Problem Statement: Our Client owns a convienence store in Milan, TN and has struggled to grow profit from its current stagnant point. We are trying to innovate a unique idea to increase profit at this store that is easy to implement and has the potential to make a significant impact.
1. Franchised Food Item
- Implement a product that can be franchised form an existing company such as a slushee machine, hunt brothers pizza, stefano’s sandwhiches, etc..
- http://huntbrotherspizza.com/
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2. Customer Loyalty Promotion
- Have a punchcard system that rewards frequent drink purchases, coffee, beer, soda that will increase repeat purchases and hopefully brought in by this promotion will by complimentary products as well.
3. Outdoor Goods Sales/Consignment
- The store has a section of land outside that could be used to allow other people or companies to sell goods on consignment. For example, he could let outdoorsman sell their old boats, hunting supplies, etc. Also, could take advantage of holidays, fireworks for 4th of July, Pumpkins for Halloween etc.
1) I like this idea. One of the main benefits is that it would probably be somewhat flexible and could be removed if it doesn't work. The main constraint would probably be the large fixed cost required to implement this idea, so it would probably be important to conduct market research to understand customer tastes and preferences.
ReplyDelete2)I like this idea. My main concern here is that the store would have to make a commitment to this. Customers may start to feel entitled to this program, so it may be difficult to get rid of the program if it is not paying off.
3) Are there other stores or homes in the surrounding area? If so, I would be concerned about how the neighbors would react.
1 and 2 seem like OK ideas, but I think 3 could provide some real differentiation, and attract a lot of people to the store, while making money. Its like a marketing campaign that pays you. Pumpkins at Halloween, Trees at xmas, fireworks in the summer... charge some rent, and have those customers stop by the store when they are there for those items - maybe create loyal customers as a result
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ReplyDeleteI really like idea #3. When I was growing up in Floriday our local neighborhood stores/parks would let public & private schools sell pumpkins, christmas trees, and fireworks on their land in exchange for a percentage of the profits. This seems like a great way to generate awareness, extra income, and hopefully loyal customers for the future.
I agree with Shannon on #1. Market Research must be conducted to determine what the proper product mix for the store should be. Has the store owner visited other local vendors to see how his product mix differs from theirs?
#2 is a commonly used tactic, and a good one as long as it "sticks".
-Kira B. Bielfield
I fear idea #1 would be expensive and would not create a sufficient benefit to the owner. If there is something specific that a lot of customers are demanding, I can see this as a possibility.
ReplyDeleteI think the reward card is a definite possibility if it uses a strong enough incentive for people to make purchase after purchase to get to that end goal.
I like idea #3 best. I think it would be a great way to bring in new sales, and would also catch people's attention as they drive/walk by. It could be an exciting new addition to the store as the products offered outside changed with the seasons.
I'm not sure that the first idea would be enough of a draw to increase profits (presumably through attracting new customers?). I think people visit convenience stores for one reason: convenience, and are not likely to choose a new one for one single product (unless, of course, there is a competitor very near by. Given the remoteness of this location, I'm assuming there is not?).
ReplyDeleteThe second idea is good, but there are likely already a large amount of return customers, who don't need to be incentivized to return. It's a good idea, since people who come in for their free cup of coffee will likely buy something else, but not the best bang for the buck.
I think the third idea is the strongest, and has the best chance of brining in more new customers. WIth the opportunity to sell seasonal items and allow other parties to see on this space, this is a flexible option to attract passing customers, ("look ma, fireworks!!!") and to increase breadth of offerings. One question: is it legal to sell these kinds of items from this land?
1) This is a good idea. Franchised Food Item could increas somehow traffics at the store. Since most franchised food company provide the free machines, my concern would be how to let customers there is a convenient store here and there are some franchised foods inside.
ReplyDelete2) I doubt that if the customer loyalty card could work for the convenient store. The incentive is not enough.
3) This is a very interesting idea. It could provide some real differentiation, attract a lot of people to the store, and then making money. It might be a great help for a small store trying to survive in this world with large retail stores everywhere.
Great points.
ReplyDelete#1: This would save development costs and having a franchisee of a popular brand would result in better sales as people already know its products.
#2: I would never stop at a convenience store for coffee.
#3: Great idea, this would also bring in more traffic as people will stop over when they look at more things at a shop thinking it is a better store.
#1 would definitely increase revenue, but I guess the price of it would be the determining factor.
ReplyDelete#2 seems like a good idea, but it would be important to look at current customer behavior. I know many people that already frequent the same convenience store because it is convenient, so adding a card when the customers are already repeat customers would have little effect.
#3 Aside from the holiday promotions, I'm not sure there would be much revenue in allowing people to sell things like boats on his property.
Concept #1 is a good idea but might be tough to implement as might involve cost and other franchising issues.
ReplyDeleteI really like concept #3. Its a way to encorage people to get out of their vehicles to see items sold, who then might walk into the store for a drink or snack. The owner might be able to also seek a fee for placement of items on their property.
Concept #2 could be difficult. As someone else mentioned, customer buying preferences would need to be known. However, milan, tn appears to be a small town, thus this type of promotion might prove very useful.
It's hard to judge your ideas fully without more information on the clientele. Obviously different kinds of people respond to different kinds of things. I wonder (as did someone above) whether the loyalty card is going to be attractive to people who don't currently shop there. If profits is the problem, then I might shy away from the loyalty card - unless you get people to spend significantly more than they currently do, you may end up reducing your margin on items and not increasing it.
ReplyDeleteIs there a way to do #1 without the cost of the franchise? Maybe people just want a frozen drink and don't care if it is the "real icee" (or the real Hunt Brothers). Could he just buy a machine (buy generic frozen pizzas), make up his own local brand and sell those? It'd be a much smaller investment, and he'd have much much higher margins and all the control. Franchises are not easy to get nor are they necessarily super profitable for the franchisee unless the franchise is a highly desirable local monopoly where the national puts in a lot of advertising effort.
Your #3 seems to be the most wide-open. I like the seasonal-variety. It may serve to keep people stopping by just to see what the "season" is. Having a little "farmer's market" there on weekends might be a good way to get new customers (and to get the farmers to spend money there as well.)
1. I like this idea and it's definitely the easiest to implement as I imagine other convenience stores do this on a regular basis. Maybe consider several options including a healthy option for consumers who may not want the typical hotdog/pretzel/slushie option.
ReplyDelete2. I like this idea, but I'm not sure convenience store consumers are necessary loyal to one store. Do they have a good number of consumers that shop there on a regular basis?
3. I really like this idea as I think it's a really great way to attract customers that may not normally stop to shop. It may take more coordination that the others but it may also be the biggest revenue generator.
Good stuff! I think #3 is the most novel -- at least to me. If done with some attention to detail to make it seem more official and less like a flea market, I think this could create an interesting cross-selling opportunity.
ReplyDelete#1 is less appealing to me, but I'm probably wrong about the tastes of convenience store clientele. I just think that pizzas and burgers aren't the most delicious option in this setting. However, creative beverage options could be GREAT! I would go Slushee over Icee any day of the week.
2) I like this idea, but after talking to Bouldin about it, he stated that the store was in a very rural area. Therefore, I feel like their customer base is already very loyal...almost to the point that they will take advantage of a 10th coffee free. Basically I don't feel it will drive new traffic.
ReplyDelete3) Again, I am not sure that this will drive that much new traffic. Maybe, but would the added liability be worth the increase in sales? Plus, if you are selling items outside the store, there is no draw to enter the store to purchase other goods.
I think the second solution provides a nice way for the owner to reward loyal customers, but I am skeptical that it would generate any new business for the store. I think the area in which this store is located will make a big difference in the potential effectiveness of the other two solutions. A new franchise item such as a slushee machine is likely to attract kids and other young people into the store, but only if a lot of kids live in the area and have a way to get to and from the store. I for one have no idea what a Hunt Brothers pizza is, but if there are lots of Hunt Brothers pizza eaters in the area, by all means, go for it! Selling pumpkins or Christmas trees on the property is an interesting idea, but would there be any pushback from the other business owners and home owners in the area? Would loyal customers be turned off by the extra commotion in the parking lot and be less likely to drop in for a cup of coffee? Don't be shy about asking your client to give you feedback about the ideas you have generated. You also may want to consider designing an innovation that would help your client better understand his market rather than feeling pressured to design an ideal solution with limited information.
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