Strategy and Implementation Summary
People’s News seeks to serve those who travel through Chinatown, New York City subway stations either as residents, commuters, shoppers, or tourists. This large population includes both Chinese-speaking and English-speaking customers. To best target these customers, People’s News will:
- Offer products familiar to Chinese speakers as well as English speakers
- Hire only bilingual clerks
- Expand to three stores in order to share resources, increase negotiating power relative to suppliers, and build some brand name recognition within Chinatown
The People’s News competitive edge is based on its simultaneous focus on Chinese-speaking and English-speaking customers who all come together in New York City’s Chinatown neighborhood. Some Chinese newsagents in Chinatown only speak Mandarin or Cantonese and sell only products familiar to Chinese immigrants from their home country. Some American newsagents sell only the same American products available at newsstands throughout New York City. Offering a bit of both reaches a wider range of customers.
While this edge is not inimitable, it will be a temporary advantage as it is a relatively unique strategy currently. Having the only leased subway kiosk available at each of the other locations does prevent some imitation however, as those who use the same strategy will not have the same advantage of location.
People’s News will use only basic low-cost marketing tactics, as it will primarily make sales through foot traffic:
- Employees and owners will inform friends and family of the business so that they can spread the work upon launch
- A sign with the name “People’s News” will be posted at each location, showing the name in English, Cantonese, and Mandarin, creating some brand recognition once the second and third stores are added
Pricing will be at newsstand market rates for all items. They cannot be offered at the same discounts available at larger establishments, but they will be offered at the same prices as other newsstands.
The sales strategy for People’s News is simple. It is based on three elements:
- Good choice of location
- Bilingual or trilingual salespeople (who speak at least English and Cantonese or Mandarin and perhaps all three)
- Swift and friendly service
Members of the Kao family are bilingual (English and Cantonese) and other family members or Chinese-American employees must meet this requirement in order to converse comfortably with Chinese or English-speaking customers.
By serving customers quickly, People’s News will show how much it values their time and acknowledge that those arriving at or leaving a subway platform are in a hurry and not interested in anything more than convenience. However, by smiling and remaining friendly even to brusque or unfriendly customers, People’s News hopes that it will stay at the top of a customer’s list as a place to buy the next time they come through the subway station.
The basic categories of sales consist of the following:
Monthly magazines: Average price of $3 and 70% cost of sales. These items have a lower cost of sales than other periodicals, as some publisher allowances are given for prominent placement of their magazines in the racks and designated spots close to registers.
Weekly magazines and newspapers: Average price of $2 and 75% cost of sales. These items have some of the same publisher allowances mentioned for monthly magazines.
Daily newspapers: Average price of $1 and 80% cost of sales. These items are the best sellers but have a low price and high cost of sales. They are a draw to the kiosks however, and this increases sales of the food and drink items.
Beverages, Snacks and Candy: 60% cost of sales. These items will sell both on their own and to those who purchase the periodicals.
The business will begin with one location in the first year and will roughly double sales in the second year with the establishment of second location. Revenue will grow in the third year as well with the addition of a third location and continued growth in the first two. The establishment of these additional locations will increase the volume of purchases from suppliers and lower the cost of sales of the products sold slightly in the third year.
|Year 1||Year 2||Year 3|
|Weekly magazines and newspapers||20,244||56,311||87,282|
|Total Unit Sales||123,994||344,906||534,604|
|Unit Prices||Year 1||Year 2||Year 3|
|Weekly magazines and newspapers||$2.00||$2.00||$2.00|
|Weekly magazines and newspapers||$40,488||$112,622||$174,564|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Weekly magazines and newspapers||$1.50||$1.40||$1.40|
|Direct Cost of Sales|
|Weekly magazines and newspapers||$30,366||$78,836||$122,195|
|Subtotal Direct Cost of Sales||$114,041||$282,729||$438,230|
Hui Kao will manage the lease, license, and permit process. He will delegate the renovation of the store and purchasing of initial inventory to his son, Zhi Kao. Additional stores will be launched after one and two years pass. These costs are all represented within startup costs and the three-year cash flow statement.
|Milestone||Start Date||End Date||Budget||Manager||Department|
|Permits and Licenses||11/15/2009||1/1/2010||$1,000||Hui Kao||Hui Kao|
|Establish first lease||1/1/2010||1/1/2010||$1,000||Hui Kao||Hui Kao|
|Renovate location one||1/1/2010||1/31/2010||$500||Hui Kao||Zhi Kao|
|Buy initial inventory||1/1/2010||1/31/2010||$1,000||Hui Kao||Zhi Kao|
|Open first location||2/1/2010||2/1/2010||$1,400||Hui Kao||Hui Kao|
|Open second location||2/1/2011||2/1/2011||$2,400||Hui Kao||Hui Kao|
|Open third location||2/1/2012||2/1/2012||$2,400||Hui Kao||Hui Kao|