for?" I mean am I aiming for the ultra cheap, low end of the market or the upper end of the market. To decide I will carry out research into what markets are not catered for by the large companies, I will then cater for this market. To do this I carry out questioners or use research already carried out by an other company. I will group the people on there response to some questionnaire in social grades. This is because this will help to create an image of the average wage, and class in the local area. Then I will cater for the group that the majority of people fit into.
Market segmentation
Market segmentation is a method of dividing up the market, into smaller subgroups. An example is that products like drinks may appeal to one group like young people, while another may appeal to older men. This means that the market will break up by age, and gender. This is very important when advertising, as different adverts will apple to different people in each group.
The most common methods of market segmentation are:
Life style
A married person with a kid who has the same wage, as a single person will buy different products. This means that the advertising for some products will be aimed at the single person. While some will be aimed at the married couple.
Age
People of different age buy different products. This means that an old person will buy different products to a young person.
Gender
Males only bring certain products, and females only bring some, so the advertising targets that group. Sometimes both groups bring the products, but the advertising is just aimed at one.
Region
People in different areas of the country will buy different products. A person in a wet part of the country will buy clothes for wet weather, while in a dry part people wont. This also applies to when a product is exported.
Income
These are created depending on a person's income. The highest in the groups are the managers while the lowest are the unemployed. Products that are to aimed art the highest income group will have a high price, while a product aimed the lowest will have a low price. This also means that the advertising campaign will be different for each group.
Use of product
a product can be used by domestic home users or business. This will influence the way the product is sold and advertised. If selling to a business then the company may go direct to the business and sell face to face. While if selling to the domestic, market they may just sell over the phone. A product that is aimed at a business user may not be advertised on television, unlike a domestic. Instead brochures may be used. This means that the same product could have to different advertising campaigns.
Social grades
what are social grades?
This is another method of segmenting the market by class. The groups are created on what the head of each home does for a living. The social grades are:
Social group
Job description
A
Senior management
B
Lower management
C1
Supervisor role, administration
C2
skilled manual
D
Unskilled manual
E
Casual labours
The product
This is important as it must have the right features to sell, good looking, hard wearing. In a small business it is easy for the business to design the product for the customer. The small business can also order special parts for the design. Customer service for a small company is normally better as they can stay open longer, and there after sales support is better. It will be easier for a customer to take a piece of equipment to a local shop, then send it back to a large company. During the products life it will have many changes to improve it, this is the products life cycle. During a products life cycle the profit and sales of the product are linked, so if sales fall so does profit.
There are many ways of putting the life back into a product:
Changing, or improving the product- This could mean that the company introduces new features, designs, or models.
Altering distribution patterns- sell your products in a more attractive way, e.g. redesign your shops or introduce catalogue or Internet shopping.
Change prices- This can make the product more popular if the price is lowered.
Promotional campaigns- You can revamp a product by adverts, that say but on get one free, or free trails.
Products, brands, and packaging
If your product does not have the benefits that a customer wants the there is no point in spending money on adverts.
Product benefits
These are the benefits that your customer wants when buying your product. This means things like on a hot day you buy a cold drink this benefits you as you cool down. Examples of benefits are:
* Convenience
* Accessibility
* After sales support
* Reliability
* Comfort and easy use
* Accountability, so if the product goes wrong then you there is after sales support
* Good staff
* Good designed and looking packing
* Peace of mind, as you know that the company is trust worthy
The more benefits that you can provided the higher the price you could be sell your product for, competition is about creating benefits.
My Benefits- To see what benefits a customer would want from my product I will carry out a survey to see what benefits are important to a person. I will only as people in my target group with a wage of £15000.
Aim
The aim of the questionnaire is to see what benefits a customer would want form local electrical shop.
Questions
) When buying from a shop, what is important to you? (Tick most important one only)
Shop has a good reputation
Good after sales service
Home delivery
Home installation
Convenience
Extended guarantee
Other 20
Never undersold guarantee
2) Would pay extra for these services?
Yes
No
3) Are the benefits available more important then Price?
Yes
No
4) Which of these would pay extra for? (Tick most important one only)
Home delivery
Home installation
Extended guarantee
Other
None
Conclusion
My conclusion is that it is that it is very important to have benefits that help to sell your product. Also that people are willing to pay extra for some these extra services. I also found that people were influenced by what benefits that they can get from other stores.
Other research
I also used the Internet to research into the benefits that are offered by the major retail outlets and found that:
Most shops charge for:
* Extended warranty
* Home delivery and installation
Most shops for free offer:
* Never undersold guarantee
* Good after sales service
* Convenience
* Customer credit
Also I spoke to a owner of a similar shop who said that I should offer as many benefit for free as possible, as I will most likely sell more thus covering the cost.
My benefits- The benefits that my customer will get as a result of my survey are:
Benefits that they will receive for free;
* A shop that has a good reputation
* Good after sales service
* Convenience
* Extended guarantee
* Never undersold guarantee
* Customer credit
*
Benefits that my customers will have to pay a small fee for are:
* Home delivery
* Home instillation
* Customer credit (The money is made on the interest)
Evaluation
The benefits that I am offering are ones that are already offered by the local competition. This is because not one store offers all of them and my survey showed which ones where the most important. The reason that I will not be offering interest free credit is that this would loose me a lot of money. Instead I will let the credit be taken of by a third party, but hopefully the opportunity of credit would bring in extra sales.
Promotional Strategies.
Each and every product must have good strong brand that makes it recognisable to people. A very strong brand is Coke a Cola brand, as the colours, shape of cans, and lettering tell the buyer what the product is. The characteristic of the brand comes from the products physical features of the product. This means the taste and the shape of the product. These are created by the manufacture through adverts and packaging. People talk the products consistency the quality, but its design, and adverting campaign.
Is image Important?
The image of the product is the way that the public see you product. Your product could have a negative or positive image, this depends on how the product is advertised and presented.
My Image- The image of my product will be taken care of by the manufacture, but I will make sure that my store is a sort of brand. This is would help people to remember my shop. I plan to create my image by a good advertising campaign, and by offering a good service.
How packaging effects the product?
Packaging is the way that the product is presented to the public, the packaging can give benefits:
* Attractive
* Strong for transport
* Can be dismantled for storage
* Or is easy to use
There can be problems with packaging, it can cause the following problems:
* Increase the production cost
* Make the product bigger and heavier so it costs more to transport
* The more packaging that you have, the more waste you will produce
This means that firms have to think very hard about there packaging, as they must considered the advantages and disadvantages of there packaging. To help decide what type of packaging I will used I carried out research into existing packaging. I found that current packaging was bulky.
My packaging: My packaging will be what the goods are supplied in by the manufacture. This is because they will have spent lots of time and effort on designing the best packaging. For accessories I will supply bags that carry my logo and shop names along with other information. This would be: opening times, services available, and special offers.
What is the aim of advertising?
The aims of advertising are:
* Inform people about the product
* Create a image
* Increase sales
* Compete with other shops
* Introduce in products into the market
What is the aim of my advertising- The aims of my advertising will be:
* Increase sales
* Compete with other shops
* Create a image
I do not want my advertising to try and introduce new products into the market, as this is normally done by the manufacture on a national scale. The manufacture will also inform people about the product.
Informative advertising
Currently in the biggest spender on this form of advertising, is the government this advertising is used to pass on information to the public. The passing on of this information is very important in any advert.
Persuasive advertising
The washing power industry spends as much as the government on advertising, there adverts try to persuade the viewer that there products are much better then the compensation. There goal is to attract people to buy there products.
There are different types of pervasive advertising:
* Adverts that show a famous person using the product
* Adverts that compare one product with a other
* Adverts that use sex to sell the product
Public relations
Public relations is the department that that try's to promote the and show the good side of the company to the public.
Advertising agencies
Advertise is a very expensive business, to make sure that the money is well spent they will hire a company to do it right. For a advertising campaign to be successful it must:
* Reach the right audience
* Be attractive and appealing
* Make the money that the audience cost back in sales.
Control over advertising
In a advert you can not put just put anything in it, there are certain rules they are:
There is a code of practice in side the advertising industry that you must obey. The trade description act, which means you can must describe as truthfully to the best of you knowledge.
My method of advertising: I plan to use informative advertising as I want to inform people of the benefits of buying from my shop.
What media's are there for advertising
There are many different types of advertising, each has advantages, and disadvantages these are:
Televisions
This is a very powerful media to use to get your message across this a very useful media. Millions will see the advert that is produced. The time at which your advert is shown effects who see it. If your product is for children then you would show your advert during children's programmes, not adult. You must also take into account the number of people watching, as this will effect the cost. To produce a advert you must take I these things:
How many adverts can you afford, as there would be no point in only being able to run your advert once
When will it be shown
Is the advert its self correct
Advantages
* Reaches the largest number of people
* The adverts can make the product look much nicer, then in print
Disadvantages
* Very expensive
Radio
This method of advertising is very similar as television adverting, but it is cheaper and sound is used instead of visual images. In a radio advert a theme tune is used.
Disadvantages
* People may switch station when the advert comes on
* If there is poor reception then the listener may miss the advert
* There are no radio stations that take adverts that span the whole country
Advantages
* Cheaper then television
* Large audiences can be reached
* This type of advertising is very good for local shops
* The advert can be repeated many times
Newspapers/Magazines
Newspapers are normally produced and bought every day, so people will see your advert daily. Magazines on the other hand are normally produced weekly, or monthly. Newspapers can be aimed at different people, some are aimed at business owners, while others are aimed at very one. A newspaper can be local national, the difference is that a national paper is available all other the country while a local is aimed at the local area. It is easy to see what social groups read a national paper, while this is harder with a local. As magazines are normally aimed at specific groups, the adverts also do the same. This basically means that if your shops sells computer parts, then you advertise in a computer magazine.
Advantages
* A advert in print is normally kept for longer, so it may be seen many times by different people
* Colour printing is now available at a much lower cost
* Coupons can be in the advert so that the person can cut them out
* Easy to reach a target group with magazines
Disadvantages
* Reader most of the time will skip the advert
* You may have to design different adverts for different newspapers, or magazines
* In some newspapers/magazines the advert may be surrounded by others, thus causing the advert to loose its affect
* Magazine adverts cost more then newspapers
* Newspaper adverts are not normally in colour
Posters billboards
These adverts are normally in a permanent place, and they are seen by every one. This means that these are good method of advertising if trying to target a large number of people.
Advantages
* A poster will be visible for a long time
* The posters are normally big, colourful so they grab people attention
* They can placed on buses, trains, and in stations
* Very good to advertise in the local area
* Quite cheap
Disadvantages
* Posters may be ignored by drivers, or pedestrians
* Message must be brief, or it will not work
* Adverts may be damage by vandals
* No detailed information can be placed on the advert
Leaflets
These can be targeted at certain people or area, by only giving the, to people in that area. This means that they are good to target certain groups.
Advantages
* Very good to target a certain group
* Are relatively cheap
* Can include coupons for the reader
* May be kept around for a long time by the reader
Disadvantages
* May not be read.
Cinemas
This type of adverting can be very affective. The film that is being watched will affect the advert, so in a kid's film you would advertise kids toys.
Advantages
* This a good method for a local business to advertise
* The advert will have a big impact, because of the size of the screen and the quality of the sound
* Very good to target a young audience
* Easy to target a audience, by the film
Disadvantages
* People may dislike the fact that they have to wait for you advert before they can watch the film
* Only seen by a limited number of people
Evaluation of advertising
It would be impractical of me to use television as a form of advertising, as I will only have one shop in a local area, and television is not good to advertise in the local area. Also the cost involved in creating the advert, and putting it on television is enormous. This would mean for me to run the advert more then once I would have to cut things for my business like customer benefits, and opening hours. Radio would be a better option but as I only have one shop, it is not a good method to use at this time. This is because the advert will be heard by the whole of London, buy I am only at the moment targeting at the Wood Green area. Local papers are a very good method in my case, but this will depend on the results of questionnaire that I carry out. A magazine is not suitable as they are normally national. A other very good method would be adverting on local transport, as they will be seen by people in the local area. This will also depend on the results of my questionnaire. A mail shoot I think would be a good method as I can target a specific group, and it is very cheap, but this will also depend on my research. Advertising in a local cinema would be a very good method, but I because it only goes to a limited number of people I think it is not that good. Also as young people normally see films, this is a disadvantage as they often have the least money. The method of advertising that I am choosing has little effect on the local area. The only effect that there is that the leaflets that are delivered are just thrown away damaging the environment.
Aim
The aim if this questionnaire is to find out:
Which media most people see/have access to
which adverts do they read them
when they are seen/read
) Which of these media's do you always notice?
Television= 15
Radio = 12
Print = 2
Poster billboards on transport =29
Roadside billboards 30
Cinemas =2
leaflets = 10
2) Do you often read the leaflets that you receive?
Yes = 27
No = 73
3) When do you listen to the radio?
8.01 am -12 PM = 59
2.01 PM - 4 PM = 3
4.01 PM - 8 PM = 2
8.01 PM - 12 PM = 25
2.01 am - 4 am = 1
4.01 am - 8 am = 10
4) What grabs you attention in an advert?
Slogans= 15
Bright colours= 35
Brand names= 29
The shape of the paper the advert comes on= 2
Other= 19
How to advertise, hire, and pay the staff?
Which media to use?
There are many different media's that can be for advertising a job. Newspapers are the most common method of advertising; if you are looking for people to do any job locally then the local paper is best. If you were looking for a senior manager for a national company then you would use a national paper. There are also job centres, or advertising in a local shop window.
How will I advertise for staff- I will advertise in the local job centre, and the in the window of my shop. This is because in a job centre the advert will be seen by a number of people who want the job. I will also use my shop to advertise so that I can attract a person from the local area.
How will I hire my staff?
The most common method of hiring staff is by using interviews. This is where applicants are short listed, and then asked for a interview. After the interview certain applicants are asked back, and the best is selected.
How I will Hire?- The method of hiring that is would use is interviews. This is because this is the simplest, and easiest method. A interview would give me some idea of what the person would be like if they worked in my shop. I would then have the applicant for a trail period to see if they were suitable. If they were then I would hire them.
How to pay my staff?
The rate that I pay my staff will depend on:
length of training, if I have to train the staff for a long time they may have a low wage for some time to pay for the raining
Qualifications, the more qualifications that a person has then it means that you normally pay more.
Type of job, if the work is manual then the pay rate is low, but If the work is non manual then the pay is higher.
Work conditions; if the person is working in very comfortable places then the pay may be higher.
Trade unions, if the worker is part of a trade union then they may sometimes get a higher salary.
Also when deciding on what rate I am going to pay my staff I will have to think about the minimum wage. The minimum wage is £4.10 an hour, which is the lowest I can pay. If I pay a higher rate then my staff my feel more valued. Commission could also be used to add on to the basic, this is would reward the staff when they make a sale.
My payment method- the method of payment that I will use is based on the type of the job. If the person that I hire is qualified to carry out televisions repairs, accountants, or any thing else of use then they will be paid more. I will pay £4.50, and but will not offer commission. This is because people do not like sales men who work on commissions. I will pay my self with what is left from the profits. This means that if I am doing very well then I will have a higher pay.
HOW I AM GOING TO FINANCE MY BUISNESS.
A bank loan is a very common source of eternal finance for a business. The loans is repaid over a certain period of time and interest is paid. The time period can be anything from one year to twenty or more.
How is interest worked out?
Interest must be paid on a loan; this is paid back to the person who lent the money. To figure out the amount of interest that is paid on the loan is worked out by this formula:
Amount borrowed
00 * percentage rate = total interest paid
Nominal rate of interest
This is the rate of interest that is applied to the whole loan from when you take the money to when you pay back the last penny.
Fixed or variable?
The interest that is charged to the loan may be fixed or a variable interest rate. The fixed rate means that it does not change, while the variable can change. The interest rate that is charged depends on:
* The status of the borrower, a small shop may have a higher rate of interest then a large company
* How much money is to be borrowed, and for it will be used for
* The amount of risk that there is, will the borrower be able to repay the loan
* The value of the goods that are used to secure loan (these are taken if the loan is not paid off)
* Bank rate, this interest rate is set by the bank of England, they also set the other interest rates.
Are there any advantages or disadvantages to a bank loan?
A bank loan may be set up quite quickly, in a sole trader business the borrower may have to use there home, as security, and interest must be paid on the loan.
My loan, and how much?- The amount of money that I will £ 40,000. This is because when I talked to the owner of a similar shop they said that I would need that much to fit the shop out, and buy stock. The bank at which I would take the loans out at is with Nat-West. This loan would be taken out over 5 years at a fixed rate of 5.5 % per month. This would work out as:
5 years = 60 months
£40,000 divided by 60 months = £666.67p
£666.67p* 5.5%= 700.00 = my payment to the bank each month.
(I have a low interest rate because this is a business loan.)
My Pricing strategies.
The pricing strategy that I am going to use at "RPES" is going to be skimming. Skimming is good when you bring out a new product, you would be able to start off by charging fairly high prices. Customers who want to be the first to buy the product would have to pay this price as they may feel that they have more status if they have it first.
For example if Sony brings out an exclusive 48 inch, flat screen television, I would be able to sell this television at an exclusive price to wealthy customers. Once a bigger more exclusive television is available on the market, the price of the "old" exclusive television would be lowered, making it more accessible to the "less" wealthier customers.
On the longer run I will need to change my pricing strategy to cost-plus pricing. In an ideal world we would all use cost-plus to set our prices. With this method you simply set prices to cover your fixed and variable costs, and leave enough room for profits.
Unfortunately, most customers don't care about your costs, and would rather get a lower price than see you make a lot of profit. Although you cannot realistically use cost-plus to set prices, you want to make sure that the aggregate prices you charge cover costs and provide for a profit.
If I purchase a television from Sony for £400, and if my business works on the basis of making a 27% return on all the products I sell, I would sell the television for £508. This means that I will add 27% on top of the price I purchase the product for; this will cover all of my costs.
Starting Your Own Business- Provided by HSBC bank.
Business Studies For You- written by David Needham and Robert Dransfield, first published in 1996 by Stanley Thornes.
GCSE Business Studies, The Revision Guide- By Richard Parsons, published by Coordination Group Publications Ltd.
I also used the market research organisation, Mintel; I got all my information from their website: http://www.mintel.co.uk (this redirected me to their main web-site http://sinatra2.mintel.com/sinatra/mintel/d/f/home)
I also received help from my teacher Mrs Heffernan.
