A Strategic Marketing Plan for the Norwich Student Mark - Assignment Example

Contents Mission and Ambition 2 Ambition 2 Mission 2 Vision ment 2 Key Success Factors 3 Financial objectives 3 PESTEL 3 Political 3 Economic 4 Social 4 Technological 4 Environmental 4 Legal 4 Product life Cycle 5 Competitive Intensity of the Club Industry 5 Market Size 6 Assumptions 7 Action plan 9 Resource plan 9 Monitoring and control 9 References 10 Annexure 11 Annex 1 11 Annex 2 12 Annex 3 13 Annex4 13 Mission and Ambition Ambition The globalization and commercialization of our society has increased stress on our student population. The job of a student becomes tougher every day. This is not only induced by tougher work schedules but engagement in part time jobs as well. This has increased the amount of hours spent in work related activities and has increased levels of mental stress. The bad shape of our economy has reduced leisure spending to a bare minimum. The consumer spending has been falling sharply since the recession hit UK economy. According to Guardian consumer spending has shown significant reduction with brands such as French Connection reported £12.8 million reduction in sales from previous quarter. In such a depressing environment and so much course work, how can students relax? With reductions in part time job opportunities, it is not possible to spend money on expensive leisure activities such as tours etc. The increase in petroleum prices reduces chances of going on a long drives. The solution for students living in Norwich is HANGOUT. No entry fee and minimum prices will allow students to have a good time, meanwhile spending very little. The beauty of this business will not only be in its profitability but the service to community. A nightclub will let energetic students engage in leisure activities that use up their pent up energy. This will keep students away from activities involving violence and drugs. Mission ‘The HANGOUT aims to provide a leisure destination for diverse students of Norwich. The main target market will be university students especially women. The HANGOUT provides a fast service and friendly environment to its customers. The music is a specialty of HANGOUT as we aim to cater a diverse market. This diversity is reflected through our music selection. The business will provides a dance floor, food, drinks and excellent music.’ Vision Statement ‘We are playing your song’ Key Success Factors The key success factors for HANGOUT stem from a strong comprehension of customer needs (psychological contract) and premium quality of service: Cater each customer as an individual and provide top notch service that is sensitive to cultural diversity and individuality. The night club should be all about fun and entertainment, there should be a strict emphasis on peace. The management will ensure there are no brawls and fights in HANGOUT to provide a healthy recreational environment. Strict control of costs to induce positive cash flow. The management will aim for capital growth and expanding HANGOUT into a brand. Financial objectives The main financial objectives of the business are to create a strong brand. The business is being financed by an angel investor. Angel investors usually invest in businesses for a period of three to four years, before selling it off at higher prices. Therefore the business will aim to build a brand rather than focus on generating income. The business will thus operate on a revenue based model, aiming for a target of £ 1.5 million sales in three years time. Market audit PESTEL The PESTEL analysis will help layout a strategic framework for HANGOUT. Macro environmental factors of PESTEL have been described below which give a detailed analysis of the environment that HANGOUT will have to operate with. Political There will be no significant political factors that must be taken into account for HANGOUT. There is however some political considerations when it comes to hiring labor for HANGOUT. A large portion of labor force in UK is based on foreign immigrants working towards education or better lives. The government has imposed restrictions on the number of hours a foreign student can work. This must be taken into account when hiring for waiters etc. Economic The bad state of UK economy will be a consideration factor for HANGOUT. The consumer spending levels have come down considerably during the last couple of years. Another economic implication will be lack of cheap funding options. The government has however taken steps to initiate a policy of consistently lowering interest rates in the economy. This policy has as yet failed to initiate a recovery in consumer spending. The business will therefore have to lower its gross margins until there is a recovery in UK economy. Social The youth of UK is empowered and independent. There is a high clubbing culture. Beer, Whiskey and Vodka are some very popular drinks in university students. According to a survey conducted by BBC £ 20 billion is spent yearly on drinking in UK. There are many different forms of the drinking customs in UK. Social drinking refers to enjoying alcoholic drinks just as a social pastime and not for getting drunk. Binge drinking and session drinking basically refers to consuming large quantities of alcohol. The main target of HANGOUT will be student willing to engage in social drinking. Technological The clubs in UK are using latest technology to enhance customer experience. High powered stereo systems have become very cheap due to advancements in technology. The cheap Chinese substitutes have also induced a reduction in prices of stereo systems. This will greatly reduce sound system costs for HANGOUT. Moreover latest advancements in computer operated lights allow clubs to generate songs specific effects. This will be an attraction for younger generation. Environmental The environmental factors that must be considered are mostly related with weather conditions. In the winter seasons, heavy snowfalls and sub zero temperatures force universities to close down. In these moths there will be a significant decrease in customers. The business will have to take this seasonal effect into account when forecasting sales. Legal There are a number of different legal requirements for running a night club in UK. There are different types of licenses given by the British government for selling alcohol in UK. These are the different licenses: A Personal License: This is a ten year given to any individual. As this is a personal license it moves with the person. A Premises License: This is a compulsory license to be held by any outlet of alcohol pub, club etc. HANGOUT will have to apply for a Premises License. Product life Cycle A product or service life cycle shows the different stages of market presence of any product. The two factors will are primary to a product life cycle are industry output and time. In annexure 1 we can see a product life cycle graph for HANGOUT. The club industry is in the maturity stage of its lifecycle as it has been around for hundreds of years. The second factor which determines the stage of product life cycle is increase in customer base. Products in the introductory of growth stage of product life cycle show an accelerated increase in customer base. The club industry is not showing an increase in the customer base. The customers are increasing in a linear fashion for club industry. The competitors fight for the same customer base through differentiation. If we look at annexure 3 we can see the recommended strategy for HANGOUT. As the business is in the mature stage of product life cycle we recommend the following strategies: Attain Cost Leadership: Lower prices in order to attract a large student customer base. Renew Focus: The focus will be changed from male population to attracting female population. This does not mean making it a place not inviting for the male population. Differentiate: By focusing on only the younger population the business can differentiate itself from other clubs. Grow with industry: As this is a mature industry there are very minimum opportunities for growth therefore the business should not invest heavily in expansion. Competitive Intensity of the Club Industry The best method to estimate the competitive intensity of any industry is to apply the Porter’s 5 Forces model. This helps the researcher to outline the basic characteristics of the main players in the market and the threats they pose. The club industry of Norwich will show the following competitive intensity (See Annex 2): Threat of Industry Rivals: The major competitors in the market usually affected by new entrants and orient themselves accordingly to counter the threat. For HANGOUT it is imperative that they understand these future implications of rivals and take corrective action. In case of clubs industry there are two main competitors for HANGOUT. The major rival is in this case are CLUB MERCY and CLUB MEDIA. The primary threat will be of a shift in their target markets. These clubs will try to counter HANGOUTs strategy by focusing more on university students and becoming more active in their promotions. To counter this threat HANGOUT will have to create a very strong USP (Unique selling proposition). Bargaining Power of Suppliers: The bargaining power of suppliers is low in the club industry because there are many brands of alcohol. According to Porter whenever number of suppliers are high power of suppliers is automatically reduced. Bargaining Power of Customers: The bargaining power of customers is very high in the club industry. This is because there are many indirect and direct substitutes to clubs. The major indirect substitutes include restaurants, soccer matches and cinemas. The direct substitutes to club industry are pubs and bars. According to Porter as options or substitutes for are service are increased, the bargaining power of customers is also increased. Threat of New Entrants: There are no legal complications in operating a club. The main consideration is investment capital. As a large investment is not required we can say that threat of new entrants in high. In annexure 2 can see that the above discussed factors prove that competitive intensity is very high in the club industry. Market Size The Norwich city has a population of 223,200. From the total 28.5 percent people are in the ages of 18-29, i.e. our target market of 37,600.   Growth Year 1 Year 2 Year 3 College-MEN 15% 18000 20700 23805 College- Woman 10% 19100 21010 23111 Total 0 37,100 41,710 46,916 The past growth rates in yearly population can be assumed to be 15% for men and 10% for woman. This includes both consideration for foreign students and local population increase as given by Norwich City Council. SWOT   Positive Negative Internal Origin Strengths Friendly staff Expert DJ Diverse Music Low Prices University Promotions  Weaknesses Inexperienced Management Financial burdens on new businesses External Origin  Opportunities Drinking Culture Lack of alternatives Expand into a franchise Constant inflow of foreign students into Norwich Threats High competitive intensity Price wars Power of customer Bad economic situation Assumptions In the process of developing any business plan many considerations must be taken into account. The primary assumptions involve customer behavior and market growth. For the purpose of this marketing plan we are assuming that students will be interested in this new HANGOUT idea. The target market has been assumed as all the people between the ages of 18-29. According to our assumption HANGOUT will gain 1% attendance from the total target market of 37,000 in the first month. The assumption has been made for a weekly basis. The average spending by each customer is assumed to be £ 10. The attendance will increase by 15% per month for the next 6 month. After the first 6 months it will increase by 5% for the next two years. The initial capital to start the club will be pitched in by angel investors. Marketing objectives The business plans to capture a total market of 1,084 weekly. The total customer visits for a total in the third year will be 57,300. The business plans to attain a 25% share of the total Norwich club market in a three years time. This is a very conservative estimate and takes into account the deplorable conditions of economy. The numerical details have been given in annexure 4. Marketing strategy The initial marketing strategy for HANGOUT will be low cost leadership. In three years time if the economy stabilizes the business will slowly start increasing its gross margin and try to capitalize. A very low cost solution is running a Blog which will involve customers, promote HANGOUT, provide information about upcoming events and also function as a tool for market research. Product Alcoholic drinks Dance Floor Snacks Song Dedications Place Near UEA Among student Residence area Price Low cost leadership A margin of only 15% retained Promotion Internet Blogs University websites Charity events Banners in UEA Action plan The initial two weeks will be completely introductory weeks for the business. The business wavier all margins and give introductory prices to customers. If the business starts flourishing in this time period, the prices will come back to their original levels. The business will hold weekly events for the next 6 months aimed at promotions. On event day which will be every Saturday night, prices will be lowered (gross margin of 7.5%). The manager will be responsible of ensuring that staff will play their designated roles. The main job of starting and making purchase will go to the owner. The club will have just one manager which will ensure a consistent stream of supplies. The club will issue discount vouchers for the first six month to induce customer loyalty. The manager will use waiters (most of which will be university students working part time) to advertise in their universities through posters. Resource plan    NO. Daily Cost £ Monthly Waiters/Security 6 420 12600 Manager/DJ 2 80 2400 The market research cost will be negligible as the owner is the one making the marketing plan. The business will be heavily burdened and stripped of cash due to its low cost leadership strategy. Therefore the marketing and promotion tools being used will be free of cost. The Banners posted in universities will be printouts because most universities only allow advertisements on notice boards. The website will be made using a free server to safe costs. Monitoring and control The Manager will hold a weekly meeting with CEO (owner). This meeting will review weekly sales and cost figures. The weekly results will be matched with targets to determine if the business was on track. The allowed deviation from forecasted results will be a maximum of 15% percent. The manger and CEO in case of deviations use two main tools to control the business results. The primary tool will be service costs etc. The business will try to reduce or increase costs in order to boost demand. The second tool will be promotions. In case the business shows subpar performance, promotional events will be organized to bring it back on track. References Baker, M. (2008) The Strategic Marketing Plan Audit. ISBN: 1902433998 Porter, M.E. (1979). How competitive forces shape strategy. Harvard business Review. Porter, M.E. (1980) Competitive Strategy. Free Press, New York, 1980. SHAH, N. (2010) British Economy Creeps Out of Recession. BBC (Retrieve on 15-1-2010) (http://online.wsj.com/article/SB10001424052748703906204575026533937617468.html) Norwich Key Statistics: Norwich City Council. (Retrieve on 15-1-2010) http://www.norwich.gov.uk/site_files/pages/City_Council__Key_Statistics.html#pop Annexure Annex 1 Annex 2 Factor Level Low Medium High Internal Rivals New Entrants Bargaining Power of Suppliers Bargaining Power of Customers Substitutes Overall Embryonic Growth Mature Aging Dominant Fast grow, Start-up FAST GROW Attain Cost Leadership Renew Defend Position Defend position, Attain cost leadership, Renew, Fast Grow Defend position, Focus, Renew, Grow with industry Strong Start-up, Differentiate, Fast-grow Fast Grow Catch-up Attain cost Leadership Differentiation Attain Cost Leadership, Renew, Focus, Differentiate, Grow with industry Find niche, Hold niche, Hand-in, Grow with industry, Harvest Favorable Start-up, Differentiate. Focus, Fast-grow Differentiate, Focus, Catch-up. Grow with industry Harvest, Hang-in, Find niche, Hold niche, Renew, Turnaround, Differentiate, Focus, Grow with industry Retrench, Turnaround Tenable Start-up, Grow with industry, Focus Harvest, Catch-up. Hold niche, Hang-in, Find niche, Turnaround, Focus, Grow with industry Harvest, Turnaround, Find niche, Retrench Divest, Retrench Weak Find niche, Catch-up, Grow with industry Turnaround, Retrench Withdraw, Divest Withdraw Annex 3 Annex4 Purchases £ 10 10 10 Gross margin 15% 15% 15% Customer Base 742 895 1,084 Attendance 2% 2.05% 2.10% Revenue Weekly 7,420 8,953 10,841 Weeks 52 52 52 Annual Revenue 385,840 465,576 563,731 Income 57,876 69,836 84,560 Read More