Book Cafe - Market Analysis - Case Study Example

Executive Summary This business plan is developed for raising funds for J.B. Bookstore that is planning to expand with addition of a reading library and Coffee Cafe in the store. The idea of Book Cafe is based on a market need of students and individuals looking for library facility. Also, it has been observed that most people read books while sipping coffee at a coffee shop and thus, the addition of a cafe would engage them for long. The proposal identifies the market that can be reached with the idea, presents the market plan, operational plan, execution schedule, business risks and assumptions. The bookstore would provide multiple products and services to customers including food, beverages, new and old books, and internet surfing facility. Table of Contents Market Analysis 3 Market Plan 5 Operational Plan 5 Sustainability & Impact 6 Overall Schedule 7 Risks, Problems and Assumptions 7 Conclusion 9 References 11 Market Analysis The target market of the J. B. Book Cafe can be divided into different customer segments based on their purchasing habits. These segments would include: Casual shoppers who come to store with no specific agenda but explore the store for some time and make a purchase if they like anything. Casual shoppers would make a high volume of customers and would also present higher probability of purchases. Hard to find shoppers with specific needs and are very price sensitive. These would include shoppers who come to purchase only a specific item or book from the store. They would be difficult to track down but if they can be reached, the probability of getting a purchase would be higher Shoppers for specific categories of products such as books, music, games, food, etc. These buyers would have preferences only for shopping in one category. A library use may only come to join a library and may not be interested in using cafe services. Similarly, a person visiting cafe may not explore the book store. Figure 1: The Value Proposition Canvas The key value preposition of the Book Cafe is the provision of a relaxed environment to book lovers and the facility of borrowing old books, buying new ones and food cafe. The cafe would provide opportunity for book lovers to read, enjoy coffee and snacks as well as use internet if they require. The cafe would have a pleasing atmosphere with good ambience, silence, and food. The cost of food would be on a little higher side to discourage masses to join but only genuine book lovers[Cha134]. The business proposition is designed considering certain pain areas that book lovers have to face currently. They always want to read books in a peaceful environment like a cafe which has only serious people coming in who do not make noise. Also, they would want to have time to read a part of book before they made a decision for purchase. The book cafe would solve these pain areas by: Providing an elegant and silent atmosphere so that they do not face noise while reading Providing Cafe facility for them to spend more time Allowing library enrolments for extra benefits like book borrowing Stocking a large number of books including old and new so that readers get a lot of variety to explore Members would be given internet surfing facility so that only those joining library can use it There would be some gains for the customers including: A large variety of books on different subjects that would be stocked or made available on request based on the customer needs and preferences The Cafe would provide drinks and snacks for readers to enjoy while they are in the library reading books The additional facilities like Wi-Fi and special discount on books would be provided to those becoming library members A kiosk would also be provided for self help so that they can search for books available in store or library. The ambience of the book store would be kept decent and the management would work to ensure that they get a crowd that is decent and not boisterous for which the prices of food are kept on higher side and internet surfing is only provided to serious library members[ALA07]. With these facilities in the Cafe Book store, customers would be able to achieve their objectives like: Studying on a subject seriously without distraction Borrow books that they would like to read at length at home Enjoy Coffee and snacks to relax in a peaceful atmosphere Surf internet for their personal or professional information needs Scan through a large variety of books and subjects to find the right book for reading Market Plan For establishing in the market, the company would make use of innovation bringing in new services with value added to a regular business like that of a Book store. The book store would offer more than just traditional model by adding library services, Cafe services and internet surfing facilities which would add more customers to the store. Thus, the business would target different categories of customers including foodies, book explorers, silent readers, and book buyers. This requires an understanding of the pains and gains of customers so that value can be delivered. These aspects have already been the base for development of the current business model which addresses some pain points of the book lovers. For marketing, following activities would be done: Distribution of pamphlets locally to people announcing opening of library Digital marketing and promotion through social media platforms like Facebook, Twitter, Pinterest, and Google plus Special invitation to authors for visit to the store on the launch day The earlier library system would already have some stock of books which would be used up in the inventory of the new store The customers of the earlier library business would also be invited to the bookstore launch and would be given special offers for upgrading their membership and for purchasing books[UCC14]. Development of a customized newsletter which would be kept in the library for visitors to read. Print ads would be given in targeted magazines with special offers mentioned for new members encouraging readers to explore. Operational Plan The Book Cafe would have books, food and beverages as tangible products sold or rented to the visitors and customers. The operations of the Book Cafe would have several major stages as follows: Procurement: The old and new books would be purchased from vendors based on the market demand for the first time and the procurement plan for the future operations would be based on the preferences and demands of visitors and customers. Inventory: Once books are brought, they would be stocked in the book store with only a few copies of each displayed in the Cafe while others would be kept inside the library storage as the inventory. An electronic inventory of books would also be maintained using an online library management application which would only be made available to the registered library customers for issuing physical as well as e-books. Sales: The books that would be new and stocked would be available for immediate sale to visitors and would be billed at the billing counter. The Food Cafe would also sell food and beverages to the visitors and customers of the bookstore[UCL141]. Library Lending: Second hand books would be piled in the library and would be lend to the customers after they are registered as members. Library members would also be provide with extra facilities like book search on kiosk within login, discount on books and free internet access. Cafe Operations: The books store would have a food cafe on the back side which would be delivering food to visitors upon ordering. Library members would be given special offers and discounts in the cafe[Luu13]. Sustainability & Impact Sustainability is about doing a business in a way that it is environmentally, socially and economically beneficial or effective. Various sustainability initiatives that would be taken include: The book store offers products that environmentally safe including books and the organic material used for cooking food. The packaging materials used for the cafe take always are made of paper which is again environmentally safe. For economic sustainability, the bookstore management choose to purchase used books, obtained the electronic copies of some of the book versions and rent the books through library[Uni153]. Used books can also be sold back once they are not needed in the library. The store would take donations and buybacks from students to receive used books that would increase their inventory at less or no cost. The shopping bags given to customers purchasing books or food and other stationary materials used in store would be made of recyclable material. These would include notebooks, folders, markers, bottles, copier paper, and index cards. For marketing, digital media would be preferred which would not consume any natural resources and thus, would add to sustainability in the business Recycling bins would be made available in the bookstore for dumping any wastage such as that can be given away for recycling[Reb14]. Overall Schedule Task Milestone Development and approval of business plan 15th April 2017 Procurement of books for sale and for library 30th April 2017 Cataloguing, indexing and listing of physical and e-books in store systems 23rd May 2017 Rent agreement with the place owner for book store 30th May 2017 Purchase of furniture and electronics for store 20th June 2017 Placement of furniture, equipments and interior decoration 20th June 2017 Placement of inventory of books in the book store 30th June 2017 Marketing for launch of book store including sending of invitations 10th July 2017 Book store launch day 20th July 2017 Risks, Problems and Assumptions Objective of any business is to gain profits. In this case, it is predicted that the business will make required profits with certain assumptions including: The cafe and food service would be profitable from the third year of its operation in which there would a break even from investment and from the fourth month of the third year, the company would start to see the profits coming in. The total investment required for establishing and running business for first year would be $300,000 which would be approved by the sponsor of the project. The income from the books issued through library would get the store 20% of its revenues every month Only those books would be stocked as inventory that is in demand in the market and thus, would be either purchased or rented by the bookstore visitors The book store would be located on a busy street and thus, a significant number of visits would be seen every month The staff hired for managing operations of the book store, library and the cafe would be highly experienced in their respective fields and thus, would be efficient enough to handle operations The company would already have sufficient funds approved before the execution of the development plan The budget includes the contingency fund of 10% over and above the amount that is required for establishment and this would only be used in the cases of emergency situations on the development of the business. However, there is a major problem faced by book retailers making them face challenges of not making profits which is due to the existence of pirated books that are available at much cheaper prices diverting customers who would resist buying original copies of the book. The retailer would also face challenges of competition from the digital media as there are other companies that are running libraries online including big giants like Amazon and Flipkart. Being a new business, the company is likely to face certain risks related to finance, market and management such as: Market risks: Book store can face competition from nearby book sellers and thus, the company would be required to do a significant marketing to stand apart from competition in buyers mind. Consumers may not be willing to accept the collection and leave store without giving feedback. This would lead to loss of potential customers. Competition can also come up with a similar model as it is not very difficult to replicate if a company has sufficient funds with it. However, the existing brand position in the library space would be useful in retaining customers such that the old customers may be invited to the launch of current bookstore launch such that a market share can be gained in the bookstore business as well. Financial Risks: There could be lack of sufficient capital required for establishment and operations of the firm. In such a case, daily operations of the company can get affected severely as there would not be sufficient liquidity and this can make the store run into problems including possibility of facing bankrupts. Another major risk could occur if the predictions of expenses go wrong and the establishment requires more funds than allotted in the program budget. There could also be fluctuations in market prices of books as well as the software that may be purchased for managing book services. This can lead to an increase in costs and reduction in the profits of the bookstore. Management Risks: The management or staff may not have the sufficient experience or knowledge of handling book store, cafe or library operations leading to inefficiencies in productivity. A talent development plan may be essential in such a case such that the staff can be trained on handling operations effectively. Another challenge may arise if the top management of the organization is not supportive enough as it would demotivate the staff and also cause operational conflicts that may become difficult to manage. Conclusion This report included a business plan that was developed for raising funds for the establishment of Book Cafe from the current business of J.B. Bookstore that is currently a library. The idea was to open a facility that not only provided a book store for customers but also retained company’s library systems as well as added a Food cafe in the book store. The business would also provide additional facilities like internet surfing and kiosk for book surfing. The proposal included market analysis which included creation of a value preposition canvas, market plan, operational plan, sustainability development plan, schedule, problems, risks, and assumptions. It was found that the business plan addresses certain pain points of book lovers such as inability to get a peaceful environment for reading and inability to explore a large number of books by reading them before they took a decision for purchase. The facilities, products and services that the business model promises to give its customers include new books for sale, old books for rent, e-books for members; buy back for old books, coffee cafe, and internet facility. As it makes use of recycled material for packing or the administrative usage and makes of electronic books for lending, thus, the model is environmentally sustainable. Purchase of old books for library makes the business economically sustainable. References Cha134: , (Charles Darwin University, 2013), ALA07: , (ALA, 2007), UCC14: , (UCC, 2014), UCL141: , (UCL, 2014), Luu13: , (Shiyun, et al., 2013), Uni153: , (University of Wollongong, 2015 ), Reb14: , (Harrel, 2014), Read More