Demand:
"In economics, demand is the desire to own anything, the ability to pay for it, and the willingness to pay. The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time (Wikipedia, Demand)." One of the key benefits to running a bar like Closing Bell is that there is always a demand for alcohol. In fact, our research has shown that despite the recent recession people are still indulging themselves with alcoholic beverages at a record pace. Boston in particular represents some of the highest alcohol consumption rates in the entire country, which makes this location for Closing Bell that much more attractive.
Addressable Market:
"Total addressable market (TAM) is a term that is typically used to reference the revenue opportunity available for a product or service. TAMs help to prioritize business opportunities by serving as a quick metric of the underlying potential of a given opportunity (Wikipedia, Total Addressable Market)." Presently there are approximately 4.5 million people living within the Greater Boston area. Of these 4.5 million people approximately 3 million are of legal drinking age. These 3 million people represent the total addressable market for Closing Bell, or the number of people we could expect to see if there were no competition (i.e. other bars, liquors stores, etc.).
Addressable Market:
"Total addressable market (TAM) is a term that is typically used to reference the revenue opportunity available for a product or service. TAMs help to prioritize business opportunities by serving as a quick metric of the underlying potential of a given opportunity (Wikipedia, Total Addressable Market)." Presently there are approximately 4.5 million people living within the Greater Boston area. Of these 4.5 million people approximately 3 million are of legal drinking age. These 3 million people represent the total addressable market for Closing Bell, or the number of people we could expect to see if there were no competition (i.e. other bars, liquors stores, etc.).
Realistic Opportunities vs. Competition:
While there are 3 million people of legal drinking age in the Greater Boston area there are approximately 1 million males age 24 to 34. Of the 1 million males age 24 to 34 in the Greater Boston area it is difficult to forecast the exact number that will choose to go to Closing Bell rather than one of the other approximately 180 bars in the area. Our hope is that people will choose our bar because of the unique pricing system we have implemented, as well as, the atmosphere that fully immerses the customer in the Stock Market experience. Because of this difficulty in forecasting we took a somewhat different approach in estimating our market. We went more with an average customer per day assumption (assuming on Friday and Saturday we would be closer to max capacity (including turnover) so more like 250 customers, where as on Monday / Tuesday, we might have an average of 50 customers. We then added a factor in, saying in year 1, we will probably only get 25% of max sales, Yr 2 increasing to 35%... and so on.
While there are 3 million people of legal drinking age in the Greater Boston area there are approximately 1 million males age 24 to 34. Of the 1 million males age 24 to 34 in the Greater Boston area it is difficult to forecast the exact number that will choose to go to Closing Bell rather than one of the other approximately 180 bars in the area. Our hope is that people will choose our bar because of the unique pricing system we have implemented, as well as, the atmosphere that fully immerses the customer in the Stock Market experience. Because of this difficulty in forecasting we took a somewhat different approach in estimating our market. We went more with an average customer per day assumption (assuming on Friday and Saturday we would be closer to max capacity (including turnover) so more like 250 customers, where as on Monday / Tuesday, we might have an average of 50 customers. We then added a factor in, saying in year 1, we will probably only get 25% of max sales, Yr 2 increasing to 35%... and so on.
Targeted Selection of "Winnable" Market Opportunities:
Closing Bell is currently targeting the 1 million males age 24 to 34 in the Greater Boston area. However, rather than go after this group as a whole we are specifically seeking those people making over $50,000/yr as this group represents the highest percentage of drinkers.
Closing Bell will benefit significantly from the city setting that Boston provides. I see that your plan is to target the 50,000+ income group, but being a college town that Boston is, wouldn't university students also be a plausible market? Understanding that student probably do not have as much money to spend, but your unique pricing system is "creating" cheap drinks for them. Furthermore, the younger college students are probably more enthusiastic about the gaming aspect than say ... a single father of two drinking his sorrows away.
ReplyDeleteWe don't mind having the college students come in and spend their money with us, but we are not specifically catering to them. We were going for quality over quantity, which is the opposite of what most college students look for. Our goal was to offer a lot local microbrews plus have our own homebrew. Coors Lights, Bud Light, and Miller Light would still be available as well, but just not featured.
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