1. BUSINESS DEVELOPMENT
PROPOSAL FOR A
RETAIL MERCHANDISING
SERVICE COMPANY
by
Dragan Ocokoljic
LSC ID NUMBER: 0023gzgz1113
Presented as part of the requirement for the award of MBA at Cardiff
Metropolitan University (CMU)
May 2015

2. BUSINESS DEVELOPMENT PROPOSAL
Supervisor Declaration Form
Student Name: Dragan Ocokoljic
Supervisors Name: Vlada Botoric
I acknowledge that the above named student has regularly attended the planned
meetings and actively engaged in the supervision process. They have provided
regular timely draft chapters of the BUSINESS DEVELOPMENT PROPOSAL and
followed given guidance.
I confirm that I have approved the BUSINESS DEVELOPMENT PROPOSAL title
specified below.
Title of BUSINESS DEVELOPMENT PROPOSAL:
BUSINESS DEVELOPMENT PROPOSAL FOR RETAIL MERCHANDISING
SERVICE COMPANY
Date: April 26th
, 2015

3. DECLARATION
This work being submitted in partial fulfilment of the requirements for the degree
of MASTER OF BUSINESS ADMINISTRATION
And has not previously been accepted in substance for any degree and is not being
concurrently submitted in candidature for any degree.
Signed: (Candidate)
Date April 26th
, 2015
STATEMENT 1
The Business Development Proposal is the result of my own work and
investigations, except where otherwise stated. Where correction services have been
used, the extent and nature of the correction is clearly marked in a footnote (s).
Other sources are acknowledged by footnotes giving explicit references. A
bibliography is appended.
Signed: (Candidate)
Date April 26th
, 2015
Either STATEMENT 2 (i)
I hereby give consent for my Business Development Proposal, if accepted, to be
available for photocopying and for inter-library loan, for deposit in UWIC's e-
Repository, and that the title and summary may be available to outside
organisations.
Signed: (Candidate)
Date April 26th
, 2015

4. Or STATEMENT 2 (ii)
I hereby give consent for my Business Development Proposal, if accepted, to be
available for photocopying and for inter-library loan, for deposit in UWIC's e-
Repository, after expiry of a bar on access approved by CMU.
Signed: (Candidate)
Date April 26th
, 2015

5. 1
Table of Contents
Executive summary................................................................................................. 3
1. Introduction......................................................................................................... 5
1.1 Rationale for the Business Idea..................................................................... 5
1.2 Business Scenario.......................................................................................... 6
1.3 Aims and Objectives of the Work ................................................................. 6
1.4 Structure of the Work.................................................................................... 7
2. The Business Concept......................................................................................... 8
2.1 Mission and Vision of the Company............................................................. 8
2.2 Organisational Setup ..................................................................................... 9
2.3 How the business will function?.................................................................. 10
3. Feasibility.......................................................................................................... 14
3.1 Primary and Secondary Market Research (Overview)................................ 14
3.2 The Research Question................................................................................ 14
3.3 Components of the Research Question ....................................................... 15
3.4 SMART Research Objectives...................................................................... 15
3.5 Literature Review........................................................................................ 16
3.5.1 Importance of Retail Merchandising .................................................... 17
3.6 Research Methods and Sources of Information .......................................... 18
3.7 Feasibility (Service, Industry/Market, Organisational, Financial Feasibility
Issues)................................................................................................................ 19
3.7.1 Service Feasibility................................................................................. 19
3.7.2 Industry/Market Feasibility................................................................... 22
3.7.3 Organisational Feasibility..................................................................... 29
3.7.4 Financial Feasibility.............................................................................. 35
3.8 Resource Requirement Evaluation .............................................................. 37
4. Business Model................................................................................................. 38
4.1 Strategic Analysis of the New Business Idea: Identification of Sources of
Competitive Advantage and Sustainability ....................................................... 38
4.2 Development of Appropriate Business Model ............................................ 39
4.2.1 Business Model Canvas........................................................................ 39

6. 2
4.2.2 The Core Strategy................................................................................. 40
4.2.3 The Resource Needs ............................................................................. 42
4.2.4 The Partnership Network...................................................................... 44
4.2.5 The Value Deliverables to the Customer.............................................. 45
5. Business Plan .................................................................................................... 47
5.1 The Industry, the Company and the Service ............................................... 47
5.2 The Key Success Factors............................................................................. 48
5.3 The Market, Market Analysis and Market Research................................... 49
5.3.1 Segmentation ........................................................................................ 49
5.3.2 Targeting ......................................................................................... 50
5.3.3 Positioning ...................................................................................... 51
5.4 The Balanced Scorecard.............................................................................. 51
5.5 Marketing Plan ............................................................................................ 54
5.6 Cost, Volume and Profit Analysis............................................................... 58
5.7 Human Capital Management....................................................................... 60
5.8 Critical Success/Failure Factors .................................................................. 62
References............................................................................................................. 64
Appendices............................................................................................................ 67

7. 3
Executive summary
Company “ShowUp” will be retail merchandising service provider for Fast Moving
Consumer Goods (FMCG) companies or their distributors on Serbian Market.
Currently few big merchandising service providers are operate on the market. Their
customers are mostly the biggest FMCG companies, with merchandising needs
which covering whole retail. For smaller merchandising coverage requests (in
limited geographical area) they have no adequate price offer, due to organisational
set for big tasks which implies high fixed costs. Small to medium FMCG companies
have no appropriate price offer for their needs. There arises market gap and the
business idea is to fulfil this gap.
The business idea is to provide service for customers which have merchandising
demand only in big cities and urban areas, not for whole retail market. The
company’s investment in merchandising service will have the same focus as the
focus of distribution of the potential customer’s. It will be “investment match”
between service provider and the customers.
Competitive advantage will be obviously in the price, but also in flexibility that
small organisation can provide. Even though the price will be reasonable, the
quality of the business execution will remain at least at the same level as
competitors’, with strong focus on innovation and tight cooperation with the
customer which will ensure better customer experience.
The company will have headquarter in Belgrade and offices in 3 big cities in the
country. The fund requested for the first year is 370,000 EUR, while for the second
it will be 340,000 EUR. The assumption of break-even point reach is after 18
months with 4 contracts (4 customers) that will engaged all 16 merchandisers on
the field.

8. 4
The organisation will have 6 months for preparing the employees for business
operations, implementation of marketing plan including introduction of the
company to potential clients, trainings for merchandisers and their supervisors and
logistic interplay. The plan is to sign first contract for the service after 6 months,
second one after 12 months, and third and fourth contract after 18 months, when
break-even point should be reached and overdrawn with revenue of 384,000 EUR.
Four contracts at the time will ensure positive cash flow. Due to very low level of
variable costs, every contract more will bring almost pure profit (before tax).
The main company’s suppliers will be IT providers, car fleet dealer and legal
consultancy firm.
Core company competence and the base for future success is lying in absolute focus
on customer satisfaction, quality of execution, flexibility and constant innovation.
Fulfilling of these demands will build the company brand - “ShowUp”. This brand
will ensure long-term sustainability, even when competitors adopt the same or
similar strategy - “investment match” between the service provider and potential
client.

9. 5
1. Introduction
1.1 Rationale for the Business Idea
FMCG industry in Serbia is very dynamic. Many companies are present and hardly
trying to find their position on the marketplace. When a product is created and
distributed on the market, the main battle is at the level of marketing through mass
media and trade marketing. The business idea in this work is about trade marketing,
or more specifically, it is merchandising service at the level of point of sale (POS).
The biggest FMCG companies gain their position with strong merchandising which
is deployed by their own field force merchandisers or with big merchandising
service providers. There are 3 big merchandising service providers that operate in
Serbia and each of them cover whole country. Those companies can serve
successfully and profitably to every FMCG company that needs merchandising
across Serbia, in almost every location. For that kind of tasks, these providers can
offer reasonable price and stay profitable. But for small to medium FMCG clients,
which need merchandising in limited market (e.g. just in bigger cities or urban
places) these big merchandising servicers cannot offer adequate price, due to very
big and complex organisation that need big job to stay profitable and not to “run
business in vacuum”. Financially looking, they have high fixed costs. For smaller
tasks, that include merchandising in limited area, they must offer almost the same
price as for tasks with merchandising in every POS in order to cover those big fixed
costs. Only vast merchandising tasks ensure profits for these companies. For
smaller tasks they are forced to offer unreasonable price, in order to stay profitable.
It cause that smaller clients often stay without merchandising service. Of course,
for smaller companies it is too expensive to create their own merchandising force.

10. 6
1.2 Business Scenario
Previous theses shows that there is a gap in merchandising service offers for small
to medium FMCG companies. There are market demands that are not satisfied
among current offers. The idea is to start new merchandising service with
organisational setup that supports needs of smaller clients. Compare with existing
competitors, the main characteristic will be tailor-made company’s resources that
can be fully utilised for merchandising tasks in limited universe. In that way, the
company can offer reasonable price for limited merchandising service and stay
profitable. The most influential resource that must be specifically tailored is the
number of merchandisers and their supportive tools such as cars, IT equipment and
centralised companies assets (e.g. offices).
1.3 Aims and Objectives of the Work
The objectives of the work is to create plan for start-up company that will meet
merchandising necessities of small to medium FMCG companies on Serbian retail
market. Plan will be based on market research that will identify market gap,
rationale for appropriate entrepreneurial reaction and deployment of start-up plan.
The company will have different approach on the market compares to competitors,
and will be dimensioned for the clients that have specific merchandising needs. In
that way, the young company will have unique offer with reasonable price that will
satisfied customers with lower budget and specific geographical needs. The
company will become only one possible partner for big group of FMCG clients.
In the same time, the company should not be leveraged on their uniqueness and
forget on customer satisfaction. Without this, the frustration between customers can
raised and generate bad partnership that can irretrievably affect future business and
sustainability. The customer satisfaction must stay the highest priority of the
business. In order to ensure sustainable and long-term competitiveness on the

11. 7
marketplace, the company must develop strong brand name that will be recognised
as the one with high quality service as well as flexible and reliable partner. From
clients’ perspective the purpose of the company is to offer right-sized
merchandising service in limited geographical area with reasonable price.
1.4 Structure of the Work
The structure of the work is as follow:
- Primary and secondary market research in order to find out what is specific
need on the market that have no adequate respond among current
merchandising service companies (define market gap).
- Feasibility study that covers all necessary business elements.
- Need for resources that must be employed for success in start-up business
and their availability.
- Identification of differentiation point and competitive advantage, and based
on that, development of business model that will supports 3-5 years business
sustainability, with aim to retain competitive advantage.
- Business plan schedule from starting capital employed, throughout all
stages of business development including creating relationship with
suppliers, customers, organisational chart and setup, defining core
competencies per job position, staff selection and recruitment.
- Defining critical success factors, risk assessment (What if the business fail?)
and assumption of potential obstacles and challenges.
- Assumption of competitors’ reaction and plan for overcoming in order to
stay competitive.

12. 8
2. The Business Concept
2.1 Mission and Vision of the Company
The name of start-up company: ShowUp
Vision statement: We exist to ensure communication between our customers and
their consumers at the level of point of sale, in the most effective way. We tend to
improve business continually with innovative approach to business execution. We
want to become the most efficient retail merchandising service for FMCG
companies on Serbian market.
Mission statement: We are committed to overcome customers’ expectations
through maximised utilisation of resources employed with aim to achieve strong
and innovative merchandising with reasonable price.
To put mission into action, it is absolutely critical to set structure of the company
and its resources in accordance with postulate: Provide efficient service in limited
geographical area, with adequate price and stay profitable. It is not unknown how
to run this kind of service. There are many good examples from where the best
practice can be “borrowed”. The newness on the market is competitiveness of the
service in smaller and focused area, which implies organisational setup that will
cover relatively big fixed cost easily. Of course, variable cost and profit margin
should be covered, but with lower price than competitors’. To build such company,
which can be profitable for smaller size of task, resource planning is crucial. The
“rule maker” for this planning is steady profitability for any customer’s request.
Understanding and defining of this rule is the key for success.
Resources are the consequence of the size of the area that should be covered with
merchandising activities. This area is dictated by clients’ merchandising needs.
Who are potential clients?

13. 9
As it is mentioned before, it will be small to medium FMCG companies.
What is their distribution coverage?
This could be in the range between 4 biggest cities to 25 biggest cities with suburbs.
Smaller coverage is characteristic of the companies without merchandising, while
bigger coverage will be a subject of vast merchandising service companies (current
competitors). Main resource of the company will be merchandisers which will be
business executor on the field. This resource further require cars, IT equipment,
offices, etc. Therefore, merchandisers will be fundamental human capital of the
company, but also the biggest source of fixed costs. The number of merchandisers
must be in accordance with clients’ demand which will be defined by the gap in the
market.
2.2 Organisational Setup
The plan is to employ 16 merchandisers, 4 per each big city of Serbia: Belgrade,
Novi Sad, Nis and Kragujevac (see Figure 2.1).
Figure 2.1 Four biggest cities in Serbia selected for Field Force offices
(Source: web of Phespirit - http://www.phespirit.info/places/)

14. 10
These 4 cities is selected to cover whole country uniformly, with almost equal
distance between. In each of these big cities will be an office. Each team of
merchandisers will have one supervisor in these cities. Supervisors will report to
National Merchandising Manager. That part of the staff will be “Filed Force”.
2.3 How the business will function?
One of the owner’s main responsibility will be to find customers among FMCG
companies and to make contract agreements for the business as well as to maintain
excellent partnership. Those contracts can be single merchandising task or for
limited period of time, but it is expected to agree firstly probation task, after which
the company can take-over permanent merchandising service for the client without
defined time frame (“rolling” tasks). To find customers and to develop customer
base the company needs marketing function. To operate with existing customers
the company need Field Force, Finance, Logistic function and administrative
support while Information Technology (IT) specialist and legal counsel can be
outsourced. IT specialist will support business operations as well as communication
between Field Force, management team and the company’s client. Excellence in
functionality of IT solution plays big role in the business efficiency and in the
customer satisfaction.
Starting capital will be ensured by my side, as the owner, so all risks from failure
in start-up will be managed by me. The amount of money for the start will be around
370,000 EUR for the first 18 months, after which the business have to be self-
sustainable and break even point reached. Further section in this work will analyse
finance in detail.

15. 11
Full schema of organisation is as follow:
Figure 2.2 Organisational chart
(Every field on the chart is represented with one employee)
Porter’s Five Forces Analyse
Porter’s Five Forces (Porter, 1979) represents simple view of key forces that shape
strategy. Porter defines (see Figure 2.3):
1. Threats of Substitute Product (in this case it is service)
2. Threat of New Entrance
3. Bargaining Power of Suppliers
4. Bargaining Power of Buyers (Customers) and
5. Intensity of rivarly within the industry

16. 12
Figure 2.3 Porter’s Five Forces Model (Source: web of Manual of Marketing -
http://manualofmarketing.blogspot.com/)
Test of start-up business with this model will reveal first signs of business potential
on the market:
1. Threath of Substitute Product (service) – There is no real threath from this force.
The only one known option for substitution is that merchandising can be done
by retailer’s staff (shop assistants). This model have been already tried on the
market, but without success (Philip Morris in Serbia tried to deploy this model
in 2013 but without success).
2. Threath of New Entrance is potentially the biggest issue of the start-up plan. If
some other company recognise the key success factor of “ShowUp” and starts
to copy the organisational advantage of the firm, with appropriate level of
expertise for this kind of business, it can be real threath. Due to clear gap in the
market there is almost no entry barrier for the business. It is just the amount of
investment for the start.
3. Bargaining Power of Suppliers – Suppliers in this business are the companies
that are not the part of the same industry, e.g. car dealers, IT providers, offices
rentals, etc. Their bargaining power does not depend on the size of FMCG or
retail industry. It is not determined specifically toward industry which is in the

17. 13
focus here. Also, it is noticable that there is no specific suppliers in core business
of “ShowUp”, because it is a service (not a product) for another industry.
4. Bargaining Power of Buyers (Customers) – This power is low due to absence
of adequate competitor that can offer such low price for limited area
merchandising.
5. Intensity of rivalry within the industry – The rivarly in the industry is pretty
high, but the idea of fulfilling the market gap excludes rivals.

18. 14
3. Feasibility
3.1 Primary and Secondary Market Research (Overview)
Research is defined as “the systematic investigation into and study of materials,
sources, etc., in order to establish facts and reach new conclusions” (Thompson,
1996). This is the starting point to check feasibility of new venture. In the process
of research we are collecting data and information in order to make business
decisions based on evidence, excluding assumptions, prejudice or emotions.
The research provides answers on predefined question which should be set at the
beginning of the process. In this particular work, the answer must provide certainty
that new venture is feasible and profitable for the next 3-5 years.
The research can be primary and secondary. Primary research is new research that
is done in the purpose of specific work and answering specific questions and issues
associated with research topic. It can be tailor-made survey, interview,
questionnaire, focus groups research or other. Secondary research represents
investigation of already known information and conclusions made earlier for some
other purpose and it can be publicly accessible or already available in some
organisation (company). It involves information from the internet, published reports
in library, articles published in professional journals which are associated with
observed industry, etc.
3.2 The Research Question
Is there a market gap in retail merchandising service in Serbia, which implies
that there is no adequate price offer for small to medium FMCG companies?

19. 15
The answer to this question has to find out whether the company has a perspective
and whether it will be a potential customer interested in cooperation. In other words,
the purpose of the research is to reveal the perspective of sales potential. The
research will be a starting point for creating customer base. That base will be target
group for service, provided by “ShowUp”.
3.3 Components of the Research Question
Is there a clear needs for merchandising in general among FMCG companies?
1. What is geographical needs for merchandising among these companies?
2. Is there a client’s needs that cannot be satisfied with present merchandising
offers?
3. What are the main characteristics of present offer on the market?
4. What is most wanted offer from the point of view of small to medium
FMCG clients?
3.4 SMART Research Objectives
1. To know do FMCG companies understand the importance of merchandising
and do they want to invest in it.
2. To find out what geographical area they want to cover with merchandising.
3. To reveal which client’s needs cannot be reached with present offers.
4. To determine main characteristics of present offer.
5. To determine what is the ideal offer from the client’s point of view and
where is the gap between ideal and usual offer.

20. 16
3.5 Literature Review
Review of the literature will show what is already known theoretically about the
business we are entering. In the centre of this research is merchandising of FMCG
products at the level of point of sale. For the beginning, we will provide a wider
background of the industry including deeper understanding of core business of
“ShowUp”.
Core business of “ShowUp” is marketing, or more precisely, ti is execution of trade
marketing. Looking deeper through concept of Marketing Mix 7 P’s introduced by
McCarthy (McCarthy 1960) and further developed by P. Kotler (P. Kotler, 2000)
the position of the business is in the area of Promotion, but it also becomes a part
of client’s People and Process, because the part of client’s business process is in
the hand of merchandising service company, which includes its people - staff (see
Figure 3.1).
Figure 3.1 Impact on Marketing Mix 7 P’s from the perspective of the client’s
business (Source: web of Marketing Mix - http://marketingmix.co.uk/)

21. 17
3.5.1 Importance of Retail Merchandising
According to American Marketing Association, merchandising encompasses
"planning involved in marketing the right merchandise or service at the right place,
at the right time, in the right quantities, and at the right price." Retail merchandising
represents activities conduct at retail in order to support sales. It is a part of
comprehensive marketing which support brand building and sales volumes. The
main objective of merchandising is to communicate with buyers (mostly with
consumers) at the level of POS in order to transfer and highlight information about
characteristics of a product. More visible and impactful merchandising implies
bigger attention and brand awareness of consumers. Good merchandising tend not
only to transmit the information but also evokes emotions in consumers. Targeting
the right consumers at the right place and time is also critical, so it is not just about
how strong the communication is, it is also about to whom it is intended.
One of the greater roles of merchandising is influence on “impulse buying”. From
the middle of 20th
century many scholars were interested in impulse buying (Clover,
1950; Stern, 1962; Rook, 1987; Peck and Childers, 2006; Chang et.al, 2011).
According to Rook (1987) buying impulse is “unintended, non-reflective reaction,
which occurs soon after being exposed to stimuli inside the store”. In this scenario,
merchandising role is to create stimulants for buying. We can conclude that for
impulse buying merchandising plays a crucial role.
We can say that when we enter the store, everything that draws attention is
merchandising. Good description of merchandising is written by G. Surrendar (G.
Surrendar (2001): “Marketing brings horse to the water but visual merchandising
makes the horse drink”. Visual merchandising is merchandising that it is visible.
The literature findings will be used in the next chapters dedicated to research.

22. 18
3.6 Research Methods and Sources of Information
Research Methods and Sources of Information:
- Different formats of retail stores in urban and rural area of Serbia and
careful observation of merchandising that is already done, as well as
observation of brands (and brand’s owner or distributors) without
merchandising support.
- Internet pages regarding merchandising service, especially websites of
competitors.
- Observation of merchandisers which already operate in stores with special
attention on job specifics (what is the result of merchandiser’s store visits
and before-after comparisons), time spending and equipment.
- In-depth interview with potential clients among small to medium FMCG
companies (questionnaire, appendix 1).
These sources will reveal relevant information for future business planning such as:
- Characteristics of retail merchandising service that is already in place. How
merchandising looks currently and how merchandisers do their jobs?
- Who are potential clients (customers)?
- Who are competitors?
- How the competitors operate and how their organisations look like?
- What are obvious elements of merchandising contract between service
providers and customers? Ethics in research involves observation of public
traces and visible elements that lead to indisputable conclusions.
- Facts about customers’ need that have not been fully satisfied?
Main output of research will be conclusion about the gap between current offers on
the market and clients’ needs.

23. 19
3.7 Feasibility (Service, Industry/Market, Organisational, Financial
Feasibility Issues)
Feasibility can be assess through researches in four areas:
A. Service feasibility
B. Industry/Market feasibility
C. Organisational feasibility
D. Financial feasibility
These researches will show whether the start-up business have profitable future.
Positive outcomes will be “green light” for the business.
3.7.1 Service Feasibility
The key question of this part of the research is: “Is there a gap in the market?” To
find out the answer we will use in depth interview with potential clients. This
interview will provide us with confidence that there will be interested customers for
our service or that something in concept is potentially misleading for the business.
Concept Statement
1. The service
This is merchandising service in retail that positions FMCG products, visual
displays, visuals as temporary POS material which follows promotional
cycle of the client, positions exhibit samples, price communication visuals,
creates “secondary positions” of products in shops and similar. Secondary

24. 20
position is position of product in shop dislocated from the same product
category.
2. To whom it is intended for?
The service is intended for small to medium FMCG companies or their
distributors, which operate in Serbian retail market.
3. Why it is of value?
The value of the service is the value of merchandising itself (as explained
in the review of literature). It is support for sales volume growth, through
brand representation to buyers and consumers. It is communication with
buyers in the most critical moment, when buying decision can be made or
changed, at the end of the “battle for customer”. Merchandising strongly
influences on impulse buying. Merchandising also ensures product
availability through fulfilling shelves in markets, whereby prevents out of
stock situation. Therefore, merchandising has impact on stock management
also.
4. Special attributes
Special attributes: flexible, fast and focused service with high level of
expertise and affordable price. In the same time, these attributes represent
competitive advantages of the new venture.
5. Who will be involved in making it happen?
To make it happen we need customer, service provider and retail as
operational area for the business execution. We create service provider
which includes: merchandisers, their management team including sales role
which has to ensure customer base.

25. 21
In-depth Interview Findings
In-depth interview provides mostly qualitative results and it will be presented per
each chapter of questionnaire. Interview has been conducted with 12 managers from
FMCG companies, small-to-medium size. For the purpose of the research small-to-
medium is defined with test whether the company is among top 5 in its sub-industry
sector. Negative answer in this test means that company is small-to-medium.
a) Client’s awareness about merchandising: All respondents answered that
merchandising is relevant factor for their success, while 10 out of 12 says
that it is the “missing link” for their business.
b) Review of distribution coverage and merchandising of the client:
Distribution vary from top 3 biggest cities in Serbia, to over 90% of retail,
but merchandising needs (from respondents point of view) is between “only
in big supermarkets or hypermarkets” to “only in urban area of each city”
to“. The conclusion is that 10 out of 12 respondents will be satisfied with
merchandising coverage in top 25 cities, while 2 of them will ask for more.
c) Previous experience with merchandising providers:
o 9 respondents tried to find provider, 3 of them signed contract.
o Main reason for declining the offer from provider is “inadequate
price” and “it will be less expensive to organise our own
merchandising field force”.
o Those who signed the contract put “question mark” on Return on
Investment (ROI) and profitability.
o Quality of execution was mostly in line with expectation, but not
over that point.
d) Investigation of ideal merchandising service offer: Ideal offer is cheaper
for 30-50%, more flexible in terms of time frame of execution and requested
response-time, and more innovative (there was an absence of creativity).
All findings can be sublimated in one statement: the respondents do not have
adequate offer in terms of price, flexibility (especially in terms of sense of
urgency), quality (focus on details) and creativity.

26. 22
3.7.2 Industry/Market Feasibility
The main questions in this stage of the research are:
 Is the Industry attractive?
 Is the Market attractive?
Industry Attractiveness
Merchandising service is in direct conjunction with retail industry. If retail industry
is growing, the associated services will also grow. In the era of globalised world,
industry trends are spreading fast, so Serbian retail industry is following these
trends. Confirmation that the industry is highly attractive lies also in the fact that
global leader in turnover across all industries is retailer Wal-Mart and still growing
(web of Fortune 500).
All these facts are in favour of increasing importance of merchandising, so we can
conclude that importance of merchandising service providers will grow.
Market Attractiveness
Industry where the new venture will operate is a mix of FMCG and retail industry.
Basically, it is their “meeting point”. The size of the retail industry represents
around 21,000 shops, with hundreds of their suppliers. These suppliers are
distributors of FMCG products, while some of them are also brand owners or even
manufacturers. Due to these interweaving, there is no exact data about number of
distributors.
The main parameter that describes industry attractiveness on Serbian market is the
amount of money in turnover. In direct correlation with this figure is country
population and its economic performance, which is best presented through Nominal
Gross Domestic Product (Nominal GDP) and Gross Domestic Product per Capita

27. 23
(GDP per Capita). These parameters directly influence consumer spend and retail
market turnover. Serbian population is around 7.2 million people (source: Web of
Serbia Census 2011) exclude Kosovo, which has special status from the
international organisations viewpoint. This number puts Serbia in the middle of
population top list in Europe (web of “Nations Online”).
The following charts and sheets shows these data and trends.
Figure 3.2 Nominal GDP and GDP per capita, 2011-2017, future projection
(Source: IGD Retail Analysis 2014)

28. 24
Figure 3.3 Consumer Spend and Total Retail Market in Serbia, 2011-2017, future
projection, (Source: IGD Retail Analysis 2014)
Trends of consumer spend, retail turnover, and GDP are growing. These growth
will generate more money in the business and it will develop Serbian retail industry
in general. The signals are positive and the data encourage this new venture
investment.
The trend of acquisitions of smaller retailers lead to more coherent stores with more
attention on merchandising. There were few big acquisitions in the last 3 years in
Serbia: Delhaize bought the biggest local retailer Delta Maxi, regional retailer
Mercator bought local chain of supermarkets Roda, the biggest regional retailer
Agrokor (Konzum) bought Mercator, etc (see Figure 3.4). Research observation
shows visibly better merchandising in these big chains than in the rest of the market.
Currently, big retail chains of groceries represent 33.9% numerically.

29. 25
Figure 3.4 Grocery Retail Market Shares 2014 (Source: IGD Retail Analysis 2014)
Who are Doing Merchandising in the Market?
Further observation of the market show that retail merchandising in Serbia is
usually done by:
- Retailer or
- Distributor or
- Merchandising service provider.
Retailers are doing basic merchandising with aim to fulfil the shelves in stores and
to communicate price. In smaller stores this job is done by regular personnel,
including cashiers, while in bigger stores (hypermarkets or similar) it is low
qualified staff or temporary employed students.
Distributors are doing merchandising mostly through their salesmen (field sales
teams). The main issue in those kind of organisations are weak focus on
merchandising, due to strong focus on sales as primary activity, which implies poor
merchandising. These distributors can be the main base for future customers.
Second group of distributors (small number of them) have their own merchandising
force. These companies are mostly from tobacco business, because merchandising

30. 26
has the biggest importance in this industry, due to advertising ban in media. They
are not in the focus of “ShowUp”.
Who are Competitors?
Merchandising service providers are direct competitors. Present merchandising
service companies on Serbian market are:
- Nelt
- Omega Consulting Team
- MVM Company
- BTL Advertising
Observation of their work on the field shows that they operate through
merchandisers, which are doing business in targeted stores, in accordance with
predefined route plans. Target list of outlets is given from client’s side. Service
provider have groups of merchandisers dedicated to one client and his group of
brands, so they are not mixing merchandising for different clients (one client - one
merchandising team).
The opportunity is to build teams which will be capable to handle multiply
merchandising.
Review of Competitors’ Offers
Nelt is the biggest company among competitors in terms of number of employees,
turnover and diversity of activities on the market. They are operating in South East
Europe and Africa (source: web of Nelt Company). Nelt’s core business is sales and
distribution for international principals such as Proctor & Gamble, Philip Morris,
Mondelez, Wrigley, etc. Further research shows that they are doing merchandising
just for the companies which brands they distribute on the market, so for the
customers that already have distributor, Nelt is not potential partner for
merchandising.

31. 27
Omega Consulting Team - Review of offer from website indicates that
merchandising is understood just as positioning products on shelves including
small, so called tactical, temporary POS materials, created from retailers’ side (e.g.
price communication). The company is oriented to provide service just for retailers,
not for distributors or brand producers/owners. Website and its generic offer shows
that there is no comprehensive approach to merchandising. For Omega Consulting
Team it is just fulfilling the shelves in predefined order, including elements of
category management (Brian Harris model of Category Management, originated in
‘90’s) like forming secondary positions.
MVM Company is another one competitor. They are offering wider merchandising
activities for big clients such as tobacco companies, telecommunication companies
or breweries (source: web of MVM Company). Most of those companies are the
biggest in their industry, with highly demanding merchandising service, not only in
terms of quality, but also in terms of geographical coverage. MVM Company
inform website visitor that they are operating at 21,000 shops, with 250
merchandisers on Serbian market. Also they show the example of company’s cost
for one merchandiser, employed by the client. According to them, it is over 1,200
EUR per month, while they offer are lower, but without exact amount. Is sound
reasonable that their offer could be around 70% of this amount (840 EUR).
BTL Advertising is another one big competitor, which operates on whole Balkan
Peninsula. The company has 100 merchandisers in Serbia and covers entire
domestic market. In their list of customers, there are almost no company that is not
in top 5 in their industry (e.g. IBM, L’Oreal, Japan Tobacco International, Henkel,
Bosch, Carlsberg, Danone, etc.).
Customers’ Loyalty toward Competitors
Awareness among FMCG companies about existence of merchandising service
providers is moderate (in-depth interview in section A – “Client’s awareness about
merchandising”, shows 75%). The highest awareness is about Nelt, due to strong
distribution role that they have on the market. Also, the interviews shows absence

32. 28
of stronger partnerships and loyalty, which is favourable for start-up company
because there will be lower barrier in customer acquisition process.
Size of the Potential Customer Base
Competitors’ reach of retail market is almost 100%. It means they can cover each
POS. But, competitors’ reach of potential customers is very low. Total number of
clients that can be counted on their websites is around 50, while on the market,
many hundreds of them operate. It means that potential customer base is many
hundreds companies, and most of them need merchandising service.
Barrier to Entry
All competitors are operate more than 5 years. Even though there is no specific
entry barrier for the business, in previous 5 years was no new entry. The only one
entry barrier is the amount of money needed for starting capital. To compete with
current merchandising companies, by using the same strategy as they are using,
starting investment will be more than million euros. It is easy to calculate, because
just for 100 cars, for 100 merchandisers, required money for leasing is around
600,000 EUR in the first year. Start-up company from this work is rather going to
get clients that have no merchandising service, than to compete with present
companies by switching their clients. Therefore, the loyalty or already established
partnership with current players in the industry cannot be our weakness.
Substitute Service
There is no threat of service substitution in the future. Only threat can be future
growth of internet shopping, that will implies decrease of traditional retailing. This
trend is too slow in food industry, so it cannot be real threat in the next 5 years.

33. 29
Bargaining Power of Suppliers and Buyers
There is no special suppliers for core business, because the company is selling
service.
Key buyers are FMCG distributors. Many of those potential customers are thinking
about merchandising, but have no possibility to pay for that. Present merchandising
providers looking for big clients that will utilised their big organisation, with huge
fixed costs. Small merchandising task does not match to their organisation and cost
structure. In order to explain better, it can be compared with transports of few
needles with a big truck: While client needs small pick-up vehicle for transportation
of needles, the service provider offers big and expensive truck.
3.7.3 Organisational Feasibility
The main question in this part of feasibility check is “Does the organisation has the
ability for defined business”. In the following work the main criteria will be
considered.
Business and Managerial Experience
The author of this work will be the creator and owner of new venture with all
belonging responsibilities for success. Business and managerial experience:
- 17 years in international companies, which operate in FMCG and retail
industry. Out of these 17 years, 11 years were in the biggest tobacco
company worldwide, with the highest business standards – Philip Morris
International.
- Responsibilities in department of distribution, sales, merchandising, logistic
and national commercial strategy planning.
- Roles:

34. 30
o Front-end business operations in distribution, sales and
merchandising, business to business role (B2B)
o Supervision of sales, distribution and merchandising
o Participation in process of selection and recruitment
o Coordination of sales and merchandising teams at national level
o Planning, development and monitoring national strategy for trade
channels in terms of distribution, sales and marketing (including
merchandising). Setting out Key Performance Indicators (KPIs) and
achievement monitoring
o Coordination and management of outsourced distributor, including
capability building of sales and merchandising teams
These experiences provides solid ground for leading start-up company which
operate in the same sub-industry.
Sources of Advice and Support
Main source for this kind of help will be:
- Partnerships among management in FMCG companies from tobacco
industry, breweries and fizzy drinks. They can provide useful advice
regarding the specific needs of their companies which could be applied on
sales offer of “ShowUp”.
- Partnerships acquired in previous years among big retailers, such as
Delhaize (second biggest grocery chain in Serbia that operates worldwide)
and Stampa System (the biggest kiosk chain in the country). They could be
of help in terms of merchandising execution modus and their view on
merchandising.
- Colleagues from Philip Morris with the similar experience – advice
regarding people and process management, organisational capability
building and especially in finance management.

35. 31
All these connections will be of help in order to create efficient and competent
organisation with attractive market position.
Organisational Competency
The importance of organisational competencies is well described from C.K.
Prahalad and Gary Hamel: “Competencies is the root of competitiveness. The
corporation, like a tree, grows from its roots. Core products are nourished by
competencies and engender business units, whose fruit are end products.” (Harvard
Business Review, May 1990). Organisational competence is company’s ability to
achieve mission. It is not the same as individual competence of an employee. Group
of people in some organisation can be successful or not, depending on
organisational competence for the business. Sometime, we just have to rotate them
or change structure, in order to set “right people”, in the “right place”, which
required adequate competence.
Core competencies of “ShowUp” are:
- Customer service – Core business of the company is service for the
customer, so it must be core competence. The key postulate for business is
satisfied customer.
- Flexibility – The main competitive advantage is flexibility for small to
medium companies, in terms of “value for money” offer.
- Quality – High level of quality execution is mandatory, in order to maintain
sustainable, long-term service for the clients.
- Innovation – Custom-made approach to specific needs of clients is
differentiation point toward competitors.
To meet these core competencies the young company need right people, on the right
place, in appropriate organisational structure, and flexible processes that regulate
their interactions and connect the units. Responsibilities for building of
organisational competencies, in such small company, is laying on founder and
general manager.

36. 32
Required Skills
Employees’ skills is “derivative” of company’s competencies. They also depend on
the position of the employee in the organization. Required skills will be assigned
for each position according to Lominger Competency Library (Lombardo, Michael
M., and Robert W. Eichinger, 2004). This is approved, highly effective talent
management tool, with the highest references in business.
Required skills per job position:
- Merchandisers:
o Action oriented
o Customer Focus
o Planning
o Drive for Results
- Merchandising supervisors:
o Motivating Others
o Organising
o Priority Setting
o Problem Solving
- Field Force (Merchandising) Manager
o Decision Quality
o Developing Direct Reports and Others
o Managing and Measuring Work
o Building Effective Teams
o Written Communication
- Marketing manager
o Creativity
o Customer Focus
o Innovation Management
o Perspective
o Presentation Skills
- Finance Manager
o Ethics and Values

37. 33
o Functional/Technical Skills
o Integrity and Trust
- Logistic Manager
o Action Oriented
o Customer Focus
o Functional/Technical Skills
o Planning
o Process Management
- General Manager
o Business Acumen
o Customer Focus
o Creativity
o Decision Quality
o Hiring and Staffing
o Innovation Management
o Motivating Others
o Negotiation
o Perspective
o Presentation Skills
o Self-Development
o Strategic Agility
o Managing Vision and Purpose
Beside internal human capital, the company should have appropriate outsourced
partners for Information Technology (IT) service and Legal advisor for specific
occasions, which has to be with good experience and recommendations from
similar small entrepreneur companies. Partners’ skills and business attitude must fit
to flexible and innovative young organisation.

38. 34
Resource to Launch the Business
Main resource for the business is people, which fit to entrepreneurial mind-set.
They will be real capital of the company. Other assets will be:
1. Four equipped offices rented in big cities: Belgrade, Novi Sad, Kragujevac
and Nis
2. Company cars for merchandisers with bigger cargo area and regular cars for
their supervisors, national merchandising manager and for general manager
(22 in total).
3. IT equipment: laptops and mobile phones for each employee and tablets for
merchandisers. One printer with scanner in each office.
4. Uniforms for Field Force staff.
Risk Assessment and Motivation to Succeed
This new venture will be the “life project”. Realistic and comprehensive assessment
of all potential risks is crucial for success. Feasibility analysis have to indicate
potential threats and to decrease the chance for failure. The better feasibility study,
the lower risk for the business. The appetite for the risk must be managing by the
size of the stake (or investment). In this particular situation, the investment is big
for small entrepreneur, so risk must be decreased to minimum with realistic
approach. The cost of failure must be done too. Strategic vision and optimistic
approach must be shared across the company from the very beginning. This will
boost positive attitude and motivation among employees.
Sufficiency for Funding Before Reaching Break-Even Point
The start-up fund is amount of 370,000 EUR. This capital need to cover all cost in
the first 18 months, when it is expected to reach break-even point, which represent
the moment when income is equal to business fixed and variable costs. In that
period of time, the main cost of business are salaries, cars leasing with associated

39. 35
costs (fuel and service), offices rental, leasing for IT equipment and contract with
telecommunication provider. Detailed financial analysis will show the financial
feasibility of the business, by counting every cost, including investigation of hidden
costs.
3.7.4 Financial Feasibility
Start-up Capital and Working Capital
According to the first calculation, total cost of all business operations for the first
year is 370,000 EUR, while for the second year it is 340,000 EUR.
Table 3.1 Cost calculation
The difference between the first and the second year is mostly due to starting
participation for cars leasing, which will be present only in the first year. Also, some
costs will appear after the first contract with customer (PC tablets, car fuel, etc.).
This calculation is based on estimation that first sales contract will be signed after
6 months of “dry run”. During that period, variable costs will be zero, such as costs
assembled with cars or IT equipment. Working capital required for that period will
Cost (EUR) First year Second year
Company registration 100 -
Salaries 170,400 170,400
Contribution for salaries (47.5% of salary 80,940 80,940
Cars 79,200 26,400
Telecommunication provider contract 6,000 6,000
Laptops 2,917 2,917
PC Tablets 2,880 5,760
Car fuel 7,920 15,840
Car service - 13,200
Printers/Scanners 300
Office rental 18,000 18,000
Uniforms 600
Office supplies 400 400
Legal counsel for labour contracts 300
Legal counsel for contracts with customers
Income TAX -
Total 369,957 339,857

40. 36
be mostly for the salaries including contribution for the government and offices
rental. Variable costs start together with signing contract with the first customer
after 6 months). The price for the contract will be around 96,000 EUR annually for
merchandising service in 25 biggest cities in Serbia.
Pricing Strategy
Price offer (calculation):
One merchandiser monthly: 500 EUR
One merchandiser annually: 6,000 EUR
16 merchandisers annually (coverage 25 cities): 96,000 EUR
How to “sell” this price?
One merchandiser that works in customer’s company will costs 1,200 EUR monthly
or 14,400 EUR annually, while 16 merchandisers will cost 16 x 14,400 = 230,400
EUR. This cost is absolute minimum according to comprehensive calculation that
will be shown in the next chapter. Finally, the cost of outsourced service (96,000
EUR) is almost 2.5 less. This is the advantage only from price perspective, while
for the sales presentation much more benefits will be included.
Sales Volumes and Break-Even Point
Break-even point will be reached with 4 customers that will engaged all
merchandisers:
4 customers x 96,000 EUR = 384,000 EUR
Cost of the first year is 370,000 EUR.
According to observation of competitors’ merchandisers work and predefined
territory that will be covered by one merchandiser, full capacity of one employee is

41. 37
between 6 and 8 different tasks (group of brands) per outlet, depending on
complexity. This is the number of contract that the company can handle at once.
Financial Risk and Cost of Failure
Financial risk is loss of 360,000 EUR annually. It is slightly lower than total
investment in the first year, due to no charge for car fuel and PC tablets, if there
will be no customers’ contract.
3.8 Resource Requirement Evaluation
As it is analysed in previous chapters, necessary resources are:
- Human resources and their skills and knowledge (from managing business
in general, to excellent execution of merchandising) and
- Financial resources as fund for business tools and equipment.
Regarding financial resource the plan will be elaborated to details, including the
smallest amount of hidden costs. Unforeseen or unexpected costs must be
minimised. Financials must be well known area of new business.
What is unknown yet and what is the matter of entrepreneurial management skills
are human capital quality. This will be the consequence of selection and recruitment
process, and afterwards implemented trainings for the Field Force staff. Finally,
after financial calculation, the difference between success and failure is in the hand
of entrepreneur and his comprehensive managerial skills.

42. 38
4. Business Model
A business model is a description of the activities that a company performs to
generate revenue or other benefits, and the relationships, information, and product
flows a company has with its customers, suppliers, and complementors (Malone et
al., 2006). According to Osterwalder and Pingeur (2010) “A business model
describes the rationale of how an organization creates, delivers, and captures
value”.
4.1 Strategic Analysis of the New Business Idea: Identification of
Sources of CompetitiveAdvantage and Sustainability
Identified sustainable competitive advantage of retail merchandising service
provider is its dedication to meets merchandising needs of small to medium FMCG
companies. Unlike other merchandising providers, the proposed firm will focus on
most urban area, which is also in the focus of targeted customers. This “area match”
is the key for adequate offer for future customers. Focus on top 25 biggest cities in
Serbia will ensure full utilisation of the company’s resources, without idling.
Looking at long-term perspective, this match will be constant because there will
always be companies with request for “limited area” merchandising. The main
threat for new venture is potential emergence of new companies with the similar
strategy, but till then, the company will gain advantage in already established image
and partnerships on the market. That kind of strategic approach guarantee
sustainable business and long-term competitive advantage.

43. 39
4.2 Development ofAppropriate Business Model
4.2.1 Business Model Canvas
Business Model Canvas, invented by Alexander Osterwalder, is tool for modelling
the business. “It is a way to experiment and test hypothesis for creating and
capturing value” (Osterwald, 2011). It focuses on how the value will be generated
and how it will be turned into revenue (see Figure 4.1).
Business Model Canvas is a visual template pre-formatted with the nine blocks of
a business model. According to its inventor, the blocks represent:
1. “The Customer Segments defines the different groups of people or
organizations an enterprise aims to reach and serve.”
2. “The Value Propositions describes the bundle of products and services that
create value for a specific Customer Segment.”
3. “The Channels describes how a company communicates with and reaches
its Customer Segments to deliver a Value Proposition.”
4. “The Customer Relationships describes the types of relationships a
company establishes with specific Customer Segments.”
5. “The Revenue Streams represents the cash a company generates from each
Customer Segment.”
6. “The Key Resources describes the most important assets required to make
a business model work.”
7. “The Key Activities describes the most important things a company must
do to make its business model work.”
8. “The Key Partnerships describes the network of suppliers and partners that
make the business model work.”
9. “The Cost Structure describes all costs incurred to operate a business
model.”

44. 40
Figure 4.1 Business Model Canvas for Retail Merchandising Service Provider
(Source: adjusted Osterwald’s Canvas Model for “ShowUp” company)
In order to elaborate Business Plan deeply, following essentials will be examined:
A. The Core Strategy
B. The Resource Needs
C. The Partnership Network
D. The Value Deliverables to the Customer
4.2.2 The Core Strategy
The mission of the firm is to cover selected area with merchandising that is executed
in high quality manner with acceptable price. The strategy follows the mission, so
the core strategy will be leveraged on 4 pillars: Price, Quality, Flexibility and
Creativity (see Figure 4.2). Every deliverables for the customer must be in
accordance with them.
Key Activities:
Quality, flexible
and creative retail
merchandising
Customer
Relationships:
Close cooperation
with aim to
constantly
improve the
service
Key Resources:
Dedicated and
creative people
Channels: Direct
marketing
presentation to
potential
customers and
industry cluster
fairs
Key Partnerships:
FMCG companies
and retail chains.
Customer
Segments: Small
to medium FMCG
companies or its
distributors
Cost Structure: Fixed costs (cars, salaries, office rents,
IT equipment), variable costs (car fleet expenses - fuel,
service, maintenance)
Revenue Streams: Payment per engaged merchandiser,
monthly, after the job is done, using proof of
performance (pictures of execution in shops)
Value Proposition: Geographically
focused merchandising service that
provides high quality merchandising
for reasonable price

45. 41
o Price
The advantage of the company will be in focusing investments (fixed costs) in the
same geographical area and retail channels (i.e. supermarkets, groceries, kiosks) as
potential clients. That is starting point for creating the lowest price that will ensure
profit. Tangible advantage for the customers will be the lowest price on the market.
o Quality
Low price does not imply compromise with quality of execution. The quality of
merchandising at the level of POS will be at least equal to the best competitor’s
execution. Quality will be ensured with skilled people, high level of expertise in
merchandising and focus on customer satisfaction. The quality will be an element
of relevant superior value proposition.
o Flexibility
Flexibility must be one of the main customer’s impression. Small organisation will
be easier to manage compares to big competitors, so the size of the firm is an
advantage from the start. Simplicity and plainness in processes within such small
organisation will ensure speed to market and easy adaptability to customer’s needs.
Managing people and managing processes (logistic) will play significant role, so
these managers (merchandising manager, supervisors and logistic manager) must
be focused on flexibility.
o Creativity
Creativity will be another one relevant element of superior value proposition which
has to be in constant development. Creativity is the reason why the main resource
of the company is its people. Creativity must be encouraged and rewarded. Constant
challenging of status quo is the way how the employees should understand their
jobs. That should be default mind-set in the organisation.

46. 42
Figure 4.2 Core Strategy Pillars made for “ShowUp” company
4.2.3 The Resource Needs
From perspective of business owner, the main advantage of the company is fixed
costs aligned with business needs of potential customers. That implies no “idling”
in utilisation of resources and maximised Return On Capital Employed (ROCE =
Earnings Before Interest and Tax (EBIT) / Capital Employed).
In order to determine the resources and to comply with the functioning of business,
conventional Porter’s Value Chain will be presented (Porter, 1987), see Figure 4.3.
This model helps to make diversification between useful and wasteful activities by
following each step of the merchandising service deployment. It is shows how the
company is gaining value step by step.

47. 43
Figure 4.3 Porter’s Value Chain adjusted for “ShowUp” company
Porter’s value chain shows competitive advantage of the company. The base for
competitive advantage is in the area of:
- Marketing and Sales: market research shows market gap (non-adequate
offer for small to medium FMCG companies)
- Service: Strong focus on innovation management, creativity and joint
planning for improvement, together with client on weekly meetings.
- Human Capital Management: selection of skilled people with competences
that ensure innovation on strategic level, tactical and operational level,
constant people development and training, and competitive compensation
package and benefits (to ensure employees’ satisfaction and excellence in
daily job).
Resources to deliver sustainable competitive advantage
From previous 3 points it is clear that key resources for competitive advantage is
initially done analysis regarding market gap and people. It implies strong focus on

48. 44
selection and recruitment process, including recommendations and refferals from
close business partners.
Core competencies for the business and how are these assured for the future
According to needed resources for competitive advantage, the main competencies
are:
o Customer Focus
o Innovation Management, Creativity, Agility
o Hiring and Staffing
o Building Effective Teams (including constant focus on skills
improvement)
Strategic assets for the new venture
Main company’s asset is customer oriented strategy and creative and agile people.
These are the real distinctive assets of the company. General Manager must be
focused on it constantly and invests time, money and energy in improvement and
development.
4.2.4 The Partnership Network
Partnership network in the area of FMCG distributors will be of great importance
for this new venture. Owner’s experience in this industry for period of 17 years
guarantee many friendships and business networks. The role of those friendships
will be in:
- Spreading information about new company in the area of merchandising

49. 45
- Making new contacts and meetings arrangements with potential customers
- Building potential customer base
- Recommendations and endorsements for integrity, competencies and
expertise for the business.
From the side of business execution on the field, huge number of partnerships
among retailers, including top management and category managers, will help in
merchandising execution. They can provide many important information that will
assist in organising field force.
Overall, those friendships will be transferred into partnerships for the business.
4.2.5 The Value Deliverables to the Customer
Superior value proposition delivered to the customer will be recognised in the
aspect of:
- Price proposition - It will be “value for money” offer. The price has all
preconditions to be the lowest on the market. The payment will be
periodically, after the partial job is done (monthly for instance) and after
joint check of quality. The customer should be satisfied not only with price,
but also with delivered value which will be proven using comprehensive
reports with photos. Merchandisers will be equipped with PC tablets, so
every execution will be captured and reported.
- Competitive proposition – Low price does not mean bad quality. The work
must be with the highest standard of merchandising. Creativity at point of
sale must be one of the main characteristic of the service. To ensure such
approach, people selected for merchandising position must fit to that
competence.
- Functional proposition – Operational flexibility must be recognised from
the client’s side. It will be shown in the process of implementation of

50. 46
improvements and innovations that are agreed on joint meetings with the
client. This is the moment when organisation has to show flexibility which
will overcome any competitor in terms of time frame and ease of handling
“changes on the fly”. Feedback from merchandisers will initiate meetings,
where improvement plan can be set. Managers in the company must be
closed to merchandisers and field execution. Field visits must be conducted
frequently. Close cooperation between managers, supervisors and
merchandisers will support innovation management.
- Emotional proposition – Emotions connected with job that has to be done
could be very useful. If everyone in the company are doing business with
love and passion, it will be reflected on achievement. That positive attitude
will be recognised from the client’s side. In order to build such emotions,
the company has to cherish “healthy” working environment, full of respects.
Team events, dinners, parties, even with clients or within client’s brand
promotion will be highly recommended.
- Ethical and Legal proposition – This proposition will builds client’s trust
and confidence. There are two aspects of ethical and legal propositions:
within cooperation with client and toward merchandising execution on the
field. The way how we doing business must be ethical and legal without
compromise. Every business activity must pass 3 tests:
o Is it ethical?
o Is it legal?
o Is it in line with the company’s policies and practices?
All answers should be positive. Legal and ethics are the highest imperatives, so
“creativity” in business must be out of this area.
All these value propositions have to be consistent during the time, with quarterly
review of rooms for improvement and action plans for implementation. These
values are competitive advantages and it should be clear from client’s point of view.

51. 47
5. Business Plan
The aim of this chapter is to develop detailed Business Plan which will setting out
key resource requirements for successful operation of the Business Model. The
questions that will be answered are:
1. What is the starting point and where have we come from?
2. Where would we like to be and by when?
3. How we propose to get there and take the best route?
4. How do we ensure arrival?
5. What are the expected outcomes?
5.1 The Industry, the Company and the Service
The industry that we tend to enter is Fast Moving Consumer Goods industry in
Serbia. The size of the market is represented by total turnover in retail market of
Serbia, and it was 8.5 bn. EUR in 2014 (source IGD Retail Analysis, Serbia 2014).
The growth comperes to 2013 was 6.3%. Projection for 2015 is 9.3 bn. EUR. Again,
growth year on year (YoY) will be almost double-digit, 9.4%. Similar positive
projection is for 2016 and 2017. It means that the industry is accelerating. Second
indicator that the industry will work well in mid to long term is GDP per Capita.
This parameter is in direct correlation with consumption rate. By compering
projection for 2017 and real figures from 2014 the forecast is 19.8% of growth
(source: web of Serbian Ministry of Finance and independent analysis of IGD Retail
Analysis). The prosperity of retail service is indicated not only in prosperity of
retail, but also in growing awareness about importance of retail merchandising, due
to increased rivalry in this industry. Competitiveness is increased with recent entry
of big international retail chain Delhaize, than few acquisitions of regional chain

52. 48
Agrokor and the latest Lidl’s announcement of market entry (Lidl is one of the
biggest retailer worldwide). These big retailers guarantee international standards in
FMCG industry which implies much more attention on merchandising.
Start-up company “ShowUp”, will be a company for providing a retail
merchandising service, located in capitol of Serbia, Belgrade (headquarter), with
operational offices in 3 big cities: Novi Sad, Nis and Kragujevac.
Service concept of the company is already known on the market, but the approach
to customers will be significantly different. The main differentiation of the firm’s
operations compares to competitors’ is in focused investments. We invest in the
same area where our client’s invest in its distribution. Where is distribution, there
is merchandising needs, and where is merchandising needs, there will be “ShowUp”
service. Geographic match of these two investments will secure win-win
cooperation. The same focus of investments of service provider and served
customer will guarantee the best price offer.
5.2 The Key Success Factors
The Key Success Factors (KSF) are:
1. Geographic investment match between our service and client’s distribution
2. Loud marketing toward targeted group
3. Excellent business execution
If the company fulfil these three assumptions, the success will be almost certain.
After first steps in the new business, long-term success must be ensured by image
building (building of the company name as the brand in the area of merchandising
service). It is important in order to set strong position on the market, before the
appearance of the new company with the same strategy. Therefore, one of the key

53. 49
goal in the first 2-3 years is to become recognisable within the industry. It will be
the objective of the general manager and corporate marketing manager.
5.3 The Market, MarketAnalysis and Market Research
The market that we observe consists of retailers, FMCG companies and their
merchandising service providers.
The number of FMCG companies and their distributors is several thousands. There
is no precise source for this data, but from the research, it is obvious that the source
of customers is huge.
The number of retailers in Serbia is around 15,000, with 21,000 shops.
Till now, market research reveals only 4 retail merchandising service companies
which are committed to such kind of service. All of them are doing other businesses,
e.g. competitor Nelt is primarily distributor, while merchandising is done only for
distributed companies. “ShowUp” will be the first company on the market that are
absolutely focused on merchandising service.
According to these numbers of market participants, we can conclude that the
“playground” is huge and “unused” due to small number of competitors.
5.3.1 Segmentation
Segmentation of the customers (FMCG companies) can be done by their
distribution coverage:
- Segment 1: Wide-range distributors. This group consist of companies
which are leaders in their sub-industry and their products are for the widest
consumer population, such as milk products, chewing gums, chocolates and
sweets, breweries, soft drinks and similar.

54. 50
- Segment 2: Moderate power distributors. Companies for general
consumer population also, but without such widespread distribution. It can
be in the same sub-industries like previous segment, but not from the top of
the list. It is also distributors of niche segment product, with high image
(e.g. luxury wines or whiskies or pet food).
- Segment 3: Local distributors. This is FMCG companies with totally
narrow distribution (all others).
5.3.2 Targeting
Targeted segment and the core customer group is Moderate power
distributors. In the same time, this is the majority of distributors on the market (see
Figure 5.1).
Figure 5.1 Customer Segmentation (Proximate representation according to market
research)

55. 51
5.3.3 Positioning
Short-term position of the company will be “in the market gap”, just where no
competitors are. This is the position where the company can easily offer the best
price. The biggest challenge for positioning process will be reaching of target group
and scheduling the first meeting, in order to make sales presentation and to convince
them in high quality of service and capability to conduct it. Even more, sometimes
the objective of the presentation can be to generate the need for outsourced
merchandising in the mind of customer.
Long-term plan for positioning must be leveraged on constant overcoming of
clients’ expectations in order to get good recommendation for the future image
building and creating “ShowUp” brand.
The Marketing Plan chapter will elaborate positioning process in more details.
5.4 The Balanced Scorecard
For comprehensive business planning the Balanced Scorecard will be used. It is “a
strategic planning and management system that is used extensively in business and
industry, worldwide to align business activities to the vision and strategy of the
organization, improve internal and external communications, and monitor
organization performance against strategic goals” (source: web of Balance
Scorecard Institute). It was originated by Dr Robert Kaplan (Harvard Business
School) and David Norton.
This strategic tool perceives the organization through four key perspectives and
helps in developing the metrics and analysing it. The main elements of these 4
perspectives, for “ShowUp” company, is shown on the Figure 5.2.

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Figure 5.2 The Balanced Scorecard - Adapted from Robert S. Kaplan and David
P. Norton, The Balanced Scorecard. Hardvard Business School Press: 9. Original
from “Using the Balanced Scorecard as a Strategic Management System,”
Harvard Business Review (January-February 1996), p. 76.
The outcomes of the Balanced Scorecard are:
- Strategic Objectives
- Strategy Map
- Performance Measures & Targets
- Strategic Initiatives
The strategic objective is to build winning and agile time which will be able to
reach break-even point in 18 months and proceed with customers’ acquisition by

57. 53
providing focused resource investment and excellent merchandising for customer
satisfaction.
The strategy map is helpful diagram that allows us to quickly visualise the
outcome of balanced scorecards (see Figure 5.3).
Figure 5.3 Strategy Map adjusted for start-up company “ShowUp”
The performance measures will be set as quantitative and qualitative. Each of
them will be measured at the level of management and at the level of Field Force
execution (merchandising execution).
- Quantitative measures of Management Team: the number of customers
(number of signed contract)

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- Qualitative measures of Management Team: utilisation of resources per
contract, customer management through meetings and daily service,
innovation and improvements
- Quantitative measures of the Field Force: the percentage of achieved POS
visits versus planned and the number of achieved executions
- Qualitative measures of the Field Force: excellence of execution measured
by the customer (each execution will be pictured and reported)
Strategic Initiatives in the beginning will be finding potential clients and clearly
presenting the company’s value for them. Long-term strategic objective will be
consistency in quality and overcoming the expectation of the client, together with
retention of low operational costs.
5.5 Marketing Plan
Marketing strategy must be based on successful positioning of the company in the
mind of clients. According to Ries and Trout (1981) “A Positioning Strategy results
in the image you want to draw in the mind of your customers, the picture you want
him/her to visualize of you what you offer, in relation to the market situation, and
any competition you may have”. From this definition the main issue for our start-
up company raised: How to create awareness and favourable image of the
company in the mind of targeted clients? How our service is perceived by
them?
How we will present the company?
The presentation of the company will be done through 3 channels:
- FMCG fairs

59. 55
- Direct marketing contact with customers (business meetings)
- Internet (business internet networks and specialised portals for advertising)
These channels will be a platform for positioning of the company. According to
Jobber (1998) key elements for successful positioning are (see Figure 5.4):
- Clarity
- Consistency
- Credibility
- Competitiveness
Figure 5.4 4C Positioning Framework (Source: Stephanie J. Morgan (2009),
Segmentation, targeting and positioning)
Clarity will be ensured with highlighted statements in sales presentation of what is
our mission, what our core business is and what we offer to the customer. These are
already described in this study.
Consistency cannot be proven to potential customer in the very beginning, because
the company is new on the market and has no record with physical proof. It is an
issue for every new company, but it can be mitigated with consistency in sales

60. 56
presentation, regarding what can we do for the customer, how and by when.
Consistency in presentation and in feasibility plan, which is presented to customer,
is not the best replacement for consistency proven with physical evidence, but there
is no other option until the company gains record of the work and recommendations
from the customers. After 1-2 year of work on the market, the company must have
proven consistency in innovation and improvements, which will be of big value for
company’s presentation.
Competitiveness lying in competitive advantage, which is reasonable price for
valuable and quality merchandising. This has been explained in details in this study.
Credibility is also a problem for the newcomers in the business, due to no evidence
recorded, but in long-term perspective it must be gained through influential
references from finalised jobs.
How we will achieve targeted position on the market?
To define marketing approach and the way how we will achieve targeted position,
we can use a modified version of Ansoff’s classic Product – Market Growth Matrix,
transformed into Services – Clients Matrix (Doehring 2011), see Figure 5.5. This
matrix plots clients instead of markets on one axis, and Services instead of products
on the other.

61. 57
Figure 5.5 Modified Ansoff’s Matrix Services – Clients (Source: web of J.
Doehring & Co. - http://www.jdoehring.com/Blog-John-Doehring-JoltWire-
Blog/bid/65886/AEC-Business-Development-A-Role-Not-a-Title)
For start-up company every client will be the new one, so we will analyse the
approach to the right fields of the chart.
“New Services – New Clients” – These are the clients which has no contact with
competitors. For them, this is new kind of outsourcing service. Sales presentation
for them must be oriented on benefits of outsourced merchandising (e.g. lower
costs, less organizational issues, etc.).
“Existing Services – New Clients” – These are the clients which had contact with
competitors. For them, this is already known service. The focus of the sales
presentation should be on competitive advantages and differentiation point (e.g.
value for money offer, flexibility, speed to market, etc.).
The position of the company in the mind of customers must be unique, with easily
recognisable differentiation points. Nevertheless, the route to this positioning will
be different, depending on customer’s position in modified Ansoff’s matrix.

62. 58
5.6 Cost, Volume and Profit Analysis
Imperative for the company is to have simple and understandable offer for the
customer. In order to fulfil this requirement, finance calculation will be plain,
simplified and transparent. The price calculation will be set as:
- Quantity – Engagement of one merchandiser on assigned territory will cost
the customer 500 EUR monthly. For calculation purpose, the projection of
merchandisers working capacity is based on fixed number of outlets that
will be covered once per month, not on time spent during the visit (territory
is fixed, while time spent per outlet is variable and depends on number of
served/contracted clients). The number of POS that can be visited depends
on the number and complexity of merchandising activity. It will be variable,
and it will be a matter of negotiation process and further alignment. For
different call mission of merchandiser, time spent will be different, and
consequently the payment can be different. Fully utilised merchandiser has
7.5 working hours, covers assigned territory, visiting each POS once per
month.
- Qualitative – Deduction of the payment will be defined by the contract: If
execution in some POS is not in line with demands, payment calculated for
one POS will be deducted. It will be presented as benefit for the client, but
with full dedication to avoid such wastage.
Calculation for fully utilised merchandiser’s time in average, monthly based:
1 merchandiser daily: 15 visits (minimum for maintaining 6 clients/contracts)
21 days X 15 visits = 315 visited POS
Full utilisation for the Field Force (16 merchandisers):
16 merchandisers X 315 POS = 5,040 POS (this is the estimated number of all
outlets in focused area of 25 cities with suburbs)

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The price for the customer: 16 merchandisers X 12 months X 500 EUR = 96,000
annually for merchandising coverage of 5,040 POS.
Previous calculation will be the base for all other financial planning. The plan for
reaching of break-even point is after 18 months, when the number of contracted
customers should be at least 4.
Annual operational cost of the company is: 370,000 EUR.
The number of customers for reaching of break-even point:
4 customers/contracts (which engaged all 16 merchandisers for each contract)
multiply with cost of contract (96,000 EUR) is 4 x 96,000 EUR = 384,000 EUR
Fourth contract that will engaged all 16 merchandisers will ensure overleap of
break-even point (see Figure 5.6).
Figure 5.6 Break-even point chart made for “ShowUp” company

64. 60
Sales Projection
The most pessimistic projection of the contract signing is:
- After 6 months: 1 contract signed (revenue 96,000 EUR)
- After 12 months: 2 contracts signed (revenue 192,000 EUR)
- After 18 months: 4 contracts signed (revenue 384,000 EUR)  BREAK-
EVEN POINT REACHED.
Earning Before Interests and Tax (EBIT):
With 4 contract in the second year EBIT will be 384,000 – 340,000 = 44,000EUR.
Every next contract will be almost pure profit, due to already included variable costs
in starting expense.
5.7 Human Capital Management
Human Capital is the biggest capital of the company. For service oriented company
it is even more important, because daily motivation of the people is in direct
correlation with customer experience and consequently with the image of the
company.
Human Capital Management will have 3 stages:
1. Attract and recruit people with highly developed competences, which is
required for each position. In selection process relevant partners from
business network will be included, in order to enhance quality.
2. Train people in order to develop required skills. Training will be organised
in the very beginning and will be delivered by General Manager, who has
big experience in people development area.

65. 61
3. Enhance and encourage constant self-development and promote culture of
innovation by permanent challenging of status quo. Innovation will be at the
top of the list of appreciated achievement and will be highly reworded.
Potential long-term issue among employees could be satiation with the job and
monotony, due to lack of promotions, which is real problem in small companies. In
order to overcome that, there must be long-term, significant investment in team
building events. Working environment will be dynamic and relaxing in the same
time, without tight and strict rules and policies. However, the basic discipline in job
must be promoted.
Motivation
The role of all people managers in the company (General Manager, Field Force
Manager and Supervisors) is to motivate their teams. Motivational drivers are
different for different employees and it should be revealed and analysed from the
manager’s side in order to reinforce motivation.
According to Herzberg's research, key motivators are:
- achievement
- recognition
- work itself
- responsibility
- advancement
People managers must measure transparently people’s achievement and recognise
the best and the worst.
Task should be “sold” to the people, not just given. This is important in order to
ensure that employee “feel” the meaning of the work itself and understand the
importance.

66. 62
Regarding responsibility, employees must be empowered for the job in order to
become responsible for them.
Advancement is one of the issue, due to small number of job positions and flat
organisational hierarchy. In order to prevent this problem, promotions should not
be set as reward for achievement.
Compensation Policy
Considering Herzberg's research and theories, money is not a motivator in the way
that the primary motivators are. However, lack of money can generate
dissatisfaction. Compensation policy have to be recognised as fair and will be
leveraged on employee’s success and its achievement appraisal. Appraisal will be
result of joint analysis of performance between employee and direct manager. The
appraisal will be split into 3 marks: improvable, optimal and exceptional. Each
mark will be followed with incremental percentage on salary. The percentage will
depends mostly on annual employee appraisal, but also, it depends on inflation rate,
business success and salary trends within the industry.
5.8 Critical Success/Failure Factors
Critical Success Factors (CSF)
The company sells service which has to boost customer’s profit through bigger sales
volume. From the customer’s point of view, return on investment (ROI ratio) has
to show clear connection between investment in merchandising service and sales
volume. This will generate customer satisfaction which is the most important
success factor of our business.
Critical Success Factors of the business are:

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- Recognised customer needs and focus on customer satisfaction
- Clear differentiation of provided service compared to competitors
- Innovation management and creative approach
- Execution efficiency
Potential Failure Factors
Potential failures often have the root from emotionally driven decisions of
entrepreneur or from the lack of expertise. Sound analysis have to prevent these
issues.
Main failures could be in the area of:
- Misreading customer demand
- Poor marketing and lack of awareness among targeted customer segment
- Competitors’ strategy shift to our position
Focus on the first two points is the matter of managerial skills, while third one is
something on which entrepreneur cannot influence, but he can build the company’s
image and extensive awareness among targeted group in order to mitigate potential
threat in the future.

68. 64
References
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3. Stephanie J. Morgan (2009), Segmentation, targeting and positioning
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natA
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Appendices
Appendix 1
In depth interview with potential clients among small-to-medium FMCG
companies
Top line instructions for interviewing:
 Respondent’s job position in the company should be relevant for research
purpose (e.g. Sales or Marketing director)
 Questions are the same for each respondent
 Question to be asked in the same order, considering wording
 Use open questions, without specifying the answer, suggesting or giving the
options
The questionnaire for the in-depth interview
A. Client’s awareness about merchandising
1. What retail merchandising represent to you and what is the importance of
merchandising for your business?
____________________________________________________________
____________________________________________________________
2. Do you have organised merchandising on the market and how it works?
____________________________________________________________
____________________________________________________________

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3. List of retail merchandising service providers in Serbia that is known for
respondent.
___________________________________________
___________________________________________
___________________________________________
___________________________________________
B. Review of distribution coverage and merchandising of the client
4. Which area you cover with distribution in Serbia and what is your plans
for the future?
____________________________________________________________
____________________________________________________________
5. What area you want to cover with merchandising and why?
____________________________________________________________
____________________________________________________________
C. Previous experience with merchandising providers
6. Did you have any contact with merchandising providers? On whose
initiative?
____________________________________________________________
____________________________________________________________
7. What was the outcome of the contact?
____________________________________________________________
____________________________________________________________

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8. Have there been any offers for cooperation or contract signing and what
were their main characteristics?
____________________________________________________________
____________________________________________________________
D. Investigation of ideal merchandising service offer
9. Which elements of the offer were favourable for you and which were not?
____________________________________________________________
____________________________________________________________
10. Does the contract is signed? If yes, are you satisfied with implementation?
If no, what was the main barrier?
____________________________________________________________
____________________________________________________________
11. If you can change the contract or offer, what part you will change? What
will be ideal offer for you?
____________________________________________________________
____________________________________________________________
12. Does the offer matched to your needs, geographically looking?
____________________________________________________________
____________________________________________________________
13. Have you been satisfied with the offered price?
____________________________________________________________
____________________________________________________________

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14. Did the provider responded appropriately on all merchandising needs of
your business?
____________________________________________________________
____________________________________________________________