Setting up a good video shop.
Executive Summary
Video shops have been around for a while and have grown since then. Everyday there is a new film released in the market. With the growth of technology the want to watch films is becoming higher and higher within people in Great Britain.
Already, there are 2 major video retail chains in the U.K. 'Blockbuster' and 'Choices'. These have proven to be the best two VHS and DVD rental & sales chains in the U.K for providing their consumers wants and good service.
With people having more free time nowadays and the trend of watching movies
increasing, more demand for videos also increases. A opening of a new video retail
market is not necessary in the U.K.- since there are already very good video shops but
however, for some people location is a major issue and because of this do not go to hire videos out as often as they would like to. More information about the state of the market can be found out by researching primary and secondary data.
An opening of a new video shop in a good location would help increase market share for the shop and this then will help promote the video shop and make it a popular name for people to come and purchase videos from.
Because of the variety of films in the market nowadays video shops target consumers for all ages and therefore all consumers have to be drawn into buying films.
I have decided to open up a new video store as a franchise which will provide a lot more facilities than the average video shop and open it in a location where there are hardly any video shops for people to purchase for convenience to them.
Objectives
) To construct a good video shop on privately owned property and have all fixtures of the building sorted before hand.
2) To Increase Net Profit Each Year
3) To sell products other than VHS and DVD's. Things like video games and food/drinks.
4) To sell different new releases every month.
Mission
To be the local leader in rentable home entertainment by providing outstanding service, selection, convenience and value.
Keys to Success
) Will be the first business, which provides a wider range of goods
2) Business will be located in a good place where no other video shops around, next to several housing developments and maybe next to restaurants.
3) Product quality will include a large variety ofVHS and DVD's.
4) Business has potential for expansion in different towns.
5) Two way traffic near shop to attract customers
Company Summary
The new video shop will be known for selling high quality videos and DVD's new/old releases. Other products will include food and drink, video games and blank tapes.
Company Ownership
The video shop will be a franchise like most video shops are, and will be a partnership between me 2 two other people.
Start Up Summary
The start up costs will include tiling and quality walls and windows in the place. Rent can be paid monthly. The start up costs will include all plant and machinery which is listed below with all the prices: -
Plant & Machinery
Cost for 1 Unit
Units Required
Total Cost
Revolving video display rack (holds 45 videos)
20
20
Wall Mounted video display Racks (holds 60 videos)
40
25
000
TV/Video display
350
2
700
Counter/ display counter (2m wide)
500
2
000
Glass fronted refrigerator
050
050
Ice cream display cabinet
000
000
Combined phone/fax answering machine
300
300
Till (Itemised receipt + Other features)
400
2
800
Credit Card swipe machine
20
20
Bank Note Checker Pen
8
2
6
Computer
800
2
600
Business software accounting
20
20
Payroll
20
20
Printer Inkjet
00
2
200
Burglar System
600
600
Shutters
200
200
Safe
400
400
Under till Bank note
20
20
Domestic Microwave Oven
10
10
Sink (stainless steel)
200
200
Basin
50
2
00
Large Toilet Role Dispenser
20
2
40
Slow release push tap
35
6
210
Soap dispenser
20
2
40
Paper Towel Dispenser
2
3
36
Total Cost
1202
Company Locations & Facilities
The location is very good as it will be near a restaurant so people who do go out a lot can
pick up movies on their way home- and it is near lots of housing areas where there are lots of people living and there are no other video shops around and people have no other place to purchase videos from. There is also a lot of traffic going past the shop, so this way people can notice it as they drive past. The property for the shop will be rented as buying will cost too much. We may have to pay advance rent.
Competitive Comparison
No other video retail business in Peterborough has 2 stores and sells old classics aswell as new.
Sales Literature
Sales literature will be distributed to the general community, will include fliers, advertisement in the local newspapers and magazines.
Sourcing
All equipment and supplies are made through a regional distributor.
Future Products
Future products will depend on the success of the business in the first couple of years.
Future products could include hot food to take away.
Target Market Segment Strategy
Our video shop will target the high income and mid income consumers who are usually the ones who purchase and rent high quality videos more as it is not a necessity of life but is a want or a bit like a luxury.
But it is also going to target people of all ages as films are made for people of all ages.
Strategy and implementation summary
The video shop is planning for slow growth every year expanding to get more new
releases even ones from different countries i.e. Indian films.
Promotion Strategy
Our video shop will be promoted by: -
• Flier distribution to consumer's homes within a five-mile radius
• Newspaper advertisements will be purchased during the first three months of the
business until a clientele is built.
• Promoting products at an introductory price for its grand opening
Consumer Sales
Consumer sales will start early 2003 (or sooner if fittings and fixtures are completed by then), because if it can open near Christmas time- DVD's and videos are good Christmas presents so we may get good sales in the first month.
Our prediction is that more sales will occur around holidays when people have a bit more free times to watch movies or around Christmas when people are buying presents- so our planned sales fore cast is shown on the graph below: -
Predicted Sales forecast for First Year
As you can see we are expecting to see a greater demand in December time for
Christmas, then average for the normal months- then a rise again for Easter- Jun/Jul are the long summer holidays for children so more demand in those months- then a great demand in October November and December time because of people doing Christmas shopping. We will also be expecting greater demand for videos on weekends than weekdays because that is when people have free time. Fridays, Saturdays and Sundays will be the most popular days of the week.
Management Summary
Our video shop will hire an employee to assist with the business after first four months of
opening.
El - effectively use the results of primary and secondary market research data and a competition analysis to complete the market analysis.
Secondary data
This type of data makes use of existing data that the business can use for its own
advantage. It is an important part of market research and goes hand in hand with primary data.
Internet
This is a method of secondary research because we can use what is already there for the business as the internet has a lot of published materials present on the internet although this method could be risky because the data from the internet may not be necessarily reliable as articles or magazines, trade journals may only want to put their own point across.
These are just two sources I can look at to find out more about the video shop that I am planning to open up.
Analysing potential methods of research has shown me that I prefer to use questionnaires as the means of collecting data that is required for the video shop. To make sure the questionnaires are answered correctly and to make are it is a fair test I will get the questionnaires filled in front of me. This would increase the reliability of the information gathered.
The results from the above questionnaire were incorporated into graphs so that I would be able to get a more clear idea of people's opinions of the video shop.
Secondary Data
Once there was just the VCR. But home video is now becoming a more complex
business, with the rise of the DVD player and the impending introduction of video-on-
demand creating challenges for distributors, retailers and rental stores alike.
The VCR has become almost as much a part of the furniture in this country as the
television, with a player in almost nine out of 10 homes.
But the rapid take-up of DVD players represents a major challenge for the video industry. With now traditional enthusiasm for new entertainment technology, the country has embraced a format that offers digital sound and picture quality, bonus features for film enthusiasts and players that have tumbled in price from more than $1,000 to less than $400.
The growth of the DVD (digital versatile disk) - reputedly the most rapidly accepted home entertainment format in the history of electronics - is the single biggest development for the industry. But there is another challenge looming in the delivery of films into homes - video-on-demand (VOD).
• The industry was worth $403.2 million at the wholesale level - sales by
distributors - in 2000. After peaking at $414.4 million in 1996, business declined
for three successive years before a 10 per cent increase on the back of DVD
growth last year.
• Although rentals have traditionally been difficult to calculate, reports that the total
income of businesses in the video hire industry was $595 million in 1999/2000.
Some see the rental industry as being in a healthy but mature phase; others regard
the threats from competing entertainment forms, especially video-on-demand and
digital television, leading to an inevitable shake-out for stores.
• As ever, rental store profitability largely depends on new releases that have
succeeded in cinemas, with the peak rental period for a major release now as short
as two weeks according to some reports and most of the rental income earned in
the first ...
This is a preview of the whole essay
income of businesses in the video hire industry was $595 million in 1999/2000.
Some see the rental industry as being in a healthy but mature phase; others regard
the threats from competing entertainment forms, especially video-on-demand and
digital television, leading to an inevitable shake-out for stores.
• As ever, rental store profitability largely depends on new releases that have
succeeded in cinemas, with the peak rental period for a major release now as short
as two weeks according to some reports and most of the rental income earned in
the first eight weeks. Thus the issue of' copy depth' - rental stores having enough
copies to meet demand - is as relevant as ever.
• While one leading retailer says the number of rentals is heading down,
distributors are shipping videos and DVDs at record levels. A decade ago, there
were 6.48 million units reaching stores. Last year there were 17.2 million,
including a massive 11 million videos for the 'sell-through' market (sales to the
public), 3.5 million videos to rental stores and 2.7 million DVDs, which are
released as sell-through titles but often go to the rental market.
• For distributors, rental revenue has now been overtaken by sell-through. Revenue
from the sale of tapes for rental was down nine per cent in 2000 to $175.5 million,
while sell-through tapes and DVDs combined to earn $227.7 million. But as
suggested above, DVD sales also include titles that end up as rental stock: one
distributor says the country's 2,000-odd video stores are starting to put 15 to 20
per cent of their purchasing budget into this format.
• Sell-through tapes (worth $163.6 million to distributors in 2000) still dominate
over DVDs (worth $64.2 million), but DVD sales are growing rapidly, with
revenue from this source rising 248 per cent between 1999 and 2000.
State of the industry
Even though the figures suggest a turnover in the past five years, many distributors believe their industry is in good shape.
What's really changed is the way the business has become more complex from a
marketing point of view. In 1990, the sale of videos for rental accounted for three-
quarters of distributor revenue; a decade later it was less than half. Instead of just
releasing a new title for rental at, say, $90, distributors are now juggling simultaneous
releases on both VHS and DVD at various lower prices.
For distributors, this increases the risk. They once shipped 60,000 copies of a top rental title. Now they talk about 50,000 to 55,000 being the maximum for a blockbuster on VHS. But that's without factoring in potentially huge DVD sales.
To maximise rental sales, some distributors have launched revenue-sharing arrangements with stores: selling titles more cheaply but also taking a slice of rental revenue. Retailers have to decide whether to buy, say, 50 copies at $50, or 70-80 copies at $35-$40 and then share the increased rental income.
Interestingly, as distributors seek to compete with pay television, different versions of
films are reaching the market on video. Often these versions have a higher rating (M
rather than PG, R rather than MA) than the cinema release. There might also be different DVD editions: a standard version might by followed by a 'special edition' with extra features six months later. Three different versions of Titanic were in the top 25 sell- through titles in 1998 - a standard edition, a wide screen edition and a limited edition box -each tapping a different market.
So what sort of titles are working in the rental market? 'Marquee attractions,' says one
distributor. 'Big theatrical titles.' Variations on the same theme are repeated by other
retailers and distributors.
With the industry in a mature phase, stores are battling competition from other entertainment forms including video games, the Internet and pay television with its extra sport as well as film programming. 'There's less video being watched without question,' says the head of one rental chain. 'There's definitely a plateauing if not a decline.' Work pressures have contributed to rentals being primarily a Friday-to-Sunday business, with 65 per cent of retailer income in these three days. There's also a heavy emphasis on major releases in this period: 'Realistically 90 per cent of the population want to see 10 percent of the films,' says a retailer.
The copy depth issue means a medium-sized store might buy 50 to 60 copies of a big
title. 'The peak demand is less than two weeks unless you get consecutive wet
weekends,' says the same retailer. Stores need to maximise rentals before demand slows. One distributor claims that 80 per cent of rental revenue is earned in the first eight weeks of a title hitting the shelves. The ability to buy enough copies of a blockbuster title to overcome the copy depth problem is what allows the country's largest chain - Blockbusters - to promise customers they'll get it first time or they'll get it free. In terms of threats to the industry, the timing of the video-on-demand roll out is described by one distributor as the $64 million question - it's thought likely to have an impact within two to four years. Retailers also believe digital tele- vision will be a threat in the same timeframe as new services and interactivity become available to households. To combat these challenges, the head of one of the major chains believes stores have to shift from 'rentailer' to 'retailer'. In other words, they will have to build their business around selling videos and DVDs, rather than renting them.
Maintaining a viable business rests on the 'window' between video and later releases.
One retailer sees the video release continuing to be four to six months after a cinema
release, with pay-per-view and VOD six months later. Pay television would follow six
months later then free-to-air television in a year's time. Even so, retailers expect a
rationalisation in the number of video stores.
In recent years, the major rental chains have extended their influence. Many
independently owned stores have become franchise outlets for Video Ezy or Blockbuster,
the attraction being the greater buying power of the chains.
The DVD revolution
With the rapid take-up of players - and the flood of titles being released - DVD seems
likely to overtake VHS within five to seven years. As well as the technological advantages and the extra features, enthusiasts point to the ease of storage and relative indestructibility of discs.
Data from GfK Marketing Services show a minuscule 4,541 DVD players were sold in Britain in the 12 months to October 1998. In the next year, sales were 30,174, and in the following year 129,203. In March 2001, it was believed there were about 400,000 players in British homes, plus many other machines with DVD capability - computers with DVD-ROM drives, PlayStation2 units and hi-fi units.
Plummeting prices have brought DVD players much closer to the price of VCRs, which also reportedly sold well in 2000, especially in the lead-up to the Olympics.
Purchasing a DVD player has begun expanding from the traditional 'early adopters' and 'tech-heads' to film enthusiasts who like to buy titles rather than rent. Each DVD
household reportedly bought eight discs last year, compared to two tapes for each VCR household.
According to the Video Trader Yearbook, the first DVD to be released in this country was
Evita in late 1997. By the end of 1999, Video Trader reports that 640 titles had been
released, with another 440 in 2000. Compare that with VHS sell-through releases, of
which there were 859 in 2000. That is, 34 per cent of all releases were on the new format just three years after the first title reached the market.
In the early years of the clash of formats, there seems to be an age difference in the
appeal. It's said the core audience for video is now 18 to 45 whereas the primary
audience for DVD peaks at 30. Backing this up is the fact that action and sci-fi titles have been driving DVD sales.
One boost for the industry, paralleling the music industry's shift from vinyl to CD, is that DVD has revitalised old titles ('back catalogue'). Says one distributor: 'Over 20 per cent of DVD titles being purchased are movies over five years old.'
The expansion of format options raises some pressing issues for rental stores. Some are already said to be phasing out VHS tapes; others are wrestling with ordering issues and juggling shelf space.
As of early 2001, sales of DVDs had not yet significantly eroded VHS at rental or sell- through level. 'But it will happen,' says one leading distributor. 'And it's going to be this year.'
The secondary data emphasizes on how the increase in the 'DVD revolution' is affecting video stores.
Primary Data
Primary
Primary data is a collection of new and original information first hand. Its main use is in market research. Collection of primary data usually involves a variety of methods such as questionnaires, interviews either face to face or telephone. The one that we are going to concentrate on is questionnaires. Primary data is the most reliable and is more likely to give us first hand experience of the local market where I plan to sell my product or service.
Questionnaires
This type of data is probably the most important method of primary research. This is
because it is easy to understand and the answers gathered from it are critical or any sot of product as it is likely to tell us about the customer's attitudes to the product. With questionnaires businesses re also likely to carry out a statistical analysis because the questionnaire is closed therefore it is easy to understand and in the right order. The questionnaire is important to the business plans success for it will give us an initial idea of what consumers may want from as new video shop. The questionnaire also gives us a direction of where we need to focus to attract more customers. However the data needs to be handed out to a broad-spectrum of people of all ages so we can identify market trends and also to make our research more reliable.
Face to face
This method is valuable a well because it allows the interviewer to gain more detailed
and sensitive information that they may not be able to gain if the interviewed the on the street. It also allows contact between the researchers and respondent. Face interviews can be very flexible. The disadvantage of this type of research is that the answers could become biased. It is also very time -consuming and it would take longer o complete.
There are many other methods of primary research these are just two of them.
To get primary data results about the video industry I carried out the research,
questionnaires were handed out to people regarding video shops. A copy of the
questionnaire is at the back. The results are shown below in the graphs:
How Often do you visit the video shop?
Once a week
Twice a week
Once every two weeks
Once a month
Other
How far is your nearest video shop?
0-15mins
5-20mins
/2hours
Next Street
What is your favorite film genre?
Romance
Horror
Action and adventure
Thrillers
Cult
Comedy
Sci-Fi
Other
Other products?
Popcorn
Beverages
Drinks
Food
One or two day rental?
Day
2 Day
Primary Data Cont
How do you travel to your video shop?
Car
Bike
Walking
This is a very important question, as I need to know how people travel to the video shop in order to see whether any vehicle parking space is required. From the chart above I can see that the most popular way of traveling to the video shop is by car- therefore some form of parking space is required outside my video shop so people can park their vehicles before entering the shop.
The primary data results show that it would be very convenient to open up another video store- as clearly people have stated improvements that they would like to see in their previous video shops.
We would expect a new video shop opening, to increase the visitation of customers to video shops, as there would be a lot more advertising and more availability. This idea was shown in the primary results- as the majority of people asked said that they do not visit the video shop due to the inconvenience to location.
New things being introduced to video shops is what people like to see, things like food and beverages- as no other video shop has this an introduction to this would increase the likelihood of people visiting the video shop.
People also mentioned that they are drawn into buying/renting movies after seeing previews- an idea would be to have a section including the top ten new releases and a screen showing previews of all ten- that would give customers an idea of what the film is about. Also a release of a new film could be sponsored by the new video shop- which will draw people to come and purchase the film from this certain video shop.
Competitors
From the secondary data I also found out who my competitors would be Blockbuster are one of our main rivals and they are located in Millfield Street Peterborough. Blockbuster is located on one of the main roads in the Peterborough area as Kwiksave supermarket and Chip shops are also situated near the video shop. As Blockbuster is situated near a busy area it has the potential to attract customers.
Membership at Blockbusters
Members of the public are welcome to the shop free of charge however if they want to rent videos they have to become proper members by having a card. To have your own card the members have to be 18 or over
Products
Blockbuster sells products under the following descriptions.
• Beverages - soft drinks
• Videos
• DVD's
• Computer games
• Snacks - crisps, chocolates
Promotional Material
Promotional material comes in the form of local newspapers ads informing the public of current offers. Mail drops are made to all customers with promotional offer leaflets
enclosed. Blockbuster also has their own website where they advertise new releases and promotional offers on the website to make customers aware of the offers.
Price
Blockbusters pricing strategy is to give a good quality service of rentals at a reasonable
price. Rentals from Blockbuster are £3.50 for two nights.
The Box office can match it by selling rentals at a lesser price.
Loyalty Schemes
Blockbuster has a scheme where if customers cannot rent a new release they can come
back and get the rental for free next time.
More Secondary Data
Blockbuster continued to hold the top spot among Video Store Magazine's Top 10 video revenue generators, listing with an estimated 2.4 percent growth in DVD and VHS revenue, to $3.55 billion in the United States (including VHS/DVD rentals, sales and late fees but not franchise revenue or video game and other ancillary revenue). Wal-Mart's estimated video revenue leapt by 58.4 percent and threatened to unseat "Big Blue" from its leadership position.
The home video retail business was, in a word,"spotty," said Blockbuster CEO John
Antioco."There were a lot of variables in the mix in 2001," he said. "You had DVD
gaining tremendous momentum, VHS declining precipitously and the retail factor of
DVD playing a major role in consumer behavior."
Blockbuster responded to DVD's surging popularity with a massive remerchandising of its stores to remove about one-quarter of its VHS inventory and focus on DVD. That resulted in DVD transactions rising 160 percent in 2001, according to the company, and an increase in DVD rental and sales revenue to more than $800 million, according to Video Store Magazine market research. The company's approximate $2.68 billion in VHS rental and sales revenue represented a 9 percent decrease from 2000.
Antioco noted that the company's rental revenue was less than expected due to "retail
cannibalization" of DVD. This was most evident, he said, in the fourth quarter, when a combination of a boom in DVD player sales and a strong slate of films made what could have been a stellar rental period less so, since consumer behavior began to move toward a buy vs. rent model. Antioco did attribute DVD's higher margin potential as a significant contributor to his company's net income turnaround in 2001, when corporatewide the company had a positive net income of $12 million, compared to a $57 million loss in 2000.
"[Blockbuster's] biggest challenge, as always, will be to get into the sellthrough game,
which is where we think the growth will be over the decade ahead," said Tom Adams,
president of Adams Media Research. He thinks the company is nimble enough to respond quickly now. "They've really shown the kind of flexibility that's required in times of technological change," Adams said.
"We really did not know how to compete against retail DVD in 2001," Antioco
concurred. "I think we have now figured that out, and you will see that reflected in our results for the balance of2002." The company has a multiage plan, with new- release and previously viewed sales strategies, and a marketing/promotions campaign that will address this, Antioco said.
"All that will grow in 2002," he said. "We will be making some significant and
innovative changes in the way people access Blockbuster for movies and games."
Besides these programs, Antioco also cited 2001 as a year when the company improved internal operations, speed and quality of customer service to position itself well against the mass merchants.
Blockbuster opened 183 stores in the United States in 2001 and is forecasting about 150 new U.S. stores in 2002, along with 150 new international outlets, where same-store sales experienced double-digit or near double-digit growth, Antioco said. Total stores worldwide in 2001 numbered 7,981.
Wal-Mart embraced home video - and DVD in particular - in an even more dramatic way in 2001. Its dominance in the sellthrough side of the business was illustrated not only by its growth in consumer dollars, but by studio estimates that Wal-Mart was their largest customer in dollars in 2001, accounting for as much as 25 percent of the studios' DVD market and 35 percent of their VHS business. Home video is reportedly Wal-Mart's single-largest product line, even as the world's biggest company continues to aggressively drive catalog prices down on VHS and DVD, and drive up volume.
Hollywood Entertainment's financial prospects and stock price rebounded in 2001 after a difficult 2000 that prompted the company to put a moratorium on new store openings. It enjoyed an 8.7 percent rise in revenue in 2001, and net income that year was $100.4 million, compared to a net loss of $393.7 million in 2000. Hollywood Video's response to the sellthrough business will be its aggressive push into the previously viewed DVD business, according to president Mark Wattles, who oversaw his company's issuance earlier this year of 7 million new shares of common stock, raising capital for a projected 200 new stores in 2002.
Kmart, 2000's fourth-largest generator of home video revenue and the second-largest
seller of home video, may have been the biggest story of the year, as its financial
meltdown and uncertain prospects in its current Chapter 11 state continue to loom over the home video business, which counted a number of studios as the retailer's largest creditors. The company's market share in home video sales, estimated last year to be 6 percent, according to Video Store Magazine market research, will likely fall as the retailer shutters a reported 284 stores and lays off 22,000 employees.
As DVD player penetration into U.S. households grows in 2002 and perhaps crests 40
percent or higher by year's end, DVD promises to play an even larger role in the retailing economy than it has in its short, meteoric history and may result in a non specialty store chain becoming the leader in home video revenue for the first time in the history of the VSMTop 100.
A report also states that last Christmas the most popular Christmas present was DVD's-this shows how DVD's have become more popular.
List of Other video shops in Peterborough that could be possible competitors.
Apollo Home Entertainment
67 Oundle Road
Peterborough
(01733)310404
Blockbuster
282 Lincoln Road
Peterborough
(01733)312417
Choices Video
328 Lincoln Road
Peterborough
(01733)311113
Choices Video
299-01 Lincoln Road
Peterborough
(01733)897660
Apollo Home Entertainment-
Advantages- The advantages of Apollo home Entertainment is that it is one of the very few video shops in its area, so people who live around that area tend to purchase videos from there when they have to.
Disadvantages- It does not sell a wide range of goods like blank tapes, food, video games etc. Just videos and the odd DVD's. Also Apollo is not a very well known company in Peterborough.
Blockbusters-
Advantages- Blockbusters is the most well known company in Peterborough, is very
popular and has many offers regularly for its customers. They have hardly any complaints about their services.
Disadvantages- Because of Blockbusters popularity most people like to join it but
because of its location they cannot- it is not located in a very good place.
Choices Video-
Advantages- Choices video also is a popular video, so much so, that it has 2 shops in
Peterborough on the same street. Choices sell a wide range of products.
Disadvantages- Some video print qualities are not very good. Some complaints have
arisen for choices.
Our video shop has already decided that its products are going to be different from other video shops- and they are. No other video shop mentioned above sells old classic movies like we do. We will too have offers like Blockbuster does. In order to be as popular as our competitors we will have to provide a good service as well as advertise- this will cause a good reputation for us and repeat business aswell.
E2- in the marketing plan, describe and explain the choice of product/service, the price(s) of the product/service, the promotional methods for the product/service and how the product/service will be distributed to/provided for customers.
All aspects of business are concerned with marketing because everything, which you do, can have an important effect on sales and profits. Marketing is about the total approach to organising and running a business, which places an overall focus on the needs of the customer. It includes not just the research needed to assess the demand for a product, but a whole range of factors, which create an impression of the business. These are essential in reassuring customers that they are dealing with a sound and professional organisation, which provides value for money.
To start up a video shop, the following needs to be taken into account: -
• Trading name
• How the telephone or correspondence is answered
• The design of business stationary and signs
• Having clean floors and windows in a shop or office
• The personal appearance and body language of staff
• The attitude to customers, staff and suppliers
• How after sales service and/or complaints are dealt with
• The packaging and presentation of products and services
• Selling techniques used
• The unique selling point of the business e.g. better range of stock, friendlier staff, quality products
• Where, when and how advertising takes place
• Knowing about competitor products, price and services to ensure that yours are at least as good, if not better.
I have decided to start up a video shop business- which will sell new and old videos and DVD's and video games.
The partnership aims to:
• Provide a quality service to the customers
• Establish a reputation for excellence initially at an area level
• Maximise profits by operation in a niche market
• Concentrate on the quality of the service rather than the quantity at which we might be selling rentals.
Marketing mix is when consumers buy a product they are attempting to satisfy a wide range of desires. The marketing mix refers to the combination of elements within firms marketing strategy, which are designed to meet or influence the wants of customers in order to generate sales. This bit of the business plan is very important to me as it aims to show me how sales we will be achieved.
• Product
• Price
• Place
• Promotion
Good marketing mix encourage customers to build up loyalty to a particular product or product range.
Product/Service
The name given to a business can affect the way in which its potential customers perceive it. Ideally the name should give customers some idea of the nature and scope of the business. This fact has been used to come up an idea for the name of our video shop business.
Several video shop names were considered in a brainstorm- then previous video shop
names were analysed and the overall name was decided as 'The Box Office'. Targeted
consumers were then asked about this name and feedback was positive. There fore this
was an ideal name.
There will be many varieties of products sold by The Box Office, these will include
products previously sold by other video stores and more looking at the primary data
results.
The selection includes: -
~ New and old Video releases on VHS
~ New and Old Classics on DVD's (as the expansion of DVD's has led to more demand)
~ Food
~ Video Games
If there is enough budget Toilet facilities for staff and customers will be provided.
There will be an email and telephone facility for the company for customers to contact
the video shop with their enquiries/complaints etc.
It has been decided that the video store should contain old classics aswell as new as we
would like to target customers of all ages. This would help increase the popularity of
'The Box Office'. There will also be video games for the younger population.
Because the video shop will contain a lot of products- the actual place will be two stores
high with video games on the second floor and all movies and food on the first floor.
Price
Price to a large extent, will be determined by 'what the market will bear' and the costs
which you have to cover. If the price is too low, profits may be low and the product could look cheap and inferior to its competitors. On the other hand, too high a price could mean that people will not want to buy. Therefore, it is important to establish a fair price, which provides a reasonable profit and retains customer goodwill and future business.
The price of all of our products will be the same as our competitors but slightly lower at first- as this will attract customers to join membership with The Box Office- then later the prices will be raised.
Short-term objectives such as responding to the threat of new competitors, or the need to extend the life of the product may affect pricing strategies. We can use cost based pricing strategies such as price skimming to help us with our products and service Price skimming is done to charge a high price on a product for instance when the DVD or VHS is first launched in rental we can charge a high price to have a substantial competitive edge. Another price strategy that I can consider is:
Premium pricing, which is used to charge a high price where there is uniqueness about a product or service. Penetration pricing on the other hand is charged on products and services to set artificially low prices in order to gain a market share. I can use this sort of price stratify for when we first open our shop because if we want to gain a lot of customers we will have to attract customers with prices of our rental's.
Once market share is increased we can charge a higher price because we could be more confident of still having our consumers. For my business I will use penetration pricing as I feel if I have slightly lower prices on the movies than our competitors Blockbuster we will be able to gain some of their customers. Also another difference from our rivals will be that I am going to let people rent out old movies and these will be at a reasonable price. This offer will make the customers happy and more delighted with the service therefore meaning this could guaranteed a loyalty from their customers along with their needs being satisfied. Price I feel is very important because the products price will have to be at a reasonable price for the people to buy the product because if the rentals are too expensive people will not buy it and this will lead to a profit loss.
Place
This is about distribution, that is, how products are made available to customers.
Distribution involves the physical process of getting goods from manufacturers to consumers. This includes the storage, transport and handling of goods which together can represent a significant element of the firm's costs.
Our products will be sold in a shop like all other video shops- where people can rent/buy DVD's/VHS/games. Our video shop will be situated where there are hardly any other video shops around- so people who live around that certain area will find it convenient as there will be no other place to go. This way The Box Office will also get more customers.
Promotion
A good product will not sell if the customers do not know it exists. Promotion is also very broad based and most visible aspect as it means communication with the customers. Promotion is persuasion its disciplines include corporate identity, advertising and so on. Promotion is very important in my marketing strategy because if the product is promoted well and in the right way we will be attracting a lot of customers and more people will be aware of the product therefore meaning more profit. We will promote our video shop by having offers, which will help us gain customers. Promotion is properly one of my key aims in the marketing strategy because if the customers are targeted well we will be making a lot of profit from out video and DVD rentals. By promoting the product well and making a profit we will be one step ahead of our rivals if it works out for the best. The promotion is another way for us to have better direct communication with our customers as well because the customers will be able to see the advertisement offers etc and benefit from them if they like the offers we have with the rentals. The type of offers we could have are buy one rental and get another one for half price or we could do deals such as rent a new video such as Harry Potter and if the customer wasn't able to rent it due to popular demand they can watch it for free next time. Open and Closed notices on the doors of our video shop which can be used to keep an advertisers name in mind of the shoppers. Promotion being done in cinemas may help more people become aware of our video shop. There are many forms of promotion we could use such as direct mail and leaflet distribution these would all help to make the consumer more aware of our video shop. The media is very useful method of promoting the video shop along with the offers we will have for the customers. Another service we could provide is that when a customer rents a new release they can get a snack free as well such as ice cream or popcorn etc. The secondary data showed that at peak-times more people are likely to watch T.V enabling them to see more advertisements. If we use the media a much wider population will see our product. So along with promoting it in cinemas we could also try this because our objective is to emphasise that or product is of a good quality so that consumes come to our video shop to rent videos. Some of the special offers and discounts we could use to promote our video shop can be:
• Two titles for the price of one
• Two titles for a special price
• More than one night's rental included in the price
• Second and subsequent nights at a discount
We could also have special discounts on the weekday rentals we would need to make
sure that promotion and offers that we give can boost the demand for slower moving or
older titles.
The key step promotion is as follows:
• Tell potential customers of the existence of the product
• Get customers to visit the firm o see the product
• Encourage customers to buy
• Persuade customers to make a repeat purchase in the future
Promotional Methods
My aim is to attract consumers of all ages because our video shop is meant to appeal to everyone. However to make more people be aware of our offers we will have to use the right promotional methods to gain their attention.
Customers will notice the following notices:
• Posters - These will be located in the store near the counter and on the window of our shop so people passing by can notice our new offers. We will also stick posters on bus shelters, billboards so that consumers can easily spot the advertisements. The use of posters will be to promote our business without giving too much away.
• Flyers - These are also a very good way of promoting our methods because flyers can
be handed out door to door thus ensuring everyone will notice our business.
When a popular new film is released. The Box Office can sponsor it- so its name
becomes well known and so people visit this certain video shop to purchase the
video/DVD.
I can also advertise in the yellow pages website under the video shops in Peterborough @ www.yell.co.uk
E3- describe the production process for the product/service including how quality will be assured.
Assuring quality is very important to us as we as a business want to be known to have a very good reputation therefore making sure quality is of a high standard is very important to us. Also we need to make sure our service is just as good as our competitors Blockbusters because customers will be used to good quality services. It is very vital to our video shops success that we operate from very stylish premises and offers a professional service. To make sure we are providing a quality service we will assure that the premises are bright and clean so customers recognise that we work in a very safe and tidy environment. Again to stress that the video shop is organised and professional we will make sure video displays are orderly and that cassette boxes are kept in good conditions. We will have "dump bins" containing second hand titles are not allowed to become too untidy. T o advertise new releases and sales we will; have leaflets and we will also make sure that they are attractively displayed so that all of our customers will be able to see them. To make sure are service is good we will also have advertisings for forthcoming features are removed regularly or put on display at the right time to keep customers on track of things. To emphasise are service of rentals ifs of a high standard we will also have library cases (for customers to take rentals hone in) are replaced frequently and that they are in a good condition. Another way in which we can make sure our service satisfies the customers is that when a new film is released on video, especially if it is a film, which has enjoyed great success in the cinema, it is likely to be in high demand. Therefore to keep the customers happy we will operate on a waiting list system this way all; of the customers can come back to us to pick up the film they've booked and we could rent them something else while they're waiting.
To make our service unique we will have our staff wearing T-shirts with our logo and
name on it to make sure customers can recognise our video shop this will be a type of
uniform. To ensure that our service is good- employees can be trained to do an NVQ in customer services.
Quality checks will be made to all videos returned to see whether they are all in good
condition to be put on the shelves for renting again. All films will also be checked to see whether they have been reminded. The floors will be cleaned regularly and the toilets will also be cleaned at certain times.
I am not actually producing no products but providing a service to the public. Therefore the different stages of production for the service are:
. New ideas for the future that have to be researched
2. New ideas that are being researched through primary and secondary research. I must do primary research before I decide to expand on the idea. I need to see whether the public has an interest in the video industry and what their needs and wants are. I also need to look at secondary information to see how the video rental industry is doing and what the future holds for it.
3. Go and speak to a bank for advice.
4. I need to look at the financial side to it, see whether I can afford it. If I decide to get a loan, I need to put together a business plan to show the bank what my idea is and how I am going to make it work.
5. Once decided whether 1 am going ahead with the idea, 1 need to look at places to
lease or rent.
6. Once found a place, I need to get builders in and draw up plans on how I want the
setting to be. 1 also need to decide what name I am going to call it.
7. At the same time as getting it furnished I need to get in touch with suppliers, compare prices and decide on who the supplier is going to be. 1 also need to sort out what I am going to have in the shop looking at competitors, primary and secondary research.
8. I need to decide how many workers I am going to employ and go through the recruitment and selection process. Give training if needed.
9. Start advertising to let the public know what the video shop is all about.
0. Once all this is done, open the video shop to the public.
Tim Hangman has suggested that quality can be defined as 'continually meeting agreed customer needs' or 'what it takes to satisfy the customer' or simply 'fitness for purpose'.
Quality assurance occurs both during and after the event, and is concerned with trying to stop faults from happening in the first place. Quality assurance is concerned to make sure products are produced to predetermined standards. The aim is to produce goods with 'zero defects'.
Assuring quality is very important to my video shop. In order to attract customers, we
must provide a service, which is better, then our competitors e.g. blockbusters as customers will not come to a place where the service is not good. We also have to make the shop and the staff looks presentable because when consumers come in for the first time they will make first impressions, if those impressions are not good then they will not come back. Therefore the place must look bright and clean, the staff must be helpful, look presentable.
Videos, DVDs, computer games will be sold to me from my suppliers. Then they will be directly sold to the public. There will also be leaflets near the counter telling consumers of the latest films in the shop, the latest forthcoming films, there will be posters, hanging advertising telling consumers about promotions.
There will also be a waiting list system whereby if there is a new film on high demand, and then customers can book the film before its release and then can receive the copy straight away when it is released. This way the consumer is guaranteed a copy when released.
We can also have a guarantee for customers saying that quality is guaranteed on rental
and sales.
