Promotion. This part of my marketing plan will show me how my respondents and potential customers are likely to react to particular promotional offers
This part of my marketing plan will show me how my respondents and potential customers are likely to react to particular promotional offers, to what extent this is likely to change the demand for my cakes, which will suggest me what promotional strategy and offers to use. My main promotional objectives are:
Before, I start discussing the types of promotion, that I’m going to use to promote “Victorio Cakes” and the products that I will be producing, I will look and analyse the promotion methods and techniques used by my competitors. If we look at “Marks & Spencer’s”, we can see that as above the line type of promotion, they mainly advertise their cakes on-line. However, due to the fact that “Marks & Spencer’s” is such a big company and produces many other products, it advertises itself relatively frequently on the Television, Radio, and popular magazines. My business cannot afford to do this, because it won’t be as big and will be unlikely to benefit from economies of scales and low cost production at least in the short term. Although “Marks and Spencer’s” is a slightly different business to mine, it also uses below the line promotion methods, which can also be used by “Victorio Cakes”. For example, “Marks and Spencer’s” offers money off promotion in the form of vouchers or promotional tickets, which can be used both ways, when you go into the “Marks & from them on-line. When I did my market research, I was considering creating a website for “Victorio Cakes” as well to be able to receive orders on-line, so I will also introduce a similar type of promotion as “Marks & Spencer’s” does on my website as well. Another below the line method of promotion that “Marks & Spencer’s” uses is that if you order several products from them, you will receive a discount on the next product you buy. They also use such forms of promotion as Buy One Get One Free or make a 50 pounds order from Marks & Spencer and get 5 pounds off or a free delivery, if you order the products on-line. These methods of promotion are not new or unique on the market, and most firms use them anyway. Now, if we look at my business, the key in promotion of “Victorio Cakes” is to grab consumers’ attention to a new firm and make them interested in the products that “Victorio Cakes” will produce- custom-made cakes. In order to do this, I will use both types of promotion- Above-the-line promotion and Below-the-line promotion. I will advertise my products in various sources of media at different stages of my product development. I’m not considering the option to advertise my cakes in such media sources as Cinema, TV and Radio, because they are too expensive for me to advertise at, and this will cause my costs to rise to such an extent that I won’t be able to breakeven. However, there are few sources of media, which I will be affording to use in order to promote my business. Firstly, I can start promoting “Victorio Cakes” on the website which I will create, in order to be able to receive orders and advertise the range of the products that I will be making, on-line. I will also use specialist cooking websites with the recipes of the cakes or those websites, which can be related to custom-made cakes. According to my research (shown in the table below), obtained from “www.hobo-web.co.uk”, this type of promotion is unlikely to be very expensive.
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By advertising “Victorio Cakes” on its website or elsewhere in the internet, my business is likely to benefit, because the information about “Victorio Cakes” may be easily spread and for some people it might seem to be much easier to use internet to make their purchases. I will also be able to keep a record of how many people will be clicking on my adverts and how long they will spend on my website and whether or not they will leave the website, come later, or purchase a cake on-line. This will also help to find out what websites are most effective-mine or some of the websites run by other companies. In addition to this it, will also help me find out what particular types or designs of adverts attract my consumers’ attention best. However, there’s a chance that my competitors will be advertising their cakes on the similar or maybe the same websites as mine, whereas if I advertise on my own websites, I will make sure that my potential customers won’t carried away onto the websites of my competitors. Secondly, I will advertise “Victorio Cakes” in the specialist magazines such as “Cake craft and decoration” which is issued in both countries UK and America. This type of promotion is most suitable for “Victorio Cakes”, because this magazine is usually sold in those shop areas where people buy sweets and cakes, and, therefore, already want to buy something sweet like a cake, or maybe be looking for a custom made cake. There’s a higher chance that this magazine will be read by potential customers of “Victorio Cakes”, although it can also be read by my competitors. There are many other advantages of advertising in the specialist magazines for my business. Firstly, I will be able to put colourful adverts, which have a great visual effect on consumer, it will be easier for people to read than a newspaper, and so they will be able to take with them anywhere, e.g. read it in the car. Advertising will be linked to particular features of my product such as being custom-made with any type of decoration. I will also be able to write and publish some articles about “Victorio Cakes” which may also make some people interested in the products I make and potentially encourage them to buy them. My readers or potential consumers will always have a chance to refer back to the article or advert about “Victorio Cakes”. And finally, advertising in the specialist magazines will help to save my budget and minimise the costs of introduction and promotion of my cakes. However, there may also be some negative sides for my business to advertise “Victorio Cakes” in the specialist magazines. For instance, it is more expensive than advertising in the newspapers. Such magazines as “Cake craft and decoration” are issued once a month, so it might take a long time to put my advert in the magazine. Also, there will not be as many places to advertise “Victorio Cakes” in the magazines as in the newspaper. It might also be quite difficult to get a good place for advert in the magazine due to competition on the market and a large number of firms wanting to advertise similar products in this magazine, so I will have to book or reserve an advert place in the magazine in advance. There might also be some places in the magazine which are more effective than the others. For example, I will put a very good advert on the 3rd page in the magazine, or in the end of it, but my competitor may put his advert on the front cover which is likely to have a greater effect on the reader. One of my competitor’s adverts may also be put next to mine. It will be very costly though for my business to advertise on the front cover though, because it is usually very expensive and, therefore, unlikely to happen at least in the short term. There’s also no movement or sound, however, some specialist magazines may include a CD or DVD which may have promotional videos. For example, in the long term I will introduce a CD or DVD in the magazine which will explain and show how to make e.g. a wedding cake in the home conditions, and at the same time, advertise the products made by “Victorio Cakes”. Many of the “Victorio Cakes” competitors use below-the-line promotion methods. I will also use one of them, but in order to find out what particular method of below-the-line promotion is most efficient, I’ve carried out a market research. The diagram and analysis of my results are given below:
The diagram above identifies the percentage preference from my respondents to a particular type of promotion. From the results obtained, it is evident that the majority or 26% of my respondents preferred to have a free delivery. It is important, because initially I wasn’t considering a delivery service to my customers, and I would rather prefer them to come and pick a cake that they’ve ordered from “Victorio Cakes” directly, which would reduce the costs of transporting the product for my business, allowing me to charge lower prices for my customers. 22% of my respondents preferred to have a discount on a cake they order. It is a significant percentage of my respondents and this would be much easier and cheaper for me to do than e.g. employing a delivery man, providing him with a car or a moped and paying him a salary. Moving on, 19% of my respondents chose to recommend “Victorio Cakes” to one of their friends and receive a free cake. This is actually quite an effective way of promoting my products by the word of mouth, and it isn’t going to be too costly. Although, I haven’t yet specified it in my coursework, when I did my questionnaire I had actually informed them that I would only give a small sponge cake for free to those customers, who actually do recommend “Victorio Cakes” to people, and this will only occur, if these people eventually buy a cake from me. 18% of my respondents said that they would like to buy two cakes and get the 3rd cake free. By this I mean, that I will be keeping a record of each customer in my system, and if they buy two cakes from me throughout the year, the third time they need a cake, they will receive it for free or they may receive it when they buy their second cake. This method I found is actually encouraging people to buy my cakes fairly well. It isn’t going to lead to high costs, because the prices that I’ve set for my cakes will well be covering the costs of production, and giving away a 3rd cake isn’t going to make much difference to my business and its costs, but is likely to encourage more customers, which is likely to increase my sales and profits overall. 13% of my respondents preferred money off coupons as a method of promotion, which is also a decent percentage, which identifies that there are people who are interested in getting some money off by collecting special coupons. However, the percentage of all my respondents who were interested in this type of promotion was much lower than for the other methods of promotion. 2% of my respondents chose competitor methods of promotion, which is only a small percentage of all my respondents is unlikely to be yet used by my business, because it is at its early stage of development and it would be difficult at this stage for “Victorio Cakes” to compete with its strong competitors, which have already existed on the market for a relatively long period of time. Therefore, by looking at all types of promotion available to my business and preferred by my respondents, in short term I will use: recommend “Victorio Cakes” to three of your friends and receive a free cake, and “Buy two cakes and Get the 3rd one free” in order to encourage more sales at the first stage of the business cycle of “Victorio Cakes” when my business is new and my cakes are first introduced on the market. This will also help me to increase the popularity of “Victorio Cakes”, because by recommending and essentially advertising my cakes to friends by the word of mouth, it is likely to be very cheap and effective. In the medium term, I will use a discount system and offer ‘money off coupons’ also to encourage more sales, however this will not be as costly to my business as the previous two methods. In the long term I will actually introduce a free delivery, but it will, to a large extent, depend on the demand for my products and how my business will develop. It will certainly not be within the first year.
Place There are a number of factors which have affected my decision to choose an appropriate place for my business. The first and the most major one is that I have a flat which is located near the centre of Birmingham, (about 30 minutes by car), a part of which I will use for my business. Initially I was already planning to create a custom-made cake business at the location which best suits me. It is shown on the map below that the location I chose is relatively close to the centre of the city and it is relatively close to my suppliers. It has good transport links and is going to be relatively easy to access by car. These are the main features, which a good location should pursuit and the location that I chose fully satisfies all major requirements for my business to be successful.
The address is the following:
25 NAVIGATION STREET, ORION BIRMINGHAM
The map below shows how close my location is to the centre of the city of Birmingham.
This picture below shows how close my location is to the nearest TESCO store from which I will buy all supplies and ingredients needed to make my cakes.
If we look at my location more closely, it is evident that it has a good transport infrastructure due to its good links with the highways, supermarket stores and the centre of the city, which will reduce my distribution costs. There’s no need for my business to be located on the high street in Birmingham right in the centre of the city, because this will lead to high rent costs or even higher costs of buying a flat or a place where I will be able to make my cakes. It isn’t a shop and those people who will be coming to my place, are very likely to come to buy a cake from “Victorio Cakes” directly, obtain some extra information about my cakes, or discuss their individual needs and some details about the cake that they want to order. It will be best for me to locate “Victorio Cakes” at the place where my operating costs will be lowest. For example, if I was to locate in “Victorio Cakes” in the centre of Birmingham, I would have high labour and ground rents, which would cause my break-even output to be higher. This means that, in order to cover the costs of producing my cakes, I would have to sell more cakes. In my case, I won’t actually have any rent costs, because I will be making my cakes at the same place where I live. Also, at the place that I chose, everything is located near my business, which means my break-even output will be lower, I will have to sell less cake to cover the costs of production, and this will provide me with more flexibility on price, so that I will be able to charge competitive prices for my cakes. As I said before, initially I’ setting up a business, where it will only be me working on my own, so the labour resources won’t be a major factor for “Victorio Cakes” at least in short term. In the long term, which is likely to be after the first year, I will need someone to help me, in terms of labour resources, according to my research, there has always been a good supply of high quality labour near Birmingham area. This will make sure that my business won’t have any labour problems in the future, which also supports my choice of location. Although I will need some labour, the type of labour that I will need won’t be required to have very high skills such as IT, because I will need labour to help me clearing up and making cakes, and all the rest of the work such as IT, managing website and accounting I will be able to do by myself. Even if there’s an extra training, which might be needed for my workforce in the long term, there are plenty of educational and training resources in the Birmingham area near my business such as “University of Birmingham”. There are also plenty of medical, retail, leisure and sports facilities as well as housing and schooling in the Birmingham area, providing relatively high living standards for me and any workforce that I will employ in the long run. In terms of the potential future expansion, there is a possibility to expand without having to spend large amounts of money. For example, in order to obtain an extra space for the kitchen I will be able to use a part of my living room, divide it up and build an inside wooden wall. Certainly extra investments will be needed. However, this won’t cost me as much as moving to a new location or buying new premises in Birmingham. There’s a good access from Birmingham and ‘Orion Birmingham, Navigation street 25’, where “Victorio Cakes” will be located, to motorways, rail links, sea ports and airports, if those are needed in order to import some of the raw materials from abroad, although most of the materials can be bought within Birmingham area. In addition to this, by choosing this location, I have also taken into the account “Victorio Cakes” closeness to some support services such as insurance, marketing, technical and banking, which might also be needed for my business at certain times. In terms of qualitative factors such as an image of the area where the business is located, Birmingham doesn’t have an image of a Metropolitan city such as London; however, it is a relatively big city with good business links and has a good reputation as a business centre within the UK and Europe.
Below is the diagram, which shows my market research results and identifies the most preferred ways of purchasing my products, chosen by my respondents, which may also support the choice of location for “Victorio Cakes”.
From what is shown on the pie chart above, it is evident that 50% of the respondents preferred to purchase my cakes on-line. This means, that have to consider creating a website for “Victorio Cakes” where I will be able to receive orders on-line as well as use it as another source of advertising and promoting my products. Although, I will introduce an on-line service, in the short-term this will only be taking orders from customers and they will still have to come to pick a cake that they’ve ordered, because it will be too costly for my business to provide a full delivery service in the short term. 38% of my respondents chose to purchase my cakes directly from where “Victorio Cakes” is located. This is percentage is slightly lower from what I’ve expected, however, it is a relatively high percentage, which supports my choice of location so that I will not have to move anywhere else and I won’t have to employ any extra workers, which would lead to higher costs of production and, as a result, higher prices charged for my cakes, which will benefit neither my customers and “Victorio Cakes”. 12% of my respondents chose to order my cakes via telephone, which I will also use, because, as any other business, I will need to be able to contact my customers and my customers will also need to be able to contact me. Modern telephone service also has an option of leaving a message or, in my case, an order for a cake. This will allow me to do several tasks at a time. For example, talking to my customer on the phone and, receiving an order from another one, and then calling him later. Overall, it can be clearly seen, that by analysing all different factors which affect the way and the place where businesses locate, I’ve chosen the most appropriate one which satisfies the following needs:
Therefore, locating at “25 NAVIGATION STREET, ORION BIRMINGHAM” will be my final decision, which I believe is going to be successful for “Victorio Cakes”.
VICTORIO CAKES Questionnaire
Please circle your answers to the following questions:
a) Male b) Female
2) Your age:
a) >16 b) 16-19 c) 20-25 d) 26-30 e) 31-40 f) 41-50 g) 51-60 h) 60>
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1) Your Gender:
