Mojo Music

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Music Retail Business Plan

Strategy and Implementation Summary

Mojo Music will be heavily promoting the store.  We will use the student daily paper to advertise a $2 off per CD coupon.  In addition, we will have a drawing for five CD/DVD players each week.  We will continue the drawings for the first eight weeks of the store's operation.

5.1 Competitive Edge

Mojo Music's competitive edge is:

  • Location: Mojo Music is on Taylor Street, one half block from the entrance to the university.  The student foot traffic on Taylor Street is very strong. The closest used CD store to the university area is a ten minute drive.
  • Quality used CDs: With the average price for a new CD at $16-$18, young adults would rather buy a used CD for a little over half that price ($8-$11).  It is even more attractive if they can get in-store purchasing credit by selling their own CDs to the store.
  • CD/DVD recording media: Young adults between 17-25 years of age are the largest group purchasing CD and DVD recorders.  There is no store that sells recording media within a 10 mile radius of the university.  
  • DVD rentals: The closest rental store is four miles off campus. Due to the drop in price for DVD players, many students own DVD/CD players, so their reasonable format for movies are DVD. 

5.2 Sales Strategy

The key to Mojo Music's sales strategy is to get the sellers of used CDs to spend their money in the store. To accomplish this goal, we will offer the seller two options for their CDs: cash and in-store credit. In-store credit will be 20% more than cash.  This can be used to buy CDs or CD/DVD recording media.  In-store credit can also be used to rent DVDs.

5.2.1 Sales Forecast

The following is the sales forecast for three years.

Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
New CDs 18,400 20,000 23,000
Used CDs 33,500 38,000 41,000
CD/DVD Recording Media 15,100 18,000 21,000
DVD Rentals 28,100 30,000 33,000
Other 0 0 0
Total Unit Sales 95,100 106,000 118,000
Unit Prices Year 1 Year 2 Year 3
New CDs $16.00 $16.00 $16.00
Used CDs $10.00 $10.00 $10.00
CD/DVD Recording Media $10.00 $10.00 $10.00
DVD Rentals $3.00 $3.00 $3.00
Other $0.00 $0.00 $0.00
Sales
New CDs $294,400 $320,000 $368,000
Used CDs $335,000 $380,000 $410,000
CD/DVD Recording Media $151,000 $180,000 $210,000
DVD Rentals $84,300 $90,000 $99,000
Other $0 $0 $0
Total Sales $864,700 $970,000 $1,087,000
Direct Unit Costs Year 1 Year 2 Year 3
New CDs $11.00 $11.00 $11.00
Used CDs $5.00 $5.00 $5.00
CD/DVD Recording Media $4.00 $4.00 $4.00
DVD Rentals $1.00 $1.00 $1.00
Other $0.00 $0.00 $0.00
Direct Cost of Sales
New CDs $202,400 $220,000 $253,000
Used CDs $167,500 $190,000 $205,000
CD/DVD Recording Media $60,400 $72,000 $84,000
DVD Rentals $28,100 $30,000 $33,000
Other $0 $0 $0
Subtotal Direct Cost of Sales $458,400 $512,000 $575,000