Question

Marketing Question: Identify two most important core competencies that the compancy CD Tradepost has and how in each case of core competencies, the core competency lent essential support to these companies’ successes.

Answer 1

CD Tradepost, a Topeka-based company started by it's owner Dennis Strobel, his company buys and sells music CDs, DVDs, VHS movies, video games, video game systems and accessories. They have entered the Wichita market with its first store and plans to launch a national wide franchise concept. The new location of company owned store is at 2161 N. Rock Road near Best Buy in Tallgrass Centre.

The company chose Wichita to introduce the franchise system because of it's rich heritage of entrepreneurship, as well as its proximity to Topeka, where they already have two stores and also have one store each in Manhattan and Salina, respectively. While CD Tradepost may open other company owned stores, they want to concentrate to develop franchise system. The company plans to have 10 franchises in Kansas, up to four in Wichita, Missouri and Nebraska. After that, the company has a long term goal of developing 100 franchises over the next five years in other cities across the US.

"Our strategy for developing the franchises is to form a core, as opposed to a shotgun approach," Strobel says. "We're a young company so we don't know what we don't know."

SUPPORT IS KEY

Don Boroian is chairman of Francorp Inc., an Olympia Fields, Ill. based consultant for companies those who want to get into franchising their businesses. He says that the success of a franchisor is not as much related to the concept as it is to how strong the system of operation is. They need a decent concept, well organized business and a strong management team or individual who is running the business knows something about franchising.

It is also important for a franchisor to be selective in who they sell a franchise to. They need to look for someone they would hire as a store manager if they were opening a store, not someone who is too entrepreneurial and might divert from the original concept.

QUALITY CONTROL

Strobel was used to work as a corporate salesperson and manager at the international lawn and garden equipment company. He was attracted to the business, he says, it provides a broad range of customers and does not require a lot of active selling or technical expertise from employees.

He started CD Tradepost in 1998. They have an entire cross section of customers. Kids like video games, young people love music, and really, you never reach an age where you don't like music," Strobel says. Another thing he says attracted him to the used CD and movie business is the ease with which the concept can be replicated.

The acquisition of a franchise costs between $86,000 to $140,000 and that includes the franchise fee, start-up inventory, site selection, signs, employee training and software licensing. The company has invested substantial amount of funds in developing it's own software system that tracks inventory and assigns values to products price based on condition, rarity, and how many other copies may already be in the store.

One of his company's strengths is that it does well selling in all areas like music, movies, and video games. Unlike some retailers that accept products for trade in, CD Tradepost pays cash for its used products from the customer. That's less confusing in the end and helps the company assign a value to each product.

The core competencies of CD Tradepost are product knowledge, strong management team, growth oriented, and business awareness led them to success.