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Javaphile Co.

PERFECT POD MARKETING PLAN

 

Prepared on November 21, 2014

 

|Company Introduction |

 

Javaphile Co. was founded in 1995 by five business students at Penn State University in an effort to satisfy the market need for more efficient, innovative, convenient, and cost-effective ways to brew coffee.

 

|Products |

 

To date, Javaphile Co. offers a plethora of products that include numerous varieties of ground coffee, gifts for the coffee lover, and pre-portioned coffee packets for the on-the-go coffee brewer.

 

|Market Analysis |

 

Market Analysis: Industry Size and Growth

 

Coffee is the second largest commodity market next to oil, and growth is expected to continue at a rate of 2.7% per year for the foreseeable future. This growth offers excellent opportunities for new companies to enter this market, and we are excited about the possibilities of what Javaphile Co. can accomplish throughout the United States and globally as well.

 

Market Analysis: Industry Trends

 

The coffee retail industry is pulverized, with hundreds of manufacturers, brokers, suppliers and retailers, such as Starbucks, Folgers, Maxwell House, and Dunkin Donuts. 54% of the population of the United States consumes coffee daily, which is over 100 million Americans. The annual revenue in the coffee retail industry is $27 billion for the United States and $100 billion globally.

 

|Target Market |

 

The principle target market is those consumers who prefer the convenient, low-cost, and sanitary benefits of brewing their coffee at home, either for at home consumption or for consumption on-the-go. Javaphile Co. is targeting those who seek new innovations and flavors of coffee. This target market is comprised of all income levels. More specifically here at Javaphile Co. we are targeting the household and student markets. For future possibilities, we plan on establishing Javaphile’s brand name in the Mid-Western United States where the market is not prenominated by Starbucks and Dunkin Donuts.

 

|Competitive Analysis |

 

Competitive Analysis: The Competition

 

The Company's direct competitors are Folgers, Green Mountain, and Starbucks Companies. For our Perfect Pod innovation we are directly in competition with these companies’ K-Cup lines. Due to the economies of scale we have achieved we are able to produce our products at a lower cost than most of our competitors. Additionally, we strive to offer higher quality and more innovative products to keep up with and surpass the competition.

 

Competitive Analysis: Barriers to Entry

 

Barriers to entry within the Coffee Retail Industry include the volatile price of coffee beans, the high initial investment needed to see significant growth, the already established strong brand recognition of many companies and the economies of scale already achieved by major players.

 

Competitive Analysis: SWOT Analysis

 

Strengths: The Company prides itself on developing innovative products for the domestic barista, as well as offering quality coffee at prices that is affordable. Additionally we strive to be an eco-friendly company. We use bamboo filters for our products, which are made from a fast-growing, biodegradable, renewable resource. 

 

Weaknesses: Our Perfect Pod is not compatible with the Keurig brewing system.

 

Opportunities: There is an unmet demand in the market for easy and efficient ways to brew a variety of coffee flavors at home without having to purchase already brewed coffee from a restaurant or chain store. Our company offers sanitary and cost-effective ways to brew a delicious cup of java on one's own schedule from the comfort of one's own home, without requiring the purchase of a new coffee system. 

 

Threats: The main threat to the Company is the addition of new competitors and the innovations and product line extensions of already established competitors.

 

|Sales and Marketing Strategy |

 

 

Javaphile's Logo was copyrighted when the company was established in 1995. Therefore it can then be used in commercials and in advertisements. Advertising of the Perfect Pod will start 2 week prior to the launch of the product. We will first announce and inform our target market that this new product is on its way to the shelves. Our first advertisements will appear in grocery stores and weekly flyers of grocery stores. This is going to get our innovators of diffusion as excited about the Perfect Pod. Once the product appears in retailers, advertisements will pick up. Javaphile will air commercials, have billboards, continue with grocery store ads and weekly flyers, also Perfect Pod will be present on social media sites such as Facebook, Twitter, and Instagram. Commercials will air on mass media on main and local channels between the hours of 6AM and 10AM, which has been researched and found to be the time when most the highest consumption of coffee occurs. We will also have trained Javaphile employees sent out to our larger retailers to hold positions at stands for taste testing and demonstrations of our product to show consumers the simplicity and efficiency the Perfect Pod holds. Perfect Pod will be place throughout all large retailers such as Walmart, Sam’s club, Wegman’s, Price Chopper, Weis, and Giant. As sales increase and we start towards the growth stage of the product lifecycle our advertisements will pick up and the strategy will aim towards persuading consumers to buy the Perfect Pod. By, then we will have picked up the innovators and move towards the early adopters and early majority with our persuasion advertisements. Later on in the lifecycle will, then again, change the direction of our advertisements and remind the market that the Perfect Pod is still around and is waiting to be in the hands of consumers. This will help us gain the business from the late majority and laggards populations.

 

 

|Pricing Strategy |

-Mug size- Our price we pay for 1 pound of coffee is $2.15 which comes out to be $0.13 per ounce. The cost of our eco-friendly bamboo filters/boxes are calculated into our manufacturing/packaging costs which total $2.00. In each can there are 20 pods and the pod itself is $0.24.Our total costs per each mug size can is $4.82 There is a 300% markup, which is typical for the industry, on each can to fund our administrative, research, payroll, and tax expenses. The retail price per can is $14.46, which gives us a profit of $9.64 per can.

-On The Go size- - Our eco-friendly bamboo filters/boxes are included in our manufacturing/packaging costs which are estimated to be $2.00. Our total costs per can for the on-the-go size is $5.48. With the 300% markup, the retail price per box is $16.44 which would give us a profit of $10.96.

-Full Pot size- Our total costs per can for the full pot size is $4.38. With the 300% markup, the retail price per box is $16.44 which would give us a profit of $13.15.

 

 

|Sales Forecast |

 

 

For our first month, when our Perfect Pod is in the introductory stage, we are forecasting sales of 75,000 units in total. This can be broken down. We predict that we will sell 25,000 containers of our Mug size pods, 30,000 units of On-the-Go size, and 20,000 Full Pot size units. As our product moves into the growth stage we predict a 250% increase in sales which will remain stable on average throughout the growth stage. Then we anticipate a decrease in sales in our product’s decline stage.

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|Sales and Marketing Budget |

 

 

For our first year, we project gross sales of $26.8 million. Since our product is only in the introductory stage of the Product Life Cycle, we will be devoting 10% of our gross revenue or approximately $2.7 million to marketing. Once our product is in the growth stage we will begin to devote 20-25% or approximately $5.3 - $6.7 million of our gross revenue to marketing expenses.

|Revenue Goals |

 

 

Short Term Revenue Goals

With the unit sales for our first month being projected at 75,000 units in total, which can be broken down into anticipated sales of 25,000 mug size units, 30,000 on-the-go size units, and 20,000 full pot size units, we can calculate our anticipated monthly gross revenue to be approximately $1.1 million.

 

 

Long Term Revenue Goals

 

With our short-term revenue projections in mind, we can project our annual gross revenue to be approximately $26.8 million. 

 

Profit

 

By deducting our expected costs to manufacture our product from our anticipated revenue, we have calculated our first year profits to be approximately $17.9 million before marketing, administrative, and tax expenses are withdrawn. 

 

|Preparer |

 

Jess Horlacher and team

Co-founders of Javaphile Co.

November 21, 2014

 

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