Part 2: Market Research Questionnaire
SECTION 1: ABOUT THE COMPANY :
“ MUA on the go” is the proposed company that is projected to be positioned as a local franchise through its creative approach to the image of the company and detail presentation. It will provide a combination of excellent make up services at value pricing with the approach on performing makeovers to customers at their location within the city of Toronto. The company staff will use vans to arrive to the custom’s location, with a small gas fee applying for customers located at a distance of more than 10Km from the company location. MUA on the go is the answer to an increasing demand for quality makeover services while customers are on the move or while at home.
SECTION TWO: PRODUCT AND MARKET INFO
1. What is the customer need for makeover services in the city of Toronto?
2. Which is the most suitable target market for makeover services?
3. How will the product solve consumer problems?
4. What methods will be used to improve the product overtime?
5. Which are the potential prevailing markets and/or potential emerging markets?
SECTION THREE: COMPETITION
6. Who are the possible direct competitors in the makeup service industry?
7. Who are the possible indirect competitors in the makeup service industry?
8. Who are the potential future competitors?
9. What is the company’s competitive advantage?
10. Which barriers to entry exist in this industry?
11. What measures will be used in safeguarding the company’s Intellectual Property?
12. What is the industry structure in terms of concentration of firms and barriers to exit and entry?
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SECTION FOUR: INDUSTRY TRENDS
13. What is the estimated worth of the makeup industry in dollars/units?
14. What is the projected growth in the market?
15. What factors currently affect the growth of the makeover industry?
16. What are the existing legal and/or governmental regulations?
17. Is the business sensitive to fluctuations in the economy?
18. What is the commercialization or business strategy in overcoming competition?
From the questionnaire, I gained an understanding of the target market through obtaining the demographics on the potential customers. In fact, their opinions and usage habits on makeover services will form a great part of the product specifications. The demographics indicated that the product need to aim at those with busy enough schedules while maintaining reasonable pricing to increase the volume of transactions.
Aspects on the use of product pointed out the current problems that customers have with similar prevailing products in the market. Several points of value will work towards helping the business in focusing on the most important qualities that customers seek. As regards competitive advantage, the product will be tailored to provide elegant styles with both simple and complex approaches depending on the customer requirements. Upon enquiring on ways to improve my product, customers provided various answers with the majority emphasizing on use of different brands to avoid monotony and give each customer a distinguished look. Aspects such as use of natural products as well as synthetic ones also featured and will be taken into consideration.
Part 3: Production and Operation Plan
Production plan.
In today’s competitive environment it is becoming increasingly important for novel approaches to providing services. As such, the company will have vans specially designed to contain a makeover studio at the back that allows convenience. The company will provide different packages, brands and products that customers can choose from. The process of providing distinguished makeover services will require a thorough analysis of the popular makeup brands. Next, the various ways of using these brands to augment each other will be done to arrive at different combinations of unique makeover styles. The next step will involve experimentation through volunteers of different complexions, different gender and in different job occupations.
In the beginning phase, the company will have five combinations of makeup styles. Various makeup artists will be hired in coming up with unique styles of donning make up on customers. The established styles will be printed in the company portfolio for advertising and marketing. Due to the financial requirements, the company will approach different makeup brand companies and convince them of how “MUA on the go” could revolutionize the makeup industry and increase the popularity of their brands. As a result, the company will have a line of supplies from these companies with a comprehensive plan of paying for the goods. With the various brands, the company will have a well-designed facility for storing the inventory to ensure that the integrity of its quality is maintained.
Operations plan
The city of Toronto offers a huge customer base due to its wide metropolitan coverage. The operations plan is prepared to obtain a location for the initial launch of this service. The target market for this company is encompasses all people, gender, ethnic groups. It also targets people with different incomes as its pricing will be reasonably fair across all social classes.
The human resource plan incorporates two company executives, the marketing department, accounts as well as the makeup artists. Job roles for the company executives include stipulating the company’s goals and steering them forward. The marketing personnel will require skills in online marketing, personal selling and product advertising. On the other hand, the makeup artists will have skills on developing makeup styles and donning customers with the various makeovers for different occasions. From a day-to-day basis, the company will employ 10 employees, where five will be makeup artists. Two will be at the communication desk to receive orders and communicate the same to the makeup artists. One individual will be in charge of maintain inventory, another one in keeping accounts with the supervisor overseeing all roles. The need for personnel will vary depending on the demand for services and not majorly on seasonal basis.
Part 4: Marketing plan
The services will be offered at the company but mainly distributed directly to customers. Retailing will be done through the company’s vans which will deliver the services to the customer’s location. The engagement of direct company vans will be employed to reduce costs and shorten the distribution channel. Regarding pricing, the complexity of the makeover will determine the price. Three classes will exist such as normal, premium and exquisite. The price for each of the classes will vary slightly with the lowest charging $10 while the highest will charge $18. These rates will be adjusted based on the demand and supply of services.
Market segmentation will be a major part where the youth will form the primary market targeted. Most of the youth in Toronto meet and hang out around major shopping and fun complexes hence advertising will be focused on these areas. The working group in Toronto form the secondary market segment. Busy road in Toronto act as the haven for shoppers and those seeking job. There are more than 10 big shopping malls across in each of the major roads with more than 40,000 workers who will be targeted for makeover services.
The company intends to use different advertising strategies to capture the target population. The first strategy will involve online advertising. The age of 15 to 37 is the major target for this strategy as they are a heavy internet user group. Their budget is usually flexible and they look for more than price/value relationship. Pamphlets and leaflets will be issued out along with other print media to promote the company and its services. Since majority of the population is literate, this strategy will effectively capture their interests. Lastly, the company will use media advertising through television and radio channels. It is widely known that these avenues provide a comprehensive coverage and repeat the ads to increase the number of people viewing them. Due to the need to have uniqueness, the company will have a logo and brand name that distinguishes it from other companies.
Part 6: Financial Plan
The company will be owned by two investors. The future shares will be offered after two consecutive years of operating in Toronto. The major short term financial goal is to make profits in the range of thirty percent in the first year of operation. The long-term plan is to sustain a 30% profit margin in every financial year through increasing ground coverage.
Start-up Funding
The company is currently owned by two founders who will each contribute $20,000 for the same amount of share, 50%. This will cover other start up requirements apart from the start up, creating a cash cushion to use for expansion over the first three years. The company will also use debt financing. Retail Control is one of the advantages of using debt financing over selling the shares of the company to raise capital. The lender usually has no say on how one should manage their company. The owner is allowed to make their own decisions. Tax advantage is another aspect since the amount one pays in interest is tax deductible therefore reducing ones net obligation. Easier planning is the final advantage since one knows the principle and interest they are supposed to pay at the end of the month
Break Even Analysis
| Year | 2018 | 2019 | 2020 | 2021 |
| Sales | $201,000 | $206,000 | $212,180 | $239,180 |
| Less Variable Expenses | ||||
| Materials | $32,000 | $32,960 | $33,948 | $38,908 |
| Labor | $50,00 | $51,500 | $53,450 | $54,550 |
| Variable overhead | $125,00 | $128,75 | $132,61 | $186,36 |
| Other | $0 | $0 | $0 | $0 |
| Contribution Margin | 106,500 | 108,650 | 119,250 | 127,900 |
| Contribution Margin Ratio | 52.99% | 52.75% | 52.75% | 53.14% |
| Fixed Expenses | ||||
| Salaries and wages | $19,000 | $19,000 | $19,000 | $19,000 |
| Employee benefits | $5,000 | $5,500 | $5,845 | $5,875 |
| Payroll taxes | $3,000 | $3,400 | $3,568 | $3,627 |
| Utilities | $300 | $300 | $300 | $300 |
| Rent | $5,000 | $5,000 | $5,000 | $5,000 |
| Insurance | $1,000 | $1,000 | $1,000 | $1,000 |
| Fuel | $2,133 | $2,197 | $2,263 | $2,263 |
| Telephone | $2,100 | $2,163 | $2,230 | $2,400 |
| Advertising | ||||
| Marketing/promotion | $3,100 | $3,400 | $3,700 | $3,900 |
| Other | $0 | $0 | $0 | $0 |
| Total Fixed Expenses | 17,133 | 20,767 | 23,150 | 24,510 |
| Total Fixed Expenses Ratio | 15.78% | 15.57% | 15.29% | 13.72% |
| Break-Even Sales | 59,533 | 60,089 | 61,185 | 61,570 |
| Break-Even % | 29.78% | 29.52% | 28.99% | 25.82% |
| Operating Profit | 74,867 | 76,883 | 79,740 | 94,275 |
Cash Flow Projections
|
Jan |
Feb |
Mar |
Apr |
May |
Jun |
|
| Cash on hand (beginning of month) |
$0 |
$7,500 |
$3,000 | $6,500 | $5,000 | $ 1,000 |
| CASH RECEIPTS | ||||||
| Cash sales | $9,000 | $14,000 | $19,000 | $17,000 | $15,000 | $17,000 |
| Returns and allowances | $1,000 | $1,200 | $1,800 | $2,100 | $2,300 | $2,350 |
| Loan proceeds | $80,000 | $0 | $0 | $0 | $0 | $0 |
| Owner contributions | $20,000 | $20,000 | $20,000 | $20,000 | $20,000 | $20,000 |
| TOTAL CASH RECEIPTS |
$101,000 |
$102,000 |
$89,000 |
$99,000 |
$106,000 |
$104,000 |
| Total cash available |
$101,000 |
$102,000 |
$89,000 |
$99,000 |
$106,000 |
$104,000 |
| CASH PAID OUT | ||||||
| Advertising | $16,000 | $16,000 | $20,000 | $22,200 | $29,000 | |
| Contract labor | $16,000 | $16,000 | $16,000 | $16,000 | $16,000 | |
| Insurance | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 | |
| Interest expense | $ 15,000 | $ 15,000 | $ 15,000 | $ 15,000 | $ 15,000 | |
| Materials and supplies | $ 12,000 | $ 12,000 | $ 12,000 | $ 12,000 | $ 12,000 | |
| Rent or lease | $18,000 | $18,000 | $18,000 | $18,000 | $18,000 | |
| Rent or lease: vehicles, equipment | $ 2000 | $ 2000 | $ 2000 | $ 2000 | $ 2000 | |
| Repairs and maintenance | $1000 | $1000 | $1000 | $1000 | $1000 | |
| Taxes and licenses | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | |
| Utilities | $ 2500 | $2500 | $ 2500 | $ 2500 | $ 2500 | |
| TOTAL CASH PAID OUT | $93, 500 | $79,000 | $92,000 | $100,000 | $102,000 | |
| Cash On Hand (End Of Month) | $7,500 | $3,000 | $6,500 | $5,000 | $ 1,000 |
