Assignment 5: Business Plan – Final (i only need the excel part done, section 2)

Running Head: Business Plan 0

Business plan draft

Product Name: Vita-MyHealth Energy drink

Company Name: Horizon Manufacturing Company.

Description

Energy drinks are controversial and popular. They are popular among the younger adults of age 18-34 who are college students or young people with responsibilities like taking care of a young family. They consequently need to stay alerted and attentive over an extended period of time. Therefore, the energy drink is popular since it is believed that it could boost energy levels and thus increase stamina plus improve physical and mental performance. Moreover, Energy drinks will help one overcome fatigue. Due to our recent busy lives, we are in search for a quick way to boost our energy levels to give us that extra energy kick to help us get past those last couple of hours at work or for the students in cramming for a test those last nights.

However, Energy drinks are controversial since they contain a high content of caffeine and sugar. Caffeine has been the most used addictive drug over the years and raises health concerns together with sugar by being affiliated to chronic diseases like diabetes and heart failures and heart attacks. More questions have been raised about what ingredients are used in making energy drinks. Effects are bound to be felt more with the beginning of a new trend amongst the youth especially the college student which involves mixing alcohol and energy drink with the motive of subduing the “sleeping effect” caused by the alcohol. This has led to increased number of emergency cases of the habitual mixers of alcohol and energy drink.

Vita-myHealth Energy Drink offers a healthy alternative to the popular energy drinks that are already in existence in the market currently. Vita-myHealth Energy Drink targets those individuals that are health conscious and hold serious concerns about the ingredients that formulate the energy drink that they currently consume. Vita-myHealth Energy Drink is manufactured and processed by Horizon Manufacturing Company. Vita-myHealth Energy Drink is a distinct blend of B vitamins Ginseng, regulated grams of sugar and sap from green tea leaves (they have relatively low amounts of caffeine and are natural). Ginseng increases energy, contains anti-fatigue properties, relieve stress, and enhance memory. B vitamins help the body convert food to energy, therefore, increasing energy. However, these components are highly regulated by our quality control team just enough for the body. Disclaimers are included in our cans to alert consumers from excessive consumption or to mix with alcohol. We majorly extract most of the ingredients from organic foods since we are concerned with the health of our esteemed consumers.

Horizon Manufacturing Company is a start- up company with a vision and will specialize in all NAB that is natural. We look forward to being the first company to be all natural in the manufacturing of our energy drinks though we understand it is an expensive endeavor, the increasing consciousness among consumers on what they ingest should not be underestimated, and we the Horizon Company never underestimates. The company is also involved in manufacturing other products that are being formulated before they are patented and made public. The name of the business Horizon was inspired by what the name stands for as we looked to differentiate from the other companies by looking forward in production of healthy and all natural energy drinks

The price point of Vita-myHealth Energy will range $2.75-$2.89 for a 10 oz, depending on the location where the product is situated.

Mission Statement

Our mission to our customers is to provide a safe and healthy substitute to energy drinks while offering the best quality all natural ingredients at an affordable price without compromising the enhancement of energy.

This mission came up after discovering the health concerns raised by health conscious individual confused by the ingredient used in making the energy drinks. Plus most of the ingredients were manufactured and synthesized. Therefore, there exist a market gap and opportunity of meeting this customers demand who are interested in energy drinks that are naturally oriented, and we have made this our mission.

Our mission to our owners is to ensure the company is and remains profitable in a bid to create wealth and enhance sustainable growth.

Owners’ interest is simply making a profit in a company, and it is, therefore, an obligation to the business to create wealth and reward the owners for the risk taken to invest their capital in the enterprise. Growth ensures their interest is protected and the company is not likely to fall to grace making the owners loss there capital

Our mission to the employees is to provide a healthy, safe and happy environment that supports the culture of team member excellence and personal nourishment and growth.

This is because we understand a happy worker is a valuable asset to our company since he is motivated to perform his or her duties diligently without fail. Teamwork culture ensures the office duties are performed efficiently and effectively thus we will be expecting a better performance.

We understand the company has a role to play by ensuring a peaceful coexistence with the society and ensuring clean surrounding in partaking cleaning campaigns and organizing sports events as a peace campaign strategy.

From our missions, we can clearly say, we see ourselves as a friendly and peaceful company that is eager to conduct its business in an open and trustworthy manner. The products themselves show that we care about our esteemed customers. Therefore, we can proudly say we embrace the client oriented strategies.

Industry Analysis

Trend

The energy drink was projected to continue to surpass the annual 3% average growth rate for soft drinks overall. The energy drink was estimated to achieve a market growth range of between 9 and 18% for the next five years. As of 2014, the global energy drink sales got to $49.9 billion as reported by BeverageDaily.com. It has been noticed that consumers have been buying more of energy drink and less of other non-alcoholic beverages. This shows energy drinks have transitioned from being niche products to being one of the fastest growing product categories in the global soft drinks market. The change can be attributed to the evidently growing focus of consumers focus on health and fitness issues. This has helped break the barrier that was initially set that energy drink were designed for sportspersons and athletes.

The top companies in these categories are the Red Bull and Monster Beverage Corporation which together forms an estimate of 80% of domestic energy drinks volumes. However, Rockstar has joined the new trend in a highly saturated market that is hard for new entrants to make the cut to the market. Dollar sales of energy drinks grew almost 6% to 6.67 Billion in 2013 which propelled sales growth for convenience stores. The energy drink industry recorded $27.5 billion business in 2015 from $3.8 billion business in 1999, according to data fetched from market research firm Euro monitor.

There is a trend where the energy drink is supposed to boost or enhance athletic performance and recovery. Shortly, we expect to see and experience more energy drink that contains branched- chain amino acids, protein, nacetyl-tyrosine, beetroot extract, and creatine. There also exist other selling points like no sugar, no calories, no carbs and no caffeine plus coffee flavors and non-carbonated flavors.

However, this industry continues to face lots of condemnation from health lobbyists but however continue to defy their outcry because of the capacity that the energy drinks provide the consumer with a quick and effective energy boost which excites most of the consumers. Moreover, they benefit from having huge investments in advertising and high profile marketing initiatives to create an exciting and wild image.

The latest trend has been the shifting of the monster beverage corporation from third party bottlers to striking a partnership with the Coca- cola vast global distribution network. This shows that companies of different categories might mutually work together. In exchange, Monster Corporation will submit its soft drink to coca cola company while in return coca cola releases its energy drink to Monster in their partnership deal.

As earlier stated, the category market is saturated, complicating things for small and new companies by making it hard to compete. This therefore makes it hard for any company to pose any significant threat to the top companies that is Rockstar, Monster and Redbull. These companies include 5-hour energy, 6-hour power, MIO Energy and Chrystal Light Energy.

Strategies position & Risk Assessment

The company will adopt Differentiation strategy that will strategically position the product in a rather monopolize the market by the three top brands that are the Rockstar, Redbull and Monster beverage company. Product differentiation is a strategy that will help the company to distinguish a product from other businesses that provide similar offerings on the market, and this will provide a competitive edge to this market that is dominated by larger companies. The competitive advantage of the company would offer the firm a chance to set up significant value for our consumers.

Before determining and arriving at our strategic position, the company observed the competitor’s product positioning. This would really help us in our positioning of our new product. Therefore we understood that the fundamental basis of the competition in the energy drink segment is differentiation making us settle for the generic differentiation strategy. We appreciate the fact that our main consumers are the millennial generation, therefore, adopting a millennial subculture strategy to reach the target audience effectively.

We exist in a market that is monopolistically competitive due to a large number of competitors, easy entries and exits and product differentiation. Moreover, the consumers have a negative notion of energy drinks because of the lawsuits, proposed legislation set and the media attention. Despite all this, the industry keeps on growing due to its benefit segmentation part that is it offers a quick fix to an energy boost. However, concerns are raised about the amount of caffeine and sugar used as the companies are not necessarily compelled to indicate their product the amount of caffeine contained in the drink. Most of the manufacturers do not label. Therefore, we would take a healthier approach to the energy drink market by having adopted a well-packaged product labeled with the amount of caffeine and sugar content. Having energy drink that is cleared labeled and showing the caffeine and sugar content would provide the best method to attract more customers. This would be supplemented by offering different varieties that would be based on taste and flavor.

The fact our product is health conscious having no carbs, calories or sugar would appeal to the millennial. Introducing fruit flavors to the mix and significantly reducing sugar content would penetrate to the different subcultures of the millennial market. Giving product line extensions of 4% juice, dual fruit flavor add organic options would make a good perception to the Hispanic subcultures due to the taste and flavor liking and appeal to African-American subculture too.

Since millennials need brands that represent them the combination of the marketing mixing elements offers an energy drink a picture of a lifestyle brand that resonates with the target consumers(Nielsen, 2014). Therefore, we will be transparent, authentic and different based on the fact that we are a healthy energy drink that acts responsibly as a lifestyle brand and ahs peace as its main mission. This would be shown by the interest relayed upon by the sport sponsorship programs in a field like kite surfing, mountain climbing, tennis, rugby and more extensively on soccer and later spread into more extreme sports in a bid to connect its millennial customer base. These are areas that are not extensively covered by the leading energy drink that is red bull. Coupling sports sponsorship with promotional events will influence brand awareness and help in achieving brand loyalty. This is because we will be using a lifestyle and self-expression brand image that holds high perception to the target millennial generation.

We will adopt a two – pronged millennial and subculture marketing strategy to enter the market and obtain long term goals. We will use the strategies in logo designing, events, social digital media, television and radio, product options, trade promotion, pricing and coupons, and packaging and promotional displays This is because the millennials are more racially and ethnic diverse and offer loyalty to the product of their liking.

The differentiation strategy keeps in mind that when on its success it can create brand loyalty among its customers. Therefore the company understands that low pricing strategy is a risky type of position strategy that will attract more customers but may not guarantee customer loyalty. Here, we will set our price lower than the red bulls and at almost the same price with Rockstars and Monsters. This will be our pricing strategy since we understand setting lower prices will not necessarily create brand loyalty since new entrants with better low pricing strategy may end up tapping more customers. Moreover, this may create inefficiencies in other sectors since our profit margin would be affected consequently.

Another aspect that would be critical in this market is the distribution channel system. We, Vita-myHealth Energy drink, consider adopting partnering with major stores and colleges to help in distributing our products.

Risk assessment and management strategy

Risk management is a vital function in an organization today as companies are involved in increasingly complex and zealous projects, and there is a need and urge for those projects to be executed effectively, in an uncertain and risky environment. Risk identification is also vital when planning so as to organize resources to help mitigate the level of risk experienced by the firm.

Risk Management Matrix

SWOT ANALYSIS

1. Strengths

1. Vita-myHealth Energy Drink is a product that is made up of natural ingredients that are safe and healthy

2. Management and leadership skills within the company are well structured and useful in communication and delegation of its responsibilities.

3. There exist a well and productive relationship between the Horizon manufacturing company and their distributors of the Vita-myHealth Energy Drink products

4. Employees are offered training as a way to boost their technological skills and revamp their innovation skills.

5. Our company has all the right people in the right places

1. Weakness

1. The product awareness is a bit low since we are a new brand trying to penetrate the market

2. The competition from already established companies like Red bull is high limiting the ability of the customer relations in our company

3. Vita-milk is yet to set up a well-established distribution channel

4. In instances of low production level the company could be faced by a problem in the bottom line of the company.

c. Opportunities

1. We look forward in partnering with colleges, gyms, convenience stores, drug stores and if possible libraries to ensure efficient distribution of our products.

2. Vita-myHealth energy drink will be priced at $2.89-$2.99(depending on geographical and market location) for a 10 oz can relatively to a Red Bull priced at $ 2.99 for an 8.4 oz bottle.

3. Vita-myHealth Energy Drink offers an alternative way of boosting energy while considering the health concerns of the consumer.

4. Vita-me Health Energy Drink has considered advertising strategy that would be coupled up with the in-store display in malls and convenient stores.

d. Threats

1. Lack of organized and systematic distribution channel by the company

2. A monopolized market by a good resourced fueled competition such as the Red Bull and Monsters limiting Vita-myHealth Energy Drinkability to tap and relate to more customers.

3. Possible strict regulation by the FDA in the market.

4. A market that is not ready for our products.

5. High capitalization needed.

Target Market

Energy drink category has its potential target market for the young adults and college students that have responsibilities or are involved in stressful activities that require much energy to get through. We understand that it is hard for a company to be all things to all people as stated by Iacobucci. Therefore by targeting the energetic youth, it is in our best interest to make it easy for the company to achieve its objectives. However, the brand does not plan to target any gender since we believe the product is not gender oriented but adopts a subculture marketing strategies. The market segment is identified by people of age 15-38 since this age group makes up the largest number of athletes, gym devotee, college students, and the working class personnel with the majority being millennials.

We plan to employ a significant digital and social media platform to reach the target market. Since there exist negative perception the plan is to use television commercials to help change this negative publicity with a message that portrays our company is the alternative. We would further try to paint and promote a fresh and more conversant image than Red bull by adopting a more focused strategy.

In our strategy to reach the millennial target market we plan to include aspects that are unique to all millennial that would include use of more technologically advanced, use of different media, using placement of commercials on television programs and radio stations, music events , and product placement(in any convenient drug stores and groceries). This is because media like tv and radio will aid to create and influence affect and cognition placing stimuli since the cables and broadcast channels are most viewed by the millennials. Moreover, the company consists of music festivals and events which are very vital in establishing and maintaining brand awareness. These events provide a positive cognitive association coupling with fun, memorable events with the brand to create a pleasurable environment associated with the brand. During these developments , we offer a free sample to the attendees in a bid to simulate trial and create brand awareness and obtaining brand loyalty.

The social media and digital media would offer a platform for the promotional events giving room for the brand to continue to engage with the customer after the event. They, moreover, provide a means to continue to affect the consumers’ cognition.

Sponsorship strategy provides the brand with the opportunity to engage with the millennials with events that are vital to them. We look forward to creating value in areas that interest youth by segmenting music and sports. Music is important to the millennial generation with facts that include millennial stream and download more music than their predecessors, with the majority of them trying those products that are associated with the music they listen to. Therefore, sponsorship likewise provides an influence on effect and provides a coupled stimulus with a fun and positive surrounding that is associated with the energy drink category plus the samples provided during sponsored events thus simulating trial to influence the consumer behavior in purchasing the product.

Statistically speaking, music has proved to increase market share by 2.4 points and increase purchase rate by over 20% and are likely to buy (95%) a brand after participating in an event and have significant (70%) positive relations with the brand.

Competition

Red Bull, Monster, and Rockstar make up the top brands with comprising of almost 90% of the market with other niche products comprising of the rest, that is, 10% of the market share. Red Bull is the largest brand in the energy drink market in the United States with 39% of the market share and has sold an estimate of 4.6 billion cans per year and is widely known internationally. It has a slogan “It gives you wings” slogan which serve as a message targeting the millennials. Red Bulls is widely associated with extreme sports and has endorsed sports figures and artists.

Red Bulls has been able to become the market leader due to its content marketing strategy which makes it appear like a marketing company with the vast use of social media and digital platform which helps in promoting sponsored extreme sports events and other valuable content. Use of videos and articles is also a strategy that is used to create a correlation of the products with the consumers. The consumers are the audience and their interest is the source of their content to appear in the videos or articles.

Monster Energy comes as the second largest competitor in the United States market having a 28.9% market share. Diversity in the varieties offered by the Monster Energy brand differentiates the company from its competitors since it offers 34 different drinks with a distinctive logo in the shape of the claws of a monster that standout for the targeted audiences. Monster Energy also sponsors extreme sporting events with its interest in BMX, Supercross, and Motorcross events. Monster landed a major deal with the Coca-cola making the latter become its main distributor of the brand.

Rockstar owns 9.8% of the United States market share and contains a large variety of flavors making up approximately 20% of the product varieties. The brand is famous for its package outlook of mostly the can which has a distinct flavor. It also has an organized distribution channel with Coca-cola Company. It has also been successful in creating Rockstar brand lifestyle with its famous slogan “Party like a rockstar”.

Therefore our company, Vita-myHealth Energy drink anticipates facing stiff competition from these largest market players. However, the brand plans to differentiate itself by branding itself as the healthy alternative as it shows its interest in their health concerns of the ingredient used in making energy drinks by labeling them in the cans. Its marketing strategy is also vital in tapping customers and maintaining them. Plus the brand could opt to use a niche marketing strategy to try get a market share which is monopolized by the top three firms.

It will also try to sponsor events of a real course like charitable events as we try to create a “peaceful kinda cool swagger” perception into our consumers. We will also try sponsoring traditional to an extreme sports event in a bid to interact with our target audience.

We will invest in the design of the product logo which will be fresh and conspicuous. The label will be designed mainly to match up with the millennials demands plus it may embrace some technological aspects on how it looks with some lighting. The can will be easy to use and generally give a refreshing outlook.

Marketing plan & sales strategy

For the company to be financially successful, attain profits and meet the mission of the company the company has to embrace a realistic and efficient marketing strategy. Moreover, as research of our competition has shown the Energy Drink category brands are widely invested in marketing especially the leading market players.

Moreover, our market strategy should be in line with what our target market interest lies. The major marketing strategy that could be used is that of social and digital media since most millennials holds accounts in them. These social sites include Facebook, Instagram and snapchat just to name a few. This platform support image and video graphics, therefore, provides a platform to interact with our customers and brand ourselves. Furthermore, the social media sites offer a quick and effective medium that can reach more people within a short period. The company will incorporate the use of billboards in busy roads as a way to advertise.

Trade promotion and sponsoring sports events are also a powerful marketing tool that is able to simulate potential customers to purchase plus they offer an opportunity where the customers interact with the brand, and free samples can be offered. The offering of free samples simulates trial and product testing.

Adopting “buzz” marketing strategy. This strategy is where the company targets a focus group that will test the product and tell people about the product. For instance, you could have a group of influential college students have a test of the product during parties. They are usually referred to as the “alpha bees”. Furthermore, the company could offer free samples in those parties. This would boost sales tremendously if effected successfully.

The company could adopt a 4 (p) marketing strategies that would help in the development of quality and image of the Vita-myHealth product. These 4 P's are: price, promotion, place and product. For the price, the set price will factor in the cost of production and manufacturing. The price would be slightly higher compared to other companies that are making entry due to factoring in ingredients that are friendly to the health of the consumers.

The product will be promoted as the healthy substitute as it tries to ascertain the safety of the product by labeling the ingredients used. Moreover, the company will seek to paint a picture of the brand as peaceful but cool as its identity.

The place where consumer purchases the product is very vital. Therefore the company’s product should be more accessible and appeal target consumers, for instance, in gym and campuses.

Ethics and responsibility

We as the horizon manufacturing company believe that we owe a responsibility to the community by ensuring that it takes care of the environment. The fact that the horizon is using the organic product rather than using chemicals will be favorable to the environment since organic products are somewhat biodegradable therefore they are unlikely to pollute the environment.

On water pollution, we shall minimize or avoid adding any preservative to the products since they are pollutants that can cause diseases and other side effects. This preservative finds their way to rivers through sewerage system. Moreover, other than dumping contaminated waters to rivers our Horizon manufacturing company will look to recycle those waters in a bid to ensure we protect our rivers.

For air pollution, we will mitigate this by reducing the number of chemicals we use during manufacturing of our products. We will ensure we embrace technology to help us reduce the amount of noxious gas emissions to the vicinity since we are a company that believe in the climate change and its impact to the world. Emission of these gases could lead to depletion of the ozone layer causing floods and unpredictable rain patterns.

The horizon company has come up with a plan to aid in energy saving. This has been made possible by the fact that our can are made up of aluminum which is a natural ore. Aluminum can are 100% recyclable therefore will save the company resources that would be used to manufacture new cans. These resources would, therefore, be directed to other uses by either paying out dividends to shareholders or investing in buying new machinery that would help in increasing capacity to produce more volumes of our product.

The company has even posted in its website an eco-friendly routine for the consumers to follow the target to maintain the environment is free from the litter of the products can.

1. The consumer takes the already used can to a recycling center or dips it into a recycling bin.

2. The disposed of can is taken to a processing facility.

3. A giant magnet picks out cans that are made of metals such steel. Since aluminum cans aren't magnetic, they drop down to a conveyor belt and are gathered.

4. The aluminum is shredded, washed and turned into aluminum chips.

5. The chips are melted under high temperature in a large furnace.

6. The melted aluminum is poured into molds called "ingots."

7. The ingots are taken to a factory where they're melted into rolls of thin, flat sheets.

8. From the sheets, manufacturers make new products, including new beverage cans, pie pans, license plate frames, and aluminum foil.

9. Beverage companies fill the cans and deliver them to grocery stores for customers to purchase.

Customers take used cans to a recycling center and the process starts all over again. This information is vital to the customers to aid them to see the importance of proper disposing of the can thus would help in ensuring the environment is clean.

Moreover, our ingredients are natural and fortunately since the release of some of our few products we are yet to receive complaints concerning about use of our products. We modeled this product with our consumer's health as our primary objective. Our ingredients include B-12 green tea, ginseng, Splenda, honey, Vitamin B, sparkling water, and lemons. As nothing is perfect, therefore our consumers should be aware that there could exist some side effects like lack of sleep, and rash. However, there are multiple positive benefits that the consumer can reap from using the product which include a quick boost in energy and alertness. Vitamin also improves body metabolism.

Job creation is the greatest societal value the company offers. We look forward to offering many jobs both permanent and temporary positions. We target to hire at least 50 students at the end of the first financial year. We believe having hired members of the community will create a spiral effect by setting up an environment that will offer self-employment opportunities plus setting up business related or non-related to our own.

We conclude that for us to make a cut of the market share, we must embrace an effective marketing strategy that targets the millennials across their cultural lines. We will embrace the technology while marketing our product. Moreover, promotions are vital in our business plan. We also acknowledge the responsibility that is due to be offered to the society and the environment. However, what stands out in our project is the need for us to become the leader of the market. It will not be easy but we will not give up.

References

Kelchner, L. (n.d.) The Advantages of a Product Differentiation Strategy. Demand Media. Retrieved on: September 1, 2015. Retrieved from: www.smallbusiness.chron.com

Ferdman, R. (March 2014). The American Energy Drink in two highly caffeinated drinks. Retrieved on: July 28, 2015. Retrieved from: www.qz.com

Abrams, R. (2014). Successful Business Plan: Secrets & Strategies. Planning Shop: Palo Alto

Baylis, D. (n.d.). 3 Characteristics of Responsible Corporate Citizens. Retrieved on: August 4,2015 Retrieved from: www.fastcoexist.com