Outdoor-lifestyle retailer Essay
Executive Summary BBQfun will be the leading outdoor-lifestyle retailer, catering to the growing need for furnishing new and renovated dwellings in the greater Brisbane area. The assortment offer of BBQs, outdoor furniture and BBQ accessories will position BBQfun as best inclass for outdoor-lifestyle retailing. BBQfun will reinvent the way people shop for outdoor-lifestyle products. BBQfun will build its reputation on offering the fullest assortment of products possible in our chosen fields, incorporating both local and imported goods with products sold on easy to manage long-term payment plans. Our after sales service and 3 year guarantees will find traction with a market dominated by low-quality. Situation Analysis BBQfun is close to entering its fifth year of operation.
Te initial rollout of stores has been well received, and marketing is now critical to its continued success and future profitability. The store offers wide-ranging outdoor-lifestyle items on easy to manage payment terms and supplies a three year guarantee on every item sold. The basic market need is for quality, fashionable and unique outdoor-lifestyle items that caters to the house-proud needs of our market. Market Summary BBQfun possess good information about the market and knows a great deal about the common attributes of our most prized and loyal customers. BBQfun will leverage this information to better understand who is served, their specific needs, and how BBQfun can better communicate with them.
• Accessibility. The patron can gain easy access to the store with minimal wait. • Customer service. The patron will be impressed with the after sales service and Guarantees. • Competitive pricing. All products/services will be competitively priced relative to comparable high-end outdoor-lifestyle lines. Above all, BBQfun believes that easy to access stores with extensive choices in our chosen fields, that are sold on an easy to manage payment plan with a three year guarantee are the keys to our customer’s needs and wants.
The market trend for outdoor-lifestyle stores is headed toward a more sophisticated and informed customer. The outdoor-lifestyles patron today relative to yesterday is more sophisticated in a number of different ways. • Item quality. The preference for high-quality items is increasing as customers are learning to appreciate the qualitative differences. • Unique. Our patrons appreciate the opportunity to include outdoor-lifestyles in their home that stand out from the mass produced and sold low quality items. • Selection. People are demanding a larger selection of choices, they are no longer accepting a limited offer in outdoor-lifestyles. The reason for this trend is that within the last couple of years there has been an explosion of media in the form of TV shows and magazines that have promoted exotic and different outdoor-lifestyles.
Our patrons no longer need to accept a limited number of options. With more choices, patrons have become more sophisticated. This trend is intuitive as you can observe a more sophisticated patron in larger city markets such as Sydney or Melbourne where there has been more choices available. BBQfun strongly believes that customers are more interested in range of products, after sales service and easy to manage payments than any other issues. These are the reasons that they will shop with us and become loyal patrons. Technological developments with the broadband rollout across greater Brisbane and Australia is opening up significant opportunities for internet shopping and for providing information for our customers about our product range.
In 2008, the National outdoor-lifestyle market reached $300 million dollars. Outdoor lifestyle sales are estimated to grow by at least 6% for the next few years. This growth can be attributed to several different factors. The greater disposable household income from the two income families, the greater availability of affordable and interesting quality imports with the high value of the Australian dollar and the marketing by popular TV shows like ‘Homes Beautiful’ and ‘Better Outdoor-lifestyles’.
Based on economic forecasts, BBQfun assumes that interest rates are staying steady and so will have no affect on disposable income. The same assumption is made about employment levels, where BBQfun assumes that unemployment levels remain the same at 4.7%.
From research carried out, BBQfun identified that the Government focus and emphasis in future legislative direction will be about ‘growing the economy’ and ‘population base which BBQfun sees as a positive for their business model. There is also a strong push for environmentally sound business practices in the legislative framework. BBQfun, as business operating in Australia, will abide by the law in all its dealings and comply with all legislation that impacts on its business activities.
The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing BBQfun.
• Excellent staff who are highly skilled and knowledgeable about outdoor-lifestyles. • Great retail space that is bright, functional and efficient for a commercial urban district.
• High customer loyalty among repeat customers.
• Assortment offerings that exceed competitors offerings in quality, range and accessibility.
• A limited marketing budget to develop brand awareness due to the lack of critical mass and store cover.
• The struggle to continually fund the growing long term repayment plans taken out by our customers.
• A growing market in a high growth area with a significant percentage of the target market still not aware of BBQfun’s offer.
• Increasing sales opportunities outside of our target area – greater Brisbane.
• Competition from local independents that can reduce prices as owner operators lower than our staff run stores.
• Competition from National chains moving into the Brisbane market.
• A slump in the economy reducing customer’s disposable income spent on outdoor-lifestyles.
• The Yard: has a limited selection but significant depth. All Australian made. No significant marketing or promotion. The price point is high, but the quality of products are quite good. Not in Brisbane. Mostly in Sydney and Melbourne. • BBQ’s R us: Broad range of outdoor-lifestyle products including trinkets and furnishings. Lots of cheap imports. Concentrating on established markets. Strong in the replacements segment. Not in Brisbane. Mostly in Melbourne and Adelaide. • Outdoorz: Large operations of only a few stores per city. Mass markets outdoor lifestyles at good value prices. No imported goods. Extensive advertising. Low to medium quality. Not in Brisbane. Strong in the replacement segment rather than new and refurbished dwellings. Strong in other capital cities.
• All independents. These stores are owned by individual owner operators. Ranges vary according to owner preferences. Very little imports. Mostly retailing Australian manufactured goods. Collectively their average item sale price is $250, have a market share of 48%, and are growing at about 8% per year. BBQfun do not see the competitors changing their marketing strategy or product offer in the foreseeable future.
Growth and Share Analysis
New dwellings – growth in potential customers 10%. Estimated Brisbane customer numbers in 2010 is 95,000. Renovations – growth in potential customers 7%. Estimated Brisbane customer numbers in 2010 is 35,000. Replacement – growth in potential customers 5%. Estimated Brisbane customer numbers in 2010 is 120,000.
BBQfun has created a outdoor-lifestyles range of retail products that are differentiated and superior to competitors. Customers can see the quality of the product as it is displayed in the stores. The following are characteristics of the product:
1. BBQfun’s credit offer is backed by a top tier bank.
2. Imported products make up 33% of the assortment.
3. The 3 year guarantee is unique in the market place.
4. Broadest possible range in chosen fields.
BBQfun’s prides itself on providing service that is on par if not better than any of the local independent stores and far in excess of the national chains. BBQfun will ensure that all aspects that are involved in the delivery of satisfaction to the customer will work using an integrated approach. At a Glance–The Prototype BBQfun Store:
• Location: a commercial, suburban neighbourhood, or urban retail district.
• Design: bright and functional.
• Size: 1,000 to 1,500 m2.
• Employees: 15 to 20 full time plus casuals
• Types of transactions: 60% cash, 40% on long term repayment plan.
Keys to Success
BBQfun’s site selection criteria are critical to success. Scott Bremmer, former partner of an international chain, helped us identify the following site selection criteria:
• New dwelling populations.
• Shopping patterns requiring easy access.
• Customer car parking counts.
BBQfun is still in the speculative stage as a possible franchise concept or joint venture. Its critical issues are: • Committed to sales growth which allows for greater options in import assortments and in reduced price with volume buys. This will promote our uniqueness and contribute to improved profit margins. • Continue to finance the easy manage long term repayment plan for customers. • Locate in easy access sites close to the growing markets in new dwelling development. Marketing Strategy BBQfun’s advertising budget is set at $250,000 for the year.
The advertising program will target local letter-box drops, radio and magazines. BBQfun’s will do direct mail and local advertising, with coupon inserts in the BrisNews magazine likely to be the most successful of the campaigns. BBQfun will try to get articles about BBQfun into the BrisNews magazine. Previous features in the BrisNews magazine has seen a dramatic increase of sales immediately after the article was published.
BBQfun’s mission is to provide customers with the most extensive assortment of quality outdoor-lifestyle products available in the market. Our after sales service is second to none supported by our easy to manage long term repayment plans which make unique, imported and high quality outdoor-lifestyle affordable to all. BBQfun exist to attract and maintain outdoor-lifestyle customers wishing to purchase products that give our customers pride in their homes. Our services will exceed the expectations of our customers.
1. Increase sales from $15million per year to $20million per year in the next three years 2. Increase our loyalty customers list from 10,000 to 16,000. 3. Establish brand recognition in Brisbane so that at least 2 in 3 people recognise our brand in a random survey taken in 18 months time.
3.3 Financial Objectives
1. A double-digit growth rate for each future year.
2. Reduce the overhead per store through disciplined management of expenses.
3. Continue increase our gross profit margins.
The market can be segmented into three target populations:
• New dwellings – generally want to purchase entire suites. Typically shopped as couples. Price sensitive to a point but co-ordination is the highest priority. • Renovations – demand for high quality and different items. Unique and exotic over rides price concerns. • Replacement – basic functional products that replace and broken or worn item. Single shopper. Cheap price required. The BBQfun customers are mostly aged between 20 and 50, making up 50% of the new and renovated dwelling market. Outdoor-lifestyle stores have been very successful in stand alone, extensive car park access, close to new housing estates being established. These areas have families who have household disposable incomes of over $40,000 per year. Combining several key demographic factors, BBQfun arrives at a profile of the primary customer as follows: • Sophisticated people who are house proud.
• Shoppers who will drive to an easy to access store.
• A customers who requires payment plans to spread their commitment over an extended period. • Renovators and new home builders
• 20-50 year olds
BBQfun will position itself as a broad assortment, quality, unique outdoor-lifestyle retailer. Brisbane consumers who appreciate high-quality and uniqueness will recognize the value and unique offerings of BBQfun. Patrons will be single as well as families, ages 20-50. BBQfun’s positioning will leverage their competitive edge: • Product. The product will be wide ranging, quality and unique. It offers the house proud customer a different option from the cheap mass produced offer prevalent in the market
• Service. BBQfun offer the only 3 years guarantee in the market. Our easy play payment scheme is just what our mortgage repaying customers welcome. Our experienced staff can assist with product knowledge second to none in the industry. By offering a superior service in range and uniqueness, BBQfun will excel relative to the competition and achieve our objectives.
The single objective is to position BBQfun as the premier outdoor-lifestyles store in the greater Brisbane area, commanding a majority of the market share within five years. The marketing strategy will seek to first create customer awareness regarding their services offered, develop that customer base, and work toward building customer loyalty and referrals. The message that BBQfun will seek to communicate is that BBQfun offers the widest, most exotic, easy access outdoor-lifestyle products in Brisbane. This message will be communicated through a variety of methods. The first will be direct mail. The direct mail campaign will be a way to communicate directly with the consumer.
BBQfun will also use ads and inserts in Brizzy magazine.The last method for communicating BBQfun’s message is through a grassroots PR campaign. This campaign will invite people from Brizzy for lunch to get articles written about BBQfun into the news. Because of this level of effectiveness and low/zero cost, BBQfun will work hard to get press in the Brizzy. BBQfun also believe that the local patrons far prefer to receive information from the store via flyers in the letterbox.
BBQfun’s marketing mix is comprised of these following approaches to pricing, distribution, advertising and promotion, and customer service. • Pricing. While BBQfun will price at comparable prices for comparable quality, it will not be cheap. We push value over cheap and back this up with a 3 year guarantee. • Distribution. BBQfun products will be distributed through a chain of retail stores which customers can access easily via the large car parking arrangements. • Advertising and Promotion. The most successful advertising will be ads and inserts in the Brizzy as well as a PR campaign of informational articles and reviews also within the Brizzy. Promotions will take the form of in store entertainment and competitions with prizes to exotic overseas destinations. • Customer Service. BBQfun’s philosophy is that whatever needs to be done to make the customer happy must occur, this investment will pay off with a fiercely loyal customer base who is extremely vocal to their friends with referrals.
It is envisaged that new products will be developed on a regular basis in line with changes in customer taste which is targeted at every 12 months. The plan for product testing is to engage market research firms. By getting feedback from these firms, changes can be made or products ‘canned’ so that only tested and proven products make it onto the store assortment list.
During the initial phases of the marketing plan development, several focus groups were held to gain insight into a variety of patrons of outdoor-lifestyle stores. These focus groups provided useful insight into the decisions, and decision making processes, of consumers. An additional source of market research that is dynamic is a feedback mechanism based on a suggestion card system in store. The last source of market research is competitive analysis/appreciation. BBQfun management will continually visit local outdoor-lifestyle stores for two reasons.
The first is for competitive analysis, providing BBQfun with timely information regarding other store’s service offering. The second reason is that local business owners, are often part of an informal fraternal organization where they support each other’s business. Financials, Budgets, and Forecasts This section will offer a financial overview of BBQfun as it relates to the marketing activities. BBQfun will address Break-even Analysis, sales forecasts, expense forecasts, and how those link to the marketing strategy.
The Break-even Analysis indicates that $1.1 million in sales per year will be needed to reach the break-even point. Fixed costs are estimated at $150,000. Variable costs are 40% of sales, therefore sales of $1.0 million will be sufficient to pay for the fixed and variable cost.
The first year of the plan will be used to get the cafe up and running. By year two things will get busier. Sales will gradually increase with profitability being reached by the beginning of year two. Gross profit is anticipated at 50%. Ongoing sales forecasting will be to use the services of Cannon’s Consultants who will advise on all aspects of the marketing function that BBQfun will be engaged with. Cannons will also be given access to the marketing cost data so that they can periodically examine and validate marketing costs in line with industry benchmarks. They have always been the preferred consultants because they are locally based unlike the national group of consultants, Brown & Holingsworth, based in Melbourne.