Setting up a shop in York
Introduction
For my business Studies coursework I will be considering the key issues around setting up my own shop situated in York. I have decided to make this a sports shop as there are only a few sports outlets in York which gives me a greater opportunity for success. In addition this is an area that I could specialise in as I have good knowledge around this market already and will be able to use this to my advantage. It will be called CarverSports which makes it obvious that it is a sports shop and new to the area which should generate some interest. I will believe we should do a range of goods and specialise in a few, less popular sports. I think this will make our company a lot stronger, attract a variety of customers and more likely to make more revenue as there is less competition and good profit margins. We will be the only sports shop in York who sell sportswear such as American Football garments and karate clothes. I think this will give us the edge against the competition. Before we go ahead we need to do some research which I will cover later.
I have decided to go into a partnership with a long known friend of mine Mark. I prefer this to being a sole trader for a number of reasons.
* More capital invested into the business therefore less debt to pay interest on
* Less work for me to do so I can share the workload
* More likely to get a loan or overdraft from the bank
* Specialisation: My partner may be better at finance and I may be better at marketing
* Someone to share idea and look for new opportunities to make profit
However, there are some disadvantages of being in a partnership
* Unlimited liability for me and my partner together
* If my partner makes mistakes, I lose money too
* Not as recognized as Ltd or PLC
* The profits will have to be shared with him
Like most businesses, our aim is survival and to prosper. We will do this making sure that our prices are competitive. We will have a range of different sportswear and products that are not sold in many of York's shops. I think that this is an advantage because there will little competition. Although other sports shops in York are well established our advertising campaign should see us through by attracting new customers. Our marketing needs to be targeted carefully. As I have said previously, we will be using newspaper mainly due to the "coffee table" effect. Hopefully people should soon realize that our shop is good quality and have a look in to see what it is like.
Our business idea is to match our prices with our main competitors and make American Football garments a bit more expensive as they cannot be bought in many other shops. Sales will be lower but will have a higher profit margin which will help our overall profitability. This is called competitive pricing
Our main influences to become successful is for customers to recognize that we are a very competitive company and to come into our shop rather than needing to go into our rivals shops to compare prices , quality and range of goods.
o One of our main rivals is JJB sports. Our main problem is JJB sports have the ability to stop us achieving our objectives. JJB is a PLC and as such a large company with shares that are sold on the stock exchange. They must make good profits so they can carry on trading and also pay out dividends to their shareholders. It is therefore very important they are successful otherwise everyone would sell the shares, the share price would fall and eventually the company would collapse. JJB is a well known national company with a trademark name and a good reputation. When I researched into this in the centre of York a lot of people named JJB sports as the main sports shop in York. When I asked why, most responded by saying that it is easy to get to, they have a lot of stock or their prices are cheaper. JJB is also popular because of its advertising. They advertise on the television as well as on radio, in newspapers and in some magazines (mainly sports). 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.
o 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.
o 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.
o 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.
In conclusion, I have decided just to place an advert in the local newspaper for my shop, and a poster in the window of my shop. This way it would be seen by a lot of people and it would be more relevant to them all, living in the area. Having a television advert would be a waste of money, since the number of customers it would bring would probably not make the advert worth the setting up costs. A radio advert isn't a good idea, since it would take some time to make it and people are likely to forget it once they have heard it. The same goes for posters. The advert I have designed is shown on the following page. It is in black and white and fairly small so that it will not be costly to run in the newspaper. On the following page is the poster I plan to show in the window of my shop, this poster can also be produced in colour.
The questionnaire survey I did followed used the following question areas. This gave me some valuable field research data to help me make my decision about setting up CarverSport.
CarverSport Field Research Questionnaire
. What age category do you fall into?
0-18 19-25 26-35 36-50 51+
? ? ? ? ?
2. How often do you visit sports shops?
Daily Weekly Monthly Not often Yearly
? ? ? ? ?
3. What is your favourite sports shop in York and why?
JJB Sports Soccer Intersport Allsports Other
.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
4. How much do you usually spend when you visit a sports shop?
£0-£10 £11-£20 £21-£35 £36-£50 £51+
? ? ? ? ?
5. What are your favourite sports?
Football Tennis Cricket Rugby Golf Sailing
? ? ? ? ? ?
Water Sports American Football Baseball Hockey
? ? ? ?
Other Sports ...........................................................................................
6. What is your most Frequently purchased item?
............................................................................................................................................................................................................
7. What would you like to have in a sports shop which other competitors do not have?
..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
...
This is a preview of the whole essay
.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
4. How much do you usually spend when you visit a sports shop?
£0-£10 £11-£20 £21-£35 £36-£50 £51+
? ? ? ? ?
5. What are your favourite sports?
Football Tennis Cricket Rugby Golf Sailing
? ? ? ? ? ?
Water Sports American Football Baseball Hockey
? ? ? ?
Other Sports ...........................................................................................
6. What is your most Frequently purchased item?
............................................................................................................................................................................................................
7. What would you like to have in a sports shop which other competitors do not have?
..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
8. Would you prefer a cheaper sports shop with less popular brand names or a shop with higher prices and better brand names?
......................................................................................................................................................................................................
9. Where do you think the best place to put a new sports shop would be in York centre?
..................................................................................................................................
Thank you very much for your time. It is much appreciated.
Questionnaire Charts
Analysis of Field Research Questionnaire
As part of my research it was important to get the opinions and views of the potential customers. To do this I did some field research by going into York centre and asking 34 people a number of questions. These people differed in age and gender so I could get a fair range of results. Most people had said that they preferred shops that had top quality products even if the price was a bit more. This helped confirm my thoughts to make this part of the business strategy. This is also what our competitors do so I would not gain much competitive advantage but would ensure I could make profits even if I reduced the prices slightly.
My research showed that 11% of the people surveyed said that American Football was their favourite sport and 32% mentioned it as one they were interested in. When I looked in "JJB" there were no American Football garments in the shop. This will be used to our advantage.
Our research and analysis pie charts helped me decide exactly where to lease a shop. It is obvious that most people would want us to be located around the Coppergate area as it is convenient, near the car park and has other shops which attract passing trade. This will now be part of the plan that I am going to do although the rent costs will be slightly higher than other areas but we will be able to make more money with higher sales and high margins on American Football gear.
I think that this primary research was very successful and a lot better than desk research.
Mintel Report
A Mintel report is a type of desk research where information is gathered about other companies and how much money is made, what most consumers like to buy etc.
In figure 10, page 22 it confirms the most popular sports wear bought are shoes. Our company will sell a good range of shoes so we can hopefully make more revenue by selling high volumes. It is important to know what customers want otherwise the stock will just stay on the shelves and we will not make any profit.
In figure 14 page 27 I can see that 25% of customers have said that they like to shop in local independent shops. This is good for my company as we would be local and independent. 19% of people have said that they prefer shopping at our main rival, JJB sports. This was based on adults, which is our target audience is mainly.
JJB sports makes 35% of their turnover from other types of clothing which does not include replica shirts. Although our company will stock a few of these items, I think that most of the customers will shop at JJB sports for items such as these which is OK as it is taken into consideration in our plan.
The Mintel report is very important for companies such as mine to find out exactly what is selling well and what is not.
According to this report, local sports shops mainly focus their target audience at young adults but mainly men. Our target audience will be slightly wider and will focus on older people as well. 28% of men regularly visit sports shops whereas 22% of women also shop in sports shops regularly. My target audience would include women as well because my company cannot afford to ignore with such a large number of customers i.e. 22% of women.
When I asked in my questionnaire what attracted people to shop in certain shops, I got a number of comments. The most significant of these were good quality items and at a good price. The Mintel report showed the following top two reasons
1. 44% of people said they wanted durable and high quality products
2. 32% said they wanted to have brand names in their shops.
The Mintel report is done on a much larger scale than my questionnaire so I can take these results as relatively accurate and represent a good sample which would more closely represent what the general public thought. However, it does not state how many people were included in the report or where this questionnaire has taken place; it could have been in an out of town shopping centre or spread across the country. The top two things that attract customer are what we should include in my plans and objectives. Overall I think that this report is very useful and important to my company as it confirms what I have been thinking and is good desk research.
Advertising
Introduction
Advertising is one part of a business's promotional mix, and thus advertising objectives will be set in line with overall Promotional and Marketing Objectives, which in turn will relate to the organisations' Corporate Objectives. We can, however, offer general categories of possible objectives a business might set itself in terms of whether it seeks to Inform, Persuade or Remind the target audience.
Advertising Objectives
Informs
Informative advertising, seeks to tell the market about the product, explain how the product works, provide information on pricing, and build awareness of both the product and the company. Such objectives are normally pursued at the launch of a new product, or re-launch / up-date of an existing product e.g. to inform customers about our American Football sports wear.
Persuade
Here the objectives are to encourage the target audience to switch brands, make the purchase, and create a preference in the market for the product as opposed to the competition. Advertising of this nature is required in highly competitive markets, where ranges of product compete directly. In such circumstances businesses often seek to differentiate their product through Comparison Advertising - either directly or indirectly comparing its product to that of its competitors.
Remind
Reminder Advertising is used to maintain interest and awareness of a well established product in the market, often in the latter stages of its product life cycle when sales are declining. Such advertising is used by the likes of Coca-Cola and other leading brands. JJB sport do this a lot in their TV advertising
Advertising Strategy
Developing an Advertising Strategy to achieve the objectives of a campaign requires consideration to be given to both the 'Message' which will be communicated and the 'Media' through which it will be sent. In addition it needs to be at the right Time e.g. just at the beginning of a sports championship such as when England are about to play in the World Cup. I will now look at the Message and Media in more detail.
Advertising Message
In an advertising campaign, no matter how much money is spent, no matter what media is used, it will only be successful if the Message appeals to the target audience. Given the level of advertising which bombards the average consumer, a successful advertising message must stand out amongst the advertising clutter, be memorable and encourage people to want the product and go and get it. Thus marketing professionals are required to be creative, imaginative and innovative in developing the advertising message, both in terms of 'What is said', and 'How it is said'.
What is said
This is often referred to as the 'Big Idea', and will normally address the key benefits sought by the target audience, motivating the audience to pay attention. Given the constant search for new ways to appeal to target audiences, it is difficult to categorise the content of advertising messages which a business may send, below I have included three examples of actual message strategy.
Examples of 'What is said'
Gillette: The best a man can get
Is an example of a message which draws attention to the brand's position as the market leader, reminding and reassuring the audience, we all like to think we have the 'best'.
Reebok: Trying to loose your belly
Is an example of a business emphasising the functional benefit that motivates the purchase of the product in the target audience. Fitness, health and a toned body is very appealing to most people.
Sony Play Station 2: Its out there
Seeks to differentiate the product from both the competition, and previous version of the Play Station 2, whilst also generating awareness and interest in the new product.
How it is said
Our last example of the Sony Play Station 2 campaign, also underlines the fact that how things are said, is often just as important as what is said. Creating attention grabbing and memorable advertising is increasingly vital, given the amount of advertising clutter in the marketplace and high cost. As with message content, advertising is constantly generating new styles of advertising, to achieve this Sony recruited the services of David Lynch, a film director whose credits include 'Twin Peaks'. Below we include examples of some of the more established message styles.
Examples of 'How they say it'
Personality Symbol
Many businesses will use a 'character' be it an actual person, or animated character, to represent the product, or the company.
Lifestyle
Here the advert will link the product with a particular lifestyle to which the target audience is thought to aspire. For example until recently oxo used the 'Oxo family' gathering round the kitchen table to eat their meal.
Musical
Tunes can stick in the mind, and many adverts are built around a song or piece of music, for example one of Coca-Colas most memorable advertising campaigns was the 'I'd like to teach the world to sing..' commercial. Another example is the recent 'Extra, Extra' adverts for Halifax.
In addition the tone of the advertisement will need to be established, which can be either positive or negative. The advert may therefore promote positive feelings of fun, contentment, and happiness or take on a more negative sombre, or even threatening tone. Unfortunately the reality of advertising is such that recent research has claimed that even the best planned, and executed advertisements may only be noticed by less than 50% of the audience, and only something like 30% will actually recall the main message of the advert. There are lots of different types of adverts, these are some of them.
Media Strengths and Weaknesses
Media
Strengths
Weaknesses
Television
Dynamic attention getting media, combining visual, sound and animated stimulus.
Strong potential Impact & High market coverage.
Good at demonstrating products.
Enabling targeting through selection of viewing channels and slots between specific programmes.
High level of initial expenditure required.
'Now you see it, Now you don't' media, in that commercials are on the screen and gone within seconds.
Poor at communicating lengthy technical information.
Newspapers
The coffee table effect - advert can be referred back to several times.
Targeting is possible through profiling readership.
Good level of market coverage.
Static media, not suitable for product demonstration.
Potential for poor reproduction, sometimes limited to black and white print.
Possibility of an individual advert being lost on a page of adverts.
Short-life span, i.e. yesterday's newspapers become today's rubbish.
Radio
Mass use of radio by audience, particularly in cars on the way to work and home.
High geographic and demographic reach.
Targeting is possible through selection of channel and programme.
Audio communication only.
Now you hear it, Now you don't.
Lower attention levels than television from the audience.
Magazines
High quality reproduction, of colour images.
Targeting is possible through specialist publications.
Coffee table effect - advert can be referred back to.
Good pass on readership.
Static media, not suitable for product demonstration.
Control of the positioning of adverts is often under the control of magazine editor, rather than the sponsor.
Lengthy lead-time between advert being placed and magazine being published.
Outdoor
Including Posters & Billboards
High repeat exposure to advert.
Relatively low cost.
Low levels of competition, in terms of advertising clutter.
Little audience selectivity / targeting possible.
Static media, not suitable for product demonstrations.
Difficult to monitor effectiveness.
Potential for damage, via weather and graffiti.
All of the above media have a common problem in that they are all one-way communication, not requiring the audience to respond or generate the interest or motivating the public to pay attention in the same way required of two-way communication.
I think that I will be using the local newspapers to advertise CarverSports. This is good because we can then use the 'coffee table' effect where people can look at the advertisement again and again. This cannot be done on television where you have to watch for a long time before the advert comes on again or people start remembering the message. In addition the cost of television is very high for just a few seconds. It costs about £10,000 for less than a minute of advertising which my company cannot really afford as it is just starting out. The radio is a lot cheaper alternative, but again it does not have the 'coffee table' effect and does not have the visual impact the television or newspaper advertisements have.
Magazines are also a good alternative and in some way are better than newspapers as they are often in colour and can be targeted to the people you want to reach. If my shop is advertised in a sports magazine, then more people are going to read it if they are interested in sport. These also have the 'coffee table' effect. The price is also a lot cheaper than radio or television.
I have chosen local newspapers as well as magazines for my advertising. Newspapers have a high level of market coverage. They have the 'coffee table' effect and are locally read because it is pointless if people in London read the advertisement because they are not going to go all the way to York just to go to my shop.
I will try to think of a slogan or catchphrase to put in the advertisements. It would probably be worth paying someone or running a competition e.g.
"CarverSports is a great place to shop because..........." (In no more than 10 words)
The winner could get some free American Football sports wear. We could also get some good publicity and have the newspapers do an article with a picture of the winner getting their prize. This is good publicity and at no cost other than the prize and printing the competition leaflets.
Effects of our business on the Environment
Our business will use recycled packaging on some of our own brands to help save the environment, keep the costs down and be a good publicity stunt and hopefully attract a few of our environmentally aware customers into our shop. If we are selling our stock quite well then we will give some of our profits to charities. This helps to increase our reputation as a good caring company to trade with. I think that this is a very nice thing to do and it will gain the respect of some of our customers and as we are a local shop , helping local charities will bring our name to more local people.
We will be buying raw materials off other local companies which will mean that they will be able to make money on the deals helping to make York a more prosperous area. We will also have to hire a few local workers in the shop which will give them the chance to spend more and give them job security. Will also buy from overseas as often the stock is cheaper as the workers are paid a lot less. It is important that the do not work in 'sweat shops' to make the goods. I would make sure this is the case and they get good pay for the work they do.
Our company has also a few policies which include laws that have to be obeyed in our business. I feel the JJB Sports policy are a good example and would base the CarverSport polices on theirs which are shown on the next page.
JJB SPORT CODE OF PRACTICE ON SOCIALLY RESPONSIBLE TRADING
JJB are the UK's leading sports retailer and a prominent FTSE quoted company. Furthermore, given the nature of our supply chain, JJB is also part of an international business. This fact, along with the ongoing globalisation of the world economy, brings with it exciting opportunities for the future of JJB, but it also raises genuine concerns over the conditions in which the goods we sell through our stores are produced. These concerns are real and important to JJB because they are important to our customers. Furthermore, we also recognise our responsibility as a business for working closely with our suppliers to ensure that decent working conditions are upheld across the supply chain. We also share our suppliers' beliefs that better working conditions result in better productivity and better quality of output and therefore socially responsible trading is in the interests of employees, suppliers, retailers and consumers.
It must be stressed that JJB itself sources almost no product directly from the factories where its products are manufactured. Subsequently, the vast majority of products are purchased direct from UK companies who themselves source the product from the manufacturers and therefore JJB's Code of Practice has to be initially discussed with JJB's UK suppliers.
This Code of Practice on Socially Responsible Trading clearly sets out what we expect from our suppliers in terms of labour conditions. The Code of Practice will be distributed to all of our suppliers. JJB will also work closely with key suppliers to monitor and review their processes for ensuring ongoing compliance with their own Codes of Practice and internationally accepted best practice principles of labour standards (for example, the Ethical Trading Initiative (ETI) 'Base Code' and the 'Model Code of Conduct' devised by the World Federation of the Sporting Goods Industry). We believe that this process, along with our suppliers' own processes and controls, will help to ensure that labour standards continue to improve across the global sports and leisure industry supply chains.
THE PRINCIPLES OF SOCIALLY RESPONSIBLE TRADING
The principles adopted by JJB are based on the internationally accepted principles of the ETI Base Code of Labour Standards and the Model Code of Conduct devised by the World Federation of the Sporting Goods Industry. We expect our suppliers to comply with the principles outlined below:
Employment should be freely chosen
There should be no forced, bonded or involuntary prison labour and employees should be free to leave their work, after giving reasonable notice.
Freedom of association and the right to collective bargaining are respected
Workers are free to join trade unions and other such organisations and worker representatives will not be discriminated against.
Working conditions must be safe and hygienic
Workers must receive health and safety training, have access to clean toilets and potable water. Accommodation, if provided, must be clean and safe.
Child labour shall not be used
There shall be no new recruitment of child labour and companies must provide for the transition of former child labourers out of the working environment.
Living wages are paid
Wages must meet minimum national standards or industry benchmarks, workers must be aware of the conditions of their employment and illegal deductions will not be made from wages.
Working hours are not excessive
Working hours must comply with local national law or industry benchmarks. Workers shall not on a regular basis be required to work in excess of 48 hours per week and shall be provided with at least one day off for every 7 day period on average. Overtime shall be voluntary, shall not exceed 12 hours per week, shall not be demanded on a regular basis and shall always be compensated at a premium rate.
No discrimination is practiced
There will be no discrimination in hiring, compensation, access to training, promotion, termination or retirement based on race, caste, national origin, religion, age, disability, gender, marital status, sexual orientation, union membership or political affiliation.
Regular employment is provided
To every extent possible, work performed must be on the basis of recognised employment relationships established through national law and practice.
No harsh or inhumane treatment is allowed
Physical abuse or discipline, the threat of physical abuse, sexual or other harassment and verbal abuse or other forms of intimidation shall be prohibited.
Health and Safety
Suppliers and their partners shall endeavour to provide working environments that comply with all relevant health and safety legislation and best practice.
Environment
Suppliers and their partners shall minimise adverse effects on the environment and demonstrate commitment to ensuring continuous improvement in terms of their environmental performance.
Legal Compliance
Suppliers and their partners shall operate in full compliance with national and local laws, rules and regulations relevant to their business operations.
Community Development
Suppliers and their partners recognise the economic and social impact of their work and are committed to improving conditions in the wider community.
Furthermore, we expect our suppliers to comply with the following:
Monitoring and Compliance
Suppliers are able to demonstrate that Codes of Conduct on social responsibility and environmental matters are being adhered to across supply chains, via effective and ongoing internal and/or external monitoring procedures.
Awareness Raising
Suppliers and their partners will make efforts, in addition to the distribution of a Code of Conduct across their businesses and supply chains, to promote awareness and understanding of the principles amongst all employees.
Fair Trading
The manufacturers used by our suppliers are treated fairly and with respect and undue pressure is not placed on them through terms and conditions of supply.
Summary
I have considered my desk and field research thoroughly to ensure I know
The customer needs and wants
The products that sell best
The products that are not sold currently by the competition
The target customers
The type of advertising and promotions
The location
I have added this to my own knowledge and that of my partner to establish the best options for my plans. I am a lot clearer on what I need to do and how to do it. This will also help when I go to see the Bank Manager for a loan to get started.
I would need to train up the staff, pay them a good salary and keep them happy so they were seen to be helpful and friendly to the customer to ensure they give customer satisfaction
Conclusion
In conclusion to this piece of coursework, I think that my business will work quite well. We will obey all of the laws including the trade descriptions act and follow our own guidelines of code of conduct. I am sure that my business will be a success if I put in the hard work and great ideas to attract customers.
If I did this again then I would not choose a sports shop as I found out that there were more than I thought and the competition is more as JJB Sport can get better deals from manufacturers because they buy such huge quantities. Apart from that I think that everything has gone very well.
I did different types of research and got the results that I needed from the Mintel report and from my questionnaire. My company would find it difficult to start like all companies, especially with rivals such as JJB sports. However, I think that our company will pull through.
Bibliography
* Mr Benoit's notes
* Notes off the Internet
* Business Studies textbook
* Mintel report
*
*
*
*
To: Mr C Benoit From: Jonathan Carver 11NA9