The type of business that I will be setting up will be an electrical appliance store.

INTRODUCTION

The type of business that I will be setting up will be an electrical appliance store. I will sell electrical goods like televisions, videos, and hi-fis. Also I will specialise in household appliances, which are used in everyday life. My business will be called ‘Electrical retailer’.

Market segments I’m likely to be targeting are those in social class C. This is the skilled working class as I think that the area I’m targeting is represented mostly by this social status. Also I will aim my products at a place convenient to the customers, to those of practically any age.

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.

Promotion is communication between the business and the customer, making the customer aware that the product is for sale and then persuading them why it’s the best in the market in order for them to buy it.

Advertising is a method of production. It will get customers aware of the product being offered for purchasing by persuasive selling techniques.

Sources – GCSE Business studies, second edition

Alain Anderton

The marketing plan is used for the owners of the business detailing recommendations about how best to promote the business during its first year of trading. It will hold information such as the product or service offered, pricing, target market, competitors, marketing budget and promotional mix. Therefore I will be able to predict what and when an objective will be met which will include a time element.

It is important that a business has and follows a market plan because it allows them to…

See their options on deciding which promotional methods to use.
Show the benefits of different kinds of promotional campaigns.
Show what steps to take in order to set up this campaign.

SECTION 1 OBJECTIVES

A retail business will have many different objectives; the most important will be survival. To survive a business has to at least break even over time, which therefore can lead in aiming to target making a profit. Also a business can establish a market share, increasing the proportion of sales made in relation to all sales in the market. Finally another frequent objective is to give customer satisfaction, which is to make sure that customers are satisfied with the product that’s being bought. This will gain a good public image.

The aim of "Electrical retailer" 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 profit maximisation, aiming to make the highest amount of profit possible. 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).

However in subsequent years in may be possible to alter my objectives depending on whether my primary targets for the first year are met. After a couple of years survival will still be an obvious objective but others may take a higher level of priority depending on the success of the business. New key objectives could include expansion, which would result in opening more branches for example further out and around the country. Another method of expanding is to increase the range of products and add more variety to them. Also you could look for growth in sales turnover ‘to become medium size electrical producer’.

SECTION 2 PROMOTIONAL METHODS AVAILABLE

The main aim of the advertising that I will do for my shop will be to attract customers and to increase my sales.

The different methods of advertising above the line, in which is outside the direct control of the firm and left in the hands of agencies or media, are listed below:

Television - This will get your business across to millions of people. However it is very expensive and since my shop is only a local shop, and television shows adverts to people all over the country, the advert would only be applicable to a tiny percentage of people watching and a waste of money.

Radio - This is a cheaper method of advertising than a television advert. Also I could place an advert on local radio for a small cost and it would go out to people all over the local area.

Leaflets/Posters - These would be a good idea, since they are very cheap to produce and you can place them anywhere in the local area, or hand them out to people. However people may ignore the adverts, and if I was to produce posters then detailed information could not be placed on them because they would only be seen ...

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Radio - This is a cheaper method of advertising than a television advert. Also I could place an advert on local radio for a small cost and it would go out to people all over the local area.

Leaflets/Posters - These would be a good idea, since they are very cheap to produce and you can place them anywhere in the local area, or hand them out to people. However people may ignore the adverts, and if I was to produce posters then detailed information could not be placed on them because they would only be seen for a short amount of time.

Magazines and newspapers - If I were to place an ad in the local newspaper I know that this would be seen by people all over the local area. It would also be a fairly low cost. However the disadvantages are that readers do not always look at the advert, and if I were to show an ad in a newspaper then it would be limited to black and white.

Also there are methods of promotion below the line, which is controlled directly by the firm.

Personal selling – This is advertising on a door-to-door basis, using a sales representative to tour and communicate directly to the customer. The disadvantages of this are that people don’t like to feel pressurised into buying products.

Public relations – Business’s find that this brings a positive image about a product through giving information to the general public via press or other business’s.

Sales promotion – This attempts to give a short-term boost to sales by using a number of methods. Money off uses retailer’s commission to reduce costs. Also there is better value offers, free gifts, discount vouchers and competitions. Direct mail is a slightly different method in which leaflets are sent to potential customers through the post promoting the business.

Branding – This is an important long term promotional method, which basically puts a brand name on a product so people, if satisfied will pay money for that product under that specific brand. As an advantage branding will build a good reputation and public image, it can also have the opposite effect which maybe a reputation of poor quality or expensive.

I have decided that it would be impractical of me to use television as a form of advertisement, as I will only have one shop in the 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 than 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 Lincolnshire, but I am only at the moment targeting at the Spalding 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. Another very good method would be advertising on local transport, as people in the local area will see them. 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 because it only goes to a limited number of people I think it is not that good. Also a 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, is that the leaflets that are delivered are just thrown away damaging the environment.

I think that Sales Promotions and Direct Mail will be strongly aimed towards, as a large customer base will be reached. However I need to carry out research to find out which method of promotion is most effective.

I will also use market research to find out which method of promotion works best below the line, but I predict prior to carrying out my research that I will target free gifts and discount vouchers. I think this because a disadvantage of competitions is that customers will ignore them, and not paying attention wont boosts my sales, a future objective.

SECTION 3 MARKET RESEARCH

Using market research I want to find out the following:

Identify what market I am aiming my business at.
Find out competition in the local area.
Research costs of promotional methods.
Identify my pricing structure.
Locate a local area for my business to be set up.

The sources I intend to use are:

Written Sources – Textbooks

I intend to visit the local library and obtain information on newspaper advertisements pricing from ‘The Willings Press Guide’, this textbook contains advertisement prices from all local newspapers in the area.

People – Questionnaires

For people sources I will create and conduct a questionnaire for the people of Spalding in order to research electrical goods in demand and prices people are willing to pay for them.

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. They’re 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 effects most aspects of my business.

Organisations – Brochures, Leaflets

For the next group of sources I will collect brochures and lealets from organisations such as the Free Press and the Spalding Guardian to research prices in their newspapers, also if there is time I will collect research on advertising prices from local radio stations.

Electronic Sources – Internet

I will research promotional methods on the Internet including leaflets, in which I will look at the distribution of local newspapers to see how far advertisements spread.

I decided to use a wide range of sources, as I believe this will give me a more reliable source to draw conclusions and to evaluate. Some information can only be found from one source such as the most popular brand of electrical appliances, which can only be found out by using a questionnaire.

Another reason for a wide variety of sources is to allow me to find out information such as markets, which are not catered for by large companies, I will then cater for this market. I will carry out questionnaires or use research already carried out by another company, which will allow me to use textbooks or the Internet. I will group the people on their response to my research in social grades. 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.

SECTION 4 RESULTS OF RESEARCH

SECTION 5 PROMOTIONAL METHODS RECCOMMENDED

I have reviewed all of my results and thought carefully about the recommendations I will give to the business ‘Electrical Retailer’. From my research I have found that the social grade of the local area is C and the average pay is between £"15000-"25000. The majority of these people do not shop locally, and the main reason is that the local shops do not cater for their needs. This is shows me that I there would be place for me to sell my goods, aimed at social group C. This is because of the people surveyed the majority fit into this group, so it makes sense to primarily aim for them, and then unskilled workers. Also the shop that most of people say they shop at is out side of the local area, but they would shop locally if they had the choice.

Source A and B shows the popularity of papers and how often they are read. These bar charts surprised me as I found out that the Spalding Guardian and the Lincolnshire Free Press was attracting a larger readership yet papers tend to be read more daily. This is a factor which I will definitely need to consider as newspaper advertisement is a possible promotional method, however I still believe that I will portray my message to inform potential customers and attract them towards my business.

Source C shows a pie chart and my results show the different types of media and their accessibility. Television clearly stood out and then poster billboards on transport. This question told me a lot and played a big part in deciding the type of advertisement to use to promote the business.

As part of my competition I looked in national newspapers and on the Internet to search for promotional methods used by Curry’s. Below I have found an advert, which from my market research I know is very expensive and therefore the size of the company is large. Also Curry’s attracts millions of customers throughout the country which is why they advertise nationally instead of locally. I found out that 25 slots a week prime time, which is when the radio is listened to most between 4.01 – 8.00pm costs £1000. This company has built up a massive customer base over many years, which is why I have a budget of £8000 for the first year of trading to spend on promoting the business.

I think that the best method for me to use is poster billboards on public transport. Even though more people have access to a television, this media is not suitable for my business. I will also use leaflets as this would mean that I could put in coupons for the reader. Also that I should use bright colours in my advert, as my leaflets should have a distinctive shape.

I will advertise on the local transport system £780 per year, for a large advert on the back of a bus. The leaflets that I will produce will cost £145 for a 1000 delivery, and will be in full colour both sides. Leaflets will contain information such as sales, the different range of stock being sold and prices. Also I will advertise in the local paper each month with a relatively small advert which is cheap.

I will change my method of advertising depending on the time of year. This is because I feel that more advertising should be done when events like Christmas take place or the January sales. From my research I know that I need to advertise months before Christmas around about October to benefit. I have constructed a table, which shows how I will budget my advertising costs throughout my first year of trading. A lump sum of money is kept aside in case all goes wrong.

The method of promotion that I going to use is price reductions, and in-store demo's. This is because televisions, videos, and hi-fi can be very expensive, and from previous research I found that this is very important. The in-store demos would be used, as the customer would want to see what the product permanence is like. Using price reductions of small amounts, like £ 10 off your next purchase would help to bring people back. The use of free samples, gifts, competitions are not very suitable for my shop. This is because it would be impractical to give out free samples, competitions will take a lot of time to set up and run, and gifts are not of any use as you normally only buy one of the product, normally.

Also I spoke to an 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

An environmental factor for the business to consider is that he newspapers are all made from trees, which are cut down. Also handling out leaflets can produce vast amounts of litter if ignored and thrown away. Therefore as a result of this I will have to use recycled paper as its more environment friendly.

This links to a social factor, which is under threat contrary to dropping, leaflets. My business could receive a bad image because of this and potential customers could be forced away from my service and search elsewhere.

Again this links to a financial factor which due to the bad image because of dropping leaflets, it would be a waste of money printing and producing them.

In Media Advertising the radio can be very good and very effective, as a wide variety of people of all ages listen to the local radio so this could have a big impact on market share if a radio advertisement was brought. However local radio stations can be very expensive for a small business, which will prove to be a large economic factor, but if the business becomes successful in the next year it could afford to use radio advertisement.

SECTION 6 CONCLUSION

The main objective of ‘Electrical Retailer’ is to survive and gain as many sales as possible. By my recommendations the business is able to appeal to the whole of the local area through newspapers, leaflets, billboards on transport which displays great value for money of all ages. This will bring in more customers and revenue in order to build up a larger market share. I have completed all of my research objectives through questionnaires, newspapers, radio stations, the Internet and other sources to produce the best recommendations I can.

The strengths of these recommendations are that the business is able to advertise easily and effectively to the local area with relatively low costs as the business grows, I have suggested radio as a good advertisement when affordable. The limitations of my suggestions are that special deals that I use in an attempt to gain customers could be quite a gamble, this should only be short term as the business could lose a lot of money if not carefully looked after. Another limitation on leaflets is that they could cause litter so they cannot be used too much.

SECTION 7 EVALUATION

My original predictions were to use Sales Promotion and Direct Mail but I then realised that after doing my research I could use a wider variety of methods. I kept to Sales Promotion, as this would be the best way to attract new customers and gain a larger market share. Instead of mailing leaflets to every house in the area I thought that it would be easier and more cost effective if the leaflets were handed out in town. This would attract potential customers, as those interested would take a leaflet missing out the people who would be considered as a waste, becoming more efficient. Another method I selected was Media Advertising through newspapers, as small advertisements are cheap and a lot of people read the newspaper all round the local area bring more possible customers who would hear about the business.

Overall I think that my project was done well as I was able to determine marketing strategies and decide which would suit a small business. I was able to research many aspects of marketing and learn how I could encourage people to shop at ‘Electrical Retailer’.

If I were to do this project again I would spend more time on market research and broaden my knowledge especially on competitors, and their methods of promotion. I would also look at costs to advertise on the Internet so that when my business grows I can use that as a way to promote my business. Another factor is the size of my budget I had to work with, again with success, which is a possible outcome; many environmental, social, and financial factors would disappear, as I would no longer use leaflets to promote my business.

On the other hand an outcome which I was surprised with was that people read in the local area daily rather than the majority reading weekly. This could in the future affect my business because with my budget not as high as id like it to be, I won’t be able to advertise in national papers which tend to be daily. This outcome wouldn’t help to improve the business if I wanted to expand in subsequent years, a future objective.