Mountine Vitamin Watere - Marketing Forecast - Case Study Example

Table of Contents Executive Summary…………………………………………………………………….3 Introduction…………………………………………………………………………….4 Objectives……………………………………………………………………………….4 Strategy…………………………………………………………………………………5 Product……………………………………………………………………………..5 Price…………………………………………………………………………………5 Place…………………………………………………………………………………6 Promotion……………………………………………………………………………6 Target Customer……………………………………………………………………..7 Supply Chain Development…………………………………………………………10 Human Resource…………………………………………………………………….10 Financial…………………………………………………………………………………..11 Profitability…………………………………………………………………………..11 Cash Flow……………………………………………………………………………13 Break Even Analysis…………………………………………………………………13 Return on Investment (ROI)…………………………………………………………14 Benchmark…………………………………………………………………………..15 Recommendations……………………………………………………………………….16 Conclusion……………………………………………………………………………….17 References……………………………………………………………………………….18 Appendix………………………………………………………………………………...20 Table 1: Profit & Loss………………………………………………………………20 Table 2: Return on Investment……………………………………………………...20 Table 3: Benchmark…………………………………………………………………20 Executive Summary Mountine Vitamin Watere which is looking towards launching a new health drink which is rich in vitamin should look towards the different areas which will help them to ensure that the product is accepted by the people of Jordan & Dubai. The report present a business plan for the same where it highlights that Mountine Vitamin Watere should go ahead and launch their product. This is based on the finding that Jordan & Dubai presents an opportunity because of rising population and a high GDP. This is further substantiated by the fact that the disposable income is also rising. Further, increasing concern towards health consciousness and obesity provides an opportunity for Mountine Vitamin Watere to ensure that they are successful. The financial analysis depicts that Mountine Vitamin Watere can go ahead with their launch as the product is profitable and ensure a ROI of more than 42%. Further even if Mountine Vitamin Watere is able to sale 50% of the forecasted sale the firm will be able to recover its cost. This makes it important that Mountine Vitamin Watere looks towards proper marketing strategy and the business has looked towards print, audio, video and billboards as a source of advertising. Also using internet through the development of their website and use of Facebook will ensure that Mountine Vitamin Watere is able to satisfy customer. Thus, various factors support the launch of the health drink Mountine Vitamin Watere and being able to manage the resources properly will ensure that the correct target customer is aimed at which will help the business to earn higher profits. Introduction Businesses all around the world are looking to understand the market scenario and develop new products which help to develop the product line. The importance of developing new products and satisfying consumer wants grows in case of the health industry as consumers are becoming educated and have increased their awareness concerning health. This has resulted in the development of Mountine Vitamin Watere which is a new product and looks towards providing vitamin to people. This new product is in the form of a drink and will help consumer to satisfy the basic quench of thirst at the same time provide energy. This makes it important that the company markets its product properly and ensures maximum efficiency and sale from the product. Objectives The objective of the report is to find out whether the new product Mountine Vitamin Watere which is a health drink will be accepted by the public. To find out the acceptability of the products different aspect of the business like marketing, services, human resource, operations, and financials are laid stress upon. This will help to understand the return on investment for the company and will help to identify whether the product will reap benefits in the long run. Thus, it will help to understand the manner in which the product will be accepted and help to identify whether developing and launching the new product will be profitable or not. Strategy This aspect of the marketing will help to understand the strategy which Mountine Vitamin Watere will follow to ensure that their product is accepted by the public and provides the required return which the company is looking for. Product Mountine Vitamin Watere is a specially prepared drink which is healthy and has been especially designed for health conscious customers. The drink besides helping customers to satisfy their basic quench of thirst helps to provide energy to the person consuming the drink. Mountine Vitamin Watere has also ensured that the drink doesn’t have any harmful ingredients which thereby will be attracting people who are health conscious. Along, with it the company plans to launch the product in Dubai & Jordan where there is an increasing demand for health drink and will be targeted towards different section of the customers as provided in detail further in the report. Price Mountine Vitamin Watere is looking towards pricing its health drink in such a manner that it is able to aim at different section of the society. The company has looked towards following a policy of penetration where they look to ensure that maximum coverage is provided. For this purpose the price of the health drink has been relatively kept low and is placed at 49 cents per bottle. Having a low price will ensure market penetration and will help Mountine Vitamin Watere to attract customers from all section of the society. Place Mountine Vitamin Watere looks towards launching the product in Dubai & Jordan because of the wide potential that the place presents. The prime reason for choosing Dubai and Jordan is the manner in which the population has grown. Dubai has a population of more than 2 million people (Dubai, 2012) and Jordan has more than 6 million people (Jordan, 2012). This provides an opportunity for selling health drink as the consciousness among people has grown. Also, the fact that Jordan poses a growth rate of 5-6% (Jordan, 2012) and Dubai with 6% (Dubai Economy, 2012) provides an opportunity to sell new products. Both the economies also have a fluctuating exchange rate and an economy where the government is stable and the policies of the government are implemented towards the growth of the economy. Further, having a stable government and growing infrastructure provides an opportunity for Mountine Vitamin Watere to ensure that their strategies and demand for the product is accepted which will help to ensure maximum penetration of the market (Czinkota & Ronkainen, 2004). Promotion Mountine Vitamin Watere has laid special stress on marketing of the new product. This is vital as marketing the product aggressively will ensure that customers accept the product easily and will help to ensure maximum sales. On the promotion front Mountine Vitamin Watere looks towards using different media and has decided to allocate Aus $100,000. The company looks to spend the same in different areas so that the benefits of different form of promotion are availed. The company looks towards advertisement, billboards, pamphlets and other form of advertising so that awareness about the product can be spent. On this front Mountine Vitamin Watere looks to spend $10,000 on channel development, $10,000 on website, $2000 for facebook development, $10,000 for a building in Jordan, $7000 for a billboard in a stadium, and $11,000 for a billboard in Dubai. Thus, Mountine Vitamin Watere has looked towards using media and ways to advertise their product so that customers become aware about the product and look towards spreading awareness about the product (Bangs, 2002). This will help Mountine Vitamin Watere and will result in increased sale and help the business to ensure proper growth and return in the future. Target Customer Mountine Vitamin Watere looks towards targeting customers on different parameters so that they are able to aim at different people from different section of the society. This will help the marketing team to ensure that their efforts are directed towards the correct customer base (Robin & Susan, 2003). The company as a result has identified the following section of customers for their product Targeted Class Age Group Class of Customer Customer Needs Business 18- 70 years Upper, Middle Class Providing quality product which helps to enhance customer thirst as well as provide energy Household 5 - 70 years Premium Middle Class Lower Class Providing quality product which helps to enhance customer thirst as well as provide energy Health Conscious Customers 18-60 years All section of the society Providing the required vitamin and energy which helps to check obesity as well as ensure proper vitamins to the body College Goers 8-23 years Middle Class Lower Class Providing quality product which helps to enhance customer thirst as well as provide energy as students are involved in a lot of activity The company has further looked towards ensuring that they look towards different class of customers like business class, college goers, households, and others. This has made Mountine Vitamin Watere look towards dividing the customer based on different segments so that they are able to target the correct customer base and ensure maximum development of their business (Cateora, Mary & Graham, 2009). This has helped to identify the market as Targeted Segment Age Group Class of Customer Customer Needs Rural 5 - 70 years All segment of customers Ensuring a healthy drink which helps to quench thirst at the same time provide energy Semi-Urban 5 - 70 years All segment of customers Ensuring a healthy drink which helps to quench thirst at the same time provide energy Mountine Vitamin Watere while looking towards identifying the target market has looked towards ensuring that different factors like behavior, social economic status and psychographics are considered. This will thereby help to develop a market where catering to the requirements of the customer will help to generate the required return and ensure growth and acceptability of the product. This thereby makes the market to look as Geographic Urban, Sub-Urban, Small Town & Rural Demographics People at all age bracket as the concern towards obesity and health issues have increased and having a healthy drink for the section of the population will ensure maximum customer satisfaction Social Economic Status Having priced the product in a manner where different section of the society looks towards having a healthy drink which suits their pocket Psychographics Increased concern towards health issues and obesity will help to attract some section of the society which is moving towards health concern Mountine Vitamin Watere has thus looked towards identifying different factors based on which the company is looking towards building their prospects so that customer satisfaction gets multiplied and provides a product for the niche market. Supply Chain Development An important area which Mountine Vitamin Watere has to look into is developing the supply chain network. This will help the company to ensure that the goods are available to the customers on time. Also, Mountine Vitamin Watere needs to look towards ensuring that they are able to procure the raw material which is of the finest quality at the correct price. Since, the company is involved into providing health drink so it is important that the company looks to have a sound supply chain network so that products which are about to expire is picked from the market and fresh products supplied (Coughlan, Stern & Adl Ansary, 2006). Having a strong distribution network will help to reduce the chances of the product to expire and will help to ensure fresh stock in the market. Also, having a strong framework where Mountine Vitamin Watere is able to develop a strategy which helps to develop the supply chain will improve relationship with the suppliers and help Mountine Vitamin Watere to use the resources effectively. Human Resource This is another area which Mountine Vitamin Watere needs to work on. The company needs to ensure that they hire the most efficient workforce so that they are able to do justice to the product. Having a sound and strong workforce will ensure that the marketing, production, operations and financial person is able to perform their duties diligently. This will help Mountine Vitamin Watere to ensure sound marketing efforts and will help to ensure that maximum efficiency is gained. Along, with it Mountine Vitamin Watere needs to ensure that the workforce understands the customer and provides regular feedback so that if any changes in required it can be done time and again (Fletcher & Crawford, 2011). Having a sound and strong human resource department will ensure that Mountine Vitamin Watere is able to work in the correct way and carry out their responsibility in the best possible manner. Thus, working on the different aspect of the strategy and developing a mechanism which will help to gain maximum efficiency will ensure that Mountine Vitamin Watere is able to market their product successfully (Gamble & Stone, 2006). This makes it important that Mountine Vitamin Watere analyzes the financial aspect which will help to understand whether launching the new product will be beneficial for the company and the manner in which their efforts will provide the required return the company is looking for. Financial This aspect of the report will help to understand the manner in which the business will be profitable for Mountine Vitamin Watere. This will also guide the management in taking a stance whether launching the product will provide the required ROI and help the business over longer period of time (Ireland, Hoskisson & Hitt, 2007). This analysis will also help to draw important understanding regarding the break even point and will provide valuable guidance which will help the management in taking their decision regarding the product. Profitability Mountine Vitamin Watere looks towards selling 800000 bottles in year 1 and expects the business to grow by 15% in the second year and 25% in the third year. The company expects to charge 0.49 cents per bottle being sold and expects to manufacture the bottle at 0.22 cents. This helps to find the contribution margin to be 0.27 cents per bottle. To ensure that Mountine Vitamin Watere is able to sell 800000 bottles the company looks to spend $100000 on marketing through the various channels which will help the business to grow. This will make the company earn different profits in different financial year which is shown in appendix as Table 1. This helps to find the profitability of the business to look as follows The above graph shows that the business is able to generate profits all the year and the profits are continuously increasing. An important assumption here is that the marketing cost is expected to be constant as the company expects that the word of mouth will help them to sell more products in the future. The business as a result is able to generate sound profits and will ensure that the stakeholders are compensated properly. Cash Flow Mountine Vitamin Watere has laid special stress to ensure that there is regular cash flow for the business so that the business is able to ensure that they don’t get trapped in a liquidity trap. This will help Mountine Vitamin Watere to ensure that they are able to meet their daily expenses easily and being able to maintain a regular flow on money. Having a mechanism which ensures that Mountine Vitamin Watere is able to earn a regular flow of money will ensure that the company is able to work on different areas and ensure that the business grows. Break Even Analysis Mountine Vitamin Watere which looks to sell 800000 bottles in year 1 needs to analyze a scenario where they are able to cover their cost. This will help identify the minimum bottles which Mountine Vitamin Watere needs to sell so that they are able to cover their cost. This will help to understand the manner in which Mountine Vitamin Watere needs to devote their resources so that the cost is at least recovered (Kotler, 2001). The break even analysis looks as follows Selling Price of one bottle (in cents) 0.49   Cost Price of one bottle (in cents) 0.22   Contribution Margin 0.27   Marketing Cost 100000   Break Even Point Marketing Cost / Contribution Margin     100000/0.27 370370 units The above breakeven chart shows that Mountine Vitamin Watere needs to sell a minimum of 370370 bottles so that they are able to cover their cost. This will help to ensure that the business doesn’t loose any money. Also, since Mountine Vitamin Watere plans to sell 800000 so being able to sell at least 46.29% of their estimated sale will ensure that the business is able to reach break even and don’t have to face any loss. Return on Investment (ROI) This is an important component which Mountine Vitamin Watere looks to achieve as it will help to understand the return the company is able to earn on its investment over the year. This will help the company in raising finance and will help the investors to gauge the potential earning capacity of the organization. This will also ensure more financing and having a sound ROI will help the company to ensure that the stakeholders are happy. The ROI for Mountine Vitamin Watere is provided in the appendix as Table 2. It shows the ROI to be as follows The above graph shows that the ROI for Mountine Vitamin Watere is sound and is growing year after year which will help to ensure maximum return for the shareholders and will ensure that the shareholders are compensated accordingly. Mountine Vitamin Watere which shows a strong ROI will help to attract investors and will ensure that the business is able to generate continuous finance which will further help to improve the cash flow. Benchmark The benchmark will help to reflect on the manner Mountine Vitamin Watere has performed on different aspect of the business year after year and will help to make strategy which helps the business in the future. Further, this analysis which has been shown in the appendix as Table 3 will help the business to ensure strategy which further develops the business and provides the required return the investors are looking for. The chart is as The above graph shows that the business has been able to ensure growth which has helped the benchmark indices to improve and has ensured that the efforts of the business are directed towards profit for the business. This analysis helps to understand that working with a directed plan will ensure that Mountine Vitamin Watere is able to justify growth and ensure proper benchmarking for the business. The financial aspect for Mountine Vitamin Watere suggest profitability and the management needs to ensure that the efforts of the business is directed in a manner that will help to achieve operational efficiency and help the business to use the resources in the most effective way (Luther, 2011). Working on the above based assumptions will ensure that Mountine Vitamin Watere is able to generate sufficient revenue that will help to sustain the business in the long run. Recommendations Mountine Vitamin Watere should look towards launching the product in both Jordan and Dubai as the vast potential provided by both the place will ensure profits for the business. Both Jordan and Dubai presents growing population along with rising disposable income. This will help Mountine Vitamin Watere to ensure that they are able to sell the 800000 bottles as planned in the first year. Also, the fact that the ROI for Mountine Vitamin Watere is very high in the tune of 42% will ensure high profits for the business. The chances of launching the product further increases as selling 370270 bottles will ensure that the business doesn’t have to loose any money. This will ensure that even selling less that 50% of the planned bottles will help the business in not loosing any money. Further, the incresed consciousness towards obesity and the growth in health conscious people provides an opportunity where Mountine Vitamin Watere should look to capture and launch Mountine Vitamin Watere which will be successful through the marketing efforts of the company. Conclusion Mountine Vitamin Watere can look towards launching the health drink in Jordan & Dubai as there is an increasing concern towards obesity and health issues. The report shows that the business strategy is directed towards achieving maximum gain from the product as the increasing population and rising disposable income presents an opportunity to earn. Further, the financial analysis also highlights that Mountine Vitamin Watere can look towards the new product as the product provides an opportunity to earn high profit. The analysis shows that the ROI is strong and selling less than 50% will ensure break even point. Mountine Vitamin Watere needs to ensure that based on the above findings they market their product properly which will help to ensure that the product is readily accepted by the people and will help to ensure better return for the business. References Bangs, D. 2002. The market planning guide: creating a plan to successfully market your business, product, or service, Sixth Illustrated edition, Kaplan Publishing Coughlan, A., Stern, W. & Adl Ansary, E. 2006. Marketing Channels, 7e, ISBN 9780131913462 ISBN 10:0131913468 , Pearson Education Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia. Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin: McGraw-Hill. Dubai. 2012. Dubai Statistics Center. Government of Dubai. Retrieved on March 4, 2012 from http://www.dsc.gov.ae/en/pages/home.aspx Dubai Economy. 2012. The Economy of Dubai. Retrieved on March 4, 2012 from http://www.dubai-livethedream.com/dubai-economy.html Fletcher, R. and Crawford, H. 2011. International Marketing: An Asia-Pacific Perspective, Pearson Australia. Gamble, P. & Stone, M., 2006. Up close & personal?: customer relationship marketing @ work. London: Kogan Page Publishers. Ireland, R. D, Hoskisson, R. E, and Hitt, M. A, 2007. Competing for advantage, Cengage Learning Jordan. 2012. Jordan Economy. Retrieved on March 4, 2012 from http://www.theodora.com/wfbcurrent/jordan/jordan_economy.html Kotler, P. 2001. Marketing Management, 11th edition, Prentice Publication, Upper saddle River, New Jersey Luther, W. 2011. The Marketing Plan: How to Prepare and Implement It, Fourth edition, AMACOM Div American Mgmt Assn Robin & Susan, 2003. In search of Strategic Management Accounting. Social science Research Network, 14 (3), 29-37 Appendix Table 1: Profit & Loss Account     Year 1 Year 2 (Growth of 15%) Year 3 (Growth of 25%) Cost Price of one bottle (in cents) 0.22       Selling Price of one bottle (in cents) 0.49       Bottles Sold (Pieces)   800000 920000 1150000 Selling Price of bottle   392000 450800 563500 Cost Price of bottle   176000 202400 253000 Gross Profit   216000 248400 310500 Marketing Expenses   100000 100000 100000 Net Profit   116000 148400 210500 Table 2: Return on Investment (ROI)   Year 1 Year 2 Year 3 Investment 276000 302400 353000 Net Profit 116000 148400 210500 ROI 42.02899 49.07407 59.63173 Table 3: Benchmark   Year 1 Year 2 Year 3 Sales 392000 450800 563500 Gross Profit Margin 55.10204 55.10204 55.10204 Operating Expenses 100000 100000 100000 Read More