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Mainstream Chain Store Launching

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					Mainstream Chain Store Launching Project




          Prepared Expressly for



            Mr. Chenyang Lee



                 Director



           WTC Branch Office



          Bank of Construction




                    1
                                   Table of Contents



Part 1 Finding Problem(s) . . . . . . . . . . . . . . . . 1

    Unit 1 Current Business Analysis . . . . . . . . . . . . . . 1

    Unit 2 Focus Group Report . . . . . . . . . . . . . . . . . . . 3

    Unit 3 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . 6

Part 11 Deciding the Project objective(s) . . . . . . 8

    Unit 1 Objective SMART Analysis . . . . . . . . . . . . . . 8

Part 111 Planning the activities . . . . . . . . . . 10

    Unit 1 Action plan 8 Activity Chart . . . . . . . . . . 10

    Unit 2 Cost Breakdown . . . . . . . . . . . . . . . . . . . 14

    Unit 3 Risk Analysis ............         Is

    Unit 4 Project Framework . . . .          . . . . . . . . . . . . 18

Part IV Presenting Proposal for Project . . . . . . 20

    Unit 1 Executive Summary . . . . . . . . . . . . . . . . . . 20

    Unit 2 Proposal for the Project . . . . . . . . . . . . . . . . . 21




                                             2
PART 1 Finding the Problems)



Unit 1 Current Business Analysis




The current state of the business



"Mainstream", a state-owned medium-sized chain store company, with

far-reaching market strategies and state-of-art performance, has been one

of the most famous chain stores consisting of 8 branches since its

establishment in Beijing 1991.



Each "Mainstream" store offers customers with a variety of supply

covering groceries, fresh or frozen food stuff and house hold products.

Instead of doing shopping at old dirty market you can now purchase your

own choice of groceries, meat, fish, etc., which are now well prepared

and wrapped with hygienic wrappers or containers, a full range of house

hold products that can satisfy all your daily necessities, giving you a

convenient, easy and relaxed modern life.



Guided by "Seizing Opportunities " philosophy, the chain store has been


                                    3
expanding for a decade, the very principle of Mainstream is "only do

conduct the all-around market research including location, customers

group, neighboring construction, traffic, purchasing capability and build

successful strategies, can a new store be launched with good prospects."



Launching project Analysis




"Tulip", a European style community adjacent to 3-ring road consisting of

26 apartment buildings and with residents of over 18,000, has been

established for 2 months. The occupation of residents mainly includes

university professors, lawyers, white-collar clerks, and managers of

foreign enterprises and directors of banking and insurance institutions

with booming-incomes.



After the careful and deliberate market research, "Mainstream" found that

there is no any market store nearby the community and that due to

working situation under great pressure, 90% residents want some

supermarkets urgently, by which they can be given much convenience. As

the result, "Mainstream" has decided to begin the launching performance.




                                    4
Financial performance




Thanks to the Mainstream's dedication to the outstanding service

marketing, the payoff achieved fruitfully. Marketing plan in 2001 outlines

an approach to attain a significant increase in company sales and profits

over the preceding year. The average annual revenue for each store is

RMB 20million, increased by 10% over the 2000 lever of RMB 18millon.

In 2001 a profit of each store was up to l million increased by 12%, while

cost declined by 8%.



The market store was granted a loan of RMB 10million to start the

business in 1991. Thanks to the effective management, perfect goods

quality and outstanding services, the expanding project implemented

successfully, thus the loan has been paid back in full in 1995.



                        Unit 2 Focus Group Report



Customers vary tremendously in age, income, education, level, and tastes.

They also buy variety of goods and make many buying decisions

everyday. Yet how to explore the dynamics of customer behavior? How to


                                     5
cater for the customer's savor? 11 Mainstream" goes to great lengths to

learn about and understand their customer's needs, wants, and demands.

Customer profiles

The majority of the customers of the chain store are as follows,

 Full-time working couple, a large percentage of residents. Due to the

   burdened work under great pressure, convenient facilities are of vital

   importance for them

 Consumption time: in the evening or on weekends

 Part-time    working    staffs,   a       small   percentage   of residents.

   Consumption time: in the morning or in the afternoon

 Servants, who are responsible for the purchasing, cleaning and

   cooking. Consumption time: at any time..

 Students: most of them were born in better-off families. Consumption

   time: after school.



Customer needs and wants analysis



Focus groups

To get a sound and reasonable idea of the views and opinions of

customers, foul focus groups were organized; the focus groups were as

follows,

 10 Full-time working couple


                                        6
 10 Part-time working staffs,

 10 Servants

 10 Students



The most basic concept underlying marketing is customer's needs, wants,

and demands. Mainstream's marketing concept is "We're not satisfied

until you are". Keeping customer satisfied involves more than simply

opining complain department, smiling a lot, and being nice, thus we do

the best job to set high customer service standards. It was felt each of

these categories of customer night have different expectations, views and

needs; so separate focus groups would be desirable.



Questions

 How often do you go chain stores?

 How do you feel each time you go chain stores?

 What kin      of chain stores you favorite?

 What kinds of commodities can meet your need?

 What kinds of commodities you nee         are often unavailable in other

    chain stores?

 What do you think of the prices the chain stores offer?

 What additional services would you like to if the new chain store

    could set up?
                                     7
     What most often disappoints you when you come to chain stores?

     What do you think of the business hours at present?

     Do you think the store assistants are helpful an       willing?

     How do you expect the chain store positioning when it sets up?



Complaints

 The community is fairly large but no chain stores set up, causing

    much inconvenience.

 The other chain stores usually are very crowded in the evening or on

    the weekends, waiting in long lines for checking-out is unavoidable.

 The store assistants, lacking experience of working in chain stores,

    some of them cannot give appropriate help when asked to do so.

 The present business hours are rather short in other stores, owing to

    the burdened job; most residents need to work overtime.

 Son-& commodities are often in shortage when needed.

 Most chain stores in lacking iii business diversification an          multi-

    services.



Suggestions



 Resident's here nee         urgently a chain store to buy household

    products thus can satisfy all their daily necessities.


                                       8
 The facilities both hardware an      software are should be first class.

 The commodities are available in abundance anytime with high

   quality.

 Working hours should be from 8.00 a.m-12:OOp.m daily.

 The shopping environment should be comfortable, refreshing an

   fashionable.

 The variety of commodities supply should be both from home an

   abroad in line with the booming-incomes and different nationalities.

 The management should keep an eye on rapid-selling products in

   order to analyze what consumer's need and want.

 The diversified services should be offered, for instance, laundries,

   barbershops, old famous charted shops and so on.

 Promotion activities should conduct on the regular basis through

   advertising and public relations.

 The price should be reasonable; discount offer is needed for

   maintaining good relations.



                     PART 1 Finding the Problem(s)



                         Unit 3 SWOT Analysis



Accomplishing the Launching Project begins with a complete analysis of


                                       9
the store's situation. "Mainstream" must analyze its markets and

marketing environment to find attractive opportunities and to avoid

environmental threats. It must analyze store strengths and weaknesses,

opportunities and threats.



SWOT analysis

Strengths

 All the formalities are accomplished, and the working capital is ready

   to use.

 Consumptive groups are booming-income persons who need high

   quality products and good service.

 The managers have extensive and intensive contacts with customers,

   who provide information on the goods and services.

 The rent of the store is fairly low, thus allowing price of commodities

   can be set flexibility.

 Thanks to the successful operation in the past decade, the business has

   been fairly well developed and the abundant supply of goods both

   from home and abroad are offered.

 The wide space, originative shelf design can be provided.

 Multiform services could be offered for consumer's convenience,

   laundries, barbershops, old famous charted shops, fast food

   restaurants, cash dispensers and newsstands and so forth.


                                    10
 Membership club will be set up, and all members can benefit from

   discount.



Weaknesses

 There is no free time to train store assistants.

 The advertising, sales promotion and publicity have not been made

   yet.

 Working hours could not be guaranteed due to the limited running

   cost.

 The internal communication is not timely sometimes.



Opportunities

 There are 26 apartment buildings and with residents of over 18,000

   adjacent to East 3-ring road, but there is no perfect chain store nearby.

 The occupation of residents mainly includes university professors,

   lawyers, white-collared clerks, and managers of foreign enterprises

   and     directors   of   banking    and   insurance   institutions   with

   booming-incomes.

 New communities will be set up soon adjoining here due to the

   prosperous real estate industry. The population of residents will be

   increasing' correspondingly.

 Following the Chinese accession to the WTO, there appears a huge


                                      11
   potential diversified market.

 Most students were born in better-off families; a variety of choice

   socks will attract their attention.



Threats

 Goods prices are fluctuating at tunes owing to the impact of world

   and domestic markets.

 On-line shops that offer discount commodities are attracting more and

   more customers.

 A large competitor has just announced that it would afford

   goods-free-dispatch service for residents here on every weekend.

 People differ greatly in their readiness to try new products.



PART 11 Deciding the Project objectives)



Objective SMART Analysis




The store's launching project needs to be turned into detailed supporting

objectives for each level of management. Each hinge management should

have objectives and best achieve them.

SMART Analysis


                                         12
Specific



 New store will be the leading one with the best service and

   high-quality goods to large groups of customers.

 Develop an advertising program without losing time.

 Implement a Point Of Sale (POS) system in the store, the POS system

   will consist of four cash registers and barcode scanners and inventory

   tracking software etc.

 A new training program will be set up in customer service for all staff.

 A new service-oriented website will be launched.



Measurable

 The annual revenue will be RMB 18million by the end of the first

   year.

 Profit will be increased by 8% in just two years. Y Cost will be

   controlled at the lowest level.

Agreed

 After extensive and intensive research, contact and layout, all

   objectives have been acceptable to everyone concerned with

   launching project as well as our customers.

Realistic

 Each plan will be implemented in line with the market trend. Y All


                                     13
   objectives meet the overall aim of the company.

 The 20,000 square meters store will feature the entire traditional and

   state-of-art market store while offering many different items.

Time-bound

The opening ceremony will be held vi December this year. A number of

special offers will be promoted from December to February.

 A new training program will be set up in customer service for all staff

   in two months.

 A new service-oriented website will be launched bi next January.

 A Point Of Sale (POS) system will be installed in the new store i15

   November this year



PART I11 Planning the activities

Unit 1 Action plan 8 Activity Chart



Brilliant launching strategy counts for little if the store fails to implement

it properly, which should be turned into specific action in order to

accomplish strategic objectives. "Mainstream" Implementation involves

15 weeks activities that effectively put the launching plan to work.



PLANNING THE ACTIVITIES




                                      14
Action Plan



It will take fifteen weeks to implement the project since it has been

approved

By the end of Week One

 Identify and negotiate the rental of the new premises

 Sign the contract to use it

By the end of Week Two

 Design the new market store layout D Sign the contract with store

   system company and POS equipment company respectively

By the end of Week Three

 Sign the contract with the modeling company to decorate and

   upholster the new store D Order new all goods-shelves, some

   equipment, tools and materials for modeling and office furniture

At the beginning of Week Four

 Start modeling the market store

By the end of Week Five

 Select consultants

By the end of Week Six

 Have the first consultant meeting and decide what new sought-after

   goods are

By the end of Week Seven


                                    15
 Hire the store staff

 Staff training and management training planed

By the end of Week Nine

 Check and accept the new modeling project

By the end of Week Ten

 Get the new equipment delivered and installed

 Install the goods-shelves and furniture in the new store

 Clean the new store

 Staff training and management training completed

By the end of Week Twelve

 Store system installed

By the end of Week Thirteen

 Advertising Campaign scheduled

 Promotion items ordered

 Order more than 6000 kinds of first-class goods based on the decision

   made at the consultant meeting

By the end of Week Fourteen

 All the store hardware worked

 Get all new stock delivered

 Put all new stock on the selves




                                    16
In Week Fifteen

    Hold the opening ceremony



Unit 2 Cost Breakdown




In terms of dollars, after initial capital investments in a retail store,

"Mainstream"has to pay back start-up costs. Keeping this fact in mind we

estimated expenses and other financial aspects of the plan.




COSTING:




"Mainstreatn" Market Store Cost Breakdown



Rental cost: The new premises would cost RMB1,500,000.00 more to

rent each year.



Modeling: The purchase of building materials and the labor costs for the

new market store for the new shop would be RMB 895,000.00


                                       17
Labor Costs    300,000.00

Flooring   100,000.00

Store Decoration 180,000.00

Lightening 85,000.00

Windows 100,000.00

Furniture For Layout 130,000.00



Equipment: The cost of equipment in the new store would be RMB

1,090,000.00



Booths 40,000.00

Goods Shelves 180,000.00

Air Conditioners 130,000.00

Office Supplies    95,000.00

Software/Hardware      100,000.00

Refrigerator   155,000.00

Wire Check Stands      180,000.00

Wire Training Room 50,000.00

Store System and Server 160,000.00



Budget: The annual expenditures in the operating budget would be


                                    18
RMB750,000.00



Staff Wages    400,000.00

Utilities   70,000.00

Equipment Maintenance 150,000.00

Services    80,000.00

Consultants Fees 50,000.00

Total Cost Of Project



Initial Costs: Modeling 895,000.00.

    Equipment 1,090,000.00.

    SUB-TOTAL 1,985, 000.00

Current costs Rental 1,500,000.00

    Operating Budget 750,000.00

    SUB-TOTAL 2,250, 000.00

    TOTAL COST 4,235,000.00




                         Unit 3 Risk Analysis
Guided by "Forewarned is forearmed" principle, "Mainstream" deeply

knows what the benefit of doing a risk analysis is!




                                    19
Risk Analysis

Risk-related:

 Customers waiting iii the long line will complain about the service

   and walk away.

 Without advanced POS and bar-code scanning system, employees

   must label prices manually, which causes high labor expense.

 Without sales and productivity reports generated from POS system,

   management cannot track trends and manage efficient scheduling.

 Without customer file information, we cannot compete with the

   mainstream supermarket chains in marketing.

 Without item movement reports, we cannot track inventory and

   orders.

 Employee may not provide good services for customers all the tune or

   do anything in careless way.

 If there is business disruption, we will suffer a lot.



Measures- considered

 The goal of implementing a POS system is to improve throughput,

   increase inventory control, reduce merchandise shrinkage (theft) and

   improve marketing. Moreover, the POS system will enable the

   company to reduce the personnel who are now performing these

   duties manually. Instead of paying checkers to report what we sold


                                     20
    and inventory clerks to report what needs to be re-ordered, the

    automated system package reports sales, re-ordering needs, and

    summarizes sales trends.

 Due to the relatively high turnover of checkers, we decide that money

    spent in training would be used to increase productivity with an

    automated system.

 Carry out market research among target customers to improve the best

    selling service.

 Set aside a certain percentage of the total budget as contingency

    allowance to take account of the unexpected risks, for instance:



    1. To install a new check stands on the store floor for minimizing the

    disturbance to weekend business, which generates the highest revenue

    2. To cover the pilferage loss

    3. To cover the research expense

After the risk analysis, there are three more items should be added to the

total costs:

 Public relations      RMB 70,000.00 per year

 Market research       RMB 50,000.00 per year

 Contingency allowance        1 % of the annual profit




                                     21
Unit 4 Project Framework




THE MARKET STORE-LAUNCHING PROJECT




The project Framework

N~RRATIVE OBJECTIVELY SOURCES OF                        ASSUMPTIONS

    SUMMARE VERIFIABLE INFORMATION ANl) RISKS

          INDICATORS

GOAL or To set up a start-of-art store Comnrurity's             Extensive

    and

    to meet residents' demands        opinion from intensive    Opinion

AIM       for state-of-art services   Working staff, survey for several

servants and students months          since

    "Tulip" established

PURPOSE or 1. To be the leading one Revenue and profit Market

    store I. That     the

OBJECTIVES with the best service figures financial                 records

    powerful head

                                       22
     and high-quality goods

            office and

Increased number of Market store        many

2. The annual revenue customers         from records booming-into

     will   be RMB community and me customers

     18million by the end surrounding y

of the first year   after year

are of great

driving force

3. Profit will be plunged

     by 8 % in just two year.

2. Physical pace

4.      Cost will be controlled

        at the lowest level




                Part IV Presenting Proposal for Project


Unit 1 Executive Summary

Executive Summary



"Mainstream", a state-owned medium-sized chain store company

                                   23
schemes to launch a new store in "Tulip" community adjacent to East

3-ring road, since there is no airy market store nearby the community and

that due to working condition under great pressure, 90% residents desire

some supermarkets urgently, by which they can be given much

convenience



After all-around meticulous market research and preparation, the new

store will cover an area of about 20,000 square meters and offer the

highly standard and diversified services to meet the customer's need.



The project would allow us to gain the revenue of RMB 18 million one

year after the plan is accomplished and profit will be increased by 8% in

the early two years. Our profitability will be further enhanced by this

growth. As a result, a large number of new customers would be attracted

here as fixed consumption group.



The new store will cover an area of about 20,000 square meters and offer

the highly standard and diversified services to meet the customer's need.



In light of the launching project, the store is expected to need RMB

4,235,000.00 to rent and model premises, purchase equipment, pay

operating budget and offer new services.


                                    24
The new store will be bound to meet the customer's demands, increase the

revenue and profit, and enhance the financial performance with promising

prospects.



                    Unit 2 Proposal for the Project



Proposal for Chain Store Launching



"Mainstream", a state-owned medium-sized chain store company, with

far-reaching market strategies and state-of=art performance, has been one

of the most famous chain stores consisting of 8 branches since its

establishment in Beijing 1991.



Each "Mainstream" store offers customers with a variety of supply

covering groceries, fresh or frozen food stuff and house hold products.

Instead of doing shopping at old dirty market you can now purchase your

own choice of groceries, meat, fish, etc., which are now well prepared

and wrapped with hygienic wrappers or containers, a full range of house

hold products that can satisfy all your daily necessities, giving you a

convenient, easy and relaxed modern life.




                                     25
Guided by "Seizing Opportunities " philosophy, the chain store has been

expanded for a decade. The very principle of Mainstream is "only do

conduct the all-around market research including location, customers

group, neighboring construction, traffic, purchasing capability aid build

successful strategies, can a new store be launched with good prospects."

Thanks to the Mainstream's dedication to the outstanding service

marketing, the payoff achieved fruitfully. Marketing plan in 2001 outlines

an approach to attain a significant increase in company sales and profits

over the preceding year. The average annual revenue for each store is

RMB 20inillion, increased by 10% over the 2000 lever of RMB 18millon.

In 2001 a profit of each store was up to l million increased by 12%, while

cost declined by 8%.



The market store was granted a loan of RMB 1OmiIlion to start the

business in 1991. Thanks to the effective management, perfect goods

quality and distinguished services, the expanding project implemented

successfully, thus the loan has been paid back in full in 1995.




"Tulip", a European style community adjacent to 3-ring road consisting of

26 apartment buildings and with residents of over 18,000, has been

established for 2 months. The occupation of residents mainly includes


                                     26
university professors, lawyers, white-collar clerks, and managers of

foreign enterprises and directors of banking and insurance institutions

with booming-incomes.




After the careful and deliberate market research, "Mainstream" found that

there is no any market store nearby the community and that due to

working situation under great pressure, 90% residents want some

supermarkets urgently, by which they can be given much convenience.



The most basic concept underlying marketing is the customer's needs,

wants, and demands. Mainstream's marketing concept is "We're not

satisfied until you are". Keeping customer satisfied involves more than

simply opining complain department, smiling a lot, and being nice, thus

we do the best job to set high customer service standards.



Customers vary tremendously in age, income, education, lever, arid tastes.

They also buy variety of goods and make many buying decisions

everyday. Around "Tulip", the managers have done extensive and

intensive contacts with customers, who expressed their complaints,

demands and hopes about the issue of launching a new store including

stock, services, space, staff and opening time etc.


                                     27
The sage scheme to meet the resident's needs is to launch a new store, for

all aspects work smoothly, the management can employ 60 sales staff to

deal with more stock and provide various services often demanded by

customers in a big store. The launching scheme needs a loan of

4,235,000.00 yuan to model the new store, install new equipment, expand

stock, hire skilled employees and train the staff.



The new store would allow us to gain the revenue of RMB 18 million one

year after the plan is accomplished and profit will be increased by 8% in

the first two years. As a result, a large number of new customers would be

attracted here to become our fixed consumption groups.



New Premises

The new store, located in "Tulip" community adjacent to East 3-ring road,

will occupy an area of about 20,000 square meters combining with the

following characteristic:

 The store combining traditional with state-of-art layout offers

   customers a wonderful shopping environment.

 The aisles are the broadest in all "Mainstream", which is designed to

   avoiding disturbance.

 All facilities both hardware and software are top- ranking.


                                      28
 Ventilation, fireproofing equipment and lighting of the store is of the

   first.



New Services

The store will offer new services in line with customer's requests and

suggestions as follow:



 A greater number of goods including upscale, exotic, and luxury

   products as well as daily necessities from home and abroad are

   displayed in the shelves.

 The diversified services are available including laundries, barbershops,

   and old famous charted shops, fast food restaurants, cash dispensers

   and newsstands and so forth.

 Implement a Point-Of -Sale (POS) system in the store, which can

   improve throughput, increase inventory control, reduce merchandise

   shrinkage (theft) and enhance marketing.

 Install a new check stands on the store floor for minimizing the

   disturbance to weekend business, which generates the highest

   revenue.

 Place several broad bulletin boards with conspicuous color for

   advertisement and special offers.

 Launch a new service-oriented website that can display all catalogue


                                   29
   of stock, thus offering customers the first-hand information.

 Provide some free gifts with birthday greetings every Wednesday for

   people those were born on that day.



New Facilities

The store will order wide space, originative shelves with the best quality

and purchase new office furniture, new counters, air conditioners,

refrigerators, wire check stands, store system and server etc.



Cost

The total cost of the launching project is estimated to be RMB

4,235,000.00. It will be used in renting a store, modeling, purchasing

equipment and operating budget.



Cost Breakdown

Rental cost: The new premises would cost RMB1,500,000.00 more to

rent each year.

Modeling: The purchase of building materials and the labor costs for the

new market store for the new shop would be RMB 895,000.00

Labor Costs       300,000.00

Flooring   100,000.00

Store Decoration 180,000.00


                                     30
Lightening 85,000.00

Windows 100,000.00

Furniture For Layout 130,000.00



Equipment: The cost of equipment in the new store would be

    RMB 1,090,000.00



Booths 40,000.00

Goods Shelves 180,000.00

Air Conditioners 130,000.00

Office Supplies    95,000.00

Software/Hardware       100,000.00

Refrigerator   155,000.00

Wire Check Stands       180,000.00

Wire Training Room 50,000.00

Store System and Server 160,000.00



Budget: The annual expenditures in the operating budget would be

RMB750,000.00



Staff Wages    400,000.00

Utilities   70,000.00


                                     31
Equipment Maintenance 150,000.00

Services   80,000.00

Consultants Fees 50,000.00




Beneflts




In accordance with the business performance of the store, it's expected to

gain the revenue of RMB 18 million one year after the plan is

accomplished and profit will be increased by 8% in the early two years.




The store will offer a variety of commodities and diversified state-of-art

services to customers. The wonderful shopping environment, well-trained

store assistance and competitive price will bring them enjoyment and

satisfaction by which most customers will be the fixed consumption

group, thus enhancing selling performance and gaining more profits.




                                    32
Schedule




The project will start one week after all the formalities is approved and

the budget is made. It will take approximately fifteen weeks to finish,

with nine weeks needed to model the new store, four weeks to install new

equipment, furniture, store system check stands and POS system, one

week to get new stock delivered and put on the selves, and one week to

make the final preparation.



I forcefully believe that this launching project will not meet the needs of

the customers but also bring great benefit to us. Though our great effort,

the new store hope to remain strongly differentiated from other types of

such kind of stores, while adapt to today's fast-paced consumer lifestyles.

Moreover, the geographical advantage, well-designed store environment,

a number of products with great quality, state-of-art services and the

sophisticated market strategies, all these strengths are more than

competitive in this fierce and changing market.



I would like to meet with you any time next week to discuss thus plan and


                                    33
will be pleasure to elucidate any details and procedures, or to provide any

annexed information that you may need. I will appreciate your early reply

when it is the best time for me to come.




                                    34

				
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