New Business Venture of Vending Machine Company in Oxford England - Case Study Example

Market and Industry Analysis Market Analysis Vending operators are increasingly investing in technology. There was for example a growing trend for telemetry capability in vending machines, enabling the monitoring and analysis of stock and vending figures from network machines nationwide. Cashless and contactless payments are also a strong feature of new machine designs introduced towards the end of the review period, with 2015 seeing launches from leading developers Nayax, Counter Solutions and Crane Payment Solutions. Touch screens also feature on a growing number of machine. The scenario will see vending business be on its rise. However, there are no operators who have invested in the vending machines that are dealing with electronics. Vending Ltd. began as an electronic vending device without any main competitor dealing with vending machines that deal directly with electronics. The founders began with a business idea that they could use vending machines in selling iphones, earphones and covers. The vending machines only existed in other business products in the world and since being purchase by the customers without the presence of the , with all of Facebook's’ resources at hand, it has transitioned into having a brick and mortar area for designing, but sales still take place online, there is no store to purchase physically at. The vending does have competition in this niche virtual reality trend. However, the amount of competition is low to only allow the consumer to choose from a few substitutes. The disadvantage is that all products offered are of similar quality and none provide a heightened experience or variable use. They all essentially complete the same need at a similar price. Finally, the buying power is in the hands of the consumers, because there are no ‘switching costs’ for the consumer when purchasing the substitute products and each product offers similar experiences of quality. Demographic-There is a huge global population of electronic needs, software and hardware developers hence they need smart phones and there covers. The need for the vending machines increases due to this large market. The Vending machines can be used for multipurpose or cross platform capabilities while remaining attractive to virtual reality enthusiasts and remain competitive against other technologies that require the same kind of services. The increasing number of individuals who prefer efficiency instead of using the traditional methods is one of the motivation that will see the business perform better in the future and even expand more. Economic analysis The United Kingdom and world economy will be the focus of this section, given it’s the targeted geographic market of the Vending machines both in the short term and the long term goals. The United Kingdom economy is a well-developed, efficient economy that allows many individuals to operate in business and work. The income levels of this market allows for the consumers to be eligible to purchase a product like those that the vending ltd is targeting to deal with. Its price range and need defines it as a luxury item, but it is attainable at the consumer income levels and can be purchased through their ‘discretionary income.’ Also, the innovators will still purchase the latest innovative products despite any economic period that is currently in effect. Economic state pertains more to the individuals with a lower ratio of discretionary income, it is these individuals that will need to save ore for the cost of the Vending machines. With the fact that labor costs and other operations costs being eliminated completely, it means that in the long run. The economy is currently doing well something that will see the businesses perform better. For example in the year 2016, the GDP is said to have grown by 5%. 5% current value growth from 2015 to reach GBP448 million in 2016. Vending saw a considerably stronger current value performance in the last three years of the review period, with 2016 seeing the strongest annual growth yet at over 5%. This means that the investment of the business will see a stronger growth of the business. With the fact the vending machines that deal with electronics have not been undertaken, it will be a good business that will have a good value return. The main target for the business are students who have an increased appetite of consuming electronics. Targeting students will be a sure way of ensuring that this products are moving in the market. When the economy is doing well generally, it will be possible that they will have an increased ability to purchase the goods and services. It is important to note that the economy will see the students take part time jobs, and receive more money for upkeep. This means that they will have a lot of money at their disposal. The scenario will see them purchase the goods from the vending machines that are strategically placed close to them. Market Segmentation To ensure that the market is well penetrated, it is important that it is segmented into different sections which will enable the penetration be easy. In the business the major target has been identified as students. However, the younger population generally has an appetite of purchasing the electronics as they tend to provide them with convenience. On top of that, the fact that most of the activities nowadays are undertaken online this means that most of the people in the world will be requiring smartphones that will enable them to purchase and receive information to them. To ensure this penetration reaches all the individuals it will require segmentation on how various population and those with different lifestyle. The segmentation will be based on the age and places where they are found. Therefore the market segments will be of two kinds geographical and a demographic which will be based on age. Geographical segmentation This will be based on how strategic the vending machines will be placed. It will be used to ensure that different people are reached easily in regard to the places where they are commonly found. An example is where the vending machines will be place in schools to target students and also those in the busy stations like bus stops with a target of the general population. This will ensure that all the populations can easily access our services. Demographic Segmentation This will determine which products will be placed in different vending machines depending on where it is being placed. It is common knowledge that the younger population will not require the products that are similar to those of the old age. An example is where the earphones will be purchased more by the younger population compared with those of the old age. Therefore, those vending machines that strategically are laced targeting students will have more of these product compared to others. Market size The United Kingdom market is a large market when you consider the current growth rate. Though many of vending machines have been used in dealing with other products, the electronics have not been dealt with accordingly. Therefore, there is a great potential for the business expansion. Currently most of the population in UK are looking for convenience when purchasing goods. The already existing competitors are shop dealers and online websites. They have not been able to completely cover all the market. When looking on the dealers of vending machines but on different products, they have been growing over the last years. Vending is expected to see growing diversification in the forecast period, particularly within food and beverages vending. This channel is notably likely to see strong growth for premium and healthier options, including high-quality coffee and healthy snacks. More interactive machines using smart screen and touch screen technology will also be utilized, while there is also likely to be a growing focus on convenience store locations. There this is an indication that in the long run the vending of electronics will also see significant rise on it selling when basing the forecast on the current trend. Vending will also increasingly be used for product launches and marketing in the forecast period, with this often tied into social media. Socialvend will notably be launching a number of vending machines in the UK in 2017, focusing on travel locations and bars, with these being "socially activated." This an indication that still the market size is good enough for the business. The increased number of individuals who are ready to use the vending machines is an indication that the business will capitalize and expand even more. Product/Brand Strategy This is going to be a service business that is going to retail iphones accessories, Chargers and earphones. Therefore there will be need to ensure that the services provided is going to be of higher quality compared to the physical stores. The services is going mainly to capitalize on time taken to deliver the quality. The products that are going to be placed in the vending machines are going to be of the highest quality. This is going to create a very strong brand and also the packaging is going to be tagged with the name of the company. This will ensure that the competitors like the online websites and shops are outdone. Pricing Strategy The pricing is going to consider the costs that are going to be incurred in learning the business. With the fact that the business will be reducing most of the costs compared to other physical stores, then it means that it is going to be very competitive. Instead of adding a high amount of marked up prices from that of the manufacturer, it will be low. This will give a good start for competition as it will lead to better prices in the market than other retailers in the market. Placement The way the supplies of the company products are going to be undertaken is going to be one of the best. It will be undertaken in a manner that the products that are most bought in the market are delivered faster. There will be continuous monitoring of the stock levels to ensure that nothing runs out of stock. Stores are going to be put in those areas that are close to the vending machines for easy filling of the vending machines. The vending machine will be set in Oxford Brookes University and Oxford city center. Oxford Brookes University has three campuses (Wheatley Campus Headington campus and Harcourt Hill Campus) and Headington campus sport center. Other machines will be placed focusing on travel locations and bars, with these being "socially activated. Promotion/Communication Strategy Promotions are going to be carried out so that the customers are attracted to the company products. Some of the methods that are going to be used are going to make the customers understand why the services provided by the company are superior to the rest of the companies selling the same products. This channels and methods of promotion are going to play an important role in attracting more customers to the company. Some advertisements through different social media platforms is going to take place something that will encourage them to visit our vending machines. After which the will be allowed to pay for any payment such as card, cash and contactless. Industry analysis Customer Research To ensure that the market is well understood and the right pace of penetration is attained, we will undertake customer research to understand what the customer’s needs are and how they can be satisfied. Target Customer Strategy We will employ a very innovative and efficient way of targeting customers to ensure that they understand our customers well. The social media platforms and strategic placement of the vending machines will form our major way of targeting our customers Channel Strategy The products will reach the market by ensuring that the vending machines and servicing stores are placed strategically nearer to the place where the customers are. Positioning Always the products are going to be said to be of quality than the rest of the competitors. The products are going to be portrayed as those that have been proven already. Pricing Strategy The price that is going to be place on the products is always going to be competitive than that of our competitors making the product better. The strategy is going to ensure that everything is moving in the right base. Internet Strategy The internet is going to assist in the marketing campaign. The internet is going to be used in a great deal in the advertisement. Sales Strategy This is going to be based on the 4Ps of marketing. That is product, placement, promotion and pricing is going to be superior that any of the companies that is selling the same product. The use of technology in sales will be relied on as the major target market is that of the young people. Therefore, the use of the social media and other online platforms to generate sales will be explored in a bid to increase the number of sales in the market. Advertisement of the service while stating the advantage it adds to the customers will be e undertaken in order to ensure that may of them are aware of the products and services. Revenue Model The revenue model that will be used will be one that will entail the forecasting method and the operations of the business be undertaken in a manner that will ensure it has achieved the target. The finance shall be one of the best in ensuring that the firm operations, profitability and productivity is the best. Operations plan Operations strategy Any firm should engage in operations process. When the operations activities are efficient it means that even its productivity will be higher. Operations are a transformation process. It's the process of transforming inputs into outputs (Taylor and Russell, 2011). The out of the operations activities will be through installation of many vending machines and also more phones and covers being sold through the vending machines. The business will be started first by undertaking the market analysis of the business idea. This will ensure that all the required information is going to ensure that functions are going to be undertaken in an orderly manner. After the collection of information, there will be laid down a plan on how to start the business through setting goals and timelines. After undertaking the said activities, identification the places that the vending machines are going to be placed. The n the machines are going to be bought and be placed in the places that have already been identified. The required systems to operate the vending machines is going to be put in place. The stakeholders are going to buy the goods that have already been identified and be placed in the vending machines. The from there the founders are each going to be allocated their roles that they are going to undertake in ensuring that the operations of the business are not disrupted in any way. For the start, the business shall be having four vending machines that shall be located strategically at 4 places of Brookes University, they are Brooke’s gym, Harcourt hill campus, JHB Building and Wheatley campus. This machines are the once that are going to test how the penetration is going to occur in the market. They are going to ensure that efficiency of buying the described products is better than that of the competitors. The major target market at the beginning shall be the students who are in the Universities that are near where the four machines are place. To ensure that the business operation is on the right track then it is important that to ensure that after every two days, we will check and refill the stock of each machine. This will make the operations of the business move in the right direction and efficiently without any alteration. The business operations will be divided into three parts. The first part is where one of the founders will be in charge of installing the vending machines in the streets and ensure that all the target market is reached. It will be his role to ensure that all potential areas are discovered and installed. In undertaking this the following activities will be carried out; To ensure analysis of the people who uses a strategic places. To ensure that all the electronic bought in the nearby shops is analyzed and understand the trend that the consumers are showing in various places. Special guests from the vending industry and phones industry to interact with other people who are interested in buying the goods from our services. To have rehearsals on the usage of the vending machine at regular intervals for the customers to be informed on how to use this machines and gain confidence on using the services in their purchases. To ensure that awareness campaign is carried out thrice a month to ensure that customers know the strategic areas where they will find various machines from which they can make their purchases from. Different promotion activities will be given to customers such us discounts, extra goods and other forms of rewards in case they make frequent purchases from the machines The second part will be taken by another member who will be looking into technology trend and innovations that are coming up in the technology. Under this the following activities will take place; Collect different information about the information technology Involve customers in expressing the kind of improvements that they will need from the startup services Observe which kind of electronic products that is being purchased frequently in the market. Observe the required improvements that can be done in the machines to make the services better. The third and last operations activities will be the sales. Which will be ensuring that the products are moving in the market. Some of the activities that will be carried out are as follows; Ensure that customers get the products they need in the market at the right time Ensuring that the vending machines are working according to the stipulated time Fixing prices that are competitive Ensuring the quality of products are according to the customer expectation In undertaking these, the main customer target shall be students in universities. Therefore different operations shall be based on their convenience. Human resource operation plan The founders are going to be the only employees in the beginning as they will ensure that they are undertaking the functions of the business with a lot of understanding. They will give the required dedication in the beginning which at the end will ensure that the required base is laid. On the expansion of the business students from different universities with interest on technology and sales are going to be recruited and be trained on how the business works. The human resource shall always be trained on the prevailing market conditions. This will ensure that the customers get what they require in the long run. The human resource shall play an important role in the organization as they will be the key drivers in ensuring that the business is being operated in the manner that we require. To ensure that the employees have the required motivation, it will be necessary that the company recognizes their input. Rewarding of the employees who have achieved the required target in their jobs shall be frequently be undertaken. To ensure that they are doing well and get serious on their job competitive salaries and better working conditions shall be provided to them. They shall be regarded as the most important assets of the organization. The HR practices that are usually practiced in United Kingdom shall be the driving force behind all the operations of the firm‘s human resource practices. The scenario will be emphasized to ensure that the working environment conditions are well maintained to accommodate different cultural deviations among the employees of the firm. However, since the company is similar, there is a need that both workers from different backgrounds to be trained on the various culture practices that will enable them to interact in the right manner. Therefore assistance will be sought to ensure that there valuable insights into the new HR strategy for our company, mainly put emphasis on HR functioning, learning, training, and development, changing management and recruitment related to solving potential issues among the expansion. The final strategy is aligned with company’s strategy and give assistance to HR department to reinforce the efficiency and thereby support the business during the development period. The firm will give its best to ensure that the human resource practice are those that will improve productivity of the workers and also ensure its cost is kept low as we can. The number of employees shall be begged on the expansion rate that shall be shown by the organization. However, continuous internship programs shall be provided by the business in order to ensure that some of the bright students do understand the operations of the business to avoid scarcity of employees in the case of the rise of vacancies. The internship shall equip students with necessary skills that will enable work in the organization whenever they will be required. In the whole operations of the business the employees shall remain major contributors. Constant guidance shall be provided to ensure that the organization is moving in the right manner to ensure that all what is undertaken at the end of the will be somethings that push the organization is profitability to the next level. Financial operations plan It is important from the beginning of operation of the business to ensure that finances are well regulated and understand how the business will perform both in the short term and long term. Therefore due to the operation plan that we have in place the finances shall be allocated as follows; Purchasing of the vending machines which shall be undertaken from the Alibaba.com one machine shall cost 1650 USD per unit, we plan to buy 4. Shipment fee: 163.16 USD. The total cost for all the four shall be 7252.64. The materials and products that shall be purchased at the beginning shall cost around 10000 USD at the start. They are going to be sourced from the companies to be producing the best quality in order to ensure that what the company will sell shall be one of the best lot in the market. When it will come to the operations related to the human resources, the founders shall be the main employees while one more will be added to ensure that he/she will assist them. The total labor estimation is said to be around 3000 pounds a month. Finally, there will be an office of operation and also stores that will be used to keep inventory before they are taken to the vending machines. The measurements of the store shall be 50 Sqft which can storage 70boxes or 100 Sqft which can storage 140 boxes. An office shall measure 10 Sqft. This will two spaces shall ensure that the planning of the organization shall be undertaken in the right manner. The total cost for these shall be around 1000 pounds a month. Different sources of finance are going to be considered to ensure that the business is running its operations without any problem. It is important to note that the source of financing that are favorable are the ones that will be given priority while the rest will come after. Personal savings, grants and loans from business incubation centers is going to be given priority. Apart from the money that will be running, it will consider other factors like profitability and budgeting will be considered to ensure that the organization doing well financially. Basing on the above financial operations the following statement is going to be the guiding principle in the finance sector. This is the target profitability within the first year that will see the business prosper in the future. As it can be seen from the above the business will have high levels of profitability which is an indication of the need of expansion of the whole process. 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