Business Plan Letter

Business Plan Letter

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Business Plan Letter
TO: Managing Director of Optimum PLC

FROM: Chief Designer of the Research & Creative

DATE: 11 January 2002

RE: Questionnaire Report on "Just Trainers"

1.0 Terms of Reference

1.1 Ralkon Shoes PLC, a major footwear manufacturer, are considering
opening a chain of shops in the local area specialising in training

We have been asked to investigate the potential market for such shops;
find out which products should be offered in the shops and to outline
a suitable advertising campaign for the shop's launch detailing all
costs. Ralkon named the shops "Just Trainers" but their research
showed this did not appeal to the target group and would like us to
suggest a more suitable name.

1.2 When carrying out this task the main aims and objectives for the
Research & Creative department were provide information about the
following for Ralkon Shoes PLC:


(1)The Potential Market-To investigate the potential market from the
people surveyed, who would consider purchasing from "Just Trainers"
company and why?

(2)The Products to be offered-To provide numerous recommendations from
the results gathered as to the types of products that should be


(1)The Main Market Segment-The main market segment e.g. Age that
Ralkon Shoes PLC will be predominately targeting in order to increase
sales revenue and profit aswell, as keeping up with the latest trends
and fashions.

(2)Spending Habits-Information gathered from our group's collated
results would produce valuable data about the limit an individual
would be willing to pay for sports footwear, which will be the main
product to be supplied by Ralkon Shoes PLC in the chain of shops.

(3)Brand Popularity-To obtain information about which is the most
popular brand of trainer from the collated results of our group's

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2.0 Procedure

Market Research is the tool used to determine what potential customers
want. The vast majority of companies may be described as market
orientated as opposed to product orientated. This is because producing
prototypes is costly.

The research method used for Ralkon Shoes PLC was Field research, from
a random sample of the local area. This was chosen above Desk research
because Ralkon Shoes PLC wants to explore the potential market for
sports shops and the products to be offered. Therfore cheap, up to
date, relevant information must be obtained in order to have knowledge
of current trends and possible future fashions.

2.1 Once the questionnaire had been answered the whole group collated
the results and divided it into various sections, answering specific
questions in order to achieve our aims and objectives.

3.0 Findings

3.1 The main target market for which the questionnaire was designed,
were the teenagers-young adults. These people are most likely to want
to follow trends in fashion.

3.2 The questionnaire was conducted in the surrounding area, which was
Edgware Road; results were obtained from a sample of 100 individuals
(50 male +50 female).

3.3 The most popular branded trainers were Nike with fifty-eight
people answering "Nike" as their most preferred brand.

Most people went to a sport shop to purchase their trainers, a massive
eighty-six of the hundred people questioned.

The majority of the respondents-thirty per cent were willing to pay
over seventy-one pounds for a pair of trainers.

Most of the respondents replaced their trainers every three to six
months-forty-five per cent.

There is no such thing as brand loyalty as many of the
respondents-eighty per cent were willing to purchase different brand



Number of Respondents








Number of Respondents

Under 12















74% of the respondents were between the ages of 13-26 meaning that the
market to be targeted needs to be within the teenage to young adult

Social Group

Number of Respondents















What is your annual income?


Number of Respondents

Under 10K













The majority of the respondents-37% earned under 10k per annum meaning
that the target market will be concentrated on people with low

Brand Popularity

Number of Respondents

















[IMAGE]The most popular brand name by far according to the results of
the one hundred respondents was Nike with 58%. Second place Adidas
only managing a meagre 18% showing that at the current time Nike is
dominating the trainer market.

How much?

Number of Respondents

Under £30















The majority of the respondents-30% were willing to spend in excess of
£71 for a pair of trainers this shows us that the consumer is willing
to pay a premium price for quality trainers.

How often do you replace your trainers?

Number of Respondents

Once a week


Once a month


3-6 months


6 months +




Where trainers are bought

Number of Respondents

Sports shop




Department store






[IMAGE]The above pie chart shows that the majority of the respondents
purchased their sportswear from sports shops.

However, there was brand loyalty with respect to the particular shop
from which trainers were bought.

Would you buy trainers from the "Just Trainers" Company ?

Would you buy trainers from the Just Trainers company?

No of respondents








The majority of the respondents-57% would not purchase trainers from
the "Just Trainers"company mainly because of the following reasons:

(1)Most of the respondents haven't heard of "Just Trainers"

(2)The company has no reputation at the present moment such as future
rivals like First Sport, JD Sports or JJB

(3)The name is not very appealing to potential customers

However, 18% of the respondents said "yes" and a further 25% said
"maybe" meaning even without the 57%, there were still 43% of the
market to be exploited according to our findings. Although 86% of
respondents bought from sports shops only 43% are potential customers
and with such a large market available for exploitation it is
advisable to changed the proposed name of "Just Trainers" to the
suggested option of "BOOM FOOTWEAR" this is because the 57% who
answered "No" were mainly put off by the name in particular.

3.4 The potential market demand for a chain of sports shops is pretty
strong with a massive 86 per cent of our respondents purchasing their
trainers from various sport shops.

For Ralkon Shoes PLC to make an impact on the market which is
dominated by a handful of companies, a more appropriate name must be
found. It should be both eye-catching and memorable. It is also
advisable for Ralkon Shoes PLC to increase the number of products they
have available. The potential customer goes into a sports shop
expecting to observe a numerous selection of sporting equipment not
only trainers.

According to our findings 74 per cent of the respondents were between
the ages of 13-26 meaning that Ralkon Shoes PLC would be recommended
to target this market segment which is the teenage/young adult
segment. This is seen as highly profitable with many potential

The most popular brand name by far according to figures is Nike with
58 per cent in favour with the respondents. This information will be
useful for Ralkon Shoes PLC because it will inform them of which
trainers and associated products to stock-giving them the highest

Quite, surprising 30 per cent of the respondents said that they would
pay in excess of £71 per pair of training shoes. This suggests that a
skimming price strategy is appropriate for this type of retail
project. This information prompts the recommendation that providing
quality trainers could be more important than charging higher prices.
This is because trainers mean a great deal to their owners especially
what with the pressures of the peer group and the need to "fit in",
exclusivity could be important as well making the individual who
purchased them the feeling of being "elite" and when new footwear
arrives on the market many consumers want to make a fashion statement.

The investigation of one hundred respondents of whether or not they
would purchase sports footwear from "Just Trainers" is entirely
conclusive with 57 per cent saying "No" however, as previously put
forward the new company has to develop-building a stable reputation as
well as prestige, if these aims are achieved then the current
potential market of 43% will grow as the company becomes more

4.0 Conclusions

4.1 It would be ideal to sample one hundred respondents in an
alternative area like Oxford Street in order to compare both sets of
results and instead of targeting teenagers adults or older members of
society can be sampled to see if diverse trends or patterns immerge.

Further research is required in order to obtain a true representative
sample of the population, as with taking a sample in a particular area
the same types of people may live in the area with the same views
whereas, an alternative area may have completely conflicting view

4.2 The following recommendations are in my view unsurpassable
according to research conducted by the Research & Creative department
of Optimum PLC:

(1)Locations of the chain of shops-My recommendations are that
firstly, the locations must be near a busy area where many potential
customers are around and secondly, it must be visible to many people
in order to create awareness.

(2)Trainers and products they should sell-The trainers should be brand
names like Adidas, Nike and Reebok according to Optimum Research, the
potential customers would like diversity in sports shops. Therefore,
other sporting equipment such as footballs, snooker cues should also
be available in limited quantities.

(3)Pricing Strategies-According to research the Skimming price
strategy is the foremost pricing strategy however, what with more
stable and reputable competitors it would be advisable to choose the
Competition pricing strategy which is charging what the current price
is that the majority of your rivals are charging, by choosing this
pricing strategy it may avoid a financially dangerous price war with
more established rivals.
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