Miniature Golf Case Analysis
... plan that will enable and ensure a substantial volume of rentals, and at least a break-even bottom line. ( or at least 20 to 25% gross sales) Problems Understanding the company’s problems is crucial for determining what criteria should be used to evaluate the opportunities in the market. The key issue that John and Sandra should be concerned with is the fact that the miniature golf market in the area is a seasonal activity, people sometimes only play the miniature golf twice to three times per year. Moreover, this activity is only last around maximum of 5 months. (May to September) They have to gain profit in the short period of time in order to stay in the business. There is not much room for growth for this product that is at the late maturity stage of the product life cycle. Due to the Windsor rainy weather, it rains about ten days per month. Therefore, their materials such as the grass carpet and the wood made of the each course have to renew annually. Their cost of renewing the material and the cost of the storage will be quite huge. Simultaneously, they don’t have a well thought-out marketing strategy, such as the advertising campaign including how to segment their market and they also don’t know how to attract their major customers, teenagers. They are also facing another problems, the security of the courses, the employment cost also the WCB, UIC, CPP which payable either by the owner or the employer which haven’t included. And what if the employee doesn’t show up who will cover the shift. Also, if the manager do not accept their idea of start a miniature golf business in the mall. Will they going to change another location? Since the Devonshire Mall is the largest mall in Windsor and it is a high traffic flow location. Realistically, it is impossible that each group in a hole because occasionally there are slow groups in the game. It can’t guarantee of 864 round fully occupy per day. Altogether they have determined that they need around $23,000 for the first year business costs. Since they only have $10,000 on their own, so they have to borrow the $13,000 from the bank. Situation Analysis John and Sandra have examined the strengths and weaknesses of the current miniature golf market. A competitive analysis such as SWOT will add more useful data by evaluating both miniature golf and the position of the competition in the Windsor area. Internal Factors Strengths (I will call the miniature golf as “John and Sandra mini golf”) The internal strengths of John and Sandra mini golf include the cost of the building the eighteen holes plus a pro shop, fencing, and miscellaneous expense. No cost included for labour because they can build the hole by the industrial art class at high school. From Appendix A, we can see the persisting and growing appeal of video rentals in general, and where the market might be going if the rental pattern repeats itself.. This will assist in alleviating the market saturation problem. Both John and Sandra have arts- related backgrounds. Mike is finishing his degree in the Arts program at the University of Waterloo, has completed a project on film director Martin Scorcese in a film studies course, and is a long-time film fan. He had wanted to be a teacher, but was turned down for teacher’s college. Floyd, the ex-road manager for a rock band, is experienced in market analysis and promotion. He was able to individualize a marketing plan for each town the band played in, so he had an insightful approach to promotion. Floyd is able to make fast, informed decisions about targetting changing markets. Mike would be a knowledge salesperson and thus able to impress customers. Weaknesses There are some looming problems in John and Sandra ‘s business: The cost of the stock purchase is their major concern because they will have to spend almost half of their money on purchasing videos. See Appendix B for anticipated costs and revenues. John and Sandra have no distinct marketing plan that will exploit a niche, make the potential market aware of their existence, or overcome the location problem. They have to be careful in choosing video titles, but few suppliers offer alternative and classic movies. Facing these challenges, John and Sandra can follow two routes, which will be discussed later: stock anime now, and expand to Asian films later. External factors The external factor affecting John and Sandra mini golf are fairly major, and may even impede its survival. First, because it is a new company, there is no relationship at all with video distributors. Some of the distributors, such as Shannock, have variable discounts available to buyers. Others, such as Astra, don’t tell the buyers what the discounts are until videos are ordered. There is no delivery date guarantee from distributors, so John and Sandra mini golf can easily miss out entirely on potential profits. John and Sandra hope to get a loan of $55,000 from Mike’s parents, and a bank loan of $15,000. The family loan is far from guaranteed. Macroeconomic challenges Before the company is opened for business, John and Sandra must understand the macroeconomic climate in which John and Sandra mini golf will operate. There are four distinct macroeconomic challenges that the company must cope with. First is the problem of geographical positioning. John and Sandra mini golf is to be in a house on Regina Street which, although it is in downtown Waterloo, is parallel to the major thoroughfare and shopping route, King Street. King Street is an important bus and commuter route, as well as carrying significant numbers of pedestrians. As well, there is the problem of visibility, even on Regina Street. The business will be in a house, an untraditional venue for a commercial enterprise in a growing city. Even with signage, the eye of the passerby will not be drawn to it. In addition, the video rental market in Kitchener-Waterloo area is quite saturated. (see Appendix C) There is limited room for growth in the commercial area, because there are already five major chain outlets and thirty independents serving the Kitchener Waterloo area population of around 250,000. There is also the challenge of consumer rental habits. However, the selected riche should be strong enough in a largely student or otherwise university-associated target population, along with the with the area’s high tech workers. To face these challenges in the environment, the company can pursue its present, planned course and 1) hope that the videotape market endures, or 2) accumulate capital, and after one year, fill another niche: the Asian film market. Waterloo has a large Asian population, and this market is currently totally unserved in video rentals. This option will be addressed later in the paper. Competitive Analysis There are 5 major video stores already in the Kitchener-Waterloo area, which have captured 55% of the market share, and another 30 stores with 45% of the remaining market. If Generation X enters the market, it will be relegated to the 45% side of the market share. It is hard for a new store to enter the market because most people will rent from the big box video stores, such as Rogers and Blockbuster. The pricing is also very competitive, because if John and Sandra set a price which is over the market price, then John and Sandra mini golf will be eliminated from the market in a short time. Consumer analysis There are 4 major factors that a consumer will be concerned about, as detailed in appendix B: 1) selection 2) convenience of location 2) price (consumers will decide what they can afford before they rent the video) 4) lifestyle appeal Selection The consumer who like to take “selection “ as their first choice is the person who really likes to watch movies. This person will not really care so much about the location, because as long as they get his favourite movie, then it will satisfy his needs. A consumer from the Arts community also fit this category, because he may need the movies to do research or prepare teaching materials. Location The consumer who is concerned about the “location” is the person from the general public. He thinks the location should be well known and convenient for renting movies. He cares less about the selection of the movie. As long as the store location is close to his living place, then it should no be a problem. Price The consumer most concerned with “price” is the college or university student. Most students are lower income class and very price sensitive. The Kitchener-Waterloo area has two universities, and many students who will rent for research or leisure time. There are five ways to analyze John and Sandra mini golf potential customers, according to their needs: 1) film buffs 2) the alternative/ fringe group 3) college and university students 4) gay/lesbian segment 5) average people looking for something that is not mainstream. The needs of each must be known so that John and Sandra can buy the correct products. It is difficult to determine this with great accuracy, but there are general ways to do it. The Princess Theatre, the local repertory theatre, could have all their old advertising on file, and John and Sandra can ask to see it. An analysis of it would show popularity of titles, if numbers of rebookings and length of showings were examined. The university libraries have past issues of film magazines that discuss revenue for various films, and old copies of student newspapers with past ads from the Princess Theatre. John and Sandra need to understand the consumers’ needs, as well; the video renter that John and Sandra mini golf desires to appeal to is fulfilling more than a personal need for entertainment and personal satisfaction. He is concerned about satisfying a desire to view old classics, because he has heard about them from teachers and peers, and has read about them in the literature. Students want to appear cool and knowledgeable in front of their peers, and do not want to be left out in the cold when references are made to old masterpieces. Self-esteem is important for any age group, but is especially important in the main age group that John and Sandra want to target. If John and Sandra can continue to update their catalogue, whether by rotating their supply of old classics through bankruptcy purchases, or by stocking new films, then they can satisfy the higher-level needs of the consumers. The constantly changing supply will keep customers motivated to return. This sort of business is well suited for repeat customers, but it is basically self-serve; renters make their own choices from stock that is familiar to them. While the subject materia...