Gift Novelty Souvenir Shop Business Plan

Market Analysis Summary

Yeti has identified two distinct market segments for each of the two different stores. For the Cleveland Heights location there is the Case Western Reserve University students and the Wigman Hospital/Cleveland Heights community. For the University Heights location there is the John Carroll University students and the local community.

Age is a significant determinant in differentiating between the different segments. The student segments are generally of a lower age than the surrounding community.

4.1 Market Segmentation

Cleveland Heights Store

Case Western Reserve community
20,044 students total. Largest private university in Ohio.

• Female students, 53.6% of student population (10,747)
• This group makes the most "lifestyle" purchases. They are either buying for themselves to give their living space a personal touch, or buying items as a gift for a friend or relative.
• Male students, 46.4% of student population (9,297)
• Male students are known for their infrequent shopping habits. They make occasional purchases. These occasional purchasers will need to be converted into impulse buyers. This can be accomplished by offering more items that appeal to their sense of independence.
• Case Western Reserve Univ. faculty (889) and employees
• This segment makes less frequent purchases than the students

Wigman Hospital community/Cleveland Heights community
Wigman Hospital is the county's largest employer. Administrative offices have recently been moved to this location, further consolidating the hospital into a dense employer.

• Wigman Hospital community. Total population 2,700.
• Higher income levels than students
• Their work site is in very close proximity to Yeti, less than a block.
• Cleveland Heights community. Total population 140,550. Ages:
• 15-19: 11,585 (8.4%)
• 20-24: 17,390 (12.6%)
• 25-34: 20,591 (14.9%)
• 35-44: 18,656 (13.5%)
• 45-54: 20,184 (14.6%)
• 55-59: 5,864 (4.3%)

University Heights Store

John Carroll University community 18,789 students total

• Female students, 47.6% (8,937)
• This group makes the most "lifestyle" purchases. They are either buying for themselves to give their living space a personal touch, or buying items for a friend or relative to give as a gift.
• Males students, 52.4%, (9,852)
• Male students are known for their infrequent shopping habits. They make occasional purchases. These occasional purchasers will need to be converted into impulse buyers. This can be accomplished by offering more items that appeal to their sense of independence.
• John Carroll Univ. faculty (830) and employees
• This segment is likely to make fewer purchases than students

University Heights community. Total population 51,040. Ages:

• 15-19: 5,662 (11.5%)
• 20-24: 9,896 (20.1%)
• 25-34: 7,317 (14.8%)
• 35-44: 5,991 (12.1%)
• 45-54: 5,570 (11.3%)
• 55-59:1,603 (3.3%)

4.2 Target Market Segment Strategy

The market segments were chosen for two specific reasons, location/proximity and customer demographics, specifically age:

Location/Proximity
In the case of both the Cleveland Heights and University Heights stores, the location is quite convenient to both the students and the surrounding communities. As our days become busier and busier, with less and less free time, we tend to choose stores that are the most convenient. The more convenient the location, the more free time that we have for ourselves.

• Cleveland Heights. The store is within several blocks of a large university campus. Students are continually walking off campus, looking for food, shopping, and diversions from school, all convenient enough so that they can easily get back on campus for the next class. For the Wigman Hospital community, the largest single employer in Cuyahoga County, Yeti is located below their offices. Many people can just walk downstairs to the ground floor, and at most they may have to walk a block to get to Yeti. Customers who need to do a bit of shopping on their break or before they leave for home are able to get to Yeti within five minutes.
  
• University Heights. Again, location is key in University Heights. The store is also only a few blocks from the large campus making it quite accessible to students, faculty, and campus employees. Yeti was able to secure a desired location within Madison Plaza, one of the premier shopping areas. The fact that Yeti is situated next to Starbucks is significant. Starbucks is nationally known for their real estate prowess, in addition to their marketing. Starbucks is very good at choosing good retail locations for their stores, a prime reason that they have closed so few poor performing stores in their history. On the other side of Yeti is another national retail tenant, Noah's Bagel. Being surrounded by two national tenants, one of them being the mighty Starbucks is quite material. Additionally, this retail space has customer daily walk-by traffic of 1,800, an impressive number.

Customer Demographics

• University communities, both Case and John Carroll. While students do not have the highest household income, since the majority of their time is spent in school instead of working, they have a very high rate of disposable income. This can be explained by two reasons. First, when students enter university, this is often the first time that they are no longer under the watchful eye of their parents, who have controlled or affected the purchasing behavior and lifestyles of their offspring. For many of the students, they suddenly have more freedom in the lives and how they spend their money.

  A second explanation of this phenomenon is that students tend to spend money in a short-sighted manner. The overwhelming majority of students receive financial aid and it is uncommon for all of the money from financial aid to be spent solely on books and tuition. Frequently a good portion becomes their disposable income. Many students take the viewpoint that if they are going to be taking on debt to complete school, then a little more debt, which provides them ample disposable income, is OK, as they will eventually pay it off years down the road when they are making good money. These two explanations offer insight into why students, those with low household incomes have high levels of disposable income. Yeti recognizes this reality and caters to these students with products that appeal to them.
  
  

• Surrounding communities, both Cleveland Heights and University Heights. The members of the community population, older than the university students, want a safe and friendly atmosphere where they can enjoy a sense of nostalgia mixed with youthful excitement. The problem with most card and gift shops is their inability to cater to a wide cross section of the population. They are either too hip or trendy and turn off the more mature crowd, or they are too safe and secure so that only your grandparents would shop there. This "hallmarkification" of gift and card shops is quite common as evidenced by (name omitted), (name omitted), and (name omitted). Yeti has been successful in appealing to both the young and hip crowd (students) as well as the more mature crowd (university faculty, Wigman staff, and the surrounding city communities). Yeti has accomplished this feat in part by offering a wide product selection with the two target segments in mind and offering every customer benchmarked customer service, a way of treating customers so that every customer that enters the store recalls their experience as a pleasant experience that exceeded their expectations.

4.3 Industry Analysis

As mentioned in the previous section, gift and card shops typically fall into two distinct categories, trendy and hip shops that appeal to a younger crowd, and conservative, "hallmarkified" stores that appeal to an older, safety conscious crowd. It is unusual for a store to be able to straddle both categories successfully.

Some stores will try by just carrying merchandise that appeals to the other category, but this approach rarely works. In addition to having the merchandise for the desired market segments, the store must have the look, feel, and customer service to make each market segment feel like they are wanted, that make them feel like they are the typical individual that the store is catering to. Please review section 5.1, the competitive edge for more information on how Yeti is able to accomplish what most in the industry has been unable to.

4.3.1 Competition and Buying Patterns

Competitor #1
Pros: Massive purchasing power (over $30 million in sales last year including a computer and book department); good location; guaranteed customers from the sale of text books.
Cons: Little to no parking; poor customer service; difficulty in selling anything but conservative merchandise for fear of being offensive; youthful customer base keeps adults away.

Competitor #2
Pros: Good location next to Case Univ.; good selection of women's apparel; established customer base.
Cons: Little to no parking; very poor customer service; lack of diversity in customer base with young women being their primary customer.

Competitor #3
Pros: Chagrin River Center tenant; plenty of parking; a national chain; average customer service.
Cons: Primary customers are 12-19 year olds; too loud background sound system; main focus is on apparel (T-shirts); little to no advertising.

Competitor #4
Pros: Capitol Mall tenant; plenty of parking; national chain; large selection of movie paraphernalia.
Cons: Merchandise selection focused on too small of a customer base; poor customer service; little to no advertising; distance from Case Univ. requires car or bus ride.

Competitor #5
Pros: Eighth St. Market tenant; average amount of parking; established customer base.
Cons: Poor customer service; poor merchandise selection.

Competitor #6
Pros: Two stores within walking distance of John Carroll Univ.; established customer base; large merchandise selection.
Cons: Merchandise selection focused on older customers; too much merchandise clutters aisles and creates claustrophobic conditions.

Competitor #7
Pros: Large national chain with ample parking; large selection of goods; average customer service.
Cons: Cannot respond to customer requests and the latest trends; focused on general merchandise, not cards and gifts; distance from John Carroll Univ. requires a car or bus ride.