Marketing Plan

You are welcome to give me some comments about my marketing plan.
If you want to use my work, please quote me as your reference.
Tony Khor, Marketing Plan in Kampar, 22/11/10.
Your coorperation is appreciated. Thanks.

Executive Summary


Gift Shop Enterprise is a start up company selling gifts offering 500 varieties of gifts. Its main focus for the first branch is in the area of Kampar, Perak.

Gifts Shop Enterprise operates on the operational model of low in capital and operational cost, leveraging on Ecommerce supported with delivery service. The model is incorporated in the promotional activities to boost the sales.

Gifts Shop Enterprise has Return of Investment in 10 months, vigorous control and contingency plans is in placed to monitor the sales and revenue figures, advertising & promotional (A&P) cost, and operational cost. Contigency plan is to focus on the changes the marketing strategy from time to time, when it is necessary.

In conclusion, Gifts Shop Enterprise is prepared to face the changes of market condition with a full equipped in marketing strategy, operational plan, as well as business strategy, liquidity of cash flow so that it is versatile and flexible enough to adapt the changes according to the situation.

Background

Kampar, a small town located in a state of Perak. The town has a population of around 100,000 including 20,000 students studying in university and college of Tunku Abdul Rahman - from the exhausted tin-mining sector to a centre of high education. Many new shops are opened here. Thanks to the great philanthropist, Mr Hew See Thong, who has been putting a lot of effort to create a better Kampar town and donate a piece of land for building these two high education centres.

This has created an opportunity for many business people to invest here. New shops are built around the new Kampar town. For instance, restaurants, gifts shop, stationary shop, 7-elevant, “mamak” stall, boutique and hotel. The recent of opening fast food restaurant McDonald and Tesco is also another “trademark” that can attract more people from other town to come over Kampar.

Gift is a great product that can serve to all different group of people. There are many creative and diverse categories of products offering in market. Many gift’s suppliers comes from Asia countries like Japan, Hong Kong, China, Taiwan and Korea. The price is affordable and it has many selection and varieties to choose from.


Kampar has rapidly been developing to become a place for high education and entertainment centre for the local and outstation young group of people. The spending power here is increasing and most of the cash flow comes from this young people. There is a high opportunity for business people to do a business here. It is not only helping their business, it is also helping the nation to boost the economy of the town.

Introduction

The Company

Gifts Bright Enterprise will be a family start up gift shop that has a vision of “The most creative gift shop ever!” Its mission is to sell different types of special and unique gifts with an affordable price and best in service.

Targeted to launch its first gift shop in the Kampar town, Gifts Bright Enterprise’s 5 year forecast is to have a great variety of gifts from ready-made to personalized gifts.

The Product

Gifts Bright Enterprise will initiate run its business with a ready-made gifts import from China and Taiwan. We choose these two countries is because we are targeting on Chinese student. Slowly we will sell personalized gifts and the transfer machines are all imported from China.


The Business Strategy

Gifts Bright Vision - The most creative gift shop ever!

Mission – Selling special and unique gifts with an affordable price and providing the best service.

Gifts Bright Enterprise main objective is to achieve an Return of Investment (ROI) of 10 months, as detailed in the forecasted Profit and Loss Statement, thus, supported with the below business strategy.

To make the pricing and product different with other competitors, and yet gain the market share in this town, will be the main challenge for Gifts Bright. Gifts Bright Enterprise start up objective is to achieve low in operational expenditure (CAPEX) and capital expenditure and highly great income.

Low operational and capital expenditure is achieved with having a gifts shop that is located at the second floor of renting shop lot. This will save the start up cost of high rental and deposit of the premises. Products will be placed into an economy rack. Number of rack to be placed in the floor will be design as in the “library style”. Customer can pass by from one rack to another with no obstacle and they can browse from first rack to the end easily. Each rack will be labeled name of each product category such as – dolls, keychain, mug, crystal, light, hand phone cover, and others. This will help customer to find their product easy.

Besides, there will be no hiring of worker but to self operation. If there is a need to hire someone for assistance, we would prefer to hire student to work as part timer and the salary is RM3.50 per hour.

To maximize its capacity, Gift Bright Enterprise business strategy will be focusing on delivery services and online ordering. This will create more opportunity to the shop to allow more customers knowing its products worldwide. The shop will do packaging and delivery service when someone had ordered online and requested to send to the respective address. From operation perspective, this will indirectly minimize the operation cost of having a bigger space or channel and resources to serve customers physically.


SWOT Analysis

SWOT analysis is conducted to identify the Strength, Weakness, Opportunity and Threat faced by Gift Bright Enterprise on its product offering and business strategy.


Strength

We will have a various products to buy and it’s unique. Products are selected prudentially to satisfy everyone ‘taste’. Products are all good in quality and durability.

Gift Bright Enterprise has another advantage of setting the price on personalized products. Because the products are a new and unique; it cannot be found elsewhere in Kampar market. Therefore, it has no problem by setting a higher price at first to cover the expenditure before lowering down the price.

Besides, we will provide an excellent service. We help customers to do packaging, choose the better gifts based on person’s characteristic and delivery service. We believed that by giving these extra services, customer will satisfy and perceive a positive image on us.

By opening a shop and online ordering, this can help us to boost the sales in two different channels. The opening of shop is to create confident for the customer that we are legal entity and they can directly approach us to get more information. Where else, online ordering has an advantage to serve customer in 24 hours and 365 days.

We have a small team of people to perform as internet marketer, designer, demonstrator which can help customers to understand and accept our unique products.

Weakness

The initial startup cost might be high because we need to order a huge amount of various ready-made products first. Since we are selling gifts, therefore there is very challenging to order products that suit the most. We also need to always find out what is the current trend now so that our products will not just keep in stock. The setting price for ready-made products cannot be too high and it needs to match with the market price.

Creating Ecommerce can be costly if we want to integrate the website with third party gateway. This requires someone to install and create a payment features that allows customer to pay online by using credit card.

Opportunity

The main opportunity here is that gifts can be sold in different occasion. Therefore, it has no limitation to not just selling for a certain group of people. It can sell to commercial and other sectors.

We can become a wholesaler and these will help us to boost the sales as all gifts are supply by us.

Besides, we can affiliate with other shop like cake, boutique, flowers, binding book, and electrical shop to offer a better and innovative package for customer which they cannot find in elsewhere. This can help us to create a better relationship and connection between us.

A student population of 30,000 is a very large pool of customers. If we have better products in pricing, a good location, a great marketing strategy and tools, and service, we would generate a faster return of investment.

Threats

The threat of substitute products is high. Besides, there are many competitors around Kampar area. The adjustment of pricing is critical. However, we will not go for price war because we believe that our gifts are special and unique. It is hardly to be found elsewhere.

The return of investment might be slow. However, ecommerce can helps us to increase the awareness of our products and sales.

Our products can be imitated by other competitors once they had found out that the products are attractive.

Marketing Objective

1. To create product awareness among the audience by 30 percent in one year.

This objective is chosen as this is a new concept of gift shop, entering product life cycle. Product life cycle is the biological life of a product, starting from Introduction, Growth, Maturity and Decline. In this case, products are new with lack of awareness of its existence. There are fewer competitors or none exists in this phase.

Hence, the marketing objective chosen is to create awareness among target audience. The initial target audience in this case is the residences of Kampar. In this case, 15% of the population comes from students who are studying primary, secondary, college and university where else another 15% comes from the Kampar residence in the age of 30 and above.

2. To meet the Sales target of RM300k by 1.5 year

This objective is to support the ROI target of 12 months. Advertising & Promotion has been carried out to support this to ensure sales are on track. Sales revenue are kept track in weekly basis.

3. To maintain Advertising and Promotion (A&P) cost to less than 5% of the forecast revenue.

This objective is to support low operation and capital expenditure.

Marketing Strategy

In summary:

Target Market – Low to mid income group; especially students
Positioning – Ready-made and personalized Unique Gifts & Info Centre, delivery service provider
Product Line – Wide Variety of Gifts (more than 500 items) charge at affordable price
Pricing – High price for personalized products (including design fees and delivery); Low price for ready-made and unique products.
Promotion – Discount, Voucher, Join Promotion with affiliate shops like bakery, flower shops. Online promotion – Affiliate Programme.


Marketing Goals & Action Plans

To create product awareness among the audience by 30 percent in one year.

1. Gifts Bright Enterprise must have an A&P’s plan that support penetration of 30k residences of Kampar.

2. Gifts Bright Enterprise’s advertising must target on strategic spot such as hotel, accommodation agency, boutique, flower, stationary, bakery shops and school to gain exposure and minimum expenditure. Online marketing is essential too.

To meet the Sales target of RM300k by 1.5 year

1. To distribute to the right channel would be able to bring amount of sales.

2. 60% must be from Online ordering

3. 30% must be ordered from shop

4. 10% must be ordered from affiliate shop

5. Encourage non-peak season to have even distribution of sales


To maintain Advertising and Promotion (A&P) cost to less than 5% of the forecast revenue.

1. Gift Bright Enterprise to affiliate with major shops for Advertising Opportunities

2. Gift Bright Enterprise to partially target online promotions in relevant Online Site/Directories.

3. Advertise with minimum cost with maximum impact.


Hence, the below action plan to support the above Goal and Objectives


Target Market

Gifts Bright Enterprise is mainly focusing on students who is looking for affordable and unique gifts. It is targeting on low or mid income customers.

Positioning

Gifts Bright Enterprise serves as the biggest gifts shop available in Kampar with a variety of unique products and services with an affordable price. It is also positioned to be the Info Centre for customer to get the latest information about current trend worldwide.


Product

Gift Bright Enterprise is a local gift shop, which sell more than 500 Variety of gifts import from Japan, Korea, China, Taiwan and Hong Kong.

Categories are as below:

Key Chain, Dolls, Baskets, Stationary, Cards, Mug, PC accessories, Tshirt, Photo Book, Puzzle, Sign, Crystal, Cushion, Ceramic Tile, Boxes, Frame, and Tissue Cover.

Products are placed in rack and arranged according to the categories. Each rack is labeled. Customer will get more information about the products online about the measurement, quality, color, description, preferences and product’s rating.

Pricing

Key selling point of Gift Bright is to play around the pricing based on the quantity. If customers buy in bulk, a discount will be given. The price for personalized gifts will be higher than ready-made because of the cost of design, quality and uniqueness. Pricing is also charged differently when there is an occasion or public holidays.


Pricing is also different and much cheaper if customer order online.

Promotion

To achieve the objective set up, the marketing plans are designed to directly relate to the marketing objectives as per below:

Objective: To create product awareness among the audience by 30 percent in one year.

With this objective, Gift Shop will be engaging the below key promotion in 1st Quarter:


1. Launching Online Website

A fully functioning ecommerce will be launched to attract customer worldwide. First target will be on students in Kampar. Students will be invited through the assistance of social network channel which is Facebook, Twitter, Friendster and Myspace. All customers’ profile will be gathered from these channels.


2. Loyalty Plan Program

1st 100 Customer who had visited our online store will receive online voucher, discount and free gifts. Lucky draw will be started at the end of 3 months to win any of the products display on the online store under the category of keychain.

1st 100 customer visited our shop will be given a free membership card that has a discount offer during occasion period or holiday.

Customer who had collected 10 stamps will be given a free gift with purchase of RM200 or above.

3. Alias with Other Shop

Students who buy something from other alias shop will get stamps and special discount.

Objective: To meet the Sales target of RM300k by 1.5 year


To meet the objective of Sales target of RM300k by 1.5 year, below is targeted on promotion that will maximize profit out of the reduced operation cost.


1. Free delivery service for gifts more than RM50.

This promotion will help us to increase profit by buying gifts that is more than RM50 and above.

2. Every 100th order through online will be free

This promotion is to serve more customers to buy online to achieve 60% of the Sales target from Online ordering.

3. Buy in Bulk will have a special price

This promotion is to encourage customers to buy in bulk; to order a numbers of items in store so that it can help us to quickly sell out and order new stock coming in.

4. Affiliate Program

Customer who had visited our website can join as our affiliate to promote our products in their website. A commission based will be given to these affiliate customers as an appreciation of their effort in getting more sales to Gifts Bright Enterprise. This is to serve another objective that is to achieve 10% of the Sales target.

To maintain Advertising and Promotion (A&P) cost to less than 5% of the forecast revenue.

To achieve low cost Advertising and Promotion,


1. Gift Bright Enterprise to affiliate with major shops for Advertising Opportunities

Other major shops in Kampar will be allied with us to promote our products. This will create awareness and win-win situation for both parties. Each shops will share an equal benefits from customer order.

2. Gift Bright Enterprise to partially target online promotions in relevant Online Site/Directories.

We will promote through online because it is low cost and very fast in spreading news. We will upload our information to certain favorite and popular online directory and forum like cari.com.my to increase the awareness of shop.

3. Advertise with minimum cost with maximum impact.

Leaflet distribution once a month in form of hardcopy as well as softcopy. Softcopy will be distributed through online website. Hardcopy will be distributed to local shop that is allied with us.

Place (Distribution)

Gifts Bright Enterprise channel are as below:

1. Online
2. Walk In

All product collection are as below:

1. Walk In
2. Delivery Services (Courier service, Pos Laju, Free delivery – only for Kampar Residence)

Forecasted Profit and Lost Statements

Forecast Profit and Lost Statement of Gifts Bright Enterprise for 12 months

EXPENSES RM

CAPEX

Fees Paid to Registra of Companies 1200

Renovation Cost 500

Setting up Internet Website with Ecommerce capability 5000

Car for Delivery service 3500

Rental Deposit 1500

Furniture & Fittings 10000

TOTAL CAPEX 21700



OPEX

Monthly OPEX

Rental 500

Salary (for all staff: 1) 1080

Maintanence of Car 300

Petrol for Delivery Car 300

Electricity & Water 600

Other Utility cost (Including website maintanence) 500

Misc (Including Insurance) 1300

Gifts (Ready-Made & Raw Material for personalized) 5000

Packaging Material 2000

A&P Cost 5000

Total OPEX per month 16580

YEARLY OPEX for 1 year 220660

TOTAL Expenses annually 249080


Number of Customer per year (walk in & online)

Walk in 100,000 x 0.10 = 10,000

Average spending of RM30 per person 300000

Online = estimated 20 customer per day.

Average spending of RM50 per person 30000

Total Revenue (Annual Forecast) 330000

With the above P&L statement, the ROI is expected by: 10 months.


Controls and Recommendation

The control of monitoring the above plan progress would be detailed down as below:

Monthly review items by the management:

1. Sales and Revenue by distribution Channel

2. Spending of A&P cost

3. Operational Cost


Triggers and Recommended Contingency Plans


Trigger 1 – Overall Sales and Revenue below RM27.5K per month (Total annual sales: 330K)
Condition and Solution: If the sale for the 1st month and continuing months is not favorable, we can cut A&P cost. We can choose free channel to promote our products online.


Trigger 2 – Sales and Revenue from Online orders is below 60%
Condition and Solution: If the first 4 months has dropped, there is a need to promote through offline advertising to create the awareness. Flyers distribution in more shop lots will be given.

Trigger 3 – Monthly operational cost exceed ~ RM17K
The root cause is due to the increase of price for raw materials for personalized gifts, sourcing of new suppliers is required. If the root cause is A&P Cost, reduce the expenses in offline advertisement is required. If the root cause is due to supporting resource cost, operation plan must be re-evaluated.


Conclusion
In conclusion, the opportunity is available for Gift Shop business model with the current market conditions. The current market condition is now in a booming stage. Gifts Shop marketing strategy and goals has to be versatile in today’s market to continue create new creative products to suit the market need and economy situation. What Gifts Shop need is to keep monitoring the growth from introduction to maturity and to decline stage. If it is on the stage of declining, the products must be re-evaluated and come out with a new concept to increase more sales. Competitive is high but there will be a solution to compete with them if our product is new, latest, creative, unique and trendy. Lastly, promotion is a must to deliver our message to customer about our latest products and information.