Target market
Energy drink category has its potential target market for the young adults and college students that have responsibilities or are involved in stressful activities that require much energy to get through. We understand that it is hard for a company to be all things to all people. Therefore by targeting the energetic youth, it is in our best interest to make it easy for the company to achieve its objectives (Baines, Fill & Rosengren, 2014). However, the brand does not plan to target any gender since we believe the product is not gender oriented but adopts a subculture marketing strategies. The market segment is identified by people of age 15-38 since this age group makes up the largest number of athletes, gym devotee, college students, and the working class personnel with the majority being millennials.
Horizon manufacturing is a company with a clear market concept. Having studied the energy drinks industry and realized a gap, the company has a product that perfectly meets the existing need on the market. With weaknesses in the industry relating to the content and use of the existing energy drinks, Vita-myHealth is not only a solution offering satisfaction to the customers but a highly profitable product. The strategy is to get to different customer segments and expand into markets far and wide. This is made possible by the flexible pricing which is set to accommodate different market segment. The price point of Vita-myHealth Energy will range $2.75-$2.89 for a 10 oz, depending on the location where the product is situated. With the market flooded with different energy drinks youths being the major consumer, the focus of the customers is now on the quality. Horizon manufacturing ventures into natural products which are the most preferred. This means Vita-myHealth stands a big chance to outdo many products that have existed over time. The product is highly profitable with an increment in profitability of up to 300% in just one year. With different products being produced and distributed by the company, this diversification strategy makes sure that the company is sure of a steady flow of revenue. The company has a flat organizational structure which goes well for decision making and enhances accountability. For the investors, this is a perfect venture for them with promising high returns within the shortest time possible.
Promotion plan
We plan to employ a significant digital and social media platform to reach the target market. Since there exist negative perception the plan is to use television commercials to help change this negative publicity with a message that portrays our company is the alternative. We would further try to paint and promote a fresh and more conversant image than Red bull by adopting a more focused strategy.
In our strategy to reach the millennial target market we plan to include aspects that are unique to all millennial that would include use of more technologically advanced, use of different media, using placement of commercials on television programs and radio stations, music events , and product placement(in any convenient drug stores and groceries). This is because media like tv and radio will aid to create and influence affect and cognition placing stimuli since the cables and broadcast channels are most viewed by the millennials. Moreover, the company consists of music festivals and events which are very vital in establishing and maintaining brand awareness. These events provide a positive cognitive association coupling with fun, memorable events with the brand to create a pleasurable environment associated with the brand (Baines, Fill & Rosengren, 2014). During these developments, we offer a free sample to the attendees in a bid to simulate trial and create brand awareness and obtaining brand loyalty.
The social media and digital media would offer a platform for the promotional events giving room for the brand to continue to engage with the customer after the event. They, moreover, provide a means to continue to affect the consumers’ cognition.
Sponsorship strategy provides the brand with the opportunity to engage with the millennials with events that are vital to them. We look forward to creating value in areas that interest youth by segmenting music and sports. Music is important to the millennial generation with facts that include millennial stream and download more music than their predecessors, with the majority of them trying those products that are associated with the music they listen to. Therefore, sponsorship likewise provides an influence on effect and provides a coupled stimulus with a fun and positive surrounding that is associated with the energy drink category plus the samples provided during sponsored events thus simulating trial to influence the consumer behavior in purchasing the product.
Location
The place where consumer purchases the product is very vital. Therefore the company’s product should be more accessible and appeal target consumers, for instance, in gym and campuses. These are perfect locations for millenials and the activities in the areas require energy boosts from time to time.
Product
Most of the manufacturers do not label. Therefore, we would take a healthier approach to the energy drink market by having adopted a well-packaged product labeled with the amount of caffeine and sugar content. Having energy drink that is cleared labeled and showing the caffeine and sugar content would provide the best method to attract more customers. This would be supplemented by offering different varieties that would be based on taste and flavor.
The fact our product is health conscious having no carbs, calories or sugar would appeal to the millennial. Introducing fruit flavors to the mix and significantly reducing sugar content would penetrate to the different subcultures of the millennial market. Giving product line extensions of 4% juice, dual fruit flavor add organic options would make a good perception to the Hispanic subcultures due to the taste and flavor liking and appeal to African-American subculture too.
Since millennials need brands that represent them the combination of the marketing mixing elements offers an energy drink a picture of a lifestyle brand that resonates with the target consumers (Nielsen, 2014). Therefore, we will be transparent, authentic and different based on the fact that we are a healthy energy drink that acts responsibly as a lifestyle brand and ahs peace as its main mission. This would be shown by the interest relayed upon by the sport sponsorship programs in a field like kite surfing, mountain climbing, tennis, rugby and more extensively on soccer and later spread into more extreme sports in a bid to connect its millennial customer base. These are areas that are not extensively covered by the leading energy drink that is red bull. Coupling sports sponsorship with promotional events will influence brand awareness and help in achieving brand loyalty (Armstrong, Kotler, Buchwitz, Trifts & Gaudet, 2012). This is because we will be using a lifestyle and self-expression brand image that holds high perception to the target millennial generation.
We will adopt a two – pronged millennial and subculture marketing strategy to enter the market and obtain long term goals. We will use the strategies in logo designing, events, social digital media, television and radio, product options, trade promotion, pricing and coupons, and packaging and promotional displays This is because the millennials are more racially and ethnic diverse and offer loyalty to the product of their liking.
Pricing strategy
The differentiation strategy keeps in mind that when on its success it can create brand loyalty among its customers. Therefore the company understands that low pricing strategy is a risky type of position strategy that will attract more customers but may not guarantee customer loyalty. Here, we will set our price lower than the red bulls and at almost the same price with Rockstars and Monsters. This will be our pricing strategy since we understand setting lower prices will not necessarily create brand loyalty since new entrants with better low pricing strategy may end up tapping more customers. Moreover, this may create inefficiencies in other sectors since our profit margin would be affected consequently.
References
Baines, P., Fill, C., & Rosengren, S. (2014). Marketing.
Armstrong, G., Kotler, P., Buchwitz, L., Trifts, V., & Gaudet, D. (2012). Marketing.
MODULE 3:
Sweet Fruit is a new business that will deal with processing, packaging and selling fruit products. The processed product will be a result of squeezed fruit bought directly from farmers and plantations. The fruits undergo a value adding process and the end product either sold locally or exported to international markets. These products include jams, jellies, marmalades and fruit juice. The company is seeking an amount of $830,000 for the acquisition of two farms: Highland Vegetable Farm and Green Vegetable Farm. The funds will also be used on equipment and facilities and being able to foot the operating expenses. The management is also seeking another $1000,000 that will be invested by its three-cofounders as follows:
Spending Breakdown
ACQUISISTION
Property
Equipment and system
Sub-Total
$1,300,000
$400,0000
$1,700,000
Operational Expenses
Wages and salaries
Advertisement and marketing
Others
Sub-Total
$ 80,000
$ 10,000
$10,000
$ 100,000
Total
$ 1,800,000
Hence the total start-funding will be distributed as $1,145,400 to assets while $648,600 will go to funding expenses the total funding required is hence $1,830,000
ASSETS
Assets from startup(non-cash)
Cash from startup
Balance on First Day
$900,000
$245,500
$245,500
TOTAL ASSETS
$1,145,400
LIABILITIES AND CAPITAL
Current and Long term borrowing
Bills
TOTAL LIABILITIES
$800,000
$30,000
$830,000
CAPITAL
Total Planned Investments
(loss at start-up)
TOTAL CAPITAL
TOTAL CAPITAL AND LIABILITIES
$1,000.000
($684,600)
$314,400
$1,145,400
The source of funding to the company will be through Capital Venture; this venture capitalist will take an equity position in the company to help carry out this promising but risky project. The company will also be open to Angel investors to enable the business to benefit from both their contribution together with knowledge and experience. These investors will be able to supervise the management during its activities.
CASH FLOW PROJECTIONS FOR THE FIRST YEAR
Sales
Receivables
TOTAL CASH FROM OPERATIONS
Cash Payments
Cash Spending
Subtotal Spent On operations
Subtotal cash spent
Net Cash Flow
Cash Balance
4143,750
$431,250
$575,000
$117,500
$408,920
$526,520
$580,440
($5,420)
$239,480
Projected Income Statement
Sales
Cost of Sales
Total Sales
Total Operating Expenses
Profit Before Interest
Interest Expenses
Net Profit
$575,000
$391,000
$401,000
$141,980
$32,020
$54,664
($22,644)
Projected Balance Sheet
Assets
Current Assets
Cash $239,980
Inventory $55,760
Other Current Assets $250,000
Total long-term Assets $500,000
TOTAL ASSETS $1,045,740
Current Liabilities
Accounts payable $6,984
Current Borrowing $346,000
Long Term liabilities $400,000
Total Liabilities $753,982
Total Capital $292,756
TOTAL LIABILITIES & CAPITAL $1,045,740
Break even analysis represents the margin of safety for an entity based on revenues and respective costs. It helps a business to determine what levels of sales will be used to cover the total fixed costs. A business will be able to give the business a greater view if the business capabilities.
Monthly Revenue Break-even $36,974
Average percentage variable cost 68%
Estimated Fixed Cost $11,832
Inventory ratio refers to the number of times a company inventory is sold and replaced over a given length of time.
Current ratio is the liquidity ratio of a business that measures, the ability of a business to pay obligations ranging from short-term to long-term.
Debt to equity ratio is a debt ratio used to measure a business financial leverage.
Reference
Greatapes, Inc. (1988). Reading the income statement. Minneapolis, MN: Greatapes.
Figure 3.2. Start-up financing sources by group and country.
Figure 2.10. Business financing relies on banks.
Duggan, I. W., & Battles, R. U. (1950). Financing the farm business. New York: Wiley.
Green, C. H. (2003). Financing the small business. Avon, Mass: Adams Media Corp.
