2. Strategic Focus and Plan
Background:
We live in a city where people are staying active and fit while getting older. As people who are
passionate and knowledgeable about health and fitness we can contribute to our community by sharing
our knowledge to help our customers chose the best supplements to help them achieve their goals.
World Vision:
To create a community where physical fitness and health are the norm.
Company vision:
To become the premier retailer of dietary supplements on the North Shore by helping people be
healthy, fit and nutritionally balanced.
Mission:
Sustaining our business by helping our customers reach their health goals through providing the
best quality nutritional and workout supplements combined with the knowledge needed to use them to
realize their fitness dreams.
Goals:
To provide superb customer service. To have 5000 people signed up to our loyalty program,
Facebook followers, twitter feed and blog subscribers by Jan 1, 2015. To achieve a 40% Cost of goods
sold through volume of sales by Jan 1, 2015. To partner with 10 yoga studios, gyms and health spas to
deliver 4 seminars a month with a 75% attendance rate by Jan 1, 2014.
Stretch goals:
To gain 75% of the retail market for supplements on the North Shore by January 1, 2015. To
have 900 customers a month by January 1, 2015.
3. Situation Analysis
SWOT Analysis:
I
Strengths
N
T –
Variety of products targeting
E different segments of the market.
R –
Comfortable environment for
N all types of consumer.
A
L
E
X
T
E
R
N
Weaknesses
–
New business in an established
industry.
–
Difficulties marketing to very
different audiences.
Opportunities
Threats
–
New generations of healthconscious people
–
Greater diversity of people
attending gyms and trying healthy
–
Growth of competitors
A
L
activities (i.e. Yoga)
Industry:
The health and fitness industry is growing as Canadians become more health-conscious. In
contrast to products such as “diet” pills that are seen as dangerous, more and more people are turning to
vitamins and supplements as a way to maintain their figure as well as their overall health. A 2004
survey by Stats Canada showed that 47% of females and 34% of males in Canada take some kind of
vitamin or supplement on a regular basis. An even more impressive figure relates to people over the age
of 51, with 60% of females and 40% of males reporting regular use, which represents a huge target
market for our company (we should cite this >>> http://www.statcan.gc.ca/pub/82-003x/2010004/article/11349-eng.pdf). We estimate that these figures will continue their steady growth, and
also predict that the figure amongst males aged 14-18 will be much higher now than the 2004 figure
(23%) having observed the “bulking-up” trend re-emerging in high-schools, and the use of supplements
to achieve desired results.
Competitors:
We anticipate Popeye’s as being our biggest direct competitor, particularly in the male bodybuilding market. Popeye’s is also looking to expand into the female market, but we believe that would
require a major rebranding on their part to make women feel comfortable in a “jock” environment. We
feel we can create a welcoming location for men and women of all shapes and sizes to purchase
products that suit their lifestyle. FUEL, SVN Canada, Nutraways and others are also direct competitors
on a smaller scale, but ultimately suffer from the same flaws as Popeye’s
Indirect competitors include health stores, pharmacies, and supermarkets. As the trend of
healthy living grows, all types of businesses with a remote connection to health are jumping in and
trying to earn a slice of the pie. Of course they can stock the same products that we do, however, we
feel that we can offer a greater variety of options at lower prices, as well as providing a friendly
shopping environment and knowledgeable staff.
Company:
Our company is expected to be a small retail location as close to Ambleside as possible. This
location puts us right in the heart of where our target market resides, giving us a huge advantage over
competitors. We plan to have fewer than 10 employees as we initially gauge our ideal size (growth is a
possibility but will not be contemplated within the first year of operations).
Customer
Customers:
Our company has three main target markets. Our primary target market are those that are aged
40 and above and looking to live a healthy lifestyle. They live primarily in the West Vancouver area (a
prosperous area) so they have the ability to purchase non-essential items but do not want to travel far to
get them, either due to living a busy life with a job and children or being retired and finding getting
around to be an unnecessary chore.
One of our secondary markets are those that are aged between 14 and 25 (particularly males)
that are looking to bulk up or lose weight, and dedicate much time and effort to fitness. These may be
high school students who live in West Vancouver or those from anywhere around the Lower Mainland
(possibly visiting our store after a trip to Park Royal). This segment are new drivers who do not mind
travelling for the best products as bulking up has become an obsession and status symbol to them. They
may work or spend their parents’ money, but they will find a way to purchase our products.
Another secondary market is more general and aimed at 20-35 year olds who are interested in
fitness and pursue it almost as a hobby. This segment has a steady job and is possibly looking to settle
down in a committed relationship and start a family. They are in a routine of work, fitness, and fun.
They are probably joggers who are committed to being healthy for life. They most likely live in the
West Vancouver area and have enough disposable income to purchase health products.
4. Marketing and Product Objectives
Objectives:
Become the premier retailer of nutritional and workout supplements to the Ambleside
community by promoting a healthy lifestyle through high quality, natural vitamins and supplements.
Target Markets:
Tier 1: 30-40% of client base. Middleclass–upper middleclass retirees living in the Ambleside
community, aspiring to improve/maintain their health. Expected to be medium-heavy users of the
vitamins and health products.
Tier 2: 20-30% of client base. 30-40+ year old, married, females with children (youngest child under 6)
with a family income of $70, 000+, living on the North Shore. Heavy users of vitamins and health
products, medium users of nutrition bars and light users of supplements as well as house-hold goods
(soaps, candles, bath salts).
Tier 3: Final 30-50% of customers will be passing trade and young urbanites. Young urbanites (highschool or university students) are projected to be heavy users of supplements and nutrition bars, and
light-medium users of vitamins and health products. We anticipate footfall to bring in medium usage of
supplements, vitamins/health products and nutrition bars.
Points of Difference:
We have chosen a location with not many competitors close by, which is also densely populated
by our target markets. This allows for easy access to customers and passer-bys. Our wide range of
natural, high quality products allows our customers to have a variety of healthy choices when choosing
from any of our product lines. Our dedication to health and fitness has lead to monthly seminars at
school’s, gyms, as well as Yoga studios where we promote a healthy and well balanced lifestyle.
Positioning:
Our store is positioned in the health and fitness product retail market as a store that offers a
wide range of all natural, high quality products that enrich each one’s well being. It is perfect for:
–
–
–
–
Anyone interested in improving their health and health of their families.
Anyone interested in taking care of their body.
Anyone interested in getting in shape.
Anyone interested in improving or maintaining their health.
5. Marketing Program
Product Strategy
Product Description:
The products our store will sell reflects both our chosen target markets, and a niche that lacks
serious competition. Our store will focus mainly on selling dietary supplements, but will also carry
work out supplements, health products, and nutritional foods. The main focus, dietary supplements will
be things like vitamin D pills, calcium powders that can be added to drinks, or omega oils. Since there
are hundreds of products out there, we will ensure our inventory includes supplements for the many
different needs and wants of customers. We will also carry work out supplements like muscle gainers,
protein shakes, pre-work out products, and post-workout products; a variety of products to fill the many
needs of those who are trying to become more fit and athletic. Another secondary focus of ours is
health products. These are things like organically made soaps, bath salts, and scented candles; products
that appeal to people who dislike unnatural chemicals. Finally we will sell nutritional snacks and
drinks; foods that already have the healthy supplements in them, energy bars like the Clif bar, or sports
drinks like Gatorade. We will also sell small impulse buy items like water bottles, or cheap pedometers.
Branding:
Because of the types of products that we sell, and the particular location of our store, there will
be a certain brand image we want associated with us. We want to be seen as healthy and helpful,
somewhere where someone can come and get excellent service from staff who are knowledgeable in
the benefits and effects of what they're selling. Apart from the sales staff, our store will always be kept
in good condition; the floors and windows will be clean, the shelves and products will be well laid out
and easy to find, and we will have a pleasant aroma in the shop instead of the usual surgical smell
associated with hospitals and pharmacies.
Branding is important not only for a store itself, but also for the products it sells. Having well
known, brand name products for our food and work out supplements, as well as the nutritional foods
we sell, will increase sales because customers will be more likely to buy what they know are reputable
products. Branding is important to the health products in a different way; instead of selling the most
well known brands from the biggest companies, we have instead chosen to sell products made by local
companies. Because people are not directly ingesting products like soap or candles, having an
established brand becomes less important than who made it and where.
Price Strategy
Factors Considered:
In deciding our prices, there are many different factors to consider. The most important factor
relates to our competition, what prices are other businesses charging? Next we have to look at our
customers: what is their demand for each good, and how much income are they willing and able to
spend? Finally we have to look inside our own company: how much are we paying the wholesaler for
the goods, and how much profit do we wish to make? To satisfactorily answer all of those questions,
we chose to use competitive prices. Competitive prices mean we don't lose customers to cheaper
competition, and customers are willing to pay. Because competitive prices give us the most customers,
they will also give us acceptable profits.
Pricing Objectives:
There were several key objectives we wanted to meet when we set our prices. The first is
market share; because we are a new business, attracting and keeping customers is our main concern.
There is no point in focusing on profit or sales until we have enough customers. At the competative
prices we set, we expect a high market share in the neighbourhood around our store. Our next objective
was volume; the prices, along with several promotions, should be incentive enough to convince
customers to buy more at our store, and keep coming back. Our final objective was profit; once we
have reached a desirable market share, our prices will be high enough to give us a steady profit.
Special Adjustments:
The only special adjustments are those involved with our store promotions and events.
Quarterly Target Revenue Projections:
At the beginning of our business, revenue will be hard to come by, and we expect to have more
expenses than revenue. For the first three months of businesses, we cannot hope for more than $9000 of
revenue; the optomistic prediction of an average of five visitors a day, each spending about $50-60 over
the course of the month. This is not nearly enough to combat our monthly expenses:
First Quarter Expense Projections:
Fixed Costs:
Variable Costs:
Rent Expense
$2,000.00
Utility Expense
$300.00
Phone Expense
$100.00
Salary Expense
$7,800.00
Promotion Expense
$2,000.00
Cost of Goods Sold
$4,050.00
Total Costs:
$16,250.00
Our first quarter will have $7250 more expenses then revenue.
As we become more and more known, and have more loyal customers, our revenues will
increase. We predict that at the end of a year, we will be at, or past the break-even point. To reach the
break even point, all we need is an average of 15 customers a day, spending the same monthly average
as before: $50-60. The break even revenue is $22200.
Distribution Strategy
Marketing Channel:
The marketing channel that we will be using to make good available for customers is a indirect
channel. We will buy our goods from a wholesaler, who will have bought the goods from the producers.
We chose to use an indirect channel because of the nature of our business; we wish to sell a large
variety of products. It would be incredible inefficient to manufacture each good for ourselves, so we
need middlemen to do some of the work. We also need to have a wholesaler in the channel because
without them, we would be forced to buy individual products from hundreds of different producers.
Buying from so many firms would cost us valuable time, salary costs, and delivery costs, not to
mention that being involved with hundreds of different buying contracts would be confusing and could
lead to costly mix-ups. Another possible benefit of buying from wholesalers is the possibility of
discounts for buying products in bulk.
Location:
The location we chose to open our new business at is the Ambleside neighbourhood in West
Vancouver. We chose this location for several reasons. The first is that much of the population of
Ambleside fits our main target market; it is a wealthy neighbourhood and almost 45% of it's population
is over the age of 60 (source). Another reason is a lack of serious competition, the only other stores that
sells comparable products are Popeye's (source) and Seller's Drug Mart (source). Neither of those
stores pose too much of a threat because they focus on different target markets. The final reasons for
setting up in Ambleside is because there are lots of potential customers. Ambleside is home to over
4500 people (source), and is quite close to Park Royal, which has a large shopping mall and is a transit
hub.
Promotional Strategy
IMC Objectives:
There are two main objectives for our integrated marketing communications. The first is to
create goodwill and loyalty among the customers we already have. The second is to create interest in
our store and products, and attract new customers.
Target Audience:
Our promotional program is designed to reach all of our separate target markets. Different
aspects of the program will be more effective than others at reaching different audiences, so we made
sure we were reaching everyone. Our ads will be effective at reaching all target audiences because
they're placed in high traffic areas like community centres, shopping malls, and buses; places that
people from all different demographics visit. The public relations aspect of the program will reach the
younger targets, because it relies heavily on things like social media. Our sales promotions will reach
all target audiences because they mostly rely on in store interactions. Finally the personal selling is
intended to reach all targets as well; good customer service appeals to everyone.
Design Promotional Program:
Advertising:
For advertising we would put up posters and brochures around Ambleside, specifically in places
like yoga studios or community gyms; the places most likely to be seen by our target markets. We are
also going to take out ads in the local papers, and on certain strategically placed buses. All of our
advertising is focused on the local community, as they will be our source of revenue. If we paid for T.V.
ads, they would reach some of customers, but most of those who saw them wouldn't be near enough to
our store to make the costs worth it.
Public Relations:
Our public relations campaign focuses heavily on Facebook and Twitter. We will use social
media to interact with customers, to get feedback, and to share promotions and interesting facts. Our
use of social media will focus on maintaining and creating goodwill with the customers. Another part
of our public relations campaign will be seminars on healthy living and wellness. The seminars will be
small events put on by our business at local gyms, community centres, and schools that aim to teach
people about proper nutrition. We would not advertise our store at the events, as that could be seen as
pandering and shameless self promotion, only mention what our store is. Finally we would try to get
small press releases or news segments about our store, talking about our promotions and the seminars
we're putting on for the community.
Sales Promotions:
Almost all of our sales promotions would revolve around a customer loyalty program.
Customers would have to sign up (for free), and then they would be eligible to receive the benefits. The
first benefit is that upon sign up, customers would receive a small sticker to put on a refillable water
bottle. From then on, provided they showed the sticker, they would be able to get free refills at the
store. This is to encourage joggers and cyclists, and other active people, to keep coming back to our
store. The next promotion is based on how much a customer spends; after every $200 spent at the store,
those in our customer loyalty program would receive $10 off their next purchase. For our next
promotion, when a customer finishes a product, and is left with an empty plastic container, they have
the option to bring the empty back to our store to give to us. We would recycle the container, and give
the customer a 1% discount on the replacement. Our final promotion would be our grand opening. To
start our store's life with a bang, and get potential customers to come visit, we would offer the entire
inventory 10% off for the first 10 days of business.
Personal Selling:
For a store to be successful, there needs to be good customer service. No matter how great the
promotions are, if customers are angry at the service they get they will not return. To ensure our store
gets a good reputation and makes our customers happy, we will instill a culture of excellent service on
our staff. Another way we will impress customers will be with knowledgeable staff. When possible, we
will hire employees who have studied (or are studying), or have experience in, the health and wellness
industry. If there is no one to be found, our managers will focus on teaching the employees about all the
products and what their benefits are.
Direct Response and Sponsoring:
We chose not include any Direct Response or Sponsoring in our marketing program because the
costs outweighed the benefits.
Marketing Budget:
A lot of what we use to promote our business are programs that have almost no costs associated
with them. The public relations like facebook and twitter can be maintained cheaply and easily, and the
personal selling done by sales staff is paid for by their wages. The largest portion of promotion costs
will come from paying for advertisements. Newspaper advertisments for small, local papers costs
around $200 (source), and we will pay $600 for design costs. Advertising on buses can cost anywhere
up to 700$ (source). Printing posters and brochures can be done cheaply, and the costs depend on how
many are printed; we have allocated $300 to printing costs. Appart from advertising, sales promotions
must be taken into account. Since our discounts apply to only members of our loyalty program, and
assuming membership is up to 80%, then discounts would apply to about $225 spent each month. All
costs combined equal $2025; based on first quarter revenue projections, our budget is just above 20%
of our revenue.
7. Evaluation and Control
We plan to evaluate the success of our marketing plan through our social media followers and
our customer loyalty program. We will track how many people visit our website and health blogs, as
well as the amount of followers we gain on sites such as Facebook and Twitter as well as their feedback
on the sites. We feel if we can attract people to these sites and provide some interesting information on
them, we will increase brand awareness and eventually bring more customers to the store. We will set
targets as to how many followers and hits we receive on these sites and use it to help judge how
effective we were at spreading the word, which is essential in the first years of operations.
We will also use our customer loyalty program to gauge success. Our customers will be offered
a free loyalty card after making their first purchase (giving them a certain percentage off that first
purchase to encourage them to sign up). The card will have an individual number that customers can
use when shopping online, and customers can provide their phone number so that they can receive
points in store if they forget their card. Members will receive special benefits such as discounts on
purchases and free trials of new products. We can easily track the success of our membership program,
as all the information will be stored on a database, and we can then use this information to estimate
future sales figures.