Venture creation: Trousseau - Assignment Example

Venture creation: Trousseau Introduction The paper aims at explaining the venture creation process associated with clothing retail business. The retail store, Trousseau, will be established in Seattle, Washington D.C. (USA). In this regard, extensive market research has been conducted as the same has been discussed in the paper. Alongside, the paper presents analysis of benefits with respect to product features, industry analyses in terms of SWOT analysis, Porter’s five-force analysis and competitive analysis and presents views regarding customer profile and offerings. Market Research Need: The business idea of the retail store comprises selling of apparel of different brands for men, women and children. The brands will range from budget ones to exclusive boutique products. It was determined that often consumers avoid visiting major showrooms because of purchasing compulsion and price issues. The proposed retail store will serve need of different consumer groups because the store will have products belonging to different price groups. The retail store will not be targeting niche market; instead the offerings will be targeted at majority of consumers belonging to medium to high income groups (Kotler, 2000). Competition: The apparel store will be one of its kinds as presently most stores are either discount stores or are branch of super markets that sells clothes of mixed brand. However, the proposed store will be exclusively dedicated to apparel selling. It is believed that supermarket visitors frequently avoid purchasing clothes, because of lack of assurance about quality. Additionally, discount stores and supermarkets often have limited variety for a given price range and as a result, consumers are provided limited choice altogether. However, it is expected that the retail store will face little to moderate competition from these kinds of stores (Homburg, Kuester and Krohmer, 2013). Proprietary issues: Proprietary issues are associated with protecting intellectual properties or innovations of a company by means of legal support. These include patent, copyright and other forms such as non-disclosure agreements. No such measures will be taken by company as the process is not highly differentiated and any organisation can pursue it. The retail store is not creating a new product. However, the company will get patent for the name of the company (store). So that in future, business expansion can be done in a distinguished manner (Cornish, Llewelyn and Aplin, 2013). Cost and manufacture: As discussed previously, the store will be offering apparels of wide price range. Considering the decline in purchasing power due to recession, consumers are expected to spend between $35 and $150 during regular season, while they are expected to spend $80 to $250 during sale (since price per product will be less). The company will be stocking products on credit basis initially with little cash payment. The expected value of monthly stock initially will be around $45000. The total workforce expense per month will be $8000. Presently, the company will require capital worth $100000 as initial start-up. It is expected that the company will need additional capital worth $500000. Employees: The store initially will be hiring 10 employees; 3 for sales and customer management, 1 for accounts management, 1 for administrative management, 2 for marketing and promotional activities, 1 employee for technology management and 2 employees for logistics and stock management. The company will employ individuals at a competitive salary, as a result, it is expected that potential employees will not decline the firm’s offer. Additionally, sufficient facilities will be provided for employee engagement so that employees feel connected with the organisation and the store as a whole. Advertisement and packaging: The company will employ digital as well as print media for advertising. Digital media comprises social media such as Facebook, local television channels and Google Adwords. The print media includes news paper, flyers and discount vouchers. The promotional tools of the retail store will include exchange schemes, price-off offers, premium and bonus offers, bonus points and scratch and win offers. For packaging, the company will be using paper bags instead of plastic bags with name and logo of the store for greater exposure to potential consumers. The company will be employing traditional as well as contemporary techniques as per its suitability to the organisation (G. Belch and M. Belch, 2001; Shimp, 1997). Sales: Selling and distribution techniques essentially depend on the nature of business. There are several selling techniques which organisations of different kinds employ as per the requirements of the business. The retail store will be employing direct marketing strategy for selling apparels. The direct marketing strategy implies direct communication with consumers and in this regard, catalogue distribution, text messaging and so on will be employed. There are three kinds of distribution techniques that are generally employed by retailers, namely, intensive, selective and exclusive strategy. The retail store will implement selective distribution strategy where limited number of stores will be established in the long run within a specific geographic area (Pelton, Strutton and Lumpkin, 2002; Smith and Taylor, 2004). Transport: The logistics and stock management team will be responsible for transportation of apparel consignments. The consignments will be transported once in every two weeks if order refilling is necessary. The retail store will hire small or medium size truck for transportation of products as per requirement. Transportation will be coordinated with available stock of the retail store so that high inventory issues are avoided (Stock and Lambert, 2001; Croom, Romano and Giannakis, 2000). Benefits and features Features: Seattle is located in the heart of Washington D.C. and it was considered appropriate for the retail activity because it presents a melting pot of business, recreation and culture. The city has all kind of designer and local brand stores. Consumers therein generally visit either of them. However, the proposed retail venture will attract consumers from both categories (designer apparel as well as budget brands). The retail store presents a common solution to multiple store hopping. It will also present a solution to hesitation of local brand lovers to visit designer boutiques. Initially, the store will stock apparels for age between 0 years and 50 years and above but in long run, it will expand to accommodate other accessories as well. Benefits: The primary benefit that consumers will be able to avail from the retail store is one stop solution for all kind of apparel needs, that is, multiplicity in terms of age groups, brands and price of products. The store location will be convenient for most consumers and they will be benefited by occasional rebates, discount coupons and bonus points. Additionally, the store will provide exchange schemes in case of product disputes, fitting issues and other problems (Schultz, 1992). Business and product Product and services: The business is about establishing a retail store that will be selling apparel for almost every gender and age group and in different price ranges (low to high). The products will belong to different brands including most preferred private labels. The services of the company will include exchange facilities and other exclusive facilities such as bonus point for existing consumers. Product protection and exclusive rights: The retail store will be selling products made by different fashion houses and manufacturers as a result it cannot protect the product. However, the company will get the store name patented so that no other retailer can use it for commercial purpose. Target market: The target market of the retail store is relatively broad as it is aimed at selling products to consumers belonging to age group between 0 years and 50years and above. More importantly, the store will target consumers from all classes as it will stock local brand as well as boutique products. There is no limit on the income level of consumers as products of almost all price range will be available at the store (Schultz, 1992). Competitive advantage: Competitive advantage at the retail store will be achieved by means of added variety and discounts. Multiple brand availability will attract greater number of consumers. Alongside, the shop will present one stop solution for men, women and children in varying price ranges (Porter, 2011). Industry research The industry has been assessed using SWOT analysis, five-force model of Porter and Porter’s generic strategies. SWOT analysis Strength: The growth rate of the industry is positive and in next five years, the industry is expected to grow by around 30 percent. The most powerful segment in the US apparel industry is the womenswear segment accounting for around 50percent of the total market share. Weakness: The US continues to recover from the crisis but the purchasing power of consumers is yet to gain momentum. Opportunity: The industry presents significant opportunities to the retail store in the form of market growth, development of multiple sales channels, technological integration and online retailing. Threat: The main threats that may affect business of Trousseau are intense competition from large fashion houses and rising wage rate (MarketLine, 2014). Porter’s five force model Buyer power: The industry has limited but expensive fashion boutiques which weakens buyer’s power. Additionally, most retailers are driven by brand loyalty. In other words, consumers exhibits strong brand loyalty and consequently, retail stores are largely driven by individual consumers. Supplier Power: Bargaining power of suppliers play an important in the apparel industry of the US. Majority of the suppliers comprises wholesalers and clothing manufactures. Every organisation has dedicated supply chain system as the switching cost therein is fairly high. As a result, the bargaining power of suppliers is moderately high. Threat of substitutes: Apparel does not exactly have substitute but there are alternative channels in this regard. Consumers have several choices for buying apparels and relevant accessories. Furthermore, variety in clothing style and material also adds to the competition. New entrant: The industry is going through a growth phase and thereby has attracted several national and international players. The entry barriers are relatively low as capital requirement is only moderate. Additionally, level of differentiation is fairly low for most retailers. Therefore, threat of new entrant can be considered as strong. Degree of rivalry: The degree of rivalry is very strong as the companies are struggling consistently for having maximum share of market and consumer loyalty. Additionally, the competition increases because of large number of retailers selling similar products (MarketLine, 2014; Porter, 2011). Porter’s generic strategies Michael Porter has proposed three strategies for describing competitive advantage. These are, cost leadership, differentiation and focus strategy. Cost leadership is referred to the strategy by means of which an organisation can reduce its overall operational cost and maximise its cost advantage. Cost leadership strategy, however, does not imply producing poor quality of products at a low cost. Instead, production of high quality product at relatively low cost indicates cost leadership. Differentiation, as a name suggests, is focussed on creating something innovative which distinguishes an organisation from its competitors and the cost associated with replication is relatively high. Focus strategy is specific segment focussed; it is mainly used in niche marketing. Trousseau will be employing differentiation strategy as most shops except super markets and discount stores are focussed on specific brand, gender, price category and so on (Porter, 2011). Cost outline The cost mainly includes cost of sales, payroll cost, administrative cost, payroll tax, telephone, electricity and water charges, advertisement, promotion and other marketing cost, inventory cost and financial charges such as interest on loan and taxes (Datar, et al., 2013). Consumer profile Customer kind: Presently, a number of companies serve business customer along with regular non-business customers. Trousseau will serve non-business customers such as men, women and children irrespective of their employment status (Smith and Taylor, 2004). Location of customers: At present, Trousseau will serve local consumers and tourists visiting Seattle. The company is planning for future expansion by means of more number of chain stores. The company will eventually target regional as well as national consumers. Factors affecting buying decision: Consumers will be purchasing from the retail store because it will provide large variety that will have profound impact on rational judgement of consumers. Besides product guarantee by main manufacturers, the store will be responsible for exchanging disputed products and those with fitting and other issues (Schultz, 1992). Purchasing frequency: The purchasing frequency of consumers is expected to range between daily and weekly purchase. Impact of the product on consumer needs: Presently, consumer purchases different brands by either visiting specific stores or by purchasing from super markets and malls. The retail store will minimise issue related to multiple store hopping for consumers with respect to apparel purchasing (Kotler, 2000). Unique Selling Proposition of the offering Unique selling proposition is referred to specific product features that differentiate a product from its competitor’s offerings. In this venture creation, the product is to create a retail store that act as a convenient apparel store for all kind of consumers. The product is the retail store, Trousseau. Trousseau is neither a discount store nor a supermarket. It will sell high quality branded and unbranded clothes to different consumers groups. The USP of the store is that age and price will not prevent consumers from returning empty handed (Kotler, 2000). The store will sell product in low as well as high price range depending upon consumer’s need. The idea of the venture creation is to position Trousseau as a convenient store where consumers can exercise their purchasing power to the fullest extent without hesitation. It is expected that the retail store will prove to be a strong competitor for most discount stores and super markets because of its quality, variety and promotional strategies (Kotler, 2000). Conclusion The venture that was developed in this paper is a retail store that will be selling branded and private label apparels accommodating large age groups. The idea is to serve maximum consumers under one roof. The “under one roof” concept will prove helpful in making the venture successful because consumers are increasingly demanding convenience, quality and cost optimisation together. In the process of venture creation, industry has been analysed using SWOT analysis, generic strategies by Porter and Porter’s five force model. For enhancing quality of the venture creation plan, an outline of various costs, features, USPs, consumer profile and benefits have been discussed. By and large, it can be suggested that the venture will be successful if executed appropriately. 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