Product Idea and Promotion - Fruitiness - Essay Example

PRODUCT IDEA: FRUITNESS of the of the school of the idea – fresh juice As a young health-oriented I decided launch the idea to bring health products to people instead of the other way around because these days everyone is concerned with being healthy and slim (clearly evidenced in the number of people sporting; the numbers of light-products,…). At the same time, this should be attainable with the least effort possible. Fresh fruit juice is one of those products that takes fairly long to prepare in small doses and therefore is skipped very often. This is where Fruitness comes into the picture. Fruitness provides the possibility to easily consume your daily dose of fresh fruit juice at work, at school, … Fruitness offers a small assortment of orange-based fruit juices to match everyone’s taste and it makes for the perfect refreshment during a break from working. The exclusivity of our business model lies in the concept of delivering fresh juices directly to companies. Fruitness will be established as a B.V.B.A. to limit liabilities for the owners. The money that has to be raised to start the business is € 60.000, financed by five managers. Dividends will not be paid during the first 7 years. Profit will be re-invested in the company to finance internal growth. Some of our major direct competitors are Minute Maid (Coca Cola Co.) and Tropicana (Pepsi Co.). Their main advantages are their size and expertise. Their weakness is their disability to deliver a fresh juice to the market. Fruitness will be launched on a pilot-scale in the Ghent-area, as this is a well-known market for the founders. Ghent has a flourishing business life which offers room for a company such as Fruitness. 2. Mission Statement “Fruitness provides a solution to increased awareness towards health and better-for-you products. All Fruitness juices are daily made with fresh fruit and delivered within 24 hours. Fruitness’ innovative business model ensures that Fruitness is available at the places where people spend most of their time and energy; at work or at school!” 3. Purpose of the Product Fruitness produces fresh orange juice, squeezed the first day and directly delivered to the customer the second day. It is made of 100% fresh fruit, without addition of sugar, concentrate, preservatives or use of heat. The packaging consists of a white HDPE (high density polyethylene) bottle that helps maintain high Vitamin C levels (extra 15% retention rate over clear bottles). It is a high quality product aimed at health-conscious consumers. The juice is delivered to companies that want to provide their employees with a fresh, healthy and tasty alternative to the usual soft-drinks. To meet customer demand and taste, Fruitness produces different flavours. It focuses on citrus juices, all with an orange basis: Orange² (100% orange), Orange & Lime (90% orange juice and 10% lime juice), Orange & Grapefruit (50% orange and 50% grapefruit) and Orange & Blood Orange (50% orange and 50% blood orange). For more details, consult appendix 4. 4. Unique Features The juice: It is produced and consumed in 24h. It is made of fresh fruit without any additives and maintains a high level of vitamins. The innovative business model: The normal value chain for fruit juices from the fruit market to the end consumers includes many intermediate steps with no real added value to the end product. Moreover, those extra steps make the time between production and consumption longer and therefore the product less fresh. The proposed new value chain with Fruitness incorporates and skips some of the unnecessary steps. That way, the juice reaches the customer faster while it is still fresh and full of vitamins. 5. Environmental analysis 5.1. SWOT-analysis Strengths Innovative product/service concept Business model easily transferable Own physical distribution network Close proximity to business Recipes include most favoured fruits (orange/grapefruit/blood orange) Fresh healthy unpasteurized juice Fast production (70 l/hour) Strong management team Small team of employees Positive image No excessive inventory holding cost due to produce to order process Weaknesses Perceived as expensive compared to other soft drinks Only 4 recipes initially Low economies of scale initially due to small production facilities Management team is not available full-time Effects of machine failure/employee absence Opportunities Alliances with major beverage suppliers Improve logistics Alliance with distributors of fresh products (e.g. soup, bread, Sodexho,…) Addition of other fresh products Expansion of product range Implementation of business model in more locations/cities/countries Extensive target market Possibility to expand to schools/hospitals Growing chilled juice market Threats Growth of private labels Low entry barriers in B2B chilled juice distribution model Seasonal fluctuation in fruit prices Large established competitors who have already started R&D and introductions of healthier chilled juices 5.2. STEP-analysis Social The growing concern regarding weight-issues amongst children re-opens an existing market besides the current dominating carbonates market People in general are more concerned with health (increase in fitness, sports, light-drinks, light cooking,…) but they want to do it in a natural way (avoid medicines) Technological Improvements in machinery can improve the capacity and speed of juice production Improvements in the ICT-system can facilitate the ordering/billing/reporting-system Economical The increase in living standards makes people more likely to spend a larger portion of their budget on products that are natural and really beneficial Political Strict hygiene and quality standards in food-related business Subsidies and free advice when starting up a business Government health programs want to ban soft drinks from schools and stimulate healthy drinks. 5.3. STP-analysis 5.3.1. Segmenting The market of soft drinks can be roughly subdivided by using two dimensions (Carbonated vs Non-Carbonated; Fresh vs Non-Fresh). The non-fresh segments are crowded out by the big multinationals companies supplying both carbonated and non-carbonated drinks. In the fresh juice segment, the focus is on local suppliers and most specifically on non-carbonated drinks, since the idea of fresh juices has no benefit in adding carbonates. But whereas the local brands mainly remain small due to restricted distribution through specialty stores, Fruitness plans to grow big by reaching a lot of customers through selected channels. 5.3.2. Targeting The target group Fruitness focuses on is the health-conscious employee/parent. The health-conscious employee will be targeted through distribution at the workplace. This ranges from the young starter to people close to retirement. The health-conscious parent worried about the fruit intake of his/her kids will be targeted through delivery in elementary schools. 5.3.3. Positioning Fruitness is positioning itself as the perfect drink during breaks at work or at school. The products of Fruitness will make sure you are filled with natural energy to sustain you throughout the day. Because it is freshly made, the vitamins are still present; making sure you get your necessary daily intake of vitamins in a natural way. The unique selling propositions for Fruitness’ products are: Guaranteed freshly made Good for your health Full of vitamins as unpasteurized Delivered in your daily environment 100% natural 5.4. Porter Five Forces 5.4.1. Barriers to entry As long as no brand has established a real name for itself it is fairly easy for newcomers to enter the market of B2B fruit juices. Starting on a limited scale does take some initial investment, but not to the extent that it blocks people from entering the market. If Fruitness is able to establish a name for good quality, good delivery and fresh products, it will become much more difficult for newcomers to actually disturb the market, since along with the growth, Fruitness will be able to maybe establish strategic partnerships with other companies or improve its own distribution channels. Fruitness will already be further down the experience curve. On the other hand, since fruit juices are not a new product, we should not expect newcomers to crowd the market. People have been drinking fruit juices for ages. 5.4.2. Threat of substitutes The threat of substitutes is very large, since that is actually the business of Fruitness; to provide an alternative to other soft drinks. Soft drinks in general, are the most important competitors for consumption during work/school breaks. But the recent trends in health science show that people are seeing through the lies and the ‘light’-bubbles are being burst. By being aware that we are actually offering the substitute, we position ourselves in the underdog-position and we are more aware of the threat of substitution. Other substitutes might arise under the form of self-proclaimed health drinks. But those have the disadvantage that they are usually not completely natural, which raises suspicion with the customer. 5.4.3. Supplier power In Belgium alone there is already a certain amount of suppliers of fresh fruit. Their main strength is delivery, so they all provide somewhat the same service (= delivering the fruit while it is still fresh). Also, the prices of fruits at the auctions are quite transparent; which doesn’t allow the suppliers to add much to their price. Both these characteristics diminish the power of the supplier during negotiations. However, it will also be to the advantage of Fruitness to establish & develop good relations with key suppliers who are low cost providers of fresh fruit in order to keep production costs as low as possible. On the other hand we are very dependent on the reliability of the fruit deliveries. If a delivery is skipped we can not produce fresh juices. So in order to have the most reliable supplier we will have to show some flexibility towards them. 5.4.4. Buyer Power Since we offer companies the convenience of having fresh fruit juices delivered to their offices, we have quite a unique selling proposition. Their alternative is to sell soft drinks (which most already do) or to find other producers of fresh fruit juices, with the risk that those will not deliver to their location. Another alternative for the companies is to make the fresh juice themselves, but that would mean an investment in material and personnel on their behalf. Of course Fruitness can not charge exuberant prices, because then the alternatives will become cheaper. But as long as the price combined with the excellent service is still attractive, the bargaining power of the buyers is relatively low. 5.4.5. Competition Within the fresh fruit juice business there is a lot of competition. Our business model targeting the B2B customers is new in this segment, and this would allow us to grow bigger than the competition by growing to different locations. 4 . Pricing Profile The characteristics of the pricing policies of the Belgian chilled fruit juice market is depicted below: Chilled fruit juice market 2004 2007 Volume Belgian fruit juice market 19,400,000 41,400,000 l € 58,400,000 126,800,000 € Price/l 3.01 3.06 €/l Belgian Population 10,000,000 10,000,000 inhabitants Average consumption per inhabitant 1.94 4.14 l/inhab At a price of 3.75 euros per litre (7. 49 euro per 2 litre bottle), Fruitness is competitive with its competitors (average price 3 euros per litre) as it is the freshest available juice on the market and the cost of the value added delivery service is included in the price. For example, a one litre bottle of Tropicana costs 2.97 euros. 5. Advertising and Promotion A large sticker with the Fruitness logo and slogan ‘100% fresh juice daily’ will be placed on the delivery vehicle. The employee responsible for deliveries will be given a shirt with the Fruitness logo and slogan embroidered/ printed on it. This will distinguish him as the Fruitness rep. When Fruitness expands, Lynka zoo. in Poland will be approached to embroider shirts for Fruitness. Lynka is a competitive company specializing in the production and printing of promotional items and corporate gifts. Their prices undercut those of similar firms in Belgium tremendously and an added advantage is that Fruitness has already established contacts with Lynka through a company visit during the MGM 2006 seminar in Poland. Promotion will be done by means of small, colourful advertising menus which will be placed on the tables in seated areas in company cafes, bars or canteens. These will also be placed on the bar counter from which the drink will be served. These will show photos of the juices available and will describe the fruits used and the nutritional information and benefits of the juice as a 100% pure fresh juice that is unpasteurized. As such, as many vitamins are retained as possible. In addition, Fruitness will have no added sugar, in comparison with Tropicana’s juices with ‘less sugar’. As sugar depletes the immune system and Fruitness juices will be rich in natural vitamin C with no added sugar, it can be marketed as a true immune boosting juice. 6. Packaging As the share of glass (which is frequently used for chilled juices) in the packaging mix declined in Western Europe, Fruitness is following the trend and using the lighter and more convenient opaque 2l HDPE bottles for the storage and distribution of the freshly squeezed juices. These bottles are dark inside and thereby prevent light from reaching the juice and destroying the vitamins. References: National Arts Marketing Project. (2002, April 10). SWOT: A Planning Tool for the Future. A concise guide to employing S.W.O.T. Analysis. [http://www.cultural-alliance.org/pubs/swot.htm] Slater, S. F.; Olson E. M. (January-February 2002); A fresh look at industry and market analysis, Business Horizons Blueprint for Your Library Marketing Plan: A Guide to Help You Survive and Thrive.” Bottom Line: Managing Library Finances 18, no. 4 (2005): 202-203. Read More