Increasing Sales and Customer Traffic at Surf and Snow Shop

Purpose

The purpose of this activity is to apply your learning from chapters 14 and 15 - IMC.

Complete this activity on your own or with a partner. Read the case scenario below, then answer the questions on page 2.

The owners of the Surf and Snow Shop, Amanda and Ethan, are analyzing the operating results covering the nine-month period since they opened their new store.  Because these results are not up to their expectations, the owners realize they have to do something to increase: (1) sales volume and (2) customer traffic in the store.

The Surf and Snow Shop is a small outdoor equipment store specializing in skis, snow boards, ski and snow boarding accessories, as well as surfing boards and gear. The store is located on a side street near a large shopping centre in downtown Victoria, British Columbia.  The store’s location is somewhat of a disadvantage to the business as it is away from mainstream downtown shopper traffic.  

Because Amanda and Ethan both have other full-time jobs, they do not have time to operate the Surf and Snow Shop.  They have hired Emily Smith, aged 30 and a longtime family friend to run the store and to handle some managerial duties.  Emily has no formal management training, but she has worked in a sporting goods store for the past three years, and was a competitive snow boarder.  In addition, they have hired a business student from Camosun College to work as a sales associate and to help in other store activities.

The Surf and Snow Shop carries a mid to high priced line of brand name equipment, as well as a selection of funky ski and board wear and accessories.  They also act as the exclusive distributor of a line of snow boards designed and built by a local manufacturer. Camping and other outdoor gear is sold in the back of the store.

The owners estimate they need sales of $7,000 per month to break even.  Since its opening, the store has averaged less than $5,000 a month in sales.  In fact, December was the only month in which sales volume was satisfactory.  Sales vary considerably by product.  Snow boards and snow board clothing usually sell well.  Sales of camping gear has been disappointing, but other outdoor items, such as hiking boots, sell well. Sales of surf boards and surfing equipment have been only fair.

The competition facing Surf and Snow Shop comes primarily from larger chain stores such as Sport Chek, and other specialty sporting goods stores, including Mountain Equipment Coop (MEC), Ocean River Sports, and Robinson’s. All competitors have outlets located downtown which serves to bring a lot of customers to the downtown core for ski and boarding equipment and outdoor gear. Surf and Snow Shop’s prices are comparable with prices in MEC, Robinson’s and Ocean River Sports.

As mentioned, except for the month of December, sales volume has been below the owner’s expectations. To help offset the store’s location problem, Ethan has placed a small poster board on the sidewalk in front of the store. The poster board has had little effect apparently, because customer traffic increased only slightly.

The owners believe that they have to increase their promotional activities to offset the competition, and to generate additional customer traffic and sales volume. Both Amanda and Ethan feel that they need to develop a store theme and identity. They want to create an ‘experience’ for shoppers. This would give potential customers more reason to shop at Surf and Snow Shop. The owners want to communicate the benefits of personal service, friendly atmosphere, and product expertise that customers receive at the store.

To date, the store’s only marketing communications has been a small ‘grand opening’ ad on Facebook, the poster board and a basic web site. Otherwise, they rely solely on street exposure to bring in business. They have no measure of the effectiveness of their marketing communications mix to date.

After much discussion, Ethan and Amanda decide to obtain a bank loan of $10,000 for a promotion campaign. Ethan feels this sum is too high, but Amanda wants to have enough money ‘to do the job right’ as she puts it. She looks upon the campaign as their last big effort to generate business for the store. She believes that if they could get people to make a first purchase, then these people would develop into repeat customers. Amanda and Ethan next are faced with the problem of how they should allocate this money. Specifically, they’re wondering what the IMC mix should be.  

1. Which budget method have Ethan and Amanda used – Percentage of Sales,

Industry Average, Arbitrary Allocation, or Task (Objective)? (ch. 14 - LO2)

2. How do the following factors affect Surf & Snow Shop’s IMC Mix selection:
   • Stage in the product life cycle (Do they need to inform, persuade, or remind?)
   • Target audience characteristics (What media does the target audience use?)
   • Type of buying decision (Is it routine, limited, or extended?)
   • Amount of $$ available (Is $10,000 a lot or a little?)
   • Push & pull strategies – (see Fig. 14.3 in ch. 14 - LO2)
     
     
3. Based on these factors, how much money from the $10,000 total budget would you allocate to each of the IMC Mix options (see Fig. 14.1) – Advertising, Social & Mobile Communications, Sales Promotion, Public Relations, Experiential Marketing, and Personal Selling?  Draw a pie chart and briefly explain your rationale for your budget allocation.
   
   
4. With your partner, describe a possible social media promotion.