Invigo Juices Business Strategies - Example

Invigo Juices Business Plan Student: Institutional Affiliation: Date: Table of Contents Part One 4 Introduction 4 Executive summary 4 Objectives 5 Vision 5 Mission 5 Product 5 Self analysis 6 Part two 6 Marketing Research 6 Geographic 6 Demographic 7 Primary research 7 Competition 8 Market segment analysis 8 Analysis of potential location 9 Part three 9 Organisation and Personnel plan 9 Ownership Choice 9 Personnel needs 10 Organisational structure 10 Hiring Strategy 11 Part Four 12 Marketing Plan 12 Product 12 Pricing policy 12 Promotional plan 13 Distribution 13 Part five 14 Financial Plan 14 Invigo Juice Income statement for the first three years 14 References 14 Appendix A 18 Part One Introduction Executive summary After extensive market research, the owner discovered there is a need for a 100% natural, organic, non-GMO juices and smoothies for the Australian market. Currently, there are a few players such as boost juice offering smoothies and juice extracted from fruits and vegetables. Currently, Boost juices dominates the Australian market with a product line that is almost similar to what Invigo intends to offer[Boo16]. The owner believes Invigo is a great name for a nutritious juice as it is derived from the English word “invigorate”, which means energize, refresh, rejuvenate or revive[Col161]. Invigo line of juices and Smoothies will be 100% natural, organic, non-GMO cold-pressed juices. The raw materials will be fresh fruits, vegetables and other ingredients sourced from Australian farmers. Invigo juices will initially be introduced in the Canberra area, whose population has a higher disposable income than the rest of Australia. Invigo juices and smoothies targets to gain a 30% market share of the fresh juice market in Canberra in three years. Invigo will rely on the founding owner’s management expertise, passion and commitment. In addition, the start-up company also intends to aggressively promote its organic, non-GMO fruit juices and smoothies through trade fairs, social media, digital platform and retail stores. Invigo success will largely be guaranteed by the company’s focus on quality, natural ingredients and creative packaging and branding. Invigo expects to be profitable in the second year of operations. In the third year, Invigo juices is projected to generate a net profit of $309,595 Objectives Invigo juice expects to gain 30% share of the fresh juice and smoothies market in Canberra within three years of introduction by offering 100% natural, organic, non-GMO juices and smoothies for the Australian market. Vision To be the leading natural juice brand in Australia Mission Invigo’s mission is to offer its customers value for money by producing high-quality, fresh, tasty and nutritious juices and smoothies that are 100% natural, organic, and non-GMO. Product Invigo line of juices and Smoothies will be 100% natural, organic, non-GMO cold-pressed juices. The raw materials will be fresh fruits, vegetables and other ingredients sourced from Australian farmers. Invigo juices will offer the target consumers an alternative product that is more nutritious, healthy and tasty. Health-conscious consumers can be assured that Invigo will not only quench their thirst, but also rejuvenate them and boost their immunity. Invigo juices will be priced between $5 and $7 depending on the cost of production. Organic, non-GMO raw materials may be more expensive to use. Invigo expects to sell at least 5000 bottles per month for the first 6 months. This volume is expected to increase to 10,000 to 15,000 in the second year of operations. Self analysis I believe I have the skills and the passion to start producing and marketing Invigo juices for the Australian market. I have a background training in business management and marketing. I am passionate about pursuing my entrepreneurial dream by offering creative products that meet the needs of consumers. I consider myself a transformative team leader as I prefer motivating people towards adopting my vision for a greater goal. I have achieved this in my school projects and small income generating projects in my neighbourhood. I believe I am a reliable team player who can motivate my team towards making Invigo a leading natural juice brand. Part two Marketing Research Invigo juices will focus on the following market segmentation to increase its chances of success in the Australian market. Geographic The Company will first introduce its juices and smoothies in Canberra and expand into other parts of Australia after one year depending on the strategic factors that will be considered by the, management from time to time. Canberra has the lowest level of unemployment in Australia at 3.4%. Canberra’s population stands a little over 350, 000 that has the highest level of disposable income at average weekly wage of $1702 compared to the national average of $1485[Aus15]. These factors make Canberra an ideal geographic segment to introduce Invigo juices and smoothies in Australia. Demographic Demographic data for selected Australian region (Canberra) Population 356,586 Number of families 95,397 Average Children per family 1.8 Median weekly household income $1920 Median weekly rent $380 People below 65 years 89.3% Unemployed 3.6% Households with rent as less than 30% of income 92% Source: Australian Bureau of Statistics Primary research Invigo juices will conduct a series of focus group interviews that includes several prospective consumers picked from different parts of Australia Capital Territory. The use of focus groups is a relatively affordable research method that will enable the company understand consumer perceptions and improve on practical suggestions[Gai12]. See Appendix A for a sample of the guiding questions. Competition There are a few players in the Australian market offering a product similar to what Invigo Juices intends to introduce into the market. Boost juice is the dominant player in the Australian fresh juice industry. Boost juice operates a chain of retail outlets in Australia and internationally. Boost juices has been operational since 2000[IBI16]. The company has the technical capability, production excellence and financial backing to offer stiff competition to Invigo juices. However, Invigo juices can rely on its flexibility, product differentiation and branding to compete with Boost juice. Apart from Boost juice, other indirect competitors such as Pepsi and Coca-Cola that mainly sell carbonated drinks have a huge share of the Australian beverage market[Aus151]. Carbonated drinks are still very popular in Australia despite the fact that several studies have linked them to lifestyle diseases such as obesity. For example, it is estimated that Australians currently consume more than 1.28 billion litres of carbonated drinks per year[Ret15]. Invigo juice and smoothies will offer a healthy and equally refreshing and tasty alternative to carbonated drinks. Carbonated drinks have 16 teaspoons of sugar per 600 ml bottle[Dun16]. This is dangerous to the health of consumers as it leads to lifestyle diseases. Invigo will get free promotion from government agencies and nonprofits that promote healthy living. Market segment analysis Invigo juices target market comprises young Canberrans between the ages of 5 and 65 years. The age group between 18 and 65 is very much concerned with the health benefits of fruit juices and is likely to recommend it for the group between 5 and 18 years[Aus151]. Canberra households have an average of 1.8 children per house and a median weekly household income of $1920. 92% of the households spend less than 30% of income on rent, meaning they have high levels of disposable incomes that can be used to buy premium fruit juices like Invigo. There are also low levels of unemployment meaning the company can expect consistent growth and sustenance of product sales[Aus15]. Analysis of potential location Invigo juices will be located close to Canberra central business district. The business is specifically interested in leasing space in the Hume area. Old stores or an abandoned but functional business premises may be ideal for conversion into a processing centre. Invigo juices will also operate retail outlets in nearby areas such as Kingston, Manuka and Civic to promote the brand. Hume area is located close to the market and is well served by rail, road, and rail transport[Aus161]. Part three Organisation and Personnel plan Ownership Choice The owners of Invigo juice intend to operate the business as a limited liability proprietary company under the Corporations Act 2001. Even though this is a complex structure for a start-up, it will allow the business to attract a strategic investor that will require such a structure[Hei10]. The founding manager will own 80% of the business while a strategic investor will own the remaining 20%. The company owner intends to invest personal savings of $12,000 as the seed capital for the idea and expects to raise the rest $4, 000 through sale of 20% at $3000 equity to a strategic partner. The company will maintain a profit re-investment policy for the first five years to enhance its competitiveness through expansion and technology integration. Personnel needs Currently, the business owner is the sole employee in the business. However, the owner intends to hire two production staff members who will be supplemented by three part-time employees. The business will also have a full-time loader and a truck driver. The owner will also hire a marketing and sales executive to assist with marketing the products and handling client relations. The business will also require the services of an accountant who will also handle the human resource function. The owner is the managing director in charge of administration and all other operations in the business. Organisational structure Invigo juices organisational structure is a flat structure with the managing director at the core of the business management. This structure is appropriate at this stage to overcome unique start-up challenges such as changes in operational objectives and strategy confusion[Rob11]. Hiring Strategy Invigo intends to offer competitive salary packages to motivate employees. The company will also strive to improve employee performance by implementing a performance management and reward system that accommodates all positions in the business. Employees will also be offered bonuses when sales targets are met or exceeded. As the company expands, employees will be offered 10% shareholding, a quarter of which shall be free while the rest shall be paid in easy instalments. Part Four Marketing Plan Product Invigo line of juices and Smoothies will be 100% natural, organic, non-GMO cold-pressed juices. The raw materials will be fresh fruits, vegetables and other ingredients sourced from Australian farmers. Invigo juices and smoothies will initially be available in two flavours, Banana-passion and Raspberry squeeze. The juices and smoothies will be packaged in 350 ml branded special, clear plastic bottles. The predominant colours will be green, brown, orange, purple, red and yellow. These colours occur naturally in several fruits and will thus enhance Invigo’s natural juice and smoothies claim. Pricing policy Invigo will initially rely on a skimming pricing strategy that will involve setting a higher price to communicate the health benefits and premium qualities of the brand. A higher price also allows a company to recoup the initial investment cost before the market is flooded with stronger competitors [Oli12]. However, Invigo may consider lowering its prices by introducing low-priced juices and smoothies in its product line. Invigo juices will be priced between $5 and $7 depending on the cost of production. The average price of Boost juices in Australia is $4 to $5[Boo16]. Invigo will consider discounting by up to 20% in the first five three introductory months. Invigo aims to generate profitability from high profit margins that should be 50% of the wholesale prices. Promotional plan Invigo will promote the new brand in retail stores by paying for display space. Personal promoters including the founder will occasionally popularise the new brand in stores and malls to create awareness. Invigo will initially rely on less-costly advertising options such as social media promotions through sites such as Instagram, Twitter and Facebook. The company will pay for targeted advertising campaigns in these sites and conduct regular promotions and offer information relating to the product. Invigo will also market via Google ads and YouTube videos, trade shows and festivals including the Canberra Food and Wine festival. Distribution Invigo will reach its target market through various distribution channels. Invigo will operate retail outlets where its range of juices and smoothies will be served. Invigo will also negotiate with several retailers and grocery stores to have its juices and smoothies on display. Invigo will further sell its juices and smoothies online through its website and social media accounts. Online sales will basically be a weekly delivery plan where customers buy at least twelve 350 ml bottles per week to cover the delivery costs. Part five Financial Plan Invigo Juice Income statement for the first three years 2017 2018 2019 Sales $800,000 $1,200,000 $1,500,000 Direct Cost of goods sold $120,000 $150,000 $160,000 Sales returns $10,000 $8,000 $6,000 Gross Profit Margin $670,000 $1,042,000 $1,334,000 Operating Expenses Salaries and Wages $ 380,000 $400,000 $400,000 Rent $150,000 $200,000 $240,000 Water & Electricity $40,000 $45,000 $45,000 Internet and Telephone $4,000 $5,000 $5,000 Insurance $ 30,000 $30,000 $40,000 Marketing and Promotions $100,000 $120,000 $120,000 Depreciation $3,000 $3,000 $3,000 Payroll taxes $50,000 $50,000 $48,000 Total expenses $757,000 $853,000 $901,000 Net profit before tax ($87,000) $189,000 $433,000 Corporation Tax - $53,865 $123,405 Net Profit ($87,000) $135,135 $309, 595 References Boo16: , (Boost Juice, 2016), Col161: , (Collins English Dictionary), Aus15: , (Australian Bureau of Statistics , 2015), Gai12: , (Goodman, 2012), IBI16: , (IBIS World, 2016), Aus151: , (Australian Food News, 2015), Ret15: , (Rethink Sugary Drinks, 2015), Dun16: , (Dunlevy, 2016), Aus161: , (Australian Capital Territory Government, 2016), Hei10: , (Heintz & Parry, 2010), Rob11: , (Hastings, 2011; Spinelli & Adams, 2012), Oli12: , (Oliver & English, 2012; Schindler, 2011), Appendix A Focus Group Guide Everybody to introduce themselves (demographic details such as age, location and occupation should be included) A What do you think about Invigo brand name? After drinking Invigo Juice and smoothie, what do you think about the products? Have you had any other natural juice or smoothie before? How would you compare it to Invigo? B How important is to you that a product is organic, non-GMO and chemical-free? Do you believe Invigo is actually 100% natural, organic, non-GMO and chemical-free? Would you pay more for a natural juice that what is currently charged for carbonated and concentrate-based drinks? Is it important to you that Invigo raw materials will be sourced in Australia? C What ingredients would you like to be included in the Invigo product line? Are there ingredients you think we should remove from Invigo? Exemplify What quantity of packaging best suits you needs? Do you like Invigo branding and packaging? What would you suggest to improve? D Would you buy Invigo juices and Smoothies online? How often would you be drinking Invigo juices and Smoothies? Do you have any comments for Invigo management? 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