Business plan proposal: Gardenia Online Garden Shop - Term Paper Example

? Running Head: Business Plan Proposal Gardenia Online Garden Shop I. EXECUTIVE SUMMARY Gardenia is an online garden shop based in Doha, Qatar. Its goal is to basically provide the common public quick access to floral arrangements and styling services at an affordable price. It is a corporation owned by five college friends whose career experiences are a mix of event planning, styling and business management. The owners believe that there is an opportunity to use technology to make it simple for the public to easily purchase garden plants and flower arrangements, with options for delivery and other value added services. One of the company’s goals is to be the area’s top-of-mind online garden shops and to be the preferred styling company for events such as weddings, birthdays among others. There is a separate approach for the individual customer, for corporate clients and for event organizers whom the company will consider business partners in selling the products. Gardenia will differ from traditional florists and garden shops because it aims to cultivate personal relationships through the use of technology and marketing, offering gift programs and providing excellent customer service. For the individual customer, flexible delivery options shall be offered to entice them to pre order and schedule arrangements for particular period. For the group customers, its in house stylists will also act as their partners in making their corporate and event requirements a success. Gardenia’s product proposition is all about style, convenience and personal approach to the service. II. INDUSTRY, TARGET CUSTOMER AND COMPETITOR ANALYSIS Floral arrangement and styling is a thriving business in Doha, Qatar. There are a handful of garden shops having physical stores that offer the same product to individual and group customers. However, the concept of having online garden shopss is relatively new to the city. On the Google search engine, www.qatarflowers.com top the search list, followed by www.floraqueen.com. Both websites boast of fresh flowers sold at reasonable prices. They have options for delivery within Qatar and also in neighboring cities such as Ar Rayyan, Ash Shahaniyah and Al Wakrah. With this, Gardenia believes that there are still plenty of opportunities in the market, especially if the company will be able to establish loyalty among the target market. For a regular consumer, the biggest risk in making online purchase is whether or not the virtual purchase will actually be delivered in the exact fashion that it has been promised. Entrusting money to a virtual store is something that may send fear among potential customers. These existing online stores have not focused on this fact, and this is something Gardenia would like to capitalize on. Target customers will be individuals, male or female, who would like to order floral arrangements for their loved ones. Promotions shall be offered during known peak season which is Valentines Day. This will give individuals an added push to take advantage of this online facility in ordering flowers for their loved ones. Event planners shall also be considered as target market as they will help in marketing the products to their clients particularly for personal events. III. MISSION Gardenia will use technology to identify and serve an ideal target market within a 10-mile radius from Doha, Qatar. The company will utilize online marketing; search engine optimization and social networking to reach the target market and get their message across. The company is geared towards operating with a constant quest for learning, being open to new ideas and designs and willingness to adapt to evolving market conditions. IV. KEYS TO SUCCESS 1. Maximizing technology to develop loyal online customers who will be offered convenience of a virtual store that can offer much more than the traditional garden shops. 2. Skilled stylists who are adept at creating sensational events using on hand materials and the best flowers being offered by the company. These stylists shall grow with the company in the sense that they aim to establish a group of returning event companies who will approach Gardenia for their events. 3. Communicating with potential customers through direct mail, print advertising and easy to use website 4. An inventory system that prevents unnecessary spoilage, therefore increasing profitability for the company. 5. Marketing efforts that engage the customer, establishing trust from the target market, and encouraging a long-time partnership among clients. V. OBJECTIVES 1. Generate positive revenue of $ 15,000 for the first year 2. Maintain an average direct cost of sales 40% or lower and a high gross margin. 3. Build pricing programs based on the assumption of 15% profit. 4. Find a minimum of three suppliers offering particular kinds of flowers at a given season VI. COMPANY DESCRIPTION Gardenia is a corporation that is equally owned by five shareholders. It is a retail e-business in Qatar, creating floral arrangements and gifts for all occasions. VII. PRODUCT/ SERVICE PLAN Product lines are as follows: 1. Original Flower Designs, using local and imported flowers. Gardenia’s arrangements will be original works of art. The company is committed to making each arrangement unique and custom-designed based on each customer’s needs. Gardenia’s floral arrangements will feature a wide-range of seasonal flowers. Valentine’s Day ranks number one in single-day holiday cut for flowers purchases, capturing 34 percent of transactions. women are likely to give a gift of chocolate to a man for Valentine's Day. What is the profile of Traditional Buyers of Floral Arrangements?Which households buys fresh cut flowers, how often and how much do they spend? According to the American Floral Endowment Consumer Tracking Study, consumer spending is on the rise. For example, the percentage of U.S. households making at least one fresh cut flower purchase during the year continues to increase. The frequency of consumer flower purchases is also remaining consistent (Statistics: Floriculture Industry Overview 2012). 27.7% of all US Household purchased fresh cut flowers at least once per year. The average floral purchase per buying household was 3.7 times. The average purchase price per buying household was $62.63. The most frequent purchases are women over 35, with incomes in access of $30,000 who live in metropolitan areas with populations greater than 2.5 million. Seventy percent of floral buys are planned purchased. 2. Styling for events and gatherings Event organizers are potential partners to make the business a success. They will bring in customers who are willing to pay for floral arrangements that are packaged with a styling concept. The concept of styling is common among the western countries. Having someone who has the right styling skill decorate and plan for a venue setup adds value to an event. 3. Delivery service in Qatar and in neighboring cities. Gardenia will partner with delivery service providers to ensure product availability within the specified delivery time. There will be two types of delivery options – one is the regular delivery which allows three days lead time from the date of order and the other is express delivery, which charges a little higher, but is guaranteed to reach the recipient within 24 hours upon placement of order. 4. Gift Cards Personalized and generic gift cards for all occasions are also offered together with the flower arrangements. These are specially designed cards that aim to add personal touches to the flowers for delivery. 5. Loyalty Program Frequent buyer programs shall be implemented to encourage repeat purchase among the target customers. VIII. Marketing Plan Roughly about 35% of Gardenia’s monthly operational budget shall be allocated to Advertising and Promotional strategies alone. This includes expenses to be incurred in utilizing mainstream media particularly print advertising; other alternative media; and design and production of merchandising and promotional materials. Mainstream-wise, Gardenia shall utilize print advertising particularly through tie-ups with different magazines. Although this would not be the company’s primary vehicle in promoting its products, it would just aim to maximize its relationship with these magazines whose websites Gardenia shall be utilizing in its online campaigns. By alternative media, it means that Gardenia shall utilize media channels other than print, radio and TV and online marketing. Merchandising and promotional materials include posters, flyers and mini billboards for display in strategic areas in Doha, Qatar and in neighboring cities. Specifically, Gardenia shall undertake the following strategies: 1. Internet Marketing Internet Marketing has become popular because Internet access is becoming more widely available and used. Well over one-third of consumers who have Internet access at home report to using the Internet to make purchases (What is Internet marketing 2004). Moreover, statistics show that Internet users increase at a rapid rate that in five years’ time, it is predicted that 80% of United Kingdom’s population will have a computer with Internet access at home (Advertising 2007). Since Gardenia’s target market are working men and women who, most likely have internet access either at the office or at home, it chooses to primarily utilize internet marketing to promote its products. First and foremost, Gardenia shall create a website that contains pertinent details regarding the company’s profile and its products. It would contain the company’s mission-vision and a statement of what the company wishes to achieve market-wise. It would also present the profiles of the stylists creating its product line. More importantly, it would contain an updated catalogue of the products being offered. Each stylist shall be represented through his own sub web page. Products shall be sorted and categorized to make it easier for browsers to look at the collections and make their decisions on which to purchase. Online shopping would be available through tie-ups with affiliate credit card companies. Tie ups with shipment companies shall also be made to ensure that Gardenia would reach various places in Doha and in nearby cities. The website shall be launched simultaneously with the shop’s opening. Advertising in the listings on the Internet can provide a website with a number of viewers. As such, Gardenia shall do Search Engine Optimization (SEO) by subscribing to the most popular search engines such as Google and Yahoo, among others. Gardenia shall subscribe to advertising services such as Google AdWords, in which Gardenia’s website would appear immediately following key word searches from Internet browsers. This would prove to be cost-effective since Search Engines charge a company only whenever a person actually accesses its website. Further, this would guarantee that the advertising effort would reach the targeted market because one can limit its ad to appear only to people searching in a particular city, state or region. Gardenia would also do Online Banner Advertising, as this is an effective way to promote brand awareness. Online Banner Advertising allows a company to flash its brand name and other details to browsers upon prompting through specified keywords. Although this does not guarantee sales leads, it nonetheless promotes the Gardenia brand through its repeated appearance on the screen, consequently leading to brand awareness and recall. To save on cost, Gardenia would employ a “cost per lead” or “cost per acquisition” strategy to ensure that it only pays for quality viewers or for browsers who actually expresses interest by logging in Gardenia’s website. Gardenia would secure numerous key words to maximize the opportunity to flash its banners to Internet browsers. 2. Word-of-Web/ Online Promos Word-of-Web is actually a modified version of Word of Mouth Marketing, in which information is passed through verbal means. Word of mouth is typically considered a face-to-face spoken communication, although phone conversations, text messages and web dialogue, such as online profile pages, blog posts, message board threads, instant messages, chat exchanges and emails are also considered word of mouth. This might be informal, and non-quantifiable, but it is also a personal means by which information can be endorsed from one satisfied customer to a potential customer. Gardenia would seek to further modify this means of communication by coming up with rewards for every referral made through its official website. Gardenia shall launch the “Gardenia Exclusive Circle’, a club exclusive to registered members who have provided their email addresses and other contact details for regular updates on Gardenia’s products. Club members may be considered satisfied clients, who may have, at one point or the other, purchased Gardenia products, or at the very least, repeatedly browsed through Gardenia’s official website. Gardenia would capitalize on the fact that these people who have actually seen, experienced and enjoyed the company website would have great influence when spreading the company’s products and offers through word-of-mouth. Registered members shall be given rewards or downloadable promo coupons for every 10 persons referred. Referral would mean that the club member has provided contact information regarding their referrals. Contact information such as email addresses shall be used to invite the referred customers to browse through Gardenia’s website or visit the branch. The registered member who provided referrals, meanwhile, may enjoy discounts for every purchase of products either at the Gardenia branch or if they purchase online through the use of the downloadable promo coupons. In addition to this, part of the efforts involved in word-of-web advertising is the use of direct mailers to be sent to club members and their referrals. Exclusive invitations to fashion shows and galleries, invitations to special promotions shall be given to these referrals to further ignite their interest in Gardenia’s products. 3. Merchandising and Promotional Materials Gardenia shall further convey its message to its target market through using posters, leaflets and mini billboards as its media. These materials shall carry the company’s brand message and shall feature teasers of the floral arrangements that Gardenia carries. Particular attention shall be given to photo shoots that would feature the latest designs so that these materials would definitely catch the attention of onlookers. Further, the ads should adhere to Gardenia’s key message, which is classy, sophisticated, yet trendy and youthful looking. The layout should represent class and elegance, and should be an embodiment of the Gardenia Style. Mini billboards shall be displayed at areas where high foot traffic is present. And since Gardenia’s target market includes working women, these mini billboards and posters shall be displayed at bus stops in main avenues, where a lot of working men and women pass by on their way to work and on their way home. Promotional materials would also be displayed in highly crowded places waterloos, subway stations among others. Design and production of these materials would constitute the remaining 30% of the overall advertising and promotional budget. A bigger portion of this allocation shall be used for the services of a good layout artist and photography team to ensure that the company’s key message is delivered right through Gardenia’s target market. These strategies were made in close reference to Gardenia’s marketing mix. Pricing-wise, subscribing to relatively low-cost advertising consequently leads to competitive pricing of Gardenia’s product line up. Promotions-wise, utilizing Internet marketing provides Gardenia with the opportunity to touch base with its target market and interact with them on a more personal level. Interacting with customers online, particularly through interactive activities such as online surveys and the like through the Gardenia Exclusive Circle gives Gardenia the chance to collect valuable feedback regarding its product line up. This enables management to be in constant check whether the products being carried continue to be competitive. This way, the management would be able to keep track of the needed improvements and move on to achieve an distinct advantage compared to competitors so that the target market may prefer patronizing its products over other retailer stores. As a whole, Internet Marketing would definitely play a big role in showcasing Gardenia’s product line up in the market since Gardenia has only one branch to physically carry and showcase its merchandise. 4. Schedule Of Advertising Management targets to launch the business in December 2012. Two weeks prior to store opening, management will start announcing this new business venture through leafleting in strategic areas such as flyer inserts in university papers and other similar publications. Simultaneous during the launch date, the billboard shall be placed in the two strategic spots within the city, and shall be displayed for the first three months of operations. The effort shall be sustained by mini billboard displays in approximately 20 other locations in the city. The Official Website shall be made available from the very first day of operations. Word of mouth via internet shall be utilized thru advertisements in some of the city’s local and tourist websites. Gardenia will also post in social networking sites such as Facebook, Multiply among others to be able to make the rounds to target buyers online. 5. Estimated Costs Flyer Inserts are at $ 700 per 10,000 pieces of flyers. Inserts will be done in three of the most popular broadsheets and/or local publication every Sunday starting two weeks prior to launch date until the sixth month of operations. After which, the management will gauge the effectiveness of this effort to determine whether to push through with the strategy or not. Flyers cost approximately $ 110 per 10,000 pieces, or a total of $ 8,580 production costs for flyer inserts alone and another $ 8,580 production cost for flyers to be used for other purposes. Design will be in house so it would not entail any extra cost. Billboard rentals are pegged at $ 5,000 per month or a total of $ 30,000 for the first three months, and additional $ 2,500 for the production costs. Website design and hosting is anywhere from $ 5,000 to $ 8,500 per month. Of course, there will be efforts to help lessen the advertising and promotional costs. One of these is to establish tie-ups with advertising and publishing companies, to cross sell products and promotions, and provide partners with discounts and support for their own marketing efforts. Gardenia Garden shops will always be open to project tie-ups, because mutually beneficial activities provide maximum profitability among partners. 6. Operations and Development Plan Preparations have commenced six months before the launch. Details have been put into place to enable the team to prepare the requirements with ample time. 7. Management Team The owners will be hands on in the business operations. They will handle financial management, marketing and merchandising and operations for Gardenia. The Finance Head will concurrently manage business operations, while the Marketing Head shall oversee sales, advertising, promotions and merchandising. The Marketing Head’s responsibilities include sales of products to commercial accounts; establishing pricing guidelines; keeping abreast on trends by establishing contacts with trade journals, vendors, sales reps, performing buying trips, industry meetings and the preparation and execution of marketing programs, including advertising, publicity and direct sales programs. Another responsibility is to establish partner relationships. The Finance Head shall oversee product development, design and delivery. He is also responsible for the purchase of merchandise, distributor relationship and inventory management. He takes care of ordering the merchandise, which includes flowers, plants and greens; purchasing supplies, vases and containers; pricing and selling merchandise and orders for profit. Operations Manager An Operations Manager directly reporting to the Finance and Operations Head shall be responsible in the day-to-day operations of the store. He will support the head’s monitoring of daily cash flow by providing inventory and movement reports. Delivery Supervisor The delivery supervisor's main task includes delivery management (right time, right day); securing plants and flowers during transportation; repairing, returning and replacing any transit-damaged products; keeping track of deliveries; and performing on-site credit card transactions.  He must be highly knowledgeable on the ins and outs of Midtown and Downtown areas of Atlanta. Stylist Stylists are important part of the company staffing because they will serve as the brand managers, responsible in creating signature arrangements using flowers, floral products and/or plants. They are the ones working directly with customers regarding price and type of arrangement or following information from an order form. Additional tasks include providing cost estimates on the proposed styles; working promptly and profitably, including tracking all materials used in every arrangement for accurate pricing. Sales and Customer Service representatives They are the company front liners, being the first ones to take in inquiries and sales orders. They work hand in hand with the stylists in coming up with the packages. They also provide after sales service, catering to customer complaints and ensuring that all requirements are met. 8. Critical Risks In the article “Retail Sector – Top 10 Risks”, two of the risks mentioned are inability to benefit from e-commerce and inability to control costs/ rising input prices (Retail Sector – Top 10 Risks). Such are the top two identified risks that this online business aims to overcome. 9. Financial Plan Balance Sheet (Projected) Beginning Projected year 1 Assets Current Assets Cash in bank $933.00 $9,000.00 Accounts receivable Inventory Prepaid expenses Other current assets Total Current Assets $933.00 $9,000.00 Fixed Assets Machinery & equipment $1,000.00 $1,000.00 Furniture & fixtures $1,000.00 $1,000.00 Leasehold improvements $1,067.00 $1,067.00 Land & buildings Other fixed assets $3,000.00 $3,000.00 (LESS accumulated depreciation on all fixed assets) Total Fixed Assets (net of depreciation) $6,067.00 $6,067.00 TOTAL Assets $7,000.00 $15,067.00 Liabilities and Equity Current Liabilities Accounts payable Interest payable Taxes payable Notes, short-term (due within 12 months) Current part, long-term debt Other current liabilities Total Current Liabilities Long-term Debt Bank loans payable $7,000.00 $3,500.00 Notes payable to stockholders LESS: Short-term portion Other long term debt Total Long-term Debt $7,000.00 $3,500.00 Total Liabilities $7,000.00 $3,500.00 Owners' Equity Invested capital $3,000.00 Retained earnings - beginning Retained earnings - current Total Owners' Equity $3,000.00 Total Liabilities & Equity $10,000.00 $3,500.00 BREAK EVEN CALCULATION   January February March   COST PER UNIT UNITS TOTAL INCOME COST PER UNIT UNITS TOTAL INCOME COST PER UNIT UNITS TOTAL INCOME Income         Individual Sales $5.00 200 $1,000.00 $5.50 220 $1,210.00 $6.05 242 $1,464.10 Styling Packages $100.00 10 $1,000.00 $110.00 11 $1,210.00 $121.00 12.1 $1,464.10 Delivery Service $2.00 150 $300.00 $20.00 165 $3,300.00 $22.00 181.5 $3,993.00 Gift Cards $0.50 200 $100.00 $800.00 220 $800.00 $800.00 242 $800.00 TOTAL     $2,400.00     $6,520.00     $7,721.20                       April May June   COST PER UNIT UNITS TOTAL INCOME COST PER UNIT UNITS TOTAL INCOME COST PER UNIT UNITS TOTAL INCOME Income             Individual Sales $6.66 266 $1,771.56 $7.32 293 $2,143.59 $8.05 322 $2,593.74 Styling Packages $133.10 13 $1,771.56 $146.41 15 $2,143.59 $161.05 16 $2,593.74 Delivery Service $24.20 200 $4,831.53 $26.62 220 $5,846.15 $29.28 242 $7,073.84 Gift Cards $800.00 266 $800.00 $800.00 293 $800.00 $800.00 322 $800.00 TOTAL     $9,174.65     $10,933.33     $13,061.33 PROFIT AND LOSS January February March April May June Add Start Up Capital $10,000.00 Income Individual Sales $1,000.00 $1,210.00 $1,464.10 $1,771.56 $2,143.59 $2,593.74 Styling Packages $1,000.00 $1,210.00 $1,464.10 $1,771.56 $2,143.59 $2,593.74 Delivery Service $300.00 $3,300.00 $3,993.00 $4,831.53 $5,846.15 $7,073.84 Gift Cards $100.00 $800.00 $800.00 $800.00 $800.00 $800.00 Sub Total $12,400.00 $6,520.00 $7,721.20 $9,174.65 $10,933.33 $13,061.33 Expenses Capital Expenditures Rentals $1,067.00 $1,067.00 $1,067.00 $1,067.00 $1,067.00 $1,067.00 Office fixtures $1,000.00 PCs and peripherals $2,000.00 Merchandise Cost $1,800.00 $1,980.00 $2,178.00 $2,395.80 $2,635.38 $2,898.92 Advertising and Promotions Website Design $1,500.00 Website maintainance $200.00 $200.00 $200.00 $200.00 $200.00 Online ads (banner ads and SEO) $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 Other below-the-line ads $500.00 $500.00 Video shoot and production $1,000.00 $500.00 Operational Expenditures Phone and internet connectivity $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 Web Hosting $200.00 $200.00 $200.00 $200.00 $200.00 $200.00 Instructor's Salary $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 Accounting Software $2,000.00 Other materials (accessories) $500.00 $500.00 Other expenses $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 Sub Total $13,667.00 $5,547.00 $6,245.00 $6,962.80 $6,202.38 $6,465.92 Net Income Before Tax $(1,267.00) $973.00 $1,476.20 $2,211.85 $4,730.95 $6,595.41 Reference List Statistics: Floriculture Industry Overview. Retrieved December 9, 2012 from http://www.safnow.org/statistics-floriculture-industry-overview Benefits of an online marketing approach. Nextsbd.com. Retrieved December 11, 2010 from http://www.nextsbd.com/imarketing/benefits-of-online-marketing.php United Kingdom Internet Usage and Broadband. Internet World Stats. Retrieved December 11, 2010 from http://www.internetworldstats.com/eu/uk.htm Retail Sector – Top 10 Risks. Retrieved December from http://www.ey.com/GL/en/Industries/Consumer-Products/Turn-risk-and-opportunities-into-results--Retail-sector---The-top-10-risks Read More