Diamond B Convenience Store - Case Study Example

Diamond B Convenience Store: Business Plan Business Summary Diamond B Convenience Store is a start-up business that will be providing a variety of different food and non-food products to customers. It will operate in an urban region in Colorado, therefore there will be considerable demographics to visit the store. Opportunities for customer volumes will are estimated to be between 5,000 and 10,000 per day, based on the commuting activities of professional consumers. Because convenience products do not have specific target markets, it is a mass market business that must have a little bit of everything for each demographic. Diamond B will receive start-up funding from a Colorado lending institution, namely a commercial bank, requesting a loan for $50,000 to cover start-up and miscellaneous expenses. The following represents the start-up needs for Diamond B: Start-up     Requirements       Start-up Expenses   Frozen Foods $5,000 Refrigerated Foods $10,000 Non-Perishables $10,000 Promotions $5,000 Computer Systems $2,500 Office Furniture $2,500 All Other Inventories $8,000 Total Start-up Expenses $43,000     Start-up Assets   Cash Required $2,500 Total Assets $2,500     Total Requirements $45,500 Diamond B will operate inside of lower-cost strip mall space, in a centralized location, with over 1,200 square feet of retail space. This was chosen to avoid the high start-up costs of building new constructions so that more money could be devoted to product variety. This will give Diamond B more flexibility by being in the strip mall and allow the company to expand without concern over the expenses of real estate agents. Diamond B can simply work on a contracted lease that allows for easy exit if the business ever decides to move or expand. On the start-up chart, frozen foods represent the different ice cream bars, sandwich cookies, and fresh frozen pizzas that will be available to customers. Refrigerated items include a variety of sodas, energy drinks, and other dairy products such as milk and cheese that customers of all varieties will require. Non-perishable foods include magazines, cigarette lighters, and other basic convenience products found commonly in this type of store model. Promotions are a high expense on the start-up list as it is necessary for Diamond B to set up a strong brand immediately after launch. The company will use the logo strongly in its promotional materials so that customers have awareness of Diamond B and can recognize it on sight. The Diamond logo will be trademarked for intellectual property reasons and for building a better competitive image. These materials include in-store displays, posters, direct mailing literature sent to random customer households, and other needed advertisements for pre- and post-launch of Diamond B. Computer systems on the start-up list include the different credit card machines that will be needed to perform basic transactions, along with inventory monitoring and adjustment systems that help with accounting and materials movements. This system will be necessary to make online ordering easier with many different vendors of perishable and non-perishable items. It will also give the owner and assistant manager the ability to regulate inventories and predict future ordering based on looking at reports about customer volume and choices. The goal is to provide excellence in customer service, it will be the mission of Diamond B. The assistant managers and employees hired by the company will be given a great deal of human resources training that highlights the psychology of customers, how to deal with crisis situations, and any other HR need. In order to be a sales resource for mass groups of people of different backgrounds and professions, these skills are necessary in order to have a positive organizational culture and meet goals for service excellence. People will be developed at Diamond B rather than simply managed and controlled. Diamond B will also use marketing to position itself as a quality leader. Other convenience stores use television advertisements to show how they are different from others in the same industry, such as talking about price and convenience. However, Diamond B intends to position itself as a high class convenience store that caters only to discriminating tastes. The goal in advertising and in marketing is to get customers to believe that Diamond B has more long-term value and should be the store of choice when looking for convenience needs. The Diamond image will be used on all promotional literature so that there is connection with high class, quality and luxury. The business owner believes that even a convenience store can give off the impression of class is marketing is done properly. Business Profits and Strategy Diamond B expects to experience higher sales growth after the first year of launch, due to the quality and frequency of promotions and getting customers to understand the Diamond B value difference. The in-store concept will be decorated using higher class materials, such as marble on the floor tiles and more top-quality paints that give a modern, bright, yet diamond-studded appearance. Heavy use of polished chrome and reflective materials will give the in-store experience one of high class from the moment the customer enters the front doors until they have exited with their merchandise. All of the in-store associates will be given low-cost diamond rings to wear when working, reinforcing the company’s Diamond standard™. There will be notices posted that identify the risks associated with this strategy, such as showing customers that there is a quality security system and that the diamond rings worn are NOT real diamond jewelry. This will act as a deterrent for theft or potential liability and injury to sales associates. Because of this high class environment that is uncommon in other convenience stores, we expect a quality profit margin from interested clients ranging from youths to the elderly. Even though Diamond B is not, in year one, a large organization, it is a relatively low overhead business where most cost comes in inventory purchasing. The following represents the cash flow and cash balance expectations for Diamond B in the first year of operations: Even with the cost of most inventory types being at 30 percent or more, Diamond B should profit $145,000 at the end of year one, in July 2011. After promotion has been completed, it is the business goal of the company to achieve sales increases of 300% in 2012, with profits approaching 500,000 to 1 million dollars. This will be achieved through brand loyalty, better product and service offerings than competition, and a better logo and self-representation model that gives the business competitive edge and a great deal of word of mouth. Customers will also be invited to join Diamond B on the value network, a new web creation presence for the business. Using low-cost web tools, Diamond B will have contests, sweepstakes, and offer special coupons for product merchandise during times when sales are slower or unpredictable. This value network will be designed with high class in mind, never allowing the brand to be associated with cheap or valueless competitive convenience stores. Contests include a $200 shopping trip conducted as needed, along with coupons such as buy one soda, get one soda free. Using the Diamond card, a punch card with value diamonds, customers can explore deep discounts on merchandise after several visits. The Diamond network will be represented as a discriminating set of customers that have the good sense and mind to choose Diamond B over other competition, such as 7-11, Circle K and other well known stores. The employment values Employees will be a key resource in setting the Diamond standard at Diamond B. They must act, speak, and listen like upper class citizens with well-bred manners and attitudes. This means that the company will have a very strong human resources focus when it comes to recruitment. People must fit the values and culture of Diamond B before becoming a part of this elite group of salespersons. They will be given these positions as career opportunities as Diamond B continues to plan expansion and strategy to become the foremost Colorado convenience chain. Employees hired today will have executive level positions tomorrow if they are able to meet certain recruitment and development criteria laid out after they have been employed. Diamond B will not sit still in areas of marketing, employment, or growth attitudes and will aggressively seek qualified candidates to help in this expansion effort. The store will be managed by the owner and an assistant manager, along with five to seven different employees needed to run the business. Unlike other convenience stores with 24-7 models, Diamond B is too elite to be open at 4AM, therefore they allow their employees time to get their beauty sleep. The store closing, while competition is opened, will be reinforced using outdoor promotions and signs that say these words, “Diamond B employees get their beauty sleep. Closed 1AM to 6AM daily”. The basic notion, other than excellence in service to the discriminating client, is that Diamond B is too good for anyone, therefore giving the company a sort of prissy, yet humorous self-view that will appeal to customers that fit Diamond B values. More on Promotion Because promotion is so important to achieve competitive edge, Diamond B will develop business to business partnerships with local graphics arts producers, advertising agencies, and even modeling companies to help with the business image and reputation. These partnerships will be alliances or special offers for discounted merchandise for regular assistance in developing changing promotional campaigns. Diamond B must be innovative in how it presents itself, never being dull or boring and always relevant. Diamond B ownership will scan the external environment and conduct regular research on social and consumer behaviors to understand what is driving popular culture and attempt to work these into promotions and advertisements. In order to keep ad costs low, these alliances and partnerships will benefit the community and both businesses by exchanging knowledge. Diamond B will try to be a knowledge organization that builds resources through cooperation with other businesses. They will be invited to join the Diamond B club of businesses, giving them special community status. When known representatives of these companies come into Diamond B to purchase products, based on their contracts, they will be offered their massive price reductions in front of customers to reinforce that value is associated with membership in the Diamond clubs. It is all about presentation for Diamond B. All promotional efforts that are being built to give the company a high class image will work toward ensuring membership in the Diamond club. For a one-time fee of $20, the diamond club card will offer multiple benefits with steep discounts on merchandise. They will accrue Diamond points that will be calculated by the computer systems and will act as instant store-credits on their purchases. For example, 10 Diamond points gets a free twelve pack of soda. The computer will be programmed with a speaker on the counter that uses a computerized voice to say ooooohhh when the discounts are substantial and it will audibly give the points in the card balance. Diamond B believes that basic human envy and social behaviors will make them want to join the Diamond club when happy customers leave the store with free expensive merchandise. Customers who did not use their Diamond card for purchase will be greeted with an audible bonk that comes from the computer that is only half the volume. This is to reinforce they made valueless decisions by opting out of the card. The following chart represents the expected growth rates, in percentages, of customers that will be willing and interested in joining the Diamond B club after witnessing deep discounts with partners and our elite club customers: Plan Review The company’s largest competitive advantage is its ability to differentiate through image, rather than through product, service, or pricing. In any convenience store, the difference in price between a candy bar is only a few pennies, therefore providing no distinguishing value to customers. The Diamond standard and the high class materials used in flooring, furniture, polishing effects, and in-store décor will make convenience shopping take on a whole new meaning. The business will make use of new techniques in marketing, such as hiring young and attractive models to pull up in front of Diamond B in sports cars throughout the entire day, stopping in to pick up refreshment in their hurried travels. There will always be an element of celebrity and fun with Diamond B and it will always be on the lips of Colorado consumers. Read More