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- 1. Entrepreneurship – Creating a Business Opportunity (M059LON) Children’s Bookstore
- 3. 3 Contents Executive Summary 4 Business Opportunity 6 Market Gap Product Offering Micro Market Analysis 8 Target Market Size Current Trends Dynamics Target profile Target Behaviour Customer Profile Macro Market & Drivers 11 PESTEL Analysis Competitive Environment & Direct Competitors 12 Porter’s 5 Forces Sustainability 14 USP Critical Success Factors (CSF) Start‐up Finances Post Start‐up Finances SWOT analysis Managerial Capabilities (Team Domain) 17 Personal Traits Execution of CSF Business & Social Networks References 19 Appendix 21 Executive Summary
- 4. 4 DreamCatcher is a childrens’ bookstore based in Kuala Lumpur, Malaysia where there is a population of 1.7million and 97.3% are literate (DOSM 2013). This bookstore will provide ambience that will excite children 12 years and below and amaze the adults. The store will carry a majority of independent childrens’ English literature books and provide excellent customer service. In this feasibility report, the business opportunity will be evaluated based on Mullin’s 7 Domains. Market Research and Data Collection Primary research was carried out through questionnaires, interviews and feedback from potential target market and book distributor in Malaysia. 22 participants took part in the survey were Malaysians married with children. Certain information like the current book market size and segments were difficult to identify hence, assumptions were made based on the statistics from the Department of Statistics Malaysian and a publisher’s market report released by the National Book Council Malaysia. Micro Market Analysis From the research conducted, DreamCatcher’s target market was identified based on the VALS™ rather than Mintel’s book segmentation, as it was more relevant. This resulted in opting for Innovators as the perfect target audience, as the business opportunity is niche and vary from existing bookstores. Macro Market & Drivers According to the PESTEL analysis, there is a trend for books. Though it may not be strong, with encouragement from the government, who is taking initiative to cultivate a reading habit among Malaysians by giving them tax exemptions of up to RM1000 (£200) will indeed help the business. Also, based on the primary survey, parents would like to invest in their childrens’ pre‐school learning. Competition Major book chains such as MPH, Borders, Popular Books and The Times dominate the Malaysian book market. However they cater for all genres and carry popular titles for children. DreamCatcher’s direct competitor is Trisha & Sasha bookstore that specializes in childrens’ books. However, they cater for expatriates and are located in a discreet area, hence are not very well known. Sustainability The sustainability of this business opportunity maybe lead up to 5 years as it can be easily imitated. However, the critical factors that make it successful initially will evolve. New products and services will be introduced in the futures.
- 5. 5 Breakeven point is speculated in the second year with the first year generating sales of RM 735,000 (£147,000) with a profit margin of 54%. Managerial Capabilities (Team Domain) The 3 domains are evaluated and found to compliment the business opportunity allowing it to be viable entrepreneurship. Though there will be areas that I personally will need to improve on, particularly in taking risks. However doing in depth research has made the risk less intimidating. Also through connections through the value chain, will make it easier to get the project underway. Based on all these domains, the business opportunity is feasible and needs to take off as soon as possible before the market becomes saturated.
- 6. 6 The Business Opportunity Market Gap Though the literacy rate in Malaysia has not reached 100%, there is a steady growth in the publishing industry in Malaysia. This is due to a few factors such as the Government’s initiative to encourage its readers through the Millennium Development Goal (MDG). One of the objectives of this program is to achieve 100% literate country by 2015 (Mallya 2012). According to the Department of Statistics Malaysia, the literate level for citizens above 10 years old is 95.2% (2010). It is reported that Children’s books are receiving good demand thus being a very lucrative market (Mallya 2012). To supply this demand, the marketplace is dominated mainly by chain‐sellers, MPH, Borders and Popular Books. Followed by a handful of independent sellers such as BookXcess, Silverfish Books whom cover all genres of books. As for specialised Children’s bookstore, there is only a single company who operates in this niche market called Trisha & Sasha. These stores are mostly located in urban areas around Malaysia. Parents of young families are also beginning to encourage their children to read more. They start reading to their babies at a very early stage, some even whilst the child is in the womb (Baby Center 2011). Though these parents are mostly from Gen‐Y, they still believe that physical books plan an important part in a child’s development hence always on the lookout for the books that will enhance a child’s growth. According to my survey where 21 parents participated, all of them preferred purchasing childrens’ books from the store and majority of the participants said the ambience of the store is also important when purchasing a book for a child. Therefore, the experience when a customer walks into a store is essential to create the mood and encourage the purchase. An estimate target market size is 250,000 population. Based on these finding, we can see there is a lack in children’s bookshop in Malaysia, more specifically in Kuala Lumpur and Selangor, both with a combined population of 7.2 million and there is a strong demand for this product (Department of Statistics Malaysia 2013).
- 7. 7 Product Offering DreamCatcher is an independent children’s bookshop located in a residential area in Kuala Lumpur or Selangor, where parents are able to bring their children to. This bookstore will provide an ambience that will excite children and dazzle the parents. Customers who walk‐in to the store will be greeted by booksellers who are in character and follow the current theme of the store, i.e Dinosaur Age, Pirates of the Caribbean, Pink Princess and so on. These themes will change every 3 months. These booksellers (customer assistant) will have a wide knowledge in children’s literature and the books sold in the store providing value added service. This service usually lacks in major chain bookstores. The books that will be stocked are meant for children between the ages of 0 ‐12 years old. These books will comprise of both local and foreign publishers and are not usually available from chain‐bookstores. There will also a small section dedicated to new parents and children with special needs such as autism. I believe with this product offering, I will be able to fill the gap in the children’s book sector that’s gradually increasing.
- 8. 8 Feasibility: Micro-market analysis Target market size As there is no specific source that is available to determine the book market size in Malaysia, it will be assumed based on the literacy level in Kuala Lumpur and the birth rate. The number of literate people is 1.65 million and the birth rate is 14.9% per 1000 population (DOSM 2013). Therefore, we can assume that we will have market of 254,850 potential consumers in Kuala Lumpur. The 2010 country report released by Malaysian Book Publishers Association (MABOPA) 93 publishers earned revenue between RM5‐10million (2010). The number of childrens’ books locally published were 3751, a slight decline compared to previous years. However, Mallya reported recently that there has been increase in Childrens local publication (2012). Most of local publishing is reported to be as academic books (MOBAPO 2010). There also many childrens’ bookfair to evidence the growth of childrens’ books (Mummy’s Home School 2013). From here we are able to gauge that the childrens’ book market growing but at a very slow rate. Current trends The current trends in the book industry are eBooks and purchasing books on the Internet. EBooks is growing rapidly in Europe and the USA, but in Malaysia there access is limited. Amazon only provides limited titles under the Asia Pacific option (Kindle Malaysia 2013) and MPH a local bookstore chain has only recently launched their eBooks store. However, despite these two new trends in the book market, they have very little effect on Children’s Literature as books are usually purchased based on the illustrations and feel of the books. EBooks are not able to replicate the heavy designs normally used in Childrens’ books (PublishGreen 2013). Moreover, based on the primary research conducted, all 21 participants preferred to buy children’s books in store rather than on the Internet. Dynamics The dynamics in the book industry is very slow or some may say it’s stagnant. Nonetheless, with the Government’s encouragement, the reading habit is slowly picking up and more books are being published. Most books published locally are in the native language, Bahasa Malaysia. But there are a few publishing groups such as Silverfish books who encourage local English authors. As far as Childrens’ books are concerned there are publishers such as Yusof Gajah that represent the writers, publishers and illustrators of children and young adults in Malaysia are becoming recognized locally and throughout the world (Yusof Gajah 2013). Hence, the children’s book sector is not just dominated by foreign markets but local publishers are encouraged by the need in the market.
- 9. 9 Target Profile The target profile here is based on the primary research conducted. As mentioned earlier, the survey forms were distributed specifically to parents in Malaysia to understand what they thought about childrens’ bookstore. Out of the 22 participants, 6 participants with the highest book expenditure were selected as target audience as the books were more likely to suit their lifestyle. Please refer to Appendices 1. Below are the similarities between these participants: Age: 30 – 40 years old Occupation: 4 different professionals and 1 home maker Number of Children: between 1 or 2 Childrens’ Age: Below 7 years old Average expenditure on books per year: Above RM800 (£160) Number of times the same book is read: varies Book needs to interest the parent: Yes Ambience: Important Prefers to buy books in store Would bring children below 3 years old to the store Most opt for quality of the story rather than famous authors Target Behaviours VALS™ framework DreamCatcher’s Target Audience: Innovators: Change Leaders Receptive to new ideas Cultivate taste for niche & upscale product & service Image importance Seeks challenges Open to new ideas Possessions & Recreation reflect finer taste
- 10. The Min the Con Abo are VAL e VALS™ fr ntel target former see nsumer Pr ove the ide young chi LS framewo ramework w groups (Ap emed more rofile eal target c ldren. Drea ork and wil was used t pathetic, D e relevant t ustomer fo amCatcher ll venture t Dr to identify Digitalists, B to the consu or the Chil r’s custome to experien reamCatch 32 Ye Marri 2 & 4 Custo Mana Loves Trave Likes thing the target Bibliophile umers in M dren’s boo ers will be nce new thi her’s Custo ears Old ied with 2 c years old omer Servic ager s the outdo els frequen to experie s t audience s and Trad Malaysia. kstore as t Innovators ngs. omer children, ce ors tly nce new instead of ditionalists the consum s based on 10 f the s) as mers n the
- 11. 11 Feasibility: Macro market and drivers PESTEL Analysis Politics Government provides tax relief up to RM1000 per person on books, magazines, journals and publications to encourage reading habit among Malaysians since 2010 (MIDA 2013) Government provided financial assistance to tertiary students of up to RM200 to buy educational books (PMR 2012) Economic Malaysian GDP is consistently increasing. In 2012, it was reported over USD$300 million with a growth of 6% (World Bank 2013) Income level is Upper Middle Income (World Bank 2013) To manage intense competitions, retailers are beginning to focus in suburban residential areas (PWC 2005) Social 3.4 million newspaper readers each month in 2012 (DOSM 2013) 97.3% population in Kuala Lumpur are literate starting from 10‐year olds (DOSM 2010) 34.5% population in Kuala Lumpur have a higher education (DOSM 2010) An average of 800,000 copies of English newspapers sold in 2012 (DOSM 2013) Parents prefer to buy children’s books in store rather than the Internet Malaysian parents also value the content of the book rather than famous titles. Technology Although Malaysians are becoming more tech savvy, most of them still buy books from book stores Many Malaysian bookstore websites are not attractive or effective and have very limited titles, hence they tend to buy books from Amazon US or UK Environment Rainy weather or extreme heat may deter consumers to walk by street shops and would prefer to shop at malls Legal Raid by religious department, confiscating books that was detrimental to Islam, charged 2 employees of Borders (Borders 2012)
- 12. 12 Feasibility: competitive environment and direct competitors Porter’s 5 Forces Supplier Power (Low to Medium) As mentioned previously, the numbers of local publishers have increased recently. However, there have been only a handful of children’s English literature publishers. To name a few, Yusof Gajah, Silverfish Books and Aku & Kamu. The book store will carry books that differ to the mainstream titles, suppliers from UK and US who do not supply to major chains like Random House, Hachette Book Group and HarperCollins (MPH Distributors 2013). Instead publishers like Egmont UK, Bloomsbury UK and Albert Whitman & Company US will be approached to supply books. Hence, the supply power will be low to medium for this business. Consumer Power (Low to Medium) Consumers have many options in the marketplace to buy children’s books. However most of the titles carried are usually of famous titles and authors, thus are not exposed to books that are published independently. According to the survey conducted, 91% of the feedback received, placed importance on the quality of story rather than celebrated books. This shows that parents have a tendency to buy books by independent publishers, which are not available at chain bookstores in Malaysia. Therefore, consumer power is rendered to between low to medium. Competition Rivalry (Medium to High) The marketplace is dominated with chain bookstores such as MPH, Borders, Popular Books, The Times & Kinokuniya. These stores cater for all genres of books including a comprehensive section for childrens’ books. These stores carry books by major publishing houses from UK and US. However, the direct competitor is Trisha & Sasha bookstore who specializes in children’s bookstore in Kuala Lumpur and provides similar services such as storybook reading session. The store does not offer the ambience and variety of books that I intend to sell. Also they are not very well known and mostly target expatriates rather than locals (Expat Malaysia 2001). The competition with online book retailers such as Amazon is low because according to the survey results conducted, 100% of the participants preferred to buy childrens’ books in store and the chances of these books of becoming e‐ books are even less (PublishGreen 2013). Entry Barriers (Low to Medium) Despite having many competitors in the market, the entre barrier is relatively low for Children’s bookstore. There is a growing demand for children’s books and for a specialty shop would certainly be able to thrive. This is because the
- 13. 13 local publishers are willing to distribute their books to reach as many consumers as possible and the foreign publication that will be imported will vary to the mainstream. The government will impose import tax, however as mentioned in the macro analysis, they provide exemption of up to RM1000. Substitutes (Low) The possible substitute for books for children interactive‐learning through tablet devices and computers. However, children exposed too much to this sort of learning will not be exposed to actual senses hence making books difficult to replace. E‐books has also recently picked up, but it is difficult to covert children’s books into a digital format as it is difficult to imitate the heavy designs and feels physical books have.
- 14. Fea USP Crit To that Star As a per sav of R poin App Dre The rep asibility: P A them Bookse Selling tical Succe demonstra t will contr rt‐up Fina a first time sonal fund ings, I inten RM250000 nt of break pendices 3. eamCatcher ere will be lenish or c Sustaina med ambien ellers with English bo ess Factors ate the ‘wa ribute the s ancing e entrepren ds and per nd to inves (£50000). keven ove r will have e a consig change the ability nce that wil in‐depth kn ooks by ind s alk through uccess of D neur, banks rsonal loan st RM50000 This loan w r 5 years. e to start gnment agr e stock eve ll excite chi nowledge a ependent p h the busin Dreamcatch s usually ar ns need to 0 (£10000) will be paid The cashf out with s reement w ery 4 mont ildren and a about the b publishers ness’ proce her is listed re not able o be cons ) and get a d without i flow statem stock wort with local ths. As for amaze pare books sold (local and i ess, the di d below: e to provide idered. As personal f interest sta ment is de th RM2000 publishers foreign pu ents internation fferent fac es loans he s I have so from my fa arting from monstrate 000 (£400 s where I ublication, 14 nal) ctors ence ome ther m the d in 000). will the
- 15. boo high The it is The (£6 Pos Like as i sup pur cou pre To r unit unit 19,7 Bas the SW The thre oks will be her tenden ere will also s a USP. Thi e profit ma ). st Start‐Up e any new b it needs to ppliers. Ho rchase of st untry. Adve sence. reach a bre ts of books t is RM16.4 700. sed on thes second qu WOT Analys e sustainab eats in the bought ou ncy to be so o be a one‐ is will be a argin is est p Financing business, D establish i owever, th tocks depe ertising ne eakeven po s or genera 40 (£3.30) se assumpt arter of the sis of the B bility of th e future in ut right. Th ld though t ‐off cost to depreciate imated at g DreamCatch itself in the e fluctuati ends on the eeds to b int, Dream te sales of . In the firs tions, the b e second ye Business O his busine ncluding ot his is becau their price renovate, r e cost at 20 54% per b her will not e communi ion in the e school ho be consiste mCatcher wi RM 735,00 st year, the breakeven ear in busin pportunit ess opport ther simila use interna may be hig refurbish a % over 5 y book at ave t perform v ity and bui e forecaste olidays and ent to rem ill need to s 00 (£147,00 e estimated point will ness. ty unity may ar busines ational pub gher. and decorat ears. erage price very well in ild its repu ed sales a d major fes mind consu sell an estim 00). The co d number o be attaine y susceptib s may foll blishers hav te the store e sold at RM n the first y utation with and period stivities in umers of mate of 25, ontribution of units sol ed probabl ble to var low to imi 15 ve a e, as M30 year, h its dical n the our ,000 n per ld is ly in ious itate
- 16. 16 DreamCatcher. As such, continuous product and service development may follow in to future. Including distributing books to pre‐schoolers, introducing other services to the store such as activity classes for children and a small café.
- 17. Fea Tea Per Bas per and mat Dre mak bas rese rese the the The The Exe To i from cruc asibility: am Doma rsonal Cap sed on the sonality (A d confidenc ture, I belie eamCatcher ke this a r ed on obs earch abou earch has a risks invol different c e areas of m Passion Commu Dedicat e areas that Rise to Confide Adapt t Ventur Learn t ecution of implement m a group o cial to the e Manager ains pabilities General E Appendices ce that resu eve that we r has alway realisation. erving the ut the indus allowed me lved seem l consequenc my strength nate about unication s ted and wi t I will need the challen ent enough to change b re out of the to think ‘ou Critical Su t the Critica of people t execution ial Capab Enterprisin 4). This co ulted in alw e will need ys been a d After taki book indu stry in Mal e to believ less intimid ces allowin hs the entrep kills lling to lear d to develo nge and no h to take lea better e ‘comfort z ut of the box uccess Fact al Success o ensure it bilities ng Tendenc ould be du ways opting to take risk dream but b ing this mo ustry busin laysia and ve that I wi dating now g for a mor preneurship rn from exp p are below t give up ea ad zone’ x’ tors Factors, Dr ts success. T cy Test, I e to the lac g for the com ks to becom before this odule and ness practi finally con ill be able t w than prev re calculate p idea perience (r w: asily reamCatch The key pe have a les ck of risk‐ta mfort zone me closer to I have not doing in‐d ice in the U ducting my to act upon viously, as I ed risk. reflective) er will req eople indica ss enterpri aking ventu e. However, o our dream t taken step depth resea UK, second y own prim n it. Moreo I have weig quire resou ated below 17 sing ures , as I ms. ps to arch dary mary over, ghed rces w are
- 18. 18 *There are more roles that are imperative to the success of this business opportunity such as cleaners, however the jobs mentioned above are vital. Business & Social Network As a start up project, it has been advised that it is best to use known contacts as it may lead to a better execution. It also lessens the cost and risk of engaging with unknown contacts to deliver the results we want. Below are some of the contacts identified for future potential launch: Contractor: Steve, Esprit Design Company. Portfolio: renovating numerous Nandos outlets in Kuala Lumpur and Selangor. Relationship: Worked previously with him on another project Interior Designer: Sze Teck Wee, Linear Vista Company Portfolio: Inti College, Metropolitan college Relationship: Friend Journalist: Sheila Priya, The Star newspaper Portfolio: Writes columns about on‐goings around Kuala Lumpur & Selangor. Also does feature stories. Relationship: Friend Accountant: Abdul, Auditor Portfolio: Consultant at EY, Shell and internal Auditor at Petronas Relationship: Brother Book Distributor: Mohd Nishar Portfolio: Been a book distributor for almost 20 years. Able to introduce publishers and share experience. Relationship: Uncle For booksellers and publishers I will need to establish new contacts and interview personnel who will be capable to take on the responsibilities at the store.
- 21. 21 Appendix Appendices 1 – Survey Questions 1. Age: ☐20 – 25 ☐26 – 30 ☐30 – 40 ☐40 and above 2. Occupation: ____________________________ 3. No. of Children and their age _____________ 4. How many times would you read the same book to your child? ☐1 – 5 ☐6 ‐10 ☐More than 10 times 5. When you pick out a book for your child, does it need to be interesting to you as well? ☐Yes ☐No 6. How much would you spend on books annually? ☐RM 0 – 200 ☐RM200 – 400 ☐RM400 – 600 ☐RM600 – 800 ☐Above RM800 7. Do you think ambience play important role in buying the book? ☐Yes ☐No 8. Would you bring your child below 3 years old to buy books? ☐Yes ☐No 9. Where do you prefer to buy children’s books? ☐In stores ☐Internet 10. Which is more important to you when you purchase a book for your child? ☐Famous Author or Publishers (i.e. Roald Dahl, LadyBird book, JK Rowling) ☐Story Concept (text informative & lively, moral values, illustration, age appropriate language) 11. What sort of books would you buy your baby 0 – 12 months ☐Picture books ☐Board books ☐Activity books ☐First Learning ☐Nursery Rhymes 12. What sort of books would you buy your toddlers age 1 – 3 years ☐Early Learning ☐Picture Books ☐Board Books ☐Activity Books ☐Moral Stories ☐Humour (Jokes, Riddles)
- 22. 13. ☐Pi ☐H 14. ☐Fi ☐H ☐Re 15. ☐Fi ☐Co Res What sort of b icture Book umour (Jok What sort of b iction umour (Jok eferences ( What sort of b iction omics sponses fro books would y ks ☐B kes, Riddle books would y ☐Hobbies kes, Riddle (School wo books would y ☐Non‐Fict ☐Religious om questi you buy your oard Books s) ☐Educ you buy your & Interests s) ☐Mora rkbooks, d you buy your tion s Stories onnaires children age 4 s ☐A ation ☐C children 7 – 9 s ☐P al Stories dictionary) children 10- ☐Hobbies ☐Referenc 4 – 6 years Activity Boo omics 9 years oetry ☐Relig 12 years & Interests ces (Schoo oks ☐M ☐Religious ☐Comics gious Storie s ☐P l workbook Moral Storie s Stories es oetry ks, dictiona 22 es ary)