4.1 Market Need
The East Side is one of Greenville's most prosperous, literate, and fast-growing communities. Yet since the closing of the East Side branch of The Open Book (several small stores were consolidated into a superstore to compete with the arrival of Barnes & Noble to the area) and the relocation (then later, closure) of Bentley's Books, the East Side does not have a convenient neighborhood bookstore. The closest bookstore new or used is Barnes & Noble, requiring shoppers to fight traffic on Haywood Road, one of Greenville's busiest streets.
[Evidence that an area has previously supported a bookstore is usually good if the reason that the store closed or relocated had nothing to do with poor sales. If you're intimately familiar with an area, then the market need may be self-evident. If you're new to the area, you may need to do more research or testing of the market.]
4.2 Main Competitors
The best direct competitor to Fiction Addiction is Carolina Book Rack; the closest competitor is Barnes & Noble.
[You must research your competitors. Some of your competitors are going to resent you for daring to steal their market share, but after a while they may even start to refer customers to you. It will help if you do not compete directly head-to-head but instead only partially overlap with each other. Thus, Fiction Addiction does not carry the category romances (Silhouettes, Harlequins) that are the bread-and-butter for Carolina Book Rack, and they send anyone looking for hardcovers my way.]
4.3 Market Segmentation
Our main target markets are Housewives, Students, Teachers, Professionals, and Retirees.
Housewives and Retirees
This target market will purchase during the day. Women will primarily be interested in romance novels, mysteries, general fiction such as Oprah's Book Club picks, and children's books. Men will typically be drawn to mysteries, science fiction, and nonfiction.
Housewives and Retirees can take their time while shopping and will appreciate a seating area, intelligent book discourse with the owner, and reading recommendations.
To appeal to women shoppers with small children who may wander in from the children's haircutting salon in the Plaza, Fiction Addiction plans to create a children's nook, with toys & child-size seating.
Students and Teachers
Students and teachers will typically purchase during the afternoons and on weekends. Teenagers would be embarrassed to have to browse through books for younger children, so books for younger readers will be divided into three sections: Young Adult, Juvenile, and Easy Readers.
High-school and college students will gravitate toward the adult science fiction, fantasy, and horror sections but may also purchase classics and other general fiction.
Fiction Addiction will to reach out to local teachers by offering a 10% discount and ask that they recommend us as a source for books to their students. We will also consider advertising in the local college directories and/or newspapers.
Professionals will tend to purchase during the evenings and on weekends. Their purchases will most likely include bestsellers, hard-to-find out-of-print books, nonfiction, and collectibles. Professionals have little time to shop and thus will appreciate shelf-talkers and other merchandising efforts.
[Who will your customers be? How will you reach them? What will their needs be? You can segment your market however you want - perhaps you're in a tourist town and will have locals vs. tourists. The idea is to try to group your customers by their different needs to have something that appeals to every group.]
5.0 Strategy Summary
Fiction Addiction's main strategy is to establish itself as the East Side's neighborhood used bookstore.
The company's secondary strategy is to expand its market via Internet sales.
[What are your primary goals regarding your potential market base? Will you be reaching out to a specific segment first?]
5.1 Competitive Edge
Fiction Addiction's proposed location in Patchwork Plaza is an important competitive edge. The nearby intersection of East North Street and Hawyood/Howell is a high traffic area and the store will have good visibility from the street. Many East Siders do not travel on East North Street farther than Hawyood and thus would find our location more convenient than Carolina Book Rack.
Fiction Addiction plans to have the best and largest science fiction and fantasy section in the Upstate. The initial inventory will be fueled by the owner's personal collection in this area.
Fiction Addiction will be the only used bookstore in town carrying a significant amount of nonfiction and hardcover books. As the reading population ages, more and more customers are preferring the larger print of hardcovers.
Another competitive edge Fiction Addiction must develop is atmosphere and reputation. Avid readers are always looking for new recommendations and will be loyal to a store with a knowledgeable owner who takes the time to merchandise and promote her inventory in an environment that encourages browsing.
These advantages are important to Fiction Addiction because our prices will be slightly higher than most of the other used bookstores in Greenville.
[How will you be different from your competition? What can you specialize in? Where does your knowledge and interest lay?]
5.2 Pricing Strategy
Since the East Side is one of the more affluent areas in Greenville and since Fiction Addiction will be the closest bookstore, we feel that we can price slightly higher than the norm for a used bookstore in exchange for the convenience of our location.
We plan to discount most used paperback books at 40% off of the current retail price (not the cover price). The norm in Greenville is 50% off the cover price, though Carolina Book Rack's complicated pricing scheme often results in a less than 50% discount. We will have a minimum price of $2.00 for children's books and $3.00 for adult books. We will give 20% of the cover price (up to $2.00/book) in store credit.
We plan to give $2.00 in credit per hardcover and to price most hardcovers at $8.00 and up. $8.00 is the current retail price for most new paperbacks. If paperback prices increase, we will similarly increase our used hardcover price. Collectible first editions may be priced as high as $300, but most will fall in the $15-40 range.
We will pay 10% of cover price for used audiobooks. We will primarily accept CD audiobooks. We will price our audiobooks at 40% off of the current retail price. We will also offer audiobook rentals at $3.50/week. Customers will pay the purchase price, then get refunded the appropriate difference when they return the rental.
[Many used bookstores operate on a 50% margin, meaning that if I buy a book for $1.00, I turn around and mark it $2.00. If it sells, my profit is half (i.e., 50%) of my sales price. But the best used bookstores have a much higher margin - at least 60%. I strongly suggest only paying 1/3 of your estimated sales price for your stock. If you think you can get away with paying less, even better. Remember that you're starting a business and it's not unethical to want to make money at it. Used books are not a high-dollar item when compared to jewelry or cars or furniture and yet you still have to pay the same prices for rent and advertising as all those other stores. You're going to need those higher margins to foot the bill.]
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