To Buy a Coffee Shop or to Build a Coffee Shop - Assignment Example

To Buy a Coffee Shop by Tony or to Build a Coffee Shop Tony Webb Strayer Dr. Marla Boulter BUS 402- Small Business Management Question 1 The industry of beverages is advancing with extreme leaps and bounds in this age of competitiveness. This is mainly due to the presence of varied types of flavours such as Caffe latte, Cappucino, Caffe Mocha and many others so as to satisfy the changing preferences of the customers. As customer is the prime strength of any organization, operating in any segment or in location. So, it’s extremely essential to attract or retain the customers in order to enhance the level of sustainability and reliability of the organization in the market among others. However, it might be possible only if a newly established organization tries to offer the differentiated products at discriminatory prices. Only then, a new entrant might compete with a well-established coffee shop. Apart from this, by using differentiated or discriminatory pricing tactic, the new entrant might attract a wide range of customers of varying age groups such as students, professionals, daily visitors and many others. Moreover, such type of pricing is also used to fascinate some specific segments such as bulk purchasers, wholesalers, children, retired persons, military members etc. So, such type of pricing strategy is also recognised as personalized pricing or preferential pricing. The prime desire behind such type of pricing strategy implementation is to develop a competitive position and image among other entrenched players. Along with this, implementation of such type of strategy might prove effective for the new entrant to enhance its popularity and reputation in the market thereby boosting its profitability to a significant extent. In addition, by offering varied types of rebates and coupons to varying age-groups and professionals, the rate of reliability and loyalty of the customers might get enhanced thereby amplifying the scope of expansion of the new entrant into many other regions and markets. This might enhance the sustainability of the organization along with its net revenue as well. Furthermore, in order to create a distinctive image and identity in the market, the new entrant might try to recruit highly trained and experienced staffs within the organization. So that, the organization might become able to offer best customer services in order to satisfy the demands and requirements of the consumers and retain them for longer period of time. This might act as a boon for the new developed organization to enhance its market share and portfolio among other rival players. Besides, recruitment of trained individual might act as a competitive advantage for the organization thereby amplifying its total sales and recognition in the market to a certain extent. Not only this, in order to enhance the identity and brand value of the new organization, the entrepreneur might introduce live concerts such as music, poetry readings, dance and many others so as to entertain the customers and to retain them for longer period of time. By retaining the customers for longer time, the amount of sale of coffee or tea might also get enhanced to a significant extent. As a result, the profitability and consistency of the organization might get enhanced with a very small period of time among others. Question 2 In order to retain the reputation and brand value in the market, every entrepreneur might desire to open a new organization. This is because; it might help the entrepreneur to design the shop or the organization in his own way. Moreover, opening a new organization or shop includes a huge amount of one time investment for resources and machines. However, in case of purchasing an existing shop, huge amount of investments need to spend in various phrases for renovation purposes. This may not be bearded by the entrepreneur in this age of financial crisis. Apart from this, the entrepreneur might try to design its interiors with modern furniture and machineries such as refreshing coffee makers and LED’s to enjoy every sip of coffee. Moreover, the organization might also sale varied types of merchandisers such as caps, T-shirts, mugs, pens, bags, coffee filters and many others to the interested customers so as to enhance its brand loyalty and consistency in the market among others. Not only this, the entrepreneur might enhance its reputation by presenting various products such as coffee with milk, black coffee, desert coffee, cold coffee’s, add-ons, tea, other refreshing drinks such as guava and mango smoothies, granites, milk based smoothies, iced teas or coffee, sandwiches, rolls, snacks items, desserts, pasta’s and many others. All these above mentioned products are highly preferred by the customers of age-groups (20-45) with high life style and living standards. Therefore, such a strategy might extremely prove effective for the newly developed organization to enhance its demand and profit margin among other rival players, operating for many years (ESOMAR, 2008). Question 3 In order to reduce the financial risk or any other threat in this challenging situation, partnership or cooperation might be the best form of ownership, to start a new business of coffee shop. This is because; all sorts of legal formalities might be tackled with both the partners, thereby resolving any sort of doubts in an effective way. Along with this, all sort of financial requirements might be equally divided among the two partners thereby reducing the burden of debts or loans. Moreover, in order to manage and control the operations and functions of a new coffee shop in an effective way, partnership is the extremely necessary. This is because; all sorts of responsibilities are shared among the two partners evenly that reduces the intensity of disputes and miss-confusions. Not only this, varied types of ideas and suggestions might also be discussed and shared with the partner, prior implementation in order to make it effective for the organization or coffee shop. This strategy might prove effective for any entrepreneur starting a business of coffee shop in this age of extensive rivalry and alternative brands. So, partnership or cooperation is highly preferred by the newly entering entrepreneurs in this age of competitiveness. Question 4 A coffee shop with a name: ‘Hot and Sweet Café’ might be opened then it might become the cornerstone of that specific community. This is because; it is a place, preferred by maximum extent of the individual of varying age-groups and life styles in order to share the precious moments with their dear and near ones. Mission Statement: The mission of ‘Hot and Sweet Café’ might be to offer the customers with numerous variations of coffee so as to present the best feeling at a distinctive price. So that the customer might remember the distinctive taste and feeling of that single cup of coffee and might return again. This strategy might act positively for the organization of coffee shop thereby amplifying its position and competitiveness in the market. Target Market: ‘Hot and Sweet Café’ positions itself as an organization for all, who prefers hot and cold beverages. The customer profile of ‘Hot and Sweet Café’ ranges between an age-group of 15- 45 years. Among them, majority of the customers are business professionals, students and retried individual of all living standards (Drummond & Ensor, 2006). Marketing Mix: Product: ‘Hot and Sweet Café’ offers varied types of products such as coffee and tea of varying flavours like cappuccino, caffe mocha, caffe latte, espresso italiano, espresso, Americano, latte bianco, caffe borgia, brrista, brrista frappe, iced caffe mocha, brrista blast, chocolate fudge, espresso shot, ice cream scoop and many others. Along with this, varied types of refreshing drinks or smoothies are also present such as guava and mango smoothies, blue curaco, lime ice, grava crush and many others. Iced tea, ginger fizz, lemon tea, Other than this, varied types of eatables are also offered such as rolls, pastas, sandwiches, light snacks in order to offer a light dining experience. Price: ‘Hot and Sweet Café’ might use differentiated or discriminatory pricing policy in order to fascinate a wide range of customers. This might help the newly developed coffee shop to enhance its market share and popularity among other rivals. Moreover, such a pricing strategy, might help the newly develop coffee shop to expand into new regions and markets thereby amplifying its profit margin and total sale. Place: ‘Hot and Sweet Café’ might be located in entertainment centres, busy streets and in super markets so as to attract a wide range of customers of varying life styles and age-groups (Bradley, 2007). Promotion: ‘Hot and Sweet Café’ might offer varied types of promotions in televisions, radios, online media’s and print medias so as to increase the level of awareness of the target customers. Only then, the level of profit margin and revenues of the newly opened coffee shop might be enhanced to a certain extent among other rival players. Capital Requirement Start-up Costs Coffee machines - $1,500 Furniture - $1,150 Other utensils - $950 Interior decoration - $700 Rent - $500 Computer, printer and other billing related machineries - $800 Wages - $1,000 Raw materials - $2,400 Marketing and promotion - $1,200 Other operating costs - $800 Total start-up cost = $11,000 From the above start up costs estimation, it has evaluated that the company needs a start-up capital of $11,000. References Bradley, N. (2007). Marketing Research: Tools & Techniques. New York: McGraw-Hill. Drummond, G. & Ensor, J. (2006). Introduction to Marketing Concepts. New York: Cengage Learning. ESOMAR. (2008). Market Research Handbook. London: Sage. Read More