Product
The firm must come up with a product that people will want to buy. It must fulfil some or all of the customers needs or wants.
Price
The price must be one that the customer thinks is good value for money. This is not the same as being cheap.
Promotion
The product must be promoted so that potential customers are aware that it exists.
Place
The product must be available for sale in a place that the customer will find convenient.
Promotion costs money. Banks and other corporations spend millions on promotional activity. But because the shop is only relatively small at the moment, I will probably spend about £6000 on promotion during the business’s first year of trading.
SECTION 1: Objectives
Most businesses have the same main objective. This is to make a profit in order to survive. If a business does not make a profit it may go bankrupt and have to close down. New businesses have survival as their main objective. Here are some of the main business objectives:
- To make a profit.
- To establish market share.
- To give customer satisfaction.
- To gain a good public image.
- To build a customer base.
- To survive (this is usually the most important objective of a brand new business).
Objectives need to be SMART: Specific, Measurable, Achievable, Realistic and Timed.
Maximizing profit is usually regarded as the primary objective of any business in the private sector (a business owned by individuals as opposed to the government, such as hospitals). In the long-run, if a business is functioning well, other objectives may be more important, such as growth or diversification.
Another aim that is considered a main target for a business to achieve its full potential is growth. Many businesses start small and increase in size. As the business increases in size it becomes a more difficult target for other businesses to take over.
As my business is a private sector business, another objective would be maximizing profit and reducing costs.
A mission statement is a description of the overall aims and objectives of a business. They remind staff of their general purpose and are there for everyone to see. Organizations often produce their aims in the form of a mission statement. A mission statement shows what an organization believes and how it wants to act.
For example: Oxfam-working with others to overcome poverty.
My mission statement will be: great products with great prices.
Businesses will have other less important objectives such as:
- Some will try to be the biggest in their market.
- Others will try to provide the highest quality product possible.
- Others may try to limit the environmental damage they cause.
Usually firms will only pursue these other objectives if it will help make a profit in the longer term. Firms might give up some profit for other objectives, but only if they have public spirited owners. Most company owners are ultimately only interested in profit.
Some will not try to make a profit at all. This is either because they are a charity or are in the public sector.
Charities and public sector businesses need to earn enough income to cover their costs. In this case their objective is to achieve a surplus. This is then put back into the business.
The objective that my business will most likely follow is:
- To survive the first year of trading.
This is because a lot of new businesses fail during their first year of trading. This is more than likely to be the result of not getting enough customers and therefore not being able to pay rent or debts, this will usually lead to insolvency.
In the future the business will change objectives because once they have survived the first year and got a customer base, survival isn’t the most important point to consider. This should be something like:
- To make a profit for example, approximately £5000 by the end of the second year of trading, this is in relation to the size of the business
SECTION 2: Promotional Methods Available
Businesses need to communicate with their customers. Promotion is about:
- Making customers aware that the product is for sale.
- Telling or explaining to them what the product is.
- Making customers aware of how the product will serve their needs.
- Persuading them to buy it for the first time or to buy it again.
Promotion is the most direct form of communication in the MARKETING MIX.
I think that these promotional methods will be best suited to my business in its first year of trading:
- Local Newspaper- This is because it will target the local area which is
mostly where the market for my products is.
- Leaflets- I want to target the local area and this would be a good way
because I can choose where the leaflets are delivered.
- Sales Promotion- Using this will attract customers initially to the shop and
they will relate the good promotions to the shop and
come back again.
There will be some constraints on the methods I use, mostly in the way that portray my products in advertisements. I will have to promote my products in accordance with:
The Trade Description Act 1968
This states that it is illegal for products to be incorrectly described. If a sweater says that it is machine washable at 40 degrees, then the colours in the sweater mustn’t run at that temperature.
So I will have to be careful how I represent my products and not make false accusations about them.
I have chosen these promotion methods because using the small budget I am using for marketing my shop and its product; these are the most efficient methods.
SECTION 2: Promotional Methods Available
SECTION 3: Market Research
Market research involves gathering and analyzing information from the customers. It is a way of gaining information about customer characteristics, lifestyle patterns, likes and dislikes. This is also known as demographics.
The market is divided into sections/segments.
The following are the four main ways of segmenting the market:
Age - adults have very different needs and wants from teenagers and young children. For example, cars are sold to adults.
Gender - men and women have different tastes and needs e.g. aftershave is bought for men whereas perfume is bought for women.
Income – High income earners often spend more then low income earners as they have greater incomes
Area - consumers in different areas have different spending patterns e.g. people in the southeast spend more money on recreation then in other areas of the UK.
For my market research I will be using Primary research. Primary research is designed to gather primary data, that is, specific information that provides answers to certain questions. There are several types of primary research these include: observation, surveys, testing, questionnaires and experiments.
Observation - this is watching and recording people’s behaviour. In the context of my business, I could observe the foot traffic in my chosen area (number of people walking by the location at a certain time. Observations can allow you to draw conclusions and have a sense of percentage chances of whether a girl between 12 and 19 walking into New Look, the fashion store, will come out with a shopping bag.
Surveys - this is one of the most used types of primary research. These can be done door to door or on the street.
Questionnaires - a questionnaire is produced to directly find out answers to specific questions. There are four types of questionnaires. Personal questionnaires, postal questionnaires, telephone questionnaires and group questionnaires. Questionnaires are usually very expensive and time consuming.
Experimentation - this is when a product or service is given to a small area or group of people and the response will decide on whether or not this product/service should be sold nationally.
This will involve:
I have chosen to do a questionnaire as it is a reliable form of research and is a good way of finding out the customer’s characteristics, lifestyles, income, needs and wants.
- Investigations into my main competitors
This will be in the form of an interview with the owner of a business that is of the same type as mine and in the relative same area. This will be, I have decided to be G&L Sports which is situated just outside Peterborough.
Questionnaire
Firstly I need to decide what sample of the population I will use for my questionnaire. There are four main sampling methods:
This means choosing the sample with an underlying purpose or theme. Purposive sampling can be an obvious source of bias. If, for example, a tea producer wants to find out consumer attitudes to a new blend, the producer should construct a sample out of known tea drinkers; otherwise the survey would be a waste of time.
Random sampling aims to overcome in built bias by making sure that any member of the population is as likely to be chosen in the same sample as any other.
Used by researchers to eliminate bias in the sample, stratified sampling involves dividing the target population into strata or groups that are linked by some characteristic, such as socio-economic features.
Often found in street based market research surveys, quota sampling involves interviewers questioning members of the public up to a given quota. The quota is generally stratified so that the correct proportions from the various sections of the population are represented.
I have decided to use Purposive Sampling as this will make my questionnaire more effective because I will target the right population. The population is sports players between the ages of 15-30.
On the next page is a copy of the questionnaire that I will use:
SECTION 4: Questionnaire Results
1. How far from the town of Spalding do you live?
These results show that a lot of my business will be done in the shop and not catalogue and online orders. This will therefore decrease the amount of energy spent on the shop because I will not have to send out products to customers.
2. What gender are you?
This means that I will have to buy in products that are mostly suited to males. Also about 20% of each order of a particular product will have to be in female sizes which reflect on profit because some products made for females are more expensive.
3. What sport do you mostly play?
Although my shop will strictly be a hockey shop I will sell a few types of products based for other sports. From looking at these results I will have to buy in football boots because the market group prefers football to any other sport.
4. How many times a week do you play/train?
Here I can see how frequently potential customers will use my business. It is obvious that if people train once a week then will not use the shop very much but if they do it four or more times then they will use it more often.
5. What surface do you play on?
I will be marketing a wide range of football boots, hockey shoes, Astroturf trainers and trainers. This will show me which will be most popular and how much I should buy in. for example grass is the most popular surface therefore it would be wise to have a large stock of football boots and trainers.
6. What is your favourite sports brand?
I need to know which brand is the most popular then I will have an idea on which manufacturer to buy most of my products from. Because the population preferred Nike then I would definitely consider buying more Nike branded products than Adidas.
SECTION 5: Promotional Methods Recommended
During the first trading year I will be using these methods as the main part of my promotional plan:
This is because it will target the local area which is mostly where the market for my products is. In my market research I contacted the local papers Lincolnshire Free Press and Spalding Guardian. They gave me and advertising rates price list. Here are prices of the adverts which I am considering:
I want to target the local area and this would be a good way because I can choose where the leaflets are delivered. Having reviewed my market research I can see that using leaflets to promote my business would be an effective method. In my interview, G&L Sports told me that they used leaflets to advertise their business, and distributed them using newspapers, delivering them directly to people’s houses and that some are left under car windscreen wipers. This has helped me decide that I will deliver leaflets direct to people’s houses, which will enable me to target certain areas near to my shop. I will not, however, be leaving leaflets under car windscreen wipers as this will contribute to littering, and could give my business a bad image. I will also not be using newspapers to deliver my leaflets, as it would be more cost effective for me to deliver them myself.
Using this will attract customers initially to the shop and they will relate the good promotions to the shop and come back again. In my interview with G&L Sports I asked whether they used any special offers, and if so which? They told me that they mostly use BOGOF (Buy One Get One Free) and a percentage off, as they were the most effective.
In my interview I asked whether Fen Sports use plastic bags, with their business name on. Fen Sports told me that they did, and that they purchased them from The Plastic Bag Company, a local business. My market research shows me that having plastic bags printed for my business will not be very expensive; their quote for 1000 bags was as follows:
Printed 1 side £205
Printed 2 sides £235
Printed bags are cost effective, and will hopefully make my business more remember able to my customers, and help draw potential customer to my business as the bags will be eye catching. I also think that Printed Plastic bags will improve the businesses image, as they will look very professional.
These methods will change over the course of the year. For example before the opening promotion will be based towards making potential customers aware of the shop using leaflets and flyers. And then in the opening week I will use sales promotions to attract customers and then later on I will use branding to ensure a good market share.
Methods that I will not be using:
I will not be using personal selling in order to increase the sales of my business, as this method is very expensive and time consuming. It is very expensive, as I would have to pay for some to go to people’s homes and try and sell products. This would allow the product to be personalized to the customer, however there is no guarantee of sale and travel costs would be high. Personal selling can also pressure people into buying a product, which may give the business a bad image.
- Media Advertising (TV advertising)
Due to the high cost of advertising on television, this method would not be cost-effective. Also, advertising on national television would reach a lot of people who would not come to my shop, therefore also making it ineffective and not cost effective.
Marketing plan
