Musical Instrument Store Business Plan

We will build strong relationships with our customers by providing stellar personal service and by exceeding our customers’ expectations on each visit. We will provide unique programs to reward them and gain repeat business. MusicWest intends to attract customers away from the mail order firms and bring them back to the local market. It will not be easy, but with a commitment to offer our customers an exciting educational environment along with up front, fair pricing, and excellent before and after the sale service, we can succeed.

5.1 Strategy Pyramid

Our main strategy is to out-serve the competition. We will accomplish this through strong personal sales/service, educational aspects, and proper product selection. Programs such as our “100% of purchase price trade up guarantee” and our “You play, we pay” incentive programs will support these areas of concentration. In addition, we intend to build strong relationships with key consumers who have influence on the purchasing decisions of others, be they teachers, clergy or performing musicians. These individuals are important to the long-term success of the business. We will take advantage of the great clinics and concerts provided by our manufacturers and suppliers to bring excitement and energy to our customer base; we will also bring in local stand-out musicians. We will follow up on these events with call-backs and surveys to maximize their potential for future sales.

5.2 Value Proposition

MusicWest offers the novice to semi-professional musician the convenience of a wide selection, unique offers, experienced and reliable staff, and an educationally-focused community center, all in one location. These values more than offset our lack of usefulness to the professional musician market segment.

5.3 Competitive Edge

Our most critical competitive edge will be the way we treat our customer base. We must deliver greater interaction and satisfaction than our peers to every consumer from the start, in order to win their trust and earn their repeat business. Musical instrument consumers in the Albuquerque area are used to poor service and the apathy of local dealers. We must break this chain if we are to differentiate ourselves from the competition and excel. Our unique marketing plans and repair/customization services will also make us stand out from the crowd. We will have a multi-faceted plan of attack in place to accommodate our prospects from the beginning to the end of their shopping experience. We will also go a step further through our customer retention plans, by keeping our store in the minds of these customers after they leave, so they will want to return. None of our local competitors actively does this.

5.4 Marketing Strategy

The marketing strategy is as follows:

• Emphasize our superior service and support.
• Aggressively expose competitors’ weaknesses in order to attract new clientele.
• Key in on consumers who have been pushed out of the market by local dealer apathy.
• Educate our clients and respect their needs. Address these needs to keep them coming back.
• Exude our excitement and enthusiasm for music to our customers.
• Always, always differentiate ourselves from our competition.
• Consistently end all of our advertising with our motto, “Stop dreaming, start playing,” to make our advertisements easily recognizable to the public.

5.4.1 Pricing Strategy

The industry is going through a period of adjustment in regards to pricing. Many manufacturers have instituted MAP pricing (minimum advertised price) which has stabilized margins to some degree; however, they also sell at lower prices to the big box stores, which places smaller dealers at a distinct disadvantage. Consumers have also become more knowledgeable and continue to hunt for low prices. Our research has shown that many of these consumers buy for price, but then when they find the after-sale service lacking, look for alternative vendors, who may not have the lowest price but do have the service to back the sale. Novice buyers are generally more concerned with the value and quality of items they are buying than with price. MusicWest will address these issues with a multi-faceted plan on pricing.

Our plan requires that all of our merchandise be clearly marked with fair, street-value prices. These prices will be appealing to 85% of our customers. For those consumers requiring deeper discounts, our entire sales staff will be empowered to negotiate discounts if the sales representative deems it in the best interest of the store. Value adding and margin boosting merchandise will be bundled with low margin bestsellers to keep net margins acceptable. For all of this to come about, we must first approach and give thorough sales presentations to each potential customer that walks through our door, and we must interrogate them to find out any pricing issues that may affect the buying decision. Additionally, we must actively pursue adding non-traditional means of income to each major ticket sale; i.e. upgrades/customization, service contracts, rentals. This will allow us to not only gain our customers’ confidence, but will give us additional revenue streams the average Musical Instruments dealer has not even considered.

5.4.2 Promotion Strategy

MusicWest will target our desired customer base using Radio, Direct Mail, Newspapers and word of mouth. Radio is the greatest vehicle to reach musicians for the simple reason that the love of music is what drives us to become musicians. Direct Mail will target consumers who are budget or coupon minded. Newsprint reaches a large portion of the public, letting them see what we have to offer before making a trip to the store. Word of mouth is the one area we really hope to see develop, as a personal endorsement by a customer is worth more to us than what any advertisement can achieve.

MusicWest will always promote itself as an education oriented store, offering private and group lessons for all the instruments we sell. Our motto is “Stop Dreaming, Start Playing!“

5.4.3 Marketing Programs

Our critical marketing program will be the grand opening, so we will place our initial advertising to give the greatest coverage. Our specific goal for the event is to create the biggest buzz the local music community has ever seen regarding a new store. The base budget we have set for this event is $5,000. We will have other events that will have no direct cost, such as performing bands and contests.

We will review our efforts by canvassing targeted ZIP codes to see if we achieved the desired coverage of our target markets. After the initial grand opening, we will have ongoing promotions that will coincide with the N.A.M.M. (National Association of Music Merchants) calendar of events. For example, N.A.M.M. has named April of each year, “International Guitar Month.” N.A.M.M provides sales kits to promote these events at little or no cost to the dealer. Different staff members will handle these sales on a rotating schedule, so that all of us are involved personally with the promotion of our store.

5.4.4 Positioning Statement

For our target clientele, including those who feel abandoned by the local retailers, MusicWest will provide a complete one stop shopping experience that will address all the needs of the aspiring musician. By offering repairs and unique marketing programs such as our “You play, we pay” and our “100% of purchase price trade up policy” we can exceed the local client base’s expectations of what a music store can be. Unlike the vast majority of our competitors, MusicWest will more selectively stock products with value in mind and not just the lowest price, and we will always strive to provide the highest level of attention to our customers in order to gain their trust and purchasing power.

5.5 Sales Strategy

MusicWest will always operate under the assumption that any customer who enters our store is potentially a customer of our competitors. We will always strive to give each client our utmost attention and will try to accommodate whatever need brought him or her to us. We will make every effort to win them over in a low-pressure relaxed atmosphere, while stimulating their senses with modern eye-catching displays designed to maximize impulse buying. MusicWest will always bend to the type of customer we are serving, whether he or she is a professional, novice, parent, or child. We want the largest market share we can get and must do anything in our power to achieve this goal.

In short, nobody walks out unless we are satisfied we did everything possible to gain his or her business either today or in the future!

5.5.1 Sales Forecast

Our projections are largely based on Dave Moore’s experiences as manager of King Music and Marc’s Guitar Center, respectively. We believe we can easily meet the projected sales figures for the first year and believe we may be conservative in our projections for the next two years. The fact that there are only two band instrument dealers in our targeted territory and that these two dealers are weak, should provide a great opportunity for garnering instant credibility in the market we serve. Mr. Moore has compiled a list of over 4,000 musicians he has helped during his tenure in the Musical Instrument market. This will allow us to save time and money by drawing in proven customers for the opening of the store, and a client base to operate from during the initial months.

5.5.2 Sales Programs

MusicWest will offer several programs designed to increase sales and reward customer loyalty:

1. MusicWest’s “100% Of Purchase Price Trade Up Policy” on fretted instruments. Within the first year of purchase, MusicWest will give a consumer 100% of what they paid for a fretted instrument less tax toward a step-up instrument that is currently in stock. The trade can have normal wear and tear. MusicWest will be the sole judge of what qualifies as a step-up instrument.
2. MusicWest’s “You Play, We Pay” incentive program for school band instruments and accessories. Students will register for the program, which will donate up to 2% of qualifying purchases to their school band booster committee for use with school band programs. A check will be forwarded to the committee quarterly.
3. MusicWest’s “Free Restring” policy. MusicWest will restring your guitar free no matter where it was purchased to attract our competitors’ customers. Restring is for labor only, strings or parts extra.
4. MusicWest will offer “Free Guitar Lessons” with the purchase of any type of guitar. Under this plan, the customer will get coupons for four free group lessons; a different level of these lessons will be held weekly. Classes will be taught by employees (David Moore or C. Ray Himes, our guitar experts). This program does not affect the price a customer pays for a guitar.
5. MusicWest will offer a “Free Loaner Instrument” when any band instrument rented or purchased from us is in the shop for more than 48 hours.

5.6 Strategic Alliances

MusicWest will become a member of N.A.M.M. (National Association of Music Merchants). This organization plans many events throughout the year, such as, “International Guitar Month.” We intend to follow this group’s promotion schedule and to tie it in to our own advertising campaigns. No local storefront is currently taking full advantage of these offerings. By taking advantage of this trade organization’s expertise, we can save ourselves time and money on developing an effective advertisement campaign from day one. Some manufacturers also have advertising co-ops that we will use when feasible. In addition, these manufacturers provide nationally known musicians on a fee basis to their dealers, to use in informational/instructional clinics and to drive additional sales opportunities.