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marketing______plan1.docxRunning head: MARKETING PLAN 1
MARKETING PLAN 9
Assignment 2: Marketing Plan
Marquise Daniels
Dr. Vernotto McMillan
Bus599 Strategic Management
August 14th, 2017
Marketing Plan & Sales Strategy
Executive Summary
The beverage industry is very wide with few players and with minority large-muscled players i.e. The Coca Cola Company and Pepsi Company. The other players could be considered as minor players in the market. The industry can be categorised into two where we have alcoholic beverage manufacturers and the non-alcoholic beverage manufacturers. Classic Drinks limited is registered under the non-alcoholic beverage manufacturers sector. It therefore has to compete with the two major market players stated above. Historically, these two companies have been able to control the market for years now. For smaller companies like Classic Drinks limited, entering such a market would be a drop in the ocean. But all is not lost because economically, markets are flexible. Consumer satisfaction depends with time and trending conditions in the various aspects of life such as technological innovations, health changes, social interactions etc. (Bierman, H., 2011). These aspects could have an effect on a person’s consumption trend. So approach made in entering this market is what matters for Classic Drinks limited. We have to develop a unique, effective and efficient market plan and sales strategies that would cater for the gaps in this market and be able to create, develop and grow new market niches within this existing market. The Company will be banking on what these existing companies have not done for our success.
Target Market/Customers
People use non-alcoholic beverages for different purposes such as to quench thirst, for flavour etc. However, flavoured drinks do not majorly quench thirst. What if we could have a flavoured drink that is used for flavour purposes and for quenching thirst? That’s the market gap that Classic Drinks limited will majorly concentrating on. The company will be sourcing for supplies from manufacturers which they will use to make naturally flavoured waters. The naturally flavoured waters will be used by for quenching thirst and for flavour. This aspect will be like killing two birds with one stone. When a customer does not need to fully consume a flavoured drink and at the same time, he or she does not want to consume water which is completely unflavoured, he or she will opt to consume our naturally flavoured water. This is one of our target markets. Will also be producing the other flavoured drinks, water and teas which will fight for the market share with the other companies.
Classic Drinks limited is also targeting to embrace the mobile product provision or the deliver on bulk order sales strategy. Through this, the company will be targeting markets such as in house parties, weddings, ceremonies and parties, sporting events and institutional events. Most of these deliveries will be made on order i.e. by both triggered orders whereby our sales personnel will be on the lookout for such events before they take place- through the event organisers- and request for deliveries and mobile services. Secondly, will also be expecting customers to make direct orders or request to be availed with such services. We want to bring the product to the consumer’s door step and save the consumers the hard hustle of travelling to distribution points, shops or supermarkets to purchase these products. The company will also have its own distribution networks through depots, market suppliers, supermarkets and shops. We expect the distribution network to have a minimal intermediary section i.e. middlemen, to reduce the inefficiencies that could occur due to this aspect e.g. limit of contact between the company and its customers and influences on prices and distribution of the products (Ferrell, O. C., 2016).
Business Location and the Target Market
Classic Drinks limited is registered in Washington D.C. and is expected to serve the market within the state of Washington Dc area and its environs (Hewings, 2017). The target market/ customer segments within this location will include the following: the general consumers who take soft drinks, wedding parties, sports events, institutional events, ceremonies and in house parties. The company will majorly serve the internal market and is not expected to serve at the international level currently. Within the location above, the company is expected to have its market positions majorly dictated by the customer segments. Since its mobile product provision will be delivering the products to the customers’ residence or location, this segment’s market position will be determined by where the customer is situated. The other market positions will be the distribution depots, shops, supermarkets and market suppliers stationed within Washington D.C. and its environs.
The target market is approximated to be made up of 681,170 plus people living within Washington D.C. and its environs (2016 Population Estimates). It’s evenly distributed in terms of sex where 47.2% of the population are male and 52.8% are female. The age distribution of the target market is also as stated below,
(https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF)
The median and the mean 2015 income estimates for the target market in Washington D.C. and its environs were as follows:
(https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF)
These composition aspects of the market therefore, shows a better opportunity to make goods sales on the company’s products. The age of majority i.e. 16 years and over caters for the largest population category and this are the consumers who are majorly targeted. The income levels also indicate that the population is better placed to afford our products.
Marketing Mix
The marketing mix that will be applied by Classic Drinks limited will encompass the product, pricing aspect, the promotional aspect, the place or the distribution aspect (Kotler, P., 2000). The products that are produced and sold by the company are beverage products which are non-alcoholic e.g. flavoured drinks, water, naturally flavoured waters and teas. Supplies for the products are majorly sourced from major manufacturers and other suppliers within the country. The pricing of the product will be based on quantities in which they are packaged. The smallest quantity will be the 300ml bottled water, naturally flavoured water and flavoured drinks that will go for $0.25, $0.35 and $0.485 per bottle respectively; 500ml of the same will go for$0.35, $0.55 and $0.685 per bottle while the 1 litre quantities will go for $0.70, $1.10 and $1.37 respectively. The canned naturally flavoured water and flavoured drinks will go for $0.40 per can while teas will be packed in 400ml cylindrical tins which will be sold for $ $0.50 per tin. The pricing would however will be flexible to the changing market conditions and competitor pricing options.
The promotional strategy that will be undertaken by Classic Drinks limited will include the following, advertising where the company will reach its target market through radio and TV adverts, print media adverts e.g. newspapers, magazines, fliers, use of billboards and branding. Personal selling through the sales personnel will also be used. It will involve direct contact promotion of the company’s products to the consumers through sales visits, phone calls, SMS, sales mails, brochures etc. Sales promotional techniques will be applied in boosting the company’s sales e.g. by offering cash discounts and sales discounts to the target markets. Online marketing will be applied by the company through the company’s website and the social media platforms. The last promotional strategy that the company will apply is the involvement of Corporate Social Responsibility activities such as sponsorship programs to create goodwill with its target market. The distribution channels of the company will include distribution depots, shops, supermarkets and market suppliers stationed within Washington D.C. and its environs.
Marketing Budget
The marketing budget will be made up of the estimated expenses that will be incurred in setting a base in the market i.e. through earning a market share and making targeted sales. The budget will be based on the current installations in the market and first years expected marketing expenses. This marketing cost will then be transferred to the income statements of their respective financial years.
Sources and use of funds
Classic Drinks limited being a limited company, will have the major portion of its capital for investment being made up of funds from sale of shares. The Company will issue common stock shares for purchase by the prospective customers. The capital structure of the company will also be made up of the long term debts from financial institutions such as banks. Classic Drinks limited is planning to fund its business through retained earnings which will be at least 20% of its net income for every financial year for the next five years. The percentage of the retained earnings will then be changed after the stated period or will remain the same considering the company and market performance. The initial capital structure for the company will be as follows:
The sourced funds i.e. from the sale of common stock shares and the long term debt will be majorly applied in starting up the company. A portion of this start-up capital will be channelled to the marketing department to carry out the marketing activities of the company. As indicated in the marketing budget, the initial budgeted costs for marketing to be incurred by the company comes to a total of $13,575,000. For the preceding years, the marketing costs will be charged on the gross income of the company.
Plan assumptions
The marketing plan is drafted and expected to be applied with the following assumptions in place.
a) The market niches for Classic Drinks limited are expected to click immediately with positive sales being made.
b) There will be minimal variance between the budgeted costs and the actual marketing costs to be made of utmost 2% of the budgeted cost per item.
c) There will be manageable market entrance forces.
d) There is a sufficient customer base.
e) The business will be profitable as from its initial year of operation.
f) There will be availability of adequate and efficient capitalisation.
g) There will be adequate management expertise to take off the company in a profitable basis.
Break-even analysis
Classic Drinks limited has to make sales equalling to the states revenues above in these financial periods in order to make cover for all its costs of sales and other operating costs, without which, the company will end making losses in these financial periods.
References
Bierman, H. (2011). Improving the competitiveness of the industry. Singapore: World Scientific.
Ferrell, O. C. (2016). Marketing strategy. S.l.: Cengage Learning
Hewings, G. D. (2017). Regional Industrial Analysis and Development. Routledge
Kotler, P. (2000). Marketing Management. (Millennium Edition), Custom Edition for University of Pheonix, Prentice Hall
Sources
2016 Population Estimates
https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF
https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF
U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates
bus_599_assignment_2_marketing_plan.docx
SubjectHouseholdsFamiliesMarried-couple familiesNonfamily households
Median income,$70,84885,321148,63961,466
Mean income,$107,594134,869195,62484,290
Classic Drinks limited
Marketing Budget
Cost CategoryCurrent Estimates,EST 20172018
Amount $ '000'Amount $ '000'
Market Research and Survey Costs1,2450
Product Promotion costs e.g. Free Samples2,5000
Publicity e.g. Road Shows800215
Creation of Website950
Website Maintanance Costs022
Social Media Marketing175120
Viasual and Audia Media Adertisement9550
Print Media Advertisement8545
Creation of Distribution Channels1,9800
Maintanace of Depots080
Supply to Distribution points3,0453,800
Salaries Of marketing Personnel9952,030
CSR Costs190190
Mobile Service Provicion Costs2,0453,000
Cost of Marketing Agency325500
Total Costs13,57510052
Capital Structure
1,000,000 Common Stock shares to be issued at $85 per share$85,000,000
Long term debt$35,000,000
Retained Earnings (≥20% of the net income)
Total$120,000,000
Year 1 (2017-2018)
September
$973,855
October
$944,631
November
$925,473
December
$906,218
January
$884,925
February
$865,475
March
$5,801,457
April
$5,784,343
May
$5,767,133
June
$5,749,826
July
$5,732,421
August
$5,714,919
Monthly Average
$3,337,556
Year 2 (2018-2019)
September$5,841,745
October$5,844,738
November$5,847,733
December$5,850,730
January$5,853,728
February$5,856,729
March$5,648,667
April$5,651,562
May$5,654,458
June$5,657,355
July$5,660,254
August$5,663,153
Monthly Average
$5,752,571
Year 3 (2019-2020)
1st Quarter$17,437,924
2nd Quarter$17,464,680
3rd Quarter$17,491,430
4th Quarter$17,518,164
Quarterly Average
$17,478,050
Year 4 (2020-2021)
1st Quarter
$17,989,759
2nd Quarter
$18,017,074
3rd Quarter
$18,044,334
4th Quarter
$18,071,527
Quarterly Average$18,030,674
Year 5 (2021-2022)
Annual Average$74,309,206
AgePopulation% Representation
16 years and over512,57585.2
18 years and over500,90883.2
21 years and over465,48777.4
62 years and over85,64114.2
65 years and over68,80911.4
