Objectives of Magic Moments - Case Study Example

Executive Summary Magic Moments (MM) is a retail venture for selling confectionary products, based in Glasgow Caledonian s Saltire Centre.The project is an emulation of the Victorian Confectionary model, selling sweets of that era. The product line will include bon bons, sour plooms, rhubard and custard, chocolate raisins. In addition to these unique items, popular British brands like’ Lee’s’ and ‘Fry’s’ will also be stocked. Magic Moments is poised to tap a promising market. According to the research that preceded the project, it is estimated that 1000 students passed that building everyday, a modest reckoning suggests that 10% are likely to become potential clients. The research also revealed that there was a robust demand for sweets in the university, chocolates being the most preferred item, followed by hard-boiled sweets. More imporatantly, majority of the respondents said that they would visit a sweet shop weekly, followed by x% who said they would visit daily! The average consumer expenditure on sweets was determined to be between one and five pounds. Therefore, the market seems to be buoyant and MM would like to cash in on the prevailing demand and the consumer’s willingness to spend. Objectives and the Mission Statement. “Goals indicate what a business unit wants to achieve.”- (Kotler, 1997 p-84) A set of well-defined objectives is paramount for any organistion, irrespective of the scale of operations.Oraganizational and individual objectives must be integrated, and endeavored to be accomplished within a finite time. Clearly spelled objectives, enable devising of appropriate means for the realization of those ends. Thus, strategies and policies can be formulated accordingly. The following were spelled as the chief objectives of Magic Moments. 1. Provide the highest possible customer service. 2. Sell products of the highest quality. 3. Improve the understanding of business environment and enrich individual experience and expertise. 4. Reap profits and donate to charity. 5. To have fun! Offering quality products and good customer service are the inherent goals of any organization. It ensures sustainability for a business, and helps in winning consumer’s confidence and brand loyalty. Enhancement of individual experience is also stated, thereby integrating personal and organizational goals. Improving profitability is the most important aspect of any corporate activity. It is an economic index to measure success. However here it is also proposed that how the profit shall be used, ie; charity.Keeping in mind the above objectives, the mission statement was made: “We endeavor to offer best possible range of confectionary to our consumers conducive to the creation of lasting memories and magic moments.” An analysis of this statement reveals the overriding importance given to consumers and giving them not only quality products but memorable experience as well. Key competitors for Magic Moments are the Students Shop on the campus and the Confectionary Retailers on the Buchanan Bus Station. However MM’s edge over it’s competitors is the- ‘value and differentiation’ offered. The products offered are unconvential,and none of the sellers offer the Victorian range of sweets. The sweets are competitively priced at 80p for 100 gms.Wrapped sweets, tabalets, macaroons at 20-25p.Cost of carrier bags is included and a decent margin for profit is allowed. The initial capital is 500 pounds. The start up capital was raise by the issue of shares, auction night, sale of football cards, raffles.After researching various aspects of the target market, the budgeted turnover is 3500 pounds and the budgeted net profit is 22%.Chocolate sales are expected to constitute 25% of the total turnover. Part 4 a) Increasing sales is the nucleus around which all the corporate activities revolve. However, consumers will buy the products only when they need the products/the product has a perceived benefit or when they desire it. It is paramount to determine the needs of the target market and accordingly offer products for sale. Given this basic principle of business, Magic Moments conducted an extensive market research to find out about the consumer preferences. The idea was to offer Victorian sweets and create that aura. This was a unique and unconventional idea, as most confectionary retailers stocked the latest branded items. Magic Moments assumed a calculated risk however and popular British brands like ‘Lee’s’ and Fry’s were made available. Chocolates were rated as the most preferred item followed by hard-boiled sweets. Accordingly traditional hard-boiled sweets, fudge, toffee and tablets were stocked. The product range included bon-bons, sour ploom, rhubarbs and custards, pear drops, chocolate raisins and toffees. This was relatively a narrow product line; nevertheless, it was successful as the surge in sales suggested. The success of the venture indicated that the change offered by Magic Moments by offering the Victorian stuff was accepted by the customers. This is can partially attributed to the fact that the collection of sweets offered was unique and rare-no other retailer offered Victorian Confectinary.Uninterrupted supply and good quality stuff also helped in winning consumer’s confidence. The differentiated brand, both in terms of the uniqueness of the idea and superior quality enabled Magic Moments to create a niche. Effective and regular external communication helps in leveraging business relationships. The function of purchasing and stocking was vested with the staff at Magic Moments, so the involvement of suppliers in delivering stock was relatively limited. The main suppliers were the wholesales in the surrounding areas. Therefore restocking was convienient.The levels of stock were monitored on a regular basis and when they fell below the stipulated minimum level and entry was made in the stocks ledger indicating the nee for replishment.Atleast one box of sweets in storage was mandatory, at a give point of time. If it fell below that level, it was replenished for the next business day. Designated staff members would visit the wholesaler and make the necessary purchases. However, one day in a week was allotted for bulk purchases. In this manner communication with the supplier was personal, face to face and informal.. Consumers are regarded as sovereign in any free market. There was a PR campaign exclusively for customers held on the campus. The students were invited to try out the products and give feedback. It was expected that this exercise would generate publicity and word of mouth advertising. In addition, questionnaires were circulated to ascertain the preferences of the prospective clients. A suggestion box was also placed at the counter to receive feedback, measure the level of customer satisfaction and analyze the brand image of Magic Moments as perceived by the clients. Magic Moments was located in the Saltire Centre of Glasgow University. The positioning of the store was decided keeping in mind the fact that the area was most frequented in the whole university. On an average 1000 students passed that region between 10 to 4.The location was such that the store was exposed to a large number of people during entering and leaving the building. There would be rush during the class changeovers. The chief advantage of the location was that it offered convenience of shopping to the customers as it was situated near the classes and it was easy for students to grab a bag during lecture changeovers. It also saved them the trouble of traveling far for a sweet fix.Convient location and easy access for the students had a positive impact on sales. b) The initial capital for this venture was 500 pounds. The fund was raised through various sources, share issue. raffle, football card sale and an auction. Shares worth 50p were issued and subscribed by the staff members of Magic Moments. The sales projections and cost analysis were drawn up after the market research results were gathered. Considering the consumer expenditure bracket of one to five pounds and the average number of people passing through that area (10% to 40% of them were expected to become leads) the overall turnover was estimated to be 3650 pounds. This would yield a gross profit ratio of 72.33%! To arrive at the net profit, overhead expenses were deducted. After making an allowance for the overhead expenditure, the overall net profit figure was 850 pounds. a 23.23% margin. A contingency fund was created to combat unforeseen events and a cash flow was maintained to meet the daily needs. 23.23%, is an impressive figure by all standards. Prudent financial policies and a keen understanding of the market generated an impressive turnover. The start up cost was used to procure the stock, invest in advertising and store set-up. After the cash started pouring in, it became the working capital and was used to finance the daily stock requirements. An allowance was made for unforeseen price reductions also. A review of the budgeted profit an loss account indicates that all the expenses incurred were legitimate, unavoidable expenses. There seems no room for ‘cost-reduction’. However, the profits could have been enlarged by increasing the sales volume. I reckon sales could have been bolstered by offering more choice to the customers. Perhaps new items could have been incorporated at the later stage, when cash was abundant to finance new products. In addition; some diversification in the product line would have enhanced variety. For instance, offering colas along with candy would not have been a bad idea. c) Marketing is a social and managerial function that attempts to create, expand and maintain a collection of customers.”-Wikipedia The process involved the acquisition and retention of customers. A marketing strategy allows the organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve sustainable competitive advantage. The UK Confectionary market had recorded a 4% growth between 2000 and 2004, according to the figures released by the TNS Worldpanel.Magic Moments wanted to capitalize on this positive trend and win a share of the growing market slice. A marketing plan was formulated keeping in mind the broad objectives of the marketing strategy. The Plan entailed, firstly, an extensive target market research to understand the consumer preferences and spending habits. It was carried out by circulating questionarres.Some significant findings were as follows: 1. The demand for sweets in the university was robust. 2. Majority of the respondents were willing to spend between one to five pounds on sweets. 3. Chocolates were rated as the most preferred item of confectionary followed by hard-boiled sweets. 4. Majority of the respondents were willing to visit the store weekly, followed by a substantial number willing to visit daily. These findings influenced the business decisions about pricing and the product line. It helped in making available what the people wanted, and at the price, they wanted. Besides facilitating a successful launch, the marketing function carried out an aggressive promotional campaign throughout the venture. A company logo was created to convey the company image. It was printed on the carrier bags, flyers, invitations so that the customers could associate it with the brand name. The Advertising campaign had been initiated at the fund raising stage. It was aimed at creating awareness about the presence of the product and the company and highlight the desirability and the uniqueness of the product offered. Advertising instruments like posters and flyers were used; verbal promotion was done outside lecture halls. The pre-launch promotion helped in giving a favorable start. However, after the initial weeks of sale efforts were made to keep the demand upbeat. Suggestion box was placed at the counter to invite customer feedback and provide suitable product according to changing preferences. The importance of a sound marketing plan and its effective implementation cannot be emphasized enough. In appraisal of the marketing plan of Magic Moments, it can be said that it was successful in accomplishing its outlined tasks. It attracted foot fallers and led to a surge in sales. d) “Internal channels of communication can provide insight into the customer’s needs.”-(McGoldrick,2002,p-87) Internal channels of communication include the communication system within the organization, between the employees at different levels and between the different departments for the smooth running of business.Efective, internal communication is vital for addressing the organizational concerns. It enhances efficiency and profitability and reduces absenteeism and grievances. Since Magic Moments was based in the university, the traditional forms of organizational communication were inapplicable. The requirements of the different departments had to be effectively conveyed for co-ordination in the functioning of business. Accordingly, a system was devised to suit the needs of Magic Moments. The following documents were prepared and used: 1. A sign-in and sign-out sheet for the staff to record the time of their entry and exit. A member of the personnel department was assigned to record lateness and absenteeism. 2. Daily sales target was prepared. The figures were more than the sales projection to motivate the staff. 3. A record of the sold products was maintained. 4. A handover log with relevant information for the next shift. It included any problems encountered during the day and relevant advices. 5. A replishment sheet. It recorded the stock that needed replishment during the visit to the wholesaler. 6. A banking sheet to keep an account of the financial activities. The characteristics of good communication are-clarity, conciseness, timeliness and informative. The communication system designed at Magic Moments was effective. It ensured smooth functioning and there were no disruptions in the operations. Part 5 I was affiliated to the marketing department of Magic Moments, my designation was, marketing assistant. The marketing department had to conduct the crucial market research and carry out promotional activities for creating awareness about our products. The position afforded exposure to potential clients, it was a dynamic and interactive job, partially planned partially unplanned. These factors induced me to choose marketing. The most important function of my department was to conduct the market research,ie;gathering and processing information which would influence business decisions about the product and strategies. We used questionnaires to collect information. I was actively involved in the research activities. Another function of our department was organizing promotional campaigns to inform the students about our venture and products. Traditional advertising instruments like posters and flyers were used across the university. Potential clients aka students, were verbally informed about sweets and confectionary items. I must acknowledge that the advertising campaign interested me immensely. Besides this, the marketing department also took up the store design and layout. The logo (twin m’s with stars) was printed on the carrier bags, flyers and invitations. The idea was to associate the logo with the brand name in the minds of the customers. Other tasks of my department included regular promotion of our products after the initial weeks of launch to maintain the demand. The customer feedback had to be taken to analyze the perceived image of the product and to identify customer’s needs so that suitable items could be made available. As an organization, we were working for the accomplishment of the broad objectives laid down for Magic Moments-economic success of the venture and winning consumer confidence by providing unequalled customer service and good quality stuff. However, I harbored some personal ambitions as well. I wanted to prove my competence in the marketing segment by demonstrating good communication and advertising skills. An assessment of my performance reveals that my key strengths lie in, meeting deadlines and doing timely work, co-operative teamwork and working successfully under pressure. There is scope for improvement when it comes to the planning and budgeting operations.Admitedly,I felt out of place in authoritative positions. The Magic Moments venture has been a valuable experience. It was fun to don the mantle of a corporate! Moreover, it successfully accomplished the desired goals. On an individual level it afforded us the chance to identify our inclinations and aversions, competence and failings.Atleast I know now that accounts or anything of that ilk holds no interest for me, and that I am competent at advertising and promotion. In retrospect, I feel that I was assigned less work than I was willing and able to do. If this exercise had to be repeated, I would have assumed more responsibilities and would have been more assertive. There were instances when I had withheld my opinion, perhaps I should have been more vocal about my ideas, as some of them were good and could have actually been accepted. References Business Plan Appendix Section of the Business Plan Appraisal form www.wikipedia.org Read More