Cellphone shop marketing plan assignment

Market research done shows a need for higher service levels, higher technology for lower prices and a particular demand for additional low cost communication. The preferred target market lies in the lower income groups with products that are focused on their particular circumstances and needs Cell Power’s goal is to be in a profitable position after the first 6 months. The budget targets set for thirty contracts per service providers, this is set far below the industry standard, management decided to rather underestimate the growth than to be caught by surprise and run into a cash flow problem.

Cell Power will be not exclusively trade in the main shop; they will make use of distributors to grow the brand name Cell Power. With the reselling via the distributors the name Cell Power will be closer to the market and the risk will be less for the owners. ? 1Overview of the company 1. 1Introduction Cell Power will start with the aim of securing a foothold in the ever growing cell phone industry. The company will have two shareholders. One of the shareholders secured the rights to sell network contracts direct to individuals and/or corporate clients. The second partner has access to start-up capital.

With the governments’ preferential procurement policy it will be advantageous to ensure that, even though the business will likely fall in the exempted category of business, an appropriate affirmative action policy and employment equity plan is in place. In addition, it would similarly be advantageous to ensure that there is an acceptable level of historically disadvantaged ownership and/or business management participation. This will create a better footing for the business to secure revenue from government contract and contracts from state owner enterprises, as well as companies who in their procurement policy favour BEE aligned business. Interest rates are another economic factor that is currently eroding the consumers’ disposable income. Consumers are looking to make savings where they can and with this additional mobile communication services will be considered a luxury. People will be using phones more economically. ??? Inflation is closely coupled with the interest rate. If government cannot bring the inflation rate down to acceptable levels the growth will be less and job creation will also be on the down side. Fewer people employed mean fewer customers and more customers going into debt that will not be able to afford to pay the cell phone bills.

Bad debt will be on the increase. Figure 3 shows the inflation over the last eight years. Figure 3 CPIX Inflation between 2000 and 2008 ? Social Factors Social factors include the demographic and cultural aspects of the external micro-environment. These factors affect customer needs and the size of potential markets. Some relevant social factors to consider are: ??? HIV/Aids will definitely have a negative influence on the industry, not only for users but also for the employer. Loss of employment will lead to the inability to afford luxury items, i. e. cell phones. ??? Population growth rate in South Africa is at 0. % and our life expectancy at birth is 43 years. This will have a negative effect on business in the future. Figure 4 and Figure 5 show these rates over the last 8 years. Figure 4 Population growth in South Africa between 2000 and 2008 Figure 5 Life expectancy at birth in South Africa between 2000 and 2008 Technological Factors ??? Technology is changing at a pace that has never been seen before. If the players in the mobile communications market do not keep up with technological developments they are soon likely to be left behind by their competitors. ??? Consumers demand more from their cell phones than they emand from their office computers. The cell phone market is driven by technology and consumers hunger of information. The fast pace of technology places a responsibility on the suppliers to be current with technological and application based development. ? 2 Market Definition The market we are intending to compete in is the mobile (wireless) communication industry. This includes both voice and data products. The market also expands into complimentary products that can be sold as value ads, i. e. laptops, home theatre systems, 3G, IBurst and mobile communication accessories.

In developed countries, this factor now exceeds one among adult economically active consumers. An illustrative example shows us why this is: an average economically active consumer may well have a combination of any of the following products, which are GSM network based: 1. One or more mobile phones; 2. A 3G card to provide mobile internet connectivity for in particular laptop computers; 3. A vehicle tracking system (such as Tracker); 4. A home surveillance system (such as Spot). When originally launched, mobile phones were speciality goods. They were sold through exclusive distribution to a high income, exclusive consumer market.

Over time, however, mobile phones have become a product that falls somewhere between the category of shopping goods and convenience goods. Some mobile phones now retail for under R200. 00 and the phenomena of disposable mobile phones is already well established in developed economies such as Japan. 2. 3Growth By 2006, industry statistics show that there were already 39. 66 million mobile communications users in South Africa. Comparing this to the estimated population of adults at mid-year 2006 of 27. 19 million or even the total population estimate on the same date, which was 47. 0 million, it becomes apparent that the market is, seen as a whole, quite saturated. Figure 6 and Table 1 on the next page indicate that mobile telephone numbers have more than quadrupled over the last 5 years. In addition the growth rate of new mobile users has declined to the lowest point since the introduction of mobile phones in the country. This dictates that the only successful strategy is to differentiate your product significantly and tap into or create new markets where there were no previous markets. Figure 6 Mobile telephone numbers in South Africa by year

Most brand building is done by the network operators as these are the primary brands in the market. Sales promotions are aimed at the retailer and end consumers. This type of sales promotion creates a push and pull effect in the market. Distribution channel marketing aims at promoting the distribution channels that are to be used by the retailer (the business under discussion) to provide marketing support for the introduction of new marketing channels. The consumers must know about the market innovations before they can begin to make use of them. 2. 7Trends in the industry The following trends are evident in the industry:

Convenience One of the down sides of the current models in the industry is that there are high barriers to entry especially into the contract market. Clients are required to submit substantive sets of documents and undergo extensive credit and background checks. By making available more people centred application procedures or developing products that do not require large sums of credit as part of the sales model, the trend in the industry can be extended into the lower income group. “ Number for life” and number porting. Clients are now able to maintain one number for their life.

Strengths ??? Personal Service The business aims to provide personalized, premium service, to take the drudgery out of owning a cell phone. ??? Latest phones available Due to the business model the business will be able to provide the latest and widest variety of handsets without engaging in major capital outlays. ??? Low entry barriers (simple purchasing) Eliminate cumbersome administrative procedures through electronic and online contracting. ??? Highly skilled entrepreneurs The entrepreneurs are highly skilled in the various related fields of expertise providing a solid skills base for the business. Technological awareness The company is technologically very aware and have highly skilled technology innovators in the entrepreneur team. Weaknesses ??? Limited capital The capital limitations place a constraint on the business in that few mistakes can be afforded and there is little money available for very large marketing campaigns. ??? Limited experience Though the entrepreneurs are experienced in their various fields they have limited direct experience of the mobile communications market. ??? Lack of a Black Economic Empowerment partner

The business does not have a significant BEE partner which may compromise business potential with certain client groups. ??? New brand / no customer base As this is a start-up company not affiliated to any other the business will start off a zero client base and the brand will be new. It will take time to build a customer base and brand loyalty. Continued on next page. Opportunities ??? New products to lower income markets New contract packages aimed at the lower income market, such as contract + top up, value added products such as home security and child security based products. ??? Emerging black middle class

The focus will be on business owners with contracts for employees not more than twenty, being the small to medium business segment. Service and advice on contracts, services and optimization will be offered to ensure best value for money. Cell Power will be concentrating on the LSM 4 to 7 Group as potential customers for contracts. This group of customers has the biggest potential to grow in the future. LSM 4 (14. 9%) LSM 5 (13. 5%)LSM 6 (14. 4%) LSM 7 (7. 8%) Demographics SexMale & femaleMaleMaleMale & female Age16 – 4916-4925-4925+ EducationUp to high schoolUp to matricMatric and higher Matric and higher HousingUrbanUrbanUrban

Income p/mR1, 924. 00 per monthR2, 674. 00 per monthR4, 400. 00 per monthR6, 880. 00 per month Media RadioCommercial mainly ALS Stations: Metro FMCommercial mainly ALS Stations: Metro FM Wide range of commercial and community radio Wide range of commercial and community radio TVSABC 1, 2 & E. TVSABC 1, 2, 3 & E. TV SABC 1, 2, 3 & E. TV SABC 1, 2, 3, E. TV, M-Net & DSTV OtherFlyersDaily/Weekly Newspapers, Magazines, FlyersDaily/Weekly Newspapers, Magazines Cinema, Flyers Daily/Weekly Newspapers, Magazines, Internet, Cinema, Flyers Table 4 Segmentation contract market Figure 7 SAARF LSM – Eastern Cape 4. 2Target market

The product is the combination of hardware and services sold by the company. The hardware includes mobile phone handset and data products. The services includes contract to lifestyle matching and warranty management. Accessories Cell power will develop its own brand of accessories to complement the rest of the product offering. This range will focus on providing trendy, fashion conscious accessories that will appeal to the youth LSM. The line will be of a medium quality construct and will be externally sourced and internally customised. The accessory line will be backed by an internal warranty and repair/replacement policy. Packaging Products are received from suppliers in branded supplier packaging.

As a differentiation and brand building strategy, all clients will receive their Cell Power purchased product in branded gift wrap style packaging. This is in line with the need of the young consumer to feel that they are receiving high service levels without adding significant additional cost. Brand Cell Power will be a new brand in the market in the Eastern Cape. The brand will have to be established in the hearts and minds of the target market through innovative branding strategies. Considering the target market, Corporate Social Investment based marketing actions will play an important role in gaining the confidence of the target market. Quality

Other means of advertising and promotion will consist of advertising in the local newspaper and flyers at robots. ??? A prime position, measuring 25m2, at Greenacres – shopping centre can be secured for R400. 00/m2. ??? Sales commission of 50% of new contracts secured is payable to sales-rep(s). ??? Two in-store sales & customer service representatives will be paid monthly wages. ??? Initial capital expenditure of R50, 000. 00 will be required for office furniture & decoration (R30, 000. 00) and initial stock (R10, 000. 00) and the design of a web-site (R10, 000. 00). This will be recorded on the balance sheet. The following figure depicted below shows the monthly sales forecast Figure 10 Sales forecast for the first twelve months ?

The figure depicted below show the expense forecast for the first twelve months. Figure 11 Expense forecast for the first twelve months ? 7Implementation and control 7. 1Control The purpose of the Cell Power marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance: Performance AreaMonitor Frequency Revenue new salesMonthly Revenue commission on previous salesMonthly ExpensesMonthly Table 7 Areas to monitor performance Variance between the monthly budgeted sales & expenses with the actual values will be the only measure of control financially. If measurable results are not realized, changes will be made to the marketing mix.