New Business Idea - My Menu - Case Study Example

NEW BUSINESS IDEA: MY MENU By Student’s Name Code+ course name Professor’s name University name City, State Date The Business Idea My Menu is a mobile and PC app that integrates a number of things to make cooking and fridge organization enjoyable and at the same time cost effective. The App links the users with their fridges and the closest grocery store thus making it easier for users to know the groceries as well as food items that have run out and require replacement. In addition to that, it comes with a social platform through which users can interact and exchange cooking ideas and tips. With the increased usage of Smartphones, tablets as well as computers, application development businesses have proved to be very profitable. Not only do these ventures offer an opportunity to mint a lot of money, but it also makes it possible for jobs to create and innovative ideas to be turned into real ventures. The food industry has also grown over the past few decades with more people now concerned about what they take and whether the food has any health benefits or not. My Menu app builds on the opportunity offered by the developments in the mobile and computer apps as well as food industry. Most individuals in the modern society spend a lot of time away from their homes at work. This means that monitoring what is in the kitchen and the fridge becomes hard. After a hard day at work, most people usually forget to refill their grocery stocks. In addition to that, most people end up taking unhealthy fast foods because they are so tired to come up with a recipe and prepare food for themselves after a day’s work. Shopping for groceries can also be cumbersome, especially when retiring from a day’s work. Not only are we prone to forgetting some of the crucial food and grocery items that need to be purchased, but we might also end up purchasing items that are already present in enough quantities back home. Deciding on the right menu as well as recipes also offers a big challenge to individuals who have just had a long and tiresome day at work. My Menu promises to solve all the above problems. The application will be integrated with the user’s fridge. A miniature camera will install in the user’s fridge thus making it possible for the users to remotely view items that are absent or running out of stock. The application will automatically generate a list of items that have run out of stock thus making it even easier for the users to pick the food and grocery items that are required. Apart from that, the app will also come with the capability of connecting to the online platforms of the nearby groceries. Growth in technology has seen many businesses changing their systems to offer online capabilities, not only can customers purchase commodities online, but they can also make requests for the commodities to be delivered at their door steps. My Menu connects users with the nearby grocery and food stores, thus making it possible for online orders and delivery requests to be made. Users can therefore get their grocery supplies without necessarily walking into the grocery stores. The app also comes with a social platform where users can share recipes, menus as well as pictures. The social accounts also makes it possible for cooking as well as grocery shopping tips to be exchanged. After a tiresome day, the users can just log into their accounts and scroll through quick recipes and menus proposed by other users. The users also have an option to scroll through a wide variety of menus that include dessert menus, dinner menus as well as lunch menus. Ingredients and tools required to prepare and serve the foods are also listed on this platform. The app also makes it possible for the users to order food ingredients required to prepare a certain meal. Users will also be offered with daily tips on the most nutritious mix of food, fruits and drinks to include in their daily meals. The idea to develop this app came as a result of my daily experiences back home. Both my parents used to come home late and tired after a long day at their respective jobs. Food was rarely prepared at our home and most of the times we had to order food from nearby restaurant. Only weekends provided an opportunity for real food to be prepared, and this came after a number of trips to the nearby grocery to purchase a number of food items and ingredients. Later on when I started living on my own in college, I used to find it hard to come up to the final decision on what food to prepare for myself. Inadequate ideas on recipes and menus, as well as lack of information on the ingredients required to prepare a healthy meal drove me into researching about healthy food and ingredients. It is during this research that the idea of developing an app came into my mind. I found out that there is a way of integrating the food industry and the technology industry. Not only will this app make it possible for people to share cooking and grocery shopping ideas, but it will also make it possible for people to eat healthily at a low and affordable costs. In addition to that, it will make it possible for people to efficiently and effectively manage their grocery and food stocks stored in the fridge as well as their time. Market analysis My Menu App will be available on various mobile and desktop operating systems. For Mobile phones, it will be available on android, IPhone operating systems as well as windows mobile. On desktops it will be available on Linux, Windows as well as Mac operating systems. Recent studies have shown that the number of Smartphone users across the globe has gone up over the past decade. The application will thus be available on various online application stores such as Google play and the apple app store. A free trial version will first be provided to the users. The trial version will include the installation of the Camera in the users Fridge. This will be done in association with our technical partners in various countries. The app targets home consumers as well as players in the grocery industry. The Food Industry The food industry has grown in many ways especially with increased concern from consumers to take healthy food. This paper specifically focusses on grocery food items. Grocery stores have over the years been offering consumers with a point through which their home food stocks can be replenished. Sales in the grocery industry are non-cyclical due to the frequent nature of trips made by consumers to the grocery stores. Competition in the grocery industry is quite high, with consumers having a wide range of options to choose from. Neighborhood supermarkets, convenience stores as well as well as larger retail stores are some of the alternative that consumers have when it comes to choosing the point where they can carry out their grocery shopping. The homogenous nature of supermarkets gives them a greater advantage over typical grocery and convenience stores. The grocery industry can be described as a mature industry. However, application of modern technology in sales as well as marketing is yet to be done to a great extent. The industry is among the few that is safe guarded from the effects of inflation due to the fact that the costs can easily be passed to consumers. Warehouse stores as well as supercenters have come up thus increasing the competitiveness of the industry. Growth in the industry is quite slow but the players in the industry are able to generate enough revenues and cash flow to cover their annual expenditures. The competitive nature of the grocery industry means that there are a lot of opportunities for the app to be utilized by the different players in the industry. For each of the players to stay ahead of its competitors, they will have to come up with strategies that would ensure they maintain and even widen their customer base. My Menu seeks to offer the different players an opportunity to directly interact with their customers. The players can thus increase their competitiveness by offering extra services apart from delivery services. In addition to that, the competitive nature of the business means that the app can be custom made for different players. It offers an opportunity for the app to grow to include other items apart from food and grocery. The grocery industry is yet to fully exploit the benefits offered by Information technology. Partnering with the different grocery stores means that My Menu will be among the few applications tailored for both consumers and producers in the grocery industry. The fact that the industry is mature and inflation proof means that My Menu has a good opportunity to grow as an application of choice for both producers and consumers in the industry. Mobile apps industry As from 2008, the mobile app industry started experiencing rapid growth as a result of apple allowing third parties to take part in application development. The Launch of the iOS 2.0 and the subsequent introduction of app markets for other vendors such as android, saw increased use of mobile applications on Smart mobile devices as well as tablets. This in turn led to more developers engaging in the production of mobile applications. Because the industry is driven by innovation and technology, competition is very stiff. The high levels of competitions means that profits margins cannot be sustained for long without constant improvement and innovation. A survey in 2012 showed that between 2010 and 2011,the number of application developers grew from 49,000 to 72,000. The same year saw the number of developers on the iOS platform grow by 48%. Capital required to enter the mobile application industry is relatively low and competitors compete on equal grounds and terms. Feedback from app users plays an important role in the development and correction of some key areas of the applications. The fixed costs required to maintain a product in the market is also low but the capital and inventory requirements do vary with how complex the development and the design of the app is. It thus be concluded that the market has very low entry barriers with the main threat being existence of many competitors who offer similar products. A recent market research points out that the global market for mobile applications is expected to be worth more the $ 25 billion by 2015. The continued growth of the mobile app market can be attributed to a number of factors such as lowered costs of mobile data usage, advanced network technologies, increased use of Smartphones as well as changes in the revenue-sharing structure. Superior content delivery as well as the 4G and 5G network development presents an opportunity for the development of advanced and meaningful applications. Regions within Asia, especially India and China have over the past few years proved to be the most profitable markets for mobile applications. The 2007 global financial crises did not in any way impact the mobile application markets; in fact, during the economic meltdown in 2007, the market saw the percentage of mobile downloads grow by 146%. The mobile application market is divided into two major segments with the first one being on-deck applications and the second one being off-deck applications. The on-deck mobile applications form the largest segment and accounts for the largest portion of the global revenues. However, the off-deck mobile application segment has shown great potential to grow in the next few years. Formations of new independent stores as well as removal of the key entry barriers are the main reason that will fuel the faster growth of the off-deck mobile applications. A 2009 survey points out that North America is the leading region in terms of revenue share at 41.9 % with the Asian market being the leading in terms of downloads. The European market promises to be the largest market in terms of revenues by 2015. This offers My Menu and opportunity to grow and expand in terms of popularity as well as revenues. The market has also matured over the past years and this gives My Menu an opportunity to explore the various channels available through which it can make an entry into the market. Increased number of mobile application users means that the application will be able to build its own base of users. Low entry barriers as well as costs are also a blessing to the development of the application. The Smartphone industry The Smartphone industry has over the past few years experienced a very rapid growth. The number of people who can now access Smartphones and the services offered by the smartphones has tremendously increased over the last decade. A survey in 2012 points out that the global number of Smartphone users reached the 1 billion mark for the 1st time. The emerging markets in Asia and Africa provide even greater opportunity for the growth of the smartphone industry as well as its usage. Competition in the Smartphone industry is very stiff with providers striving to outwit each other in terms of innovation and software support. The Android platform has over the past few years emerged as a big player and is giving the Apple mobile platform stiff competition in terms of application development and distribution. The stiff competition in the smartphone industry has seen some players such as Blackberry and Nokia wean out in terms of market influence as well as revenues. The increased usage of Smartphones has resulted to the development of a wide variety of applications. Smartphones can be placed used for a number of purposes such as video conferring, picture taking, notes taking, task management as well as budgeting. The largest percentage of smartphone users (81%) use it to browse the internet. 63% of Smartphone users utilize it to connect with friends and make new friends. Online shopping has presented Smartphone users with an opportunity to shop using the phones in the comfort of their homes and cars. A recent surveys point out that 79% of Smartphone users use it to do online shopping while 49% use it to find out and compare the prices of different items. The increased usage of Smartphones means that My Menu can be made available to many people. Porter’s five forces analysis The porters five forces analysis helps analyze the various factors that play an important role in determining the competitiveness of an industry The five factors include threat of new entry, threat of substitution, bargaining power of suppliers, bargaining power of customers and competitive rivalry. 1. Threat of new entry The competitive power of any industry is determine by the threat posed by new entrants into the market. Entry into the mobile app industry is relatively easy compared to entry into other industries. It requires less capital as well as time to enter the industry. Over the past few years, the mobile app industry has shown an upward trend in terms of new entrants into the market. This has seen the mobile application market grow in terms of application developers. The reputation of a brand is of less essence in this market, but over the past 1 or 2 years, consumers have shown to prefer applications that are reputable and which receive positive feedback from users. Industries that are easy to enter make it possible for competitors to infiltrate thereby reducing the profit margins available to the already established players. 2. Threat of substitution The threat of substitution in the mobile application industry is very high. The fact that it is easy for new entrants to make their way into the industry means that the chances of new entrants to come up with applications that can do the same the job as your application are high. This means that users will have a wide array of options to choose from. Mobile applications can easily be copied or imitated by other developers. In addition to that, other developers may come up with greater ideas based on your application thus exposing the application to a greater substitution threat. The power of an application in the industry will be weakened if substitution is viable and easy. 3. Bargaining power of suppliers The bargaining power of suppliers in the mobile application industry is low given the high number of players in the industry. Consumers are able to choose from a wide variety of applications available to them. Higher supplier bargaining power makes it possible for the players to squeeze out industry profits by selling the products at higher prices. Higher supplier power also makes it possible for the players to control a number of other factors in the market. The weaker bargaining power of suppliers in the industry is fueled by the chances that similar suppliers will emerge, high chances that similar resources will be available within a short time and difficulties in extinguishing the product and winning the loyalty of customers. 4. Bargaining power of customers The bargaining power of consumers in this industry is high due to the fact that many applications are available for free. Making the consumers to pay for the applications will be difficult unless additional incentives are provided. The buyers also have a lot of options to choose from. The fact that the application market is easy to enter makes it possible for cheaper applications to be made available. Availability of cheaper alternatives lead to an increase in the bargaining power of consumers which in turn results to reduced prices and lower profit margins. 5. Competitive rivalry Competitive rivalry in this industry is very high given the easy nature of entry into this market. The increased number of mobile application developers means that new ideas are being developed each and every day. Each day sees entry of new players who promise to offer even greater quality applications. Higher levels of competitive rivalry means that customers can easily refuse to use the app if they are not offered better deals than what the rivals are offering. Competitor analysis An online research showed that there are a number of apps that offer one or two services that My Menu offers. However, most of the apps only integrate one or two functions. Most of the competitors offer similar products, with only a handful of applications offering unique ideas. The most competitive applications include Epicurious, NRDC eat local and Fooducate. 1. Epicurious This is a free application that makes it possible for its users to plan out menus to fit their various needs. The application enables users to a thousand of recipes on its official website. The recipes on the official website are divided into various categories such as desserts, dinners and healthy lunches. After choosing the appropriate category and recipe, the app lists the ingredients as well as cooking tools required to prepare the meal. Users of the app are also able to utilize it when shopping by creating a checklist which makes it possible to identify grocery items that have picked and those that have not been picked. It is also possible to print or send a recipe by mail to another address. 2. Fooducate This app is currently available on the iOS platform. This app makes it possible for consumers to know the actual ingredients of the various grocery items they are buying. The rear camera is utilized to scan the barcodes thus making it possible for consumers to pick healthy grocery items. Apart from warning consumers about unhealthy items, it also offers them alternatives to the scanned items. The app was voted as the best fitness app in 2011. 3. NRDC eat local This app makes it possible for users to plan their menus and prepare local foods. By only inputting the area zip code, the application provides users with a range of local food products that are in season together with recipes to prepare the seasonal food items. It is a free application and only available on the apple iPhone operating system. Marketing plan This part outlines the various marketing and sales strategies the company will employ in marketing and distributing the app. We will describe our product and the pricing criteria that we wish to follow. The mobile app industry has a number of major players and the success of each brand lies in the marketing strategy that the respective firms employ. Most of the players position their product to fit the market segments they have identified and try as much as possible to differentiate their products from other products offered by their competitors. The relationship between marketing and sales is important in that it ensures the customers get the value they want. The nature of selling is constantly changing hence the need for marketing and sales strategies to be constantly reviewed. Our research showed that major players in the industry heavily invested in advertising. The main channels through which they advertise include the internet, the T.V, billboards and sports and corporate events. Advertising is the most visible marketing strategy and due to the growth of the internet, advertising through it has become very cheap and reliable. Product and competitive advantage My Menu is unique in its own way. Not only does the application make it possible for various consumers to interact and exchange ideas and recipes, but it also makes it possible for buyers and sellers to interact and a personal level. The app integrates many things that other application developers are yet to embrace. My online research showed that there is no single app that has brought together the various functionalities that the product offers. This places the product way above other food applications. Promotions The application is fairly new into the market. Advertising will play a great role in promoting it. Being an internet based product, most of the advertisement will utilize the internet channel. Not only is the internet cheap, it is also effective in that a larger audience can be reached. Recent research shows that the number of people using social sites and the internet in general has soared. It thus means that the product can be promoted through various social sites. The targeted consumers will be invited to try out the trial version which will be made available for free. Requests will be sent to major grocery retailers through mails. The product will also be offered at a fair price. A fair price encourages more app consumers into using the application. Advertising through television will make it possible for non-internet users to know about the product. Place and distribution The application will be available in all the major app stores. Being an application, its distribution will be much easier as it will only require uploading and approving by the various app stores. App stores can easily be accessed from any point as long as there is internet connectivity. The application will be available on android, apple as well as windows devices. Users will be able to find the applications in their respective app stores. Areas where the app is expected to sell moist include North America, Europe as well as Asia. Position and entry strategy Entry into the market will be through the various app stores. A big internet advertising campaign will be carried out prior to the apps introduction in the market. The app targets people of ages, but specifically young families and single males and females. I aim at placing the app in a strategic position by ensuring that most customers get the value for their money. In addition to that, the app also targets emerging countries in Asia and Africa which are increasingly showing great growth potential. Financial plan Funding Given the low costs of entry and inventory maintenance, it is projected that the highest portion of income will come from personal saving as well as loans from various financial institutions. Setting up of the whole venture will also require an agreement to be entered together with various grocery providers as well as a company that will provide the technical support for the installation of the fridge cameras. Costs to be incurred include licensing costs, labor costs, advertising costs as well as consultation costs. The following table summarizes all the costs. Activity Costs( In Euros) Labor costs 1000 Licensing costs 1000 Advertising costs 12,000 Consultation costs 9,000 Total startup costs 23,000 Euros With regard to the startup assets the following table summarizes what would be required Item Amount(Euros) IT equipment 3000 Office (per annum) 20,000 Short term liquidity 25,000 Machineries 15,000 Total 63,000 The total startup costs would thus be given by 63,000 + 23,000 = 86,000 Euros. Out of the total start-up costs required, I would raise 30,000 Euros from my personal savings, the remaining 56,000 euros will be acquired in form of a loan from a financial institution. Income statement It is projected that the company will be able to generate its revenue through the sales of the applications to various clients as well as through partnering with a number of software providers. The management also looks forward to partnering with a number of fridge companies so that the app and the accompanying equipment can be installed by the fridge company’s during assembling. Partnership with various grocery providers will also generate extra revenues. The following table summarizes the projected income statement for the next four years. The table presents expected revenues from direct application sales as well partnership with other players. Year 1 Year 2 Year 3 Year 4 Direct app sales 55,000 78,000 98,0000 110,000 Partnership 46,000 80,000 100,000 150,000 Total 101,000 158,000 198,000 260,000 With an increased number of mobile app users, the company expects growth in terms of revenues. It has been assumed that no direct competition will be experienced during the four year projection period. In addition to that, the projection has assumed that total expenses will remain constant through the four year period. Future prospective We hope that the app usage will slowly grow to include all grocery stores around the world. In addition to that, we hope to integrate the app so that it can be used on other platforms that are yet to emerge. We also hope to make constant developments on the application so that our competitive position in the app market can be maintained. We also hope to bring on board other players. By bringing other players from different industries on board, we hope to grow to be among the most successful mobile applications. For the exit strategy, I am of the opinion that the best way would be to partially sell the company’s ownership to another player. By partially selling the app company ownership, I would still be able to benefit from it, although the control of the company would be under another individual. I hope to exit the app market by selling the ownership of the app to one of the mobile phone operating system providers. References List Mack, A. C., & Shumrak, G. K. (1975). U.S. Patent No. 3,924,100. Washington, DC: U.S. Patent and Trademark Office. Read More