Internet Café Business Plan (Strategy and Implementation Summary)

Executive Summary

Company Summary

Market Analysis Summary

Strategy and Implementation Summary

Wired Bean will follow a differentiation strategy to achieve a competitive advantage in the cafe market. By providing Internet service, Wired Bean separates itself from all other cafes in Salem. In addition, Wired Bean provides a comfortable environment with coffee and bakery items, distinguishing itself from other Internet providers in Salem.

Marketing Strategy

Wired Bean will position itself as an upscale coffee house and Internet service provider. It will serve high-quality coffee and espresso specialty drinks at a competitive price. Due to the number of cafes in Salem, it is important that Wired Bean sets fair prices for its coffee. Wired Bean will use advertising as its main source of promotion. Ads placed in The Daily Cyclone, Salem Weekly, and the Jubilee Herald will help build customer awareness. Accompanying the ad, will be a coupon for a freehour of Internet travel. Furthermore, Wired Bean will give away three free hours of Internet use to beginners who sign up for an introduction to the Internet workshop provided by Wired Bean.

Target Markets and Market Segments

Wired Bean intends to cater to people who want a guided tour on their first spin around the information highway and to experienced users eager to indulge their passion for computers in a social setting. Furthermore, Wired Bean will be a magnet for local and traveling professionals who desire to work or check their e-mail messages in a friendly atmosphere. These professionals will either use Wired Bean's PCs, or plug their notebooks into Internet connections. Wired Bean's target market covers a wide range of ages. From members of Generation X who grew up surrounded by computers, to Baby Boomers who have come to the realization that people today, cannot afford to ignore computers.

Pricing Strategy

Wired Bean bases it's prices for coffee and specialty drinks on the "Retail Profit Analysis" provided by our supplier; Frederickson Supply Co., Inc. Frederickson Supply has been in the coffee business for 22 years and has developed a solid pricing strategy.

Determining a fair market, hourly price, for on-line use is more difficult because there is no direct competition from another cyber-cafe in Salem. Therefore, Wired Bean considered three sources to determine the hourly charge rate. First, the cost to use other Internet servers, whether it is a local networking firm or a provider such as America On-line. Internet access providers use different pricing schemes. Some charge a monthly fee, while others charge an hourly fee. In addition, some providers use a strategy with a combination of both pricing schemes. Thus, it can quickly become a high monthly cost for the individual. Second, Wired Bean looked at how cyber-cafes in other markets such as Portland and Ashland went about pricing Internet access. Third, Wired Bean used the market survey conducted in the Fall of 1996. Evaluating these three factors resulted in Wired Bean's hourly price of five dollars.

Promotion Strategy

Wired Bean will implement a pull strategy in order to build consumer awareness and demand. Initially, Wired Bean has budgeted $5,000 for promotional efforts which will include advertising with coupons for a free hour of Internet time in local publications and in-house promotions such as offering customers free Internet time if they pay for an introduction to the Internet workshop taught by Wired Bean's computer technician. Wired Bean realizes that in the future, when competition enters the market, additional revenues must be allocated for promotion in order to maintain market share.

Sales Strategy

As a retail establishment, Wired Bean employs people to handle sales transactions. Computer literacy is a requirement for Wired Bean employees. If an employee does not possess basic computer skills when they are hired, they are trained by our full-time technician. Our full-time technician is also available for customers in need of assistance. Wired Bean's commitment to friendly, helpful service is one of the key factors that distinguishes Wired Bean from other Internet cafes.

Service and Support

Any customer who runs into trouble working on a terminal can ask Wired Bean's full-time technician for assistance. If the technician is not available, Wired Bean's part-time employees are trained to deal with common problems encountered by novices. Also, if Wired Bean's founder, Peter Jones is around, he is always willing to personally help a customer.

In the event that a customer is unsatisfied with a food or beverage product, Wired Bean will courteously remedy the situation by either replacing the item, or offering a complete refund.

Strategic Alliances

Wired Bean will purchase coffee beans from Frederickson Supply Co., Inc., a coffee wholesaler and retailer based in Corvallis. Frederickson Supply is extremely supportive of its buyers. They sell as well as lease coffee equipment such as grinders and espresso machines. Frederickson Supply provides the following: a one or two year parts and labor limited warranty, installation and testing, on-call service (24hrs/day-7 days/week), training on-site, or at their Corvallis facility, and a start-up kit including syrups, chocolate and other supplies necessary to operate an espresso machine.

Timeline

From the time of start-up, Wired Bean has allocated $5,000 for promotional efforts. The majority of these funds will go towards advertising, while the remaining dollars support in-house promotions such as coupons for free Internet access. Wired Bean realizes that direct competition is just around the corner. Therefore, Wired Bean is planning on contributing an additional 2%-5% of revenue toward promotion as it becomes necessary to combat competitive threats. Due to the uncertainty of competition at the present time, Wired Bean is not setting a scheduled plan for implementation of sales promotions.

Management Summary

Wired Bean is owned and operated by Mr. Peter Jones. The company, being small in nature, requires a simple organizational structure. Implementation of this organizational form calls for the owner, Mr. Jones, to make all of the major management decisions in addition to monitoring all other business activities.

Personnel Plan

The staff will consist of six, part-time employees working thirty hours a week at $5.50 per hour. In addition, one full-time technician (who is more technologically oriented to handle minor terminal repairs/inquiries) will be employed to work forty hours a week at $10.00 per hour. The three private investors, Jerry Thomas, Jack Simmons and Gary St. Clair will not be included in management decisions. This simple structure provides a great deal of flexibility and allows communication to disperse quickly and directly. Because of these characteristics, there are few coordination problems seen at Wired Bean that are common within larger organizational chains. This strategy will enable Wired Bean to react quickly to changes in the market. In the future, a full-time manager will be employed.

Personnel Plan

Financial Plan