Business Plan for the coffee shop - Coursework Example

?Business Plan The purpose of opening more coffee shops in London is to save it from mediocre milkshakes and coffee shops through the control of the entire coffee-milkshake making process from the beginning to the end. The new coffee shops will provide the customers with the chance to make a variety of choices regarding the products and services offered in the market. The coffee shops will mostly rely on customer service and quality products as a strategy to retain existing customers and attracting new customers. Online advertising, brand advertising, and unique selling proposition will be used to make the products and services known to the people. Aims and Objectives Short Term Objectives To make the coffee shop known in the area and gain competitive advantage To increase customer awareness by 30 percent within a period of three months Long Term Objectives To achieve sales worth ?85,000 within a period of one year To open over 10 shops around the United Kingdom within five years To gain at least 3 percent share of the market within a period of seven years SWOT The strengths of the coffee shop include provision of high quality food and drink services, a friendly environment, ample parking space for the consumers, good location, save expenses on wages, and a wide range of products and services. Weaknesses include a variety of coffee shops in the London region, high competition from other coffee-milkshake vendors, and poor brand awareness and promotion of the current products and services sold by the company. Opportunities include increase on profits within a very short period, increase in the number of shops retailing coffee-milkshake, and sales on deliveries and websites. At this age, selling through the website is considered one of the ways through which business can reach a wide range of customers effectively and efficiently. Website is beneficial since the entry cost is low, easy access to the global market, higher margins are achieved because there are no middlemen, and the pricing of the product is evident and can be compared with competitors.1 Threats include the recent economic recession (the recession has put most consumers under pressure and this might affect their purchasing pattern) and high competition. Competitor Analysis Competitors are divided into two, direct and indirect competitors. Direct competitors include Starbucks, Pref A Manger, Costa, and other coffee shops in the London region. Indirect competitors include bars and restaurants who sell milkshakes and coffee. Saturation in London has prompted key coffee chains to expand regionally. Despite retaining their outlet growth, this has resulted to downward pressure on sales and increased competition. The year 2004 witnessed key coffee shop brands picking off major high traffic sites thus leveraging their powerful brands to compete with other independents and formats. Caffe Nero, Costa, and Starbucks remain to be the dominant players in the United Kingdom coffee shop markets. In 2004, the main competitor was Starbucks and it has more than 400 outlets.2 However, in 2010, Costa Coffee became the market leader and it is the current UK’s preferred coffee shop.3 The coffee shop has competitive advantage over the competitor’s coffee shops. This is because of its good customer service, good location, and good product quality and various choices in terms of the interior. Industry Analysis After oil, coffee is the second most traded product in the world. The milkshake and coffee market is highly competitive. The coffee and milkshake market is dominated by international brands such as Starbucks and Costa. Project Cafe10 UK research has revealed that the UK coffee shop market sales have grown by 12 percent in 2010 and branded coffee shop segments such as Pret, Caffe Nero, Costa, and Starbucks recording 1.94 billion Sterling pounds in revenue. Venue choice among the consumers has increased and these venues include non-specialist operators, independents, and branded chains; in 2010, the venues comprised over 14,022 outlets. The market, in particular the branded coffee shop section, has shown exemplary performance in the recent economic recession; the section out-performed the entire retail sector. In 2010, the market developed by more than 12 percent in comparison to the 2.5 percent for United Kingdom retail sector. The coffee shop market added close to 800 outlets during the economic downturn.4 Plan of Operation The plan of operation is as follows; customer service, marketing and sales, suppliers and distributors, and finances. Customer service is very important and it is governed by the choices the customer makes. Though price governs most of the choices made by the customer, other elements are important such as personalization and service quality. These elements can assist the coffee shops in gaining a competitive advantage over the other companies. In the past, companies had to cut prices in order to compete but the trend has changed to customer service excellence. If the customer service is largely based on various cultures rather than the capital, the company is placed in a good position to create loyalty among the existing customers and to appeal new ones using minimal capital investment. Excellent customer service turns strangers to acquaintances and then to friends.5 Marketing and sales will be enhanced through advertising and unique selling proposition. Advertising is a special type of distribution that addresses potential customers who are physically distant and cannot enter, immediately into direct conversation about the services or have a direct contact with the products. Advertisements make marketed products more appealing and they reassure the customer of the value and acceptability of the product, “while also reminding or altering consumers to product’s availability or prompting consumers about an imminent event – a sale or a product launch for example.”6 Advertising attempts to expose the products to customer desires, wants, and needs. At the same time, it also aims to expose the consumers to the products and their linked promises and ideas. There are dimensions that advertising uses to target groups and they are geographic, demographic, cultural and temporal.7 Among the mediums of advertising, mass media is not popular in many corporations because they fail to serve most of the needs of the brand. Mass media advertising is not very cost-efficient or effective for accomplishing the objectives of modern advertising. Companies are using mobile advertising, the internet, sponsorships and other forms of advertising to put their advertising messages. In this case, the coffee shop will use internet advertising to advertise its products and services. Other than internet advertising, the coffee shop can use brand advertising to advertise its products and services. Brand advertising is usually used when the company wants to enter the market. The main purpose of brand advertising is to manipulate demand for a certain product. In this case, emotions are given priority than promotion.8 Brand advertising is defined as a non-personal sales presentation of a particular brand. Some of the brands are advertised to the consumers aware of the changes in the product. Common strategies utilized to advertise a particular product include reminder advertising and comparative advertising. The main intention of comparative advertising is to convince the consumers to purchase a particular product through the demonstration of a brand’s superiority over the competitor brands. The main aim of reminder advertising is to remind the consumers that the product exists.9 These two forms of advertising are the most suitable ones for the coffee shop since they will meet the coffee shop’s objectives. Unique selling proposition is the “description of the qualities that are unique to a particular product or service and that differentiate it in a way which will make customers purchase it rather than its rivals.”10 Unique selling proposition can also be defined as an advertising appeal. Advertising appeal recognizes the reason why an individual should buy a particular product. Advertising campaigns focus on several advertising appeals. These appeals are very general and they permit the company to create several mini campaigns or sub themes using sales promotion and advertising. The appeal is supposed to be desirable and to create a positive impression on the target market. The appeal must also be unique or exclusive, that is, the customers must be capable of distinguishing the message of the advertiser from that of the competitor. Lastly, the appeal ought to be believable.11 The unique selling proposition for the coffee shop will be “Quality and Service to Suit Your Tastes.” In regard to supply and distribution, Fairtrade will supply coffee beans because it distributes coffee beans to the key players in the coffee shop market.12 The coffee shop products will be distributed to interested organizations and companies within the London region. The mode of distribution will be based on order basis. Concerning the finances of the coffee shop, the following table shows the cash sale projections. Picture Segmentation and Targeting Segmentation of the target market will be based on demographics (age, gender, income, occupation and lifestyle), geographical location (area type and regions), and behavioural (loyalty and user/spending status). In regard to segmentation and targeting, it is important to understand consumer trends. Coffee shops are important in the British lifestyle. Most of the consumers visit the coffee shops more than once in a week.13 The following diagram shows the trade areas for the coffee shop. Picture In conclusion, the focus of the coffee shop is on quality and price of the product. The main forms of advertising to be used include online advertising and brand advertising. Online advertising makes use of the internet to advertise the product. Mass media has not proved to be an effective method of advertising. Online advertising is used by most corporations because of its efficiency and cost effectiveness. On the other hand, brand advertising entails gaining the confidence of the market about a particular product. Its aim is to manipulate demand for a particular product. Unique selling proposition will also be used to advertise the product. Unique selling proposition makes use of a unique ‘slogan’ for a particular product in order to differentiate it from the competitor’s product. The unique selling proposition for the coffee shop is “Quality and Service to Suit Your Tastes.” References Palmer, MA, The 10 deadly sins of antipreneurship: And how to avoid them, AuthorHouse, Bloomington, 2007. Euromonitor International, Coffee shops in the UK, retrieved 9 February 2012, Weston, S, UK coffee shop market reaches all-time high, retrieved 9 February 2012, Welsh, K, Happy about customer service? Creating a culture of customer service excellence, Happy About, Silicon Valley, 2008. MacRury, I, Advertising, Routledge, London, 2009. Lamb, CW, Hair, JF & McDaniel, C, Essentials of marketing, Cengage Learning, Mason, 2011. Madura, J, Introduction to business, Cengage Learning, Mason, 2006. Hindle, T, Guide to management ideas and gurus, John Wiley & Sons, Hoboken, 2008. Lamb, CW, Hair, JF & McDaniel, C, MKTG 5, Cengage Learning, Mason, 2011. Welch, D, Fairtrade beans do not mean a cup of coffee is entirely ethical, retrieved 9 February 2012, Read More