TWS_Marketing_Plan_12-5_09

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Project Coordinator:
Prof. Franck Vigneron
Project Team Members:
Avi Jacobsen
Brian Frankel
Crissy Hannah
Melinda Meyers
Raghupreet Singh
CSUN BUS 491
Team 1
9/30/2009
BusinessModel

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PPAARRTT 11-- SSIITTUUAATTIIOONN AANNAALLYYSSIISS ..............................................................................................................................66
I.A The Company........................................................................................................ 7
I.A.1. INTRODUCTION .........................................................................................................7
I.A.2. STORE DESCRIPTION .................................................................................................7
I.A.2.1. Store Layout................................................................................................ 8
I.A.2.2. Parking...................................................................................................... 11
I.A.3. FINANCIAL CONDITION .............................................................................................12
I.A.4. SALES ANALYSIS.....................................................................................................13
I.A.4.1. Seasonality................................................................................................ 13
I.A.4.2. Gross Profit............................................................................................... 14
I.A.4.3. Sales by Category ..................................................................................... 14
I.A.5. HUMAN RESOURCES................................................................................................15
I.A.5.1. Responsibilities ......................................................................................... 15
I.A.6. CURRENT CUSTOMER ANALYSIS: PRIMARY RESEARCH .................................................15
I.A.6.1. The Research............................................................................................. 15
I.A.6.2. The Results................................................................................................ 16
I.A.7. MARKETING STRATEGY: THE MARKETING MIX.............................................................17
I.A.7.1. Product Portfolio ...................................................................................... 17
I.A.7.1.1. Wine .............................................................................................. 17
I.A.7.1.2. Spirits............................................................................................ 18
I.A.7.1.3. Lottery........................................................................................... 18
I.A.7.1.4. Beer............................................................................................... 19
I.A.7.1.5. Tobacco......................................................................................... 19
I.A.7.1.6. Miscellaneous product inventory.................................................. 19
I.A.7.2. Pricing Strategies...................................................................................... 20
I.A.7.2.1. Current Pricing Strategy............................................................... 20
I.A.7.2.2. Sales.............................................................................................. 20
I.A.7.3. Promotional Strategies ............................................................................. 20
I.A.7.3.1. Internal.......................................................................................... 20
I.A.7.3.2. External......................................................................................... 20
I.A.8. DISTRIBUTION STRATEGY .........................................................................................21
I.A.8.1.1. Distillery selling power to retail stores ........................................ 21
I.A.8.1.2. Contracts....................................................................................... 21
I.A.8.1.3. Tarzana Wine and Spirits advantage............................................ 21
I.A.9. HIGHLIGHTS ...........................................................................................................22
I.B Industry Analysis ................................................................................................. 23

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I.B.1. STRATEGY .............................................................................................................23
I.B.2. ANALYZING THE BUSINESS LANDSCAPE ......................................................................23
I.B.2.1. MACRO ENVIRONMENT VARIABLES................................................... 23
I.B.2.1.1. Political......................................................................................... 24
I.B.2.1.2. Economic....................................................................................... 24
I.B.2.1.3. Socio-Cultural............................................................................... 27
I.B.2.1.4. Technological: .............................................................................. 28
I.B.2.1.5. Environmental............................................................................... 29
I.B.2.1.6. Legal ............................................................................................. 29
I.B.3. INDUSTRY ATTRACTIVENESS: FIVE FORCES ANALYSIS..................................................29
I.B.3.1. Threat of New Entry.................................................................................. 30
I.B.3.2. Intensity of Rivalry.................................................................................... 30
I.B.3.3. Threat of Suppliers.................................................................................... 30
I.B.3.4. Threat of Buyers........................................................................................ 31
I.B.3.5. Threat of Substitute................................................................................... 31
I.B.4. EVALUATION OF ENVIRONMENTAL OPPORTUNITIES ......................................................32
I.B.4.1. Corporate Strategy.................................................................................... 33
I.B.4.2. Strategy and Operational Effectiveness.................................................... 34
I.B.4.3. Unique Activities....................................................................................... 35
I.B.5. HIGHLIGHTS ...........................................................................................................36
PPAARRTT 22-- MMAARRKKEETTIINNGG SSTTRRAATTEEGGYY .................................................................................................................... 3377
II.A Marketing Objectives......................................................................................... 38
II.A.1. MISSION STATEMENT...............................................................................................38
II.B Target Market ...................................................................................................... 39
II.B.1. TARGET MARKET DEMOGRAPHICS .............................................................................39
II.B.1.1. Age ............................................................................................................ 39
II.B.1.2. Income....................................................................................................... 39
II.B.1.3. Race........................................................................................................... 39
II.B.1.4. Baby Boomers ........................................................................................... 40
II.B.2. TARGET MARKET’S WANTS AND NEEDS......................................................................40
II.C Wine Segments.................................................................................................... 41
II.C.1. ENTHUSIASTS (12 PERCENT OF CONSUMERS)..............................................................41
II.C.2. IMAGE SEEKERS (20 PERCENT OF CONSUMERS) ..........................................................41
II.C.3. SAVVY SHOPPERS (15 PERCENT OF CONSUMERS) .......................................................42
II.C.4. TRADITIONALIST (16 PERCENT OF CONSUMERS) ..........................................................42
II.C.5. SATISFIED SIPPERS (14 PERCENT OF CONSUMERS) .....................................................42

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II.C.6. OVERWHELMED (23 PERCENT OF CONSUMERS) ...........................................................42
II.C.7. SEGMENT WRAP-UP................................................................................................42
II.D Recommendations (Short Term & Long Term).................................................. 43
II.D.1. CUSTOMER RELATIONSHIP MANAGEMENT (CRM) ........................................................43
II.D.2. STORE LAYOUT.......................................................................................................44
II.D.2.1. Store Atmosphere...................................................................................... 48
II.D.2.1.1. Customer dos and don’ts........................................................... 48
II.D.2.1.2. Attracting Customers: Store Tips.............................................. 49
II.D.2.1.3. Suggestions/Solutions................................................................ 50
II.D.2.2. Display...................................................................................................... 50
II.D.2.3. Signage...................................................................................................... 51
II.D.2.4. Leaflets...................................................................................................... 52
II.D.2.5. Deli Area................................................................................................... 53
II.D.2.6. Summary ................................................................................................... 54
II.D.3. PRODUCT ASSORTMENT...........................................................................................54
II.D.3.1. Wine .......................................................................................................... 55
II.D.3.1.1. Wine Department Issues............................................................ 55
II.D.3.1.2. Wine Department Recommendations ........................................ 55
II.D.3.2. Liquor........................................................................................................ 55
II.D.3.2.1. Liquor Department Issues......................................................... 55
II.D.3.2.2. Liquor Department Recommendations ..................................... 55
II.D.3.3. Lottery....................................................................................................... 56
II.D.3.3.1. Lottery Department Issues ........................................................ 56
II.D.3.3.2. Lottery Department Recommendations..................................... 56
II.D.3.4. Beer........................................................................................................... 56
II.D.3.4.1. Beer Department Issues ............................................................ 56
II.D.3.4.2. Beer Department Recommendations......................................... 57
II.D.3.5. Tobacco..................................................................................................... 57
II.D.3.5.1. Tobacco Department Issues ...................................................... 57
II.D.3.5.2. Tobacco Department Recommendations................................... 57
II.D.3.6. Grocery ..................................................................................................... 57
II.D.3.6.1. Grocery Department Issues....................................................... 57
II.D.3.6.2. Grocery Department Recommendations................................... 58
II.D.3.7. Sales by Price-Point.................................................................................. 58
II.D.3.7.1. Sales by Price-Point Current situation ..................................... 58
II.D.4. PROMOTION ...........................................................................................................58
II.D.4.1. Wine Lockers............................................................................................. 58
II.D.5. PROMOTION ..............................................................ERROR! BOOKMARK NOT DEFINED.
II.D.5.1. Wine Lockers (Brian)...................................Error! Bookmark not defined.
II.D.5.2. Integrated Marketing Communications .................................................... 59
II.D.5.2.1. Advertising ................................................................................ 59
II.D.5.2.2. Direct Marketing....................................................................... 60

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II.D.5.2.3. Public Relations ........................................................................ 60
II.D.5.2.4. Sales Promotions....................................................................... 60
II.D.5.3. Nonpersonal Communication Channels ................................................... 61
II.D.5.3.1. Short Message Service (SMS) ................................................... 63
II.D.5.3.2. Implementation: ........................................................................ 64
II.D.5.4. Event Marketing........................................................................................ 65
II.D.5.4.1. On premise events:.................................................................... 65
II.D.5.5. TWS Brand Identity................................................................................... 65
II.D.5.5.1. Logos......................................................................................... 66
II.D.5.5.2. Themes....................................................................................... 66
II.D.5.5.3. Color Scheme ............................................................................ 66
II.D.5.5.4. Business Cards.......................................................................... 67
II.D.5.5.5. Website ...................................................................................... 67
II.D.5.5.6. Data Capture............................................................................. 69
II.D.5.5.1. Search Engine Optimization ..................................................... 69
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Part 1: Situation Analysis
Section I.A. The Company
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II..AA..11.. IInnttrroodduuccttiioonn
Tarzana Wine and Spirits (TWS) is a family run wine and spirits shop that was established in
1972 by Simon Shamoun. The store is located on Ventura Blvd, a very popular street in the
heart of Tarzana in San Fernando Valley.
Currently, TWS offers a wide variety of wine, spirits and beer to include items that cannot be
found in most stores in the region. TWS is also able to maintain everyday low prices. This is
accomplished by purchasing items in bulk mainly on cash. However, the wide variety of
products are not fully appreciated as the current method of displaying and organizing them
does not allow customers to easily locate the merchandise, nor does it adequately entice them
to purchase the more expensive items.
In addition to a vast and unique collection of products, TWS delivers in customer service and
product knowledge via owner Simon Shamoun. While Simon’s customer friendly demeanor
and product familiarity is a definite strength for his company, it also serves as a weakness as his
employees are not also equipped with these valuable services.
The physical store boasts of a temperature controlled wine cellar as well as cigar humidor,
which ensure the quality of the wine and cigars respectively. It is also noteworthy that the
store is not leased, but owned by Simon Shamoun; this reflects the financial strength of TWS.
Furthermore, when a customer first enters into a store, he or she immediately develops a first
impression. This impression or experience is perceived within seconds of entry and is
influenced by the individual’s observations of the physical characteristics of the store. TWS
would benefit from a more positive store experience by developing a logo, slogan and overall
color scheme, which could also be applied to TWS’s website. These items would assist in the
development of a better store experience and mood.
II..AA..22.. SSttoorree DDeessccrriippttiioonn
Tarzana wine and spirits manages and holds 8,000 square feet of alcohol and tobacco. The
store is divided somewhat logically into five major sections (wine, beer, spirits, mixers, and
cigars) and several subsections housing various other products.
The inventory database is maintained on one computer and is connected to the register at the
front counter. He has three registers to ring up purchases.

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Presently, Simon enjoys $2 million in yearly sales that he uses to reinvest in his store
operations.
I.A.2.1. Store Layout
Figure 1: Store Blue Print
Store Entrance
As customers enter the store they are greeted on their left (to the west) by a large L shaped
counter top with three cashier stations. This counter top extends all the way to the western
wall of the store. Along the face of the counter customers will find a large assortment of candy,
gum, energy bars and other snacks. Behind the checkout counter are several shelving units
housing products particularly prone to theft such as pints and miniature size bottles of various
spirits, cigarettes, and other products. A small office area is also sectioned off behind the
checkout counter for Simon to sit and do most of his paperwork (Refer to Error! Reference
source not found. on page Error! Bookmark not defined.).
Pros
By placing these items behind the counter shoplifting is prevented.

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Cons
The desk offers little privacy. The financial information does not leave the store and there is no
alternative way to retrieve the data if required.
Western End of the Store
Working north along the western wall, customers will find a large walk-in cigar humidor
housing a variety of cigars. This humidor is approximately 10’ x 10’ and is easily large enough
for an average person to do jumping jacks in.
Further north along the western wall is a major section of the store housing a large array of
spirits. Vodkas, tequilas, scotches, and cognacs can be found here, stacked on shelving units,
floor to ceiling, arranged by type.
On the western edge of the north wall customers will find a seven door temperature controlled
wine cellar. This wine cellar houses very expensive wines from around the world. Wines in this
section are kept under strict temperature and light controls in order to keep them in pristine
condition for discerning clients.
o Aisle A: Aisle A is a box aisle as it is literally made up of stacked boxes that are
positioned parallel to the western end wall. It is about waist high with whisky,
rum, vodka, and tequila “specials”.
o Aisle B: A double-sided shelving unit immediately to the east, sections off the
first aisle of spirits from the second isle. Kosher products, mixes, whisky, and
liqueurs are found on this aisle.
o Aisle C: This aisle holds vodka and tequila specials, larger bottles and gift
packages. The purpose of the aisle is to section off the spirits and expensive
from the rest of the store, which helps prevent shoplifting.
Pros
The spirits are all located in one general area. If someone has made a pre-purchase decision to
buy only spirits, they will have an efficient shopping experience.
Cons
There is a lack of signage distinguishing the different types of spirits, making it difficult for
customers to navigate. Having an exclusive wine section located in the Spirits region of the
store causes confusion for customers looking for high end wine. There is also a lack of signage
notifying customers what is in the wine refrigerators.

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The Middle of the Store
In the middle of the store customers will find red wines from around the world stacked on
custom made shelving units. Each of these shelving units holds wines of a different type such
as cabernet or merlot and are arranged by country of origin or geographic region where they
were bottled (Refer to Error! Reference source not found. on page Error! Bookmark not
defined.).
o Aisle D: Aisle located in the middle of the store that displays a random
assortment of wines that are on sale. They are stacked to waist level.
o Aisle E- G: Three wooden aisles hold a variety of wines arranged by country and
type, but do not have a consistent organization pattern.
o Aisle H & I:These two aisles on the east of the store hold White wines.
o Section J: This section of the store is made up of two isles of various grocery
items and is located in the north east corner. This section houses products such
as plastic cups and plates for party use, firewood and party size bags of chips.
o Island K: Piled high with gift packages and deals
o Island L: Stacked boxes of red wines ranging from $20-$150. Includes special
promotions.
o Island M: Stacked boxes of red wines ranging $5-$15
o Island N: The cheapest bottles of wines are found in this aisle in the entrance of
the store. This aisle forces customer to walk left or right.
Pros
This organization clearly separates the different types of wine and is often used in wine retail
stores. The three wooden aisles add to the store’s aesthetic appeal.
Cons
There is a lack of signage for the “less-knowledgeable” wine consumers. They have trouble
making a decision, and are overwhelmed. Islands K-N form a grid lock, which restricts the
customers free mobility in the store.
Northern Wall (Refrigerators)
The northern wall of the store is entirely composed of glass cooler doors. The majority of the
refrigerators house a selection of chilled bottles of wine and champagne; the north-east corner
has four doors contain sodas, juices, energy drinks and bottled water. .
o Refrigerators 31 – 35: These refrigerators contain champagne.
o Refrigerator 21-29: These refrigerators contain chilled wines.
o Refrigerators 14 - 20: These refrigerators contain soda, water and energy
drinks.
Pros

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The numbers on the refrigerators provide organization and readily available chilled products.
Cons
New customers are not familiar with what the numbers mean. The numbers take away from
the aesthetic appeal of the store.
Eastern Wall
The eastern wall of the store is also made up entirely of glass cooler doors. These refrigerators
contain imported and domestic beers.
o Refrigerators 4-13: These refrigerators contain a variety of imported and
domestic beers sold in single 40 oz. bottles, 6-packs, 12 packs, and 24-packs.
o Refrigerator 2 & 3: These refrigerators contain chilled bottles of vodka, tequila
and milk.
Pros
This organization provides simple and easy access to the chilled products.
Cons
There isn’t set organization of beverages. For instance, the chilled Grey Goose is found on the
opposite end of the store.
Storage Rooms
There are also two separate temperature controlled rooms in the back of the store used for
storage.
Pros
This gives TWS enough capacity to hold excess inventory that requires a temperature
controlled environment to deliver consistent products.
Cons
Currently, the space is not utilized to its potential.
I.A.2.2. Parking
There are 15 shared parking spaces located in front of TWS and the adjacent stores, five of
which are located directly in front of TWS. When parking is not available in front of the store,
the extra space behind the bus stop is utilized. Metered parking is also available along Ventura
Boulevard.
Pros

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Additional Parking – When TWS is busy, customers are able to park in the other spaces in front
of the adjacent stores.
Cons
Limited Parking – During festival season, for example Halloween, the costume store next to
TWS has a rush of people who take over the entire parking lot. Many bank customers also park
in the limited spaces in front of the store even though the bank is not located in the same strip
mall.
II..AA..33.. FFiinnaanncciiaall CCoonnddiittiioonn
Based on our initial interviews, Tarzana Wine and Spirits appears to be in relatively good
financial health.
The most common problem among small businesses particularly in the retail sector is access to
operating capital. By definition, operating capital is cash, credit lines and tangible assets that a
business can leverage on a daily basis to purchase the facilities, equipment, supplies and
products necessary to generate revenue. Access to capital is such a big problem due to the
fact that banks are generally unwilling to lend large amounts of cash to small businesses and
amassing an amount large enough to weather the slow seasons is generally quite difficult.
While the exact amount of company assets is unknown, we do have enough information to
make the statement that access to operating capital is not an issue at TWS based on the fact
that:
1. TWS has been in business for many years
2. The building is owned not leased
3. Upgrades have been performed in the recent past
4. New channels of advertising are being considered
5. All accounts payables are current
6. The business has no debt
If any of these six situations were to change we would be forced to consider the TWS to be in
less than optimal financial health, fortunately this is not the case.
Financial Performance
Through the analysis of raw sales data we were able to generate the chart seen below showing
the relationship and progression over time of Tarzana Wine and Spirits’ performance in the
areas of: Total Sales, Total Units Sold and Gross Profit.

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Figure 2: Total Sales, Gross Profit & Total Units Sold 2006 - 2009(YTD)
II..AA..44.. SSaalleess AAnnaallyyssiiss
I.A.4.1. Seasonality
Sales at Tarzana Wine and Spirits are highly seasonal. January is generally the slowest month
of the year with February through November seeming to alternate between up months and
down months. On average January through November attain around $140,000 in gross sales
and around $40,000 in gross profit, but December is another story. Each year, December is by
far the most profitable month with almost double any other month’s gross sales and profits.
Quantities of units sold month to month have been relatively stable. People seem to purchase
approximately the same number of bottles each and every month of the year. There is no
0
50000
100000
150000
200000
250000
January
March
May
July
September
November
January
March
May
July
September
November
January
March
May
July
September
November
January
March
May
July
September
2006 2007 2008 2009
Total Sales, Gross Profit & Total Units
Sold
2006 - 2009(YTD)
Qualtity Sold Total Sales Total Profit
Linear (Qualtity Sold) Linear (Total Sales) Linear (Total Profit)

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appreciable spike in the quantity of units sold at any time of the year even in December around
holiday time.
The fact that the number of units sold in December is not any different than any other month
of the year and yet gross sales and profits are so much higher than any other month is at face
value perplexing. One would think that in order for gross sales and profits to be as high as they
are in December quantity of units sold in December would have to correlate, but this is not the
case. Sales, profits and units are climbing independently forcing us to believe that some other
occurrence must be in play.
Our best explanation for this phenomenon is that people are purchasing higher price point
items to consume themselves or give as gifts for the holidays. Each and every year in
December, consumers trend to trade up to better quality beverages and are willing to pay
more at this time of year. This seasonal change in consumer behavior represents a
significant opportunity for TWS to market higher price point more profitable products to
consumers.
I.A.4.2. Gross Profit
Despite the fact that TWS has sufficient operating capital, we have determined through the
analysis of sales data that the company is not heading in a good direction. As evidenced by the
trend lines in the figure above, quantity of units sold, total revenue and most importantly gross
profit are all negative.
The store is year over year making less profit. There are two main causes for this decline:
1. The store is selling less units
2. The store is selling units at a lower price point
In the current downed economy people are trying to save money any way that they can and
customers at TWS are doing so at an alarming rate.
I.A.4.3. Sales by Category
In 2006 the wine and liquor segments collectively contributed 64% to gross sales with the
remaining segments contributing 36%. By 2009, there was a significant shift in overall sales
with the wine and liquor segments contributing only 55% of gross sales and the remaining
segments contributing 45%.
Sales of alcoholic beverages are slowing, while sales of lottery products and cigarettes are
growing rapidly. The impact of this shift on the bottom line is unknown due to as the lotto and
cigarette cost information was not provided in the raw sales data. An analysis of profitability is
not possible without the aforementioned information.

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II..AA..55.. HHuummaann RReessoouurrcceess
TWS currently employs five people including Simon, the owner. The employees operate the
cash registers, assist customers in reaching hard-to-reach items and maintain the inventory in
the back room as well as on the floor. Simon manages the operations of the store and is
currently the main source of product intelligence. It is also notable that there is currently no
dress code for TWS employees.
I.A.5.1. Responsibilities
Tarzana Wine and Spirits company hierarchy consists of three main tiers (Management,
Assistant Managers and lower level staff) and are defined below.
Figure 3: Hierarchy of Responsibilities
II..AA..66.. CCuurrrreenntt CCuussttoommeerr AAnnaallyyssiiss:: PPrriimmaarryy RReesseeaarrcchh
I.A.6.1. The Research
Our consulting firm has done extensive primary research onsite at Tarzana Wine and Spirits.
Observations of TWS customers were recorded at differing times and days of the week. This
was done in order to better ascertain TWS’s current customer attributes and purchasing
behavior.
Manager
• Simon is the owner and head manager of the store
Assistent
Manager
• When Simon is not present, the Assistant Manager is in charge.
In charge of register and customer service
Lower
Level Staff
• They are in charge of the price labeling gun (used to mark
prices on bottles) and carrying products to the customer’s car.
They also are in charge of store maintenance which includes
cleaning, stocking and gardening.

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The customer attributes/demographics were segmented by:
o Gender – whether male or female
o Age – estimated based on appearance
o Nationality – assigned according to skin color and observed features
o Class/Income – based on attire worn and car driven
The purchasing behavior was notated according to:
o Duration spent in the store
o Route customer took throughout the store
o Communication - discussion held between customers and employees to include any
recommendations made via the staff
o Purchase – customer’s final purchase(s)
I.A.6.2. The Results
TWS does not have a clearly defined target market. Currently it is Simon’s desire to gain as
many passersby as possible into the store of all ethnicities, ages, and incomes from the local
surrounding areas but mainly focuses on the consumers living North of Ventura Boulevard.
Observational research was conducted in order to determine TWS’s current customer
characteristics and behavioral patterns. The research resulted in defining two major categories
of customers: regulars and non-regulars.
1. Regulars
a. The regulars are classified by frequency. Some customers come in daily, once a
week, or once every few months. There are also customers who come in several
times in one day. One TWS employee explained that “regulars sometimes
purchase up to four times a day”.
b. The regulars prefer convenience. They are in and out of the store within two
minutes as they know what they want to purchase, where it is located and how
much they want to spend prior to entering the store. A regular was rarely
observed browsing the store for new products.
2. Others
a. This customer group desires personal assistance from knowledgeable
employees who can provide recommendations if needed. Others often enter
the store and describe a particular wine or spirit that they had previously
sampled at a past party or dinner. It is also notable that they are easily coaxed
into trading-up or spending a little more for a higher-end product.

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II..AA..77.. MMaarrkkeettiinngg SSttrraatteeggyy:: TThhee MMaarrkkeettiinngg MMiixx
I.A.7.1. Product Portfolio
TWS currently boasts of over 3,000 wine products to include many unique and hard-to-find
brands. The top product categories include wine, beer, champagne, spirits, tobacco, and an
assortment of miscellaneous items.
In addition to the alcoholic products, TWS offers a variety of non-alcoholic beverages to
include soda, water and milk. The store’s inventory also includes snacks and drinking
paraphernalia such as plastic cups and nick-nacks.
I.A.7.1.1. Wine
TWS’s wine inventory (including champagne) represents almost 75% of its total inventory and
consists of a broad selection of wines from around the world at multiple price points catering
to people from all income brackets. After reviewing Simon’s inventory data it was determined
that there are 32 categories of wine kept in stock at all times.
The top 5 best selling categories are based on percentage of total wine sales and are as follows:
Cabernet Sauvignon 39.94%
Chardonnay 13.50%
Italian Red 6.81%
Merlot 6.30%
Australia/New Zealand 5.66%
The other 27 categories of wine available for sale contribute minimally to total wine sales and
therefore do not warrant individual consideration.
The enormous breadth of wine products available for sale is one of Tarzana Wine and
Spirits’ many strengths. TWS’s inventory of wine is a driving force behind sales as it brings
customers in the door.

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I.A.7.1.2. Spirits
TWS’s second largest inventory is consists of liquor with a little over 20% of total inventories.
Very similar to the wine department, the liquor department has a wide variety of products
from around the world selling at various price points designed to appeal to all consumers.
Products within this department are broken down into 20 discreet categories of similar
products.
The top 5 best selling categories are as follows based on percentage of total liquor sales:
Vodka 29.23%
Tequila 18.62%
Blended Scotch 8.89%
Cognac 8.15%
Single-Malt Scotch 7.72%
The other 15 categories of Liquor available for sale collectively contribute an insignificant
amount to total Liquor sales and therefore do not warrant individual attention.
TWS’s sales by category within the liquor segment reflect current industry sales. Specifically,
the top three spirit categories industry wide are as follows respectively: vodka, tequila, and
whiskey.
The enormous breadth of liquor products available for purchase is one of Tarzana Wine and
Spirits’ many strengths. Additionally, its liquor inventory acts as a major incentive for
customers to shop at TWS.
I.A.7.1.3. Lottery
TWS’s total lotto sales account for 15.51% of gross sales according to the 2008 financial
records and are growing rapidly both in sales dollars and in percentage of total sales year over
year. The profitability of this product however is unknown, as we were only able to retrieve
quantity sold.
Specifically, the quantity of scratchers sold has increased to such a degree that despite the fact
that 2009 is not yet over, sales have already exceeded 2008 by 25%. California lotto ticket
sales however are experiencing a decline in sales.

19
I.A.7.1.4. Beer
TWS’s beer inventory represents the fourth largest segment of purchases based on 2008 sales
dollars, yet represents only 1.16% of its total inventory. This segment is experiencing a slight
decline in both sales dollars and percentage of total sales growth.
The beer category can be broken down into five major sections. The fastest selling category,
imported beer, represents 57% of beer sales, followed by domestic (15% of beer sales) trailed
by the three major American breweries Budweiser, Miller and Coors totaling 28% of beer
sales.
I.A.7.1.5. Tobacco
TWS’s tobacco inventory in 2008 made up 7.52% of reported sales and continues to
experience growth in 2009. This segment consists of two major categories: cigars and
cigarettes.
Cigars have been experiencing a decline in sales whereas cigarettes are experiencing
significant growth.
Tobacco’s high inventory turnover is worth noting as it accounts for less than 3% of TWS’s
inventory, yet represents 7.5% of its total sales.
I.A.7.1.6. Miscellaneous product inventory
TWS’s miscellaneous products represent 5.88% of 2008 sales and 2.77% of overall store
inventory. This segment consists of numerous grocery items such as chips, sodas, and milk in
addition to other various products to include fire wood and kitty litter. This segment is
currently experiencing negative growth.
The convenience factor of offering grocery items draws customers into the store. Once inside,
these customers will tend to look around and find other products that they need contributing
to sales.
Other liquor stores in the area carry similar items although none offer the variety of products
sold at Tarzana Wine and Spirits.

20
I.A.7.2. Pricing Strategies
I.A.7.2.1. Current Pricing Strategy
TWS is more like a discount store. It keeps the prices as competitive as possible because of
high competition. Simon is able to maintain a competitive price structure by ordering his
products in bulk. He also offers sales to encourage the movement of excess products as well as
those less popular to consumers.
I.A.7.2.2. Sales
Most of the products sold by TWS are commodity products. Currently, TWS has no specific
pricing objective. However, TWS tries to maintain ‘Everyday Low Prices’. For Price Quality
Strategy, TWS uses Good Value Strategy i.e. low price and medium quality products along
with decent customer service. It sells its products at competitive prices to build traffic and
maintain its price leadership in the geographical region where it is located. TWS uses cost-plus
or cost based pricing like many retailers. It buys the products in bulk to lower the cost price and
pass on that benefit to the customers.
I.A.7.3. Promotional Strategies
I.A.7.3.1. Internal
Like most of the other major retail store chains TWS does not offer discounts, coupons or
loyalty programs. However, to promote its products, TWS keeps the prices low and uses
‘Promotional Pricing’. This pricing strategy is used to either increase the sales of slow moving
products or to promote certain brands. TWS promotes certain products within the store by
displaying them on aisle end caps and by placing products on store islands located at the front
of the store in order to enhance visibility.
I.A.7.3.2. External
Over the past few years, TWS ran cable television ads on multiple channels during peak hours
to increase awareness among consumers. TWS advertised itself as the neighborhood store
guaranteeing affordable prices on a wide range of products. However, due to a lack of
proposed controllability, the campaigns’ success or lack thereof is unable to be determined.
Currently Simon plans to implement a direct marketing campaign via mailers geared toward
local residents.

21
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I.A.8.1.1. Distillery selling power to retail stores
Tarzana Wine and Spirits purchases its products through a select set of major distributers one
of which is Young’s Market Company. These distributers have what is in effect monopolistic
power over their customers. This is due to the fact that the owners of the individual brands of
alcohol have formed contracts with one of the major distributors allowing only one of them to
distribute a particular brand at a time in the designated region. This completely eliminates the
ability of companies like Tarzana Wine and Spirits and its’ competitors to shop around among
distributors for better deals on products. Simply stated, if Simon wants to have Jack Daniels in
his store he must purchase it from whichever of the major distributers that happens to
currently hold the distribution contract for that brand and deal with the price they charge him.
There is unfortunately no way around this effect.
I.A.8.1.2. Contracts
Spirits are distributed entirely using the method described above, however only some brands
of wine have formulated distribution contracts. Other lesser known brands of wine are sold by
smaller distributers and some brands of wine are even distributed by the wineries themselves.
I.A.8.1.3. Tarzana Wine and Spirits advantage
Due to the fact that distribution in the alcohol industry is effectively monopolistic, the only way
Tarzana Wine and Spirits can purchase product at a lower cost than the competition is to take
advantage of economies of scale and purchase bulk and closeout lots. Both of these options
unfortunately add to industry holding costs.

22
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Strengths
•Tarzana Wine and Spirits is
currently located on Ventura
Boulevard, a very popular street
in the heart of Tarzana.
•Currently, TWS offers a wide
variety of wine, spirits and beer
to include items that cannot be
found in most stores in the
alcohol industry.
•TWS is also able to maintain
everyday low prices. This is
accomplished by purchasing
items in bulk.
•In addition to a vast and
unique collection of products,
TWS delivers in customer service
and product knowledge via
owner Simon Shamoun.
•The physical store presently
boasts of a temperature
controlled wine cellar as well as
a humidifying room, which
ensure the quality of the wine
and cigars.
•It is also noteworthy that the
store is not leased, but owned
by Simon Shamoun; this adds
value to his company.
Weaknesses
•When a customer first enters
into a store, he or she
immediately develops a first
impression. This impression or
experience is perceived within
seconds of entry and is
influenced by the individual’s
observations of the physical
characteristics of the store. TWS
would benefit from a more
positive store experience by
developing a logo, slogan and
overall color scheme, which
could also be applied to TWS’s
website. These items would
assist in the development of a
better store experience and
mood.
•Despite its excellent location,
the store’s presence remains
minimally recognized as it is set
back far enough from the street
that it proves difficult to find.
•However, the wide variety of
products are not fully
appreciated as the current
method of displaying and
organizing them does not allow
customers to easily locate the
merchandise, nor does it
adequately entice them to
purchase the more expensive
items.
•While Simon’s customer friendly
demeanor and product
familiarity is a definite strength
for his company, it also serves
as a weakness as his employees
are not also equipped with
these valuable services.

Section I.B. Industry Analysis
23
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Every company needs to develop a strategy to differentiate itself from its competitors and
maintain that difference. Strategy helps the company to define its core competencies and
create a competitive advantage based on those competencies. According to the article – What
is Strategy? by HBR, the author defines “strategy is about choosing activities that are different
from rivals.”
The definition of Strategy as “Position”: creating a “niche” position that generates above
average returns. Definition as “Theory”: achieving high levels of performance in the markets
and industries within which the company is operating.
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TWS falls under Alcohol and Tobacco retail industry. Before deciding on what strategy TWS
should adopt we need to understand the business landscape, industry, and other elements that
affect the industry.
The business landscape can be evaluated in two steps:
Evaluate environmental threats
o The macro environment variables
o The attractiveness of the industry: Porter’s five forces model of environmental
threats
o The sixth force: Complementors
Evaluate environmental opportunities
o The industry structure: Types and opportunities
I.B.2.1. MACRO ENVIRONMENT VARIABLES
The macro environment is defined as any major external and uncontrollable factor that
influence an organization's decision-making, and affect its performance and strategies. These
factors include the economic, demographics, legal, political, and socio-cultural, environmental,
and legal. These are the factors that are outside of the company's control but influence a
company or its products.

24
I.B.2.1.1. Political
These factors include laws that endeavor to regulate control consumption behaviors and
drinking patterns of the public. “World Health Organization (WHO) recognizes the ‘existence
of a wide range of alcohol policies’ and notes that these ‘policies are enforced and combined
differently in different countries to meet the needs of that particular country...” (The Structure
of the Beverage Alcohol Industry). Currently, Alcohol and Tobacco industry, tobacco is facing
the maximum brunt in the US and California.
Threats:
o “Effective April 1, 2009, the federal excise tax on cigarettes was raised .62 to
$1.01 per pack, the largest hike in history, as part of the $32.8 billion bipartisan
legislation to expand children’s health coverage in the … next four and a half
years” (Bossong-Martines, MacVeign and Nuttall).
o “Other tobacco products typically are taxed at lower rates and, as a result, are
cheaper than cigarettes, with small cigars and roll-your-own taxed at 5% to 10%
the rate of cigarettes” (Bossong-Martines, MacVeign and Nuttall).
Trends:
o Because of the increase in taxes and social trends, “large cigar sales increased
37%...” (Bossong-Martines, MacVeign and Nuttall).
I.B.2.1.2. Economic
These factors change with the change in economic conditions of the economy and/or
government monetary or fiscal policies such as inflation, rate of interest, etc.
Threats: The impact of economic down turn was not noticed on the alcohol and
tobacco industry. However, it did change the concentration of money within the
industry.
o “According to the US Census Bureau’s Monthly Retail Trade Survey, retail sales
at beer, wine, and liquor stores rose 6.7% in 2008…” (Bossong-Martines,
MacVeign and Nuttall).
o “Fewer consumers are drinking in bars, restaurants, and nightclubs. Nielsen and
Bevinco recently surveyed bar managers, bar owners, and bartenders: more
than 40% reported a decrease in traffic, 25% saw a decrease in drinks ordered,
and 22% noted that customers are ordering less expensive drinks. We think
consumers are switching their consumption from on-premise to off-premise (at
home) in order to save money” (Bossong-Martines, MacVeign and Nuttall).

25
Trends: “A Nielsen Co. survey of consumers released on June 3, 2008, reported that
nearly half said the economy has had no influence on the amount they’re spending
for beer, wine, and spirits; less than 20% said it has had a significant impact. More
than 80% said they were spending the same amount or more compared with a year
ago” (The Structure of the Beverage Alcohol Industry).
o Tobacco:
 According to Standard & Poor’s estimates, “the cigar market will expand
by 4% to 5% annually over the next several years” (Bossong-Martines,
 “In contrast to cigarettes, sales of both cigars and smokeless tobacco
products continue to rise…” (Bossong-Martines, MacVeign and Nuttall).
o Beer:
 “…also found that beer sales were least affected by the economy: nearly
half of those surveyed reported that beer was having the best sales
trend. Spirits followed at 40%, but wine had the worst results, with just
11% rating the category as having the best trend” (The Structure of the
Beverage Alcohol Industry).
 Combined retail sales for the alcoholic beverage and tobacco products
reached approximately $263 billion in 2008. “Beer accounted for more
than half of the alcoholic beverage revenues” (Bossong-Martines,
 According to industry trade publication Beer Marketer’s Insights, “US
beer shipments were approximately .4% in 2008, compared to gains of
1.4% and 2.1% in 2007 and 2006, respectively” (The Structure of the
 “…the super-premium segment … had a very strong year, advancing
27.3%. Key brands driving this growth were Bud Light Lime, Bud/Bud
Light Chelada and MillerCoors” Blue Moon” (The Structure of the
 “Imports lost approximately .6 share point in the US market in 2008, due
to economic weakness and super-premium category success” (The
Structure of the Beverage Alcohol Industry). Shipments declined of
Corona Extra (down 4.6%) and Heineken (down 5.5%) constituted for
almost half of this loss (The Structure of the Beverage Alcohol Industry).
o Wine:
 “…wine and spirits [took] market share away from beer [in 2008]” (The
Structure of the Beverage Alcohol Industry).

26
 Wine came in third place with sales of $27.2 billion on 705.4 million
gallons (The Structure of the Beverage Alcohol Industry).
 “The top five US wine marketers in 2008 made up about 74.2% of
volume. They were E&J Gallo Winery, The Wine Group Inc., Constellation
Brands Inc., Foster’s Wine Estate Americas, and Broncho Wine Co”
(Bossong-Martines, MacVeign and Nuttall).
 Approximately 93% of all US grapes used for making wine are from
California…” (The Structure of the Beverage Alcohol Industry).
o Spirits:
 Spirits is second-largest segment in terms of sales with total sales of
$61.1 billion on 440.9 million gallons (The Structure of the Beverage
Alcohol Industry).
 The spirits industry is comprised of the following three segments:
white goods, brown goods, and specialties.
 White goods: clear/nearly clear in color; includes vodka, gin, rum
and tequila
o Vodka is the US market leader in white good sales with
29.7% (Bossong-Martines, MacVeign and Nuttall).
o Rum is second-largest with 13.2% followed by gin and
tequila (Bossong-Martines, MacVeign and Nuttall).
 Brown goods: dark in color; consists of Canadian, Scotch, Irish
and other whiskeys, bourbon and blends.
o Imported whiskeys make up 56% of total brown goods
(Bossong-Martines, MacVeign and Nuttall).
o Domestic straight whiskey makes up for 33% of brown
goods (Bossong-Martines, MacVeign and Nuttall).
 Specialties: includes high-priced products (cognacs and imported
liquors) and lower-priced products (domestic cordials, ready-
made cocktails, and mixed drinks) (Bossong-Martines, MacVeign
and Nuttall).
 The three major specialty categories are: brandy and cognac,
cordials and liqueurs, and cocktails and mixed drinks (Bossong-
Martines, MacVeign and Nuttall).
 “The growth of spirits advertising on television has risen sharply but
almost exclusively on cable networks” (Bossong-Martines, MacVeign
and Nuttall).

27
I.B.2.1.3. Socio-Cultural
These factors change with the change in lifestyle trends, demographic changes, etc. of the
country or region.
Threats:
o On the social front, tobacco has been affected a lot in the USA and similar
trends are expected in the future. “A recent study from the Harvard School of
Public Health found that while US cigarette sales declined 18% … from 21.1
billion packs to 17.4 billion, sales of other tobacco products, such as moist snuff,
roll-your-own tobacco, and small cigars increased by 1.1 billion cigarette pack
equivalents…” (Bossong-Martines, MacVeign and Nuttall).
Figure 4: Smoking and Tobacco
Source: (Somoking and tobacco use)

28
o Higher Expectations
 Consumers expectations of what brands should provide have
increased (McWilliams).
 Consumers have become more educated and now have more
sophisticated needs (McWilliams)
o The battle to win over consumers has increased due to the wider variety of
products offered by every company and many forms of media used
(McWilliams).
o Rise in product proliferation
 Today global brands are offering an abundance of choices to meet an
eclectic set of the end consumer needs --- hunger and thrust,
location, occasion, lifestyle, mood and health.
Trends:
o “Off-premise (at home) consumption in 2008 accounted for 48.3% of total retail
sales, compared with 46.2% the previous year…” (Bossong-Martines, MacVeign
and Nuttall).
o “…trading up activity (where individuals switch from lower-end products to
premium products) will continue to characterize demand over the long term
[and] ongoing price increases” (Bossong-Martines, MacVeign and Nuttall).
o “…premium wine sales should benefit from increasing numbers of consumers in
the over-55 age group, who tend to consume more wine (especially premium
wine) than beer” (Bossong-Martines, MacVeign and Nuttall).
o “Of the reds, cabernet sauvignon is the most popular variety; white zinfandel is
the most popular of the blush wines” (Bossong-Martines, MacVeign and
Nuttall).
o “Table wines are the most popular and fastest-growing type of wine in the U.S.”
Domestically produced table wines make up “just under ¾ of all U.S.
consumption…” (Bossong-Martines, MacVeign and Nuttall).
o “Standard & Poor’s believes the muted beer demand is a result of strong
competition from the wine and spirits categories, a move toward healthier
living, and, to a lesser extent, a lack of innovation and creativity in the beer
market” (Bossong-Martines, MacVeign and Nuttall).
I.B.2.1.4. Technological:
As per a bbc news article - English wine gets help from space, wine industry has
started using the satellite imagery to determine vine leaf density, soil water
content, grape bunch sizes, measure the sugar content, and tannin content in the

29
grapes. France was the first country to launch this new technology in 2008 (English
wine gets help from space).
I.B.2.1.5. Environmental
“Wastewater is one of the most significant waste products of brewery operations.
Even though substantial technological improvements have been made in the past, it
has been estimated that approximately 3 to 10 liters of waste effluent is generated
per liter of beer produced in breweries (7)” (Kanagachandra and Jayaratne).
“Upstream emissions during production and transportation of packaging materials
and beer ingredients add up to 1,531.3 g CO2e, or 48.0% of total emissions.
Downstream emissions from distribution, retail, storage and disposal of waste
account for the remaining 1,484.6 g CO2e, or 46.6% of the total” (The Carbon
Footprint of Fat Tire Amber Ale).
“The largest line item in the tally of GHG (green house gases) emissions is electricity
used for refrigeration at retail: 829.8 g CO2e. The next largest sources are
production and transportation of glass and malt (including barley) barley): 690.0
and 593.1 g CO2e, respectively” (The Carbon Footprint of Fat Tire Amber Ale).
I.B.2.1.6. Legal
“By 2008, 17 states and the District of Columbia had enacted fire safe cigarette laws
and 14 more are expected to implement legislation by the end of 2009. [The
remaining states are expected to] eventually follow” (Bossong-Martines, MacVeign
and Nuttall).
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To understand the industry one of the ways is to understand the forces that shape the industry
competition. The five forces that define an industry’s structure and shape the nature of
competitive interaction within an industry are rivalry among existing firms, threats of new
entrants, bargaining power of buyers, bargaining power of suppliers, and threats of
substitutes” (Porter, The Competitive Forces that Shape Strategy 79).
“The strongest competitive force or forces determine the profitability of an industry and
become the most important to strategy formulation. The most salient force, however, is not
always obvious” (Porter, The Competitive Forces that Shape Strategy 80).

30
I.B.3.1. Threat of New Entry
Threat of new entrants is important because “new entrants to an industry bring new capacity
and a desire to gain market share that puts pressure on prices, costs, and the rate of
investment necessary to compete” (Porter, The Competitive Forces that Shape Strategy 80).
The threat of entrant is high because in TWS industry:
o Low capital investment required
o Easy access to capital
o Little product differentiation
o Low government barriers
I.B.3.2. Intensity of Rivalry
Intensity of rivalry among firms is high because of
o Many competitors
o Little product differentiation
o Easy availability of products
o Price cutting
o Frequent introduction of new products
Availability of complementors:
o House party culture is the biggest complementors of the TWS’s industry. More
people like to through parties at home more they buy from the retail stores.
o Wine tasting trends and increasing knowledge about the wine are other biggest
complementors of Alcohol retail industry.
o Holiday and celebrations is the time that compliments the TWS industry.
I.B.3.3. Threat of Suppliers
The power of suppliers: “Powerful suppliers capture more value for themselves by charging
higher prices, limiting quality or services, or shifting costs to industry participants” (Porter, The
Competitive Forces that Shape Strategy 82).
The bargaining power of suppliers is high because in TWS industry:
o Suppliers offer differentiated products. Every big/popular brand of product has a
distributor in southern California.
o Very difficult to find substitutes for the well known products

31
I.B.3.4. Threat of Buyers
“Powerful customers – the flip side of powerful suppliers – can capture more value by forcing
down prices, demanding better quality or more service (thereby driving up costs), and
generally playing industry participants off against each other, all at the expense of industry
profitability” (Porter, The Competitive Forces that Shape Strategy 83).
Bargaining power of buyers is medium high because in TWS industry
o Products sold to buyers are undifferentiated and standard
o Switching cost of buyers is zero or very low
o Buyers are price sensitive
I.B.3.5. Threat of Substitute
“A substitute performs the same or a similar function as an industry’s product by a different
means” (Porter, The Competitive Forces that Shape Strategy 84).
Threat of substitutes is low to moderate for TWS’s industry because
o If the TWS products are bought for self consumption then there are very few
legal substitutes such as brewing own beer.
o If the buying purpose is different from self-consumption such as gift or cooking
then TWS industry faces high competition. However, majority of people buy
TWS products for self-consumption.
Figure 5: Five Forces

32
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The economists are hoping 2010 a better year than 2009. The economic down turn was
expected to continue through 2009, however it was noted in September 2009 that the global
beverage industry remained stable “mainly due to drink-makers’ resilience amidst the
economic downturn” (McWilliams). In however, 2010, most food and beverage companies are
expected to do better with a 72% improvement in business conditions, 72% in increased
revenue and 65% increase in profitability (Looking ahead to 2010). Therefore, there will be
even more opportunities to grow business and see results.
The industry structure: Types
o Type of Industry: The opportunity to make money is always there. Profits are
defined by the industry structure and nature of competition, not by the type of
industry. According to Michael E. Porter, “Industry structure drives competition
and profitability, not whether an industry is emerging or mature, high tech or
low tech, regulated or unregulated.” Therefore, opportunities mainly depend on
the type of industry of the firm (Alpaslan).
Alcohol and Tobacco retail Industry can be considered as fragmented as well as
mature industry because of the following characteristics:
 Fragmented
° Large number of small retail firms
° No dominant firms
° Commodity type products
° Low barriers to entry
° Few economies of scale
 Mature
° Technology standards exists
° Increasing international competition
° Industry-wide profits are declining because of high competition
o The industry structure: Opportunities in TWS industry:
 Fragmented
° Buy competitors
° Build market power
° Exploit economies of scale
 Mature
° Refine current products
° Improve service
° Process innovation

33
I.B.4.1. Corporate Strategy
Currently, TWS has been using middle of the road strategy so that the store is perceived as a
neighborhood store. TWS tries to cater to everyone who lives in that geographic area by wide
range of product portfolio and improving operational effectiveness, and strives to be a low cost
leader for its region.
Issues with the current strategy:
o With the current strategy, the profitability is low.
o It is difficult to grow beyond a certain point or stage.
o Competitors can easily imitate the firm’s resources.
o Firm has no clear cut strategic positioning
o Firm has no competitive advantage.
TWS cannot out perform its competitors with the current strategy because:
o Most of TWS’s competitors are chain of stores such as BevMo, Costco, Ralphs,
and Trader Joe’s. They have an advantage of economies of scales over TWS due
to large number of stores and presence in multiple geographic regions.
o Competitors will always have greater negotiating power than TWS negotiating
power because of their size and demand.
o Most of its competitors are more than a liquor store and they have bigger
product portfolio than TWS.
Figure 6: Market Share – Profitability Relationship

34
Because of the above reasons, TWS needs to develop a new strategy so that it is not
stuck in the middle.
o TWS cannot cater beyond a certain geographic location because of its strategic
target i.e. buyer type, product variety, channel, and geographic location.
o It is difficult for TWS to accomplish high market share due to geographical
constraint. Therefore, TWS’s should adopt Focused Differentiated strategy
instead of low cost leader strategy.
Figure 7: Generic Strategies
Competitive Advantage
StrategicTarget
Low Cost Differentiated
Broad Broad Low
Cost
Leadership
Broad
Differentiation
Focused Low
Cost
Focused
Differentiated
Narrow
I.B.4.2. Strategy and Operational Effectiveness
Operational Effectiveness is the act of performing similar activities better than competitors
are. However, operational effectiveness is not a strategy but part of company strategy.
So far, TWS has been concentrating on operational effectiveness by doing things right and
better through observation and experience. TWS excels in few individual activities. However,
TWS lacks strategy because:
TWS is not doing all the right things.
TWS is not doing most of the things differently from its competitors.
All the activities performed by TWS are not combined such that the business model of
TWS looks like one unit working together to achieve a common goal.

35
Figure 8: The Productivity Frontier
The productivity frontier keeps moving outward because of new technology or management
practices (Porter, What is Strategy?). To achieve this strategic positioning:
TWS needs to change its strategy so that it falls on the curve and keep up with the new
trends by continuously improving its operational effectiveness to stay on the curve.
TWS can achieve this by selecting the unique activities it is good at or by developing
new unique activities that are difficult for competitors to imitate.
I.B.4.3. Unique Activities
“The essence of strategy is choosing to perform activities differently than rivals do” (Porter,
What is Strategy?). Unique activities work as the framework of the business. They help the
company to gain its strategic position in its industry. The other activities of the business are
either related to or are based on the unique activities.
Current unique activities of TWS are:
Low fixed or overhead cost
Better customer service than competitors at lower prices
Wide range of products
Store location
However, these activities are neither very different from the competitors nor difficult to
imitate. Therefore, TWS needs to develop new unique activities to gain and maintain its
competitive advantage.

36
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Opportunities
•Off-site alcohol consumption
•Cigar consumption
•Seasonal demand
•Notable cultural environment
Threats
•Rivals
•Substitutes
•Customer buying power
•Political/ legal environment
•Economic Environment

37
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Part 2: The Marketing Plan
Section I.C. Marketing Objectives
38
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IIII..AA..11.. MMiissssiioonn SSttaatteemmeenntt
“Our mission is to provide our patrons with a convenient and unique experience by delivering
quality products and selection at competitive values on a daily basis through an informed and
knowledgeable staff.”
TWS
Value
Customer
Service
Convenience
Experience
Quality

Section I.D. Target Market
39
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IIII..BB..11.. TTaarrggeett MMaarrkkeett DDeemmooggrraapphhiiccss
In order to better understand the local demographic and ascertain an appropriate target
market it is important to define the local population demographics.
The local area demographic information was derived from the following cities: Tarzana,
Calabasas, Woodland Hills, West Hills, Encino, Sherman Oaks and Porter Ranch. These cities
were selected as they are within 20 miles of TWS and include a selection of residents that
adequately represent the local medium to upper class area.
II.B.1.1. Age
Collectively, the surrounding areas consist of a 42% populace made up of those who are 45
years of age and older. According to primary research conducted at various competitor’s sites,
this is an accurate age grouping representative of primary wine consumers.
II.B.1.2. Income
According to U.S. Census data, the surrounding areas’ population consists of those
predominantly in the middle to upper class income categories. For the purposes of this report
middle to upper class is defined as those making $50,000 or more annually. Overall these
segments represent 65% of the population. Based on our observations of TWS’s competitor’s
consumers, this falls within the appropriate demographic criteria.
II.B.1.3. Race
After further reviewing the U.S. Census data, it was determined that the local areas consist of
the following majorities: White (80%), Hispanic (8.9%) and Asian (9.5%).
Upon further investigation, it was observed that the surrounding areas represent a large
population of Middle Easterners and Jews. It is also worth noting that these races are not
segregated in the racial reporting of census data and are often absorbed by the white category.

Section I.D. Target Market
40
II.B.1.4. Baby Boomers
Baby Boomers are defined as those born between the years 1946 and 1964 (45-63 years of
age). Specifically this segment is described as goal-oriented, adaptive, self-actualizing and
confident.
This group coined phrases such as “glass ceiling” and “equal opportunity workplace” and
“began using personality profiles to build awareness of how to get along with all co-workers.”
These individuals are concerned with savings and debt management and realize the value of
higher education. Many are business owners and have developed a strong work ethic.
IIII..BB..22.. TTaarrggeett MMaarrkkeett’’ss WWaannttss aanndd NNeeeeddss
The chosen market segments have many different characteristics. However, their motivations
behind purchasing wine are driven by a unique hierarchy of needs. These four needs are (1)
basic shopping – the need to have quick and easy access to affordable products; (2) product
portfolio – the basic level of quality and selection; (3) intellectual capital – the need to have
tacit and explicit information; and (4) ambiance – the need to have significance and to feel
important. TWS can satisfy these needs by providing the target market with the “total wine
shopping experience” characterized by exclusivity, efficiency, and specialization.
Figure 9: Hierarchy of Needs
Ambiance (feeling,
significance)
Intellectual Capital (Tacit/
Explicit)
Product Portfolio (Selection
Quality)
Basic shopping needs
(Value, Price, Convenience)

Section I.E. Market Segments
41
IIII..CC WWiinnee SSeeggmmeennttss
Currently TWS lacks a clear marketing segmentation strategy. The optimal marketing strategy
divides profitably a heterogeneous market into segments of more homogeneous customers
according to geographic regions, demographic differences, income levels, psychographic,
behavioral, benefits, and differential channels of marketing communication. Having a proper
segmentation strategy is essential to providing customers with the best wine shopping
experience.
Basically, there is no typical wine customer. Constellation Wines US Project Genome Home &
Habits Consumer Study provides a clear segmentation strategy based on the behavioral
differences of 10,000 wine consumers. Behavioral differences include: attitude, why purchase,
when to buy, and when to use. The study segments wine consumers into six groups:
Enthusiasts, Image Seekers, Savvy Shoppers, Traditionalists, Satisfied Sippers, and
Overwhelmed. For an explanation of the differences between each segment, see Appendix for
News Release from Constellation Wines
IIII..CC..11.. EEnntthhuussiiaassttss ((1122 ppeerrcceenntt ooff ccoonnssuummeerrss))
Entertain at home with friends and consider themselves knowledgeable about wine
Live in cosmopolitan centers, affluent suburban spreads or comfortable country
settings
Like to browse the wine section, publications and are Influenced by wine ratings &
reviews
47% of Enthusiasts buy wine in 1.5L size – “everyday wine” to supplement their
“weekend wine”
98% of Enthusiasts buy wine over $6 and it accounts for 56% of what they buy on a
volume basis
IIII..CC..22.. IImmaaggee SSeeeekkeerrss ((2200 ppeerrcceenntt ooff ccoonnssuummeerrss))
View wine as a status symbol
Have a basic knowledge of wine and discovering wines is new to them
Likes to be the first to try a new wine, and are open to innovative packaging
The number one most purchased varietal Merlot
Use the Internet as key information source including checking restaurant wine lists
before they dine out

Section I.E. Market Segments
42
IIII..CC..33.. SSaavvvvyy SShhooppppeerrss ((1155 ppeerrcceenntt ooff ccoonnssuummeerrss))
Enjoy shopping for wine and discovering new varietals on their own
Have a few favorite wines to supplement new discoveries
Shop in a variety of stores each week to find best deals and like specials and discounts
Heavy coupon users and know what’s on sale before they walk into a store
When dining out they typically buy a glass of the house because of the value
IIII..CC..44.. TTrraaddiittiioonnaalliisstt ((1166 ppeerrcceenntt ooff ccoonnssuummeerrss))
Enjoy wines from established wineries
Think wine makes an occasion more formal and prefer entertaining friends and family
at home to going out
Like to be offered a wide variety of well-known national brands
Won’t often try new wine brands
Shop at retail locations that make it easy to find favorite brands
IIII..CC..55.. SSaattiissffiieedd SSiippppeerrss ((1144 ppeerrcceenntt ooff ccoonnssuummeerrss))
Don’t know much about wine, just know what they like to drink
Usually buy the same brand, usually domestic and consider wine an everyday beverage
Don’t enjoy the wine-buying experience so buy 1.5L bottles to have more wine on hand
Second-biggest category of warehouse shoppers, buying 16 percent of wine in club
stores
Don’t dine out often but likely to order the house wine when they do
IIII..CC..66.. OOvveerrwwhheellmmeedd ((2233 ppeerrcceenntt ooff ccoonnssuummeerrss))
Overwhelmed by sheer volume of choices on store shelves
Like to drink wine but don’t know what kind to buy and may select by label
Looking for wine information in retail settings that’s easy to understand
Very open to advice but frustrated when there is no one in the wine section to help
If information is confusing they won’t buy anything at all
IIII..CC..77.. SSeeggmmeenntt WWrraapp--UUpp
Consumers in each of these segments must be marketed to differently. The new target
marketing strategy will focus on each segment of customers individually based on segment
size, growth potential, and consumption.

43
IIII..DD RReeccoommmmeennddaattiioonnss ((SShhoorrtt TTeerrmm && LLoonngg TTeerrmm))
First, it is important to note that TWS has been in business for 20 years and has much
experience. The store is in a good financial condition and despite any appearance it has, it is
still successful. Even though the store is currently in good financial condition, there is always
room to grow which is where we have come in. Any recommendations give from upgrades to
simple store display, are only to help boost sales even more. TWS has potential to grow! All it
needs is just to have a kind of personality that encourages people to want to come and keep
coming…. It helps them remember the store and makes them want to go.
IIII..DD..11.. CCuussttoommeerr RReellaattiioonnsshhiipp MMaannaaggeemmeenntt ((CCRRMM))
At the heart of any business are its customers. Better, the relationship with the customer
better the business. In today’s competitive world, it is very important to understand the
customers to serve them better and create value for them.
According to Harvard Business Review article, “CRM aligns business processes with customer
strategies to build customer loyalty and increase profits over time. Effective customer
relationship management is based on good old-fashioned segmentation analysis. Moreover, it
is designed to achieve specific marketing goals” (Avoid the Four Perils of CRM).
Positive aspects of the current CRM:
Helps to strengthen and maintain relationship with the current customers.
Facilitate to develop new customers.
The customers feel highly regarded and comfortable.
Weaknesses of the current customer relationship management method:
Store Assortment Promotion

44
Not an efficient model to support high traffic.
Does not provide enough information what kind of products customers are and will
desire.
Does not help in developing structured data for further evaluation and understating of
the customers’ needs to serve them better.
Neither provides the data and information to quantify the marketing efforts nor to
develop future marketing strategy.
Reasons to develop and maintain a CRM system:
To understand its customers’ wants better
Enhance the effectiveness of marketing mix (4-Ps).
Increase customer value
Generate more profits
Develop new and maintain the existing profitable customers
IIII..DD..22.. SSttoorree LLaayyoouutt
A well-planned retail store layout allows a retailer to maximize the sales for each square foot of
the allocated selling space within the store. The layout generally shows the size and location of
each department, fixture locations and customer traffic patterns. The floor plan of the store
depends on the type of products sold, and how much the business can afford into the overall
design (Walters).
When designing a liquor store or specialty wine shop, more than just sales needs to be taken
into consideration. Sight lines, exiting paths, and back of the store security are also equally
important. Many liquor stores have completely refurbished, revamped and modernized their
stores to appropriately accommodate the rise in product volume and display. One of the major
advantages to reconstructing and revamping the store is that it provides a refreshed new
layout that is very inviting (Liquor Store Design).
Like other liquor and wine specialty store, TWS should also change the layout of the store in
order to maximize the sale of wine and spirits. The store layout must show the size and
location of the beverage category, sales promotion rack locations, and customer traffic
patterns. The following are examples of store layout floor plans.
The straight floor plan:

45
o This is the current floor plan that TWS uses. This is one of the most economical
store designs. It makes use of the walls, refrigerators, and fixtures to create
small spaces within the store.
Figure 10: The Straight Floor Plan
Source: (Walters 2)
The diagonal floor plan:
o This is a good store layout for self-service types of retail stores. It offers
excellent visibility for cashiers in order to prevent theft. It also provides excellent
visibility for customers; they can see more products from a given location. The
diagonal floor plan initiates movement and traffic flow for the retail store.
Figure 11: The Diagonal Floor Plan
Source: (Walters 3)
The angular floor plan:
o This plan is best used for high-end specialty stores. The curves and angle
fixtures and walls makes for a expensive store design. However, the soft angles
create better traffic flow throughout the retail store. Jewelry stores or discount
retailers such as Wal-Mart utilize this floor plan.

46
Figure 12: The Angular Floor Plan
Source: (Walters 4)
o Trader Joes utilizes a straight and diagonal floor plan. They use diagonal fixtures
to display different categories of domestic wines. They utilize the wall to display
international brands. Customers are able to view 4 different brand categories in
one specific location of the store.
The Geometric floor plan:
o This is a sustainable store design for clothing and apparel shop. It uses racks and
fixtures to create an interesting and out-of-the-ordinary type of store design
without high cost. An example can be found in the Abercrombie and Fitch
clothing store.
Figure 13: The Geometric Floor Plan
Source: (Walters 5)
The Mixed floor plan:

47
o We recommend that Tarzana Wine and Spirits implement a mixed floor plan
which incorporates the straight, diagonal and angular floor plans to create the
most functional store design.
Figure 14: The Mixed Floor Plan
Source: (Walters 6)
o This layout will move traffic towards the walls and the back of the store.
Figure 15: TWS Store Layout using the Mixed Floor Plan
38 37 36 35 34 33 32 31 30
Cognac Whiskie
1
K L M
Candy
Tobacco Wine Tasting
Pint Bottles
Office
Glasses
Lottery
BrandisCognac
Scotch
(Whiskey)
Cigars
Cognac
Tequila
B
(head high shelves)
Vodka
Mixes
Liqueurs
JD/Whiskie
CrownRoyal
Rum
Kosher
Expensive Wine Champagne Soda & WaterChilled Wine
Vodka & Tequela Stacks
Australia
CabemetSavignon
Italian
Chilia
Argentina
Spanish
ZintoDel
Syrah/PetitPinotNoir
1615143213121110987654
BeerE F G
FrenchPorto
Dessert
Clearence Items
Mevlot
J Grocery
20 19 18 1729 28 27 26 25 24 23 22 21
Cold
Vodka
Juice&
Energy
Ital
Ital
RedWines
($5-$15)
RedWines/
Promo($20-
DesrtDesrt
VodkaVodka

48
II.D.2.1. Store Atmosphere
A store’s atmosphere is made up of “the physical characteristics and surrounding influence of a
retail store that is used to create an image in order to attract customers” (Waters,
Atmosphere).
Although most retailers don’t take this into consideration, taking the time to create an inviting
atmosphere for your store in very important. It is important to understand that a retailer needs
to connect with their customers emotionally. This connection is not met alone through
customer service. It also includes creating a store feel or environment that makes the customer
feel welcome and comfortable. Many times retailers know this but fail to put this in practice.
They “neglect the opportunity to make emotional connections and put too much emphasis on
prices. The promise of low prices may appeal to customers’ sense of reason, but it does not
speak to their passions” (Berry). To better meet the needs of your customers, focus on the
emotional lift of the store along with the low prices. Great retailers actually reach beyond the
product need and strive to establish feelings of closeness, affection, and trust through the
store display, layout, organization and customer service. “Everyone is emotionally connected
to some retailers—from local businesses such as the wine merchant who always remembers
what you like; to national companies like Harley-Davidson, which connects people through its
Harley Owners Group; to catalog retailer Coldwater Creek, which ships a substitute item to
customers who need to make returns before the original item is sent back” (Berry). Retailers
should bear in mind that it takes more than a room full of products with price tags on them to
draw people in; it involves creating an atmosphere that emotionally connects with the target
audience.
II.D.2.1.1. Customer dos and don’ts
Next, it is important to note that all individuals have pet-peeves (Waters). As retailers, you do
not want to turn-off customers. Image is everything! With that in mind, it is important to keep
a clean organized environment. Besides, keeping a neat, clean and organized is a very simple,
quick and inexpensive way to attract customers and provide a pleasant environment.
In an article written by Shari Waters on About.com, she says the top ten things that turn off
customers (Walters). At number four, since one through three do not apply, is hand written
signs. Hand written signs can be hard to read for the customers and give a “last minute” vibe
whereas printed signs with simple font are reader friendly and look professional.
At number five, is stained floor or ceilings. Accidents do happen, but customers should not
have to see them. This is why carpeting can be an issue. Vendome in Burbank had this
problem. It is very difficult, costly and time consuming to clean the carpeting when a bottle
breaks and spills; it also gives a messy feel, turning off the customer, when the spillage
becomes a stain. This is a plus for TWS, however it is important to keep in mind for future
reference. Also, in addition to stained floors and ceiling, it is also important that the store
should always be clean. A store display is less effective when it is dusty or dirty and tends to

49
turn-off customers. This was an issues for Bevmo. In our primary research, we visited Bevmo
and notice may bottles were dusty. It gives a feel that the bottles are unpopular or have been
there a while which can discourage customers. If necessary, consider hiring a cleaning crew if
current employees do not have the time to dust the store and mop or sweep the floor on a
daily basis. This will help TWS look neat and professional and also put it at a competitive
advantage.
At number eight is crowded aisles. Customers like it when they can move easily through the
store and have their space to shop. If the customer base increases, lack of space could become
an issue, making customer feel trapped. To avoid feeling this way, customers may go to
another location, even if they must travel a little further to get what they want. Stores, when
properly designed, should be an open, uncluttered environment. Less is more; simplicity is key!
There are two pluses to this. First, it makes it easier for customers to browse and flow easily
around the store in a location that is well organized, which can lead to additional sales. Second,
it gives the staff the opportunity to set up unique specialty displays, promotions, and
samplings without compromising the visibility or accessibility of the rest of the products. The
consumer feels more comfortable and at ease in these more efficiently laid out spaces.
II.D.2.1.2. Attracting Customers: Store Tips
Don’t use yesterday’s store fixtures to draw in the attention of today’s shoppers
Now days retailers are finding new more sophisticated and creative ways to attract shoppers,
which means you, as a retailer, should also use contemporary strategies, including attractive
fixtures, to keep customers satisfied.
Use Retail displays and fixtures that are uniquely suited to your target audience
“Here's a great example of how not to structure your retail space. A blogger at a site for petite
female shoppers was complaining that retailers – meaning those who cater to the petite – use
retail displays that are not within comfortable reach of its customers. Now, does that make any
sense? Of course not. Take a detailed look at your own store. In what ways are the store
fixtures and retail displays that you're using not compatible with your customers' needs?”
(Barczyk).
Design the story layout and display in a way that makes it easy for your
customers to keep shopping
Organize the store in a way that encourages customers to keep browsing. Look at your store
and locate the fixtures or other items that make it difficult for your customers to keep
navigating through the store. This is one reason why we suggested the “mixed floor plan”
earlier.

50
II.D.2.1.3. Suggestions/Solutions
Outside of the store- The outside appearance is very important. Pick up the trash outside your
store location. Also empty the trash outside your store, an over flowing trash can is not pretty.
Inside the store- Since TWS want to focus more on selling wine, create an environment that
has a boutique feel. Create a going to a vineyard theme.
II.D.2.2. Display
When it comes to organizing a retail store, product placement and presentation is essential for
the success of the store. Presentation is everything! A simple, well-organized store display
allows the retailer to maximize sales. The first step in setting up a store display is to determine
which products to display where. Second, clean and dust the display. Nothing makes a display
less effective and a messy one. Third, get organized and have all necessary tools ready to work
with so you don’t run around the store trying to find items in the middle of a set up. Finally,
arrange displays in a way that is not random, hodgepodge of products. Follow a particular
theme and have the them stay consistent throughout the store. Also, display in a relatively
symmetrical or circular pattern. Whatever is pleasing to the eye is most effective.
Some suggestions and image ideas for a display or fixture:

51
II.D.2.3. Signage
After setting up a display, it is important you use appropriate signage that is consistent with
the theme of the store.
Outside the store-
Inside the store-

52
II.D.2.4. Leaflets
A Leaflet is a cost effective, exclusive, personal, and easy direct marketing tactic to get a
message out to the customer. It is most important to have a consistent leaflet throughout the
store. NOT every bottle should have a leaflet in the store. However, the top sellers must have
a leaflet. Also, leaflets should be used to promote bottles, as a push tactic, to get rid of a
specific inventory.
The design of the wine leaflet is two flaps. Both flaps have the color scheme to match the
theme of the entire store, gold. It is extremely important that the leaflets are easy to read.
Front Cover- The name of the brand (Specific Font, Size); Location (Specific Font,
Size); released price (Specific Font, Size); “Our” price (Specific Font, Size); Tarzana
Wine and Spirits (Specific Font, Size)
o The information shown on this side of the leaflet is geared towards all of the
target segments. Most customers seek wine by price and wine region. (Wine
Intelligence, 2009) The specific font used for the name of the wine adds
elegance. The location of where the wine originates is important to show if
the customer is seeking wine from a specific area. The price comparison is
important to show customers they are receiving a good bargain.
Rear Base – The Point Value; Description of the wine
o The information shown on this side of the leaflet is geared towards the
Navigator, Quartermaster and the Mate segments. It is important to give
them further information about the wine so they are confident with their
purchase and to satisfy their information needs.

53
II.D.2.5. Deli Area
The former deli area of Simon’s store is currently vacant, but can be used to educate his
customers in new and exciting ways. The corner will entice those entering the store with its
cherry stained counter tops, flat screen television displaying interesting wine facts, and its
elegant display wall offering interesting recipes and catering ideas for those preparing to
entertain guests.
Vendors will frequent the store offering wine and food pairings as well as spirit samplings.
Tastings will be held and consumers can meet other attendees as well as brush up on their wine
and spirit knowledge. TWS will be able to successfully bring in the local community and
establish a heartfelt rapport, and ultimately customer loyalty.

54
II.D.2.6. Summary
Overall, what ever theme you choose to use, makes sure it is consistent because customers like
it when things stay consistent. They like knowing things will be the same when they come
back. Change is good to an extent because you want to keep consumers on their toes and keep
them coming and by changing a little, makes them feel like something new. Take Trader Joe’s
verses Ralphs. Ralphs recently remodeled their stores and at first customers were upset that
the items they normally purchase were not in the same location they were use to. Ralphs
continues to change the store around and this makes it frustrating of customers; especially
when the customers go to get in and get out. Going to the store to buy a product and not have
it be where it always use to be can be frustrating when you are short on time. Then the
customer is upset because they have to spend extra time searching for the product.
Trader Joe’s goes about a different strategy when they want to promote other items. Instead
of changing an entire aisle or moving products to another part of the store, Trader Joe’s will
sometimes move the product down or over a shelf. This is helpful in the sense that when the
customer comes in and goes to the exact spot where the ketchup is sold, they notice its not in
the normal location but now notice another product that they may not have known of before.
At the same time, the ketchup is not in an inconvenient location. They don’t have to go look
down every aisle to find the new location. It’s the best of both worlds. Customers win by having
the small change and not having to search the entire store while Trader Joe’s wins by making
the customer aware of another product they have.
Also, in adding to what was mentioned earlier about keeping the theme consistent in all forms
of store representation (from store display, signage, website, advertising, etc). Having the
theme website different from the store being different from the mailers makes customers feel
they are in an unstable environment. When a potential customer goes to the website, how it is
displayed gives them this feel of what the store is actually like. So the store has a different feel
than the website, that customer may feel held-back and may not come back because the
unconsciously expect the representation to be consistent. There needs to be the connection.
When a customer goes to the website, it should feel like they are walking into the store. When
the customer sees the advertisement, they need to feel like it represents the store.
IIII..DD..33.. PPrroodduucctt AAssssoorrttmmeenntt
Currently, Tarzana Wine and Spirits carries a wide assortment of products including almost
80,000 items and over 4,500 discreet item SKUs. The total value of the store’s inventory is in
excess of $1.8 Million. The store’s inventory is easily broken down into the nine major store
departments: Beer, Champagne, Liquor, Wine, Cigarettes, Cigars, Lottery and Grocery
Taxable and non-taxable. Each of these departments can also be broken down into various
categories of similar products such as within the “Liquor” department there exist categories
such as “Vodka” or “Single-malt Scotch.” For the purposes of this report, each store
department will be addressed separately by sales volume from highest to lowest.

55
II.D.3.1. Wine
II.D.3.1.1. Wine Department Issues
There is a clear disparagement between wine inventory levels and sales levels considering
wine sales account for a little under 1/3 of total store sales (31.77% 2008). However, the
broad assortment of products and high level of inventory in the wine department are necessary
to support the store’s current goal of supplying all varieties of wine at all possible price points
to all possible customers.
II.D.3.1.2. Wine Department Recommendations
In order to sync the wine department inventory and product assortment with our proposed
marketing plan, very little must be done. If upscale consumers are to perceive the store as a
good place for them to make their purchases there must be at wide assortment of wines from
every conceivable region of the world, and thankfully this is already the case. The only aspect
of product assortment in the wine department that must be considered is that the majority of
wines available for sale are high quality wines offering good value to the consumer at mid to
high price points.
The bottom line is Tarzana Wine and Spirits should be perceived as a good place for upscale
consumers to locate and try out quality wines.
II.D.3.2. Liquor
II.D.3.2.1. Liquor Department Issues
There is again, a clear disparagement between liquor inventories and liquor sales. Liquor
sales represent approximately 27% (27.57% 2008) of total store sales, and yet product
assortment and inventory levels are not in parody. Much as in the case of the wine
department, products in the liquor department are designed to appeal to all consumers and
therefore inventory levels and breadth of available assortment must be high.
II.D.3.2.2. Liquor Department Recommendations
Recommendations within the liquor department are very similar to the wine department but
with a slight twist. Liquor department product mix must be strategically expanded to appeal
to the tastes of upscale consumers. These new products should be very high quality and
represent good values at various price points.

56
Name brand liquors must be prominently displayed but lesser known brands should be focused
because of their higher profit margins and relative lack of availability in competing stores. The
goal for the liquor department is for upscale consumers to perceive Tarzana Wine and Spirits
as a good place to purchase not only brand name spirits but to locate and try out smaller and
more difficult to find spirits.
II.D.3.3. Lottery
II.D.3.3.1. Lottery Department Issues
Despite the fact that the lottery department is growing quickly year over year, it may be doing
more harm to the company’s image than it is contributing to the bottom line. There is no
lottery department at any of the upscale competitor’s stores. The simple act of offering
lottery products for sale conveys an aura of the corner liquor store. This perception in the
minds of consumers is exactly what we are trying to eliminate with our proposed total brand
repositioning.
Despite the negative impact the lottery department has on the store’s image, it brings
customers in the door. It is also acts as an impulse buy item bringing up the average amount
per transaction slightly. Once these lottery customers are in the door they are likely to
purchase other products which without the lottery department would not have been sold.
II.D.3.3.2. Lottery Department Recommendations
Despite the fact that the lottery department brings customers in the door, its’ contribution to
the bottom line may not equal its’ damage to the store’s image. Careful consideration must be
employed when deciding whether or not to continue offering lottery products at Tarzana
Wine and Spirits.
Ideally, lottery products would be eliminated. This simple act would work wonders to
differentiate Tarzana Wine and Spirits from every other corner liquor store. Unfortunately,
eliminating lottery products would alienate a large number of customers and therefore not an
option. Our recommendation is to keep selling lottery products but merchandise them in a
more upscale way so that they appeal to a more upscale customer base.
II.D.3.4. Beer
II.D.3.4.1. Beer Department Issues
The beer department is experiencing negative growth which must be addressed. The breadth
of available product is quite small and does not support current sales levels.

TWS_Marketing_Plan_12-5_09

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