Small Business Management Issues - Example

Tea Time Shop Marketing Marketing research It important to conduct a market to determine the competitive position of Tea Time shop as it comes into the market. Marketing research occupies a service function within organisations, and its main function is to supply managements with reliable, valid, timely, relevant and up-to-date information. In order to benefit from this aspect of the business, it is important to take decisions with far-reaching consequences, avoid threats, segment the market, select the target market, exercise control, and implement and monitor the market plan. Market analysis Tea Time shop will start operating in market that already has well-established competitors such as Fernwood High Teas (available at http://fernwoodhightea.com.au/), Nok Restaurant (available from http://www.menulog.com.au/nok_restaurant) and Monets Café. Although the restaurant and catering industry in Australia is a crucial service industry, it has suffered setbacks in recent years due to low profitability and shortages of both skills and labour (Allen Consulting Group, 2007, p. v). This is one of the major challenges that Tea Time is likely to face as it ventures into the market. Small businesses face myriad challenges such as taxes and regulation, stiff competition, and attracting and retaining a quality workforce (Sarley Group). Despite the challenges above, Tea Time shop has an opportunity to establish an “underdog brand” in comparison to the already established players in the market. It is also important for the organisation to be in a position to make quick business decisions when new opportunities arise. Importantly, the company should reduce overheads and increase the quality of personalised service so as to attract and retain more customers. To reinforce this, Tea Time shop should build strong personal relationships with customers by going above and beyond to meet their specific needs. Seasonality Seasonal changes do not have major impacts on the restaurant industry as it relies on people who are at work, in town and so forth. In addition, this is because Tea Time shop targets women in the age group of 20 to 45 years, most of whom are office ladies or housewives within the city of Newcastle. Good advertising schemes and customer relationship marketing strategies will therefore help the proprietor to capture and retain more customers. Competitors Some of the major competitors of Tea Time shop include well established restaurants, fast food shops and hotels (Australian Bureau of Statistics, 2005) in Newcastle. Most of these establishments already have notable marketing strategies in place including use of the Internet. Tea Time shop will therefore have to use customer relationship marketing strategies to have increased personal contact with the customers. Customer relationship marketing strategies This will be achieved through a combination of high quality service delivery and improving the relationship with customers. It is important to note that high quality customer service is the key to improving relationships with customers. Further, an enhanced relationship with one’s customers can ultimately lead to greater customer retention, customer loyalty, and more significantly, profitability. Another point worth noting is that customer satisfaction is hard to win and easy to lose; thus if customers are not satisfied, they will simply move to other stores that offer similar services (Brink & Berndt, 2009, p. 55). SWOT analysis Strengths Market segmentation – targeting women aged between 20 and 45 years Location of the market is specific – hence creating a particular market niche Weaknesses Limited scope of the market Product range limited to only tea, coffee, cakes and sweets Opportunities With the limited range of products and specific market it is possible to deliver services according to customers’ own tastes and preferences It is possible to use promotional strategies to increase the appeal of the services on offer and hence capture many customers Threats Stiff competition from well established restaurants and hotels Competition from establishments with substitute products/services Product offering Tea Time shop will offer a number of food items including brewed tea, cakes, sweets, and coffee. To increase convenience, the facility will offer takeaway cups so that customers can take their choices from their convenient places if they prefer to. This means that customers will not necessarily have to take their beverages or snacks while inside the tea shop. Place The target area is Hunter Street, Newcastle City. Pricing Prices of the products will range from between $5.50 and $7.50 (for dine in customers) and between $3.50 and $5 (for take away customers). This will encourage more customers to opt for takeaways and therefore reduce queues or crowding within the shop. Such application of different pricing is referred to as differential pricing and hotels can take advantage of this for various segments because hotels can be divided into specific customer segments (Yelkur & DaCosta, 2005, p. 252). Market Segmentation Tea Time shop will segment the market based on demographic and psychological aspects. This will involve understanding what the target market (women between 20 and 45 years of age) want in the product offerings. A market research will conducted on a significant sample of 100 women to determine what their tastes and preferences are. The survey will be used as a benchmark for initial product offering but more offerings will be availed depending what customers suggest during the actual marketing and promotion process. The survey will be conducted in Newcastle within the busy central business district to get an actual representative sample for the prospective market. The targeted women will be required to specify the nature of combination they would like, e.g. coffee or tea with cake and some sweets, black coffee, milk tea and so forth. Promotional strategies Tea Time shop will make counter and window displays its products and services to ensure that potential customers are well informed of what is on offer at the most appropriate time. The counter and window displays have to be designed in such a manner that they create a desire for the products when customers look at them, meaning that people want to buy what they see right away (Stephenson & Thurman, 2007, p. 313). The significance of display advertising lies in its ability to allow the potential buyers to experience the products before buying. It is also an effective dealer aid as it attracts customers to the shop and leads them to impulse buying (Bootwala, Lawrence & Mali, 2007, p. 3.37). Another form of display advertising that will be used is outside signs at the shop. Attractive and innovative signs outside the shop are likely to attract and urge window shoppers to step into the Tea Time shop. Tea Time tea shop will also use school or community bulletin boards as these are frequented by potential customers. Hence, the bulletin boards will easily pass the message across. To increase the popularity of the promotion campaign, coupons will be placed in the local newspaper in Newcastle so that those customers who bring them along will be offered some discounts. In the first two weeks of opening the Tea Time shop, those customers who visit the shop and will be offered a 10 percent discount on all products and services. This will be applied as a retention strategy to maintain the new customers. Another strategy will be to offer membership points collection cards. Under this strategy, customers who buy ten cards will be offered one for free. It is important to note however that features such as loyalty cards may have a role to play in maintaining the relationship with customers but they cannot realistically be taken as a proxy for the relationship marketing philosophy. At their best, loyalty schemes area meant to be used only as reinforcing mechanisms, as on the whole they only reward the already loyal customer rather then anyone else (Kong, 2006, p. 44). Importantly, the same message will be put across through online social networks such as Facebook, Twitter, and MySpace. A key advantage of using social networks sites is that people who use them share their interests with their friends and tend to be friends with people who share their interests (Furht, 2010, p. 652). Operation and production The operation and production activities will be undertaken by the proprietor, James Cooper and his team of two other staff. The business will operate under the name Tea Time teahouse as mentioned earlier. Production The equipment required and the production method are described below. Plant and equipment Tea Time show will require a delivery car for availing ordered supplies and delivery of orders to customers. Shelves will be required to display the items on offers Tea time shop will also require tables and chairs to deliver service to dine in customers. A microwave will be required for preparing the food items required by customers. An expresso machine will be required to prepare and deliver coffee and tea to the customers. A cash register and counter will be required to facilitate payment by customers as well as keeping records of the cash paid. Chinas, cutlery and takeaway cups will be required to serve the meals to customers. A fridge will be necessary for storing cold beverages as may be required by some customers. Production method Tea time teas shop will employ a job method of production. Job production involves industries producing goods or services that meet the particular needs of the customer. The advantage of the job method of production is that each item can be altered for the particular needs of a given customer and this provides significant marketing benefits (GCSE Business Studies for CCEA). With this method, it is possible for Tea Time shop to add value to its products and services and thus create a unique selling point, which will in turn help it to sell more and at more reasonable prices. In this regard, standard products will be produced specific to meet individual customer requirements. As such, the wide range of products available at the shop such as tea, coffee, cakes and sweets will prepared based on customers’ tastes and preferences or based on their suggestions regarding the quality and presentation of what they want. This will ensure personal attention to customers’ needs. The method is undoubtedly expected to increase customer loyalty and customer retention. The downside of the job production method however is that it may require more staff -implying that the firm will have to pay more wages to staff to attend to all individual customers’ needs. This will be taken into consideration by ensuring that the staff are adequately equipped to handle the different needs of different customers. References Alen Consulting Group 2007, “Evaluation of the Restaurant and Catering Industry Action Agenda,” August 2007 Report to the Australian Government Department of Industry, Tourism and Resources, available from http://www.ret.gov.au/tourism/documents/tourism%20industry%20development/restaurant_and_catering_allen.pdf (accessed 15th April 2011). Australian Bureau of Statistics 2005, “6461.0 - Australian Consumer Price Index: Concepts, Sources and Methods, 2005” available from http://www.abs.gov.au/Ausstats/abs@.nsf/66f306f503e529a5ca25697e0017661f/4515BD8BC48BB177CA25705F0020D282 (accessed 13 April 2011) Bootwala, S.; Lawrence, M.D. & Mali, S.R. 2007, Advertising and Sales Promotion, Prakashan Nirali, New Delhi. Brink, A. & Berndt, A. 2009, Relationship Marketing and Customer Relationship Management, Juta and Company Ltd, London. Furht, B. 2010, Handbook of Social Network Technologies and Applications, Springer, New York. GCSE Business Studies for CCEA, “Methods of Production,” available from http://www.hoddersamplepages.co.uk/pdfs/cceabus5.pdf (accessed 12 April 2011) Kong, C.M. 2006, Relationship marketing in a globalised world: Are you ready? Utusan Publications, London. Sarley Group, “Marketing Small Business – The Challenges and Triumphs,” available from http://sarley.com.au/blog/?p=5 (accessed 13 April 2011) Stephenson, J. & Thurman, C. 2007, Ultimate Small Business Marketing Guide (2nd edition), Entrepreneur Press, London. Yelkur, R. & DaCosta M.M.N. 2001, “Differential pricing and segmentation on the Internet: The case of hotels” Management Decision, Vol. 39 No. 4, pp. 252-261. Read More