Business Plan
Executive Summary
Conrad Bakers is a new company located in California planning to produce and sell Naturally Pita Crackers. The Naturally Pita Crackers is an organic thin, crisp, and flavorful crackers made of low sodium with zero saturated fats. It a family owned company that will be well known for that represents quality, health, and indulgence, into successful new product introductions in the highly competitive snack food market. The target market of the company is women with an annual household income higher than $ 50,000. The company will conduct its distribution through existing retail channels and regular distributors.
Product
The new product that my company will produce and sell is Naturally Pita Crackers, which is an organic thin, crisp, and flavored crackers made of low sodium with zero saturated fats. It has a herb blend of basisl and organo. This cracker could be combined with hummus appetizer, Turkish pizza, and Greek dip recipes for a delicious meal. This marketing plan is created to address the needs for healthy food options for women and young children looking for healthy organic foods without many additives.
Target market
The target market for Naturally Pita crackers is women with an annual household income higher than $ 50,000 (Kowitt, 2010). This represents 27,026,290 U.S. households (Arter, 2002). The main target market is local consumer. The secondary market would be the supermarket and restaurants.
Customer profile
Conrad bakers has developed a comprehensive marketing plan that will include clearly demarcate the customers according to the specific finer characteristics. The sales and marketing department has carried out an extensive marketing research and came up with the following customer profile that will be crucial in developing marketing strategies. Customers will be categorized according to the following categories
The company’s sales and marketing team is confident that the above trend will continue for about 5 years as the market goes many structural changes. The company’s customer profile is a reliable one and it’s promising more sales.
Production volume
The demand for cookies and crackers is based on population growth, consumer tastes, and health considerations (Abbott & Sheldon, 1996). The company will produce more than 27,026,290 units per day and this will increase as the size of the market increases.
Market Share and Financial Impact
Distribution methods
Distribution will be done through existing retail channel and regular distributors. The products will be sold to existing re-sellers who distribute to grocery stores and established distribution venues. Partnership with all niche-product supermarkets is possible in order to blunt impact of niche store competition
Promotion and advertising
The main focus of the firm is to extend the Naturally Pita Crackers without allocating too much on marketing cost. Also, we would propose to have a card awarded free to regular consumers of crackers products. Freebies and discounts will be given on designated periods to all cardholders. However, those who are not able to get the cards free will have the chance to own the cards for at a minimum membership fee. The advertising of the product of the marketing will consist only of a free taste boot in front of the supermarkets during the first week in front of supermarkets, a hundred fliers and half dozen streamers around the area to be given away at supermarket doors. Additionally, business cards will be distributed, as they provide a great way of advertising. The rest of the advertisement will be left to word-of-mouth.
Environmental scanning
The company has its headquarters based in California which is one of the biggest states. The economy of California is very stable with unemployment rate of 4% which is significantly minimal. The average annual income is $ 90000 per household. The average income of the women in the country is $50000 and this has placed the company in a more vibrant market where the clients have a high purchasing power. Therefore developing high and quality products will be appropriate since the consumers have good purchasing power to purchase the products. The company’s main competitors are three companies which also deals modified Pita crackers which are not natural. The companies deal with natural modified Pita crackers that have been flavored with modern flavors. The company has created value for, money for its customers by offering high quality products which has original taste. The company will therefore be able to phase out competition from the competitors very swiftly. The legal and structural regulations that have been put in place by the state government in California favor entrepreneurship. The government provides incentives in form of tax wave for the first there years for the newly developed companies. Conrad Company will use the excesses profits from the government to expand its operations.
Market forces
The current market supply matches the market demand. The rise in population is expected to increase the demand for pit crackers tandem. However, supply is not expected to increase due to limited capacity to expand operations fully to match with the customer requirements. Therefore the market prices are expected to increase rapidly over the next 3 years due to exceeds in demand
Economic forces
The economy is expected to remain stable and current projected annual growth by the world bank of 8.9% is expected to continue for the next 3 years .This will ensure the income earnings of the target market will rise at the same rate an hence increase in the purchasing power. As a result, the company will continue recording increased sales.
Technological forces
The company will take advantage of the modern technology to install an automatic bakery in its main plant. This is expected to increase production by 47% annually. The company will also take advantage of the internet in sales and marketing of its products. It has already developed a fully functional marketing website and it is in the process of expanding it
Regulatory forces
There are new regulations that are being implemented by the federal government concerning the recycling of packaging materials used in packing of raw products. The company is expected to set up a recycling plant to recycle its waste products and comply with the regulation. The other regulation concerning production safety have been complied with
Legal forces
There is a new bill has been tabled in to the congress seeking to allow the federal government to increase e tax of consumption products by 16%. If the bill is passed in to law, it will have serious implications on the earnings of the company which is young and has yet repatriated any profits
Social forces
The company is operating in a socially viable environment where the rats of anti-social behaviors are very minimal. The income of majority of the citizens is derived from legal transactions such as formal employment and business. Illegal activities like drug trafficking are very minimal. However, the company has developed a policy of promoting social responsibility because the rates of crime are expected to rise in the next 3 years due to increased abuse of drugs among the young people and this is likely to affect the cool social environment in which the company operates.
Ecological forces
Because of its location in California State, the company is supposed to devise means of handling various ecological forces that may arise in the course of operations due to frequent hurricanes that usually hits the area in which the company operates. However, the company’s management has developed mechanisms of ensuring continued operations during winter when few people are actually willing to go out and buy the products due to the harsh environment that normally hits most parts of the US.
Current opportunities:
There are many viable opportunities in which the company should invest as a form of diversification to spread its risks among multiple portfolios. The current market trend shows that there is increased demand among the customers for cold fruit beverages during the summer season. The company is considering developing a production plant in New York State. The plant will serve as one of the strategic tools to help in advertising for the company’s products in various states as it adopts a robust growth strategy. The firm company will list more shares in the New York exchange market to raise more finds to utilize the existing business opportunities
Situational Analysis:
Summary - SWOT
Strengths
Conrad Bakers can parlay their iconic brand image representing quality, health, and indulgence, into successful new product introductions in the highly competitive snack food market. Unique distribution logistics support the delivery of fresh, quality foods throughout U.S. locations and serves as a competitive advantage amongst other industry players. Conrad Bakers’s innovative company culture is an integral component of portfolio expansion while it’s strengthening financial position, due to debt reduction, will enable the company to consider product roll-outs.
Weaknesses
Conrad Bakers’s ‘limited’ customer base comprised largely of upper and middle class, quality seeking consumers tends to translate into limited market share when compared with competitors and supports only a narrow product offering.
Opportunities
Incorporation of one of the industry’s hottest trends, use of ethnic-inspired flavors and spices to appeal to a broader consumer base, Conrad Bakers’s can increase variety in their existing product line-up. Additionally, introduction of new products that use wheat-flour alternatives, i.e. whole grains, will lessen the dependence on high cost corn-base raw materials and increase the nutritional value. Exploitation of existing factory automation will allow Conrad Bakers to quickly produce new products for delivery into test markets; this ability to ‘fast-track’ new products translates into a clear competitive advantage for the company.
Threats
The economic slump that began in 2008 will affect sales in 2013 as consumers continue to buy less-expensive ‘necessity’ items, such as groceries. Compounding the effects of reduced consumer spending, increasing prices in both raw materials and energy will negatively affect the company’s profit margin. Wide-spread availability of lower-priced, private label (generic) brands may further restrict sales of premium brands in this tight economy.
Summary Competitive Analysis
Major competitors in the snack food industry, Kraft (Nabisco), PepsiCo (Frito-Lay), Kellogg’s, and Ralcorp Holdings, Inc., offer a wide variety of crackers and other snack food products that attract a larger, more diverse consumer base than Conrad Bakers. Additional competition comes from private-label premium store brands such as those found in Whole Foods and Trader Joe’s. Strong competition and customer loyalty make attracting new customers paramount. Conrad Bakers can exploit emerging industry trends in the development of innovative products to gain a competitive advantage and address a more diverse consumer base. Some possibilities include:
- Crackers made with whole grains, reduced wheat-flour, organic ingredients
- Specific Ethnic-inspired Crackers
- Crackers with new spice / flavor combinations
Profitability in the snack food industry is a based on efficient operation, effective marketing, and a strong sales force. New products that can be produced and packaged in existing equipment while still offering unique features will be most viable. Conrad Bakers has a unique route to market system with independent, commission-based distributors that allow the company to efficiently meet product demand. This system is also advantageous for new product introduction as it can be used to distribute only to specific target markets.
Conrad Bakers’s strategy is to remain an iconic brand but is interested in making their products more widely available while maintaining their position as a provider of premium products. Company is focused on providing healthy indulgences and expanding the adult cracker market with innovative products and marketing promotions.
Summary of Research Findings
Results of extensive primary and secondary research were compiled to inspire the concept development for a new cracker product potentially belonging to Conrad Bakers’s family of products. Following the narrowing of ideas and subsequent testing of the resulting two concepts it was clear that Naturally Pita Crackers were perceived more favorable amongst survey respondents than Flavor Select Crackers.
Industry trends derived from secondary research were influential in concept development because they are often driven by consumer interest and buying patterns. Currently, three major trends in the snack food industry, and across most food segments, are the development of healthy options, use of new flavors and spices driven by an increasing ethnically diverse population, and increasing use of organic raw materials. Also, eco-friendly products that address sustainability issues (environmental as well as economic) are of increasing importance to consumers. Additional research was conducted to obtain a better understanding of the potential consumer of the specific product concepts and their wants/needs in a new cracker offering. Information gleaned from focus groups and in-depth interviews showed that nutrition, taste satisfaction, and convenience were the most important aspects for snack foods.
II. SITUATIONAL ANALYSIS
SWOT Analysis – Conrad Bakers Cracker Division
- Competitive Analysis
Major Industrial Competitors (Cracker Division)
- Kellogg’s
- Kraft’s Nabisco
- PepsiCo’s Frito Lay
- Ralcorp Holdings, Inc. – producer of private label products
General Snacking Industry Trends
- Top 50 cracker manufacturing companies, 90% market revenue
- US cracker consumption expected to increase at an ACGR of 3.9 % between 2007 and 2012
- Demand closely tied to population growth
- Salty snacks contributed $599.8 million to the grocery market last year exceeding the value of nutritious snacks and nuts combined
- Major change in perception toward the acceptance of convenience foods
- Industry-wide increase in raw material costs
- Increasing energy costs
- Increasing concerns over food safety
- Busy lifestyles
- Snacks are particularly popular at work because they are easy to access, easy to prepare, easy to eat, and easy to clean up
- Technological advances allow for rapid prototype launch and real-time tracking of sales
- Implementation of SAP systems
- Conrad Bakers continues to invest in automated throughput to increase efficiency
Healthy Alternatives
- Healthier fare is by far the most important and widespread trend in the industry, with a strong focus on children's health
- Reformulated flavors and development of healthy salty snacks have resulted from this surge
- Manufacturers are maintaining high sales in a health-conscious climate
- Parents becoming more concerned with offering kids healthy eating choices
- The market for foods for kids is an estimated $65 billion/annually
- Both children and parents have become increasingly interested in eco-friendly products
- Obesity and concern about overall health is driving demand for more wheat and low fat crackers
- Inclusion of various grains is on the rise (semolina, barley, millet, etc.)
- Consumer results reveal that parents are increasingly aware of the importance of nutrition and its impact on their children
- Consumers are looking for options to increase their whole grain intake, crackers can be a very good option
- Calorie counting has become a way of life for many consumers
- Governmental ban on trans fat has forced companies to develop new, more healthful, recipes for their products
- Crackers vary widely in their range of nutritional value
- Studies suggest that most consumers concerned with topping and not the cracker itself
- As consumers alter their diets to consume fewer carbohydrates from wheat-flour based foods like cookies, crackers, and pasta their popularity declines
- Kellogg launches new products to meet healthy indulgence trend
- Other companies offer portion control packaging including 100 calorie packs, and mini versions
- Kraft-Nabisco had lead portion control effort among competitors
- Kellogg invested $40 million in innovative, healthy, nutritious products
- Fruit is the top snack choice for children under 6 years of age
- New study shows fruit is the top snack choice of children under the age of 6 followed by cookies, milk, crackers and juice
- Kids account for almost one-third of all consumption of snack orientated, convenience food products
- Increased demand for indulgent, guilt-free snacks that taste good
- Based on a survey of 5,000 consumers in the US and Europe, 60% sought convenient and healthy foods and drinks
- One-third looked for indulgent snacks more regularly than in previous years
Ethnic-inspired Product Offerings
- Increased influence of Asian and Hispanic spices
- Asian Americans will represent $670 billion in spending power by 2012
- Hispanic Americans will represent $1.2 trillion in spending power by 2012
- Agricultural Marketing Resource Center estimates that ethnic foods account for $1 out of every $7 spent
- Today’s manufacturers are looking for tastes and aromas that capture the imagination of the consumer
- Food and beverage manufacturers to look to exotic fruits and fresh, soothing flavors and use of ‘superspices’ in 2009
- Exotic fruits and unusual ingredients allow consumers to experiment and move outside their comfort zones
- Incorporation of flavors forecasted for 2013
- Persimmon – can be blended with common fruits in foods and beverages
- Masala – Indian inspired flavor
- Starfruit – already very popular in the global marketplace
- Lavender – brings an aromatic quality
- Cactus – popular in Latin America
- Chimichurri – popular grilling sauce in Latin America
- Peri-Peri – popular African hot sauce
Eco-friendly and Organic Options
- Increased demand for eco-friendly and organic products
- Increasing use of organic raw materials
- Interest in organic foods varies by demographic factors
- 5 distinct consumer groups have been identified that can be specially targeted by food and beverage manufacturers for green products
- Lifestyles of health and sustainability (LOHAS) – highest buyers of green products
- Naturalites – driven by personal health and wellness
- Drifters – price sensitive
- Conventionals – driven by cost savings
- Unconcerned consumers – do not actively buy green products
- Positive growth in the organic industry is driven by parents willing to pay premium prices for organics
- Parents don’t want to compromise when it comes to snack foods
- Grocery buyer for Harris Farm Markets, Tristan Harris, says the consumer trend is leaning towards children's snacks rather than adult
- Green-minded consumers are looking to buy more organic foods and green products
Conrad Bakers vs. Major Competitor’s Cracker Products
Strategic Plan and Focus
In order to broaden Conrad Bakers’s cracker offering, Naturally Pita Crackers were developed for the intention of being introduced into the U.S. domestic market.
- Goals and Objectives
- Develop and implement creative marketing plan to encourage strong sales and profitability for the innovative product
- Successfully identify and penetrate target market to increase sales through innovative marketing and sales tactics
- Provide sound financial results to Conrad Bakers and Campbell Soup Company
- Sustain financial goals through 2-year initial period
Target Market
The target market for Naturally Pita Crackers is women with an annual household income higher than $50,000.00. This represents 27,026,290 U.S. households. The geographical market is the U.S. domestic market.
Target Consumer Profile:
- High quality seekers who can afford more, cost-sensitivity minimized
- Average Age: 44
- Average Income: $54k
- 80% female
- 40% have children
- 80% attended college
- 50% graduated college
- Employed in a professional or managerial position
Motivated by:
- Outstanding value
- Continuous innovation
- Creative design
- More choices
- Quality
