1) Introduction: 1.1 Mission of Radio City
1) Introduction: 1.1 Mission of Radio City
For years Radio City has provided best quality service in home entertainment business and is planning to expand its business across Pakistan. The quality and service of Video and Audio products is what has allowed Radio City to stand out from its competitors. Radio City is the first Audio and Video chain that produces its quality products under full copy right productions of major Hollywood studio and provide you an experience of an international quality service in Pakistan. Radio City has expanded into large scale license production under its sister company Communication City (Pvt). Communication City provides state of the art production facilities, as it is the only company that provides latest digital duplicating facilities with excellent sound quality. Radio city operates from its headquartered based from Islamabad and this will support strong distribution network into all major cities of Pakistan. Radio City aims to capture highly populated and urban population of Pakistan. Radio city was established in 1984 as a source of home entertainment to the customer. Over a period of almost 20 years we have gained the reputation of being the best source of Audio / Video in terms of quality and variety. We have facilities and resources through which we can distribute home entertainment product at our stores in all major cities of Pakistan. The future opportunities for the franchisees in Pakistan are that our group will be dealing in LCDs, DVD Players, CD Players, Mobile Phone Home Video Theater, and Hi-Fi sound system, Home appliances and other electronic accessories.
Provide latest digital print facilities with excellent sound and video quality and target the market that do not sacrifice quality and believe in the best of the best
2) MARKET ANALYSIS
In this section we have done three main analyses for forecasting that what changes will occur in the local market due to our existence and how we can up with the threats in the external environment, our competitors and the changing consumer needs. So for this we have done the following analysis SWOT Analysis Michael Porter Industry Analysis Consumer Analysis.
2.1.2 Weakness
Relatively high price Relatively high operational cost Lack of brand awareness in this product category
2.1.3 Opportunity
Line extension Product development Market development (Expansion of business at other places) Can get license from entertainment production studio Grimed future of pirated CDs
2.1.4 Threat
Pirated editions Economic slump situation Religious extremist groups Internet downloads and online material availability
Substitutes There is high substitute chances in our product type because entertainment is something that is very diversified thing and can be obtained through different channels with same cost for example if a person is not watching movie on DVD then he can go out to see it on cinema similarly if a person dont play games at home then he can go out on gaming zones.
The major results that shows the consumer acceptance for this new concept is shown as follows.
The result shows that almost 79% people prefer to go to shop for buying CDs
The result shows that people will prefer to go to shop where there is organized assortment of goods and people will select of their own.
The result shows that a greater percentage of people prefer to buy original CDs. And as mentioned above that our store is different from other stores because we will be providing original high quality CDs and DVDs.
14 12 10 8 6 4 2 0 pirated original Series1
The result shows that 84% people have never visited a shop that provides facility of listening to the music and playing games before buying the product.
yes 16%
yes no no 84%
The result shows that 89% people will prefer to come to the shop that will provide the facility of experiencing the product before buying. So this shows that if we will open franchise in Lahore then it will be acceptable by local market.
3) MARKETING
The marketing portion of the franchisor business plan describes the feasibility of the business in the local market and how to attract the franchisees. The major elements are described as follows:
Geographic Segmentation
On the geographic basis, we will be selecting the people of Lahore. We are planning to open franchise in Lahore so at first we will be serving the people of Lahore only.
Demographic Segmentation
Age We are basically trying to fulfill the wants of the youngsters through our collection of music and games. So the age that we will be considering would be 15-35 years. The collection available in our shop will also be catering the wants of above 35 aged people. Like the classic collection of music and movies will be for people who are above 50 and they want to enjoy the Oldie Goldie music and movies. Income The income level the target customers will be above 40,000 because the prices of our products will be a bit higher than the other music shops because of the good quality products and the experience that we are providing to them is not available in other retail shops of music CDs and DVDs.
Psychographic
The psychographic segmentation will be done on the basis of life style and social class. Social Class The target market will belong to the middle class and above. The reason is that the price we are offering is affordable for only those who have income level. Secondly, we are proving good quality products; no pirated version is available in our ship so we want only brand conscious and quality conscious people to shop from our retail outlet. Because other people who prefer price go to the other small scale shops who provides pirated version and they can get it at low price. And brand conscious people psychology is that if they buy a product from a particular brand it will depict their good status in the society.
Lifestyle Lifestyle segmentation is on the basis of the attitudes, beliefs and interests of the people. So our retail shop is only for those people who have got interest in music, movies and games. Each category is according to the interests of the customers.
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franchisee from these cities of Pakistan. The franchise of Radio City will be located in urban areas of the city. Operating Assistance The operating assistance will be providing to the franchisee by headquarter in Islamabad. The franchisee will be getting assistance in issues related to the site selection, layout of shop, its interior, the assortment of merchandise and ongoing support in order to improve the services and to retain the same standards throughout the franchise network. Needed for a franchisee to get started The franchisee must have the experience in same field. He must know about the current market conditions of music and movies CDs and must have a clear view of how to cope with it. Customer satisfaction is the necessary element in our franchise system so the franchisee must have good communication skills which could help in assisting the customers. The franchisee must have the capability of making useful strategies which will help the franchise to stand out in this tough competition. In terms of finance, the franchisee needs to be financially strong to buy such a franchise. Because the theme is different and is also costly so in order to operate it and give a different experience to the customers, the franchisee needs to make some investment. Ongoing Assistance Ongoing assistance will be provided to the franchisee by Radio City in terms of training of the personnel in dealing with the customers and giving them satisfactory services. Along with it the owners of the franchisors will be getting ongoing assistance related to the changes which should be made according to the changing environment and changing customer needs. Radio City will also provide the assistance related to the promotion of the franchise in the local market. The strategy of co-operative advertising will be followed.
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Location There is condition of Radio City in terms of the selection of franchise. The franchise must be in a famous and well located Mall. The reason behind it is that the type of products which are placing in our shop comes in the category of impulse buying. People visit malls on weekends for shopping and many of them prefer to buy CDs on weekends. Standards of Performance The standards of performance will be same for all the franchisees in order to maintain the quality standards same throughout the franchise network. The franchisee will be evaluated on the basis of the customer satisfaction, the number of repeat purchases made by the customers and the sales of the franchise. A Radio City rep will be given the responsibility of checking the performance on regular basis and help the franchisee if it is facing any problem.
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Send Prospectus
Interview of Applicant
Disqualify Applicant
Outlet Setup
Grand Opening!!!
Staff Recruitment
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1) 2) 3)
The idea behind it is that if we will have a franchise in a shopping centre then we can utilize the traffic of the shopping centre in our shop. On weekends the traffic of the shopping malls is usually greater than the week days. And it is observed that mostly people buy music CDs and movies on weekends when they visit the shopping centers. So the surrounding stores will complement our retail shop also. People visit the shopping malls for buying other things like they may visit the departmental store or they may go to for shopping of clothes and other accessories. Some of them also go there for window shopping so we can create the traffic through these customers coming in the mall. The merchandise that we are offering comes under the category of impulse buying. So the retail shop in shopping mall will be best for this kind of merchandise.
The location must match with the demographics of our customers. The mall must be well known where young people and families come for shopping and they must belong to upper middle class. They must be quality conscious people who give more priority to the quality and price is their second preference. The snap shots of the store are attached in the appendix in the end.
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4) MANAGEMENT
The management section covers the major elements like the organizational structure of the franchisor and franchisee, the operating manual and the training manual. All the elements have been discussed below:
4.1 Headquarter
Here is the description of headquarter of the Radio City, the organizational chart and policies.
HR manager
Finance Manager
Operation manager
Marketing manager
Accountant
Resourcing manager
Salary manger
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4.1.2 Policies
Radio city has adopted strict standards that govern operations and ensure accountability for our actions. We have made policies to ensure good quality standard, social corporate responsibility and talent sustainability. We are focused on developing home entertainment industry to the best of its current capabilities in Pakistan, because our customers deserve the finest quality product. HR policy Human resource is a key resource for any organization. Our corporate policy is to find the best of the best talent in Pakistan to work for our organization. We also understand how to make our employee continuously delighted to get maximum output from him and retaining him. We would also like to create a corporate culture that could motivate our employee to work at their best. All the employees of the organization must co-operate with each other in order to provide greater value to the customers. Marketing policies Our marketing policy is to carefully define our target market through proper marketing research and marketing intelligence and then create our brand awareness in our customers. It also includes the policy related to the quality standards of products that we are providing. The quality standard must be same for all the franchises. Privacy Policies The privacy issues are defined by the franchisor for the franchise. Now as Radio City will give its Business Format to another party so it is very important to assure that the other part will not disclose it and will not leak out any information being shared by the Radio City. Payment Policies The payment policies are related to the payment of royalty fees and the initial fee which the franchisee has to pay to Radio City for acquiring the business format. This policy includes the time of payment the franchisee has to follow. Franchisee has to pay initial payment on the
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Cashier
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Quality Standards
We are providing original DVD /CD so very strict standards will be made to ensure that our franchisee is also meeting the standard of selling the original DVD/CD. No pirated versions will be available
Customer Relation
We want to provide the best quality products to our customers and we want to retain them for the longer period of time. This will be achieved by providing satisfactory services to the customers when they are shopping in our shop and provide them a great experience that they will come to our shop again. The employees of the franchisee must be trained and well qualified in order to provide the assistance to the customers when needed.
Inventory System
There will be a good variety of CDs available in the franchise so the franchisee needs to follow the inventory system in order to avoid any shortage of the merchandise. There will be computerized inventory system. The software will be provided by the franchisor to the franchise. The inventory level will be updated on regular basis. When it will reach to half, the system will identify it and the franchisee can ask for new CDs from the franchisor.
Price
We are catering people from upper middle and upper tier of society. So our prices will be little bit greater as compared to the local shops who are selling pirated cds. Movies: 250 Rs Games: 250 Rs Songs: 100 Rs
Franchise Image
Our franchising positioning is on the basis of genuine and original CD s to the customers. We are providing superior and outstanding environment to customers to experience things before paying.
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Customer Services:
There will be customer services counter for customers. Here consultancy will be given to customers for selection of different movies, games and music. And we will not take any charges for these services.
Maintenance Requirement
Our product is not of the sort that require great maintenance requirement only thing that has to b taken into account is that light and dust should not damage the product.
Credit Policy:
We will be giving items of credit to franchisees. Period of credit will be around 30 days. The franchisor can give 40% credit facility to the franchisee.
Store hours:
Store hours of the franchise will be from 11 am to 11pm.
Position Descriptions:
We have 3 staff member on movies, games and music. Person has the responsibility to guide customers who come in any section. They can help customers in picking out their desired CD from racks. There will be a person will be dealing with the cash flow of the franchise. He will be responsible for cash collections.
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In songs, we will be placing songs CD according to the types of music. In games, our games placing will be on types and new releases of the games. All sections will label properly and things will be placed in eye level of the customers so that they can easily approach the things.
Parking
All the franchising will be in some shopping mall, so franchisee will be using parking of that shopping mall.
Background Music
To keep the shop environment smooth and lovely, we will play background music.
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5) Financial Requirements
In order to attract the franchisee its quite important to let him know about the return on investment that in how much time the initial investment will be returned back in a business. Along with it the franchisee also needs to know about the break even analysis that approximately in how much time the franchisee will achieve the breakeven.
Rs 50,000.00
Initial Training Programme Full set of Franchise Manuals Renovation Legal ( Franchise Agreement ) Equipment Computer (Hardware & Software UBS) Initial Stock Working Capital
Total <plus GST>
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the mall will be buying from the shop. These calculations are given below and based on this data; forecasted sales have been calculated for the franchisee. Number of people coming in a mall (in Lahore) = 500 per day Number of people coming in the shop = 30 per day Number of people buying from shop = 30x7=210 per week On an average if one person is buying one CD then the sales in a week = 20x Rs.250 (price of CD) = Rs. 5250. Sales in one month= 5000x30= Rs.2, 10,000 Sales in one year = 2, 10,000x12 = Rs 2,520,000
Gross Profit
Salaries Marketing Expenses Rent Royalty Fees(20%sales)
1,920,000
5,40,000 1,80,000 3,60,000 504,000
1,584,000 3,36,000
1,117,600
EAT
2,18,400
Return on Investment= 2, 18,400/5, 90,000 x 100 = 37%
So this shows that the return on investment to the franchisee in first year of business will be 37%.
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Break Even Point =Fixed Cost/ Selling price per unit Variable cost per unit = 95000/250-168 = 95000/82 =1,158 This means that the franchisee will achieve the breakeven point after selling 1,158 units.
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6) APPENDIX
6.1 Interior of Shop
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movies 6%
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music 12%
movies 12%
music movies
games 76%
games
From the above results we can interpret two things People have got interest in music, movies and games The assortment that we have to place in our shop must be according to the preference of the customers. The results shows that mostly people prefer to go to shops for buying CDs thrice a week.
8 7 6 5 4 3 2 1 0 weekly Twice thrice Series1
From this we can actually estimate the traffic of the customers to the shop.
The result shows that 42% prefer to listen to music through CD player. And many of them actually listen to music while driving.
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CD 42%
CD Cassette Portable
The result shows that there is a greater percentage of people who watch movies on CDs and DVDs
10 8 6 4 2 0 CD/dvd Series1
online
cinema
The result shows that a greater percentage of people play games using computer. So again we can interpret from it that if we will place games in our shop then people will prefer to come to our shop.
15 10 5 0 Series1 Series1
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The result shows that people will prefer to go to shop where there is organized assortment of goods and people will select of their own.
The result shows that people are not that much brand conscious related to buying CDs.
yes no
Out of 37% people who are brand conscious for buying CDs, almost 71% think that buying CDs from brand shows a good status level. So we can interpret that people buy brands because they think it will show their good status level in society. This result will help in estimating that brand conscious people will shop at our shop and mostly brand conscious people are loyal customers.
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The result shows that a greater percentage of people prefer to buy original CDs. And as mentioned above that our store is different from other stores because we will be providing original high quality CDs and DVDs.
14 12 10 8 6 4 2 0 pirated original Series1
The result shows the preference of customers related to benefits that people will be getting from buying original CDs. The first preference is given to high quality of CDs, second preference to long life and third preference to brand association.
brand associati on 5% long life 5% high quality brand association long life
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high quality 0% high quality brand associati on 42% brand association long life
high quality 10% high quality long life 37% brand association long life brand associati on 53%
The result shows the preference of people related to store environment, collection of CDs, arrangement in categories and customer services. First preference is given to collection of CDs, second to the arrangement in categories, third to customer services and fourth to store environment.
Custome Store Envionr r services ment 10% 16% Categori es of cds 16% Collectio n 58%
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Custome Store Envionr r services ment 11% 16% Collectio n 26% Categori es of cds 47%
Store Envionr ment 5% Collectio n 11% Custome r services 58% Categori es of cds 26%
Store Envionrment Collection Store Envionr ment 61% Categories of cds Customer services
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The result shows that 84% people have never visited a shop that provides facility of listening to the music and playing games before buying the product.
yes 16%
yes no no 84%
The result shows that 89% people will prefer to come to the shop that will provide the facility of experiencing the product before buying. So this shows that if we will open franchise in Lahore then it will be acceptable by local market.
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