Marketing and Financial Plans of River Rocks Books Store - Research Paper Example

BUSINESS PLAN: A CASE OF RIVERROCKS BOOKS STORE. Table of Contents 1.0Executive Summary 2 1.1 Products and Services. 2 1.2 Target market 2 1.3 Industry 3 1.4 Objectives 3 1.5 Philosophy 3 1.6 Mission 4 1.7 Keys to success 4 2.0 Marketing plan 4 3.0 Industry Analysis 7 3.1 Competitive edge 9 4.0 Financial Plans 10 5.0 Risk Assessments 12 6.0 Strategy 13 7.0 Recommendation and Conclusion 14 Bibliography 16 1.0 Executive Summary River Rocks Books Store is a mid-size retailer of books dealing with both print and electronic books. The company operates in the UK through 47 branches located in major cities and at main train terminuses and airports. The company also has an active online presence to increase its capabilities. The report is divided using the following section; marketing plan, financial plans, risk assessment, industry analysis, recommendation and conclusion, and strategy. Each of this section will cover a given thematic area. The report will aim to ensure that we reflect the true picture of the business together with the expected performances. We will also recommend what the business needs to do to ensure that it is profitable and creating wealth for the owners. 1.1 Products and Services. The company is in the business of selling books. This is mainly retail sales through local market and in the online space. We offer a wide range of books in a bid to satisfy our customers’ needs for quality content. The books are in a wide range of subjects thereby being a one stop shop for books. 1.2 Target market The target market for the company is governed by the products on offer. To this end we offer quality adult and children content. Although the market has experienced some serious challenges in the recent past, we intend to increase and grow our market share. We are targeting customers from different backgrounds. 1.3 Industry The books industry is a large market with so many players. Many of them offer products in print form although there has been notable competition from e-books. The market has had its own fair share of challenges and this affected a number of businesses with some of them filing for bankruptcy. This can be deemed due to the increase in competition in the book sales industry. Those businesses that are note responsive to the changes in this dynamic market will continue being edged out by others. It is worth noting that innovation and creativity are noble causes in establishing competitive advantage. 1.4 Objectives The main objective of the company is to achieve good financial position through improved leverage levels and debt management. Specific objectives are listed below 1. To maintain a profitable picture in the next five years. 2. To have our website increase in terms of traffic s a top website for all books needs in the next five years. 3. To increase our market share and achieve consistent sales volume. 4. To have fun in making our customers happy by satisfying all their needs. 5. To pay our employees well while increasing the shareholders’ wealth during the years of our operations. 1.5 Philosophy 1. We answer to the customer. 2. Do not be greedy. 3. Satisfied employees are a necessity. 4. Always available at the perfect level of convenience. 1.6 Mission The mission of the company is to be the specialty retailer of books both locally and through online market. We aim at providing quality services to our customers at all time. Our goal is to keep our customers happy by satisfying their needs through offering quality products at affordable prices. 1.7 Keys to success 1. Providing excellent customer experience. We hold our customers dearly. Our philosophy dictates that we are responsible to the customers. In a special way we answer to the customer. When find customers we aspire to keep them happy on continuous basis so that they can be coming for our products in the future. 2. Slow and organic growth so we can be able to keep our expenses at the minimum hence operates efficiently. 3. Having and easy-to-use website that is both informative and a marketing tool. 4. Having significant grass root presence. This is through having highest level of visibility through promotion of the company and its products. 5. Attracting and maintaining a committed workforce. Just like our customers, our employees have a special place in our company. At all times we provide them with an environment that fosters their growth and encourages innovation. 2.0 Marketing plan The company deals with books and also offers other customized services to our customers. The sections of the company are; adult fiction, adult non-fiction, children and teenage books, and gifts and stationery. The store forecasts that the major purchases will be in print media as compared to online versions. The table below represents projected sales volume of the company’s products. From the table it is noted that the adult fiction section represents our major product. To increase the volume of sales per section we are proposing price reduction strategy (Peter and Donnelly, 2011). We are aiming at providing our products at affordable prices. Prices of the product play a big role in the running of the company (Armstrong, Kotler, Harker and Brennan, 2015). They help in not only meeting the costs of the company but they are also a key component of operating profits. This implies that the company has to make right pricing decisions (Hinterhuber and Liozu, 2012). The decision will be based on the analysis of certain parameters in the market. The table below is a representation of the price reductions that have been proposed. The pricing model is made by considering past information to be able to make these projections (Peter and Donnelly, 2011). From the table it is evident that the only item that we plan to increase is the discount factor in the on-line market. This is meant to ensure that the business attracts and retains more clients. We also intend to incorporate home delivery plan in a way of increasing sales volume in this marketing channel. The aim of the decision to reduce the prices was arrived at so as to increase the demand for the company’s products. We plan to maintain these projected results and make them a reality through continuous rolling out of new titles. We are going to increase our marketing cost for this section through product promotion. We will include rewards and other incentives for customer referrals. This is going to make us maintain this growth and remain competitive. Little investments are going to be made for the gifts and stationery section. This is because the section is projected to have reduced revenues. The assumption here is made because we believe specialized companies dealing with these products are continuing to increase competition now and in the future. Promotion is a necessity in maintaining the business afloat. It works not only to inform the customers of the products it also helps in attracting new customers. This is in line with marketing our brand. For the website advertising we intend to have optimized mobile website together with strong social media presence (Li, Xu and Li, 2013). This is from the knowledge that Smartphone usage is on the increase and it is projected to maintain steady growth. The strategy is going to benefit the company in having improved user experience, strong brand identity, improved search performance, more flexible and cost effective advertisement, and new advertising opportunities (Peppard and Ward, 2016). The online promotion is going to be done through Google Adwords, Banner ads, and Facebook promotional ads. The company intends to maintain the current shelf space allocation strategy. We are hereby going to be allocating more space to the adult fiction section as this is our main product. We are also not going to be increasing the number of in-store coffee shop franchises in future. This is so as to help us in minimizing the operations costs and in a way help in increasing our profits. 3.0 Industry Analysis This section of the business plan is important in showing the strengths and weaknesses of the company in the market place. It shows the capability of the company and also shows the attractiveness of the market. In market analysis the consultant is going to use both qualitative and quantitative assessment of the market. This is in term of both values and volume of the market. Various aspects of the market analysis involve analyzing the customers and their consumer behavior, competition, barriers to entry, and exit from the market. This section serves to show the investors about the market and the ability of the market to foster and sustain long-term business The book retail market is recovering from a period of below-potential growth (Greco, 2013). The low market growth yields fierce competition in the industry. The low price strategy and home delivery by online bookstores further compounds competition. They threaten the survival of physical bookstores and many stores are reported to have closed shops during this period. Having come from a troubled economic time the industry is starting to show impressive trends. Those companies that had good strategies are coming out even stronger and new businesses are being started in the industry. Some established online giants are changing their operations and infusing recommendable changes in their strategy. For example Amazon, a key player in online books business, is considering opening close to 400 physical stores. This is informed by changes in the market. In addition, small-sized private bookshops continue to struggle to survive in difficult situations. Borders, a largest bookstore, closed all its branches and filed for bankruptcy in 2011. This was due to low profits and low revenues that could hardly cover operation costs. The larger players in the industry have strong bargaining power. This is mainly due to their ability to own distribution channels and thus by-pass middlemen. Small companies lack this capability. Due to the company’s management connections within the country and abroad, we have an excellent feel for the area and the core customer groups (Freeman, 2010). They will all share something alike, which will be a feeling of belonging and owning the success of the company. Although the branches are different with small connection with each other, they are going to complement one another. We do plan to continue reducing our prices as the company grows and charge a premium for the feeling to belong to the company. The following curves represent our projected price levels. 3.1 Competitive edge The books industry is a large market with so many players. Many of them offer products in print form although there has been notable competition from e-books. The market has had its own fair share of challenges and this affected a number of businesses with some of them filing for bankruptcy. This is due to the ever increasing competition in the books industry. Those businesses that are note responsive to the changes in this dynamic market will continue being edged out by others. It is worth noting that innovation and creativity are noble causes in establishing competitive advantage. Our competitive advantage is comprised of our quality products, ambient environment, our able employees, and having a strong IT section. We believe we are up to the task in facing competition in the market through this combination. Our products are of high quality and at all times we aspire to satisfy our customers’ needs. This is done through continuous customer analysis to respond to their ever changing tastes and preferences. By combining quality and affordable prices we are able to maintain and attract new customers. Our coffee café offers customized services as having free internet connectivity for shoppers as they continue with their shopping experience. Our excellent shopping experience is governed by our philosophy of answering to our customers at all times. We also take pride in informing our customers on relevant issues. This is through our bogs in current and emerging trends in education sector. Through our coffee shop, the company is in a special way seeking to provide a relaxed environment to our customers. The IT section together with other departments of the company is headed by highly motivated employees. We know that employee satisfaction is the key driver to our success. We continue to encourage innovation and creativity of our staff. A comprehensive medical cover and other fringe benefits are offered to our staff in addition to salaries. 4.0 Financial Plans Finance is a key resource of any business. A financial plan involves evaluation of current situation of the company and forecasting future obligations. It involves the use of current known variables to predict the future. The plan involves an analysis of current financial statements of the company and trying to get a picture into the future by moving from the known to the unknown. It involves projection of future incomes and expenses of the company. In the cause of developing the business plan it is imperative on the consultant to presents clear and understandable financial information. This will help users of the plans in making informed decisions about the company. The financial plans so developed will show financial goals, comprehensive analysis of the current state, comprehensive financial risk assessment, and the development of long term strategy (Wilks, Morales, Garcia and Pacheco, 2011). The plan will involve an analysis on the capital requirements and determining competition levels. It will involve the company framing its financial policies in a way to achieve optimum results. The analysis of the financial statements of the company was done and projections made. This was in line with current performance levels and analyzing the market for the necessary trend analysis. It was revealed that the company is going to experience improved results throughout the years as is shown by the strong balance sheet position. It is also noted that the current position is projected to improve and then start declining in the 4th year. The main reason for this is the issue of loan repayment. During that period the loans of the company will start falling due. The company proposes the following financial decisions. 1. Maintaining the creditors and payables days at 30 throughout the 5 years covered by this plan. 2. A constant dividend as a % of total profits after tax at 10%. This is in aim of maintaining the current investors of the company. The table above shows the projected income statement for the company over the planning period. This is used to give information on the financial performance of the company. From the analysis it is noted that the companies operating expenses are huge and are in a significant way working to reduce the operating profits. This will cause the company to increase its total debt resulting in the increased debt-equity ratio. 5.0 Risk Assessments Risk is a key aspect in business management. It involves analyzing and estimating both in qualitative and quantitative terms business risks. Risk in business is the potential for success or failure. It incorporates uncertainties about future occurrences. Risk assessment will help the company in developing mitigating strategies against any identified risks (Anagol, Cole and Sarkar, 2012). It is going to help the investors to know of the potential loss or gain in their value in terms of wealth. It involves determining what could go wrong and what may cause variations from the expected results. Just like any other business, the company is going to have certain inherent risks. The management is formulating mitigating factors for each identified risks. The following are the risks and their mitigating factors. 1. Competition. The company is going to saturate the market with as many products as possible. The risk from this is diminishing returns from market saturation. To mitigate against this risk the company has gotten exclusive distribution in the East London territory and surrounding areas. This will give the company the necessary freedom to operate in this location without fear of market saturation of the brand name. 2. Location. Business location plays a huge part in its success. The risk here is getting new places to operate from as the company expands. This is minimized by collaborating with mall developers to have exclusive information on new developments and availability of floor space. 3. Business failure. There is indefinable chance of failure of the business. This could be from indirect factors while there is also a likelihood that it is from direct factors. The success or failure of the company is anchorage on its creditors and financiers. The company intends to bargain for lenient credit terms and ask for a reconsideration of debt terms. 4. Disasters. The company is going to contract service providers to insure the business against all losses. The company will also nurture positive relationships with surrounding bookstores. The relationships will enable the company to use their infrastructure in times of damages. This will go a long way in ensuring that the company retains services and cash reserves as the insurer pays and repairs the infrastructure. 6.0 Strategy Strategy is any means identified to help the company in achieving its vision. It involves the company connecting its resources with the future. The business strategy offers a match between the organization and its environment.[Ken17] The strategy of the company is quite simple and it is the one going to govern success (David, 2011). We intend to succeed by offering a combination of high quality goods and services at affordable prices. We are going to have an ambient environment that is attractive to new customers and at the same time maintaining the current clientele. By increasing the number of branches available we are going to reach new market. The marketing section is going to have a turnaround strategy aimed at informing our customers of any developments, the implementation of the strategy is quite simple and we intend to continuously keep our costs at the available minimum. 7.0 Recommendation and Conclusion Having set out the goals and objectives of the company in the set period we recommend the following to enable the company achieve the goals and objectives: Online presence – The internet has become one of the greatest tools for businesses. It is therefore important for the business to ensure that it has presence online through an e-commerce. The company will have a website where it can receive orders from clients and then make a delivery within a set period of time. This will not only increase sales but also ensure that the business receives the publicity required. Social media – Technological advancements have made social media the new front for doing business. Social media is used by almost 95% of teenagers whom this business will target for textbooks. The company will also use social media to drive traffic to its website thereby increasing sales in that end. Delivery channels - We recommend the company to use timely and cost effective delivery channels. This will be necessitated by the e-commerce. The delivery channel will determine the success of the e-commerce business segment, therefore the need for for well-planned strategy. The delivery channel needs to be selected through the use of outsourcing from a reputable company. The company is going to remain profitable in the near future and will be able to meet its obligations as and when they fall due. Through the use of a delivery channel the company will be able to make more sales and deliver the same to clients promptly. The company will ensure that it has a reliable service provider with whom to sign the contract with. The selection process should be thorough so as to ensure that the company selected will deliver the set standards. This strategy is aimed at purely ensuring that the online business is competitive. Through the offer for delivery the company expects to make more sales at fair margins. Compensation - Any new staffs recruited by the company and the company selected to do the delivery will be compensated on a commission basis. The use of a commission based compensation structure will help the business in increasing the level of quality and quantity of delivery as well. By offering to work with this new company the business will also be reducing the expected costs on resources charged with ensuring that there is prompt delivery of the orders. Location – New physical locations for the company need to be strategic. The company will target educational institutions and open book stores near the institutions. Where possible the company needs to speak to the institution for them to open a store inside the institution e.g. a university. By choosing a suitable location the company will be increasing its chances of success thereby profitability. Bibliography Anagol, S., Cole, S.A. and Sarkar, S., 2012. Understanding the incentives of commissions motivated agents: Theory and evidence from the indian life insurance market. Harvard Business School. Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education. David, F.R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall. Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge university press. Greco, A.N., 2013. The book publishing industry. Routledge. Hinterhuber, A. and Liozu, S., 2012. Is it time to rethink your pricing strategy?. MIT Sloan Management Review, 53(4), p.69. Li, Y., Xu, L. and Li, D., 2013. 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