Barriers to entry

1. Consumer behavior: educating local businesses on the necessity of a proper marketing agency. The expert group were unanimous is considering psychology as the number one barrier to entry.
   • Accountants have consistently suggested cutting the advertising budget as the first course of action for any company with financial problems. Originally, I considered this to be an accountants bias but considering assessment of the quality of advertising in the marketing plan, it was probably wasted money to begin with.
   • For 100 years of local business, few establishments have had the opportunity or foresight to use a quality consultant. Local radio and print has a history of charging nothing for creative; “if your paying nothing, it is worth nothing.” Local advertising may see no value in quality.
   • If I am adding price to the advertising, I will be adding it to zero. That is, I will be charging for what was once or still is free. That may be a hard sell.
   • Local advertising rates are about one-fifth the national average. For jewellery, that means instead of 15 percent of sales, only 2 percent is being spent locally and for retail, instead of 6 percent, its only 1.5 percent.
   • Few businesses are using an outside marketer, so why would they change?
2. Distribution of advertising: Transcontinental owns its own distribution system with the polybag. Using Canada Post will add cost to distribution of direct mail advertising (11 cents per piece). Therefore, most major printing companies operate on an economy of scale and distribution is a competitive advantage for them but an added expense for a smaller advertiser.
3. Loyalty: two major printers have been operating in Grand Falls-Windsor and Bishop’s Falls for about 75 years. This feasibility will test loyalty.
4. Grand Falls-Windsor by-laws: Billboard by-laws are antiquated and the council may not support innovative advertising such as sidewalk art.
5. Initial capital to pay my wages (estimated at 6 months of negligible income).
6. Human Resources: Finding a dedicated staff who can work unsupervised and initially receive pay based on piece work (contract work where employees are paid based on productivity).
7. Finally, and possibly most significantly, is a barrier that is impossible to measure. It was generally stated that this business would be feasible for “the right person, with the right timing, and willing to work harder than anyone else.”

Market Area Characteristics

Geographic definition of the market

Central Newfoundland which encompasses: Grand Falls-Windsor, Bishops Falls, Botwood, Gander, Harbour Breton, Lewisporte, Twillingate, Springdale

The primary trade zone for DHMD is the 45 km radius surrounding Grand Falls-Windsor (800 businesses). The secondary trade zone will be the area between Corner Brook and Clarenville, with the rest of the province making up the tertiary trading area. Advice from the expert group suggested exploring my Canada wide contacts which include Toronto, Ottawa, Calgary, and Vancouver.

Demographic factors

This is a business to business (B2B) operation targeting mainly small and medium retail and professional services.

Number of potential customers

Canada Post list 800 business mail addresses within a 45km radius of Grand Falls-Windsor.

Diversification of the area’s economy

See charts page 13 and 14.

• Heavy retail (Newfoundland and Labrador’s primary industry)
• Government Services and Medical
• Professional Services – accounting, legal, insurance
• Auto retail
• Educational – many private schools, a public college, and primary and secondary schools.

For new businesses (locally based), the large majority are developed in the retail sector, followed by service. There is little to no light manufacturing and little businesses planning for marketing outside the province. For established businesses (locally based), there is some out-of-province marketing and almost none are international (I did discover one NL – Iceland connection).

Conclusion to the strength of the market area:

If the strength of the inference is relative strength and regarding the context of a market for a marketing agency, then the economy would be considered weak, especially when compared to a urban area such as St. John’s. Though there are 800 local businesses that help create a overall healthy economy, a statement regarding the absolute strength of the market for a marketing agency would definitely be a naïve one.  In terms of human nature, using the analogy of the ideal self and the actual self, Central Newfoundland definitely needs a marketing agency (a strength) but a forensic look at the economy shows very few businesses willing or able to use such a service.

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