Kiowa Smoke Shops
Strategy and Implementation Summary
Kiowa possesses a number of competitive advantages to its immediate rivals. These include established supply channels and its various cost advantages that are difficult to replicate, multiple locations in the Kansas City area, and our future combined cafe and tobacco store that will create more volume and greater client loyalty. This facility will act as a pilot project to determine the long-term profitability of this concept. If it proves popular, we plan to expand all of our facilities to include this unique customer experience.
Kiowa is limited in the types of marketing it can do. However, we plan to advertise in specialty publications such as Smokehouse, Cigar Connoisseur, and others. In addition, we are targeting a number of local magazines such as Kansas Highways, Midwest Life, and others that cater to upper-income people. We are also in the process of creating partnerships with other Internet firms to create Internet links to our existing informational website. When we launch our online ordering features we will intensify these efforts.
As every patron is critical in a shrinking market, Kiowa seeks to create long-term salesperson-to-customer relationships. This we see as the necessary step in repeat sales that will sustain our business. Promotions, specialty items and other such standard sales strategies will be used when possible.
5.1 Marketing Strategy
One of the most critical legislations passed recently has been the various restrictions on advertising for tobacco products. Because of this, Kiowa is limited in the types of marketing it can do. We plan to advertise in specialty publications such as Smokehouse, Cigar Connoisseur, and others. In addition, we are targeting a number of local magazines such as Kansas Highways, Midwest Life, and others that cater to upper-income people. We are also in the process of creating partnerships with other Internet firms to create Internet links to our existing informational website. When we launch our online ordering features we will intensify these efforts. Finally, we will be seeking to introduce our new combination cafe and tobacco shop to the community through newspaper articles and banner advertisements.
5.2 Sales Strategy
As every patron is critical in a shrinking market, Kiowa seeks to create long-term salesperson to customer relationships. This we see as the necessary step in repeat sales that will sustain our business. Promotions, specialty items and other such standard sales strategies will be used when possible.
5.2.1 Sales Forecast
Sales forecasts are based on conservative estimates. The tobacco products industry is fortunate in that sales are not seasonal and remain steady throughout the year. We estimate that sales will go up in 2005 due to our Internet distribution outlet and this will continue to moderately grow for the foreseeable future. We do not anticipate any sales growth from our combination cafe and tobacco shop until the last quarter of 2006 and management has decided not to include those revenues in this plan.
| Sales Forecast | |||
| FY 2004 | FY 2005 | FY 2006 | |
| Sales | |||
| Cigars | $189,996 | $201,188 | $210,532 |
| Cigarettes | $229,992 | $243,217 | $254,513 |
| Pipes and pipe tobacco | $130,080 | $137,800 | $144,200 |
| Roll-your-own products | $64,992 | $68,900 | $72,100 |
| Accessories | $34,992 | $38,450 | $40,050 |
| Total Sales | $650,052 | $689,555 | $721,395 |
| Direct Cost of Sales | FY 2004 | FY 2005 | FY 2006 |
| Cigars | $131,952 | $134,836 | $141,099 |
| Cigarettes | $159,729 | $163,004 | $170,575 |
| Pipes and pipe tobacco | $90,341 | $92,354 | $96,643 |
| Roll-your-own products | $45,137 | $46,177 | $48,321 |
| Accessories | $24,302 | $25,769 | $26,842 |
| Subtotal Direct Cost of Sales | $451,461 | $462,140 | $483,479 |
5.3 Competitive Edge
Kiowa possesses a number of competitive advantages to its immediate rivals. First of all, it has been dealing with its distributors for a very long time and has established close relations with these companies. Our established supply channels and its various cost advantages are difficult to replicate. Secondly, we are the only tobacco products firm that possesses multiple locations in the Kansas City area. This means more volume and lower marginal costs. Finally, as part of our revitalization plan, Kiowa will be expanding its Parvin Avenue facilities to create a combined cafe and tobacco store to create greater client loyalty. This facility will act as a pilot project to determine the long-term profitability of this concept. If it proves popular, we plan to expand all of our facilities to include this unique customer service.
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