Target market – Promote my Business
In the short term I will use penetration pricing. This is when a business offers products or services cheaper than a leading competitor. . I will use this form of pricing as this is a competitive market to break into.
I have chosen not to use skimming, which is where you start off with a higher price than the competition the steadily lower it, because this would be inappropriate in this type of market as I have competitors offering products the same as mine but at higher prices so skimming would give them an advantage over me for a period of time. In the long term I will use competition based pricing as I will be able to keep up when the competition change their prices. This will enable me to change my prices and lower them so that I can keep my customers loyal and happy. Promotion I aim to promote my business by:
Advertising – In newspapers, by radio. I will use the radio station Metro to promote my business to many of my target market who listen to this station. I will put information on products I am selling and various introductory offers and information on my location so my customers know where I am located. I will also put an advert in my local newspaper The Evening Chronicle. I will put a similar advert as my radio advertisement as many local people read this paper and this may promote word of mouth. I will not use TV as this is expensive and is broadcast to a national audience.
Direct marketing (mail) – Posting leaflets through doors. I will use this type of marketing as it is easier to give areas where my target market lives information on my business.
Public Relations- Main aim is to boost image, companies may hold sponsored events. I have very limited cash flow so I will not be able to fund public relations if it going to cost me money. I could contact my local newspaper and ask them to do an article on my business to help promote me.
Displays – Used in supermarkets and at trade fairs – used to attract people to stop and look, free pens, food etc.
I will use displays in my own shop as these will attract more customers.
Sponsorship – Businesses often sponsor teams or events by providing money. I will not use this as it will be to expensive to sponsor Formula 1 race cars and won’t just provide my target market with information. This is because all of the different types of promotion aim to attract the target audience to buy my products and visit my store and create a well respected and liked image which in further will attract more new customers.
Place Producer -; Retailer -; Customer
I will use this form of trading as it will give my business a full range of up to date parts and accessories and advice on current trends. It will also give my customers cheaper high-quality products than those companies who use wholesalers as the wholesalers are cut out of the equation so they don’t make any profit at all. Location 1 is the current location of my main competitor. Location 2 will be the location of my business. I have chosen this place as it central to Newcastle and is the main place identified by my target market.
Therefore my shop is easily accessible by roads such as the A1, A167 etc.
Section 2 Action Plan
Month 1 I intend to undertake high levels of informative market research to allow the local target market to find out about my shop. I will use a questionnaire to do this as this is easy and simple to use. It is also easy to put in graph form. I will then identify that sales will be low so costs have to be kept low. This is because at the beginning of a product life cycle is called weaning and not many sales are expected straight away
I think it will also be important to be more attractive than competitors. I will do this by using various pricing strategies such as special introductory offers such as buy one get one free on alloy wheels etc.
Months 2-6 I will analyse my data that I collected in month 1 and see if it fits my predictions. If it does I will continue research into other aspects of my business. If it doesn’t I will try to adapt certain aspects of my company to suit these results. During this time I hope to reach the growth stage of my target market.
If I don’t reach this stage I will have to inject more money into my business to promote it as this will increase sales.
Months 6 – 12 By this time I should have established myself and have a few repeat customers. Due to this I can start using persuasive advertising and start putting money back into the business. I can also determine which products that are selling and order more of these and get rid of other non selling products through sales and special offers.
Months 12+ Hopefully by now my company will be making a lot of money. People will associate my business with high-quality products at very low prices.
I may expand my business and if business is going well I will think about locating in new areas. Conclusion In conclusion, I feel my marketing mix has been put together so that it will attract my target market. I feel that with my price, product, promotion, place all coming together, they work well together and that with all of them together I can create a successful business that will hopefully still be a successful business in years to come. Constraints I feel that the main thing that will get in my way of creating and maintaining a successful business are simply my competitors.
With all of the experience that they have of being and staying in a car market, I think they will feel that they will have the edge over me in that respect, but I feel with the right attitude, a lot of hard work and my business plan, I can fend off these competitors to create a good segment of market share over the car business. A few more things that could contribute to the downfall of my business, if they go against me over the next few months, are:
* Unemployment in my area – I might not be able to get many customers, if they are all unemployed, they might not be able to afford any of my products and/or services.
On the other hand, if I need staff, a large unemployment rate in the area could be good and it could be easier for me to recruit staff. If they continue to go up; interest rates could stand in my way. Usually to buy an expensive car, people would take out a loan. If the interest rates for these are particularly high, people might resist. This could result in fewer sales for Carl’s Car Mod’s, therefore lowering my profit margins. Not enough money being spent on promotion – I need to get the balance right between not spending enough money on promotion, and spending too much money on promotion.
If I do not spend enough money, people might not end up knowing about my shop, and sales will fall. On the other hand, if I spend too much on promotion, people might get sick of hearing about my shop, and not come. Or, because I have spent so much money on promotion I might not have the money to get enough products in, or to make my staff happy by paying them the right amount of money for working in Carl’s Car Mod’s.
* Not enough market research – personally, I think I have carried out a good amount of market research and enough, to make my shop successful.
Saying that, I might find out in the next few months if I have done enough. Also, if I had more time and capital I could maybe have carried out more market research.
* Poor customer service – I need to have an excellent customer service, simply to compete with my main competitors. Nook Car Accessories has an excellent customer service. All of the staff there are very friendly and helpful. I need to match or better this or Carl’s Car Mod’s will fail miserably. Quality recruitment and training will be essential if I am going to have any chance of better my competitors in this area of my business.