SMALL BUSINESS MARKET RESEARCH - Essay Example

? SMALL BUSINESS MARKET RESEARCH Table of Contents SMALL BUSINESS MARKET RESEARCH Table of Contents 2.0 Introduction 3 3.0 Considerable Market Factors 3 3.1 Suitability and Risks 3 3.2 Target Market Segment 4 3.3 Attractiveness of USP to this Market Segment 5 3.4 Competitors Why Customers Buy from Them 6 3.5 Proposed Selling Price 7 3.6 Nature of Market 8 3.7 How the Product Will Reach the Customer 9 4.0 Summary and Recommendations 10 5.0 References 11 6.0 Appendix 13 By Name Course Tutor Institution City/State Date 2.0 Introduction Entrepreneurship involves taking up risks in the market (McDonald & Hawkins, 2012, p. 23). Different entrepreneurs have different ideas in the market and this may also be determined by whether the business is to operate as a sole business or a partnership. This report seeks to carry out a market research for a sole trader in the UK market. The product in contention is ‘Nomido Pizza’. This is a fast food product that will target university students and therefore will be located close to The University of Liverpool so that it serves the students both in and out of campus. With the growing concern about the health of young people, this product will be a pizza, just like the others but clearly made from natural and locally available food items. No additives and chemical combinations in the ingredients. The unique selling proposition (USP) will be “Delivery within, quality maintained to the natural taste”. This is a product that seeks to take consideration of the health status of young people and therefore there is bound to be a very high profile sales to the students given that they already have this knowledge of health and have dynamic minds subject to change on what they consume. 3.0 Considerable Market Factors 3.1 Suitability and Risks This is a very suitable enterprise for a sole trader as the factors considered in establishing it constitute a positive trend. The location, raw materials, human resource, market demand, competition, laws, the technology and the expected returns are bound to be good. This venture is suitable for a single business owner because it is economical on all economic and human factors as listed before (Ashton, 2007, p. 21). Having considered the suitability of these factors, it is a viable cause of action as the likeliness that the students will capture health as opposed to quantity and junk is probable. Moreover, as a sole trader, there is always the chance one could get family members to help in the operation as well as employ a few workers to take care of the workload (OECD, 2000, p. 11). This food industry choice can be punctuated by the fact that there is knowledge of catering and hospitality which puts up an advantageous position in the operations of the business. There is however several risks involved in sole trading. McDonald and Hawkins (2012) clearly indicated the sacrifice that should be put into becoming a sole trader. The major risk is the liability risk. Sometimes the operations may be led by over-ambition; this may create liabilities and if there will be inability to service these, personal assets may be taken to cover for this. The heavy burden of decision making is a risk that can never be overlooked. One wrong decision may lead to closure of the business given that the decision will be binding in all situations. Other risks involved could take the form of lacking time off and lack of prestige in the business (Cruz-Cunha & Varajao, 2010, p. 97). 3.2 Target Market Segment A combination of segmentation bases will be at work in this case. The choice of a university environment reflects their prevailing knowledge of the need to change from the current consumption methods to new better methods. The geographic lineation of this segment is because it is very populated and therefore the market is concentrated at a place as found out by Emmanuel (2006). Shah (2010) also noted that an urban place where population density is high increases demand for a product. The demography is consistent with the young people whose is that of developmental process and therefore there will always be need to keep up with the best consumption patterns to live healthy. This is a customer group that is very vital in development and expansion of the market. In this current generation where there are several young people who care more about how they look like, psychographic segmentation takes root to include the needs of a generation that is poised on value, attitude, personality and self-image (Carter & Jones-Evans, 2006, p. 11). Therefore, with the influence that the young people usually have, it is necessary to make sure that quality is guaranteed. The actual behaviour expected towards use of this product is the expected benefits. A look at the expected benefits creates a situation of mutual consent on consumption. These considerations are important in making sure that there is a balance between supply and demand. The variables that would be affected therefore would be company size (small), the purchasing approaches and product uses. These are segmentation variables that, according to Ashton (2007), determine the expansion aspects of the company. 3.3 Attractiveness of USP to this Market Segment The USP as stated is “delivery within, quality maintained to the natural taste”. Customers are usually concerned about whether they are these products that they want in the market or not (Deakins & McGraw-Hill, 2005, p. 53). So this USP is very vital in creation of a unified economical reasoning among the students. First, this USP intends put up information on solving a problem, the problem of the students feeding on junk as opposed to the better quality foods. Secondly, it will change the person that the consumers are to the positive as they will be served at the convenience of their doorsteps going by the “delivery” section of the statement. This is a market segment that requires a lot of convenience. They require respect and the respect can only be given to them if there is respect to their demands. Other modalities put in place, they will only be required to make a call to the centre of production and distribution and then they will be given a delivery timeline. This will make them be served in the convenience of their dwelling places. Equally important is the fact that other companies in the same industry serving this region have USPs but this one will be service to the customer and quality guaranteed. 3.4 Competitors Why Customers Buy from Them The UK is served by approximately nine pizza companies (PizzaExpress, 2010, p. 10). Some of these are foreign companies and only seek to establish themselves as profit oriented as opposed to providing quality to the people of the UK. Some of the major companies in the larger market which also serve the Liverpool market are as listed below: Ask Domino's Pizza UK & IRL easyPizza PizzaExpress Prezzo Strada Zizzi Papa John's Pizza Pizza Hut Most of these companies are operational in Liverpool and serve people including students on different occasions. For instance, Kings Waterfront Inn is a pizza centre that is an affiliate of Pizza Express Company and operates on booking online. Customers buy from these companies because they have established themselves over the years and some have created loyalty membership with customers. The kings Waterfront Inn operated on having its express card. Customers having this card are never in a hurry to go elsewhere to have their pizza. Moreover, the company has created a kind of conservative consumers having been famed with bringing pizza to the UK for the first time in 1965 (PizzaExpress, 2010). This company is also famed because it offers outside dining, take away and people can also book spaces in the inn prior to getting there. It also offers access to the disabled people given that it has facilities that take care of the needs of the disabled. 3.5 Proposed Selling Price Determination of the prices will be determined by the unit volumes produced and the demand in the market according to the indications by Wickham (2006). Therefore, the forces of demand and supply will be left to control the operations. However, the starting price will be depended on the prices charged by other companies in the same industry. This is the conventional method of getting to prices as indicated by Harford (2006). In consideration of cost per unit of the Nomido pizza, there is consideration of the capital costs and the expected profits. For the same quantity of pizza in the market, a cross checks of PizzaExpress company indicated the following prices from their menu: Take- away offers Quality Price (?) Classico 9.95 Piccolo 4.95 Speciale 11.95 On a special treat, the Inn menu had categorised the plan into Intros, sides and Starters as shown: Intro Price (?) Marcona Almonds 2.95 Olives Nocellara Del Belice 2.95 Sides Price (?) Polenta Chips 3.95 Caesar Salad 3.80 Mixed Salad 2.85 Starters Cost Price (?) Dough Balls 3.40 Garlic Bread 3.50 Garlic Bread with Mozzarella 3.95 Source: PizzaExpress (Check appendix) The prices would therefore be determined by consideration of the table menus above: Capital cost per unit of Nomido pizza produced ?0.95 Profit (30%) ?1.24 This price takes into consideration the facts that production is done at the low levels and at foundations level. There are also no extra costs of taking the pizza at the restaurant. The cost of delivery is included in the capital cost. However, it is important to note that mass supply would include a consideration for economies of scale at that level and push down the prices (Timmons & Spinelli, 2008, p. 08). 3.6 Nature of Market As was seen at the competition level, this is a market with several companies competing for the same customer. The industry factors also affect individual factors on the ground. Economic analysts have indicated that the industry has been witnessing a growth trend of around 4% per annum (Fletcher, 2002, p. 31). The main players in the fast food segments have been pizzas, sandwiches, burgers, chicken, fish and chips as well as the Chinese take away. It is also an industry that has witnessed a lot of concern on the health value of foods where there has become a legislative campaign to label genetically modified foods. People who advocate for animal rights have been on the forefront to try and reduce the level of consumption of meat as some of the increases in the meat products indicated a violation of the rights of the animals (Siara, Buscha, & Karuk, 2008, p. 24). The nature of the market has also been signified by the changes that have been seen in the social lifestyles of the people. People have adapted very busy lifestyles, obesity has led to a call for healthy living and there has become a big shift in the social activities. Many people have also adapted vegetarianism lifestyle (ABI, 2010, p. 31). Therefore the fast food industry if fast changing and the trend would highly impact on the type of businesses to be carried out. This therefore is a growing market given that people are now adapting foods rich in dietary returns to their bodies. 3.7 How the Product Will Reach the Customer The market geographical segment is small. The population however may be large depending on effective response to the product. The business, being a sole trader will not use a very complicated strategy to the customers. Much as it will offer services both at restaurant level and doorstep level to the consumers, there will be great marketing of the product before launch as proposed in the work of (Kitching, Smallbone, and Xheneti, 2009:21). The aim is to map the product with the end user and his availability. This channelling will help determine whether the company distribution plans match the preferences of the consumer and the effective availability. Much as there may be a recommendation for new channels in future, the immediate strategic supply plan would be to get the end product to the doorstep of the consumer. As observed by Bienaube and Sauntier (2010), in a market where competing companies are large and well established, there is mostly an identified lack of focus on the issue of getting their products to some segments like students. Therefore, the business is bound to develop a team of distributors who will deliver the products to the respective customers at the convenience of their hostels. The business may consider use of scooters and other flexible well equipped means of distribution. 4.0 Summary and Recommendations Being an entrepreneur in an already parked industry is very challenging. However, taking advantage of the prevailing trends would develop a small business into a very large one. Developing the business with the youth as the target market has its own measure of challenges and advantages. This report has presented a comprehensive review of market analysis for an entrepreneurial venture. It has highlighted the value of the market segment and the risks thereof. With consideration of the other companies in the market, the report has presented an effective price for the ‘Nomido Pizza’, a new pizza product ready for a try into the market. In consideration of the nature of the market, the report has presented a distribution strategy that would see the company get its goods to the market. It is therefore highly recommended that the market be given a try in the name of launching the product because the most important ASPECT, the consumers are available. This is verified in the trends of consumption as witnessed in the market. 5.0 References ABI. (2010). Insurance for Small Businesses:a Guide to Protecting your Bbusiness . London: Association of British Insurers. Ashton, R. (2007). The Entrepreneur’s Book of Checklists. London: Prentice Hall. Carter, S., & Jones-Evans, D. (2006). Enterprise and Small Business: Principles, Policy and Practice (3rd ed ed.). London: Prentice Hall. Cruz-Cunha, M. M., & Varajao, J. (2010). E-Business Issues, Challenges and Opportunities for SMEs: Driving Competitiveness. London: IGI Global Snippet. Deakins, D., & McGraw-Hill, M. F. (2005). Entrepreneurship and Small Firms ( 4th ed ed.). London: McGraw. Emanuel, R., & Adams, J. (2006). Assessing college student perceptions of instructor customer service via the Quality of Instructor Service to Students (QISS) Questionnaire. Assessment and Evaluation in Higher Education,, 31(5), 535-549. Fletcher, D. D. (2002). Cultural organising and ‘professional management’ in the small familybusiness. Journal of Small Business and Enterprise Development, 22-39. Kitching, J., Smallbone, D., & Xheneti, M. (2009). HAVE UK SMALL ENTERPRISES BEEN VICTIMS OF THE ‘CREDIT CRUNCH’? Budapest: Small Business Research Centre,Kingston University. McDonald, s., & Hawkins, D. (2012). Enterprise and Entrepreneurial Management. Harlow: Pearson. OECD. (2000, 6 10). Small and Medium-sized Enterprises: Local Strength, Global Reach. Retrieved 12 2, 2013, from Organisation for © OECD 2000 Economic Co-operation and Development: https://www.google.co.ke/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCoQFjAA&url=http%3A%2F%2Fwww.oecd.org%2Fregional%2Fleed%2F1918307.pdf&ei=MnScUp-VFafJ4wT57IDoCg&usg=AFQjCNEuV4n72Ta2Smq8rOe4Vb9fjeir3g&sig2=ag9FkzKt7qdnA2Ii_62JBw&bvm=bv.57155 Pearson, A. (2006). Strategic Entrepreneurship ( 3rd ed ed.). London: Wickham. PizzaExpress. (2010, 10 10). Liverpool - Kings Waterfront. Retrieved 12 2, 2013, from PizzaExpress: http://www.pizzaexpress.com/uploads/menu/pizzaexpress_menu_ta.pdf Sauntier, E. B. (2010). The Role of Small Scale Market Producers to Address Market Access. London : Centre for Co-operation and International Development. Shah, V. (2010, 10 4). The Role of SME’s in the UK Economy. Retrieved 5 5, 2013, from Thought Strategy: http://thoughtstrategy.co.uk/2012/04/10/the-role-of-smes-in-the-uk-economy/ Siara, B., Buscha, F., & Karuk, V. (2008). Small Businesses in the UK: New Perspectives on Evidence and Policy. Westminster: University of Westminster. Timmons, J., & Spinelli, S. (2008). New Venture Creation: Entrepreneurship for the 21st Century. London: McGraw-Hill. 6.0 Appendix SET MENUS AT PIZZAEXPRESS Enjoy your restaurant favourites with one of our special offers exclusively to take away Classico ?9.95 Classic pizza and dough balls or garlic bread Piccolo ?4.95 Designed for kids; a Piccolo pizza (Margherita, Mushroom or La Reine), Dough balls and a mini chocolate fudge cake Speciale ?11.95 Classic pizza, dough balls or garlic bread and a mixed salad or dessert Famiglia ?34.95 Four classic pizzas, two garlic breads or dough balls and two mixed salads INTROS Marcona Almonds ?2.95 ‘Queen of the Almonds’, tossed in sea salt Olives Nocellara Del Belice ?2.95 Large green Sicilian olives (with stones) STARTERS Dough Balls “PizzaExpress” ?3.40 Garlic Bread ?3.50 Garlic Bread with Mozzarella ?3.95 Bruschetta Originale “PizzaExpress” ?4.80 Tomatoes, red onions, garlic, fresh basil and pesto Mozzarella & Tomato Salad ?4.15 Served with fresh basil, pesto and extra virgin olive oil SIDES Polenta Chips ?3.95 Italian polenta with rosemary, twice-baked and finished with Gran Moravia cheese, served with honey & mustard dressing Caesar Salad ?3.80 Cos lettuce, Gran Moravia, anchovies, croutons and Caesar dressing Mixed Salad ?2.85 Read More