• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Mock Business Plan
 

Mock Business Plan

on

  • 12,797 views

As part of my Senior Honours year at university I was required to prepare a comprehensive business plan for a mock company. The attached business plan recieved an A1 at Glasgow University.

As part of my Senior Honours year at university I was required to prepare a comprehensive business plan for a mock company. The attached business plan recieved an A1 at Glasgow University.

Statistics

Views

Total Views
12,797
Views on SlideShare
12,793
Embed Views
4

Actions

Likes
7
Downloads
0
Comments
0

1 Embed 4

http://www.lmodules.com 4

Accessibility

Upload Details

Uploaded via as Microsoft Word

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Mock Business Plan Mock Business Plan Document Transcript

    • © Copyright Chris Watt 2008 1 Busines s Plan Definitive Search Kiosks Chris Watt Chriswatt87@gmail.com Number of Plan ___________ Date Shared ___________
    • © Copyright Chris Watt 2008 Version 1.1 2 Table of Contents I. Executive Summary...................................................................................1 II. Company Description................................................................................3 III. Industry Analysis.......................................................................................6 Industry Definition.........................................................................................................6 Trends and Characteristics.............................................................................................6 Segmentation of the Market...........................................................................................7 IV. Market Analysis.........................................................................................8 Target Market Selection ................................................................................................8 Target Market Size and Trends......................................................................................9 V. Marketing Plan........................................................................................10 Pricing Strategy............................................................................................................10 Promotions Plan and Strategy .....................................................................................10 VI. Management Team and Company Structure........................................12 Ownership Structure....................................................................................................12 Management Profiles...................................................................................................12 Board of Directors .....................................................................................................13 Professional Services...................................................................................................14 VII. Operations Plan........................................................................................15 Office Location............................................................................................................16 VIII. Product Development Plan......................................................................17 Challenges and Risks................................... .............................................................17 Intellectual Property.....................................................................................................18 IX. SWOT Analysis........................................................................................19 X. Financial Projections ..............................................................................22 XI. Appendices...............................................................................................23 Appendix 1: Life Cycle of New Digital Media ..........................................................23 Appendix 2: PEST Analysis........................................................................................24 Appendix 3: Competitor Analysis ..............................................................................27 Appendix 4: Sales Process...........................................................................................30 Appendix 5: Financial Projections and Ratios ............................................................31
    • © Copyright Chris Watt 2008 Executive Summary 3 Introduction An increasing number of individuals are shopping at shopping centres rather than on the ‘high street’ (Datamonitor, 2008). Findings from a survey conducted by Definitive Search Kiosks show that shopping mall customers generally do not make use of shopping mall websites before going shopping and are dissatisfied with current store directories found in shopping malls. Moreover, modern day lifestyles have caused individuals to often face a time constraint when shopping and thus shopping efficiently has become important for some members of society. Definitive Search Kiosks’ first product, Store Search, is a kiosk which allows those individuals to find exactly what stores in a shopping mall stock the products they desire, whilst also allowing users to search for the likes of cinema times and restaurant menus. The product also has a function to broadcast digital media and advertising, allowing our customers to recoup the costs of the Store Search system through selling digital advertising space on the kiosk’s screen. Industry Analysis Definitive Search Kiosks will compete in the digital signage technology industry. Digital and new media advertising is in the growth stage of its lifecycle, but is soon to become the most important marketing channel to reach out-of-home audiences. Growth is being driven by an increasingly fragmented audience due to people’s hectic lifestyles and a rise in technologies that allow consumers to skip or avoid ads. At present the majority of digital signage technology companies are focussed on producing digital screens that can be strategically placed in high traffic areas, allowing advertisers to broadcast digital advertisements and reach. However, these technologies provide no functional benefit to consumers. Store Search attempts to leapfrog this digital signage technology by combing both the functionality of the Store Search kiosk with a medium to broadcast digital advertisements at point-of-purchase locations. Market Analysis Definitive Search Kiosks will target covered shopping centres and specifically those over the size of 70,000 square metres of retail letting space. There are currently over twenty shopping centres of this size in the UK, with seven more forecasted to be completed between 2008 and 2012. Thus far Definitive Search Kiosks have already received a note of interest in our Store Search product concept from Capital Shopping Centres, one of the UK’s largest shopping mall real estate conglomerates. Management Team and Company Structure Definitive Search Kiosks is a limited company and is owned by its five person management team, each of whom have contributed £5000 to the business and have an 18% stake in the business. At present, Definitive Search Kiosks has a vital skills gap in the form of an operations director. We hope to fill this role with an experienced operations manager within the first year and have allocated 10% equity in the business to whoever fills this position. Definitive Search Kiosks also has a five member board of directors. Operations and Development Plan In order to minimise our initial capital outlay, Definitive Search Kiosks will outsource the manufacturing of its products to a well-established local kiosk manufacturer, Priora Solutions. The company also outsourced the development of the software to be imbedded into each kiosk, as our management team has no direct experience with software development. We realise that there are risks with outsourcing key elements of our supply chain, but believe we have and will take the necessary steps to mitigate these risks.
    • © Copyright Chris Watt 2008 Financial projections 4 The Database includes a full set of profit and loss accounts, cash flow statements, and balance sheets for the first two years of operation. The company projects an operating profit in both its first and second years. Moreover, our projected ROS is 25% in 2009 and climbs to 33% in 2010. Net profit is projected to be £104,188 in 2009 and £182,219 in 2010. The company will remain cash flow positive throughout the first two years of operation.
    • © Copyright Chris Watt 2008 Company Description 5 Company History Definitive Search Kiosks was founded in August 2008 and was initially setup to sell and market a kiosk designed for supermarkets which had imbedded software allowing recipes to be stored on the device. This would allow supermarket customers to view and print-off recipes in-store. However, after conducting a comprehensive feasibility analysis, it was discovered that there was little demand for this product from supermarkets as they felt such a device would significantly reduce impulse purchasing. After meeting with a technology specialist it became clear that the kiosk and software we planned to develop could easily be modified to become a valuable product to the shopping centre market. In September of 2008, a feasibility analysis was completed, which validated the Store Search Kiosk concept. Mission Statement Definitive Search Kiosks’ mission is to make shopping a less time consuming and more enjoyable experience for those individuals who prefer to shop fast and dislike browsing around shopping centres for the stores that sell the items they desire. Product Definitive Search Kiosk’s first product is “Store Search”; a touch-screen kiosk which allows shopping mall customers to easily locate where in the mall they can purchase the products they desire. Users can select a product category on the touch screen which will generate a list of the stores that stock such products. Further options to define that list are then made available to the user. For example, if the consumer selects the product class “men’s shoes”, then the options “dress shoes”, “casual shoes”, “sports shoes”, or the option to search by a particular brand will appear. If the user chooses to search by a particular brand, a key pad will appear on the touch screen enabling the user to type in the brand(s) they desire.1 Moreover, Store Search allows the user to easily discover which stores have sale offers and promotions at that time. The user can then select the stores they want to visit by selecting the box next to the store name on the touch screen, and then choose to have a map printed which indicates where each selected store is located in the mall. Alternatively, the user can choose to view the path required to his chosen stores on a digital map on the kiosk screen. The Store Search system supports Point-of-View of calibration, meaning the user will see the map exactly the way he sees the surroundings from where he is standing. This enables to have the kiosks oriented in any direction. Incorporating the suggestions and results from the feasibility analysis2 and focus group3 conducted allowed our company to design a kiosk that includes additional features potential users would find beneficial. For example, focus group participants agreed that there was scope to add supplementary functions to each kiosk, such as adding a tourist information feature on the touch screen. There was a consensus amongst the participants that additional functions would encourage them to use these kiosks on a regular basis when visiting shopping centres. Thus it was decided to include further functions in each Store Search Kiosk including the ability to access both cinema times of movie theatres and menus of restaurants situated in the shopping centre. Users of the kiosk can also reserve cinema tickets or book reservations with restaurants in the shopping mall. Information regarding travelling to/ from the shopping centre and events taking place in the mall and its city can also be included as functions in a Store Search kiosk. Moreover, the Store Search 1 See Database, Page 29, for Screen Shots of the Store Search touch screen; See Database, Page 25, for a 3D Model of the Store Search Kiosk 2 See Database, Page 1 , for full Feasibility Analysis 3 See Database, Page 23, for full Focus Group Findings
    • © Copyright Chris Watt 2008 system is multilingual, which is extremely important as there was a general consensus by focus group participants that this service would be particularly beneficial to tourists. 6 Another issue that was discovered, after distributing a concept statement to a selection of industry specialists, was how information was to be inputted into each kiosk. Industry specialists noted that the Store Search system used for entering information had to be user friendly and could not be extremely time consuming. Taking this into account, each Kiosk is internet enabled, allowing the mall management to upload and update store information on to their kiosks with ease and promptness. Each client will have a personal and protected account on www.StoreSearch.com allowing them to access the store directory and other information stored on their kiosks and update as necessary. Their account on this website will also allow mall management to upload any advertising and promotional material, such as digital signage, to be shown on the kiosks screen when it is not in use. Furthermore, each kiosk is equipped with built-in high quality speakers, allowing advertisements shown on the screen to be accompanied by sound. Each kiosk is also connected via the internet connection to our manufacturer, Priora Solutions, who can solve most software malfunctions over this connection. This, therefore, eliminates the amount of time the shopping centre’s kiosk system will be down if these unlikely glitches do occur. Store Search’s USP is its combination of multi-functionality with digital point-of-sale advertising. This form of advertising is becoming ever more important as brands need to effectively interact with the increasing number of out-of-home audiences. Garry Lace, managing director of Admedia, notes that digital advertising is becoming increasingly important in shopping centres due to their proximity to point-of-sale (Campaign, 14/11, 2008). Store Search gives shopping centres both a medium to increase digital advertising revenues and provide an innovative and beneficial service to shoppers. Current Status Next Generation Kiosks is in position to commence operations in January 2009. The following presents milestones already completed by the company and milestones that have yet to be completed for the company to start operations. Milestones completed: • Feasibility analysis, prospective end-user survey, and focus group completed • Business plan completed • Registered company name with Companies House • Store Search Software developed • Store Search Interactive Website developed • Store Search Kiosk Prototype Developed • Obtained trademarks and copyrights • Contract with potential kiosk manufacturer, Priora Solutions, already in place • Five-member management team in place • Board of directors in place • £25,000 invested by management team
    • © Copyright Chris Watt 2008 • £8, 700 grant (i.e. 30% of R&D Costs) obtained from Scottish Executive 7 • £25, 000 two-year loan from the West of Scotland Loan Fund at 6% interest. Milestones remaining to be completed • Attain product certification for the Store Search Kiosk • Employ software developer (Year 2) • Fill vacant COO position • Begin marketing and public relations initiatives Legal Status and Ownership Definitive Search Kiosks is a Limited Company. It is currently owned by its management team. Registering as a limited company allows Definitive Search Kiosks to enjoy certain tax advantages as we anticipate relatively high turnover. Moreover, as our management team is quite young, registering as a limited company gives more credibility to Definitive Search Kiosks. A detailed schedule of ownership is provided in the “Management Team and Company Structure” section of the business plan.
    • © Copyright Chris Watt 2008 Industry Analysis 8 Industry Definition Digital Search Kiosks considers itself to compete in the digital signage technology industry. Digital signage is a form of electronic display that can be installed in public places (IPA, 2008). The key benefit to our customers that our Store Search product provides is the ability to upload digital advertisements to be shown on the kiosks’ touch screens when kiosks are not being used by consumers. Thus one of our key remits is to win over our customers by making them realise the revenues that can potentially be gained from the sale of prime digital advertising space on our kiosks’ screens. Established companies in this industry include CBS Outdoor, Clear Channel and JCDecaux. Benefits of digital signage to advertisers, brands and retail stores Digital out-of-home advertising is becoming ever more important for companies who want to effectively advertise their brands to target audiences. Declining national audiences and a rise in technologies that allow consumers to skip or avoid ads have contributed to brand managers and advertisers investing heavily in digital media. Individuals are now exposed to more ads than ever before and thus an increasing number of brands want to deliver brand messages when purchase decisions are being made, for example in shopping malls. Moreover, brands are increasingly attracted to digital signage as it allows them to cut lead times on getting new campaigns published and also let’s brands/stores change offers in a very short space of time. This is especially important considering more than 70% of purchasing decisions are made in stores or shopping centres (The Economist, 11/03/2006). Digital signage also makes it possible for advertisers to vary their digital ads shown by time of day, season or local factors, such as demographics (Bradshaw, 2008). Digital signage trends and industry characteristics A recent report by Profitable Channels (2006) notes that out-of-home digital advertising represents the fastest growing marketing communications channel, and will continue to do so into the distant future. At present, digital outdoor advertising accounts for roughly £48m, or 5%, of the £950m that UK advertisers spend on out-of-home advertising; however, this figure is expected rise rapidly over the next five years as more mediums to broadcast digital advertisements are installed in ‘high-traffic’ public areas (Marketing Week, 27/09/2007). Nevertheless, compared to the US and Asia, digital out of home media is underdeveloped in Europe. We see this as an opportunity to capitalise on this emerging advertising trend in Europe by incorporating the function to upload and stream advertisements and digital signage on every screen of each Store Search kiosk. Screen Digest (2008) forecast that digital signage and advertisements will account for at least 10% of all out-of-home media expenditure in Western Europe by 2012, which is estimated to equal £626m. Thus we can assume a projected industry growth rate of at minimum 3.33% per annum for the next three years. There is no question that we will see an increase in advertising on digital displays in such locations as shopping centres, airports and train stations over the coming years. Store Search attempts to leapfrog this digital signage technology by combing both the functionality of the Store Search kiosk with a medium to broadcast digital advertisements at point-of-purchase locations. Nature of industry participants As the digital signage industry is its infancy, the industry at present is rather fragmented. However, these firms are currently focussed on producing wall mounted digital screens, which only show digital advertisements and thus have no functional benefit to the consumer, differentiating Definitive Search Kiosks from the competition.
    • © Copyright Chris Watt 2008 Segmentation of the market 9 The easiest way to segment the industry is by the various public locations that digital signage technology can be installed. As the new digital media industry is still emerging (See Appendix 1) no sound datasets yet exist detailing exactly how many firms are targeting each specific public location. However, by extrapolating information from a number of sources, we can make educated estimates concerning the penetration of each market. As the graph below shows, there has been a focus from digital advertisers on entertainment venues, which includes bars, restaurants, nightclubs, bowling alleys, etc. Nonetheless, less than half this market has been penetrated by digital advertising, which again emphasises the infancy of this industry. The graph below all shows that only 30% of Definitive Search Kiosks’ target market, shopping centres, has yet been penetrated by our competitors. Nevertheless, a recent survey conducted by Arbitron (2005) found that an overwhelming majority of mall shoppers (71%) would welcome video display screens in shopping malls. We thus are confident that we can gain a foothold in this market, and then eventually introduce our Store Search product to other sectors, such as airports. Penetration of each potential market in the UK by digital advertisers
    • © Copyright Chris Watt 2008 Market Analysis 10 Target market selection The segment of the industry that Definitive Search Kiosks will be focussing on is the UK Shopping Centre Market. This market can be further segmented into covered shopping centres (both in-town and out-of- town), retail parks, and factory and designer outlet centres. Definitive Search Kiosks will target covered shopping centres and specifically those over the size of 70,000 square metres of retail letting space. The following factors led to the decision to select this segment of the market. • Market Analysis: The market analysis (See Database, Page 7) shows that covered shopping centres are the largest segment of the shopping centre market. The volume of covered shopping centre space currently under construction is at its highest level since the 1980s, with the majority of this shopping centre space being completed between 2008 and 2010. As can be seen in the graph below, the size of this market segment has been increasing at an impressive rate since the early 2000s and is forecasted to continue to rise into the future. Figure 1: The Estimated Total UK Covered Shopping Centres Market by Letting Area (000 square metres), 2003-2007 Source: Key Note • Feasibility Study: Findings from a product concept survey sent to industry specialists4 showed that this product would be more beneficial to larger shopping malls (i.e. over 70,000 square metres of letting space or above). There are currently over 20 covered shopping centres in the UK that house over 70,000 square metres of retail letting space. Moreover, an increasing number of in-town and out-of-town shopping centres are being extended, indicating that the number of ‘large’ shopping centres is set to rise. Industry specialists have suggested that one Store Search kiosk would be required per 5,000 square metres of retail letting space. 4 See Database, Page 3.
    • © Copyright Chris Watt 2008 • Additional Evidence: The results from a survey conducted by Definitive Search Kiosks5 show that 96% of respondents admitted to regularly visiting shopping malls, with 58% admitting to shopping 11 in malls more than once a month. Moreover, 50% of respondents reported that they preferred shopping in covered shopping centres than on the ‘high street’. This is consistent with the findings of a recent study by Datamonitor (2008), which discovered that an increasing number of consumers are shopping at malls as opposed to shopping on the ‘high street’. This is both important for advertisers and shopping malls themselves; advertisers want to effectively target and reach this increasing number of consumers shopping at malls with their messages at point-of-sale, whereas shopping centres want to attract these consumers into their mall as opposed to competing malls. Store Search gives advertisers the medium to reach these key audiences, whilst also providing shopping malls with an edge over their competitors who have yet to install a Store Search system. • Current digital signage technology employed in shopping malls does not provide a functional benefit to customers. At present, the vast majority of digital signage technology that can be found in shopping centres is in the form of wall-mounted LCD Screens which broadcast advertisements. Although it can be argued that customers benefit from being exposed to the information contained in these advertising messages, current digital signage technology utilized in malls provides no functional benefit to customers. Store Search, however, allows customers to search for stores and brands, browse cinema listings and book restaurants, whilst also broadcasting digital advertisements when the kiosks are not in use. Target Market Size and Trends As mentioned above, there are a limited number of shopping centres in the UK that house over 70,000 square metres of retail letting space. At present there are 24 shopping centres of this size in the UK, although this number is expected to rise in the near future due to forthcoming shopping centre developments and extensions. Key Note (2008) anticipates that 2.4 million square metres of additional shopping centre retail space will be added to the market between 2008 and 2012. Moreover, proposed changes to planning laws6 could make it easier for shopping centre real estate conglomerates to gain planning permission to build large out-of-town shopping malls in areas where previously they could not. However, in our third year of operation Definitive Search Kiosks plans to expand the business’ market by also focussing on ‘medium’ size shopping centres (i.e. those that house between 40,000 and 69,000 square metres of retail letting space). We are confident that expanding our target market scope will be relatively uncomplicated as our chosen marketing channels expose our product to the entire shopping centre market. Moreover, we believe that the benefits of Store Search will become more apparent to smaller shopping centres after seeing the Store Search kiosks in operation in their larger competitors. For an analysis of key direct, indirect and future competitors please see Appendix 3. 5 See Database, Page 17. 6 See PEST Analysis, Appendix 2
    • © Copyright Chris Watt 2008 Marketing Plan 12 Overall marketing strategy The overall marketing strategy of Definitive Search Kiosks is to make shopping centre managements aware of the benefits of the Store Search Kiosk to both themselves and their customers. Definitive Search Kiosks play to do this by employing a push communications strategy with an emphasis on personal selling7. Reasons for utilizing this strategy can be attributed to the fact that Store Search is a high-involvement purchase and because the offering is complex and is in the early stages of its product life cycle. Pricing strategy Definitive Search Kiosks will employ a value-based approach to the pricing of our product. We took a customer orientated perspective on our pricing decision of the Store Search kiosk early in the product’s design process and then developed the product around the relative customer price point. Our feasibility analysis8 shows that a £40,000 price point is the maximum a shopping centre that houses 70,000 square metres of retail letting space would be willing to pay to install a Store Search Kiosk system into their shopping mall. Moreover, our feasibility analysis indicates that at least one kiosk will be required per 5,000 square metres of shopping centre retail letting space. Thus, by dividing £40k by the minimum number of kiosks required for a centre housing 70,000 square metres of retail letting space (i.e. 14 kiosks), we calculate that the price a shopping centre would be willing to pay for one kiosk would be £2857.14. After sourcing an established manufacturer who could produce the Store Search product at a cost of £1190 per kiosk, which includes the cost of our necessary kiosk components, Definitive Search Kiosks came to the decision to price each Store Search kiosk at £2571. This price provides a 10% cushion between what our customers are willing to pay and what we plan to charge, and translates to a 116% mark-up on our manufacturing and component costs. Promotions Plan and Strategy • Trade Magazines Definitive Search Kiosks plan to take out a bi-monthly half page print advertisement in “Retail Technology” Magazine, which is available to subscribers in both digital and hard copy formats. Retail Technology offers the best coverage of this evolving market place and thus provides a platform for targeting key decision makers in the retail and shopping centre industry. Half page ads will also be published in “Shopping Centre”, which is the only monthly magazine specific to our target market. Through these publications, Definitive Search Kiosks is confident that the Store Search concept will be perceived and retained by our target audiences: shopping mall owners and managers. • Trade Shows Trade shows will be important channels for Definitive Search Kiosks to advertise the Store Search Kiosk. The two most important annual trade shows to reach our target market are Retail Connections and KioskCom, both of which take place in London in February and September respectively. Furthermore, in order to garner interest from advertisers concerning the digital signage function of our kiosk, Definitive Search Kiosks also plans to set up a booth at the Digital Signage Trade Show, which also takes place in London in September. Demonstrating our (prototype) product at these trade shows will provide an 7 For a detailed explanation of Definitive Search Kiosks’ Sales Process, please see Appendix 4. 8 See Database, Page 1 for Concept Statement and Survey
    • © Copyright Chris Watt 2008 excellent prospect to gather sales leads and set up future business deals with key decision makers in the shopping centre market. In addition, these shows may allow Definitive Search Kiosks the opportunity to 13 acquire interest from the other markets outlined in the opportunity section of the SWOT analysis. We believe displaying Store Search at these events will also garner some media coverage in industry press and create “buzz” about the product on retail technology internet blogs. Moreover, attending these events allow our management team to keep an eye on competitors’ products and services. • Website StoreSearch.com will serve as a promotional tool for the Store Search product. Visitors will be able to view an online video demonstration of the Store Search Kiosk functions, download information about the product, and view case studies of previous clients. Moreover, to access parts of the site, the visitor will be asked to register their details, which provides Definitive Search Kiosks with a database of leads to follow up on at a later date. In order to ensure that StoreSearch.com receives a decent amount of exposure on the internet, we also plan to allocate a small amount of our promotions budget to highly focused pay-per-click advertising on google.com. • Direct marketing As Store Search is a high involvement product and our target market is easily identifiable, direct marketing will be heavily utilised in order to promote the kiosk. For example, potential leads will be sent an information booklet detailing the technical specifications, functions and benefits of the Store Search Kiosk. The advantages of direct mail include its relatively low costs and close targeting of leads in a way not possible using mass advertising media. Moreover, in order to strengthen business relationships with buyers, past and present customers will receive a bi-monthly newsletter or e-newsletter detailing news about Definitive Search Kiosks and its products. Cold calling potential leads will be also utilised to induce excitement about the Store Search product and qualify leads. Finally, qualified leads will be given personal sales presentations at their own premises, in which a prototype kiosk will be exhibited and explained. Leads will have the opportunity to test the functionality of the kiosk and ask any questions they might have.
    • © Copyright Chris Watt 2008 Management Team and Company Structure 14 Ownership Structure Definitive Search Kiosks is a start-up business incorporated in the United Kingdom. The company is jointly owned by its five person management team, and each partner has personally invested £5000 into the company for an 18% stake in the business. The company thus has an options pool of 10%. Management Team Profiles9 Title Name Job Description Qualifications CEO Chris Watt • Responsible for guiding the MA Honours Degree in company in a profitable direction. Economics and • Oversee all aspects of the business, Business from Glasgow including but not limited to: sales, University marketing, human resources, logistics, accounting and finance. Experience working in B2B marketing and sales CFO Adele Callan • Responsible for book-keeping, BA Honours Degree in accounting and tax considerations Business Management • Responsible for financial analysis and budgeting and ensuring the Experience working as business generates sufficient cash an intern financial flow advisor with a top accountancy firm. COO Vacant • Responsible for planning, developing and implementing strategy for organizational development and monitoring, measuring and reporting on organizational plans and achievements • Responsible for managing and controlling expenditure within agreed budgets Marketing Callum • Responsible for planning and BA Honours Degree in and Sales Lobban implementation of marketing and Business Management sales activities, so as to maintain from Glasgow and develop sales in accordance University with agreed business plans • Responsible for developing ideas Has experience and creating offers for B2B working with small marketing businesses in • Responsible for all customer Marketing and Sales service enquiries Marketing Holly Paterson • As above. MA Honours degree in and Sales Psychology and Business from Glasgow University 9 Please see Page 34 of the Database for Definitive Search Kiosks’ Management Structure Chart
    • © Copyright Chris Watt 2008 Has experience working with small 15 businesses Marketing Cameron • As Above. BA Honours degree in and Sales Clark Business Management from Glasgow University Has experience working in sales of software and retail technology Skill Gaps As can be seen in the table above, a large skill gap exists in the form of an Operations Director (or COO). Definitive Search Kiosks plan to fill that role with an experienced operations manager within three months. Definitive Search Kiosks also propose that in order to keep costs down our COO will receive a 10% equity stake in the business instead of receiving a fixed salary. Until the time that this position is filled, John Wigham, a retired COO of a highly regarded technology company and one of Definitive Search Kiosks’ board of directors, has kindly agreed to temporarily fill that role as a favour to the management team. Additional Personnel In year 2 of operation, Definitive Search Kiosks will hire a software developer to bring any software development updates that may be required in-house. This is extremely important as Moore’s Law states that software becomes outdated roughly every 18 months (Schaller, 1997). Any Store Search software updates will be available to past clients for download from the Store Search website. This software developer will be paid a yearly salary of £20,000. In our first two years of operation, we are confident that our management team will suffice as large enough sales force. However, in the event that our company grows faster than anticipated, Definitive Search Kiosks may need to hire additional sales personnel by the third year of operation. This will involve higher costs for the business in the form of salaries and comprehensive training concerning the Store Search product. Board of Directors As our management team is still relatively young, Definitive Search Kiosks have also assembled a board of directors who volunteer their time and experience. There are three outside directors and two inside directors. The board meets monthly and individual board members interact with Definitive Search Kiosks’ top management team frequently. Outside Directors Lindsay MacEwan, Co-Founder of Crawford MacEwan Lindsay MacEwan is responsible the marketing activities of a successful creative marketing firm in Aberdeen. Her experience in database marketing and direct selling will be very beneficial when implementing our marketing strategy. John Wigham, Retired COO of Insight Technologies
    • © Copyright Chris Watt 2008 John Wigham is a retired engineer and operations manager of a successful manufacturing company which specialises in retail technology. John helped Definitive Search Kiosks develop the Store Search concept. 16 His knowledge in operations and logistics, as well as his contacts in the retail industry, will be invaluable to Definitive Search Kiosks. Jack Evans, Entrepreneur, CEO of Caledonian Heritable Jack Evans has set up and sold five successful businesses over the course of his career. His current business, Caledonian Heritable, owns a considerable number of pubs and a golf course in Scotland. His experience in start up businesses will be extremely useful to Definitive Search Kiosks. Inside Directors Chris Watt, Cofounder and CEO, Definitive Search Kiosks Adele Callan, Cofounder and CFO, Definitive Search Kiosks Definitive Search Kiosks will be using the services of the following professionals as sources of advice and counsel on an as-needed basis. None of our professional advisors are paid a regular retainer. Professional Services Peter Smithwood, Chartered Accountant, Smithwoods Accounting Peter Smithwood will be providing accounting advice and services as necessary. Adele Callan will be performing the bookkeeping of Definitive Search Kiosks with advice from Peter. Stewart Watt, Lawyer, CS Watt and Company Stewart Watt is a well-know Scottish lawyer who specialises in employment law. He has over 25 years experience in law, and is also the father of Definitive Search Kiosks’ CEO, Chris Watt. Additionally, we will be using the services of Denise O'Connor, Small Business Account Manager at Business Gateway10. 10 Please see Page 6 of the Database for our record of communication between Denise O’Connor and Definitive Search Kiosks regarding our funding options available.
    • © Copyright Chris Watt 2008 Operations Plan 17 Please see the Operations Flow Diagram on Page 33 of the Database for an overview of the key steps in our production and distribution process. The following describes Definitive Search Kiosks operations procedures in detail. The Store Search product concept was designed by Definitive Search Kiosks. Web design and application development specialists, Interactive Red, were hired to develop the software for the Store Search system and its supporting website, for a non-recurring cost of £29,000. It should be noted that Interactive Red were contracted under a non-disclosure agreement, so as to protect Definitive Search Kiosks proprietary software information. Definitive Search Kiosks, along with its contracted manufacturer, Priora Solutions, then sourced the most cost effective components (e.g. PC, Touch Screen, Printer) to be used in each Store Search kiosk. Priora Solutions is contracted to assemble and manufacture the Store Search kiosks using these components. It was agreed that Priora Solutions would purchase these components due to their already established relationships with component suppliers, install them in each kiosk and then charge Definitive Search Kiosks per kiosk. Our manufacturer employs a just-in-time inventory strategy, in that it manufactures our kiosks as required and therefore does not keep an inventory of kiosks produced for Definitive Search Kiosks. However, we have been assured that Priora Solutions will keep a stock of components necessary to produce forty Store Search kiosks. In the event that one month’s sales will be in excess of forty kiosks, Priora Solutions have guaranteed Definitive Search Kiosks that they can order in the required components within one week, thus meaning that their three week manufacturing lead time will be upheld. Priora Solutions have also taken on the responsibility to upload the Store Search software developed by Interactive Red and input the initial store directory data for each of Definitive Search Kiosks’ clients. After agreeing on a discount of 15% on all our orders with Priora Solutions, the total cost of each kiosk will be £1190. Payment is due to Prirora Solutions within 30 days of Definitive Search Kiosks placing an order. We will also employ a 30 day payment period policy, meaning that our customers are expected to pay Definitive Search Kiosks in full by 30 days after the installation of the Store Search system. The decision to outsource the manufacturing of our kiosks was made for the following reasons. Firstly, external service providers can achieve economies of scale unavailable to individual firms when they combine the volumes of multiple companies. Moreover, the machinery to manufacture our kiosks represents a significant capital investment, and thus outsourcing our manufacturing eliminates this capital investment for Definitive Search Kiosks. Local manufacturers were chosen over foreign manufactures because shopping centre industry specialists commented that technology malfunctions are of paramount concern to our target market. Therefore, having our manufacturers located in the UK means that if malfunctions do occur they can be remedied without delay. Furthermore, local manufacturers have significantly shorter lead times than foreign manufacturers. Priora Solutions has two manufacturing bases in the UK; one is located in Cumbernauld, Scotland, and the other is located in Berkshire, North East England. Thus, if production bottlenecks do occur in times of high orders, the manufacturing of our kiosks can be spread over these two plants, allowing Priora Solutions to maintain their 3 week production lead time. The distribution and installation of our kiosks will be handled by our manufacturer, Priora Solutions, so as Definitive Search Kiosks do not incur any unnecessary costs. However, there are risks with employing this distribution strategy. For example, as we are not distributing our product to our customers, there are issues of ensuring the quality of each Store Search kiosk manufactured. Moreover, there are issues concerning whether our products will be delivered to our customers in a timely manner, and whether our kiosks will be
    • © Copyright Chris Watt 2008 correctly installed into our customers’ premises. Definitive Search Kiosks plans to mitigate these risks by carrying out random quality spot checks at our manufacturer’s factories. Moreover, our CEO and COO will 18 be in frequent contact with our manufacturer to ensure that lead and delivery times are being upheld. In addition, our sales team will engage in follow-up telephone calls within seven days of the installation of the kiosks to gauge how satisfied our customers were with the distribution and installation service they received. Definitive Search Kiosks’ after –sale service includes a phone call within seven days after the installation of our customer’s Store Search system to assess the delivery and installation service they received, bi-monthly phone calls with buyers to ensure the Store Search system is operating effectively, and a monthly newsletter detailing news about Definitive Search Kiosks and its products. Furthermore, all past customers of a Store Search system will be eligible to download software updates from their account on StoreSearch.com for no extra charge. Definitive Search Kiosks’ Office Location Definitive Search Kiosks’ has qualified for free rent commercial premises11 after preparing an application for the premises with the aid of Business Gateway. The ‘Glasgow4Business’ Programme is being run by Glasgow City Council and aims to help start-up businesses who will eventually produce benefits for the economy of the area the business in situated in. Definitive Search Kiosks have taken an office in Towhead, close to the centre city of Glasgow. This location is beneficial to us because it is close to the M8 motorway, which is important if members of our management team have to travel the country to attend trade shows and business meetings. 11 See Database, Page 35.
    • © Copyright Chris Watt 2008 19 Product Development Plan After completing a comprehensive feasibility analysis and conducting both a focus group and questionnaire to fine tune the functions of the Store Search system in July 2008, Interactive Red were commissioned to develop the software to be imbedded in each Store Search kiosk and construct the products’ supporting website. Software development was completed in November 2008. A usability test of the software was then arranged to test the functions, ease of use and user perceptions of the Store Search software’s functions. Ten individuals of different age groups were able to ‘test’ the software after installing it onto a number of laptops. The general perception from these tests was that the Store Search system was user friendly and had all the desired functions/features users wanted. During the three months our software was being developed, Definitive Search Kiosks established a business relationship a well-established local kiosk manufacturer, Priora Solutions. During this three month period we were also able to garner interest from prospective buyers by cold calling key decision makers in our target market. To our surprise, after simply reading the Store Search product concept brief and speaking with our CEO, Capital Shopping Centres, one of the UK’s largest shopping centre real estate conglomerates, showed great interest in installing Store Search kiosks into their larger shopping malls. Our prototype Store Search Kiosk was completed in early December 2008, and this prototype will be displayed in every trade show we attend. Usability testing of the kiosk will be completed by the end of December 2008 to measure users’ perception of the Store Search kiosk experience. A virtual prototype (i.e. a 3D computer generated model) has also been completed, which we will use in sales presentations to potential buyers. Challenges and Risks The following challenges and risks are associated with the manufacturing, maintenance and use of Definitive Search Kiosks’ first product, Store Search. • Outsourcing manufacturing and distribution. As Definitive Search Kiosks outsources its manufacturing and distribution of its product, we lack direct control over key elements of our supply chain. For example, there is a risk of our manufacturer not adhering to lead and delivery times. Moreover, there is a risk of our manufacturer facing inventory problems concerning the stock of our kiosks’ vital components. Furthermore, there is the issue of how we ensure a quality standard of our product and installation service as Definitive Search Kiosks will not be undertaking the distribution or installation of the Store Search kiosks. In order to mitigate these risks, Definitive Search Kiosks’ CEO and COO will be in regular contact with our manufacturer to ensure that operations are running smoothly. In particular our CEO will be in frequent contact with Priora Solutions’ operations and logistics manager, George Hollis, to ensure that there is a regular inventory of kiosk components, manufacturing lead times are adhered to, and kiosks are delivered to our customers in a timely fashion. Moreover, random on the spot quality checks will be administered at our manufacturer’s factories every two months to ensure that the agreed quality standard of Definitive Search Kiosks’ products are being maintained. Furthermore, follow up
    • © Copyright Chris Watt 2008 telephone calls will be made to our clients after seven days of the installation of their Store Search System in order to assess Priora Solution’s delivery and installation service. 20 • Maintenance Issues. Most product malfunctions can be solved over an internet connection by our manufacturer. Priora Solutions have also agreed to repair our kiosks on site, if necessary, within seven days of the product malfunction. • Updating data. It is up to our customers to keep the data stored on their Store Search system updated. In order to make this an easy and brief task, customers can upload and change information via their client account on StoreSearch.com, meaning that this updated information is then sent to every single kiosk on that client’s network. Intellectual Property Both our company name, Definitive Search Kiosks, and our product name, Store Search Kiosk, are protected by trademark. The software used in our kiosks and any future software updates will also be protected by copyright. Definitive Search Kiosks also consider the following material to be trade secrets: ideas for future products, our marketing plan, financial forecasts, logs of sales calls and our operations manual. We realise that because our product is not patentable there is a risk of imitation products being produced by competitors. However, we are confident that our first mover advantage into the shopping centre market will allow Definitive Search Kiosks to build strong relationships with shopping centre real estate conglomerates, creating an effective barrier to entry.
    • © Copyright Chris Watt 2008 21 SWOT Analysis Strengths • Product Benefits: Store Search benefits shopping centre management, stores located within the mall, and the end-user. o Benefits to shopping mall management:  Allows the shopping mall to sell advertising space on the kiosk’s screen. • Out-of-home digital advertising is now of one the most important marketing tools advertisers and brands possess. Store Search allows mall managements to tap into this growing market, allowing them to recoup the costs of the Store Search kiosks.  May eliminate the need for an information kiosk, reducing costs.  As stores often change in shopping malls, mall maps can become outdated fast. Store Search eliminates the need for pre-printed maps, and allows mall management to update information stored in the kiosk’s computer to allow for store closures and openings. o Benefits to the stores located within the mall:  Allows stores to advertise promotional offers and sales on the kiosk.  Helps stores to compete more effectively as Store Search gives them a point-of- purchase medium to promote the brands and products they stock.  May help attract more consumers into their stores: A recent survey conducted by Definitive Search Kiosks12 found that 35% of respondents would be more likely to shop in shopping centres if a service such as Store Search was available. o Benefits to the consumer: 12 See Database, Page 19
    • © Copyright Chris Watt 2008  Allows consumers to locate the stores in a shopping mall which sell the product(s) or brand(s) they desire. 22  Allows consumers to pinpoint exactly which stores sell the products they need eliminating the customer pain of wasting time looking for a product in a number of stores.  Store Search’s other functions let users reserve cinema tickets or book restaurants within the mall. • Wide consumer base: The multifunctional nature of the Store Search kiosk means that it is not only shoppers who will be interested in using the kiosk. For example, people visiting a new city may be interested in using the kiosk’s tourist information function and non-shoppers may be interested in exploring the kiosk’s city events function, when in the centre of town. This further benefits shopping centres and the stores located within them, as the Store Search kiosk may attract more ‘potential’ consumers into the shopping mall. • Unique Concept: Store Search has a unique selling point in that it combines the multi-functional attributes of the kiosk with a medium to sell digital advertising space on the kiosk’s screens. Digital out-of-home advertising is becoming one of the most important channels brands use to reach their target audiences, and the ability to use the kiosk’s screen as a medium to broadcast digital media will allow Shopping Centres to recoup the costs of the kiosks through selling advertising space on the kiosks’ screens. • Barriers to Entry: High start-up costs and a first mover advantage act as barriers to entry into this market, reducing the threat of potential future competition. • Local Manufacturer: Each Store Search Kiosk is manufactured in the UK meaning malfunctions can be dealt with swiftly and Definitive Search Kiosks can enjoy shorter lead times (only 3 weeks) than if we had each kiosk manufactured in the Middle East. Weaknesses • Management team: Lack of experience in the shopping centre industry and no in-depth knowledge of software development. • High Start Up Costs: Initial (non-recurring) cost of software development is rather high (£29,000) • Resource Requirements: Mall managers will have to rely on retailers to provide them with up to date information in order to keep the information stored on the kiosks current. Opportunities • Demand for an interactive store locator system in shopping centres: Results from a survey conducted by Definitive Search Kiosks13 showed that 31% of respondents agreed with the statement that they prefer to shop efficiently, whereas only 23% reported that they prefer to browse and take 13 See Database, Page 16
    • © Copyright Chris Watt 2008 their time whilst shopping. Moreover, 69% of respondents said that they do not find current store directories found in shopping centres very useful. From these results we can clearly see that 23 demand exists for a service that allows those individuals who prefer to shop efficiently to do so. Further evidence for this conclusion is given by the finding that 23% of respondents said that they would ‘definitely’ use the Store Search kiosks if they were installed in malls, whereas 15% would ‘probably’ use the product and 46% ‘might’ use the product. • International Markets: As can be seen in the market analysis section14, the shopping centre market is beginning to blossom in Europe and especially in the emerging economies of Eastern Europe. This presents an opportunity for Store Search to expand into other international shopping centre markets. • New Markets: There may be opportunities to move into other markets with Definitive Search Kiosk’s product. The Store Search software can be easily modified to make it a beneficial product for the likes of airports, the ‘high street’, and retail parks. • Backward Horizontal Integration: The opportunity to integrate with our manufacturer, Priora Solutions, may arise, which would allow Definitive Search Kiosks to reduce its costs. Threats • The rise in the popularity of internet retailing: UK consumers are becoming more comfortable shopping online and increased household access to broadband internet, in conjunction with improved website designs, have stimulated growth in internet retail sales (Euromonitor, 2008). As can be seen in the PEST Analysis15 internet retail sales are set to rise in the future, where as store- based retailing sales are set to decline. As an increasing number of the UK population shop online, retailers may decide to reduce the number of retail stores they have in order to concentrate on online selling. Some retailers may then move out of shopping malls which will slash the marketing budgets available to mall managers. Consequently, this may mean that shopping centres do not have the budget to invest in Store Search kiosks. • Weak Economy: The current economic climate has lead to a reduction in marketing budgets available to shopping centre managers, and thus the Store Search Kiosk may fall into a ‘luxury’ category meaning that some shopping centres may not be able to justify its cost at this time to make such an investment. • Indirect competitors: Store Search will face indirect competition from shopping centre websites. However, as discovered in Definitive Search Kiosks’ survey conducted, 58 % of people have never visited shopping mall websites before they go shopping, and thus we do not see them as a major threat. • Direct competition: Store Search will face direct competition from established digital signage companies, some of which already have established business relationships with shopping centre real estate conglomerates in the UK. Definitive Search Kiosks realise that directly competing with 14 See Database, Page 7 15 See Appendix 2
    • © Copyright Chris Watt 2008 established competitors is a major risk, but are confident that the Store Search Kiosk is sufficiently differentiated from competitor products, as these companies have a strong focus on LCD Screens 24 and Touch Screens, but have yet to introduce a product as sophisticated as Store Search to the market. However, we must consider the risk of these companies moving into the shopping centre kiosk market, as if they do Definitive Search Kiosks would struggle to survive such a strong competitive threat.16 Financial Projections As can be seen in both Appendix 5 and Pages 36-38 of the Database, Definitive Search Kiosks’ sales projections in 2009 and 2010 are very encouraging, allowing the company to increase its net profit (before taxes) by 75% from £104,118 in 2009 to £182,219 in 2010. Moreover, the company will breakeven in month four of year one after selling 46 kiosks. The current ratio shows that even by the end year one Definitive Search Kiosks has an extremely strong liquidity position for a start-up company (14.98). Furthermore, Definitive Search Kiosks’ high working capital (£248,746 in Year 2) reflects the business’ commitment to keeping current liabilities at a minimum. It is important for Definitive Search Kiosks to maintain a sound working capital position as we expect our orders to increase in 2011due to the expansion of our target market that year to include ‘medium’ sized shopping centres. The company’s low debt ratio in 2009 reflects the very little borrowing undertaken by Definitive Search Kiosks. As we will have paid-off our loan from the West of Scotland Loan Fund in mid-2010 the debt ratio for 2010 is zero. As shown in our profitability ratio analysis in Appendix 5, Definitive Search Kiosks is an extremely profitable business. Our returns on sales are projected to increase from 25% in our first year of operation to 33% in 2010. Moreover, our projected return on investment is extremely promising, as it shows that by the 16 See Appendix3 (Competitor Analysis) for a full description of potential competitors to Definitive Search Kiosks.
    • © Copyright Chris Watt 2008 end of year one we will have more than tripled our initial investment of £25,000, and by year 2 we will have made almost seven times the initial investment. Furthermore, our asset to equity ratio shows 25 Definitive Search Kiosks reinvestment of profits from our two first operational years. Appendices Appendix 1: Life Cycle of New Digital Media
    • © Copyright Chris Watt 2008 26 Appendix 2: PEST Analysis Political factors Recent Government White paper on Planning Laws The government white paper, “Planning a Sustainable Future” (HM Government, 2007), was published in May 2007, and is aimed at speeding up planning laws in the UK. The paper notes that changes will be put
    • © Copyright Chris Watt 2008 in place in order to fast track major developments that increase consumer choice and promote the growth and development of town centres. These changes could affect current planning rules, which protect high 27 street stores from out-of-town shopping centres. However, if new out-of-town shopping mall developments are seen to support town centre development, then shopping mall real estate conglomerates may face less red tape when applying for planning permission to build shopping centres on the outskirts of towns. This will likely lead to a rise in out-of-town shopping centre developments in the UK. UK Real Estate Investment Trusts (REITs) Introduced REITs were launched in 2007. Companies that covert to REIT status are not liable for corporation tax or capital gains tax on assets held for a qualifying rental business, provided that they agree to a number of conditions including distributing at least 90% of their profits from their property rental business to investors rather than holding them back. Historically, investing in quoted property companies has been the domain of larger and institutional, rather than private investors. The new REITs regime removes the barrier of double taxation, making the quoted property sector attractive to private investors who want to hold tax efficient indirect property investments in their portfolios(REITA, 2008). A number of the UK’s shopping mall real estate conglomerates have already converted to REIT status, including British Land PLC, Hammerson PLC, Land Securities Group PLC and Liberty International PLC (Key Note, 2008). It is thus likely that these new trusts will encourage more private investors to invest in such real estate corporations, possibility leading to a rise in future shopping centre developments in the UK. Economic factors UK Retail Sector Sales Store based retail sales have grown at a much slower rate than in previous years growing by only 2.9% between 2006 and 2007, compared to 5.8% between 2003 and 2004. Table 1: Sales in retailing by sector: Value 2002 – 2007 Lower retail sales growth is being driven by two factors (Euromonitor, 2008a): 1. Economic uncertainty has lead to fragile consumer confidence • UK recession brought on by the US sub-prime mortgage crisis has lead to declining consumer confidence. • Slowing house markets combined with rising utility bills have reduced the disposable income of the average UK consumer. 2. Rise in the popularity of internet selling • UK consumers are becoming more comfortable shopping online and increased household access to broadband internet, in conjunction with improved website designs, have stimulated growth in internet retail sales. • Internet retailing increased 27% in 2007, and is forecast to reach sales of almost £26 billion by 2012 (Euromonitor, 2008).
    • © Copyright Chris Watt 2008 • As the tables below illustrate, internet retail sales are set to rise in the future, where as store-based retailing sales are set to decline, indicating that more and more people will 28 shop on the internet in the coming years at the expense of store-based retailing. Table 2: Forecast sales in retail by sector: Value 2007 -2012 Table3: Forecast sales in non-store retailing by sector: Value 2007 – 2012 Tougher retail trading conditions These conditions brought about by financial market volatility have caused some retailers in new shopping centre developments to demand improved incentives before they rent space. For example, some retailers are asking for 18 months free rent instead of the usual 6 to 12 months. This may lead to retailers with high buying power to be more inclined to locate on the high street than in shopping malls. Change in UK Fiscal Policy As part of a fiscal stimulus package to encourage spending in the UK economy in these tough economic times, the Government has recently announced a 2% VAT cut (Oliver and Smith, 2008), providing a direct incentive for consumers to spend. Moreover, the recent 1.5% cut in interest rates (Duncan, 2008) should also encourage more consumers to spend instead of save. These two policy measures should therefore boost retail sales during these uncertain economic times. Social Factors Number of shopping trips According to the National Travel Survey, British residents made an average of 219 trips for shopping in 2006, which was the highest number since 2002. In line with this increase, the distance British residents spent travelling on shopping trips rose to 926 miles, which was again the highest recorded over the 5-year period (Key Note, 2008). Figure 2: Number of Shopping Trips per Person per Year in Great Britain, 2002-2006
    • © Copyright Chris Watt 2008 29 Source: National Travel Survey, Department for Transport Technological Factors The Internet As mentioned above, the development of website design has led to an increasing number of consumers shopping primarily on the internet. This will have a negative impact on store-based retail sales if this trend continues.
    • © Copyright Chris Watt 2008 30 Appendix 3: Competitor Analysis Direct Competitors Store Search’s direct competition primarily comes from digital signage technology specialists targeting shopping centres. Screen FX/Mall FX and Avanti Screen Media are Definitive Search Kiosks largest direct competitors, as both these companies have a strong focus on the UK shopping centre market. Screen FX/Mall FX has its products running in a number of UK shopping centres, including those owned by Capital Shopping Centres, Peel Group, Westfield, Land Securities, Hammerson PLC, and Prupim. Moreover, Avanti Screen Media has a digital screen network in 33 shopping centres nationwide. However, the products produced by these companies that are employed by shopping centres are mainly digital flat- panel screens that are used only to broadcast digital advertisements and media. The screens are much larger than the average kiosk touch screen and are strategically placed throughout shopping centres to ensure that the messages advertised on the screens reach the maximum intended audience; however they provide no real functional benefit to consumers (See Perceptual Map). Avanti does manufacture interactive kiosks, but these are intended for retail stores, and are currently employed in selected M&S stores across the country. Moreover, all products produced by Screen FX and Avanti Screen Media are simply leased to shopping centres, who have little control over which brands are advertised on these screens. In contrast, Definitive Search Kiosks allows shopping centres to purchase its kiosks and use them as a medium to sell and control digital advertising space. Indirect competitors Indirect competitors include shopping centre websites, in which users can search the stores and brands the shopping centre stocks. However, our research has shown that a majority of consumers do not use these websites very often but would use the Store Search Kiosk17, as it perceived to be more convenient as it brings the store locator service to point-of-purchase. Future competitors As noted in the business plan, digital out-of-home advertising is fast becoming the most important channel advertisers and brands can use to reach their target audiences. This combined with the forecasted increase in shopping centre developments in the UK suggest that other start ups may arise that attempt to combine a medium to broadcast digital media with functional benefits for consumers. However, Definitive Search Kiosks’ high start up costs and plans to establish strong relations with clientele should serve as barriers to entry, dissuading these competitors move into the market. 17 See Survey Findings, Page 16, Database
    • © Copyright Chris Watt 2008 31 Competitive Analysis Grid Name Definitive Search Screen FX Screen Avanti Media_____ Flagship Store Search Kiosk Info Pod Network Digital Screens Strategically Product (2 Back to Back Positioned to Maximise Plasma/LCD Digital Consumer Retention Signage Screens) Price £2571 per kiosk £49,000 annual £52,000 annual contract contract Primary Shopping Centres Advertisers Advertisers Target Market Established Not as of yet Yes (Strong) Yes (Medium) relationships with shopping centres Functionality High Low Low Of products Innovativeness High Medium Medium Differentiation High Medium Medium Intellectual UK Trademark + International UK Trademark Property Copyright Trademark
    • © Copyright Chris Watt 2008 32 Perceptual Map The following perceptual map was created on the basis of research gained from company websites and confirmed by the statement “current digital signage employed by shopping malls provides no real functional benefits to customers, and is merely there for advertising purposes” (Jennifer Bruce, Marketing Manager, Land Securities, See Database, Page 3). Summary The grid and perceptual map show that Definitive Search Kiosks has a competitive advantage over its competitors in regards to its functionality and innovativeness. Furthermore, the Store Search Kiosk is significantly differentiated to Screen FX and Screen Avanti Media’s offerings. In addition, although these competitors operate within such public locations as shopping malls, their primary target market is advertisers as the benefits of their products accrue to advertisers more than shopping centre management. Thus, it is normally the case that advertisers or brands cover the costs of these products, not shopping centres. Conversely, shopping centre managements will be responsible for purchasing the Store Search Kiosks, but unlike competitors’ offerings, mall managements will be able to sell digital advertising space on the kiosk’s screens themselves, allowing these shopping centres to reap advertising revenues and recoup the costs of their Store Search Kiosks. Nevertheless, Screen FX and Avanti Screen Media have already established strong relationships with shopping mall managements. However, Definitive Search Kiosks is confident that the Store Search product is sufficiently beneficial to both mall managements and consumers to warrant the successful creation of strong business relationships with the UK covered shopping centre market.
    • © Copyright Chris Watt 2008 33 Appendix 4: Sales Process Stage in process Ways Definitive Search Kiosks will support each phase of the process Gathering sales leads Direct Mail targeting covered shopping centres in the UK. Interest/ responses from Trade Show attendees. Downloads from StoreSearch.com. Responses from print ads in trade journals and target market specific magazines. The initial contact Print ads will direct potential customers to StoreSearch.com, where visitors can enjoy a video package showing the functions of the kiosk and learn more technical details about the product. Visitors must also register their details to access parts of the website, allowing Definitive Search Kiosks to build a database of potential leads. Qualifying the lead In the first instance, a potential lead will be contacted by telephone in order to qualify the lead. The next step will be to offer a sales presentation of the Store Search product by Definitive Search Kiosks’ marketing/sales executives. Any qualified leads who do not sign a contract with Definitive Search Kiosks will be contacted by phone two months the initial contact to reassess the potential buyer’s interest in the product. Sales presentation Qualified leads will be given personal sales presentations at their own premises, in which a prototype kiosk will be exhibited and explained. Leads will have the opportunity to test the functionality of the kiosk and ask any questions they might have. Meeting concerns The management team is well qualified to tackle any objections/concerns that may arise. Each sales person will have a comprehensive understanding of competitors’ offerings and prices. Closing the sale The management team is well trained to close deals with potentials buyers. Follow up Definitive Search Kiosks will contact each buyer within 7 days of purchase/installation to ask how satisfied they are with the kiosks. Buyers will then be contacted by phone every two months to establish strong business relationships with customers. Buyers will receive a bi-monthly newsletter detailing news about Definitive Search Kiosks and the company’s new products (if applicable).
    • © Copyright Chris Watt 2008 34 Appendix 5: Financial Projections and Ratios Financial Projections Sales Forecast: 2009 2010 £411,360 (160 Kiosks) £545,052 (212 Kiosks) Profit and (Loss) Projections Before Taxes : 2009 2010 £104,118 £182,219 Sources of Funds: Owners Investment £25,000 Government Grant (30% of R&D costs) £8700 WSLF Loan (24 Months; 6% Interest) £25,000 Total £58,700 Financial Ratio Analysis Costs Fixed Costs: Marketing Expenses £28,969 Software Development £29,000 Trademark Costs £ 400 Utilities £ 630 Insurance £ 1200 Travel £ 2100 Telephone £ 715 Postage £ 504 Total £63,518 Variable Costs: Manufacturing Costs (incl. Materials) £1190 Break Even Analysis Unit breakeven volume: Total FC/ (Unit Price – Unit VC) 63,518/(2571 – 1190) = 46 Kiosks
    • © Copyright Chris Watt 2008 Contribution Margin: (Unit Price – Unit VC)/ Unit Price 35 (2571 – 1190)/ 2571 = 0.54 Breakeven pound volume: Total FC/ Contribution Margin 63518/0.54 = £117,626 Liquidity Analysis Current Ratio: Current Assets/ Current Liabilities 2009: 109,872/7336 = 14.98 2010: 248,746/0 = N/A Working Capital: Current Assets – Current Liabilities 2009: 109,872 – 7336 = £102,536 2010: 248,746 – 0 = £248,746 Financial Leverage Ratios Debt Ratio: Total Liabilities/ Total Assets 2009: 7336/125272 = 0.06 2010: 0/264,146 = 0 Profitability Ratios Assets to equity ratio: Total Assets/ Owner’s Equity 2009: 125,272/117,936 =1.06 2010: 264,146/265,633 = 0.99 Debt to equity ratio: Total Liabilities/ Owners’ Equity 2009: 7366/117,936 = 0.06 2010: 0/265,633 = 0 Return on Sales: Net Profit (before taxes)/ Sales 2009: 104,118/411,360 = 25% 2010: 182,219/545,052 = 33%
    • © Copyright Chris Watt 2008 Return on Investment: (Net profit before tax – Owners Investment)/ Owners Investment 36 2009: (104,118 – 25000)/25000 = 3.16 2010: (182219 – 25000)/25000 = 6.29 References Arbitron (2005), “Survey of mall shopper”, in Stephen Diorio’s (Ed.) (2006) Adding out of home digital advertising networks to the marketing and media mix. Understanding and realising the potential of emerging out of home digital advertising networks and their role in your marketing plan, Profitable Channels PLC. Barringer, B (2008) Preparing Effective Business Plans – An entrepreneurial approach, London: Pearson Bradshaw, T. (2008) “Tunnel Vision leads owners into the Tube”, Financial Times, 14/07/2008, London. Business Week (2008), “How high a mark-up?”, Business Week Magazine 22/03/2001. Campaign (2008), “Does the future of out-of-home media rest with digital?”, Campaign Magazine 14/11/2008. Datamonitor (2008) UK Town Centre Retailing 2008 – Verdict Research, Available at: http://www.datamonitor.com/industries/research/?pid=DMVT0481 Diorio, S. (2006) Adding out of home digital advertising networks to the marketing and media mix. Understanding and realising the potential of emerging out of home digital advertising networks and their role in your marketing plan, Profitable Channels PLC Duncan, G. (2008) “Bank of England cuts interest rates by 1.5 points to 54 year low”, The Times, Nov. 6th 2008 Economist (2006) “Signs of the times”, The Economist, Vol. 378, Issue 8468, 11/03/2006, London. Euromonitor(2008a), “Retailing – United Kingdom”, Country Market Insight June 2008, Euromonitor International, Available at: http://www.portal.euromonitor.com/passport/Retailing.aspx Euromonitor (2008b), “Internet Retailing – United Kingdom”, Country Market Insight June 2008, Euromonitor International, Available at: http://www.portal.euromonitor.com/passport/InternetRetailing.aspx HM Government (2007), Planning a sustainable future – white paper, London: TSO, Available at: http://www.communities.gov.uk/documents/planningandbuilding/pdf/planningsustainablefuture.pdf Key Note (2008), Market Assessment – Shopping Centres, Third Edition. Marketing Week (2007) “Ambient Marketing: Outdoors’ digital awakening”, Marketing Week, 27/09/2007, London. Oliver, J. And Smith, D. (2008), “Gordon Brown to cut Vat as winter recession bites”, The Sunday Times, Nov. 23rd 2008. Shaller, R (1997) “Moore’s Law: Past, present and future”, Spectrum, IEEE. Screen Digest/ Goldmedia (2008) Digital out-of-home media bucks sluggish advertising market – expenditure on digital screens in Western Europe to reach £626m by 2012, Screen Digest
    • © Copyright Chris Watt 2008 Stevenson, V.S. (2005), TNS Media Intelligence Report, American Society of Newspaper Editors. 37 Websites IPA Website, Available at: http://www.ipa.co.uk Screen FX website, Available at: http://www.screenfx.com/mallfx Avanti Screen Media website, Available at: http://www.avantiscreenmedia.com REITA website, Available at: http://www.reita.org/live/About_us/working_industry.html#Working_with_the_property_industry