Business Plan of an Angelix Pretzels Company - Research Proposal Example

?Pretzel Company Table of Contents Thesis ment 4 Objectives 4 Company History 5 Marketing Mix 5 Product 5 Price 6 Promotion 6 Place 7 Packaging 8 Local Market Analysis 8 Market Segmentation and Target Market 9 SWOT Analysis 10 Strengths 10 Weakness 10 Opportunities 11 Threats 11 Competitor Analysis 12 Finance Plan 13 Break Even Analysis 13 Projected Sales 14 Projected Profit and Loss 16 Conclusion 17 Works Cited 19 Thesis Statement The report incorporates a business plan about the formation of a company named ‘Angelix Pretzels’ which will engage in production and distribution of hard salted pretzels. The report carefully states the missions and objectives of the company and critically addresses related marking mix factors. In addition to this, the report also describes market analysis, SWOT analysis, competitor analysis and ultimately draws a financial projection for the company. Mission Statement The mission statement of Angelix Pretzels is to create the finest quality hard salted pretzels with a commitment to incorporate the freshest and richest nutritional ingredients. The products of Angelix Pretzels will meet the highest standard of excellence and offer greater value to the customer with enhanced quality. Furthermore, Angelix Pretzels will also seek to respond to the changing needs of potential customers as well as offers product at competitive price. Objectives The objectives of Angelix Pretzels are as follows: To enhance profit and production without compromising product quality To generate strong sales in the city’s major supermarket chains To maintain consolidated control on cost of business operations Company History Angelix Pretzels will offer delicious and nutritious hard salted pretzel products in the market of Washington City. The company will be established as a general partnership business. The business partners will be liable for performing all managerial responsibilities. In order to expand the business, Angelix Pretzels will attempt to take the advantage of demand of hard salted pretzel in the city of Washington. In order to survive in the market, the company will strive hard to build a loyal customer base. The company will be registered as Angelix Pretzels and will operate its business solely from the city of Washington. Marketing Mix In order to survive in a market any new company needs to constantly produce and deliver quality products in an increasingly sustainable way, while meeting business objectives simultaneously. Thus, in order to achieve the business objectives, Angelix Pretzels should ensure that it balances the four elements or the 4Ps of marketing mix. Product Angelix Pretzels will produce and market standard hard salted pretzels product. The standard hard salted pretzels product will be made by considering the nutritional value and health of the customers. In view of that, 1 Oz (ounce) of hard salted pretzels will contain 108 calories which can be further include 8% of fats, 83% of carbohydrates and 9% of protein. The common serving size of hard salted pretzels will be 1 Oz, 10 Oz and 100 Oz. Angelix Pretzels will emphasize on attaining greater profitability through increased sales of its product and critically place importance in satisfying the customers’ needs and preferences. Nowadays, people have become concerned about health related issues, and thus they desire for eating healthy food without compromising the taste. Hence, Angelix Pretzels would be very careful while using wholesome ingredients in its product. In order to maintain the quality of its product, Angelix Pretzels will prudently select its suppliers. It will ensure greater customer satisfaction (Hood and Morgan, “Marketing a Food Product: Marketing Considerations for a Small-Scale Food Processor”). Price Pricing is vital for opening any new business because price can determine the sales as well as amount of profit. In order to maintain the position in the market, Angelix Pretzels will offer its’ product at competitive price. The price fixed by the company for its product would be determined on the basis of market research. In the initial phase, Angelix Pretzels will use penetration pricing strategy, i.e. the company will lower the prices of its product to attract potential customers. Hence, it will gain competitive pricing and at the same time will be able to enjoy increasing sales. The pricing strategy of the company will be intended for attracting more customers towards the product at much affordable price. Angelix Pretzels will constantly supply hard salted pretzels to its potential customers in order to make their breakfast healthy and nutritional (Hood and Morgan, “Marketing a Food Product: Marketing Considerations for a Small-Scale Food Processor”). Promotion Promotion is regarded the other important element of marketing mix. The objective of promotion is to stimulate the product demand of a company. With this concern, Angelix Pretzels’ promotion activities would basically cover two major areas including advertisement and sales promotion. The target of the company should be to attract the customers aged from 18 to 35. With respect to advertisement, an advertising campaign will be conducted with the goals to increase the sale of product and to generate more revenue. Moreover, the advertising should be conducted through national TV during prime time such as during sports events on major broadcast network and cable networks across the city. In addition to television advertising, print and radio media will be used for advertisement. With respect to sales promotion, Angelix Pretzels will provide discounts as well as free gifts on significant amount of purchase (Hood and Morgan, “Marketing a Food Product: Marketing Considerations for a Small-Scale Food Processor”). Place The choice of place or distribution for any new business depends on variety of circumstances. Thus, in order to distribute its products, Angelix Pretzels will carefully consider transportation expenses involved in the movement of its products from manufacturing site to ultimate users. The company will either sale its product directly to customers through its own food store or can also supply its products through retailers depending on the feasibility (Hood and Morgan, “Marketing a Food Product: Marketing Considerations for a Small-Scale Food Processor”). Packaging Packaging is a vital aspect of marketing strategy. Accordingly, Angelix Pretzels would wrap hard salted pretzels in an air tight plastic package in order to maintain freshness of its product and to ensure longevity. The company will essentially focus on the packaging for ensuring delivery of quality and healthy products to its potential customers. The product packaging of hard salted pretzel products will be designed in such a way so that the product contents inside the package remain safe during transits from the manufacturer to the ultimate users. Additionally, the company‘s packaging will act as a trademark and helps in promoting the product in the market. Hence, the packaging of Angelix Pretzels will be attractive and so that it communicates the uniqueness of the product to the customers. The product packaging of hard salted pretzels will ensure that the contents inside the packages are free from any contamination and will also ensure greater health security of its potential customers (Scribd Inc., “Effect of Packaging and Design Strategy on a Product”). Local Market Analysis The major business region of Washington City spreads from Walnut Street and North Main Street to South Main Street. Furthermore the city has expected growth rate of number of households. Two major shopping destinations of Washington are Washington Crowne Center and South Strabane Township. Furthermore, other frequently desired destinations for shopping in Washington are general retail shops, book stores and sport stores among others (Washington Business District Authority, “Downtown Washington Business District Market Analysis”). Thus, Angelix Pretzels will strive to offer its product not only through super markets but is should be committed towards enhancing its product sale through small food stores as well. Consequently, Angelix Pretzels will primarily focus on meeting the demand of regular local resident customer base as well as visitors from nearby areas. Angelix Pretzels will concentrate on the middle and upper income group people as they can relatively spend more money on food products like pretzels. It would offer its product through two types of stores which include super markets and small food stores. Furthermore, the company will offer expedient customers services at competitive price to boost its product sale. While determining the prices of products, Angelix Pretzels will also consider the bargaining power of customers and suppliers. It will help the company to identify the potential demand for its product in the target marketplace, and the company will also be able to identify the degree of control hold by suppliers in the market. The company will also abide by the food and health standard regulations enacted by government. The compliance to these standards will enable the company to win the confidence and loyalty of its potential customers. Market Segmentation and Target Market Angelix Pretzels will segment its market on the basis of the scale of sale. It is worth mentioning that in present days, American people tend to buy their food products more from small food stores rather than supermarkets. Consequently, Angelix Pretzels will concentrate more on distributing pretzels via small food stores and meet the needs of potential customers. At the same time, the company will also endeavor towards attracting all age group people especially the house makers who are concerned with the health related issues of their spouse and children (Bloom, Jonathan Z, “Market Segmentation: A Neural Network Application”). SWOT Analysis Strengths In the USA, there has been constant increase in the demand of hard salted pretzels over recent years. Besides, customers’ preferences towards the consumption of hard salted pretzels have also increased due to its high nutritional value and low calories. Hard salted pretzels has become an important part of breakfast to almost all the people in Washington. Thus, as a producer of hard salted pretzels in the metro, Angelix Pretzels will be able to attract considerable number of customers (University of Northernlowa, “Conducting a SWOT Analysis”). Weakness Angelix Pretzels will have to depend on few customers as the company will operate in the domestic market of Washington City only. The company will also suffer from limited availability of finance therefore will be unable to take the full advantage of increasing product demand. The other weakness of the company is related with its product line. Since the company will produce only single product i.e., hard salted pretzel, any changes in the customers’ preferences may lead the company to loss of significant market share (University of Northernlowa, “Conducting a SWOT Analysis”). Opportunities Today, almost all people across the globe are highly concerned about their health. Customers are now tempted towards those products that add to their taste and preferences and at the same time are quite interested in knowing their nutritional value. Contextually, Angelix Pretzels will offer delicious hard salted pretzels that would meet both taste and health requirement of the customers. Currently the food market in USA is constantly growing along with the income of people. This increasing growth will provide the company with an enhanced opportunity to sustain business profitably for longer period of time (University of Northernlowa, “Conducting a SWOT Analysis”). Threats In recent years, the costs of raw material including flour and other commodities have been increased significantly. Additionally, the increasing costs of commodity and transportation expenses may act as threat for Angelix Pretzels to conduct business effectively. Moreover, the taste of customers and living standard has been changing constantly over the last few years which can cause difficulties for Angelix Pretzels to cope up with the fluctuating demand. Furthermore, availability of any close substitute of hard salted pretzel may also impose threat for Angelix Pretzels in the market of Washington (University of Northernlowa, “Conducting a SWOT Analysis”). Competitor Analysis In order to succeed, every new business should aware about the prevailing competition in the existing market. In this context, it can be stated that in Washington, there are already other competitors who offer close substitute products of hard salted pretzels. Thus, in order to compete with other rivals, Angelix Pretzels will closely evaluate the strategies adopted by them within the same market segment. Angelix Pretzels will carefully consider the policies that may deter the company from establishing itself in the marketplace. The pricing strategies of Angelix Pretzels will be based in accordance with its competitor’s strategies, which will help the company to attract customers. Product quality is a significant factor of which the customers are highly concerned, irrespective of the price. Thus, in order to secure quality, Angelix Pretzels will sensibly choose the suppliers. Furthermore, in order to make the product available for customers, Angelix Pretzels will critically consider the distribution channels adopted by its rivals at the market place. Selection of appropriate means of promotional activities is the other crucial factor that provides a company to gain competitive advantage over the rivals at the marketplace. With respect to promotion, Angelix Pretzels will equally consider the quality, health as well as the taste and preferences of its customers in order to influence them to purchase. In addition to this, the company would critically consider the factors behind the success of its competitors and it will try to imitate them or formulate better strategies. It will help Angelix Pretzels to succeed and compete in the market of Washington. The company will strive to provide value to its customer in order to maintain or increase its market share (Czepiel and Kerin, “Competitor Analysis”). Finance Plan The success of Angelix Pretzels will depend on the spending activities on finding new customers and on promoting the product to the market. Break Even Analysis Since it is a start-up business, there will be no net profit for the company during first few months of its establishment. During first few months, the company’s profit will be consumed by the expenditure incurred for establishing the company such as installation of machinery, spending on marketing and spending for final production of its product. The following figure will show the breakeven of Angelix Pretzels: Figure 1: Breakeven Analysis From the above figure, it can be observed that Angelix Pretzels will start to gain profit from fifth moth of its business operation. Projected Sales The above figure indicates that during the initial five months of its establishment, Angelix Pretzels will not gain any profit. The reason is that the company will take certain time to settle in the marketplace and to recover the startup business expenses. After four months the company will gradually make profit when more and more customers become aware about the product offerings of Angelix Pretzels. Due to this reason, Angelix Pretzels will spend heavily on promoting its product in order to make it familiar among the potential customers. The following figure will show the projected monthly sales of Angelix Pretzels for first year: Figure 2: Projected Monthly Sales From the above graph, it can be stated that the company’s overall income may not be satisfactory during its initial first year. Nonetheless, with the passage of time it can be expected that its annual income will grow at the rate of 20-30% per annum. The following figure will show the forecasted income of Angelix Pretzels for three years i.e. from 2013 to 2015: Projected Profit and Loss The above forecasted three years income reveals that the net profit in terms of total sells of Angelix Pretzels will be almost 1.56% for the initial first year and 1.76% for the successive second year. It is expected that there will be radical shift in net profit of the company by 6.56% in terms of sale for the third year of its establishment. The following table will show the projected profit and loss statement of Angelix Pretzels from 2013 to 2015: Table 1: Projected Profit and Loss Statement FY 2013 (Amt in US$) FY 2014 (Amt in US$) FY 2015 (Amt in US$) Sales $313,000 $346000 $419000 Direct Cost of Sales $31300 $346000 $419000 Total Cost of Sales $31300 $346000 $419000 Gross Margin $281700 $310700 $378700 Gross Margin % 90.00% 89.80% 90.38% Expenses Payroll $199200 $215136 $247406 Depreciation $9600 $9600 $9600 Promotion $3600 $12000 $12000 Insurance $9600 $9600 $9600 Rent $12000 $12000 $12000 Payroll Taxes $29880 $32270 $37111 Total Operating Expenses $269880 $298606 $337717 Profit Before Interest And Tax $11820 $12094 $40983 EBITDA $21420 $21694 $50583 Interest Expenses $4760 $3405 $11780 Taxes Incurred $2118 $2607 $11780 Net Profit $4942 $6082 $27488 Net Profit/Sales 1.58% 1.76% 6.56% Conclusion The market of Washington is quite attractive for Angelix Pretzels to operate its business. The above marketing mix strategies such as pricing, promotion and distribution will help Angelix Pretzels to ensure sustainability in business. Furthermore, Angelix Pretzels will also try to maintain the business operational expenses as low level so that it can gain maximum profit. The major competitive edge of Angelix Pretzels will be its quality products within affordable price. Furthermore, the product of Angelix Pretzels will be available to maximum small food stores along with major supermarkets, making it accessible for most of the customers in Washington. Works Cited Bloom, Jonathan Z. “Market Segmentation: A Neural Network Application.” Annals of Tourism Research 32.1 (2005): 93-111. Print. Czepiel, John A. and Roger A. Kerin. Competitor Analysis. Identifying Competitors, 2009.Web. 06 Dec. 2012. Hood, Kenneth and Kimberly Morgan. Marketing a Food Product: Marketing Considerations for a Small-Scale Food Processor. Mississippi State University, 2009.Web. 06 Dec. 2012 Scribd Inc. Effect of Packaging and Design Strategy on a Product, 2012. Web. 06 Dec. 2012. University of Northernlowa. Conducting a SWOT Analysis, 2012. Web. 06 Dec. 2012. Washington Business District Authority. Downtown Washington Business District Market Analysis, No Date. Web. 06 Dec. 2012. Read More