KAZOO TOY STORE

Posted: September 5th, 2019

KAZOO TOY STORE

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Kazoo Toy Store
Introduction
A business plan is an official document that state goals and objectives of a new or existing business venture and a plan of achieving them in a specific timeline. It examines the technical, financial, and economic feasibility/ viability of a business. Diana Nelson owns the Kazoo toy store, which is based in Denver. When she took over, she developed a business plan, which gave the business a competitive edge in the market. A business is an integral growth strategy for any successful entity.
Importance and Elements of a Business Plan
A business plan is a business card that introduces the venture to the external world, such as banks and investors, when seeking for the financial aid. A business plan serves as a management and planning tool, since internal and external stakeholders use the business plan to make financial and investment decisions. It provides financial projections, which help the investors to make decisions on investments. The economic projections predict possible returns on investments. The management is able to monitor and control the business from the results outcome and indicators. The document provides an analysis of demand, supply, and market trends, which help a business proprietor to review commercial and marketing strategies. It identifies the course of action for risk and resources management (Jones & Penaluna 2013). The plan helps the management to assume responsibility for defined objectives with goal oriented actions.
A business plan comprises of eight fundamental sections. The executive summary is the most significant part of a business plan that gives a brief description of the company, missions, goals, market plan, operation plan, and funding requirements. The description of the company is the second part that consists of the business name, legal structure, mission statement, ownership structure, location, history of the company, and the ways the new venture will enhance the market. Product section entails the features and aspects of the product, regulations and how they will be met. The market section outlines the industry, market share, target customer, market demographics, trends of the customer base, competitors, pricing strategy, marketing strategy, supply chain, and product description (Navarro 2015). The marketing plan segment describes the product awareness methods, launching of marketing plan, and place of promotion. The operations section discusses the location of the business, equipment needed, inventory tracking, costing methods, growth plan, and external business relations.
The management team section describes the roles and responsibilities of the business proprietors. It gives the organizational structure, the communication channels, and reporting structure. This section is significant to the investors who need assurance that the business has the right people to achieve success. It indicates the team members, their qualifications, responsibilities, and duties. It provides a timeframe for specific duties and gives directions on how to overcome challenges, such as labor and production shortages. The last section is the financial section, which shows the status of the business. It provides the management with the data needed to make decisions. It contains a financial projection of five years for income statement, cash flow, and statement of financial position. It contains assumptions made in determining the financial figures used. In addition, it explains in depth how the business will finance its activities, the source of funds, and the historical records for the last five years. The size and format of a business plan varies with the industry, business type, and structure.
The Impact of Understanding Market Dynamics
A market is a social construction for financial activities with an element of social order. The establishment of the social order influences the marketing practice and creates specific dynamics that one has to understand to succeed in a particular industry. Diana Nelson took over Kazoo toy store in 1998 and propelled it to success in a span of four years. She seems to have understood the market dynamics of the toy industry basing on the financial success of the store. The market dynamics include understanding of factors affecting the market, such as demand, supply, pricing, and production factors (Wesley & Barczak 2012). On understanding the industry driving forces and factors, Diana made a business plan that included a market analysis (Patino et al. 2012). The business plan played a significant role in understanding and projecting total revenue and cost of goods sold, distribution and logistics as well as customer service.
The outcome of understanding the market dynamics were obvious, as the store was ranked number one in Denver in the toy industry for a period of four years. The Denver magazine ranked the toy store as the best for eight consecutive years from 2002 to 2009. Nationally, the store was on Inc. 500 list of the five hundred private firms growing rapidly. The toy industry dealt with one product line of items. The giants in the industry had the resources needed to market their products and compete in price cuts. For Kazoo store, the financials resources were scarce and the competition was rife. The market share was narrow for one product line. Nelson understood the market dynamics and identified a market niche. The market was saturated with specific types of toys (Vogel 2014). However, there was untapped potential in the market. The only way to remain competitive and maintain a market share was to differentiate the products. Diana understood that merchandise mix would provide the target market with variety of selection.
Differentiation introduced new product range of trendy and educational toys. The store was not involved in price competition but relied on efficient customer service to create and build customer loyalty. The management understood the need to have appropriate lead times. To ensure regular supply of goods, Diana maintained a strong relationship with the distributors and suppliers (Goossen 2013). The merchants had interactive sessions with the store staff for demos and testing. In the sessions, ideas were generated and exchanged, which helped the store to have unique products to meet the market requirements. The use of different platforms provided more channels for the consumers to interact with the products and buy. Access to the drop shipped products as well as those in the store was easy, and many customers were attracted. The store was not franchised in a bid to maintain its image and brand. Nelson understood the power of customer retention and loyalty is good customer service (Tariq 2014). The store was small, but it was divided into departments to help the clients choose toys with ease and as per their classification. The customers were satisfied with the service and kept making repeat purchases. The driving force of business entities are happy clients. Kazoo had friendly customer service, good shopping ambience, and free parking. The clients’ were assured of their own security and that of their vehicles. Differentiation was the correct direction to make Kazoo a place of unique shopping experience, distinct from the competitors has and fill a market gap (Blank 2013).
Supposing that Diana focused more on other details of the business; such as recruiting and hiring, advertising, and designing of accounting system, and did not take time to understand the market dynamics to develop a business plan, the business would have made losses in the long run. In the short term, the changes would have made gains (Patino et al. 2012). However, the business would have been driven out of the market due to shortage of funds to compete with the giants on one-line products. The company would engage in price cuts competition to remain relevant, which would hurt the profit levels. Eventually, the customers will keep away, because their needs are not met. In summary, to succeed in a business, one has to have a comprehensive understanding of the market dynamics in the particular industry and formulate a business plan that will meet the need of the market niche.

Reference List
Blank, S 2013, Why the lean start-up changes everything, Harvard Business Review, 91(5), pp.63-72
Goossen, R 2013, Disarming the toy store and reloading the shopping cart: resistance to violent consumer culture. Peace & Change, 38(3), pp.330-354.
Jones, C & Penaluna, A 2013, Moving beyond the business plan in enterprise education. Education+ Training, 55(8/9), pp.804-814.
Navarro, F 2015, Business plan: A preliminary approach to an unknown genre, Ibérica, 30, pp.129-154.
Patino, A, Kaltcheva, D, Lingelbach, D, & Pitta, D 2012, Segmenting the toy industry: a study of pre-teen Millennials, Journal of Consumer Marketing, 29(2), pp.156-162.
Tariq, S 2014, Product recalls and product-harm crises: A case of the changing toy industry. Competitiveness Review, 24(3), pp.190-210.
Vogel, H 2014, Entertainment industry economics: A guide for financial analysis. Cambridge: Cambridge University Press.
Wesley, M & Barczak, G 2012 Innovation and marketing in the video game industry: avoiding the performance trap. New York: Gower Publishing, Ltd.