Integrated Core Project



centercenterIntegrated Core Project Adam BrokaEmily YoungbloodMelanie BauerSamantha KautzHannah Gorman Spring 2013 \ 9500095000Integrated Core Project Adam BrokaEmily YoungbloodMelanie BauerSamantha KautzHannah Gorman Spring 2013 \ 193738525209500Table of ContentsExecutive Summary………………………………………………………………………..6Situational Analysis………………………………………………………………………..7Company………………………………………………………………………………………...7Background………………………………………………………………………………..7Corporate Goals…………………………………………………………………………...8SWOT Analysis…………………………………………………………………………...8Strengths…………………………………………………………………………..9Weaknesses………………………………………………………………………11Opportunities……………………………………………………………………..13Threats……………………………………………………………………………14Organizational Structure…………………………………………………………………16Capabilities and Processes……………………………………………………………….17Industry Environment……………………………………………………………………17Customers………………………………………………………………………………………20Description of Buyers……………………………………………………………………20Changes in the Customer Base…………………………………………………………..21Purchased Products………………………………………………………………………22Value of Products………………………………………………………………………...23Order Qualifying and Order Winning Characteristics…………………………………...24External Environment………………………………………………………………………..25Industry…………………………………………………………………………………..25Economic………………………………………………………………………………...26Technological ……………………………………………………………………………27Societal…………………………………………………………………………………..28Legal……………………………………………………………………………………..29Competitors……………………………………………………………………………….…...29Description of Competitors……………………………………………………………....29SWOT Analysis—Newell Rubbermaid, Inc.………………………………………….....31Strengths…………………………………………………………………....……32Weaknesses………………………………………………………………………33Opportunities………………………………………………………………….….33Threats……………………………………………………………………………34SWOT Analysis—Avon, Inc.……………………………………………………...…….35Strengths…………………………………………………………………………35Weaknesses……………………………………………………………………....36Opportunities …………………………………………………………………….36Threats……………………………………………………………………………37SWOT Analysis—Lifetime Brands, Inc.………………………………………………...37Strengths…………………………………………………………………………38Weaknesses………………………………………………………………………39Opportunities……………………………………………………………………..40Threats……………………………………………………………………………40Competitive Advantages………………………………………………………………....41Financial Ratio Analysis…………………………………………………………………43Liquidity………………………………………………………………………….43Long-term Solvency……………………………………………………………...45Asset Management………………………………………………………………46Profitability……………………………………………………………………....48Market Value………………………………………………………………….....50Collaborators…………………………………………………………………………………..52Growth Strategy……………………………………………………………………………53Description of Growth Strategy………………………………………………………….53Goals and Objectives…………………………………………………………………….54Segmentation…………………………………………………………………………………..55Variables…………………………………………………………………………………55Customer Segments……………………………………………………………………...55Demographics…………………………………………………………………....55Age……………………………………………………………………….55Gender……………………………………………………………………56Family Life Cycle………………………………………………………..56Psychographics…………………………………………………………………..56Motives……………………………………………………………..……56Lifestyles…………………………………………………………………57Targeting……………………………………………………………………………………….57Positioning……………………………………………………………………………………..58Strategy Execution………………………………………………………………………...59Product………………………………………………………………………………………….59Goals……………………………………………………………………………………..59Description of Product…………………………………………………………………...60Plastic Containers………………………………………………………………..61Cloth Bag………………………………………………………………………...62Pamphlet…………………………………………………………………………63Description of Processes Used to Make Product………………………………………...63Outsourced Components…………………………………………………………………66Life Cycle of Product……………………………………………………………………66Complementary Services and Warranties……………………………………………….68Place…………………………………………………………………………………………….68Goals……………………………………………………………………………………..68Level of Market Exposure……………………………………………………………….69Channels Used…………………………………………………………………………...69Supply Chain System…………………………………………………………………….70Promotion………………………………………………………………………………………71Goals……………………………………………………………………………………..71Promotional Blend……………………………………………………………………….72Personal Selling………………………………………………………………….72Sales Promotion …………………………………………………………………73Advertising……………………………………………………………………….74Price……………………………………………………………………………………………..76Goals……………………………………………………………………………………..76Value Proposition and Customer Sensitivity…………………………………………….76Pricing Strategy………………………………………………………………………..…77Breakeven Analysis……………………………………………………………………...78Capital Budgeting Analysis……………………………………………………………...78Project Life………………………………………………………………………78Sales Volume…………………………………………………………………….79Discount Rate…………………………………………………………………….83Marginal Tax Rate……………………………………………………………….84Change in Working Capital……………………………………………………...85Initial Investment………………………………………………………………...85Depreciation……………………………………………………………………...86Salvage Value……………………………………………………………………86Variable Cost…………………………………………………………………….87Fixed Costs……………………………………………………………………....90Revenues………………………………………………………………………....91Cannibalization of Volume, Revenue, and Capacity…………………………….92NPV and IRR Discussion ……………………………………………………….95Implementation and Control…………………………………………………………...96Timing and Implementation Activities ………………………………………………….96Sales Estimates…………………………………………………………………………..97Scenario Analysis………………………………………………………………………..98Sensitivity Analysis………………………………………………………………….…101Comprehensive Financial Analysis ………………………………………………….…104Conclusion………………………………………………………………………………….106References…………………………………………………………………………………..107Appendices A-V………………………………………………………………………..…112Executive SummaryTupperware Brands Corporation is one of the most trusted brands in housewares. The renowned company continues to manufacture and sell high quality, innovative products to women all across the globe. In fact, Tupperware Brands has an international sales force of 2.8 million in almost 100 different countries and territories, as well as sales revenues of almost $2.6 billion in 2012 (Tupperware Brands 10-K, 2013). They currently offer eight distinctive product lines, which include Armand Dupree, Avroy Shlain, BeautiControl, Fuller, Nutrimetics, NatureCare, Nuvo, and their most apparent brand, Tupperware (Tupperware Brands 10-K, 2013).After reviewing Tupperware Brands’ financial statements from recent years, they have remained consistent with their profitability. Considering today’s societal and wellbeing concerns, our team has constructed a growth strategy to take advantage of these current trends and help increase the value of Tupperware Brands’ shareholders wealth. With an integration of finance, marketing, and supply chain management, our team has fashioned a profoundly detailed analysis of our growth strategy and how it will be executed.Throughout the marketing plan, our arrangement to implement a new product line extension will be introduced in further detail. We plan to create a new product that is appealing and beneficial for tweens and their mothers across the United States. In the comprehensive financial analysis, we will discuss why we believe this project is financially feasible for Tupperware Brands, and why we think they can achieve such parameters of the new project set by our capital budge. As a result of our financial perception provided in a later report, and assuming Tupperware Brands management capabilities do not change in the future, our team believes the project should be accepted.Situational AnalysisCompanyBackground and Competitive AdvantagesTupperware Brands Corporation was originally founded in 1946 by Earl Tupper. Tupperware was unique because it was the first company to offer products that were lightweight and less likely to break when compared to the traditional glassware found in kitchens at that time (Heritage, 2012). Tupperware Brands is known for selling high quality, sustainable, and innovative products. They currently offer eight unique product lines, which include Avroy Shlain, Armand Dupree, Fuller, BeautiControl, Nutrimetics, NatureCare, Nuvo, and their most distinguishable brand, Tupperware (Tupperware Brands 10-K, 2013). Their Tupperware line features innovative plastic containers that can be used to store, serve, and refrigerate food. Tupperware Brands uses the product differentiation strategy as their source of competitive advantage. Tupperware Brands holds a competitive advantage over the other firms in its industry because they were the first company to manufacture and distribute plastic containers for food storage; and since then, they have lead the industry with a highly recognizable brand name. Furthermore, Tupperware Brands pioneered the direct selling strategy, an unconventional distribution method that has proven to be successful and they continue to distribute its products in this manner today. The final significant advantage is their superior research and development capabilities. They have become leaders in their market in innovation, and their research and development skills reflect this. For these reasons, Tupperware Brands has differentiated itself from its competitors giving them their unique advantages. Although Tupperware Brands main business was selling plastic goods at first, they have expanded into new markets and have acquired seven other product lines which have become a good competitive fit in the company. The success of these new product lines can be associated with the trusted brand name of Tupperware known by customers.Corporate GoalsTupperware Brands’ mission statement states that “Tupperware is passionate about changing lives, especially for women by enlightening, educating, and empowering. We not only strive to obtain our premium position, but we are passionate about changing lives and inspiring confidence in every one of our nearly 3 million sales force members” (Vision and Strategy, 2012). As for Tupperware’s goals for the future, they state it is essential “to sustain our reputation as the premier, global direct seller of quality and innovative products.” In addition, they seek to “inspire confidence in our associates, sales force, consumers, and investors.” Lastly, Tupperware Brands would like to “continue to literally change lives, especially women's, by enabling them to reach their full potential” (Vision and Strategy, 2012). These goals are governed by their core values of empowerment, integrity, responsibility, innovation, collaboration, and celebration. How Tupperware Brands conducts business and formulates strategies are centered on the goals mentioned above.SWOT AnalysisSTRENGTHSHigh brand recognitionGeographically diversifiedIndependent sales forceDistribution methodWEAKNESSESHigh turnover of contractor workersLimited product diversityProducts unreachable to some consumersOPPORTUNITIESProduct designSustainability practicesGlobal market penetrationTHREATSProducts easily substitutableEnvironmental concernsSocial health concernsStrengthsHigh Brand Recognition: Tupperware Brands’ primary and staple brand, Tupperware, has high brand equity and many consumers value these products from the brand name alone. Consumers often attribute generic plastic containers with the Tupperware brand name, and refer to other competitors’ plastic product containers as ‘Tupperware’. The introduction of Tupperware products in the kitchen during the 1940s helped launch the plastic revolution of the upcoming decades (Heritage, 2012). Because Tupperware was the first to introduce plastic containers in the kitchen, it has since then built and maintained a strong reputation in the plastic containers industry that many consumers can identify with today.Geographically Diversified: Tupperware Brands does business in almost 100 countries worldwide selling its eight distinct brand names (Tupperware Brands 10-K, 2013). Figure 1 shows the scope of Tupperware Brands’ expansion throughout the world and the illustration distinguishes between its two broad product groups. They are a multinational company that sells its products directly to the customer, and their global diversification reduces the chance of business and operational risk, leading to a greater return on investment. In 2001, the United States and Canada took up 29 percent of Tupperware Brands’ sales and Europe, Africa, and Middle East at 36 percent. More recently, United States and Canada only hold 12 percent, Latin America and Asia Pacific each at 28 percent, and Europe, Africa, and Middle East in the lead at 33 percent as of 2011 (Tupperware Brands 10-K, 2013). Tupperware Brands has successfully penetrated the global markets shown and is continuing to seek more widespread expansion, deeper penetration in existing markets, and greater penetration in areas that have low penetration.Figure 103002915World Wide Presence (2012)00World Wide Presence (2012)Independent Sales Force: Tupperware Brands sells directly to its customers using individual consultants. As of 2012, Tupperware Brands had an independent sales force of 2.8 million employees (Tupperware Brands 10-K, 2013). The majority of this sales force is independent contractors and not actual employees of Tupperware Brands. Tupperware Brands employs only approximately 13,000 people; 1,000 of which are in the United States (Tupperware Brands 10-K, 2013). The company seeks to remain competitive by continually training, motivating, and offering new compensation arrangements for its independent sales forces. Their method of independent sales force provides a personable customer service and enhances direct relationships with the consumers. Primarily, Tupperware products did not sell well in retail stores because customers needed demonstrations to fully understand how they operated. This led to the first Tupperware home party which took place in 1948. The purpose of these parties was to introduce Tupperware products to the consumers in a social setting. Fortunately, the parties were so successful that it became the focused method of selling (Heritage, 2012).Distribution Method: Tupperware Brands uses the direct-to-consumer method worldwide as it continues to be successful for the company. The renowned company sells its products through the “party” method of sales, which allows them to bypass retail intermediaries. Tupperware parties take place in homes, offices, social clubs, and other locations. According to Tupperware Brands’ most recent 10-K (2013), The system facilitates the distribution of products to the consumers in a timely manner, without needing to work with intermediaries, and establishes routine standards regarding the use of the firm’s trademarks and administrative arrangements. This includes order entry, delivery and payment, as well as with the recruiting and training of dealers.This method has differentiated Tupperware Brands from its competitors and is a major strength because it has given them a competitive edge in its industry.WeaknessesHigh Turnover of Contractor Workers: As stated previously, Tupperware Brands uses a direct sales distribution force of contractors to sell their products. Because many individuals of the sales force seek to supplement their normal income with Tupperware parties, many of them are not dedicated to the method entirely and leave the sales force, and some experiment with it only once or twice. As a result, Tupperware Brands relies strongly on retaining and motivating their sales force because of this high turnover rate of independent employees (Tupperware Brands 10-K, 2013). In fact they state that “a key element of the Company's strategy is expanding its business by increasing the size of its sales force” (Tupperware Brands, 10-K). This is evidence that their growth as a company is reliant on retaining and expanding their sales force, and their success could be compromised if they do not effectively maintain a large and competent sales force.Limited Product Diversity: Tupperware changed their name from Tupperware Corporation to Tupperware Brands Corporation in 2005 after several acquisitions expanded their brand portfolio to eight distinct brand names (Tupperware Brands, 2012). Not only are they selling durable containers now in many different markets, but they also have a wide variety of beauty products. Although they hold eight distinct brands, the company only has two broad groups of products, plastics and beauty. Tupperware Brands may still be exposed to more risk than other companies that hold more product diversification. If a significant drop in business results in one of their two broad groups of products, Tupperware Brands could be left struggling to preserve long-term survival and would be exposed to even more risk. Tupperware Brands should consider adding another broad group of products that fits in their existing strategies.Products Unreachable to Some Consumers: Direct selling benefits Tupperware Brands because it can build customer relationships and loyalty, and also specify orders to that particular customer. However, since Tupperware Brands does not sell through retailers, they lose a large potential customer base. Instead of consumers directly ordering their products from Tupperware Brands, it can be sometimes easier for customers to conveniently pick up a competitor's brand off of the grocery store shelf. Although their method of direct selling is one of their competitive advantages and has not caused them any significant problems in the past, a shift in consumer’s attitudes and buying behaviors in the future could render their method obsolete, and they would lag behind getting their products to retail locations because companies such as Clorox (Glad) and Newell Rubbermaid are already selling their products in retail stores. OpportunitiesGlobal Expansion: Tupperware is not only a household name in the United States, but also in almost 100 countries all over the world. “Tupperware Brands' products are sold in almost 100 countries around the world under eight brands…” (Tupperware Brands 10-K, 2013). Tupperware Brands has discovered that most of their customers and markets are found outside of the United States. Stated in their most recent 10-K (2013), “the Company derived 90 percent of its net sales from operations outside the United States in 2011.” They have been successful in their global expansion to nearly100 countries so far, and there are more opportunities in the global markets to be successful in the future. They also have the opportunity to reposition their product in the United States to build a stronger customer base and increase their sales in the United States as well as the global nation. There was a sales increase of six percent from 2010 to 2011 already in the United States and Tupperware Brands can continue to increase that percentage using different market and repositioning strategies (Tupperware Brands 10-K, 2013).Product Design: Tupperware Brands innovative company culture allows them to express their innovative visions in the product development process. They can take advantage of new trends in societies across the globe and find new solutions in the kitchen and home by designing products that specifically fit these new needs. Tupperware Brands has continued to innovate, and this is apparent as their 10-K (2013); it states, “…Tupperware has evolved towards truly lifestyle-oriented products and has leveraged its research and development expertise to bring new concepts to market, such as the Individual Microwave Rice Maker, the Microwave Omelet Maker, a Universal Knife Sharpener…” Tupperware Brands can continue to pursue new opportunities by designing new and improved products. For example, Tupperware Brands has an obvious opportunity to design and extend their present eco-friendly line. Tupperware has already broken into the environmental aspect of the market by creating eco-friendly mugs, water bottles, and lunch containers, but as more consumers become concerned with environmental issues, the company can seek to fulfill new environmental needs with innovative and quality products. Also, because the company has already entered the global market, they have a great opportunity to extend their innovative lines globally. Sustainability Practices: Introduced in the preceding section, Tupperware Brands has an opportunity to begin implementing practices that are environmentally safe and sustainable. President and Chief Operating Advisor of Tupperware Brands’ Corporation stated that, “We continue to look for opportunities to improve the environmental performance of our products and manufacturing processes, without compromising on safety and quality. Tupperware Brands is focused on eco-friendly product solutions that help reduce energy consumption and eliminate waste in landfills” (Executive Message on Sustainability, 2012).Now that “Going Green” is a new trend in the United States and places all over the world, it presents an opportunity for Tupperware Brands to not only design sustainable products, but also sustainable operations. By creating products that ensure the preservation and safety of the environment, they can not only create products that are better for the environment but, as stated earlier, they will be able to attract new customers.ThreatsProducts Easily Substitutable: Although Tupperware Brands is the leading brand of packing and container products, its products can easily be substituted by others. Several companies have developed products similar to Tupperware that may possess qualities such as cost differentiation. Tupperware Brands offers their plastic products at a premium price to reflect their dedication to high quality and durability; however this high price can deter some consumers from buying. With today’s depressed economy, buyers are more conscious of spending, and may be persuaded to buy a product that is less expensive regardless of quality comparison. In addition to the economic factors, Tupperware Brands has the disadvantage of not forming relationships with retail buyers. Customers may find it easier to go to a local store to purchase their food containers rather than making an order to be shipped to them on a later day. Environmental Concerns: “In 2010, the United States generated almost 14 million tons of plastics as containers and packaging, almost 11 million tons as durable goods, such as appliances, and almost 7 million tons as nondurable goods, for example plates and cups. Only 8 percent of the total plastic waste generated in 2010 was recovered for recycling” (Plastics, 2012). These statistics highlight an external threat Tupperware Brands may encounter in the future. As environmental awareness becomes more prevalent across the globe, consumers may begin avoiding products made entirely of plastic because of the known environmental effects it causes. Plastic has been known to take a long time to degrade in landfills, and without a strong recycling program in many countries, Tupperware Brands business could suffer unless they take the actions to minimize this threat.Social Health Concerns: Apart from the environmental damage plastic is known to cause, there has also been concerned in the public about plastics adverse effects on health. It is commonly known that many individuals are still concerned with certain chemicals in plastic products leaking into their foods when stored or microwaved in. However, “As of March 2010, items sold by Tupperware US & CA are BPA free” (About BPA & Materials, 2012). This means that Tupperware products are safe to consumers, but it does not necessarily remove the stigma still surrounding plastic products. Tupperware Brands is still exposed to the attitudes of society and this negative attitude surrounding plastic products could affect Tupperware Brands sales if they fail to remind consumers of their products safety. Organizational StructureThe Tupperware Brands management team and board of directors are committed to having appropriate structures and processes in place to insure that our shareholders' best interests are served and to meet the current requirements of law (Corporate Governance, 2012). Figure 2, an organization chart of the company’s structure best illustrates the chain of command at Tupperware Brands.Figure 204248150Tupperware Brands Organization Chart (2013)00Tupperware Brands Organization Chart (2013)Capabilities and Processes Tupperware Brands offers high quality products at a premium price. The products are long-lasting, durable, and stand out from other plastic substitutes. The products offered from Tupperware Brands stand out mainly because they are innovative and decorative. They not only offer storage containers, but also have product lines consisting of cooking utensils, cooking spices, and housekeeping items. Tupperware also has a beauty line that offers skin care products, cosmetics, fragrances, jewelry, and more (Tupperware Brands 10-K, 2013).One of the most notable capabilities that really set Tupperware Brands’ apart from its competitors is its superior research and development (R&D). “Tupperware spent $18.9 million in 2012, $19.5 million in 2011, and $17.8 million in 2010 on Research and Development” (Tupperware Brands 10-K, 2013). Tupperware Brands has leverages their superior R&D capabilities to bring new concepts to markets (Tupperware Brands 10-K, 2013). This has allowed them to offer the most innovative products through their engineering and manufacturing processes. Tupperware Brands believes their expertise in engineering and manufacturing “brings customers the next generation of serving, fridge storage, and microwave products” (Tupperware Brands 10-K, 2013). Industry EnvironmentTupperware Brands Corporation operates distinctly in the consumer goods sector, with it specifically occupying the packaging and containers industry (Industry: Packaging & Containers, 2013). However, Tupperware Brands also competes with companies in the direct selling industry. Because Tupperware Brands spans these two specific industries, competitors from both industries will be considered and compared to the company in order to fully understand the competitive environment. Avon, Inc. offers the closest competition for Tupperware Brands in the direct selling industry because they sell similar beauty products that rival Tupperware Brands’ beauty line, distribute their products in a “direct selling” fashion, and also concentrate on the same target markets. Newell Rubbermaid, Inc. is Tupperware Brands’ closest competitor in the packaging and containers industries because they offer similar products that serve as substitutes to Tupperware Brands’ popular kitchen food storage solutions. Lastly, Lifetime Brands, Inc. constitutes as a competitor of Tupperware Brands because they offer household and kitchen cutlery, cookware, and food storage items; items that are parallel to Tupperware Brands’ product lines. The beginning section of this analysis contains a brief description of how each competitor of Tupperware Brands got started, the products they offer and markets they operate in, and a description of their competitive environments.Avon was founded by David H. McConnell in the 19th century after he noticed an opportunity to provide women of the time a chance to become their own business by allowing them to directly sell products to other consumers. He noticed very little women working outside the home and his idea gave women a chance to gain financial independence for themselves by becoming personal representatives for Avon (Avon Founder, 2012). Today, their success has led them to become the world’s largest direct seller and a leading global beauty company, operating in over 100 countries, where its 6 million independent representatives sell high quality beauty, fashion, and home products to women (Avon Markets, 2012). Avon, also known as “the company for women”, targets and markets their efforts toward women consumers where they generate over $11 billion in annual revenue, selling such well-recognized brands as Avon Color, Anew, Skin-So-Soft, and Avon naturals. (Investor Relations, 2012) Newell Rubbermaid was founded in 1903 after Edgar A. Newell purchased the company and renamed it the Newell Manufacturing Company. Throughout the years leading up to an acquisition that would eventually change the company name to Newell Rubbermaid, Inc., Newell Manufacturing Company strategically acquired a variety of firms that introduced them to diversified markets such as the cookware and office supply market segments. In 1999, the company finally made its most significant acquisition and acquired Rubbermaid, doubling the size of the company, and thus adding another high quality product line which included innovative plastic home solutions, commercial, and infant products (Our History, 2013). Because of the numerous acquisitions made in Newell Rubbermaid’s history, the firm is now involved in many product segments which include tools, commercial products, writing, baby and parenting, home solutions, and specialty items. The firm experiences solid competition throughout its numerous segmented markets, and is required to constantly innovate by designing new products that deliver superior performance (Our Company, 2013). Today, a highly competitive environment has led Newell Rubbermaid to implement a new “Growth Game Plan”, where the company is redesigning their corporate strategy and focusing on global opportunities for growth in emerging markets, while also maintaining their share of their current markets (Our Growth Game Plan, 2013). Lifetime Brands, Inc. was founded under the name Lifetime Cutlery Corporation in 1945, which it later changed to Lifetime Brands in 2005. Up until its initial public offering (IPO) in 1991, Lifetime Brands acquired a few firms which expanded their existing lines of kitchenware and cookware. After its IPO, the brand acquired several other companies and secured a successful KitchenAid license agreement with Whirlpool Corporation to manufacture and market a high-end line of kitchen utensils. More recently, Lifetime Brands has opened a new west coast distribution center, and has made several moves into the international markets of Asia and Central and South America (Company Timeline, 2012). According to the company’s 2011 Annual Report, “the markets for kitchenware, tabletop and other products used in the home including home décor products are highly competitive and include numerous domestic and foreign competitors…” (Annual & Quarterly Reports, 2011). Lifetime Brands remains competitive by stressing the importance of innovation throughout the firm and designing products to meet the ever-changing needs of customers (Annual & Quarterly Reports, 2011). Lifetime Brands’ popular product lines include kitchenware, cookware, and glassware under the familiar brand names of KitchenAid, Farberware, and Pfaltzgraff (Brands, 2013).Avon and Lifetime Brands are close competitors to Tupperware Brands and both offer unique challenges to its strategic outcomes. However, Newell Rubbermaid offers the closest comparison to Tupperware Brands because it is the biggest threat to Tupperware Brands’ most popular product line; Tupperware food storage solutions. Because Newell Rubbermaid offers the closest substitute to Tupperware Brands’ products, an analysis of the two companies will follow in the financial ratio analysis discussion below in order to gauge the relative financial strength of Tupperware Brands in relation to its competitor. This will be achieved by using the two firms’ most recent financial statements.CustomersDescription of BuyersTupperware Brands targets mostly one demographic, which is middle aged women, either married or married with children. This demographic would typically fall in the Generation X cohort, with some customers occupying the baby boomer generation. Since Tupperware is sold by women either through home parties or catalog orders, the main customer is therefore women. With Tupperware Brands offering an opportunity for women to make a business for themselves, they target their own friends, family, and other women when selling and marketing their product.With Tupperware being sold mostly at home parties, it offers a different buying environment rather than just in stores. Being surrounded by friends, cocktails, and good conversations, this leads to less buyer’s remorse, and the likelihood that more goods will be purchased. Women who attend Tupperware parties are looking for an entertaining buying situation that will engage their senses. They seek more involvement in the purchasing decision and are better informed than if they were to buy from traditional retail locations.Different lifestyles is the main psychographic that Tupperware Brands targets. The women they target for both customers and as sales representatives are women that are independent or women that are homemakers. The sales representatives are women that are looking to supplement their incomes to help support their family or host parties for their friends and family to receive party benefits. This unique selling method gives independent women an opportunity to start their own business with little capital invested on their part.Changes in the Customer BaseTupperware Brands Corporation continues to evolve with the adjustments in consumer wants and needs. The world is changing constantly and Tupperware Brands’ innovation and creativity allows its products to adapt with the differences in buyer behavior and attitudes. Tupperware Brands “use[s] a modern approach to form and function to create convenient solutions to household tasks (Heritage, 2012). In fact, Tupperware Brands currently reaches over 100 markets worldwide and offers products specifically manufactured for different cultures, such as the Kimchi Keeper, the Kimono Keeper, and the Japanese Bento Box (Heritage, 2012).Recently, there have been slight changes in society that are persuading buyer behavior. For instance, the environment has been a major factor in consumer purchases. Products that are sustainable and eco-friendly have become an essential attribute, and can make or break a buyer purchase. Since Tupperware Brands are using plastics in most of their merchandise, they have created an eco-line to attract consumers that support “going green.” Another shift in society has been the trend toward a healthier lifestyle. More than one-third of adults (35.7%) in the United States are considered obese. Centers for Disease Control and Prevention proclaimed that medical costs related to obesity were estimated at $147 billion as of 2008 (Overweight and Obesity). Due to the issue with obesity, people have looked into healthier options dealing with foods and portion control.Purchased ProductsTupperware Brands’ core business is centered around “design-centric preparation, storage and serving solutions for the kitchen and home” (Tupperware Brands 10-K, 2013). This core business is centered on Tupperware Brands’ most well-known brand, Tupperware. This means consumers who purchase from Tupperware Brands can expect innovative kitchen and home solutions that are based on individuals’ lifestyle needs. Because the products are lifestyle oriented, they are designed to enhance many of the situations consumers find themselves in around the home and kitchen. Consumers are buying more than a plastic container when they purchase from Tupperware, they are buying a product whose physical characteristics and attributes are suited to fit their unique lifestyle needs.Tupperware Brands carries a variety of product lines that include the traditional plastic storage and serving solutions, but also an established line of kitchen cookware, microwavable products, textiles, and gifts (Tupperware Brands 10-K, 2013). Some of the traditional storage solutions include popular collections like Modular Mates and FridgeSmart, where the purpose of the two collections is to provide consumers with simple containers in which they can proportionally store dry or cold foods. Tupperware Brands also has a Chef Series collection where it offers high-end cutlery sets, individual knives, and stainless pots and pans. They also carry a kitchen complement category where consumers can purchase items to supplement their experiences in the kitchen. Items in this category include recipe books, microfiber cleaning cloths, sponges, and a can opener. Tupperware Brands also provides consumers with gift options such as decorated drink and serving containers, and a boy’s or girl’s lunch set. The company is also meeting people’s need for a cleaner environment, by offering new products such as Square Eco by Tupperware. Tupperware Brands’ diversely designed kitchen and home product lines fulfill consumers’ different needs around the home and kitchen.Apart from Tupperware Brands core business of storage and serving solutions around the kitchen and home, the company also “manufactures and distributes skin care products, cosmetics, bath and body care, toiletries, fragrances, and nutritional products” (Tupperware Brands10-K, 2013). Tupperware Brands’ markets and distributes these products under the brand names Armand Dupree, Avroy Shlain, BeautiControl, Fuller Cosmetics, NaturCare, Nutrimetics, and Nuvo. In each of the brands, consumers find a unique kind of cosmetics, skin care, fragrances, and bath and body care products. Many of these brands originated in specific international markets, but are now sold globally by Tupperware Brands’ after their acquisition of the brands. Consumers purchase naturally enriched cosmetics from the NaturCase, Nutrimetics, and Nuvo brands, and find a variety of perfumes and colognes, lip applications, and body washes throughout most of their beauty line selections (Tupperware Brands 10-K, 2013)Value of ProductsCustomers are buying our products mainly because they offer unique storage solutions to the endless types of situations in the kitchen and home. Our products offer the customers a way to keep food fresh and ready to consume when they are. Additionally, our products can be taken on-the-go to places like school or work and keep food fresh and protected along the way. The reason customers choose to buy our products over our competitor’s products is because they value that we are a sustainable and societal company, not only looking out for the well-being of our environment, but the health of our customers. Our customer’s value the durability, reusability, and the warranties that come along with our product lines. Tupperware products are made to last and if any product is believed to be defective a free replacement will be issued(Warranty and Returns, 2012). Customers are always returning to Tupperware Brands because they value the company’s constant efforts to innovate and offer new solutions to old problems. In fact, Tupperware Brands was named in the World’s Most Admired Companies in 2013 by Fortune, and received the top ranking for innovation in its industry (Fortune: World’s Most Admired Companies, 2013). Order Qualifying and Order Winning Characteristics All companies must create order qualifying products to survive in the market. Their order winning products, on the other hand, are what sets them apart and pulls them ahead of their competition. Tupperware clearly has the order qualifying products they need to compete in the market and they have for many years. The order qualifying attributes include durability, reliability, range of products, and portability. Included on all their products is also a lifetime warranty where they will replace the product if anything should happen to it due to normal wear. Their competitors, such as Newell Rubbermaid, also have this attribute to their products. These qualities allow Tupperware to be in competition with other close competitors.However, it is Tupperware Brand’s order winning attributes to these products that sets them apart and the reason why customers will choose them over others. Their products are all designed to fit the needs of their customers. Tupperware Brands offers “truly lifestyle-oriented products and has leveraged its research and development expertise to bring new concepts to market” (Tupperware Brands 10-K, 2013). Another order winning characteristic is they distribute their products through direct selling. This enables them to build a strong customer-business relationship and customer loyalty. “This direct selling method offers consumers a personal and convenient way to purchase products that they may not had access to otherwise” (Direct Selling, 2012). They are also now, like many other companies, pushing to become a more sustainable manufacturer, which will be a great order winning quality to their products if they are able to achieve this before their competitors.External Environment IndustryTupperware Brands is listed in Yahoo! Finance in the packing and containers industry (Industry: Packaging & Containers, 2013). The packaging and containers industry consists of firms engaged in the manufacturing of containers, as well as companies providing services in packaging. In addition to the packaging and containers industry, Tupperware Brands other diverse brands of beauty and cosmetic products also compete with similar companies that sell these types of products. Tupperware Brands unique distribution method also puts them in competition with companies such as Avon and Pampered Chef that distribute and sell in this method. Lastly, because many of Tupperware Brands’ products are used around the kitchen and home, companies in the housewares industry also rival Tupperware Brands with the products they offer. It is clear that Tupperware Brands is affected by several different industries, and each industry provides different challenges to their business strategy. For a more detailed discussion on Tupperware Brands industry competitors, see the competitors sections in this report.EconomicTupperware Brands’ external environment includes economic factors that are out of the control of the firm but still have an effect on the company’s strategy. Several economic factors in the domestic market, as well as international markets, shape how Tupperware Brands intelligently plans for the future. A primary economic factor that could negatively affect Tupperware Brands’ success in the future is the rising cost of their raw materials; specifically, the price of oil. Oil is the main raw material used to refine plastic resin pellets, the materials Tupperware Brands uses in its operations to mold its various plastic containers. As finite global energy sources deplete and populations of developing countries become more developed and use more energy, the price of oil will continue to rise. Tupperware Brands most recent 10-K (2013) states …“resins are purchased through various arrangements with a number of large chemical companies located throughout the Company's markets. As a result, the Company has not experienced difficulties in obtaining adequate supplies and generally has been successful in obtaining favorable resin prices on a relative basis.” Although there has not been a negative short-term effect on Tupperware Brands, our team suspects without new technologies in the future, rising energy and raw materials cost will cause major problems for the firm’s ability to maintain long-term growth.Along with other multinational companies, Tupperware Brands is faced with the economic risk of floating exchange rates in the international economy. Their 10-K (2013) states, “the Company derived 90 percent of its net sales from operations outside the United States in 2012. Because of this, movement in exchange rates may have a significant impact on the Company’s earnings, cash flows and financial position.” Exchange rates are uncontrollable by Tupperware Brands, and although strategies can be taken to diminish the effects, a strengthening U.S. dollar will most certainly negatively impact Tupperware Brands as they have more business outside of the U.S. Their 10-K (2013) highlights this by stating, “Although this currency risk is partially mitigated by the natural hedge arising from the Company’s local product sourcing in many markets, a strengthening U.S. dollar generally has a negative impact on the Company.” As the U.S. economy continues to strengthen, and the U.S dollar becomes more valuable relative to other currencies, Tupperware Brands will need to consider these risks and plan accordingly.The last economic factor in the external environment that is affecting Tupperware Brands strategy is the most recent U.S. and global recession. The U.S. Great Recession of 2007-2009, and the global recession that ensued, had a major effect on people’s attitudes and buying habits. As a result, people’s real income and purchasing power dropped, and more and more people focused on necessity items rather than additional wants. The depressed U.S. and global economy has showed some progress in recent years, but its scope still has lingering effects on the people. Although purchasing power has risen slightly, and more people are returning to work, people are still unsure of the future and are reluctant to spend money. Our team has recognized that our products, especially the plastic products, could be negatively impacted. Because of the reusable nature of our products, and our warranty that guarantees replacement from defects caused by normal use, individuals will be less willing to purchase new specialty plastic items from Tupperware Brands and be more willing to reuse the items they already own. Tupperware Brands may need to start offering lower priced options during the recession recovery to entice more individuals to buy their products.TechnologicalTechnology is an aspect of business many companies struggle with. There is a constant change in the types of systems a company uses to run their business. Software updates, faster processors, and new programs are all things that a company needs to keep constant watch on because if their competitors implement a system that is more cost efficient and effective than the programs Tupperware Brands may be using then that creates a competitive advantage for their competitors.Things such as market/product research, new designs, increased production, sales monitoring, etc., are all things that technology has greatly improved over a short amount of time. Online surveys have quickly become the most popular and efficient way of conducting market research and this was because of technology. Getting information about a market is now easier than ever. As mentioned before, in order to gain a competitive advantage, Tupperware Brands must keep up with the changes in operational and administrative technologies as it will help their business remain ahead of the competition. The evolution of the internet will also serve as another technological factor Tupperware Brands will need to follow with.SocietalA current societal trend within the United States is childhood obesity. Childhood obesity has more than doubled in children ages 6-11 from 1980 to 2010, from 7% to 18%, respectively. Meaning that in 2010, more than one third of children were overweight or obese. Overweight is commonly defined as having excess body weight, while obesity is defined as having excess body fat (Childhood Obesity Facts, 2013). Children that are obese are more likely to have high blood pressure, high cholesterol, and pre-diabetes. In a sample of 5 to 17 year olds, 70% had one of the risk factors previously named. The long term effects of childhood include most likely being obese as an adult and increased risk for heart problems, strokes, type 2 diabetes and numerous types of cancer (Childhood Obesity Facts, 2013). Overweight and obesity within childhood can be prevented by eating healthy and physical activity (Childhood Obesity Facts, 2013). As these trends continue, consumers will be seeking products that will supplement a healthy lifestyle.LegalAs environmental concern grows, there could be an increasing number of EPA laws originating in the United States—Tupperware Brands domestic market. Tupperware Brands primary products, plastic containers, may be subject to these laws as plastic is known to have adverse effects on the environment and ecosystems of the world. As of present, Tupperware Brands claims it has no issues with environmental laws. Tupperware Brands states in their 10-K (2013) “Compliance with federal, state, and local environmental protection laws has not had in the past, and is not expected to have in the future, a material effect upon the Registrant’s capital expenditures, liquidity, earnings or competitive position.” However, government regulation on the environmental practices of businesses in the United States could become more prevalent as time passes, and this legal factor could have an effect on Tupperware Brands operations. Although they do not foresee this having a negative impact on their operations, it should be noted that this is a possible, future outcome that should still be monitored by Tupperware petitorsDescription of CompetitorsNewell Rubbermaid, Inc. The renowned company has managed to flourish and remain successful for over 100 years. In 1903, Newell Rubbermaid started operation in Ogdensburg, New York and primarily produced and sold curtain rods. As years progressed, they have widened their range of products. Their mix of products now includes pens, cookware, drill bits, strollers, hairbrushes, etc. The organization strives on “helping people flourish every day, where they live, learn, work, and play” (Our Company, 2013). Similar to Tupperware Brands, Rubbermaid is affiliated with more than one industry. They are widely known for their home solutions which include home and food storage solutions, premium cookware, window treatments and hair styling tools. They focus on the need for women and their families to get their households in order, and make their lives much easier. Because Newell Rubbermaid targets the same market as Tupperware Brands with their home solutions, it makes them one of their top competitors.Avon, Inc. As the “world’s largest direct seller and a leading beauty company, Avon has nearly $11 billion in annual revenue” (Avon 10-K, 2013). With their wide range of products targeting women in all aspects of their life, Avon has dominated the market putting their label not only on beauty but also home products as well. Avon was founded in 1886 by David H. McConnell, who himself was a door to door salesman until he recruited women as sales representatives to start selling his products (Avon Founder, 2012). The business then grew to a global company empowering women while creating jobs around the world. Just like Tupperware Brands Corporation, Avon sells not only beauty products but also re-useable containers. They use the direct selling technique which helps maintain close relationships with customers. Avon is considered one of Tupperware Brands’ main competitors because they target women as their main target market, while selling similar products at reasonable prices.Lifetime Brands, Inc.Lifetime Brands, formerly known as Lifetime Cutlery Corporations, is a kitchenware and tabletop product manufacturer founded in Italy in 1945. The name of the company changed to Lifetime Brands in 2005 after they began to build a stronger foundation and secure licenses to brand names such as Kitchenware, Cuisinart, Farberware and many more. They continued to increase the number of brand names associated with Lifetime Brands all the way up to their most recent brand acquired, F&F (About Lifetime Brands, 2013). Today, Lifetime brands’ is associated with 31 brands and counting. Consumers can find Lifetime Brands in stores worldwide. The company sells their products to wholesalers, national chains, retailers (private and public) and they make many of their products available to customers online. Lifetime Brands also has a strong belief in increasing the sustainability of the company’s manufacturing facilities and products (About Lifetime Brands, 2013). They are a company that believes in providing the best and most innovative products for their customers. Their ultimate goal as a company is to increase their shareholders wealth as stated in their mission statement on the corporate website, “We are committed to deliver five-star experiences to the earth’s consumers through innovative products, services & solutions for the home. In return, they will reward us with increased market share and profitability allowing our associates, stakeholders and shareholders to prosper” (Company Timeline, 2012).SWOT AnalysisNewell Rubbermaid, Inc.STRENGTHSStrong brand equityWide range of productsWEAKNESSESProducts sensitive to consumer demandExpensive production costsOPPORTUNITIESGlobal expansionProviding better online serviceTHREATSProducts easily substitutableRaw material costsStrengthsStrong Brand Equity: ?Newell Rubbermaid has been in the market for over 100 years, and has made a difference to families all across the globe. ?The familiarity of the company’s quality and consumer values put them in a leading position within the market. ?The brand equity is the value of a brand to a company—the higher the brand equity, the more successful and recognizable the brand.?In a survey conducted of the financial community (over 1,000 analysts), Newell Rubbermaid received the highest linked rating compared to seven other major U.S. rubber and plastic corporations. ?In fact, the most highly rated benchmark for Newell Rubbermaid was brand equity (Rubbermaid, 2013).Wide Range of Products: Newell Rubbermaid produces and distributes a wide range of products around the world. ?Newell Rubbermaid categories span from home storage and garage organization, food containers and laundry supplies, bath and cleaning products, closet configuration, and refuse removal (Careers—Rubbermaid). ?Newell Rubbermaid can offer almost every household necessity for women and their families. ?They are not limited to few products, and diversification of products enhances their chances of maintaining their competitive advantage.WeaknessesProducts Sensitive to Consumer Demand: Newell Rubbermaid’s offers a range of products whose sales are sensitive to consumer demand; for example, their line of tools could see a drop in demand in recessionary times. In recent years, the economy in the United States has suffered which altered consumers’ purchasing power, so it is assumable that Newell Rubbermaid’s vast array of products was negatively affected.Expensive Production Costs: Referring to their 10-K statement, Newell Rubbermaid has a cost of products sold figure of 60 percent of their total revenues (Newell Rubbermaid 10-K, 2013). This indicates Newell Rubbermaid may have difficulties controlling costs or their diverse product lines cause them to operate at thinner margins than their industry competitors.OpportunitiesGlobal Expansion: Newell Rubbermaid has a strong brand that continues to grow in global markets with “insight-driven innovation” (Newell Rubbermaid 10-K, 2013). In fact, Newell Rubbermaid’s Home & Family segment consists of five global business units. The business units consist of Rubbermaid Consumer, Baby & Parenting Essentials, Decor, Culinary Lifestyles, and Beauty & Style. By continuing their global expansion, it could open up opportunities to for increased sales in new markets.Providing Better Online Service: Newell Rubbermaid recently paired up with The Clutter Diet to provide unlimited access to direct, personal help from a team of Certified Professional Organizers (R) via internet and weekly action plans for members (Clutter Diet, 2011). Shortly after, White Lion adapted the functionality from the established Clutter Diet membership service with the Newell Rubbermaid brand to provide assistance directly with Rubbermaid’s customers. Overall, the Clutter Diet and online tools are helpful to get rid of clutter and reduce stress. With an organized website, customers can find their way through more easily. Providing a better online service can open more opportunities with increasing profit (Clutter Diet, 2011).ThreatsProducts Easily Substitutable: ?Although Newell Rubbermaid is a leading brand; its products can be easily substituted. ?Newell Rubbermaid is in an industry where there are several other companies, such as Clorox, Inc., are offering similar products. ?Since most of Newell Rubbermaid’s merchandise is sold in retail stores, there are other options that may or may not look more reasonable to the customer. ?In today’s economy, people are more economical, and aren’t will to pay top dollar for household items. ?Due to cheaper, more generic options being offered, this will become a threat to Newell Rubbermaid products.Raw Material Costs: As the cost of oil rises, Newell Rubbermaid’s production and distribution are impacted. ?Rubbermaid uses the resin imported from China for its products. ?The cost of transportation has a positive correlation with the cost of oil, therefore, the higher prices of oil drive up the cost of transporting materials. ?This defeats the attempt of lowering costs using the method to outsource manufacturing. ?Asia provides over 75% of Newell Rubbermaid’s goods, but brings in less than 4% of revenue. ?This situation leaves Newell Rubbermaid no other option but to transport goods over long distances from manufacturing centers to markets (Newell Rubbermaid 10-K, 2013).SWOT AnalysisAvon, Inc.STRENGTHSTarget market ????Customer relationships WEAKNESSESSensitive to size of workforceInformation technology systemsOPPORTUNITIESGlobal sellingBroaden target market ?THREATSStrong competition StrengthsTarget Market: Tupperware Brands considers Avon a close competitor due to their products they sell. A specific strength of Avon is their specific market they target. Avon is targeted more towards women, selling beauty, fragrance, and household items. According to Avon’s 10-K (2013), “Our research and development department’s efforts are significant to developing new products, including formulation effective beauty treatments relevant to women’s needs, and redesigning or reformulating existing products.” They focus on the women’s needs while still trying to keep their ideas fresh and ever changing as the market demand changes. Customer Relationships: Another strength that Avon has is their strong customer relationships. Just like Tupperware distribution method, their direct selling method supports relationships with customers and connects with them on a personal level. Their channels that they use are online ordering and catalog sales. Therefore, relationships are fostered through Avon’s personal sales representatives.WeaknessesSensitive to Size of Workforce: Although their independent sales representatives give Avon a competitive advantage, their business is sensitive to the size and competency of their workforce (Avon Products 10-K, 2013). If their independent sales people decide to leave their positions for our direct selling companies, this could have an adverse effect on Avon’s ability to distribute and expose goods to their customers. Information Technology Systems: According to Avon’s 10-K (2013), they state that their “Information Technology Systems are susceptible to disruptions.” Their systems are used to “employ information technology systems to support our business, including systems to support financial reporting, an enterprise resource planning system which we are implementing on a worldwide basis, and an internal communication and data transfer network. We also employ information technology systems to support Representatives in many of our markets, including electronic order collection and invoicing systems and on-line training” (Avon Products 10-K, 2013). This means if their susceptible systems experience a disruption, it would have negative impact on Avon’s daily operations. Avon may face problems if methods are not used to improve the integrity of their information systems infrastructure. OpportunitiesGlobal Selling: Even though they already sell their products in 64 different countries and territories (Avon Products 10-K, 2013), they can continue to expand into new regions. To increase their revenues they can offer their products to growing countries. There is always an opportunity for a company to keep growing, and if Avon can modify their products to meet the needs of different cultures, they can expand in new regions.Broaden Target Market: Another opportunity for Avon is broadening their target market. Their main target is currently women, but the company can look to offer a wider variety of products to attract a male population. This would increase their sales and allow them to leverage their direct selling strategy to develop relationships with male consumers.ThreatsStrong Competition: Since Avon does sell a wide range of different products, they have intense competition (Avon Products 10-K, 2013). They are not only competing against beauty companies who sell their merchandise in retail locations, but they are also competing with other companies that use the direct selling strategy such as Pampered Chef and Tupperware Brands.SWOT AnalysisLifetime Brands, Inc.STRENGTHSInnovationWholesale and RetailWholesaler CollaborationWEAKNESSESMaterially AdverseLimited Online Selection OPPORTUNITIESEnvironmentally FriendlyRetail Direct Selling ExpansionTHREATSIntense Competition E-CommerceStrengthsInnovation: Lifetime Brands is constantly coming up with new and innovative products. They pride themselves on their innovation. “At the heart of the Company is a culture of innovation. The Company brought over 3,600 new or redesigned products to market in 2012 and expects to bring to market over 4,000 new or redesigned products in 2013” (Lifetime Brands 10-K, 2013). Because Lifetime Brands is so innovative, they are able to stay ahead of their competition. They are also able to break through to new markets and create new consumer needs through their design team. “The Company’s in-house design and development teams currently consist of 101 professional designers, artists and engineers. Utilizing the latest available design tools, technology and materials, these teams create new products, redesign products and create packaging and merchandising concepts” (Lifetime Brands 10-K, 2013).Wholesale and Retail: Lifetime Brands sells their products in both retail and wholesale settings. They also are able to sell a limited selection of their products online to customers. This gives them the advantage of being available to customers on the convenience and specialty shopping levels. “The Company operates in two business segments: the Wholesale segment, which is the Company’s primary business that designs, markets and distributes its products to retailers and distributors, and the Retail Direct segment in which the Company markets and sells a limited selection of its products through its Pfaltzgraff?, Mikasa?, Lifetime Sterling? and Housewares Deals? Internet websites” (Lifetime Brands 10-K, 2013).Wholesaler Collaboration: According to Lifetime Brands 10K (2013), “The Company generally collaborates with its largest wholesale customers and in many instances produces specific versions of the Company’s product lines with exclusive designs and/or packaging for their stores.” Lifetime Brands not only sells their products through wholesalers but will also alter their packaging to better fit the specific wholesaler. This builds long-term business to business relationships with Lifetime Brands and its wholesalers giving them an edge over other competition (Lifetime Brands 10-K, 2013).WeaknessesMaterially Adverse: Lifetime Brands is unable to produce products by quick demand change of the customer. They lack the materials and facilities to do so, resulting in financial difficulties and a possible breakage of common retailer relations. The Lifetime Brands’ 10K (2013) states that, “Decisions by large customers to increase their purchases directly from overseas vendors could have a materially adverse effect on the Company. Significant changes or financial difficulties, including consolidations of ownership, restructurings, bankruptcies, liquidations or other events that affect retailers, could result in fewer stores selling the Company’s products, the Company having to rely on a smaller group of customers, an increase in the risk of extending credit to these customers or limitations on the Company’s ability to collect amounts due from these customers” (Lifetime Brands 10-K, 2013). Lifetime Brands has many wholesaler relationships but their relationships with their suppliers are lacking, resulting in difficulty in collecting materials to produce more of their product for the quick order change. Limited Online Selection: Lifetime Brands sells their products through retailers, wholesalers, and also online. However, they lack a selection for their online products. “The Company also markets and sells a limited selection of its products directly to consumers through its Pfaltzgraff?, Mikasa?, Housewares Deals? and Lifetime Sterling? Internet websites.” This limits the market exposure of its products in a channel that can reach a large amount of people (Lifetime Brands 10-K, 2013).OpportunitiesEnvironmental Friendly: All manufacturers are subject to some sort of environmental, health and safety laws. As stated in Lifetime Brands 10K (2013), “The Company’s operations also are subject to national, state and local environmental and health and safety laws and regulations, including those that impose workplace standards and regulate the discharge of pollutants into the environment and establish standards for the handling, generation, emission, release, discharge, treatment, storage and disposal of materials and substances including solid and hazardous wastes” (Lifetime Brands 10-K, 2013). Lifetime Brands is presented a great opportunity to open up to a new market by going above and beyond the standards of these laws. Eco-friendly products are presently becoming more popular in several markets. As of right now, Lifetime Brands is meeting the minimum for environment requirements. This creates a great opportunity to reach a new market by developing products that are more environmentally friendly. For example, they could create BPA free products or products that are recyclable and biodegradable. Retail Direct Selling Expansion: Most companies sell their products online in some way. Technology is advancing so quickly that shopping online is now very common among consumers. Lifetime Brands currently only sells a limited amount of its products on its online as stated before. Although this constituted as a weakness, there is also an opportunity to expand the selection of products and brands sold through the Internet directly to customers. This could greatly increase sales and also make for easier global expansion without setting up new, costly distribution infrastructure. ThreatsIntense Competition: Lifetime Brands is in the industry of household appliances and kitchenware items. This is a very competitive market for household items. Lifetime Brands must compete with other manufacturers for supplies and resources. Lifetime Brands lacks an advantage over other competing companies because of their size. There are many companies that are much more established and have great foundations and relationships with their suppliers making it difficult for Lifetime Brands to compete. Lifetime Brands 10K (2013) states, “The markets for kitchenware, tabletop and other products used in the home including home décor products are highly competitive and include numerous domestic and foreign competitors, some of which are larger than the Company.” E-Commerce: E-Commerce can create a huge competitive advantage for many companies, “However, the Company’s computer network could be compromised which could impact operations and confidential information such as customer credit card information could be misappropriated. This could lead to adverse publicity, loss of sales and profits or cause the Company to incur significant costs to reimburse third-parties for damages which could adversely impact profits” (Lifetime Brands 10-K, 2013). Technology is something that can significantly help a company or hurt them. Lifetime Brands are constantly concerned about their customers and their sales online; therefore they have yet to rely on the Internet for their sales which results in many potential sales being lost. Competitive AdvantagesNewell Rubbermaid, Inc.As a result of their “design-driven” attitude, Newell Rubbermaid has a competitive advantage because of their highly innovative and differentiated products. Newell Rubbermaid seeks to design their products around their customers and their diverse line of products allows them to do this. These diverse products line has allowed Newell Rubbermaid to become experts in their markets and gain recognition through the success of their brand names. The company leverages its expertise and experience to bring new concepts to the market and continues to stay ahead of the competition by offering products designed to make customers lives easier and attracting new customers across the world (Newell Rubbermaid 10-K, 2013).Avon, Inc.Avon consistently has a competitive advantage over other strong competitors because of its various products and unique distribution method. Currently, Avon’s products include a diverse line of color cosmetics, skincare, fragrance, personal care, hair care, jewelry, and household items. Avon has products and brands that target women as well as children and teens. Because of their extensive product line Avon dominates their market. Avon is currently the world’s largest direct seller, which makes known their powerful brand and their worldwide contributions (Avon Products 10-K, 2013).Lifetime BrandsLifetime Brands maintains a competitive advantage over its competitors by its ways of selling. Their products are made more accessible to customers because they can be found in retail stores, online and through wholesalers worldwide. Also, the company believes that they hold a competitive advantage through their patents and innovative products. “The Company believes it possesses certain competitive advantages based on its brands, its emphasis on innovation and new product development and its sourcing capabilities. The Company owns or licenses a number of the leading brands in its industry including Farberware?, KitchenAid?, Mikasa?, Pfaltzgraff?, Cuisinart?, Elements?, Melannco?, Fred? and V&A?. Historically, the Company’s sales growth has come from expanding product offerings within its product categories, by developing existing brands, acquiring new brands and establishing new product categories” (Lifetime Brands 10-K, 2013). Lifetime Brands has so many brand extensions that are recognizable to the public and are household names in homes across the globe. Financial Ratio AnalysisTupperware Brands Corporation’s SEC 10-K financial statements for 2011 through 2009 (Tupperware Brands Corporation, 2013) are located in Appendix A, and key financial ratios for the firm are located in Appendix B. Newell Rubbermaid, Inc.’s SEC 10-K financial statements for 2011 through 2009 (Newell Rubbermaid Inc., 2013) are located in Appendix C, and key financial ratios for the firm are located in Appendix D. Thus, each of the firms’ financial ratios included in the analysis below will be referenced from their respected Appendices.LiquidityLiquidity consists of two different financial ratios. These ratios are the current ratio and quick ratio. Together, they measure how liquid a firm’s assets are, which indicates how quickly assets can be converted to cash in order to cover their debt. The higher the liquidity measure for a firm, the better it will be able to meet its short-term obligations. The first measure, the current ratio, is calculated by dividing current assets by current liabilities. This expresses how much of the firm’s current assets will be readily available to convert to cash if needed to cover short-term debt. Located in Appendix B, Tupperware Brands has a current ratio of 1.1392 as of 2011; this means that they have enough liquid assets to cover their short-term debt. Consistently, throughout Tupperware Brands current ratio history, they have been able to maintain a ratio higher than one, and this is evident when they had a current ratio of 1.6970 in 2010, and 1.5131 in 2009 (Appendix B). Newell Rubbermaid is one of Tupperware Brands’ leading competitors. Newell Rubbermaid was able to maintain a consistent current ratio of 1.2933 in 2011, 1.2798 in 2010, and 1.2402 in 2009 (Appendix D). Tupperware Brands had a lower current ratio than Newell Rubbermaid in 2011, but had higher ratios in 2010 and 2009. This means they had more assets available to them to cover short-term debt in those previous years. Overall, both firms have maintained a healthy current ratio over the past three years, staying just slightly over one in every year. However, it appears Tupperware Brands has maintained a better average of current ratio measures over a three year period which may indicate the firm is more financially sound in this particular category. The other ratio that measures liquidity of the firm is the quick ratio. The quick ratio measures the firm’s ability to meet its short-term debt obligations with the most liquid assets available to them. This measure uses the firm’s currents assets—but excludes the inventory portion of assets. It is calculated by subtracting inventory from current assets, and dividing that figure by current liabilities. This often makes for a more accurate measure of current assets available to turn into cash. Tupperware Brands had a current quick ratio of 0.6913 as of 2011, which is very poor, and a drastic drop compared to their 2010 quick ratio of 1.1393 (Appendix B). Newell Rubbermaid's quick ratio for the year of 2011 was 0.8719—while in 2010 it was 0.8586 and 0.8490 in 2009 (Appendix D). A quick ratio of one or higher is something that should be desired by companies because it indicates that they have enough assets at this current moment in time to cover their debt. Both corporations will want to increase their quick ratios more rapidly than they have been in order to become more financially stable. Overall, Tupperware Brands has performed better in the current ratio and quick ratio category than Newell Rubbermaid in previous years, but has performed more poorly in the most recent year of 2011. This downward trend for Tupperware Brands in its most recent year should be evaluated by management and corrected in order to maintain levels seen in 2010 and 2009. Although it may just be a temporary dip, it should be noted and monitored so Tupperware Brands does not fall to even lower levels while its competitor is improving their performances.Long-term SolvencySolvency is the measure of the firm’s ability to pay off long-term debt and interest. The ability to pay off long-term debt and interest is important for long-term survival. The most popular equations to evaluate solvency are the total debt ratio and the debt to equity ratio. The total debt ratio is calculated by the total assets of the firm minus the total equity, divided by the total assets. The comparison of total assets to total debt in this equation gives an idea of the amount of leverage used by a company. A lower total debt ratio means the firm relies less on leverage and vice versa. From the most recent financial statements obtained, Tupperware Brands has a total debt ratio of 0.7284 as of 2011. This is the highest total debt ratio Tupperware Brands has seen in the past years, with 2009 being 0.6448 and 2010 being 0.6082 (Appendix B). In other words, Tupperware Brands has been more reliant on debt leverage in 2011 than in previous years. Tupperware Brands currently has the highest total debt ratio when compared to their largest competitor, Newell Rubbermaid. As of 2011, Newell Rubbermaid currently has a total debt ratio of 0.6993, which has decreased over the past two years from 0.7226 in 2009 to 0.7025 in 2010 (Appendix D).The debt to equity ratio, another equation used to evaluate solvency, is calculated by the total debt divided by the total equity. This ratio is a comparison of the firm’s debt to their equity, which gives an idea of the proportion of debt to equity being used to finance the firm’s assets. For 2011, Tupperware Brands’ debt to equity ratio was 2.6825, which has fluctuated over the years from 1.8153 in 2009 to 1.5523 in 2010 (Appendix B). Comparing the ratios from 2010 to 2011 shows that Tupperware substantially increased their debt financing and therefore may have an advantage over their competitor, Newell Rubbermaid. Newell Rubbermaid’s debt to equity ratio in 2011 was 2.3255, which remained quite stable from their 2010 ratio of 2.3615 and was only a small decrease from their 2009 ratio of 2.6045 (Appendix D). The stability in these ratios show that Newell Rubbermaid has been quite consistent with the amount of debt financing that they have used over the years. The total debt ratio and debt to equity ratio for 2011 of Tupperware Brands was higher than their closest competitor, Newell Rubbermaid. This means that Tupperware Brands has chosen to use more debt financing than equity financing. Regarding whether this reliance on debt, opposed to equity, is a strength or weakness for the firm all depends on the outcome of the financing. Using more debt leads to greater risk, but the more risk a company takes on, the more opportunities for reward. Additionally, earnings in the firm can be accelerated rapidly upward when leverage is used in times of positive growth, but earnings can also decline dramatically if the leverage used returns negative growth. Again, the outcomes of the situations will determine whether a higher, or lower, total debt ratio or debt to equity ratio is desired. Asset Management Asset management is the maintenance and monitoring of a firm’s tangible assets. The measurement of how successful a company is at generating sales efficiently and effectively through the management of their assets can be determined by asset management ratios. In short, asset management determines the ability of a firm to turn tangible assets into sales revenue. The two most commonly used ratios include inventory turnover and days sales in inventory.Inventory turnover is a measurement of how many times inventory is sold or replaced during a period of time. A high inventory turnover ratio could indicate high sales and profitable inventory, but could also be an indication of under-stocking. On the other hand, a firm must be aware of a low inventory turnover ratio because this may be an indication of obsolete, overstocked, or deficient inventory. The inventory turnover ratio is measured by cost of goods sold divided by inventory. The preceding information can be found in Appendix B of the firm’s financial statements. Tupperware Brands’ inventory turnover ratio for 2011, 2010, and 2009 are 2.8125, 2.7453, and 2.7062, respectively. These numbers indicate that the turnover of Tupperware Brands’ inventory has been quite consistent over the years but infrequent. Tupperware Brands’ main competition Newell Rubbermaid has had inventory turnover ratios for 2011, 2010, and 2009 of 5.2285, 5.1146, and 5.1266, respectively (Appendix D). In comparison of each other, Newell Rubbermaid has a much better, higher inventory turnover ratio which could be due to any of the reasons previously named that are associated with high numbers. It can be noted that Tupperware Brands turns their inventory over nearly twice as less as Newell Rubbermaid during the year which could indicate a major weakness at Tupperware Brands and a measure that should be evaluated.Days sales in inventory is an extension of the inventory turnover ratio, which divides 365 by the inventory turnover number to help viewers of financial statements better understand the turnover of tangible assets. Days sales in inventory converts the number calculated by the inventory turnover ratio into the number of actual days that inventory turns over. A low number, such as 20, indicates that every twenty days the inventory is sold and replaced. A higher number, such as 340, indicates that every three-hundred and forty days the inventory is sold and replaced. The goal of a firm is to have assets in inventory for a short amount of time to avoid obsolete assets; therefore a lower days sales in inventory ratio is crucial. Tupperware Brands’ days sales in inventory ratio for 2011, 2010, and 2009 are 128.0163, 132.9545, and 164.8757, respectively (Appendix B). Since the days sales in inventory ratios are so high this indicates that the inventory turnover ratios were low because the two equations are related inversely. Newell Rubbermaid’s days sales in inventory turnover ratio for 2011, 2010, and 2009 are 69.8097, 71.3643, and 71.1973, respectively (Appendix D).After comparing Tupperware Brands’ asset management ratios to Newell Rubbermaid’s, it is easy to see that it takes Tupperware Brands almost twice as long to turnover their inventory. As previously stated, this could indicate overstocking, deficient or obsolete products. The manager in charge of inventory should re-evaluate sales, demand, and also the quality of the products and supplier to help increase the amount of times inventory turns over. This should be an area where management at Tupperware Brands looks to improve to remain competitive in its industry and against its competitors. Profitability The capability of a firm to accomplish their objectives in the most effective and efficient manner determines profitability. Profitability is the amount of money the firm is able to keep after covering their expenses, costs, debt obligations. The three methods to measure profitability include profit margin, return on assets (ROA), and return on equity (ROE). Profit margin shows what percentage of sales makes it to the firm’s “bottom line” (net income line). It is calculated by taking net income and dividing it by total sales. In 2011, Tupperware Brands had an 8.44% profit margin, a decrease of 1.37% from the previous year of 2010 as shown in Appendix B. On the other hand, Tupperware Brands’ closest competitor, Newell Rubbermaid, had a dramatically lower profit margin rate of 2.13% in year 2011, as referenced in Appendix D. In fact, Newell Rubbermaid’s profitability has decreased consistently since 2009 when it had a higher margin of 5.12% (Appendix D). These outcomes conclude that Tupperware Brands is more effective at capturing a higher percentage of profit from total sales, providing them a competitive advantage over Newell Rubbermaid.The second measurement of profitability is return on assets (ROA). ROA measures how effective the firm is in generating income from their productive assets. It is calculated by dividing net income by total assets. Since 2009, Tupperware Brands’ ROA has gradually increased. ROA for Tupperware Brands was 11.84% in 2011, 11.19% in 2010, and the ROA in 2009 was at 9.75% (Appendix B). This demonstrates Tupperware Brands’ ability to utilize their assets in making the most profit. Tupperware Brands’ strongest competitor, Newell Rubbermaid, has had a fluctuating ROA since 2009. After a slight increase in 2010 from 2009 (.4.44% to 4.57%), Newell Rubbermaid’s ROA dropped significantly to 2.03% in 2011. Based on these figures, Tupperware Brands had a better return on assets amongst its closest competitor and is able to generate more profit off their investments in assets. This is both an operating and financial strength for Tupperware Brands, as it indicates their assets in operations are being used efficiently and effectively, and as a result, they are able to achieve a better financial return on those assets. The third method to measure profitability is return on equity (ROE). ROE is calculated by dividing the net income of a firm by total shareholder’s equity. This, specifically, measures the organization’s profit achieved from investments made by the firm’s stockholders. In 2009, Tupperware Brands’ return on equity was 0.2746 and has increased each year since (Appendix B). As of 2011, the ROE for Tupperware Brands was 0.4359, which is close to double from 2009 (Appendix B). In contrast, Newell Rubbermaid has had the opposite correlation of ROE as the years increase. In 2009, its ROE was 0.1602 and lowered to 0.0676 in 2011, as shown in Appendix D. This concludes that Tupperware Brands is consistent with their ROE, and Newell Rubbermaid is struggling to provide shareholders with consistent returns on their investments. It appears Tupperware Brands is a leader in this category and the company is effectively managing their investments and making wise decisions that produce solid returns for their shareholders. In each of the profitability measurement categories, Tupperware Brands has had a higher measure than Newell Rubbermaid. It can be concluded then that Tupperware Brands is superior at controlling costs that allow them to keep more profits from their operations, and they are excelling at setting up efficient and effective operations that provide greater returns on their assets and investments over their competitors. Tupperware Brands should uphold this financial strength over its competitors by continuing to make investment and operational decisions that will produce the strong returns they have seen in the past few years. This also could be evidence that Tupperware Brands is effective at managing new growth strategy investments, which could have an effect on the overall decision of whether to go ahead with our proposed project introduced later.Market Value Market value of a firm is the highest estimated price that a buyer or consumer is willing to pay based on the firm’s current standing in the market. Two different ratios are calculated to determine the firm’s market value—the first being the price to earnings ratio (P/E). This is calculated by dividing the price per share by earnings per share. Although the P/E ratio varies from industry to industry, a firm with a relatively high P/E ratio is generally expected to have a higher earnings potential in the future. The P/E ratio is especially useful when it is used to compare against other firms in an industry. As Appendix B states, Tupperware Brands’ price to earnings ratios has varied over the past three years. In 2009, the ratio was at 16.8357, and then declined in 2010 to 13.3917. In 2011, the last year in its most recent financial statements, their P/E ratio was slightly higher at 15.4187. Tupperware Brands’ top competitor, Newell Rubbermaid, had a P/E ratio of 14.7157 in 2009. In following years it rose to 17.4808 in 2010, and then rose steeply to 37.5581 in 2011 (Appendix D). Tupperware Brands sustained a similar P/E ratio to Newell Rubbermaid’s throughout years 2009 and 2010, but has lagged behind in 2011. This means investors in that particular industry are seeing Newell Rubbermaid as a more desirable company to invest in, and consider them more valuable. If they are going to remain competitive with Newell Rubbermaid, changes should be made that would raise their P/E ratio much closer to their competitor(s). The second part of a firm’s market value is calculating the market to book ratio (M/B), which is done by dividing market value per share by book value per share. Additionally, the denominator of the ratio, or the book value per share, is calculated by diving the firm’s total equity by the number of shares issued. According to QFINANCE, it explains that a “low market/book ratio could suggest a company’s assets are undervalued.” (2012). With that being said, the opposite could also be true; a high market/book ratio could suggest a company’s assets are overvalued. According to Appendix B, the M/B ratio for Tupperware Brands in 2009 was 4.7020, decreased to 3.8826 for year 2010, then climbed to 7.1088 in 2011. When comparing them to their closest competitor Newell Rubbermaid, their M/B ratio in 2009 was at a lower 2.4761, with a slight increase in 2010 at 2.9309, then decreasing again for the year 2011 at 2.6614. Tupperware Brands overall had higher M/B ratios for three consecutive years over their competitor Newell Rubbermaid. This is a disadvantage for Tupperware Brands because as their M/B ratio climbs their firm becomes more overvalued, and investors could see its competitors like Newell Rubbermaid as better investments. This could limit their growth in the future if investors are not willing to provide capital to the firm. CollaboratorsKey collaborators of Tupperware Brands include suppliers of their raw materials, the various depository and financial institutions that house their cash and cash equivalents and execute financial transactions, and their extensive network of independent sales people. These relationships benefit Tupperware Brands and allow them to secure favorable raw material prices, hedge against the financial risks of exchange rates, and execute their business strategy of direct selling. All these relationships offer an advantage to Tupperware Brands and they seek to maintain these relationships to remain competitive.In Tupperware Brands most recent 10-K (2013) statement, the firm mentions its relationship with its suppliers, and offers the benefits it derives from the relationships. The firm says, “Resins [raw materials] are purchased through various arrangements with a number of large chemical companies located throughout the Company's markets”. They discuss the benefit of these relationships by saying, “…as a result, the Company has not experienced difficulties in obtaining adequate supplies and generally has been successful in obtaining favorable resin prices on a relative basis” (Tupperware Brands 10-K, 2013). Although Tupperware Brands does not explicitly name these chemical companies, it is evident that strong relationships with their supplier of raw materials has been imperative in securing favorable prices which allow them to reduce their costs.It was noted in the economic analysis section that Tupperware Brands is exposed to the risks of changing exchange rates. In order to hedge this risk, “The Company uses derivative financial instruments… with major international financial institutions, to offset the effects of exchange rate changes on net investments in certain foreign subsidiaries, certain forecasted purchases, certain intercompany loan transactions, and certain accounts payable” (Tupperware Brands10-K, 2013). These financial institutions, again not named explicitly in the 10-K document, play an important role in Tupperware Brands global market presence. These institutions help mitigate the losses Tupperware Brands experiences when doing business in nearly 100 countries around the world. The final key collaboration for Tupperware Brands is their relationship with their extensive independent sales force. Because the vast majority of the sales force are not actual employees of Tupperware Brands and they can easily quit selling for them, motivating and retaining the sales force is vitally important to Tupperware Brands’ survival. Tupperware Brands is dependent on the sales force to distribute their products in the direct selling method, so the relationship with this group of independent workers must be constantly maintained by offering the group compelling learning and earning opportunities. Without this vast network of the independent sales force Tupperware Brands could not exercise their distinctive competitive advantage of direct selling.Growth StrategyDescription of Growth StrategyOur growth strategy takes a product development approach because we are creating a new product in an existing market. We plan to introduce a new children’s lunch box called TupperBox that will enhance children's awareness of healthy eating practices in order to achieve a healthier lifestyle. The product will be introduced in the existing market of the United States where the tween cohort and women of those tweens will be our primary targeted focus. We plan on integrating current healthy eating standards into the lunchbox by leveraging our firm’s ability to create innovative product designs that will influence our customer base to buy. We will take advantage of the current health trends in the U.S. society discovered in the situational analysis of this report and offer a product that will satisfy these new wants while staying consistent with Tupperware Brands strategy to offer products which are lifestyle oriented. Individuals in the U.S. are searching for products that will supplement their new healthy lifestyles, and our team plans on pursuing that opportunity with our unique product design. Additionally, our team will formulate our growth strategy by using methods that are consistent with Tupperware Brands’ current internal strengths (i.e., distribution method & independent sales force)Goals and ObjectivesOur primary goal with this new lunch box is to raise awareness of healthy eating for kids, ages 6 – 11, which bring a lunch to school. This new product offers food drawers that are intended to ensure all food groups are incorporated into the child’s lunch. The drawers are designed to approximately reflect the proper portion of each food group. The new product offers an easy way for parents to pack a healthy lunch for their children and is also a learning opportunity for children to be introduced how to prepare a proper meal. Another goal is to distribute this product to consumers that are familiar with Tupperware Brands unique selling method. Because mothers typically prepare children’s school meals, these same women will be likely to attend a Tupperware party. Our distribution method goals will therefore ensure the correct audience is being reached. The final goals will be promoting the product customers of Tupperware Brands are accustomed to, and offering the product at a comparable price to existing Tupperware products. This mix of objectives will influence whether the ultimate goal of the firm, increasing shareholder wealth, will be achieved through financial success.SegmentationVariablesIndividuals in the market of food storage containers value products that meet their special needs, wants, and expectations. Tupperware Brands has the potential to serve the entire market with our new product, but to better reach the consumers who will desire our new product’s unique characteristics, the market must be divided into segments using segmentation bases, or variables. Our segmentation strategy will take a multiple-variable approach in order to define a more precise market base. The first characteristic that will be used as a basis to segment the market is demographic segmentation. The specific descriptors that will be used within these broad bases include age, gender, and family life cycle. The second broad category that will be used in our segmentation strategy is psychographic segmentation. The specific variables used within this category are motives and lifestyles.Customer SegmentsDemographicsAge: Young and middle aged parents (ages 25-55) are one of the main segments Tupperware Brands new lunch box will be targeting. The parents of the children will be the purchasers of the product and therefore will be a main segment for Tupperware Brands to target. Our product will be designed for parents, specifically mothers, who will be searching for a product that is made to promote a healthy lifestyle and will be a learning experience for their children. We predict these mothers will fall within the age range stated above.The other segment that this product will be targeting is the young children themselves, tweens, ages 6-11. Since children are still included in the consumption of the lunch box, but will not be the ultimate purchasers of it, so the marketing approach will be modified for to attract this group to our product. Our team will mostly use the design of the product to attract their interest. Our team will seek to create the next new “cool”, creative lunch box children will want to own.Gender: Women, particularly mothers, are the main target market for this particular product. This product provides health conscious mothers the opportunity to not only pack healthy lunches for their children but also to teach their children the basics of a healthy diet. Additionally, our distribution method of direct selling typically attracts mostly women participants to the party demonstrations, so we believe they are our main audience as well. Both genders of the tweens group will be targeted for this lunch box. The designs for the product can be modified to be both gender neutral and gender specific, therefore both genders will be targeted for children.Family Life Cycle: Young and married with children and middle-aged married with children are both segments of the market that we believe will provide a demand for the product. Both of these life cycles are families that most likely will have children in the tween category and are parents looking to provide the most opportunities to care for their children when it comes to life choices, such as the foods they choose to eat. This new product will provide that opportunity for these parents in these particular family life cycles.PsychographicMotives: The motives of Tupperware Brands’ consumers for this particular product are those who want to provide or start a healthier lifestyle for their children. They are the types of people that are looking to establish healthy eating habits in their children at a young age so they can continue to grow and learn about nutrition their entire lives. These people are motivated at starting children at a young age with healthy eating habits and find lunch meals a great learning opportunity. In addition to targeting individuals that value health, we intend on targeting to young children who are motivated by the thought on owning the most creative lunchbox in school. Children ages 6-11 are beginning to value their peers’ opinions, so designing our product to not only serve as a health tool, but also serve as a creative expression and interest children who value becoming opinion leaders of their peers.Lifestyles: Tupperware Brands’ products are originally designed to be lifestyle-oriented products, so designing one to fit the increasing health needs of families is consistent with Tupperware Brands current business. The markets of people who are health conscious or adopting a healthier lifestyle are individuals most apt to find interest in our new product. Parents who practice healthy eating habits will most likely want their children to also do so. This product will provide these parents with the right tools to teach their children what the main food groups are and how much of each food group they should be eating. Children attend school five days out of the week, so our product needs to serve their needs at lunch time. Children who are looking for a creative lunch box to meet their busy lifestyles at school lunch time will find interest in our product and we seek to target those individuals.TargetingA particular target markets is needed to be selected in order meet the needs of certain specific segments. Because our new product will appeal to serve two or more well-defined market segments Tupperware Brands will use a multi-segment targeting strategy. The first target market will consist of young and middle-aged women with children, using the division of demographic segmentation. Age, gender, and family life cycle segmentations are all essential factors to our target marketing. These women are most likely upper to middle class. In addition to the demographic segmentation, we developed a strategy to the psychographic segmentations for our new product idea. Aside from our target market being women with children, they obtain motives to become more health conscious and to spread the awareness amongst the rest of her family, as well. As a result of such high rates of obesity in the U.S., we respectively narrowed our focal point to women in the United States that are concerned with these issues.The second target market will be male and female tweens (ages 6 to 11) that live in the United States. The mothers will ultimately be the purchaser of our new product, so the product’s message and positioning will be focused on influencing their perceptions, but the children will be our primary consumers and actually use the product on a daily basis. The psychographic segmentation involved tweens who are fashion forward and trendy. These trend setters embrace their unique sense of style and incorporate it in our product. They are the elementary and middle school students who wish to be in style and associated with the “in-crowd.”PositioningIn developing a marketing mix, the process of positioning will intensify the potential customers’ overall perception of our new product line. Currently, Tupperware Brands positions its products as high quality, durable goods that simplify the consumers’ life. The containers are priced at a premium to symbolize their prestigious quality and are for women who are willing to pay the extra dollar for a smart, long-lasting solution to their kitchen problems. We used price and quality, product user, and attributes as positioning bases. Following with Tupperware Brands’ current positioning strategy for existing products, we plan on offering this product at a premium price to uphold its high quality image. The product itself will be manufactured to match the durability and long-lasting nature of Tupperware products. Furthermore, our positioning will be structured to appeal to the product user of our product—the children consumers. We intend on offering a new design of lunchbox with distinctive patterns to attract children who value being noticed at school for having the latest and most creative accessories. With our new product, we want the target market to perceive this product as more than just a durable and high quality container amongst the other competitors. We want our audience to recognize the beneficial attributes of delivers. Our product will demonstrate Tupperware’s effort to raise awareness in making more health conscious decisions when packing lunches for children. Child obesity is a major issue, especially in the U.S., and we wish to take this opportunity to position our product to provide a smart, simple solution that will educate the consumer in order to lead a healthier life for themselves and their families. Although there are thousands of different lunchboxes sold in the United States market, our product does simply more than just offer a medium to carry a children’s food at lunchtime, our lunchbox’s function and ‘never-before-seen’ design are made specifically to give mothers the tools to execute healthier practices for their children. Moreover, the children will have the opportunity to learn about health through this creative tool, many of which will use it nearly every day at school. Strategy ExecutionProductGoals Our primary goal is to sell a product to our target market that will exceed their expectations and enhance their satisfaction with Tupperware products. With our innovative strategy, we plan to create a product that is durable and long lasting for kids ages 6-11. Tupperware Brands takes pride in offering high-end quality and non-breakable products, and we wish to continue this tradition. In addition to upholding the quality status, we expect to sell 75,375 units for the first year of production. Based on the percentage of Tupperware Brands’ share of market in the packaging and containers industry and applying it to the number of children who prefer using a cloth lunch box (which is a percentage taken from all students who bring a packed lunch to school), we computed a number to represent our potential customers for our new product. A more detailed discussion of this is present in the base case of our capital budget. Lastly, we want our product to raise awareness about the issue of child obesity and encourage healthy food options with our product. Although it is unrealistic to expect our product to make a dent in the high ratings of obesity in the United States, we want mothers to take initiative in providing healthy lunch proportions for their children to encourage these healthy habits early on in life. With our new stylish product, the tweens of our market will learn that the “healthy way” is the “cool” thing to do. In order to determine if we met our objectives, we must measure the product’s performance. To do so, we keep track of units sold and compare it to the number we predicted. Also, we can compare the units of our product sold to the already existing Tupperware lunch pails and observe any product cannibalization. This will allow us to determine the demand for our healthy product amongst the other Tupperware options.Description of the Product Our new consumer product is expected to gradually become an asset to the existing Tupperware Brands merchandise. Due to Tupperware Brands personal selling strategy, our new creation will hold a shopping product status. Our product requires more extensive decision making than a convenience product, therefore, it is a product that requires comparison shopping because it is usually more expensive and found in fewer stores (in our case, most of which is sold in homes). The product description in its most simple form is a lunch box for children to take to school on an everyday basis. Tupperware Brands already has a lunch solutions line of products, so the introduction of our new product will result in the extension of this line and add more depth to the line.The lunch box materials will include a plastic shell which will house plastic trays and a cloth-like bag. The main plastic shell will act as a place to hold the specific plastic trays. The five other plastic pieces are trays that fit into the larger mold like drawers. Each of the drawers will have a handle for easy access to the food being used in the lunch box. The measurements and weight of each plastic container is calculated and displayed in Appendix B. The entire Tupperware container will then fit flawlessly into the customized cloth lunch box. The sizes of each tray play an important role with our product’s overall value, and will help set our product apart from other lunch solution items sold by competitors. An illustration of our lunch box is displayed in Appendix V.Plastic Containers: Each tray in our lunch box roughly represents the different portions individuals need from the various food groups. On the front of each tray is a small handle, so they can easily slide out like a drawer. Every plastic tray, including the outer shell container, is microwaveable and dishwasher safe. The size of the containers will account for the grains, protein, vegetables, fruits, and dairy proportions. The different food groups require different nutritional needs. If one of the groups is regularly skipped, it will affect the amount of nutrients that must be met for the best health. Our product is to be used as tool for healthy eating and is designed to be meet nutritional standards, but it is designed to be versatile enough if children and parents do not want to always follow the product’s suggested healthy guidelines. We plan on integrating healthy eating by assigning a color to each tray that will represent a particular food group. The colors displayed in Appendix V are not necessarily the colors we will use for production; however these colors will be referenced for the sake of discussion. The bottom drawer, which is a light blue, will be for grains. Whole grains are a nutritious and important part of a child’s diet and have lots of dietary fiber that enhances the feeling of ‘fullness.’ Next, the drawer directly above grains is for protein. The protein tray will be the orange color on the model in Appendix V, and is essentially used to help body build, maintain, and repair tissue. The taller red tray can be used to alternate between fruits and vegetables, although it will be suggested vegetables occupy this tray. The alternative option for the smaller serving (either fruit or vegetable) can be put into one of the green trays. Vegetables provide many vitamins and minerals needed for good health. And fruits, like veggies, contain vitamins, minerals, and fiber. Lastly, the second green drawer is used to primarily for dairy. Dairy products are rich in calcium, such as milk, cheese, and yogurt. This is essential for growth and strength of a human’s teeth and bones (Teens Health, 2013). Each tray will have measurement ‘ticks’ on the side of it to give individuals an idea of the volume capacity of each tray. This can be used to better judge the proportion sizes needed for each food group.Cloth Bag: The cloth bag will keep the outer shell and trays together for transporting to and from the cafeteria. When the bag sits right side up, it is shaped like a vertical rectangular cube. The bag will possess a handle at the top, a side pouch for a drink and utensils, and a zipper that flows around the entire front side to access the plastic drawers. The zipper will start at the bottom left corner and continue up the edge of the bag towards the top. Once it reaches the top left corner, the zipper will proceed to move along the edge, changing its direction, and moving along the top of the bag towards the far right side. Lastly, the zipper will run down the right side of the bag until it reaches the bottom right corner. After being completely unzipped, the whole front side of the bag can be put down to conveniently access the inside. Outside of the bag, on the right side, is a mesh pouch for a water bottle or other preferred drink and any needed eating utensils. To craft our product to be engaging to the tweens market, we are offering customized designs and colors for them to choose from. The range of creative and attractive options will appeal to both male and female tweens. Our options include pink, orange, blue, green, black, floral print, and sport themed print. After a couple years of production, we may wish to expand the options of designs. We want our customers to be excited and proud to consume our product, and offering them a chance to choose a look that fits their style will allow them to do so.Pamphlet: Every customer who purchases our product will be granted an informative pamphlet guide. The pamphlet will help mothers become more educated on the idea of using portion control. The colors used on the plastic drawers will match up to a food group description provided in the guide. This will make it easier for consumers to determine how much to pack of each food group to achieve a healthy and complete lunch. The pamphlet is an important factor to our product, and will appeal to both the parent and their children. In addition to the chart of the different food groups assigned to the different trays, there will be a brief description of each food group with suggested food items to put in the lunches. This will serve as an informative guide that will set it apart from other lunch boxes but also will be used as a sales promotion technique to induce more demand for our product. Description of Processes Used to Make ProductWhile developing a new product it is inevitable to encounter constraints that make the development process more difficult. The main constraint that we have encountered while developing our new lunch box is the need to use our current equipment not only for our other products, but for our new product as well. The reasoning for having to share the equipment among products is because the new products only require new injection molds to make them, so it would be cost inefficient to go purchase more machines. As a team, we had to consider how much machine time to devote to our new products and our older products. This decision of course leads to some cannibalization of revenues from our other products. In the end, we found a way to devote time between products that was beneficial to our revenues.Another constraint that we have encounter is how to market kids ages 6-11 to buy our products. The main problem with developing products for children is they are usually not the ones to pay for the item. Therefore, we have to market to not only the children but also the person who will likely by the item for them. We have come up with the solution to market to the kids through their mothers, making mothers one of the primary targets markets.When taking into consideration lean applications, Tupperware is producing to the point where there are low levels of waste. We are a company beginning to adopt sustainable practices so operating at where waste levels are low is consistent with our mission. Also, while producing this new product we will be producing at a minimum cost. Tupperware operates at a minimum cost by eliminating non-value-adding steps and creates value by focusing primarily on the process. Figure 3 shows a simplistic process map and the activities necessary for our product.Figure 3 - Process Map1589405-333375Start of Production –Make to Stock00Start of Production –Make to Stock349567543180001885950431800014598652924175Receive cloths00Receive cloths18859501885950003110230828675Produce plastic containers00Produce plastic containers1459865828675Order cloths for the exterior of the lunch box from distributor00Order cloths for the exterior of the lunch box from distributor35502851708150022174203111500309547633655Assemble Product00Assemble Product3608070202751003110230370337Distribute Product00Distribute ProductOutsourced ComponentsThe only outsourced component that will be used in our company’s product is the cloth lunch box that will hold the plastic outer shell and food trays. Our team has realized that outsourcing the cloth is more beneficial to our company than if we were to produce the cloth lunch component ourselves. We plan on outsourcing decorative cloths from distributors near our manufacturing companies.Life Cycle of ProductA newly introduced product passes through the four stages of the life cycle, where in the end, production of the product ceases or the product is modified, and possibly repositioned, thus beginning a new life cycle. Although there is no standard time any one product spends in its life cycle, it is being assumed that our product spends around 3-5 years in its whole cycle. Based on the prediction that our product will appeal to children in middle school, our team derived this range of time by relating it to how long children spend in middle school. Our team is deducing that those children first exposed to our product will use it throughout their middle school years, and then replace our product with another alternative or switch to buying lunch at school. At that time, our team assumes the product will need to be enhanced or modified to appeal to children of the future, who most certainly will follow new trends and have new attitudes. It is still necessary though to estimate the exact number of years our product will spend in its life cycle. To estimate the exact number of years, an article from the external environment about the most recent attitudes and trends in healthy eating will be used to justify why our team predicts our product will expend 5 years in the product life cycle—the maximum figure in our assumed product life cycle range.According to an article in the Scientific American, students are not responding well to the recent changes made by the U.S. Department of Agriculture (USDA) who are now offering healthier lunch options to students (Meal Thicket, 2012). Those students whose schools are participating in the federally supported National School Lunch Program (NSLP) are resisting the Institute of Medicine’s science-based nutritional standards by boycotting lunch provided by their school, and turning to social media sites such as Facebook to voice their displeasure. Some schools report the recent change in nutritional standards is the cause for a 70 percent drop-off in school lunch participation (Meal Thicket, 2012). However, the USDA and the federal government are sticking with the program is hopes of changing the norms of unhealthy eating practices in the public school system while also emulating the ongoing trend in the U.S. towards healthier eating (Meal Thicket, 2012).With the recent backlash the NSLP has received, and the drop-off of “hot” lunches being served at school, it is certain that the number of “cold” lunches brought from home will increase in the upcoming years until the program is accepted by students. Furthermore, this trend towards healthier eating will not only continue in the school systems, but also remain at the broad societal level for many years. Our product will serve as the perfect alternative for children who want to start bringing lunch from home and parents who still want to see their children eating healthy and portioned lunches. There will be an opportunity in the short-term to serve the needs of the parents of students who fit the situation described above. Based on this article, it is believed by our team that the growing awareness of healthier eating practices in schools and in society will see no significant slowdown in the near future, and consequently, our product should be able to reach the maximum life cycle of five years based on the reasoned higher demand for health products in the near term. Complementary Services and WarrantiesTupperware Brands values the customer satisfaction and is committed to producing superior quality goods and deliver outstanding customer service. Tupperware Brands wants their consumer to feel delighted and content with their decision in purchasing their merchandise. If for whatever reason the customer is not satisfied with the product, Tupperware currently offers a return policy of 30 days for full refund of the initial purchase price. In addition to the return policy, Tupperware Brands products are warranted by Tupperware against chipping, cracking, or peeling under normal non-commercial use for the lifetime of the product. Customers are encouraged to call the Customer Care line for a free replacement. If the product is unavailable, there will either be a comparable replacement or store credit towards a future purchase. Warranty replacement items will be issued to shipping and handling charges and applicable taxes (Warranty and Returns, 2012). With our new product, we will continue to use the same policies and warranties Tupperware Brands currently offers for its existing Tupperware branded products.PlaceGoalsThe primary goal for having an effective placing strategy for TupperBox is to stay consistent with the distribution strategies Tupperware Brands currently employs. Tupperware Brands’ “direct-to-customer” method plays a crucial role in the success of their operations and their marketing and selling strategies are created and implemented from this technique. By distributing our product in this style, it will meet the way our existing customers buy our products, the places and times they are familiar with when purchasing our products, and will support and enhance our promotional blend. Also, our goal is to distribute products in the most effective and efficient way for Tupperware Brands, and their current distribution systems in place are structured on the direct consumer method, so using this method will ensure an effective and efficient delivery to the end consumers.Level of Market ExposureThe exclusive distribution strategy will be employed for our new product, TupperBox. Because Tupperware Brands grants distributorship to only a few groups, (i.e., distributors, directors, managers, and the sales force) it limits the amount of market coverage of their products. Their products’ exposure to the market is dependent mainly on the effort and success of their independent sales force. This means that our new product will be exposed only to individuals who attend Tupperware parties or access their online Tupperware store, and only registered sales people are given the exclusive right to market their products. Individuals seeking our product will typically need to find a representative in their area if they are interested in the product. However, now that Tupperware products are offered online, the exclusivity of our distribution method is reduced since nearly anyone with access to the Internet can purchase the item.Channels UsedOur primary channel which will be used for distributing our product is the nontraditional “direct-to-consumer” channel where the merchandise will be sold through the independent sales force outside traditional retail store locations. Instead of retail locations, our product will be introduced and promoted at Tupperware parties. Representatives of Tupperware will display merchandise for participants to sample and perform demonstrations. At the conclusion of the party, participants are encouraged to place orders through Tupperware’s catalogs for the items they desire. Tupperware Brands employed this distribution method shortly after their onset of business in the 1940s, and have continued with this method since then. In order to expect adequate levels of sales for our product, our team will place our items where their existing customers are accustomed to. Additionally, because Tupperware Brands supply chain system is set up to function in conjunction with “direct-to-consumer” distribution goals, it would be ineffective and costly to distribute TupperBox in any other way, such as traditional retail locations.The second and last distribution channel being employed for the new TupperBox product is the Internet. Tupperware Brands currently maintains a website dedicated to strictly selling Tupperware products. The website address to its online store is . This distribution method will be used to expose our product to consumers who may not attend the traditional Tupperware party. By offering our product via the Internet, end consumers can expect an alternative place to find our product, at a time that is convenient and flexible for them. The Internet offers the flexibility for consumers to view and access our product in a setting that is more comfortable for them. Supply Chain SystemTupperware Brands supply chain system includes many elements to product their plastic line of products. Although not explicitly stated in their 10-K, the company mentions close relationships with large chemical companies as suppliers (Tupperware Brands 10-K, 2013). Tupperware Brands procures its main raw material for these large chemical companies. Tupperware Brands “owns and maintains significant manufacturing and distribution facilities in Brazil, France, Greece, Indonesia, Japan, Korea, Mexico, New Zealand, Portugal, South Africa and the United States…” (Tupperware Brands 10-K, 2013). Our new product’s manufacturing location will be within the United States because of its proximity to its market. Although not the exact location was not explicitly stated by Tupperware Brands, our product will be manufactured in their east coast location in the United States (see figure 4).158753679531Tupperware Worldwide Factory Locations (2012)00Tupperware Worldwide Factory Locations (2012)Figure 4Once the products are manufactured, the products are shipped to distribution locations which are owned by Tupperware Brands. These locations “stock inventory and fulfill orders of the sales force that are generally placed after orders have been received from end consumers” (Tupperware Brands 10-K, 2013). Once orders are fulfilled, the goods are transported using logistics companies and customer orders are received at their homes. PromotionGoalsThe ultimate goal of promotion includes communicating a good or service to individuals in hopes they will purchase the product. With our new product, our team will achieve that ultimate goal by informing the target market the benefits our product has to offer. Because our product will be a newly introduced product to the market, we seek to bring interest, awareness, and desire to the new product in the early stages of its life by promoting its use and demonstrating to the consumers the healthy benefits they can expect if they purchase our item. In the promotional mix of our new product, our strategy will parallel the goal of informing consumers, and personal selling, sales promotion, and advertising will be used to achieve that goal. We plan to use methods within each promotional mix element that are consistent with informing the consumers, such as informative brochures or informative selling demonstrations. These methods should not only inform our customers of the product, but also bring interest, awareness, and desire in order to establish value in the eyes of the customers.Promotional BlendAlthough the promotional mix is established by the firm as they see fit, certain factors unique to a firm or product serve as guidelines for the mix. For example, factors such as the nature of our products’ distribution method, its stage in the life cycle, and the characteristics of the target market will dictate the particular promotional mix that will be used by our team. We seek to stay consistent with Tupperware Brands current strategies and competitive advantages while working in the guidelines set by these factors. The primary strategies of our promotional blend will include personal selling, sales promotions, and advertising. Methods used within each element will take into account the factors stated above and the goals of our promotion strategy.Personal SellingThe nature of Tupperware Brands’ current distribution channel, the “party” method of sales, will largely dictate the specific personal selling method we will use for our product. Tupperware Brands does not sell its products in traditional retail locations as stated before in the report, so our new product will only be exposed to the sales force and consumers who attend or host their own Tupperware party. Tupperware parties generally bring awareness and desire to products through actual demonstrations during the party which highlight the features and benefits of products. It is essential that our new product, in its introductory phase, be visible during these parties and be included in the demonstrations put on by the host of the party. Attendees of the parties will be able to see firsthand how the product functions and be able to receive informative tips on the new product. This demonstration method of personal selling will bring new interest to our product, and will hopefully lead to the action of purchasing it at the conclusion of the party. In demonstrating the features and benefits of our new product in this personal selling fashion, we believe better relationships can be developed between consultants and consumers resulting in a more personalized service, which can foster a more educated and more satisfied consumer. By selling personally to consumers in this fashion, we are staying consistent with Tupperware Brands’ current strategies and still reaching our goals for promotion.Sales PromotionOur product is essentially a new product, so sales promotional methods for our product will focus less on persuading consumers with discounts and coupons, but rather use methods aimed at informing them. Since our product is centered on healthy eating, our team will use the premium method of sales promotion. Our team plans on including an extra item with the purchase of our lunch box to inform consumers the most up to date healthy eating standards they can follow to take full advantage of our product. A brochure will include information on portion sizes, food groups, and how to integrate this information with the lunch box itself. With our product’s message and function being about healthy eating, we believe this supplemental aid will help parents and children truly master healthy eating during lunch time and bring more value to the consumer. Our team believes this informative sale promotional method will result in added interest and desire for our product, making it more likely a sale will occur at the conclusion of a Tupperware party. AdvertisingTupperware Brands does not utilize the traditional nodes of advertising common to most firms. Tupperware Brands rarely uses advertising methods aimed at reaching a mass target market, such as television and radio. Instead, Tupperware Brands takes a more personal approach to advertising to its target market, and our team plans to stay consistent with their strategy. We plan on using the method within product advertising that pioneers, or stimulates, the demand for our product by informing and communicating its benefits to consumers in a personal manner.The first advertising method Tupperware Brands employs is the use of catalogs. Our team plans on allocating catalog space to our new product to bring awareness of its benefits. Catalog advertising will be important because a Tupperware party demonstration might not always include our new lunch solution item, so the audience will need a printed source to obtain the information about it. The item will be displayed in the catalogs in such a way to appeal to the health desires of the purchasers, highlighting the health benefits which will be received. Tupperware Brands releases seasonal catalogs throughout the year. One consideration for our new product will be the placement in the catalog during the different seasonal catalogs. We believe that during the summer catalog edition, our product should take a dominant position in the catalog as children will be returning to school during that time. This dominant position, such as near the front of the catalog or on the back cover, will draw the most attention to the item at the time it is most likely to be purchased.Our team will also advertise using the advertising channel of brochures. Tupperware Brands currently promotes its products through brochures mailed or given to people invited to attend a party (Tupperware Brands 10-K, 2013). Our team assumes Tupperware Brands promotes its most popular or newest products on these brochures from time to time. Our team will seek to contact consumers by mail that have purchased Tupperware branded products before, and use their contact information to send them a brochure displaying the new product. This method will bring interest and awareness to our new product, and the brochure will also contain the steps viewers can take to purchase the new product. By displaying the item and informing the viewers the steps on how to contact a local sales representative, our team hopes this method will lead consumers into attending a Tupperware party and ultimately purchasing the item. This method will be effective in reaching and motivating non regular customers who are not exposed to Tupperware Brands other promotional techniques.The final method of advertising we will employ in the advertising element is online advertisements for our new product on Tupperware’s online store. Tupperware Brands maintains a website where customers who do not want to attend a party can still purchase items and have those items sent to their home. Along with the direct sales distribution method, our product will also be distributed through this online store. Therefore, it will be appropriate to display our new product on the main page on the website from time to time. During the first few months of the product’s introduction, our team plans on featuring the item on the homepage of the online website to maximize its exposure to the online audience. The feature will be an embedded link where once clicked, the viewers’ browser will be redirected to the new product’s page where information about the product will be displayed. The same web page will also contain the functions necessary for viewers to buy the item. Additionally, during the summer months, particularly before children return to school, the product will be again featured on the main page to maximize exposure. During these times, the advertisements will be informative and appeal to viewers health concerns in order to induce viewers to purchase the product.Because of the new nature of our product, the target market, and our distribution methods, our team took an informative approach to promotion in order to educate consumers of the benefits the product has to offer, and sought to use methods that drew interest, awareness, and desire in order to induce an action from the customer. Our promotional blend of personal selling, sales promotion, and advertising are all consistent with Tupperware Brands current promotional strategies being used, and the methods within each promotional element were designed to meet our promotional goals.PriceGoalsThe price of our new product will be centered on the pricing objective of status quo pricing. Status quo pricing objectives seek to maintain existing prices or meet the competition’s price. In our case, status quo pricing will be used to maintain the existing price of our lunch solutions product line. We want to offer a price similar to existing products in the Tupperware’s lunch solution line as not to replace a large amount of demand. Furthermore, we seek to offer a premium priced item to maintain Tupperware’s high quality image. We believe Tupperware’s brand prestige substantiates their high prices for their lunch solution products and our team plans to stay consistent with Tupperware Brands’ pricing strategy.Value Proposition and Customer Price SensitivityTupperware Brands value proposition for this particular product is to provide a high quality, appealing, and innovative lunch box for mother’s seeking an opportunity to promote healthier eating practices to their children (ages 6-11). Our product’s starting price will be $35.00 per unit and will include all the features mentioned in the product description section of the report. The product is a guide to mothers and children alike on how to eat healthier and contribute to a healthier lifestyle for children in the United States. Each color coordinated drawer in the lunch box indicates a respective food group. The drawers, along with a health guide provided in the packaging, will provide the child with all of their nutrition standards and also a great learning opportunity by demonstrating to children, and their parents, healthy eating habits. For the children, specifically, this lunch box will offer an opportunity to express themselves with our appealing and creative product designs. Because our lunch box is priced relatively high compared to the competition, we believe the demand for our product is slightly elastic. This means that a substantial increase in the price of our lunch box would cause a loss in demand. However, we plan on maintaining the status quo price of the lunch solutions line so a slight increase would not result in a large demand drop—but a drop nonetheless.Pricing StrategyFor the first year of the new product’s life, our product will be using the status quo pricing strategy. Pricing this product similar to the ones it already has will portray the same type quality and value that the other products have. This simplistic method will provide the new product with the benefit of already having an image of good quality to customers and it will prevent the struggle and possible failure of the new product. Because Tupperware products are not sold in retail stores next to competitors’ products but rather sold in catalogs exclusively at Tupperware parties, Tupperware products are sometimes competing with products in their own products lines, so status quo pricing will maintain a level demand for products in the lunch solutions line.As the new product continues through its life cycle, Tupperware Brands will take into account the availability of substitutes, demand of the product and the current status of the economy in order to adjust the price accordingly. In most cases, Tupperware products are kept at the similar prices they were introduced at, and the company employs methods of discounts and rebates for its products. These are popular promotional strategies Tupperware Brands offers at the various Tupperware parties to induce buyers and hosts to purchase their product. As our product moves into the latter stages of its product life cycle, discounts such as a percentage off will be offered. These long-term details will be reevaluated and decided at a more appropriate time in the future.Breakeven AnalysisBreakeven is used to determine the amount of units a company must sell in order to reach a point of equality between total costs of producing the product and the total revenue that the product has acquired. An analysis was done for year one of our capital budget. Total fixed costs for the life of our project equal $750,000 (Appendix G). The revenue per unit of our product is $35 and the cost per unit is $9.13 (Appendix G). Our team calculated that a figure of 28,991 units serves as the point where total costs equal total revenues—the breakeven point. Our project’s first year of production has a predicted quantity of 75,378units, so the quick breakeven estimation highlights that our project is producing about 50,000 units more than the breakeven point and our project is returning adequate revenues to cover costs and contribute to profits.Capital Budgeting AnalysisProject LifeA prediction for the relevant life of a project can be achieved by closely following the life cycle of the new product being introduced. The life of our project is dependent on the predicted amount of time our product will spend in its life cycle, and therefore, our particular project life will be derived from our new product’s specific life cycle. Our team believes that because our product will expend five years in its life cycle, the life of the project will also be five years. The discussion of the product life cycle in the product section serves as the justification for the project life.Sales VolumeSales volume for the first year of our product will be determined by closely following our intended market, and predicting the amount of individuals in this market that are most likely and willing to buy the product. After the first year’s demand is estimated, a simple sales growth percent will be applied to depict the rise and eventual decline of our product’s sales as it travels through its corresponding stages of its life cycle. An analysis of our consumer market will be used as a base for predicting the expected sales volume for the first year. Currently in the United States, there are nearly 22 million children that are considered to occupy the Tween cohort, which is defined as children aged 6-11 (Marketing Environment, 2012, p. 49). Based on the design and purpose of our product, this group would most likely be the consumers of our product, as they are the group considered to most likely take a lunch box from home. Although the mothers of these children are the ultimate decision makers and purchasers of our product and our marketing efforts will be aimed at influencing their decision to buy, the end consumers of our lunchbox is the only data necessary to predict the amount of sales for the first year.It can be reasoned, after establishing the number of tweens in the U.S., that not all of those children bring a lunch from home, and that a percent of those buy their lunch from their school’s lunch program. Based on data collected from an internet source, it was stated, “…an average of 53 percent of students bought a lunch on a typical day. (The State of Nutrition and Physical Activity in Our Schools). Based on that data, it can be reasoned that around 47 percent of children do not buy a lunch from school and choose to alternatively bring their lunch from home. Given the 22 million tweens in the U.S., and the 47 percent of children that bring a lunch from home, it can be concluded that nearly 10,340,000 children ages 6-11 use some form of method to bring their lunch from home. Children have a variety of options when bringing lunch from home. The various options include a cloth lunch box, a plastic or tin lunch pail, or the generic brown paper bag. These are the most common options children have when choosing to bring lunch from home, so it is reasonable to think our cloth lunch box will be competing with these alternatives. Data about the proportion of children that choose to take a cloth lunch box was not readily available, so a general assumption will be made to gauge how many of the 10,340,000 children take a cloth lunch box to school. Because there are three common lunch carrying options to choose from, our team determined that the cloth product would be chosen around 33.33 percent of the time based on its probability of its selection. However, our own experiences with children these ages led us to adjust the selection proportion to 40 percent cloth lunch box, 40 percent lunch pail, and 20 percent generic brown paper bag. We have observed that children these ages are slightly more likely to bring a purchased lunch box to school rather than the brown paper bag, warranting a rearrangement of the proportions. With this information, our team inferred that of the 10,340,000 children who bring a lunch to school, around 4,136,000 of them choose to use the cloth style lunch box; the same style of our new product.It is necessary to determine the appropriate market share of Tupperware Brands relative to its competitors to estimate how much share of the market they can expect to capture from the 4,136,000 children in the U.S. most likely to purchase our new product. According to Yahoo! Finance, Tupperware Brands is listed under the packaging and containers industry, which had a total composite value of $1,499.8 as of March 15, 2013 (Industry, 2013). This value is subject to change based on overall market conditions, but our team suspects this figure will remain consistent enough in the short-term for it to be used as a reliable base. Tupperware Brands had a share price of $78.56 at the same time the composite value of its industry was determined (Industry, 2013). Tupperware Brands’ share price indicates the value of the firm per outstanding share, and will be used by our team to generalize our estimate of their share of market. We are assuming that the ratio of share price value to the total composite value of its market can give us Tupperware Brands’ estimated market share, that is, how valuable they are compared to their competitors in their industry For example, if Tupperware Brands’ value is a relatively large portion of the overall industry value, it can be assumed then that it has a dominate position in the market and can capture sales better than its competitors. Performing the ratio of share price value to composite value yields a figure of 5.24 percent (rounded). We conclude that Tupperware Brands has roughly 5.24 percent of the market share compared to its competitors in the plastics and containers industry. Since Tupperware Brands has an estimated 5.24 percent market share, this figure can be used to find the amount of the 4,136,000 children in the market Tupperware Brands can expect to sell to. We believe it is appropriate to use the entire 5.24 percent of market share in our estimation. Because we previously segmented the market to only children aged 6-11 who bring a cloth lunch to school, applying the 5.24 percent market share rate will result in a figure that only represents a share of that small, defined market, not Tupperware Brands’ entire market itself. If Tupperware Brands captures 5.24 percent of the market, we can then expect to have 216,727 children as potential customers for our new product. However, we expect because of the higher relative price of our product and our firm’s unique distribution method of direct selling, that selling to the full 216,727 children in the first year will be unachievable. We presume our product will appeal to only those families in the social classes that earn a higher income, that is, near or above the national average. Those families in the upper middle class and middle class, which constitute 47 percent of America, are two social classes with enough discretionary income to purchase our product while also still identifying with our product (Consumer Decision Making, 2012, p. 97). Additionally, because our product is distributed and sold mostly through direct private parties, only a percentage of our market will be exposed to the product. Based on research by the Direct Selling Association, more than 74 percent of the American public in 2011 has purchased goods or services through direct selling (DSA FAQs, 2013). Applying these two percentages to our base market of 216,727 kids, we arrive at a figure of 75,378. After considering the overall market conditions, price sensitivity of our market, and the distribution method, our team concludes that our new product can expect to sell 75,378 units for the first year of production.During the first year of production, we can expect our product to occupy the introduction stage of its product life cycle. The graphic representation (see Figure 5) of the product life cycle shows revenues tend to rise until it reaches maturity, and decrease thereafter during the decline stage. Figure (2010) (2010)These assumptions will be used to apply an expected annual growth rate to our sales volume for years two and three, and a similar rate will be used to represent the decay of sales in the decline stage of years four and five. Tupperware Brands’ 10-K (2013) states, “the significant assumptions for these forecasts in 2012 included annual revenue growth rates ranging from negative 7 percent to positive 10.0 percent with an average growth rate of positive 3 percent.” Our team has selected to use a growth rate of 5 percent in years two and three because we believe the current trend toward healthy eating warrants a slight increase in the average growth rate indicated by Tupperware Brands; however, the indicated 3 percent growth rate practiced by the firm will be used as a decay rate in years four and five to depict the decrease in sales at a decreasing rate typical of the decline stage. Given these assumptions, we can expect sales volume to be 79,147 units in year two, 83,105 units in year three, 80,612 units in year four, and 78,194 units in year five.Discount RateAnother important decision in capital budgeting involves determining a discount rate. A discount rate is the percentage that a firm uses as a required rate of return on the investment. The discount rate that we have chosen to use is 8.08 percent, based on a calculation provided by (Appendix E). This percent will be used to appropriately discount the future cash flows of our investment to determine the net present value (NPV) of our project. Whether the NPV is positive or negative will determine if the project is accepted or rejected, or if indifference occurs. Marginal Tax RateBased on the U.S. Federal Government’s table (Figure 6) for filing a U.S. Corporation Income Tax Return, we predict Tupperware Brands’ marginal tax rate for this project to be 35 percent. Tupperware Brands reported an ‘income before income taxes’ amount of 272.8 million on their most recent 10-K (Tupperware Brands 10-K, 2013). From the table, our team used this amount to arrive at the marginal tax rate stated above.Figure 6Tax Rate Schedule If taxable income (line 30, Form 1120) on page 1 is:Over—But not over—Tax is:Of the amount over—$0$50,00015%$050,00075,000$ 7,500 + 25%50,00075,000100,00013,750 + 34%75,000100,000335,00022,250 + 39%100,000335,00010,000,000113,900 + 34%335,00010,000,00015,000,0003,400,000 + 35%10,000,00015,000,00018,333,3335,150,000 + 38%15,000,00018,333,333- - - - -35%01333503864611Department of Treasury Internal Revenue Service (2012)00Department of Treasury Internal Revenue Service (2012)Change in Working CapitalBased on a valuation from , located in Appendix E, our team will use a change in working capital figure of 11.95 percent. It can be assumed our project will resemble Tupperware Brands’ current working capital structure, and the stated percentage will be used to appropriately illustrate the change in working capital over the life of our proposed project.Initial InvestmentThe manufacturing of Tupperware plastic products is accomplished through the injection molding process. In simple terms, machines are used to melt and process plastic pellets called resin, where the heated plastic is injected into a molded machine part. The necessary investments for new plastic Tupperware products commonly warrant an outflow of cash for either a new machine and new molds, or just new molds. Our team has decided to invest only in new molds, and we will use existing machines for which the molds will be installed on and used by. Because these molds are interchangeable, and can be installed and removed as needed, existing output of another product will be sacrificed from time to time, and this will be accounted for in the cannibalization of revenue section.Based on knowledge provided to our team from an industry expert, it can be assumed a typical investment for one injection mold requires an average $500,000 cash outflow (Appendix F). Furthermore, it was also determined by the industry expert that our new product would require an investment of five new molds—(see Appendix F). With this information available, our team suspects that an initial investment of $2,500,000 will be necessary to put our project into operation.DepreciationA straight-line depreciation approach will be used throughout the life of the project. Based on the initial investment of $2,500,000 and a project life of five years, $500,000 will be used as the yearly depreciable bases for our capital budgeting model.Salvage ValueAfter the end of a project’s life, assets can be either sold or scrapped for a gain. Our injection molds will not be sold at the end of their useful lives because they are proprietary in nature, and Tupperware Brands would not want to give the competition an opportunity to purchase these assets. Additionally, the integrity of the parts would be diminished after years of use, so they may be close to inoperable. However, Tupperware Brands can scrap these parts and receive a gain on the assets. Based on information from our industry expert, it can be assumed the typical weight of a single injection mold is near 1,000 pounds (Appendix F). Therefore, we can assume our five molds will equal a weight of nearly 5,000 pounds. Injection molds have various types of metals incorporated into each one, but the bulk of metal is aluminum alloy according to the industry expert. For the sake of simplicity, our team is assuming that we have 5,000 pounds of aluminum alloy to scrap at the end of our project. After visiting , our team learned that aluminum alloy currently has a cash value of $0.8482 per pound (LME Aluminum Alloy Daily Summary, 2013). It has been recognized that the value of metal prices fluctuate over time, but our team has determined that five years is a short enough time period to safely use the current value of scrap metal per pound. Based on these numbers, our team expects to receive a pretax gain of $4,241 from the scrapping of our injection molds. After paying taxes on this gain, our project can expect a recovery of $2,757 at the end of the project.Variable CostThe major task of estimating the various costs involved in making our new product will be accomplished by focusing on the main categories where our team expects large increases in incremental costs. This includes an analysis of the direct materials needed to produce our product, the costs of direct labor and overheard, extra direct labor time needed to assemble the product after the production process, and distribution costs. These costs will account for the variable portions of costs and will be discussed in the sections below. A major cost involved in the introduction of our new product includes the direct materials needed for production. A discussion on the cost of plastic resin, the main raw material input for our product, and the insulated lunch box included, will be used to predict the direct materials portion of our cost. Our main source of information for this section was provided to our team after consulting with an industry expert who had the resources to accurately estimate the cubic dimensions of our design. This information was then used to predict the gram weight of the product’s individual components, thus leading us to the appropriate cost per unit based on the market price for polypropylene (PP) resin. As shown in Appendix F, the total gram weight for our product design totaled to be 203.6 grams. The current market price for PP resin was also given to us by the industry expert, which is $0.95 per pound in today’s commodity resin market. Based on these two figures, our team was able to calculate our product’s weight in pounds per unit using the ratio of 1 pound to 453.592 grams, and then using this number to accurately compute the cost based on the market price of resin. After converting grams to pounds, and applying the appropriate price per pound of resin, it was determined that the cost of the raw materials portion would be around $0.43 per unit.To estimate the direct labor and overheard portions of the cost of producing one unit of our product, a general rule of thumb in the industry was supplied to us by the industry expert. He noted that the total cost of a unit is generally two times the cost of materials (Appendix F). He suggested that once the cost of plastic materials was found, multiplying this figure by two would serve as a way to derive the additional costs of standard direct labor and overhead for one unit. Following his advice, our team estimates that the standard direct cost of manufacturing the plastic components of our product will be $0.86 per unit. Another direct material required for the production of our product is a soft, cloth lunch box designed to house the unique characteristics of our removable trays. Scanning the competition, we discovered Newell Rubbermaid, one of our competitors, offers a lunch box similar to the design our team has in mind. We believe our firm can locate a supplier that can match the design of Newell Rubbermaid, and we predict we can secure a price similar to the cost Newell Rubbermaid incurs. Referring to Newell Rubbermaid’s financial statements located in their most recent 10-K, we concluded their cost of products sold is 62.24 percent of their net sales (Newell Rubbermaid 10-K, 2013). And based on the retail price of $10.99 Newell Rubbermaid offers their trademarked LunchBlox product for, our team estimates the cost of obtaining a similar lunch box for our new product will be around $6.84 per unit (62.24 percent of $10.99).Beyond the obvious direct materials and labor needed for production, our product will also require extra assembly that most of our existing products do not require. Because of the nature of our product, individual pieces are needed to be assembled by trained workers. Based on our own simple mock simulation of the assembly process, we expect a trained worker to assemble our product around 30 seconds or less. Hourly wage rates for a factory worker were taken from a Kelly Services CareerBuilder site that offered a job description for a plastic manufacturing firm in Northlake, Illinois. The position was for a standard factory job, and used as a benchmark to gauge the wages we believe are paid in Tupperware Brands own factories. The site offered a daily wage rate of $15.90 (Job Description, 2013). In addition to the normal wage rate, a factor of 1.5 will be added to the base wage rate to account for the normal fringe benefits received by the typical worker. Therefore, it can be assumed a typical factory worker in the plastics industry receives a wage rate of $23.85 per hour. Based on this information, we believe our own factory workers are paid rates similar to this example, and thus the added assembly will warrant a $0.20 increase per unit for our new product. This was calculated by multiplying the wage rate per second of a factory worker by the additional time required for assembly.The final component to the unit cost of our proposed project is the associated distribution costs. According to Tupperware Brands’ 10-K (2013):The warehousing and distribution costs of finished goods are included in DS&A expense. Distribution costs are comprised of outbound freight and associated labor costs. Fees billed to customers associated with the distribution of products are classified as revenue. The distribution costs included in DS&A expense in 2012, 2011 and 2010 were $148.8 million, $151.7 million and $135.5 million, respectively.This information from Tupperware Brands 10-K will then be used in order to estimate the amount of distribution costs that will be incurred. Our team has noticed a direct correlation in the DS&A expense column and cost of products sold column of Tupperware Brands’ income statement. Because of this relationship, we believe it is appropriate to use a ratio of the two categories in order to estimate distribution costs. In 2012, cost of products sold was $856.4 million and DS&A was $1,329.5 million. Therefore, in 2012, DS&A was around 1.55 times the cost of products sold. Because we have already estimated our cost of products sold per unit figure (the variable cost components of our product—$8), we believe DS&A expenses for our product will be around $12.40 per unit. However, distribution costs only constitute $151.7 million of the 1,329.5 million DS&A expenses, or roughly 11.41 percent of it. Therefore, distribution costs will not be the full $12.40, but rather, the distribution costs for our product will be 11.41 percent of $12.40, or more accurately, $1.41.The direct materials, direct labor, overhead, and distribution components of manufacturing are typically product costs that vary with the level of production. These are typically referred to as variable costs, and a summation of our new product’s direct materials, direct labor, overhead, and distribution components will be given to justify our variable cost per unit. As presented earlier, our team suspects the total cost of manufacturing the plastic elements of our product to be $0.86 per unit, the cost of the cloth lunch box component to be $6.84 per unit, and the added labor costs for assembly to be $0.20 per unit. Additionally, $1.41 will need to be added to account for the distribution costs involved. It can be concluded that the variable components of costs for our product will be near $9.13 per unit for the first year of production and will rise and fall proportionally with revenues in the following years. Fixed CostsFixed costs include costs that do not vary with the level of production and remain the same no matter what level of production a factory is operating at. Our team does not expect our project to warrant an increase in the fixed components such as electricity, property taxes, rent, or insurance. These costs are already being accounted for by our current operations, and we do not expect any incremental changes in these categories from our new project. However, we do expect routine maintenance will be the largest fixed cost of maintaining the molds’ engineered integrity. Maintenance is a cost required by all manufacturing businesses to maintain their operations and ensure capital investments last. Referring to their income statement, it is seen that the cost of products sold section for 2012 was 33.14 percent of sales (Tupperware Brands 10-K, 2013). This means that Tupperware Brands typically is responsible for controlling 30 percent of revenue. Our team predicts it would be reasonable to assume that Tupperware Brands maintains a discretionary maintenance target of around 30 percent of an investment. We assumed this because if Tupperware Brands controls around 30 percent of costs, then a 30 percent figure (rounded) could also be applied to the cost of the initial investment to estimate the fixed cost component. This assumption is based on the notion that Tupperware Brands is responsible for around 30 percent of revenue as costs, in which case they will try to maintain a cost target of 30 percent of the investment’s initial value. Therefore, a cost of $750,000 will be charged to fixed costs for five consecutive years. RevenuesOur pricing was established by looking at Tupperware Brands existing products which are similar in nature to the new product being offered. After scanning their online retail store, our team has observed lunchbox sets which include plastic components to be retailing within a range of $35-$59. Because our team is extending this existing product line, we aim to maintain the pricing status quo for this category. In other words, we do not want to replace a large amount of demand for the other products by offering a price that falls outside this range. We believe these existing products retail at such a premium price because Tupperware Brands seeks to maintain a quality product image, distributes in the unique direct selling fashion, and has a high level of brand equity. For these reasons, we believe our team can also expect our product to be offered at a premium price. Our team expects to sell our product at a price of $35 per unit. We chose to offer our product at the low end of our stated price range because our product does not include separate items that our other existing products offer. For example, some existing products offer a water bottle with its lunch set, and our product will only include a plastic insert, warranting a lower price. Therefore, a $35 price will be appropriate for a simpler product; however, this price is not low enough to leave consumers questioning its quality.Cannibalization of Volume, Revenue, and CapacityA major consideration in our capital budgeting decision includes the lost revenue of an existing product after the introduction of our new product. Tupperware Brands offers Boy’s and Girl’s Eco Lunch sets which retail for $45.00. Our team suspects this existing product will experience the largest impact in lost revenue because its function and overall message are substitutable by our product. We are assuming that mothers, who care about the environment and want to set good examples for their children by purchasing an Eco friendly lunch set, will also be interested in our new product because they will see the learning opportunity to teach their children about healthy eating practices inherent in our product’s message and positioning. Based on this assumption, our team will consider the lost revenue of the Tupperware Brands current Eco lunch sets. To do this, an estimation of the Eco lunch set’s current volume is required.To judge the current sales volume of the Eco lunch sets, it is necessary to estimate what product life cycle stage we think the Eco lunch sets are in. Since the Eco lunch sets appear in Tupperware’s catalogs, which are sent to the independent sales force across North America for the Tupperware party demonstrations, we can reason that this product has successfully completed the introductory and growth stages of the product life cycle. We believe that products that make it into their catalogs have been successfully adopted by consumers and have seen enough healthy profits to warrant an appearance in the catalog. As such, we believe their Eco lunch sets have already reached the maturity stage of the product life cycle, and more importantly, are beginning to cycle to the two year decline stage.Since their Eco lunch sets are comparable in nature to our new product, we also assumed that Eco lunch sets’ sales volume match our predicted sales volume. However, since the Eco lunch sets have a 28.5 percent higher price than our proposal, we believe the demand for the Eco lunch sets are 28.5 percent less than our proposed projects’ expected yearly demand. From this information, and considering Eco lunch sets are in years four and five of their life cycle, our team expects the current volume of the old product to be 28.5 percent less than our new product’s year four and five unit demand—or 57,638 units and 55,909 units. Now that the old product’s current sales volume has been estimated, our team needed to judge the volume loss of the old product given the introduction of our new product. We expect our firm’s manufacturing plants to be operating in a lean fashion, so capacity for the Eco lunch sets will need to be sacrificed for the last two years in order to meet the capacity needs of our new product. Located in the discussion above, we justified that Eco lunch sets are in their two year decline stage. During this same time, it is reasonable to think our new product will be in its introductory and growth stages, where success of the product is still risky. Based on these assumptions, our team has decided to sacrifice 40 percent of Eco lunch sets production time for the last two years of its life, and maintain a production ratio of 60 percent Eco lunch sets and 40 percent new product. We want to allocate more production time to Eco lunch sets given these products have already proved to be successful, and the success of our new product is still unknown. This general assumption is being made because without adding any new capacity to production, we are assuming our closest, most substitutable product’s capacity will suffer to produce our new product. With this assumption made, we can expect to lose 40 percent of Eco lunch sets’ volume in its last two years of life, resulting in a 23,055 unit volume loss in year four and a 22,364 unit volume loss in year five. Although this assumption might not reflect the exact loss of units given production times for each product are unknown to our team, a general assumption was made to recognize that loss of capacity for the old product will take place regardless.Beyond the lost volume due to the limited resource of time and capacity, our team also considered lost demand in the marketplace of the old product. We assume the Eco Lunch set will experience a slight dip in demand barring the introduction of our new product. A simple marketing principle was used to determine the drop in demand. The 80/20 principle states that typically 20 percent of the market supplies 80 percent of the demand for a product (Segmenting and Targeting Markets, 2012, p. 137). If this is true, the reverse should also hold; that only 80 percent of the market supplies 20 percent of the demand. Based on this assumption, we believe the slight minority of customers, the 20 percent, has already purchased this product because they supply the majority of demand, and their needs have already been satisfied. The majority, or 80 percent, is the group most likely to not have purchased the Eco lunch sets because they constitute only 20 percent of demand, and because of this, they are also more likely to substitute our new product for the old product if and when they do decide to make a purchase. Based on this dynamic of the market, our team suspects that it is possible the old product could see a maximum demand drop around 20 percent. However, this would mean every consumer in the 80 percent majority would substitute our new product for the old product, which is not likely. Therefore, we believe that 60 percent of the time Eco lunch sets will be chosen, and the other 40 percent of the time our new product will be chosen. This prediction is ultimately related to our choice to only produce Eco lunch sets 60 percent of the time, and we believe the same outcomes will apply in the marketplace. Based on all the information provided above, we expect to see a 40 percent decrease in the maximum 20 percent drop in demand of the old product. This will result in an 8 percent decline (40 percent of 20 percent) in demand for the old product, or more accurately, a 4,611 unit decrease for year four and a 4,472 unit decrease for year five. By adding the decrease in volume due to reduced capacity and the demand drop for the old product, our team supposes a total volume drop of 27,666 units in year one of the project and 26,836 decrease for year two of the project.NPV and IRR DiscussionAppendix G neatly presents the information and numbers discussed above in a landscaped table. The decision to undertake a project or not is dependent on the NPV of the project’s expected future cash flows. Managers apply a discount rate to future cash flows to determine if project’s are enhancing firm value and staying consistent with the ultimate goal of the firm; that is, to maximize shareholder wealth. A NPV that returns a positive figure is generally accepted as it enhances the value of the firm, and a negative NPV is rejected by management. Our firm has decided to undertake this project based on the positive $546,341 NPV our table has returned. This positive NPV will successfully add an incremental enhancement to the value of our firm.Another decision tool for company projects is an analysis of the internal rate of return (IRR) of a project. The IRR is the rate that causes the NPV of a project to be zero. If the IRR of the project is larger than the discount rate applied (cost of capital), the general consensus is to accept the project. However, this decision rule only applies if free cash flows are conventional, and the project is independent of other projects. Our project is both independent and its cash flows are conventional. Therefore, it is acceptable to use IRR as another decision tool in this instance. Based on the IRR of 14.31 percent of project returned, it would be acceptable to undertake this project given the IRR is larger than our cost of capital of 8.08 percent.Implementation and ControlTiming and Implementation ActivitiesTo jump start our marketing plan, we must allocate necessary action assignments and ensure that the assignments are executed in a way that accomplishes our plan’s goals. ?This process is called implementation. ?In order to do so, it is essential to make the timing right. ?Since our new product is primarily for upper elementary and middle school students, we wish to start promotion in late July, early August. ?Starting of production will take place in May, so we can have our products in stock in time for promotion. ?During the summer months, the individual consultants will have the new Tupperware catalog with TupperBox ready to introduce, demonstrate, and sell to potential customers. ?The end of the summer is the start of “back-to-school” shopping, and our goal is to implement our growth strategy around that time frame. ?As a result, we expect our product to attract the mothers making such purchases.The TupperBox will not require new machinery, other than the different molds used for each individual tray, used by Tupperware Brands for their manufacturing. ?Due to the similar production, we will not require new training or additional employees in the manufacturing department. ?Once the first batch of TupperBox’s are produced and distributed to the individual consultants, the sales forced will be trained with a demonstration for a full understanding of how the product operates. ?In order to properly control our potential growth strategy, we will distribute a survey to all customers. ?This will help us gauge the customer approval, feedback, and areas of improvement.Sales EstimatesOur team did not use the mathematical, quantitative techniques of forecasting such as moving average or exponential smoothing to predict demand for five year life of the project, but rather took a qualitative approach. In the absence of stable, our team instead used intuition of consumer market qualities to predict the appropriate forecasted sales. Because our project spans a time frame of five years, this forecast constitutes as a long-term forecast, which is appropriate when a new product is being developed. Our team was concerned with the strategic outcome of the project so we sought to predict aggregate sales data for five years, and the details of short-term and medium-term forecasts were left to be determined afterwards. The number of units predicted to be sold in each year of the five year period will govern the later decisions of inventory, personnel, and production scheduling. Based on the discussion in the sales volume section of the capital budgeting section of this report, our team used market research to arrive at an estimated sales forecast of 75,378 units for the first year. This figure was determined are considering our target market, and narrowly defining it with certain characteristics such as income of consumers and market share of Tupperware Brands. As stated earlier, past sales data was unavailable to our team, so quantitative methods could not be used to forecast sales volume in the following years. Instead, our team applied a simple growth rate of 5 percent in years two and three, and a decay rate of 3 percent for years four and five. This was done in order to reflect the product life cycle stages our product will go through and the growth and decay rates were taken from Tupperware Brands 10-K document.Once a forecast is made, the last step is to typically implement the action. Whether this project is accepted or rejected will dictate the implementation decisions following the sales forecast. If the project is accepted, the necessary steps will be to communicate these estimates to the appropriate functional areas of Tupperware Brands, such as production, in order to plan for the resources needed to implement the project.Scenario Analysis Our team performed an analysis to our base case model in order forecast the best and worst case scenarios our model could realize. These scenarios represent the upper and lower extremes of the project, and will be used accordingly as another tool to test the financial feasibility of our project. These extreme bounds will be compared to our most likely outcome, the base case, and afterwards, the likelihood of these extreme cases occurring and what might cause these events to materialize will be discussed. Our team collected closing prices and dividends for Tupperware Brands from years 2008 through 2013. This information was used to calculate the holding period return for each year, which in turn was used to calculate an average return and the standard deviation of returns for the five year period. Our goal was to correctly estimate the standard deviation of Tupperware Brands’ return over a five year period and apply this figure to our base case model to estimate the extremities of our project. As stated in Appendix H, our team calculated a standard deviation for Tupperware Brands over a five year period to be 78.67 percent. Our team suspects that because many firms’ share prices have fluctuated wildly over the past few years due to the conditions in the macro economy, it would be inappropriate to use such a large percentage, as it would incorrectly represent what our firm would usually experience. Therefore, our team has decided to follow the advice given to us by an outsider and adjust our base case up and down by a percentage of 20 percent. This percentage will be high enough to capture the volatile nature Tupperware Brands has experienced in recent years, but not too high as to lose the financial soundness of our best and worst case models.Appendix I captures the best and worst case models our team performed. Our team chose to adjust the variables of volume, unit price, and the variable cost per unit, annual fixed costs, and the discount rate. These variables were adjusted up and down by stated 20 percent. In the upper half of Appendix I, our team calculated the lower and upper bounds for each relevant input variable, and assigned these figures to the best and worst case approaches accordingly. The lower half of Appendix I displays the best case, which includes a high volume estimate, a high unit price, low variable and fixed costs, and a smaller discount rate. The worst case represents the opposite and includes a low volume, a low unit price, high variable and fixed costs elements, and a higher discount rate. Appendix I can be referenced for the exact estimates of both the best case and worst case scenarios, as the values were not made explicit in the discussion.After determining the values for the best and worst case scenarios, our team used these values to calculate the NPV and IRR of both scenarios, and used it to compare the results to our base case model. It should be noted that when calculating the NPV of the best and worst cases, the volume loss of the old product [Eco Lunch sets] in the base case model was adjusted accordingly as it had a direct relationship with the volume of our new product. This action was performed in both cases to have an equal effect on the results. Appendix J illustrates the NPV and IRR of our project’s best case scenario. As shown, the expected NPV of the best case scenario is $4,275,553, and the IRR of the project is 48.06 percent. For the worst case scenario, our project could realize an NPV of negative $2,172,443 and an IRR of negative 22.42 percent (Appendix K). The IRR could not be used as a valid decision tool for our worst case scenario as the cash flows are not conventional. Therefore, a comparison of the best, case, and worst case scenarios will be done using NPV as the basis. Recalling from Appendix G, our base case NPV was $546,341 and the IRR 14.31 percent.Once the NPV of all three scenarios was established, it can be observed that this project is highly volatile and potentially very risky. If the worst case comes to fruition, then Tupperware Brands could expect to lose a little over $2,000,000 of value to the firm. This could be potentially damaging to Tupperware Brands operations considering this loss would come from a single product. This may affect Tupperware Brands’ future plans to expand into and penetrate more global markets, limiting their competitive edge. On the other hand, if the best case is realized, Tupperware Brands could expect to gain over $4,000,000 of value to the firm, which would prove to be a highly successful growth strategy. This added value could supplement Tupperware Brands growth as a company, and the product’s success would affirm their strategy of offering innovative products that meet the ever-changing needs of the markets they serve.Given the recent economic downturn and ensuing recovery of the market our team expects to sell in, our team predicts that it is most likely the base case will result; however, uncertainty of the economic future of the United States, at least in the short term, could also result in the our project performing near the worst case scenario. The United States economy has shown signs of a slow recovery out of the recession of the mid 2000’s, but its economic future and expectations for growth are still unclear, making new growth ventures for firms in the United States market still somewhat risky. We predict that because our products are reusable, durable, and sold at a premium price, consumers in a depressed economy are less apt to buy our new products and more likely to reuse their existing products until the economy improves. Our team believes that if the slow and steady recovery continues in the near term, our firm’s base case would best represent the expectations of the project. Business is by no means booming; however, consumers are beginning to buy more goods, which can indicate to our team an intermediate return for our project is most probable. However, if the economy does not recover, and returns to zero or negative growth, our firm would be forced to lower the price of our product while costs continue to rise; at which point, the worst case scenario could be realized. Although more unlikely than the base case and worst case, certain events could result in the best case scenario. New technologies which lower the cost of operations or a higher demand of our product due to unexpected popularity of the product are both events that could influence the probability of the best case happening. Sensitivity Analysis To better judge the effect that each variable has on the NPV of our capital budgeting model, our team performed a sensitivity analysis. Each of the key variables mentioned above were varied one at a time while the other variables were held constant. This allowed our team to critique the volatility in NPV in relation to each specific variable, presenting the forecasting risk involved. After an analysis of each variable was performed, our team recognized which variable(s) had the greatest effect on NPV, and which variables require the most attention. The discussion that will follow will include each variables effect on NPV and the likeliness of each variable increasing or decreasing. For reasons stated in the scenario analysis, our team chose to increase and decrease each variable by the suggested 20 percent. The most volatile variable in relation to NPV our team noticed was the revenue per unit variable. In Appendix N, when our team increased the price by 20 percent to $42, it returned the highest NPV of $1,965,097. On the other hand, Appendix O showed the effects on NPV when our team lowered the price 20 percent to $28. The NPV for this instance was negative $872,415. The price variable’s best and worst NPV had the largest variance, suggesting this factor should be carefully considered and monitored as it has a great impact on the success of the project. It is more likely that the price of our new product will increase rather than decrease. Because our product is at the low end of the price range of Tupperware Brands similar products, we believe it is more likely the price would inflate slightly to better match the prices of existing similar products, and not fall further away from the product line’s status quo pricing strategy.The next variable that was relatively volatile in relation to NPV was the volume variable. In Appendix L, it is observable that when the volume was increased by 20 percent for five consecutive years, NPV $1,404,256. However, when volume was decreased by 20 percent, volume for our project was negative $311,559 (Appendix M). This key variable is particularly risky for the firm because forecasting volume demand is always difficult for firms to do, and rarely are they ever close to their original estimates. Therefore, it is difficult to judge whether Tupperware Brands will be more likely to experience an increase or decrease in volume over five years. If it had to be decided, our careful analysis of the consumer environment leads us to believe a slight increase could be possible given the conditions and trends in the market. The variable cost and fixed cost inputs will be included into one discussion as they had a very similar effect on NPV. In Appendix P, the NPV is $921,535 when the variable cost was decreased by 20 percent. Similarly, the NPV is $934,811 when the fixed cost was decreased by 20 percent (Appendix R). Both of these instances have nearly the identical effect on the project’s NPV. In Appendix Q, the NPV is $171,148 when variable costs are increased by 20 percent and Appendix S shows the NPV is $157,871 when fixed costs are increased by 20 percent. Compared to the NPV of the base case, these values deviate from the $546,341 less drastically than the price and volume variables, indicating the cost variables are less volatile. It is more likely that the cost components of this project will realize a decrease during the life of this project. Tupperware Brands income statement shows the firm manages their costs effectively, which leads our team to believe Tupperware Brands could realize a likely decrease in costs over the life of the project. The final variable that was adjusted while holding the other variables constant was the discount rate. Appendix T shows a NPV of $715,163 when the discount rate is adjusted down 20 percent to 6.46 percent and Appendix U shows a NPV of $389,694 when the discount rate is adjusted up 20 percent to 9.70 percent. It is clear that is variable has the least effect on NPV as it deviates from the base case only around $200,000, and the least amount of attention should be given to this factor. Our team suspects as the United States and global economies recover over the next few years, real interest rates will rise as the business cycle improves. As a result, our firm could see a higher cost of capital, which would warrant the use of the increased discount rate. The base case model of our project returned a positive NPV, which would validate the acceptance of the project. However, performing a scenario and sensitivity analysis conveys a better perspective to the true financial viability of our proposed project. The best case scenario of our project returned a value just over $3,500,000 better than the base case estimate, and the worst case scenario returned a value just under $3,000,000 from the base case estimate. Given these two estimates, our project can expect a variation from the base case NPV of about $3,000,000 in both directions. This figure may question the financial viability of the project as a $3,000,000 range seems risky for a single product line. However, the sensitivity analysis exposed that the variables of price and volume are the most sensitive variables in this project. If Tupperware Brands can maintain and manage those variables, the project is far less risky, and suggests the support of the project. In conclusion, the project has its risks, but this analysis exposed the sources of those risks, so managing them correctly and evaluating Tupperware Brands confidence in their ability to manage those factors could ultimately be a major factor in the support of this project. Comprehensive Financial AnalysisBased on all the financial data and analysis included in this report, our team believes there is enough financial evidence for Tupperware Brands to undertake this project and begin the process of producing the lunch box.Our team began with the results of our capital budgeting model. Based on that model alone, the positive NPV of $546,341 validated our decision to accept the project. However, a decision cannot be made on the base case alone, and a scenario and sensitivity was performed to model the dispersion of results around the base case. After these best and worst cases were modeled, our team learned that this project could realize a best case with a positive NPV of over $4,000,000 and a worst case with a negative NPV of over $2,000,000. This means our project’s ultimate outcome could fall within this range. This large range led our team to question the financial viability of this project as it appeared to be a risky project based on these two projections.However, after the sensitivity analysis was performed, our team discovered the variables that provide the sources of risk for the project. These were the price and volume variables. The other discount rate and variable and fixed costs variables did not have an extreme effect on NPV, so therefore these variables should be given less attention. Once it was discovered which variables affected NPV the most, our team had to decide whether Tupperware Brands was capable of managing the variables of price and volume. For this judgment, our team referred to the financial ratio analysis performed by our team.It was discovered in the financial ratio analysis that Tupperware Brands ROA and ROE were superior to its competitor, Newell Rubbermaid. Our team used these figures to evaluate Tupperware Brands capability to manage the most risky variables in the sensitivity analysis. Our team reasoned that because Tupperware Brands had high returns in ROA and ROE on their other investments in the firm, then they are highly capable of managing projects in general and will be able to control or even improve the most risky variables in our project to drive the NPV of the project even higher. Based on those figures, we believe their managers can achieve the parameters set by the capital budget and their extensive network of independent sales people is adequate enough to drive the demand for our new product. This proposal acceptance is based on a foundation of assumptions. We are assuming our firm is capable of meeting the goals set by the capital budget because they have adequate management in place. However, if Tupperware Brands fails to maintain a competent workforce and sales force, they could lose their ability to manage risks effectively and reach customers in an effective manner. If Tupperware Brands loses these abilities, our project could result in a bad outcome for the company. Based on the whole financial perspective given in this report, and assuming Tupperware Brands management capabilities do not change in the future, our team believes the project should be accepted, and Tupperware Brands will be successful with our distinctive lunch box growth strategy.ConclusionTupperware Brands Corporation, as a whole, has maintained a consistent rate of growth. Because of this, our goal as a group is to be able to add to the consistent growth levels of Tupperware Brands. Society has proved to have an upward trend in health awareness, which we believe will be a great benefit to our new product that targets that section of consumers. Our product appeals to consumers wishing to live healthier lifestyles and establish better eating habits for themselves and their children. Tupperware is already a very well known, established brand and our group strives to sustain the image of that brand. We hope to use the success of the company’s previous products to enter into their market successfully and continue the high quality image Tupperware has maintained for many years. Our capital budgeting model and comprehensive financial analysis for this product proves that TupperBox will be successful. We, as a team, believe that this product will not only benefit the Tupperware Brand name but also society as a whole. We hope to increase Tupperware Brands Corporations shareholder wealth and create a healthier society with the success of our new product, the TupperBox. References About BPA & Materials (2012). In Product Description. Retrieved April 6, 2013, from Lifetime Brands (2013). In Lifetime Brands Company Timeline. Retrieved April 10, 2013, from & Quarterly Reports (2011). In Lifetime Brands. Retrieved February 16, 2013, from Avon Products Inc. 10-K (2013). In U.S. Securities and Exchange Commission. Retrieved April 9, 2013, from Founder (2012). In Avon. 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