Pro Local Business Plan Oct  essay
- Length: 12 pages
- Subject: Sports
- Type: essay
- Paper: #62839978
Excerpt from essay :
5% and 2.35% over that period but opposite the trend of fluctuation in overall spending
The result is approximately $23.5 billion spend each year in the U.S. attending sporting events like the 82 games per year at the Boston Garden
Average U.S. households spent more attending sports events while incomes fell after 2007, and less as incomes increased since then
Households in the Northeast region including Boston spend higher on "apparel and services" and more or the same compared to all other regions and the national average for complementary local amenities "fees and admissions" (the Garden) and "food away from home" and "alcoholic beverages" (neighboring sports bar)
Bostonians spend higher than the region on entertainment and less on apparel and alcohol than the regional average, for the most recent years available, 2007-2008
Bruins season tickets are already sold out, which suggests weak 2010 economic fundamentals may take second place to hometown brand loyalty
Many of these Boston fans participate in amateur league hockey, and these sports fans constitute the second niche market ProLocal will cultivate after Garden patrons and the general public
VI. Marketing Plan
Customer Profile, Unique Market Niche and Differentiation Strategy
ProLocal's customer profile includes hockey fans; sports fans; tourists and visitors; sports bar patrons, Boston Garden event consumers; amateur hockey players and their fans and families, commuters and the general public. This diversity implies a consumer profile skewed toward younger male but also some female consumers who, if not hockey players or sports fans, know sports players / fans for whom to buy gifts and demonstrate hometown pride. A 2009 ESPN study found television sports viewers tended toward males from adolescence through senior age in varying intensity at different stages in their lives (Mulhern, 2009). Women participate in sports before the age of eighteen, ESPN found (Mulhern, 2009), but that falls off sharply during their twenties, only to increase later as they consume sports with family. This suggests refining the target market towards parents and youth of both genders, older consumers of both genders, and adult males via professional, college and amateur sports will provide higher per-dollar return, and also suggests marketing to youth leagues, schools and college sports may deliver effective exposure to amateur sports participants, their parents and families.
Celtics and Bruins fans can park within the Garden itself and also reach the game by public transit located inside the facility, but many of the potential 17,500 hockey fans who attend Bruins matches or the 18,500 or so Celtics fans the Garden can possibly hold (Delaware North Companies, Inc., 2011), must approach the stadium from the street, and these consumers will see the storefront and merchandise cart. Between these games the Garden holds more than twice as many events, for a claimed annual attendance of some 3.5 million. Bruins season tickets are already sold out (National Hockey League, 2011), and these repeat consumers provide our core market as they grow familiar with our presence before and after their favorite events.
On top of these millions of potential consumers, the downtown itself draws tourists from the surrounding region and rest of the world. The Downtown Boston Business Improvement District claims 230,000 pedestrians pass through ProLocal's neighborhood every day (Downtown Boston BID Corporation, n.d.). These pedestrians will provide a stream of marketing targets with our cart on the sidewalk during busy periods, especially if promotion can be bundled with other amenities like the Four's Grille.
Promotional Strategy and Evaluation
Promotions will target active sports consumers at Garden events; during amateur league play; at the neighboring sports bar, and throughout the year as events allow. Our most valuable promotion will be word of mouth and relationship building with sports players, their fans and families. Advertising will be geared more toward these specific demographics, through coupons and incentives hopefully developed bundling our merchandise with other complements like eating and drinking at the bars, amateur league play, and at events. All our promotions will take forms we can quantify whenever possible, such as coupons or "tell them that you heard it at the game" type discounting, so we can measure and improve targeted marketing.
VII. Financial Plan
Key Points and Capital Requirements
Initial capital requirements will be minimal, with the owner-operating leveraging personal savings into credit with wholesalers and commercial credit cards where applicable; and investing some personal savings in startup and initial inventory sunk cost
This principal will be paid down over the first fifteen months of baseline sales to wholesalers and credit card firms, and the owner's equity will be reimbursed over years two through four
The fifth year of operations will generate similar capital for a second location, such that low capital requirements for credit with wholesalers will be backed by the equity ProLocal #1 has achieved by then free and clear
Initial break-even will take longer than the first year due to startup and sunk cost, but baseline sales will break even and deliver profit every subsequent year at the least necessary volume indicated in the pro-formas (Appendix I)
These estimates are intentionally low in order to establish baseline minimum unit sales for different scenarios. Real results will either be significantly better, or the results will not justify continued operations
Narrative Assumptions for Financial Statements
The pro-formas attached in Appendix I are based on specific assumptions derived from the industry reports and Federal Reserve predictions described above, that a recent surge in retail construction in Boston (Boston Redevelopment Authority 17) combined with unemployment and lukewarm inflation, will keep Boston rent and wage growth low or flat (Downtown Boston Business Improvement District, 2011); that consumers will become increasingly risk- and price-averse (Yahoo! Finance, 2011); that taxation, licensing and permitting fees will remain constant absent any indication of change in the short-term; that professional sports will increase brand market share in this intense competition because of high brand awareness and loyalty; and that no major weather or social disruption will introduce positive commodities price shocks.
Disruptions in regular play like this year's NBA management-labor dispute have cost local retail and hospitality millions, and the loss of even one star player can ripple through local economies (Withers, 2011). Major producers and retailers like NIKE, Rebok, Finish Line and Dick's Sporting Goods are diversifying product to mitigate such loss from contracts with NBA stars and revenue from this important seasonal economic shortfall (Platt, 2011), and this is the approach ProLocal will take to player loss or seasonal volatility at the Boston Garden.
• Placement in prominent location between major consumer draw and local neighborhood draws • National champion NHL and prominent NBA franchise draws with some of the highest brand awareness / loyalty in global retail; branding achieved at little cost to retailer
• Access to numerous and diverse local amateur sports leagues, players and consumers
• Access to stable general consumer draws at transit center, parking and local businesses
• Ability to diversify product mix against volatility
• Volatility in professional sports performance and seasonality
• Seasonality in amateur sport leagues
• Weak consumer income and purchasing power from low employment and potential inflation in less discretionary consumption especially food and energy markets
• Prices dependent on volatile, inflation-prone agricultural inputs
• Established local competition in more traditional sports retail
• Diverse events at Boston Garden throughout year
• Seasonality drives regular and constant change in consumer apparel demand
• Partner with nationally prominent neighborhood sports bar for promotion synergies
• First year of operations will allow tailoring open hours to minimize variable cost
• Internet sales can help recoup salvage cost for low-turnover inventory in the face of volatile consumer preference; league disputes and seasonality; player / team performance; weather seasonality, etc.
• NBA-Lockout-type league disputes
• Team / player performance
• Direct competition with producers on location
• Macroeconomic recession
• Input price inflation
• Consumer nondiscretionary cost inflation
• Sole proprietor competing against diversified chains enjoying economies of scale, scope
Contingency Plan for SWOT Threats and Weaknesses
ProLocal will keep inventory low to diversify around volatility and seasonality in professional and amateur sports and consumer demand. ProLocal will keep prices and markups lower than competition where possible in order to generate sustainable market penetration at the potential cost of immediate direct revenue. ProLocal will specialize around and away from 'Big Box' retail toward relationship-building with individual consumers where they live, play and work, by partnering with neighboring merchants and achieving placement sponsoring amateurs. ProLocal will deploy new locations across sports and team availability to achieve economies of scale and reduction of risk through diversification, starting first with other NHL hockey teams, which will likely share stadiums with professional sports in different leagues, and then across local events as…