I have decided to open a small sports shop in Wombourne called TMG Sports as a sole trader selling new, up to date clothing, trainers, sportswear, and sports equipment.

        The 4 P’s of marketing

                

        Product: As I will simply be selling a range of products, all that I need to concentrate on is buying the right stock. I can accomplish this by keeping up with customer buying trends and popular fashions. I will have to stock a range of styles and sizes to suit a variety of consumer needs.

        Price: As I am starting up a new business, there needs to be a pricing strategy in place to attract new customers. The questionnaire will help me decide on pricing strategies, and desk research will allow me to see how much other shops are charging for similar products. I think the right pricing strategy will be penetration pricing because it meets both specifications of attracting new customers, and getting money back into the business to firstly survive.

        Place: I will be setting up my retail outlet in Wombourne village. There is only one other shop to compete with, which sells mainly equipment for cricket and football. I will be selling more fashionable goods, so the two shops will be attracting different types of customers with different needs and wants. I plan to place my shop in the centre of the village where there are lots of parking spaces available, and also it is a good location for passing trade because young customers pass by everyday. Also, lots of companies are now using mail order and e-commerce. I could set up a website so customers could buy direct from their homes.

        Promotion: This is how the business attracts consumers to buy products, or come to browse around retail outlets. The main type of promotion is advertising, and this is how I plan to attract my customers. I will be placing an advertisement in the local Express and Star newspaper. This will reach most of the village, and sections of Wolverhampton as well. I believe the cost for a 2 column wide, by 10cm deep black and white advertisement is currently £500 per week. I plan to advertise for 2 weeks, the week prior to opening, and the week of opening. Also, for the first week or so of opening, I could have a special offer in place such as ‘30 per cent off’.

TASK 4

        I produced the questionnaire to find the answers to what I needed to know:

• Who exactly was my target market, in terms of age range, what sports they play, what type of advertising they are most attracted to, and what they are most likely to buy. Age, gender, and income group would all be factors of my target market, and I will try to attract a segment of each of these,
• What pricing strategies to have, in terms of trainers etc,
• Which products to stock, in terms of what they are most likely to buy next,
• How the shop should be presented, in terms of where they usually go for sportswear,
• What my target market want, in terms of the marketing mix.

The information produced by my questionnaire would prove useful, because I could find out how to convey my business to the consumers, and to know what they want. The best way to portray a business is to find out how the customers want it to be portrayed. The most important aspect in a retail outlet is the product or products they stock.

        I wanted to find out what my target market wanted, to supply them with it. A business needs to know what their target market wants; otherwise they will try and sell them the wrong products, which they don’t need. Therefore, they will not buy anything. I asked the question, “Do you feel that IJP Sports stocks enough fashionable clothing”, because I feel that they don’t, and I plan to capitalise on this by selling the products they don’t have. I asked the question, “How much would you usually pay for trainers”, because the response from the question would help me adjust my pricing strategy. I could have asked about designer labels as well, to find out if my target market prefer quality brand named goods or cheap prices.

I tried to use mainly closed questions rather than open, because people would rather complete a questionnaire with less thinking and writing to do, so all they have to do is tick boxes most of the time. The results produced by my questionnaire helped me decide how the business would be conveyed to customers.

Other Methods of Market Research

Desk Research:

• Research agencies that will have your information already stored and sell it to you. This is an easy method, however it can be expensive so I won’t be using this option,
• Public libraries have reference books, and some have computers. I will not be using this method, because it is too time consuming,
• The Internet is a good source for research, because it has a wide variety of information. I will use this method, because it is readily available at home, and can provide a lot of information. However I must be careful what websites I retrieve the information from, because some are American and would not represent the UK market,
• Newspapers and magazines provide information on customer trends, and fashions.

Field Research:

You can complete surveys over the phone, or on the doorstep. These are like questionnaires; only you ask questions and fill them out, not the customer.

        

TASK 5

        

I have visited IJP sports in Wombourne, which is a sole trader sports shop business. I arranged a meeting with the owner of the shop, called Ian Painter. The meeting took place on 18/01/03, at 11.30am. Its objectives at the moment are to increase market share in the area, and to increase profit margins, and therefore revenue.

The shop is located just outside the centre of Wombourne village, on a busy crossroad corner.

There are traffic lights opposite the shop, and I believe these are an extreme advantage to the owner. This is because lots of cars have to stop there and would probably notice the shop. This creates a lot of passing trade, because people are likely to be reminded of things they wish to buy if they see a shop they can buy the products from. There is sufficient room at the back of the shop to take deliveries, and there are about 5(max) parking spaces at the front of the shop, which the owner shares with a neighbouring shop. Also, the space for parking is quite small, and difficult to pull into and out of. I consider this lack of good parking to be a disadvantage to the shop, because this may put off possible customers, and they may go elsewhere.

        IJP Sports offers mainly goods and some services:

Services:

• Tennis racket string tightening, and replacing,
• Cricket bat protective layer replacing,

Goods:

• Tennis equipment and clothing,
• Cricket equipment and clothing,
• Football boots and kit,
• Specific sports equipment such as tennis balls, and goalkeeping gloves,
• Trainers,
• Rugby boots,
• Accessories.

The target market of IJP Sports is directly related to the sports facilities of the local area. In Wombourne, there is a Cricket/Tennis club, and IJP stocks cricket and tennis equipment. The most likely people to play cricket and tennis are children, youths, and the amateur team players from 18 to 50 yrs old. There is also a local leisure centre nearby, which has many sporting facilities. Members of these two places are likely to purchase from IJP Sports. Leaflets and posters could be distributed around the two clubs, with an arrangement with the managers/owners. This would directly promote the shop to the target market.

The shop is located directly in-between the cricket/tennis club and the leisure centre. I believe the target market of IJP Sports has influenced the location a lot. The members of the two shops are likely to pass the shop a lot in cars or walking, and are also likely to need replacement goods for their particular sports. The shop stocks a range a range of goods its target market is likely to purchase. This is reflected in the local facilities.

        ADVANTAGES:

• NEW JOBS (ASSISTANT)
• NEW PRODUCTS CLOSER THAN WOLVERHAMPTON OR MERRY HILL,
• BRING BUSINESS INTO THE LOCAL AREA, E.G. PASSING TRADE, FOR OTHER BUSINESSES.

DISADVANTAGES:

• THE COMPETING BUSINES MAY LOSE SOME CUSTOMERS,
• TRAFFIC IN THE AREA MAY INCREASE,
• POLLUTION MAY INCREASE,
• NOISE MAY INCREASE, BECAUSE OF MORE CARS MAY VISIT THE AREA.

Many consumers choose where they shop because of ethical of reasons. Some consumers may only buy goods from shops that have purchasing policies, such as ‘The Body Shop’. They only buy stock, which is not tested on animals. My business may only buy stock from companies that do not use slave labour or child production teams. I could promote this point, which may attract customers to the shop, and be an image boost for the local area. However there are some drawbacks. The cost of goods would then be higher, and I may not be able to get the goods I want, because they are produced ‘cheaply’.

        

Marketing Plan

        Reviewing Market Research Results

        Here are the results of my market research in a graphical form:

What Attracts Consumers to Stores

        

        This is a graph to show what attracts consumers to sports shops. It is clear to see that PRICES, STORE DISPLAYS, and CONVENIENCE are most important to consumers in Wombourne, between the ages of 15 and 20. The others are important, however I will be concentrating more on these 3. As a sole trader, I will be giving a personal service, so this may attract customers to my shop as well. They may prefer to know the owner, rather than be followed around by an anonymous assistant.

How Consumers Feel about IJP’s Pricing

        Above is a graph to show how consumers feel about IJP’s pricing. It is to clear to see that the majority think the prices are relatively cheap. I can conclude from this that I will be able to charge more than IJP as my shop increases its market share in Wombourne. However to start the business I will need to have a pricing strategy, such as penetration pricing. As long as customers get value for money products, at an affordable price, they will be happy.

How Much Money Consumers would usually Pay For Trainers

                Above is a graph to show how much money consumers would usually pay for trainers. The majority of my sample would pay between £30 and £50. I will therefore try to purchase stocks of trainers to sell at those prices.

        The Effectiveness of the Questionnaire

• The main drawback of the questionnaire was that only around 20 people completed it. This is a disadvantage because the small number of answers may not represent the target market as a whole.
• I did get some positive feedback regarding pricing, what attracts customers to stores, and how to beat the competition.
• I will be able to use the results of my market research in deciding on a marketing plan.
• Overall my questionnaire got me the information I needed, but it wouldn’t be very good for a larger, real company.
• In reality, the questionnaire would be more professionally formatted, and would be distributed on a larger scale. This would achieve better results, because consumers would feel more obliged to complete it, and lots more information would be collected, which would represent the consumer better, and more accurately.

The Main Ways Of Promotion

• Advertising:

1. Word of mouth: Is not the most effective method of advertising, because it is object to human error, and does not guarantee to reach anyone. Cost = Free. I will use this method because although there is no guarantee of the public hearing about m business, it is free, and may work in a local community.
2. Local newspapers: Are a relatively cheap way for small local businesses to advertise, and reach a wide variety of audience. Cost = £500 per week. I will be using this method, because it will reach a large audience in the area, and is not too expensive for my budget.
3. Leaflets: Can be expensive depending on the quantity, and delivering them is labour intensive (leaflet drop), or expensive (postal service). Mainly for small, local businesses. I do not know the exact cost of leaflets, but I will estimate at around £350 per thousand leaflets. I will not be using this method, because I feel it is not cost effective or value for money.
4. Yellow Pages: Is delivered to many households in the regional area, however can be expensive with an annual fee. I will be using this method, because it is an extensively used source of information about businesses for customers. Cost =£100, for a year of advertising in the directory. Value For Money!
5. Public Transport: Can be expensive, yet will be seen by lots of people. Using public transport may give the business a good/bad image depending on the target market. I will not be using this method, because I fell it will give my business the wrong image, and it will be too expensive, and not value for money.
6. Catalogues: Can be expensive because they have to be batch produced by another company, and are only read by people who receive them. I will not be using this method.
7. Radio: Advertisements are only in an audio form, and because there is no graphical representation of the good/service, consumers are less likely to remember it. However, the advertisement will reach a lot of people. I will not be using this method, because I feel it is not cost effective enough, for a small local business.
8. TV: Very expensive, however my market research shows that it is the best form of advertising, and most people value TV advertisements higher than any other kind. Will reach a large audience. Cost = £1,000 per second on regional television networks. I will not be using this method. Because it is far too expensive for a small business like mine.
9. National press: Will reach a large audience, and is cheaper then TV. This is a very cost effective method of advertising. Unfortunately, it reaches a far wider range of audience than I need to, so I will not be using this method.
10. Billboards: If placed correctly, they are seen by a lot of people in cars, and stay in their memories. Also, a lot of billboards stay up for a long period of time, and are seen a number of times by the same consumers. This influences the to visit shops or buy goods etc. Cost = £300 per week. I will be using this method, because it will promote the right image for the business, and is very cost effective and good value for money.

• Packaging:

1. As I am setting up a retail business, the only packaging I can control is the plastic bags my goods are sold in. I plan to have them specially printed, with the shops name, address, and phone number, accompanied by the shop’s logo on the bags. Hopefully, this will give the shop a professional image, and customers will want to return. I do not know the cost of this service, however I will estimate a rough cost. Cost = 30p per bag. I will have printed bags, because it promotes the right image of professionalism for the shop.

• Sales Promotion:

1. Special Offers: Customers are encouraged to buy one product, because they will get another free. This method is quite effective. I will use this method throughout the course of the year.
2. Free Gifts: Are not cost effective, and in some cases can actually loose money like a loss leader. I will not use this method, because it is not very cost effective, and I would loose too much money in the process.
3. Competitions: Encourage customers to buy things because they may win a bigger prize after. I will not use this method.
4. Money Off: Simple reductions in price are a brilliant way of attracting customers. I know this from business knowledge. A good example is the ‘January Sales’. Lots of customers participate in these because great deals are too good to miss out on.  I will use this method, as it will attract customers. Also, this ties in with my pricing strategy of ‘penetration pricing’. Low prices will always draw in customers, as the results of my market research show.

• Sponsorship:

Businesses sponsor sports teams or events in a bid to attract customers. The customers relate the team/event to the business and this creates an image for the business. This can be quite expensive, depending on the team/event. I will not use this method, as it is not value for money, and will provably be out of my budget.

Legal Constraints

        

• Trade Descriptions Act:

Makes it an offence for businesses to describe goods falsely, when promoting them. For example, I couldn’t say that a replica ‘addidas’ shirt was real, if it wasn’t. I could face a jail sentence if I did.

Conclusion

        Methods of Promotion I Plan To Use

• Word of mouth, Cost = FREE.
• Local newspapers, Cost = £500 per week, x 2 weeks = 1,000.
• Yellow Pages, Cost = £100.
• Billboards, Cost =£350 per week, x 2weeks = £700.
• Packaging: Printed carrier bags, Cost = 30p per bag, x 150 bags = £45.
• Special Offers, Cost =Lower mark-up on goods.
• Money Off. Cost = Lower mark-up on goods.

Total Cost = £1845.

This is a very reasonable budget, and there is no need to arrange a loan with a bank to cover costs of promotion. However, I will need to arrange a business account with a local bank, and perhaps a loan to cover start up fees, such as a mortgage for the shop premises, or rent.

Location Of My Business

        I plan to locate my retail outlet on the main road in Wombourne village centre. There are lots of other shops to attract customers, and lots of passing trade. However the rent or price of the unit will probably be high, because it is a prime location for shop.

Final Conclusion

        The Marketing Mix:

Product: I will stock mainly fashionable sports clothes, with reputable brand names, such as ‘Adidas’ and ‘Nike’, because the local competition doesn’t sell these products. Therefore, I will gain an advantage over the local competition, ‘IJP Sports’. The results of the market research show that local sporting facilities affect which specific sporting equipment should be on sale. As there is a range of sports facilities available, I will only be able to stock the main ones for the starting period of the business. I plan to stock tennis, cricket, and football equipment. Also, the time of year/decade affects what products I should stock. For example, when the ‘Wimbledon’ tennis cup is taking place, there is usually an increase in tennis equipment/clothing sales. Therefore, I should stock tennis equipment at this time.

Price: I will enter the market with a definite pricing strategy of penetration pricing. I will also have some special offers, and money of some items. This is linked to promotion. I believe my pricing strategy will attract new customers, who usually go to ‘IJP Sports’, or major stores, and hopefully they will return to my shop.

Promotion:  I plan to use these methods of promotion, to attract new customers to my shop. Word of mouth, local newspapers, yellow pages, billboards, packaging: printed carrier bags, special offers, and money off. The money off deals and special offers are linked to the price, because I need to make a profit on the stock I buy. By selling goods at lower prices, I will have a lower mark-up, and therefore have less revenue. This is a disadvantage compared to the major stores, because they buy in bulk and are able to have a high mark-up on goods. However, I will be able to increase the prices of goods, once I establish some regular customers.

Place: My shop will be located in the main shopping street in Wombourne village, ‘Windmill Bank’. I believe I will have a direct advantage over ‘IJP Sports’ because it is located just outside the village centre, and away from other highly regarded shops. Customers of these well-established shops will create passing trade for my shop, and my shop will be associated with well-known names as well. However, because my shop will be in a slightly better location than’ IJP Sports’, the rent or cost of the premises will be higher. This is a disadvantage, but I think it will be worth the extra cost.

Sources of Information

• Textbook: ‘GCSE BUSINESS STUDIES’, by Pat Martin with Jill Bond.

Published by ‘Heinemann’.

• Communication: Appointment with Ian Painter, owner of ‘IJP Sports’.

• Electronic: Internet, ‘Jd Sports’ website (www.jdsports.co.uk), and ‘all:sports’ website (www.allsports.co.uk).