Prepare a feasibility study for a business with a view to acquire a vacant property and develop it for a new business.
Business Studies Coursework
I have been asked to prepare a feasibility study for a business with a view to acquire a vacant property and develop it for a new business.
I am planning to choose a business in the Earl's Court Rd area. There are a number of businesses under consideration. The underlying consideration for selecting a business would be the long-term survival and profitability of the business. The road that has the shop premises vacant and available already has an assortment of shops. However there is a large catchments area as well that is a mixture of residential area and hotels.
The businesses under review are Newspaper shop, Internet Café,, Bureau de exchange and a flower shop.
In order to attain my objective I would need to research the pros and cons of all types of businesses mentioned above. To do this, I would research into all aspects of a business, conducting a survey of the area, interviewing local people, using books, people and computer resources. I will create plans to help me, evaluate and redesign them as I proceed during the project. The reason for doing plans is to help keep track and organise what I am doing and it also shows points that I should cover for my study to implement it successfully.
I have observed the Earl's Court area very carefully for a number of days and tabulated a schedule showing the number of shops in each category as follows,
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Newspaper 5
Flower 4
Bureau De Exchange 5
Internet Café 2
The road has reached a saturation point in respect of the first three options due to the existing numbers. However there is still a great deal of potential for some more Internet Cafes. This is due to the fact that there a number of hotels in the area . I have also taken into account the fact that a number of hotels offer in-house internet facilities. However, my research shows that if the service is provided at a competitive rate, the business would attract customers to make it a successful venture.
I have decided to have an Internet café (Net Palace(tm)) situated in the vacant area. I will explain the reasons why during the course of the project.
The vacant business site is situated in a location where most of the shops provide the local population with everyday requirements. The shops on the same road as my local business site are Pizza Hut, a bakery, A coffee shop. There is then a restaurant and then my chosen vacant business site. This is also the case on the opposite side of the vacant business site, where there is a Sainsbury's local, a newsagent's, and an international call centre. There is a train station extremely close to the vacant area; the significance of this being that there will be a lot of passing trade and the vacant business site will be prominent and conspicuous.
The aim of Net Palace(tm) is primarily to be able to compete with the two other Internet cafes in the local area. Other aims are to break even and make a profit. However, my most important aim is to provide a high quality service to the public.
My task will involve me conducting market research in order to determine the local population requirements. There are many factors to consider when locating a new business which all play an important part in a successful sale of a product. The factors that I must consider are the infrastructure of a business site. My business would need good communication systems, telephone systems, fax, e-mail etc. Another factor is the geographical factor. I must have my business situated in the ideal location in order to have a good chance of making a profit.
The research will also give me a clear guide of what type of pricing I will set for the use of the internet and how I will price for the food and drink. My pricing strategy will depend on my area, so I will carry out a survey to see what pricing structure suits that area. I will then research pricing strategies by visiting other similar local Internet cafes and coffee houses. I will also have to research into any planning restrictions that are placed in the Earl's Court area.
Why I haven't chosen the other business alternatives
Newsagent's: As there are already five newsagents around the vacant site, it would be very unsuitable to have another newsagent's. There are two main problems which would occur if I were to open up a newsagent's. First of all, there is the customer's loyalty. The customers would have and still probably go to the same newsagents due to the convenience and it is hard to change the habit of the customers. The second main reason is that the newsagents are conveniently situated where they are near flats, whereas the vacant site is situated in such a place that it is inconvenient for most people.
Flower Shop: The four flower shops are already most likely to be competing with each other, and adding another flower shops will not only put more pressure on them but also on me. I will have to have set prices at a competitive rate and keep updating my market research in order to have a clear idea of how to attract more customers and make sure I do not fall behind in setting prices at an attractive rate.
Bureau De Change: Again, five of these is already more than enough as they are all conveniently situated. Two of them are situate very close to the train station, where there are a re lot of passing trade, and a lot of tourists. .
M7What is the point of market research?
I must find out how many people there are whom will use the facilities available in Net Palace(tm) and how many people there are whom will buy the products such as coffee, tea, pastries etc. This is where market research is extremely important. It is used to find out what products and facilities such as using the computer and internet do people like or dislike?. How much would they pay?. Who and where will people use and buy the product? Competition and are people thinking of using the Internet and the computer?
The information can be gathered ...
This is a preview of the whole essay
I must find out how many people there are whom will use the facilities available in Net Palace(tm) and how many people there are whom will buy the products such as coffee, tea, pastries etc. This is where market research is extremely important. It is used to find out what products and facilities such as using the computer and internet do people like or dislike?. How much would they pay?. Who and where will people use and buy the product? Competition and are people thinking of using the Internet and the computer?
The information can be gathered in two ways:
Primary research
This is where 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. The different types of primary research are: questionnaires, interviews and testing and observing.
Each method of primary research has both advantages and disadvantages:
Questionnaires
This is the most common method of primary research as it is the easiest. The advantages are that detailed information can be gathered and customer's options can be obtained. The disadvantages are that it would take time to carry out a questionnaire and analyse the results obtained and the questions must be well thought out, otherwise the results will be misleading.
Interviews
This is a face-to-face conversation. (An interviewer and an interviewee). The advantages are that questions can be explained if the interviewee doesn't understand a question and very detailed information can be gathered. The disadvantages are that interviews are very time consuming and the interviewer may lead the interviewee's answer to the questions.
Testing and Observing
The best example of this type of research is when a supermarket gives out free samples of a product. The advantages are that this is very easy to set up and you get customers reaction quickly. The disadvantages are that people may lie to not hurt your feelings and you only get the opinions of a small number of people.
Secondary research
This is research that has been gathered for another reason and is available for anyone to use. This type of research comes in two forms:
Internal resources
This is information that has already been collected by a business and is 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 information is gathered outside a business. There are many external sources but vary according to what you are researching. The data has not been gathered for any specific purpose, so it is very general. External sources are trade associations, specialist magazines, reports, newspapers, government reports and media reports. This method of research is very cheap, but as it does have limitations it is not always the best.
Primary data Vs Secondary data
Primary research is data collected for a specific reason while secondary data is data, which is collected for another purpose. Primary data is better as it is normally accurate and it has been carried out just for a businesses' purpose, it will have more specific information and the information that is collected is of a neutral viewpoint.
Random or Quota sampling?
Random sampling is when everyone in the country has an equal chance of being picked, often by computer. The advantage of this is that everyone has an equal chance of getting picked, but there is a chance that some people picked do not use your product or service.
Quota sampling is where people are picked to do a survey because they meet certain characteristics such as age, gender, and ethnicity and where you live. This is useful as the personal characteristics find out what a certain group thinks about any topic.
I have concluded that I will use random sampling in the local area in order to find out what a wide range of people think and want in the local area. This is so I get data that is relevant to me. I will use primary research in the form of questionnaires. This is because the research will be accurate and more relevant as it is being carried out for a specific purpose. However, there are some limitations to my method of research, the major one being that it will be time consuming.
This is very important as it affects most aspects of my business. I will also group the people on there response to the questionnaire in social grades. The reason being that it will help create and image of the average wage, and class in the local area. I will cater for the group that the majority of the people fit into.
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
(A) Senior management- Doctors, Judges, Company Directors
(B) Lower management- Teachers, Solicitors, and Department Managers
(C1) Skilled non manual- Supervisory workers
(C2) Skilled manual- Plumbers, Electricians, Secretaries, Sales Assistants
(D) Unskilled manual- Cleaners, Assembly Line Workers
(E) Casual Labour- Unemployed, State Pensioners, Casual Workers
The most common methods of market segmentation are:
Life Style-A married person with children who have the same wage, as a single person will buy different products. This means that the advertising of some products will be aimed at the single person while some will be aimed at the married person.
Age-Different age groups will buy different products.
Gender-Male and females will often (but not always) buy different products.
Region-consumers living in different parts of the country will have different tastes and needs.
Income-people with higher levels of income will want particular products. This also means that the advertising campaign will be different for each group.
Questionnaire
The aim of the questionnaire is to find out what social group is not catered for in the local area. The results are shown in the form of a pie chart, as they are the best way to show percentages.
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Conclusion
After analysing my market research, I have concluded that the social grade of the local area is (B) Lower Management, and the average pay is between £25000 and £35000. The majority of the people do shop locally, the main reason being that the local shops cater for their needs. This shows that there would be a place for me in this local area because there aren't any specialised Internet cafes, aimed at social group B. The majority of people surveyed fit into this group, so it makes sense to primarily aim for them, and then the skilled non-manual workers.
Planning restrictions
Planning restrictions are used to restrict where a business can build or start up. If the government rejects then it would be against the law for the company to build there. Planning restrictions help to protect beautiful nature from being destroyed. They also stop factories from opening near homes. Planning restrictions also help bring businesses into areas where there is high unemployment.
From research into local planning restrictions, I have found out that I must get permission for any ballads placed by me near my shop, shutters, extra building at the rear of shop and any structural work. I do not need to worry about the replacement of doors and windows, as my business is a non-listed building.
Social effects of my shop
Social costs are the costs that the rest of the area must pay because of where a business or factory is situated. There can also be social benefits which means what is gained by the local area from placing a business there.
The social costs as a result of where I place my business are increase in litter and my result in local competition closing down. The social benefits from placing my business are that people shop locally, creates one or two extra jobs and helps the local economy.
Evaluation
The place that I have chosen has more advantages than disadvantages. This is because my shop will be right next to a main road which will allow people to see any promotions, and they will be drawn to the area by a Sainsbury's Local. There is also a
bus stop a few metres away from my shop which will make it easy to get to my shop. Another major advantage is that there is a bank nearby that has a cash point meaning it is easy to withdraw cash. There is also a college very near to my internet café so there is a good chance students will come and chat with friends etc. However, the disadvantage is that there are likely to be computers in the college so it would be more likely they would use it rather than paying for the use of a computer and internet. There are some disadvantages; primarily, there is no dedicated car park, and there are parking restrictions. The main parking restrictions are that there is no parking on certain points between 6pm and 8pm Monday-Friday. The planning restrictions in the local area are not very strict so this will help if I want to make changes to my, business. There are more benefits than costs, the only ones being litter and closing of competition. The major benefit of me placing my shop in the chosen area is that there would be a good chance of more people coming into the local area that would help other local shops.
How will I set the price?
The price must be right, as people will have to buy large numbers to make profit. The price you charge depends on what you are trying to do. I am selling pastries, tea, coffee etc as well as providing an internet service so I will have a low prices in order to attract a lot of customers and to see if my business will succeed. It is different for me as I don't sell things (apart from pastries, coffee, tea etc) to make a profit; I provide a computer service as my main way of making a profit.
My price
My price will be as low as possible, so that I can attract the largest amount of customers. I will also have some goods such as pastries, coffee; tea etc at is at high prices because they are unique. I am aiming at social group B.
How to price?
This is very important, as I must decide how to price the use of the Internet and how to price the food and drinks.
Hour based pricing will be the most suitable way to charge the use of the computer and the Internet.
The food and drinks will be charged at high price seeing that the social grade of this local area is group B and most of the local area earn £25000+ so they will be more likely to spend more money.
From my first plan, I know my place, my pricing structure and what group I am targeting. After evaluating my first action plan, I have found that I need to cover areas that I missed in my previous plan. .
I will be selling food and drink, so each and every product must have a 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 characteristics of the brand come from the products physical features of the product. This means the taste and the shape of the product. The manufacturer through adverts and packaging creates these.
What is the aim of advertising?
The aims of advertising are to inform people about the Internet café, create an image, increase sales, compete with other shops and introduce new products into the market. The aims of my advertising will be to increase sales, compete with other shops and to
create an image.
Informative advertising
Currently, 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
Their adverts try to persuade the viewer that their products are much better then the competition. Their goal is to attract people to buy their products. There are different types of pervasive advertising. They could be adverts that show a famous person using the product or adverts that compare one product with another.
Public relations
Public relations are the department that tries to promote the company and shows the good side of the company to the public.
Advertising agencies
Advertising is a very expensive business; to make sure that the money is well spent they will hire a company to do it right. For an advertising campaign to be successful it must reach the right audience, be attractive and appealing and make the money that the audience cost back in sales.
Control over advertising
In an advert you can't just put anything in it, there are certain rules. There is a code of practice inside the advertising industry that you must obey. The trade description act, which means that the advert must mean what it, says.
I plan to use informative advertising, as I want to inform people of the benefits of buying from my shop.
What types of media are there for advertising?
There are many different types of advertising, each has advantages, and disadvantages:
Television
This is a very powerful media to use to get your message across. The advert that is produced will be seen by millions. 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. You must also take into account the number of people watching, as this will effect the cost. To produce an advert you must take into consideration how many adverts can you afford, as there would be no point in only being able to run your advert once and when will it be shown and is the advert its self correct?
The advantages are that television reaches a large audience throughout the country and the adverts can make the product look much better than in print. The disadvantages are that it is extremely 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. The disadvantages are that people may switch station when the advert comes on, if there is poor reception then the listener may miss the advert. The advantages are cheaper than television, large audiences can be reached, this type of advertising is very good for local shops and the advert can be repeated many times.
Newspapers/Magazines
The advantages are that an 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 and it is easy to reach a target group with magazines. The disadvantages are that readers will skip the advert most of the time, 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 and magazine adverts cost more then newspapers.
Posters/ Billboards
The advantages are that the posters are normally big, colourful so they grab people attention, it can be targeted at particular areas of the country, they are very good to advertise in the local area and they are quite cheap. The disadvantages are that posters may be ignored by drivers, or pedestrians, message must be brief, or it will not work, and no detailed information can be placed on the advert.
Leaflets
The advantages are that it is very good to target a certain group, they are relatively cheap, they can include coupons for the reader and the reader may keep them around for a long time. The disadvantage is that it may not be read.
Cinemas
The advantages are that this is 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 and it is very good to target a young audience. The disadvantage is that people may dislike the fact that they have to wait for you advert before they can watch the film and the advert can only be 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. Also the cost involved in creating the advert, and putting it on television is enormous. 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. However, I will only target the earls court 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 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 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.
Questionnaire
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?
Questions
Which of these media's do have the most access to?
Television 35%
Radio 15%
Print 6%
Poster bill boards on transport 25%
Road side posters 3%
Cinemas 1%
leaflets 15%
Do you often read the leaflets that you receive?
Yes 44%
No 56%
When do you listen to the radio?
8.01 am -12 PM 22%
2.01 PM - 4 PM 8%
4.01 PM - 8 PM 34%
8.01 PM - 12 PM 10%
2.01 am - 4 am 1%
4.01 am - 8 am 25%
What grabs you attention in an advert?
Slogans 22%
Bright colours 18%
Brand names 35%
The shape of the paper the advert comes on 25%
Results
The results are shown in pie char form as they best represent percentages.
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Conclusions from results
My conclusion is that the best method for me to use is poster billboards on public transport. Even though more people have access to 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 £98 per month, for a small advert on the back of a bus. The leaflets that I will produce will cost £25 for a 1000 delivery, and printing costs vary.
The first adverts are the one that would be placed on buses. The advert is brief, as there may not be enough time to read it, and shows some information about opening times. The advert tells people about my Internet café and special offers.
The second advert is in a shape of a computer as I hope that this will catch a person's attention. It has the same colours, and style of the other advert so that people will remember them. There is also a discount if you show the advert on one purchase; this is a way of getting people into the shop.
Promotions
A promotions is not run for a very long time, they are used to help the advertising, and to get existing and new customers to buy the product. This is only ever used for a short time. The advantages of having promotions are that it can help to boost sales when they are low; it gets people to use new products and engorges.
The different kinds of promotion, which will be suitable for me, would be:
Money off
This is where you offer money off your product so to attract customers. Coupons could be used, these can be in leaflets, or come in a previous product that you buy. Another way is where there is a discount in the whole shop and no coupons are needed. The idea of these is to get the customer to use the computers.
In store displays/demos
This is where there is an in store demo of the product in use, or there is a special in-store displays. The idea of these is to incise the customer into buying their product.
The method of promotion that I going to use is price reductions, and in-store demos. This is because if people are using the computer for the first time, they would hopefully have some knowledge of how to use a computer and the internet. Using price reductions, such as using the internet for an hour at half price, 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. I will also have special offers such as buying a coffee will give you a free extra 15 minutes to use the computer.
I have concluded from my second plan is that I now know what methods of advertising, promotion, and packaging I will use and I know what benefits I will offer my customers .