Introduction to Business proposal
In the following report, Distilled has been taken as the firm over which the idea of new business is applied. The concerning firm observes the opportunity to start a coffee shop at London Knights-bridge which is rich area of the place. With increase trend of people to conduct small meetings which can be personal or professional, they seeks cafeteria as the best place to spend their time. Considering the same condition, Distilled has created an opportunity for themselves and expect success in the relevant industry (Garoufallou and et.al., 2013). For implementing the following business idea, they needs to conduct a market research. The target people of Distilled comprises mostly of the young teens who wants to spend their time over a coffee. The most preferential area of focus for Distilled will be to provide quality services with excellent product to attract people and provide competition to existing firms such as Starbucks and many more (Business strategy. 2014).
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Selection of target market
Distilled is a cafeteria which targets the young teen people who observe best places to spend their time. Other than young teens, the other mass comprises professional persons who wishes to spend their time over meetings for some important discussions (Dibb and Simkin, 2013). They can conduct small get together with other business people to arrange small meetings that lasts for few hours. Distilled can divide their overall market into different segments by making the ambiance suitable for all types of people. It may include the following:
- They can divide the market area on the basis of demographic profile by considering the age group. The place can be made suitable for children as well because they expect places where they can enjoy (Hammervoll, 2013).
- Segmentation can be done over gender of people to identify whether the place is attracted by males or females. It is because females are more influenced towards places such as cafeteria to spend their time with friends. Hence, it can be another target market which can increase the business capabilities of Distilled (Watty, Jackling and Wilson, (Eds.)., 2014).
Presenting facts and figures
- Costa Coffee is the fastest growing business firms in the industry having 183 outlets in UK. They observes the sales growth of 22% which is tremendous and their annual turnover is £648 million.
- Starbucks observed the growth in sales by 6% having annualized turnover of £420 million. The company has 14 stores by the year 2012.
- Cafe Nero possess 530 outlets in UK with the growth of 13% in sales. They have observed the sales of £215 million by the year 2012 (UK coffee: market grows and to grow strongly - Hospitality & Catering News, 2013).
- The total coffee shop market of UK is estimated to be having 15723 outlets running in the country. It has the turnover of nearly £5.8 billion.
- The market of coffee shop has been raised by 7.5% in terms of sales and 3.8% in terms of number of outlets in UK.
- The branded coffee chains including Costa Coffee and Starbucks have delivered the growth of 10% in sales by recording annual turnover of £2.3 billion and 5.2% in outlets reaching up to 5225 outlets by the year 2012 (UK coffee: market grows and to grow strongly - Hospitality & Catering News, 2013).
Evaluating current trends in market
In the modern period, the demand for coffee places is constantly rising that results to increasing opportunities of business for Distilled (Hassan, Craft and Kortam, 2003). The current trends that are observed for creating the market share for relevant business includes the following:
- Increasing interest of youngsters to visit coffee house for the purpose of spending their time over there. They enjoys such places having fun with friends which creates market for the business (Terano and et.al., 2015).
- Many small business meetings in the modernized period are conducted at the coffee houses as they are considered to be the place for relaxation. They are safe venues where corporate meetings can be held and there is no time limit (Roberts, 2014).
- Families with small kids loves to visit such places where they can relax, enjoy and spend time with families. It creates the market opportunities for such firms where Distilled can create chances to grow their business to a massive level providing competition to other brands (Cenere and et.al., 2015).
For the purpose of gaining competency and increasing the business market share, Distilled have to make policies under which they should make efforts to convert their strength into opportunities (Hassan, Craft and Kortam, 2003). It could be done as follows:
- Distilled is providing dietary snacks which attracts family people while going out to spend some time. They can have these products along with coffee which is loved by children (Terano and et.al., 2015).
- Coffee with whipped cream is preferred by adults who wishes to come out at cafeteria for the purpose of small meetings. They can have the cup of coffee which they will enjoy as well as increases the sale of Distilled (Cleverley, 2014).
- Since the industry is growing at a rapid pace, Distilled has came out with natural products which are 100% pure. It will surely provide business opportunities for the company by converting their strength for public satisfaction (Business strategy. 2014).
Analyzing the micro environment
In order to analyze the micro environmental factor, the approach of Porter's 5 forces is applied which is as follows:
Bargaining power of buyer
With rise in demand of people and number of branded coffee chains in UK, there is low degree of bargaining power of buyer.
Bargaining power of supplier
The bargaining power of supplier is low as well due to their potential to supply materials to number of coffee shop chains (Terano and et.al., 2015).
Threat of substitute
There is very high degree of threat from substitute because the other branded firms are offering large variety of products (Hassan, Craft and Kortam, 2003).
Threat of new entrants
There is very high degree of threat from new entrants because the industry is growing at rapid pace allowing other firms to enter into market as well.
Threat of rival competitors
With huge market share of branded coffee shops such as Costa coffee and Starbucks, the degree of threat from rival firms is very high (Watty, Jackling and Wilson., 2014).
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Barriers to business
There are number of barriers that may act as restricting agent for Distilled. They are as follows:
Tough competition from rival – Since there are large number of branded firms in the coffee shop retail chain, it provides very tough competition to the business. Distilled may face a big challenge from these firms which eventually act as a barrier for their business. They have to make proper planning to overcome this barrier by providing wide range of products (Garoufallou and et.al., 2013).
Tough market conditions – The market condition of UK in current period is quite tough. The branded coffee house chains have the capabilities to fight against such conditions, but Distilled being a new venture in the industry have to face tough challenge which is another barrier for the firm.
Economical stability – To compete with the branded coffee house chains, Distilled have to possess sound financial liquidity. They have to make arrangements for huge capital investment to make conditions similar or better than other firms such as Costa coffee and Starbucks (Dibb and Simkin, 2013).
- Garoufallou, E. and et.al., 2013. The use of marketing concepts in library services: a literature review. Library Review.
- Hammervoll, T., 2013. Niche marketing research: status and challenges. Marketing Intelligence & Planning.
- Hassan, S. S., Craft, S. and Kortam, W., 2003. Understanding the new bases for global market segmentation. Journal of Consumer Marketing.
- Roberts, A., 2014). Practical matters: Using the foundation skills training package. Fine Print.
- Terano, T., Sasaki, Y., Kunigami, M. and Yoshikawa, A., 2015. Persona Design Method for Evaluating Business Skills. Journal on Innovation and Sustainability. RISUS ISSN 2179-3565.
- Watty, K., Jackling, B. and Wilson, R. M. (Eds.)., 2014. Personal Transferable Skills in Accounting Education. Routledge.