Is Repackaging Wine into Small Glasses of 250ml Will Be a Viable Business Venture - Assignment Example

NEW VENTURE CREATION (FEASIBILITY ANALYSIS) Table of content Executive summary/concept ment…………………………………………....3 0. PRODUCT/SERVICE FEASIBILITY………………..………………..……..3 1.1. Explanation of the product…………………………………………......3 1.2. The target market…………………………………………………........4 1.3. Why the prospective customers should venture into this product…..4 1.4. Special feature (how is it different from others)……………………...4 1.5. The management team……………………………………………….. .5 1.6. Competition……………………………………………………………..5 1.7. Marketing and sales strategy……………………………………..…...6 2.0. Industry/market feasibility……………………………………………….…....7 2.1. Industry attractiveness………………………………………………....7 2.1.1. Porter’s Five analysis of wine industry in UK…………….7 2.1.2. Market research-Primary data collection…………….…..9 2.1.3. Secondary data collection………………………………...10 2.2. Market timeliness……………………………………………………..12 2.3. Identification of a niche market………………………………….......12 References…………………………………………………………………………13 Executive summary/concept statement This feasibility analysis is aimed to investigate whether repackaging wine into small glasses of 250ml will be a viable business venture. The analysis starts by focusing on the product itself in terms of customers’ expectation, and target market. It will also look at the special features that will make the product gain a competitive advantage, the management team of the product, the business model that will be in a form of franchising, and competition. The second part will be about the industry and market feasibility, which is meant to investigate the attractiveness of the market, timeliness of the market and the niche market. This in-depth analysis of secondary and primary data to back up the analysis will indicate that this is a viable product that can lead to a successful business venture. 1.0. PRODUCT/SERVICE FEASIBILITY 1.1. Explanation of the product Wine De Glass will sell classic wines known around the globe but will be rebranded in a bottle but a glass. It will seek franchise from known wine manufacturers who sell delicious and healthy wines in U.K and other countries like the USA. The wines will be sold in glasses of 250ml in major retail outlets around UK, and later the company will seek to globalize the product. Development of this concept was because a bottle of wine is sometimes too expensive, and the cheapest bottle of wine that is of the good standard can cost £10. It not only makes wines more available to the consumer, but it will give the customers an opportunity to taste different types of wine. 1.2. The target market Market segmentation is crucial since it will target a specific group of customer such as tourists that are likely to enhance profit maximization from reduced operation cost (Chen, 2003). The first two years of operation, this venture will target retail outlet, restaurants and major wines vendors. At first the restaurants will be given the utmost priority because people love to take wines during dinner or major meals. The target market is described as those people who could not afford a particular bottle of wine, and now they will have an opportunity to test the wine since it will be packed in small quantity. 1.3. Why the prospective customers should venture into this product This product will enter the market as a franchise. A franchise is the agreement or license between two legally independent people. A group of people or person (franchisee) the right to market a service or product using the trade name and trademark of another enterprise (franchisor). Hence, the wines that are sold will be legit and known by their brand name. The wines will be ready to drink in a glass, and can be carried anywhere, the need for corkscrew will not be required anymore, the customer has to open quickly and swallow it. The freshness of the wine will not be lost as the glass is made in high standards while the cover is fit tightly to trap pressure and air. 1.4. Special feature (how is it different from others) This product is different from other known wines where one has to dispose of the wine bottle. The packaging is so elegant and classy, and there are different colours depending on the franchisor’s brand. The glass will be eco-friendly, attractive, and one will be just be required to peel and enjoy the delicious wine from the comfort of anywhere. One of the franchisors will be Chardonnay that offers an amazing citrus upfront and apple, followed by small amounts of butter flavours. Such companies will make his product stand out from the ordinary bottle wine that is not always available. The engineered glasses are made in a way that allows a much shelf life duration as compared to any competitor, and they are also resalable, recyclable, and durable. 1.5. The management team Since the product needs to be pushed very hard in hard in the market, and we are determined to succeed in this business venture. A self-driven and dedicated management team will be required to make this business venture a success. The first person in the management team is the Chief Executive Officer (CEO) that will be responsible for everything and everyone. The CEO will be a strategic thinker and will be able to decide about the future of the business and the industry. The next is Chief Operating Officer (COO), who will be responsible for all the complex operation of the business. The primary complex operation for this operation is delivery and the chain of distribution. The last major person is the Chief Marketing Officer (CMO) who will be responsible for all the marketing of the product. Marketing will be crucial since this is a new concept and new product. He will be obligated to push the product in all levels of product promotion such as the use of social media platform and the mainstream media. 1.6. Competition A new business venture should position itself to develop and identify a sustainable competitive advantage. This process is not an easy task for any new business venture, and it demands a very thorough strategic plan. The wine industry is very competitive, and it has a conservative culture, where people will hold on to a particular type of wine packed in a particular way. The business should be in a position to create a customer value in relation to low price, convenience and speedy delivery (Winer, 2004). It is critical for this new business venture to make sure that the customers perceive this product superior and self-satisfying. Apart from the marketing mix it is very necessary for the product to differentiate itself as part of the competitive strategy (Miller, 2011). Differentiation has been focused in-depth in this business venture, and the glass has been engineered to stand out as well as making sure that it is patented. 1.7. Marketing and sales strategy A perfect and practical marketing and sales strategy is an ongoing value-creating process that is composed of various items such as marketing segmentation, marketing strategy, market research, pricing, placement and value chain. Market segmentation is supposed to split the market in terms of reachable consumers that are likely to maximize profit. Marketing strategy is supposed to act as a plan of the business that will be consistent with the goals of this new venture. The price of the product will be dealt upon according to the type of the wine. But the price will be cheaper since the volume of the wine will be spilt into portions of 250ml. The value of the product will ensure that the product is high providing satisfaction is achieved. Consumers are said to be very savvy and will choose the product according to the level of satisfaction that corresponds with the price. Placement is also a very crucial aspect of marketing strategy, and this product has been positioned to be very assessable and convenient. The product will be placed in every retail outlet, restaurants and wines shop vendor. The Value chain of the product will also be considered such as the inbound logistic, which involves bringing the wine and the packaging glass that is key to this commodity. Outbound logistic that will mean finding the right distributor that will ensure the product reaches the customer at the right time. 2. Industry/market feasibility 2.1. Industry attractiveness Market or industry attractiveness is a concept that suggest that a business should invest in a market that is attractive. In particular with characteristics such as large and growing, critical to customers, operating margins are high and are not crowded (Kottler, 1997). Consumption of wine in a sociocultural perspective, there has been an advocate lately for people to take wine as compared to other alcoholic drinks such as beer and spirits. Hence, an indication of the future growth of the wine industry. Wine is also accepted as classy trend globally and most is sold in a fancy restaurant. Demographically wine is produced in the Southwest and east of United Kingdom. 2.1.1. Porter’s Five analysis of wine industry in UK Porter’s five forces model will be used in feasibility analysis to examine the competitive pressure that Glass De Wine will face in the wine industry in UK. Porter’s five forces model can be summarized in the figure below and then each effect will be explained keenly (Porter, 1985).  a) Bargaining power of customers Customers bargaining power is very high since there is no switching cost, there are various wine brands to choose from, and there is a probability of customers changing habits. b) Bargaining power of supplier Suppliers bargaining power is low because suppliers offset the buyers giving them little bargaining power. Wine is made from some fruits like grapes that will rely too much on the weather conditions. c) Threat of substitute the threat of substitute is high since the consumer might decide to replace the wine with other forms of alcoholic drinks like beer and spirits. Due to this fact price level might be limited. d) Threat of new entrants The Threat of a new entrant in the wine industry can be described as moderate because switching costs from the customers are small. It is worth noting that wines basis of competition is from the price and branding. This is the reason as to why our venture has considered branding of the known wines to a more affordable packages. e) Rivalry among competitors Rivalry from other competitors will be almost to none since we shall rebrand wines from various wine manufacturers to a more elegant ready to drink glass. The rivalry will also be reduced since the business will be operating as a franchise. 2.1.2. Market research-Primary data collection Market research is important in relation to addressing any one of the product mix such as price, product, place, or promotion. Before conducting a market research, the problem that should be addressed should be clearly defined prior to doing the research (Salant and Dillma, 194). In regards to our new product, we aim to establish whether branding wines in this form of packaging will appease potential customers. The primary data that will be collected will be mainly to investigate whether they will be satisfied in this niche of wines. The main form primary data that will be collected will be face-to-face interviews. 2.1.3. Secondary data collection Secondary data collection is information that has already been gathered from the wine industry. Such data can be found in publications, competitors’ websites and government bureau of statistics. One of the primary sources that were relied upon to gather information about the wine industry is The Wine and Spirit Trade Association (WSTA). The UK Wine and Spirit Trade Association represents over 340 companies that manufacture, export, import, transport and sell wines and spirits. There various activities associated with wine and spirits in UK such as bottling, logistic companies and small retailers. It is estimated that wines and spirit will account for approximately 51% of all the alcohol sold in the UK. £9,132 million is the amount that was expected to be spent on wines in the year 2014. The figure below indicates that there is a possibility of an increase in the production of wine in the future especially with innovation such as Glass De Wine. Figure 2: 2014 UK value sales of selected alcoholic drinks (£m) Source: Nielsen, CGA UK is reported to be the sixth largest country that consumes according to Nielsen data. However, it is dominated by importers from countries like Australia and France. This is a clear indication that there is a potential growth of this industry especially if innovative products such as what our business venture is offering in the wine industry. Revenues realized from the sale of wines annually can reach £100 million if exploited fully. 2.2. Market timeliness In regards to the market timeliness, it can be said that the market receptive to Glass De wine. This is because the product is a modification of the existing packaging but the only difference is rebranding and differentiating the product to be more affordable. The wine industry is growing, and people are substituting other types of alcohol with wine. Millions of euros are made annually in the UK from the sale of wine making this market be timely. The product can also be characterized as a first mover in the industry since traditional wine is packed in bottles with hard cork to open. This product is a game changer in the wine industry where one can purchase a glass of wine, peel the seal and take it. Some potential customers indicated that purchasing a whole bottle of wine is sometimes difficult due to the price but now this will be easy with small quantity packaging. 2.3. Identification of a niche market Identifying a niche market will be crucial since it will lower the cost of value chain especially in this product that relies on logistics and transportation. The niche market realized is economy hotels where fancy wines are not sold. Budget hotels will be able to include this type of packed wine to their customer and boost their sales. When the five star hotels might not appreciate our product and continue selling the wines in the bottles budget hotels will appreciate our product. This strategy will be crucial to avoiding competition from other sectors that might not sell ‘small wine’ hence offering a competitive advantage. References Box, T. & Miller, W. (2011). Small Firm Competitive Strategy, Academy of Strategic Management Journal, 10 (2), 55-59 Chen S.J., (2003), Market segmentation by tourists’ sentiment, Annals of Tourism Research, 30(1): 178-193 Eckhouse, J. (1998). Technology Gives Edge to Smaller Businesses, InformationWeek, November 30, 1998; 711, 2-5SR. Hardy, K. & Magrath, A. (1987). Buying Groups: Clout for Small Business, Harvard Business Review, September-October, 16-21. Kottler, P. (1997), Marketing Management, 9th ed., Prentice Hall. Lev, L., L. Brewer and G. Stephenson (2004). “Tools for Rapid Market Assessments.” Oregon State University Oregon Small Farms Technical Report No. 6. Porter , M. (1985). Competitive Advantage, Creating and Sustaining Superior Performance, New York, NY: The Free Press. Salant, P. and D.A. Dillman (1994). How to Conduct Your Own Survey. New York: John Wiley and Sons, Inc. Timmons, J. & Spinelli, S. (2004). New Venture Creation, Entrepreneurship for the 21st Century, New York, NY: Irwin/McGraw-Hill Publishers. Winer, R.S. (2004). Marketing Management, Upper Saddle River, NJ: Prentice Hall Publishing Company. Read More