Woodside CorporationFinal Report - FMCG

Olly DentClaire JohnstonMiriam KnightJames TysonBen Wood

Word Count: 5475

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Contents1. Executive Summary........................................................................................32. Market Analysis...............................................................................................4

2.1. Nature and Structure of the FMCG Industry..............................................42.2. PESTLE Analysis of FMCG Industry and fruit juice market.........................52.3. Porter’s Five Forces Analysis.....................................................................72.4. FMCG Segment Analysis...........................................................................92.5. Primary Research....................................................................................112.6. Opportunity for New Product...................................................................132.7. Customer Analysis...................................................................................13

3. Market Segmentation, Targeting and Positioning..........................................163.1. Perception Map.......................................................................................163.2. Segmentation..........................................................................................17

3.2.1. Behavioural.......................................................................................173.2.2. Psychographic...................................................................................183.2.3. Profile................................................................................................18

3.3. Target Marketing.....................................................................................193.4. Competitor Analysis................................................................................193.5. Positioning...............................................................................................20

4. New Product Development and Launch.........................................................224.1. Introduction.............................................................................................224.2. Product....................................................................................................22

4.2.1. Portfolio Matrix..................................................................................234.2.2. Branding...........................................................................................234.2.3. Launch..............................................................................................244.2.4. Packaging.........................................................................................24

4.3. Price........................................................................................................254.4. Promotion................................................................................................264.5. Place.......................................................................................................304.6. People.....................................................................................................314.7. Physical Evidence....................................................................................324.8. Processes................................................................................................33

5. Forecast and Financials.................................................................................355.1. Financing the Product.............................................................................35

5.1.1. Start-up Funds..................................................................................351

5.1.2. Product Cost per Unit........................................................................365.1.3. First Year Sales.................................................................................375.1.4. Second and Third Year Sales............................................................375.1.5. Expenditure Fixed Costs per Annum.................................................375.1.6. Marketing Costs................................................................................385.1.7. Promotion.........................................................................................395.1.8. Market Share....................................................................................405.1.9. Breakeven Analysis...........................................................................405.1.10. Cash Flow Forecasts.........................................................................40

6. Cash Flow Forecast........................................................................................416.1. Year 1......................................................................................................416.2. Year 2......................................................................................................426.3. Year 3......................................................................................................43

7. Internal Analysis............................................................................................448. SWOT Analysis...............................................................................................449. Conclusion.....................................................................................................4510. Appendix 1 – Consumer Questionnaire Results..........................................4711. Appendix 2 – Health Professional Survey Results.......................................5812. Appendix 3 – Supermarket Observations...................................................6113. Appendix 5 – C&D Distribution from Refresco Gerber to Waitrose.............6214. Appendix 6 – Memorandum of Association.................................................6415. Appendix 7 – Minutes of Meetings..............................................................6516. Appendix 8 – Waitrose Buyer Email............................................................6617. Assessment of Individual Contribution.......................................................6818. Reference List............................................................................................69

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1. Executive SummaryElixir is a fruit juice drink that specifically targets the 55 – 65 year old age range. An apple flavoured version will be initially launched and it will include a variety of natural ingredients such as beetroot and plant sterols that are proven to lower blood pressure and cholesterol levels. Elixir’s packaging will also be made from recyclable materials and contain sustainably grown British apples. Above all, it tastes great and can improve the consumer’s health as part of a healthy, fun and active lifestyle.

From extensive primary and secondary research, it has been established that there is no fruit juice brand that currently targets an older demographic. With the fruit juice market set to grow in the near future and there being a growing ageing population, this represents an un-mined gap within the market that can be exploited for significant profit. This ageing population has high levels of disposable income and is becoming increasingly health conscious, making them an attractive target market. Further to this, the low barriers to entry and higher levels of profit compared to other FMCG sectors means that Elixir is likely to be successful at carving out a defendable niche.

Whilst the market environment is considered tough, it is not insurmountable. Politically and economically, the market is turbulent and the supermarket’s oligopolistic tendencies give them high bargaining power. There is also the potential threat of new entrants to the market. However, the growing ageing population in the UK serves to offer increasing opportunities and despite some indirect competitors, there are currently no direct competitors in the market. The bargaining power of suppliers and threat of substitutes is low creating favourable market conditions for Elixir.

Following the segmentation of the 55 – 65 year old market, Elixir will target consumers known as ‘zestful explorers’ who are looking for a rejuvenating/anti-ageing drink that can be bought with their weekly grocery shop and consumed on a daily basis. The ideal customer has been conceptualised as a retired but highly active and sociable 60 year old woman. She is part of the 1/3 of 55 – 65 year olds who are increasingly health conscious and are keen to stay younger for longer. From an extensive competitor analysis and supermarket observations, Elixir will be deliberately positioned as a premium, high-end health drink specifically targeting this demographic.

As a healthy fruit juice drink, the Elixir brand will embody the fun and active side of later life. The name Elixir was chosen for its simplicity as well as its life extending connotations. The theme of simplicity is continued with the product’s packaging that, as well as having a clean image, will also stand out on a cluttered shelf and is made from recycled materials. Elixir will be priced at £3 per litre bottle to place it competitively at the premium end of the market. This price will also be affordable for the target audience as a result of their high disposable income. Due to financial constraints, Woodside Corporation plans to use a

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combination of magazines, in-store taste stands, trade stands at events and PR initiatives to promote Elixir. This ensures strong communication with the

target audience whilst not diminishing potential profits. Following primary research and correspondence with a Waitrose buyer, Elixir will be sold exclusively in a cluster of Waitrose stores in the Cotswolds at first before expanding geographically in years two and three. This launch strategy will place Elixir within a defendable niche.

The forecast and financial section shows that the company will be successful and a good investment. Woodside Corporation with the help of an angel investor will start with £100,000.00 this will cover start-up costs and the first year where the company loses money. By February of the third year Elixir earns above the initial investment funds. Elixir’s contribution per unit is £0.95 and as the product enters more stores, the units sold drastically increases. By the end of the third year Woodside Corporation will have a 1.12% market share and considerable funds to expand the brands portfolio.

Woodside Corporation recommends that the proposed angel investor contribute £50,000 to Elixir’s start-up capital. Comprehensive research indicates Elixir will be a highly successful brand that can fill a gap in the market and maintain significant long term profits.

2. Market Analysis

2.1. Nature and Structure of the FMCG IndustryA Fast Moving Consumer Good (FMCG) is a product that consumers buy on a regular basis and use every day. It is characterised by three key traits:

1. Low in price (Masterson & Pickton, 2014)2. Sold in large quantities (Malhotra, 2014)3. Frequently purchased –daily/weekly basis (Masterson & Pickton, 2014)

The FMCG market, worth approximately £179bn (Mintel, 2014), can be segmented into many small niches but for the purpose of this report, Woodside Corporation has used six broad categories (Figure 1).

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76.6

65.2

5.39.6

18.63.6

FMCG Market Size (£bn)

FoodDrinkHouseholdPersonal CareTobaccoPharmaceuticals

Figure 1 – FMCG Market

As can be seen from the pie chart showing the market size for each category, the FMCG industry is dominated by the Food and Drink sectors. These account for almost 80% of the market share and nearly £142bn worth of sales. This is distantly followed by Tobacco with 11% of market share. This can be attributed to the fact that food and drink items are consumed more regularly and in greater volume than other categories.

2.2. PESTLE Analysis of FMCG Industry and fruit juice market

PESTLE exploration is used to give consideration of factors surrounding the environment (Lynch, 2012). The company has undertaken a PESTLE analysis to identify external influences on the FMCG industry as well as the fruit juice market.

Factor AnalysisPolitical

Following uncontrolled immigration and legal interference, the UK is potentially holding an EU referendum in 2017. This will affect the FMCG market in two ways (Grant Thornton, 2013):

Reduced free trade Reduced free movement of labour

For the General Election in 2015, the various parties are in the process of outlining their manifestos. A Conservative-led government will be more pro-business than a Labour government (The Telegraph, 2013).

EconomicThe UK has experienced a major recession and disposable incomes have fallen, causing consumers to reduce spending. Whilst demand for FMCG products has remained high, FMCG brands have had to offer greater value through price and promotional drives. Even once incomes rise, consumers will continue to expect the same value.

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Britain now has a budget deficit of £11.6bn (Bloomberg, 2014). To meet the interest rates and spending commitments, borrowing will continue and consequently, taxes will rise and public sector spending will fall.The Fruit Juice market alone is worth near £1.9bn in 2013 (Keynote, 2014). The market itself is exponentially increasing year on year, showing that the demand for different drinks is growing (Keynote, 2014).

SocialIn the developed West, over 60s make up over 20% of the population and this is set to increase further in years to come (Hooley, et al., 2012). This growing demographic group is relatively wealthy and is quickly becoming an attractive target market to FMCG brands.Following high levels of immigration, Britain has seen an increasing number of diverse cultures develop (The Telegraph, 2009). This has created opportunities for new markets within the FMCG sector in the UK, as shown by Sainsbury’s creating ethnic food aisles.Trends in the juice industry (Keynote, 2009):

Increase in popularity for ‘natural’ ‘healthy’ drinks- Vitamin Water, Coca Cola Life leaves plenty of opportunity for NPD for some time to come.

Juices and smoothies are increasingly purchased in favour of other snacks such as crisps or chocolate.

Manufacturers of fruit juices have capitalised on the well-publicised ‘five-a-day’ recommendation, promoting their products as an easy way for consumers to meet this target.

Functional foods, which effectively address issues such as high blood pressure and high cholesterol, among others, should continue to enjoy strong growth potential among the ageing population, given the large majority affected by these ailments (Mintel, 2011).Over-55s are taking a proactive stance towards eating healthily, being more likely than the younger cohorts to make dietary changes such as eating their recommended five portions of fruit and veg per day and including more fibre in their diet as a way of improving digestive health (Mintel, 2011).

TechnologicalConsumers find that online shopping can often be faster, more flexible and more enjoyable than spending precious time in supermarkets (The Daily Mail, 2013). Smartphones and tablets offer new consumer engagement channels.Radio Frequency Identification allows resources to be identified and tracked throughout the operations process. This has improved the efficiency of the supply chain (Bottani, et al., 2010) and therefore profits of FMCG brands.

LegalThe Consumer Protection Act (1987) states that brands are prohibited from manufacturing unsafe goods and misleading customers on price. Failing to adhere to consumer laws will also

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have serious consequences.The Advertising Standards Authority (ASA) applies advertising codes to many industries. An example of this could be where the ASA banned Budweiser radio advert in April 2012 which they believed suggested that there was a link between alcohol consumption and sexual success (Advertising Standards Authority, 2012).The Fruit Juices and Fruit Nectars (England) Regulations 2013 are the main body who give guidelines to the fruit juice industry (UK Government, 2013). The legislation states that fruit juice is 100% pure juice made from the fresh fruit and is not permitted to add sugars, sweeteners, preservatives, flavourings or colourings to fruit juice (British Soft Drinks, 2014).

Environmental Consumer purchasing behaviour is now somewhat motivated by

the environmental credentials of a brand and FMCG brands are no exception. It is now considered that Corporate Social Responsibility is a key driver of innovation amongst businesses (Hooley, et al., 2012). For example, Unilever aims to halve its environmental impact by 2020 (Unilever, 2014).There are a lot of varieties of fruit imported from sunnier climates which is regulated by the government (UK Government,2014).Most fruit juice cartons are made from recycled and recyclable cardboard or plastic (PET) (Refresco Gerber, 2014) reducing the impact of the packaging.

The PESTLE analysis has briefly introduced some key macro-economic factors to do with the FMCG industry, fruit juice market and the demographic for Elixir. Woodside Corporation is aware of the macro-economic environment and feels that it is supportive of the product.

2.3. Porter’s Five Forces AnalysisPorter (1980) devised the five forces model of industry competition. Woodside Corporation has undertaken the analysis as it is a practical micro-environment tool which defines the rules of competition within an industry to enable a firm to reassess its position to achieve superior performance (Clegg, et al., 2011).

Force AnalysisBargaining Power of Buyers

We will be selling our product initially through a small cluster of Waitrose stores (as outlined in the NPD and launch sections) before branching out to all major supermarkets nationwide. Due to the oligopolistic nature of the supermarket industry, our buyers will be small in number and highly concentrated. The loss of one supermarket as a buyer will have a huge impact on our revenue. Consequently, the bargaining power of buyers is high. However, we plan to develop strong consumer demand

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which will go some way to overcoming this power.

Bargaining Power of Suppliers

It is evident that there is a wide number of fruit suppliers throughout the UK and globally. The same could be said for fruit juice manufacturers and bottle manufacturers. These supplier’s processes are relatively uncomplicated and untechnical. Consequently, it should not be difficult to switch suppliers or find new ones if the situation requires this. Therefore, the bargaining power of suppliers is considered minimal.

Threat of Substitutes Whilst there are many fruit juice products on the market, there

are currently no drinks exclusively targeting an older demographic. However, the core element of our product is the health benefits that are gained from consuming it. It is not inconceivable that other food/drink products or pharmaceutical products with similar health benefits will come to the market in the long run. The chosen benefits of Elixir, (lowering blood pressure and cholesterol) were decided upon from the research identifying these as the major health concerns of the target audience. If these health issues no longer become of concern to the target audience in future years, then the product may become redundant and there may be a fall in sales. Thus whilst the current threat of substitutes is relatively low, the future threat is relatively high.

Threat of New Entrants It is possible for major food/drink brands to copy our product if

they desire. This is a possibility if our product is successful and major brands are likely to have the financial means to launch sophisticated marketing campaigns and potentially out-compete us. The ability of new entrants to do this will depend upon us establishing brand loyalty quickly. The product is also relatively simple and inexpensive to produce. Overall, barriers to entry are low and consequently the threat of new entrants is high.

Rivalry from Competitors As previously mentioned, there are no fruit juice brands that

provide health benefits that directly market to an older demographic. However, there are other brands of food/drink which offer health benefits but are less targeted in their marketing. Examples of these could include Naked Juice, Beet It and Benecol. Therefore, there are a number of established indirect competitors which could be viewed as threats. However, our marketing strategy will successfully carve out a defendable niche within the market.

2.4. FMCG Segment Analysis

Segment Analysis

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FoodThe food segment can be broken down into five main niches, fresh food, bakery, food cupboard, frozen food and baby food.

As can be seen from the table above, there has been steady growth across the food sector, possibly due to the emergence from the recession.Key market trends (Mintel, 2014):

With lifestyle becoming more hectic and misconceptions of the nutrition of pre-made brands dissipating, baby food sales have grown

Major brands dominate the Meat and Seafood markets (90% of sales)

More consumers are living on their own and are therefore buying smaller quantities

Whilst the food segment is large and growing, the significant barriers to entry have led to the decision to avoid entering this market.

HouseholdThe household market can be split into three main sectors, fabric care, cleaning and dishwashing. As can be seen from the table, the market grew 1.9% to £18.7bn (Mintel, 2014).

Key trends (Mintel, 2014): Consumers are worried about viruses and food poisoning

which is arguably why ‘anti-bacterial’ products sell best Low cost and own brand products are performing well as

a result of the recession Consumers are increasingly buying environmentally

friendly products

A possible opportunity within this segment is through marketing cleaning products to young adults who are currently not being targeted. However, Procter & Gamble have a major presence within this sector; therefore we feel it would be a poor strategy to take a brand such as this on.

Personal Care & Pharmaceutical

This market comprises of a huge variety of products but can be separated into five niches, heath & wellbeing, cosmetics, fragrances, toiletries and pharmaceutical products. As can be seen by the table, this segment grew from 2.2% to £13.6bn (Keynote, 2014).

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Key market trends (Mintel, 2014): Gift sets are common ways of selling products within this

sector Hair growth products are increasing Unilever and Procter & Gamble have been driving their

prices down and focussing more on brand value Spending on marketing campaigns and new product

development is highBarriers to entry within this segment are significant due to how competitive the market is (Mintel, 2014) and how the clinical research and approval process can often take up to eight years to complete (PharmTech, 2009). Thus, Woodside Corporation will not be entering this market.

TobaccoThe tobacco industry can be segmented into four niches, cigarettes, rolling tobacco, cigars and pipe tobacco. The number of smokers in the UK fell from 40% to 20% of the population between 1974 and 2011 (Keynote, 2013). This is likely to be due to the increased awareness of the health risks from smoking and also the legislative restriction imposed such as the Health Act (2006).Key market trends (Keynote, 2013):

Many smokers are trying or want to quit Men are more likely to smoke than women Market is dominated by major tobacco companies

The market is oligopolistic in nature and the competitiveness of the major brands means the barriers to entry are high. This, along with the long term decline of the market, makes the tobacco industry an unattractive segment.

DrinksThe drinks segment is vast, accounting for £65.2bn (37%) of the FMCG industry (Mintel, 2014). It can be split into nine categories, soft drinks, bottle water, chilled fruit juices/smoothies, milkshakes, tea and coffee, hot chocolate and malted drinks, beer and cider, wine and spirits.The drinks market was minimally impacted by the recession (Keynote, 2014) and within the next four years, the fruit juice and energy drink market is expected to increase by 15% (Keynote, 2014).Key market (Keynote, 2014):

The market is growing in the energy drink and fruit juice sector, showing there is room for new product development

High profit margins are achievable which suggests that new products have a higher chance for success if correctly marketed

Smoothies are performing well due to the consumer looking for healthier options

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Whilst large drinks companies are present within the industry, new entrants have found considerable success by offering something different. This suggests that this is the most attractive FMCG segment to enter.

From analysing the FMCG segments Woodside Corporation has decided that the ‘Drinks’ segment is the most suitable segment to pursue.

From the points that have been highlighted, Woodside Corporation has identified that the drinks segment of the FMCG sector has lower barriers to entry than other segments while also offering high potential revenues (Mintel, 2014). Furthermore it has been identified that the fruit juice market is expected to grow and that new entrants can be successful as long as they offer something new (Keynote, 2014).

From the research identifying that over 55’s in the UK make up almost 1/3 of the population and are growing more concerned about health issues (Mintel, 2011), Woodside Corporation has been able to spot the gap in the market. The company has identified that a new fruit juice drink within the drinks segment, targeted to 55-65 year olds that offers health benefits can fill a gap in the market.

2.5. Primary Research

Primary research plays a vital role in being able to better understand what our target audience’s wants & needs are and how best to meet them.

Woodside Corporation has created SMART objectives in order to obtain primary research: They all are within a timeframe of one month.

To carry out questionnaires in order to gain a perspective from the target market. The aim is to get as many as possible, with a minimum response target of 30 to get a justifiable sample result.

To conduct 4 interviews with health professionals to see what ingredients contribute towards lowering blood pressure and cholesterol, as well as what the main health issues are in our target audience.

To carry out observations in 5 different outlets that currently stock health drinks in order to see what the products look like, how much they are sold for and where they are stocked.

To converse with a drinks buyer in order to discuss how to get the product into the chosen supermarket Waitrose.

QuestionnaireGoogle Forms software was used to create a questionnaire; this was sent out to people within the target audience in order to gather information that helped Woodside Corporation gain insight on what consumer’s thoughts and needs are on aspects related to the proposed product idea. A Questionnaire can be defined as “A method of collecting data in which each person is asked to respond to the same set of questions in a predetermined order” (Saunders, et al., 2012, P. 416). The

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advantages of using a questionnaire was that the company had the ability to gather large amounts of information, gain responses in an efficient time frame, and easily analyse the data from the questionnaires. The information collected has been compiled into tables, which can be seen in appendix 1.

InterviewInterviews were undertaken with health professionals. They were asked about the potential benefits and ways to go about making a health drink to reduce high blood pressure or cholesterol, this helped the company develop a suitable product to market. An interview can be defined as “a purposeful conversation between two or more people, requiring the interviewer to establish rapport, to ask concise and unambiguous questions, which the interviewee is willing to respond and to listen attentively” (Saunders, et al., 2012, P. 372). The health professional interviews answers have been collided and attached in appendix 2.

ObservationThe company visited shops that were thought to likely to stock the product e.g. supermarkets, health shops, pharmacies and cafes. These shops usually sell healthy products and cater for the audience required. These establishments were used to see what was currently on offer and how viable the proposed product was is in relation to this. Observation can be defined as “the systematic observation, recording, description, analysis and interpretation of people and/or an organisation’s behaviour” (Saunders, et al., 2012, P. 340). This research helped the company decide where to place the product and the price to market the product at. It also determined what indirect and direct competition is already in the industry. Photos of this research can be seen in appendix 1.

FMCG Buyer Correspondence The company was given the opportunity to communicate with

an FMCG drinks buyer for Waitrose to see whether or not they think the drink would be viable in the market and whether they think that a product such as Elixir would be stocked in their stores. This was extremely useful as the company could make well-informed decisions on how to place the product within a Waitrose store and how to go about doing so. The Waitrose buyer has indicated that he would be willing to take on Elixir so long as it meets the specified criteria.

2.6. Opportunity for New ProductWith an ageing population and consumers becoming more health conscious, there is a gap in the fruit juice segment for a brand targeting the 55+ age demographic. Woodside Corporation has created a fruit juice drink that not only tastes great, it is proven to have significant health benefits such as the ability to

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lower blood pressure or cholesterol as well as including a variety of essential nutrients.

According to Wise Branding (2014), there are 19m over 50s in the UK. This makes up 35% of the UK population and they have the highest disposable incomes of all age groups (Marketing Magazine, 2013). Older consumers arguably represent an un-mined sector within the FMCG market and with consumers becoming more health conscious (Hanson, 2013) and the fruit juice market rapidly growing (Keynote, 2014) this market is considered attractive.

From primary research (see appendix 1), 84% of respondents would be interested in buying a fruit juice drink that was proven to improve your health. Moreover, 71% would be willing to pay more for a drink with proven health benefits. Whilst details of the product will be discussed in the NPD section of the report, the brand will embody the fun and active side of later life and will aim to become a staple drink choice within a healthy and balanced lifestyle for the specific target market.

2.7. Customer AnalysisWhen analysing and attempting to understand customers, it is important to consider the set of key questions as outlined by Hooley et al. (2012) in the diagram below:

Figure 2 – Customer Analysis

Question AnalysisWho is involved in the buying and consuming?

Hooley, et al. (2012) suggest there are five ‘actors’ in the purchasing/using process which have been considered in turn:

1. Initiator – This is any individual which initiates the search for a solution to the customer’s problem – for a healthy fruit juice drink, this could be a doctor or health advisor who suggests the customer is in poor health and needs to change their lifestyle. The family and friends of the customer may also recommend a change in lifestyle on health grounds or perhaps recommend the drink as a tasty beverage. It is also

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possible that health scare headlines in the media can trigger customers to change their lifestyles.

2. Influencer – This is any individual that can influence the purchase decision – this is likely to not only include recommendations by family and friends but also marketing campaigns from the brand will potentially have a significant effect.

3. Decider – This is the individual who makes the decision about which product to purchase – ultimately, for a fruit juice product, this is likely to be the person who purchases the groceries.

4. Purchaser – This is the individual who physically exchanges the money for the product – this is likely to be the consumer of the product but could also be a family member or friend of the consumer.

5. User – This is the end user of the product – this is likely to be the individual consumer or household but could also be family or friends of the customer.

Overall, it can be concluded that due to the health issues surrounding the product, it is a very personal decision regarding which product to buy. Whilst there are potentially many influencers on the purchase decision, the decider, purchaser and user are likely to be the same person. Consequently, with the limited investment available, marketing should be targeted towards this individual rather than multiple campaigns for various influencers.

What are their choice criteria? As can be seen from the research (see appendix 1), the taste

(74%) and health benefits (55%) of the drink the most important purchasing criteria for potential customers. This is closely followed by price and appearance of the drink. From the results, it is clear that whilst the product will need to be competitively priced and look appealing in a busy fruit juice aisle, ultimately it needs to taste better than competitor products and deliver on the promised health benefits. Failure to do so will most likely result in the failure of the product.

When do they buy/use the product?

Given our product will be sold in supermarkets; it will be bought during a normal grocery shop by consumers. Almost half of respondents to the survey (appendix 1) shop for groceries on a weekly basis, with 77% buying groceries once or twice a week. This leads to the conclusion that the product is likely to be bought on a weekly basis. This is supported by the fact that almost 60% would buy a 1 litre bottle of our product a week.In terms of when they will use the product, 32% of survey respondents consume fruit juice drinks every day, with breakfast being the most common time to do so. The survey results show that our product is highly unlikely to be consumed later in the day. It can therefore be concluded that our product is most likely to be consumed with breakfast or mid-morning.

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Why do they buy/use the product?

The taste and health benefits of the drink are key motivators for consumers when buying a fruit juice product. But while taste is important, the health benefits the drink can bring are arguably more enticing for consumers. 84% of respondents to the survey would rate themselves moderately health conscious or higher. 71% of respondents indicated that they would be willing to pay more for a drink with proven health benefits and 61% currently buy food/drink products for health purposes. 84% of respondents would also be interested in buying a fruit juice drink that was proven to improve your health. These statistics highlight how important health is to this audience and leads to the conclusion that, along with taste, the health benefits that the product promises will be a key reason as to why they buy the product.

Where do they buy? Respondents to the survey indicated that 81% would prefer

to be able to buy the product in large supermarkets with the most popular one being Waitrose. This, as discussed in the NPD and launch section of the report, is why Waitrose has been chosen as the initial launch location for the product. Other locations such as convenience stores/newsagents, coffee shops and online food retailers proved less popular. Furthermore, research suggests that 55-65 year olds will only go to convenience stores in an emergency and have negative perceptions of these stores (Mintel, 2014)

How do they use the product? Given this product is a drink, this question is perhaps less

relevant than the others. However, it is important to re-iterate that consumers are likely to consume the drink with breakfast or perhaps mid-morning as part of a healthy lifestyle.

3. Market Segmentation, Targeting and PositioningThis section of the report considers the segmentation, targeting and positioning of Elixir. This section will demonstrate a comprehensive understanding of the target audience, specifically in terms of their needs and wants.

3.1. Perception Map55-65 year olds in the UK have varying attitudes towards life, retirement and health, and key differences between groups emerge as a result of their different attitudes towards ageing (Wise Branding, 2014). The perception map below

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shows the different sub-segments of the over 50 market, according to (Wise Branding, 2014).

Figure 3 – Perception Map

From the research Woodside Corporation has been able to identify that the company’s target audience of 55-65 year olds. These people have an active life style and live in the Cotswold area with a high level of disposable income and would be considered ‘Zestful Explorers’.

3.2. SegmentationFahy and Jobber define segmentation as observing the various needs and tastes that may exist in an industry (Fahy & Jobber, 2012). For the purpose of this report, it has been chosen to use Fahy & Jobber’s (2012) segmentation methods; focusing on behavioural, psychographic and profiling factors.

3.2.1.BehaviouralBenefits Sought Product contains beetroot, wheatgrass and plant phytosterols that

are proven to lower blood pressure and cholesterol. Woodside Corporation has chosen to address this benefit as there is currently a demand for a drink that is ‘rejuvenating/anti-aging’ (Durtschi, 2011). Keynote (2014) also suggests that functional foods that effectively addressing the issue such as high blood pressure would see strong growth. Similarly the research found that 61% showed interest in a product with the benefits that are planning to be produce.

Purchase Occasion Aligning with the definition of what an FMCG product is, the aim is

for this product to be bought regularly (i.e. daily or weekly). The research showed that the target demographic 84% shop at least once a week if not more frequently.

Purchase Behaviour The aim is to attract customers that are already using products

such as Benecol, but want a product that is low in sugar. Due to the

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product being made from fruit and the sugar content being reduced, it will be low in calories which are what the target market is looking for (Mintel, 2011).

UsageThe product can be consumed daily as a drink with a main meal, or a healthy snack alternative. The research found that a 1/3 of the sample drank fruit juice daily usually with breakfast.

Media Behaviour The research found that the target market preferred TV advertising

as the most popular form of advertising. However at the initial launch phase Woodside Corporation do not have the funds available for this. Magazines will be used instead due to the affordability and the ability to have a more targeted approach to the audience. From the research (Richards, 2013), it can also be seen that the internet is a growing medium for the 55+ age group and therefore future marketing strategies are likely to involve internet marketing.

3.2.2.Psychographic

LifestyleWithin the age gap market the focus will be on the third of men and women who meet recommended activity requirements by the government (British Heart Foundation, 2012). This group who are active, and therefore show signs of being health conscious will be more likely to purchase our drink for its health benefits.

PersonalityThe target market is very social; with the idea that they will be able to self-promote the benefits of our product to their friends who also are active. The research found that 70% of the demographic are likely to recommend a product and so this has the potential to be one of the most profitable ways of gaining publicity.

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3.2.3.Profile

Persona Case Study - The ideal customer

Figure 4 - Deborah

Traits Targeting factorsName Deborah N/AAge 60 Within target age gap

Residence Detached 5 bed house in the Cotswolds

Living in a high income area

Employment Retired High level of disposable income

Relationship Married with Husband still working

Indicating she does the weekly shop

Children Three older children who have families of their own

Lack of dependency

Supermarket of Choice

Waitrose Shops at a ‘high end’ supermarket which indicates

she goes for quality over price

Hobbies Gardening, Tennis, Walking, Parish Council

Volunteer, Local Rotarian

Highly active, indicating that she is health conscious

3.3. Target Marketing

Target marketing is where it is decided which segment or segments the company is going to serve (Fahy & Jobber, 2012). Focused marketing is being used as the target marketing method. This is because the system allows targeting one specific segment within the marketing mix, in this case the 1/3 of 55-65s who are active. From this it can be tailored to the marketing specifically for a smaller market making the advertising more regional and effective.

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3.4. Competitor Analysis

Hooley, et al. (2012) defines a competitor analysis as a breakdown of the current or potential future competitor’s strategies, actions and performance to a business. As can be seen below a range of competitors that are direct and indirect have been analysed with the information available. The analyses have found that the price in relation to size is at the higher end of the market, and as discussed in the price section of this report, there is considerable justification for this.

It is also clear that the chosen forms of advertising are similar to the competition, which indicates that these forms are a successful form of advertising but also a competitive one. From this analysis it is clear to see how Elixir will fit in the drinks market and the potentials threats that it may face.

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3.5. Positioning Fahy and Jobber define positioning as the act of designing the businesses offering and image so that they occupy a meaningful and distinct competitive position for the target consumer (Fahy & Jobber, 2012). In order to make sure the brand is appropriately positioned, it has been decided to use the 4 C’s of successful positioning.

ClarityIn order to have a clear understanding of the target market, initial secondary research has been carried out using reliable sources such as Keynote and Mintel to gather information. The research has been conducted on the target market as well as speaking to a buyer from Waitrose to get a clear understanding of where the product can be positioned. Along with this, an unmined market has been found where a differentiated product would have a competitive advantage over the current health drinks in the market. A low sugar drink that has ingredients that are proven to lower blood pressure and cholesterol will have differentiated advantage.

ConsistencyIn order to gain a level of consistency in the promotions, the aim is to market the drink from the initial launch as a healthy drink with proven health benefits that can be consumed with a meal or as a snack.

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CredibilityIn order for the drink to be credible, a number of health professionals has been contacted, including GP’s, nurses and consultants to find out what ingredients are proven to lower blood pressure and cholesterol. As well as this a buyer at Waitrose has been contacted to ask if they believe the drink is viable to which they think it has potential. Both the buyers and the health professionals that were contacted are in agreement that this product is a possibility.

CompetitivenessFahy and Jobber (2012) explain that competitiveness can come from having distinctive packaging that differentiates from the competition. From the (Hanson, 2013) it has been found that it is important for the demographic to have a simple clear and easy to grasp bottle. The product has ingredients that are proven to reduce cholesterol and high blood pressure which no other current product claims. From the competitor analysis, Woodside Corporation has shown that Elixir is competitive against the direct and indirect competitors to the product.

4. New Product Development and Launch

4.1. IntroductionThe marketing mix will be analysed which is a term that Borden (1964) created to discuss the main activities that added to the marketability of their products and services (Hooley, et al., 2012).

4.2. ProductIn this section, it is important to remember that customers are always interested in the perceived benefit that they will gain from buying it (Kotler, 1997). The name of the product was decided upon through a brainstorming session and Elixir was decided on due to the definition, which is a potion that has the ability to prolong life (Oxford Dictionary, 2014). The product is a healthy juice drink which will lower cholesterol and blood pressure, have reduced sugar levels and contain natural ingredients. The health benefits are the likely reason consumers will purchase it and will make the product differentiated from others that are on the market. The product will create an incremental improvement on existing drinks such as Innocent’s Antioxidant product.

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Figure 4 - Elixir

The product will include apple, beetroot, water and plant sterols. The second most popular flavour from the research was apple and therefore the decision was made to create a product with this being the main flavour. Apples can be easily sourced in the UK which means that they are cheap to get in a large quantity which will keep the costs down (UK Government, 2014).

As the ingredients will be produced in Britain, it means that the number of miles travelled globally will be significantly reduced. This helps to be economically and environmentally sustainable and should also boost the UK economy from sourcing locally. Due to the juice being not from concentrate, Elixir will have a shelf life of around 30 days (British Soft Drinks, 2014).

A study on participants over the age of 50 found that beetroot containing nitrate molecules can widen blood vessels causing a reduction in blood pressure (NHS, 2014). The reduction is only short-term so if beetroot juice is consumed, it should be part of a healthy lifestyle.

Heart UK (2014) explain that plant sterols are found in plants and ‘work by mimicking cholesterol and competing with it for absorption’. The reduction in cholesterol levels are dependent on how much plant sterol/stanol is taken.

Heart UK (2014) suggest that consuming it over three weeks as part of a diet that is low in fat can reduce cholesterol by 10% and is one of the most effective foods for doing this.

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The ingredients have benefits known to reduce high blood pressure and cholesterol and therefore when they are consumed together in the drink as part of a healthy lifestyle, they should improve these conditions. It is recognised that competing against strong brands is difficult due to the high barriers to entry, however by creating a niche product, it should be able to overcome these barriers.

4.2.1.Portfolio MatrixCooper, et al. (2001) define portfolio management as ‘a dynamic decision process, whereby a business’s list of active new products (and R&D) projects is constantly up-dated and revised.’

Building a balanced portfolio is an important aspect in order to be successful. Woodside Corporation will have one product until Elixir has become established in the market. The aim is to build a balanced portfolio after three years through developing a range of drinks. If one of the flavour drinks is sold more than others, the product could be developed further for example creating different sizes, a multipack etc. The company should be able to achieve economies of scale when developing a portfolio (Mulhearn, et al., 2001).

4.2.2.BrandingAccording to Fahy & Jobber (2012), brands help consumers distinguish one company’s products to another in a competitive environment. Brands are an increasingly popular aspect of a product as consumers are often more comfortable buying a product from a brand that they trust and therefore it is recognised that when creating a brand, it needs to be thoroughly thought out in order to be successful. The brand Elixir will embody the healthy, fun and active side of later life and have a logo of the word Elixir to represent this. Successful brands can create company value, consumer preference and loyalty, a barrier to competition, high profits and a future for brand extensions (Fahy & Jobber, 2012). The brand will be built throughout the marketing activities described below. Once the company is established, the ethical values will be promoted through a charitable arm. However, while the product is being introduced to the market, the values will be represented within the product and its health benefits.

4.2.3.LaunchThe idea of a product life cycle needs to be considered when creating the product due to the constant changing environment. The main phases, which will affect the product during the three-year forecast, are the introduction and growth phases.

IntroductionThe introduction phase involves lots of concentration on research and development which has been carried out by conducting primary and secondary research. The product has been developed from these results, looking at packaging, price, promotions and the ingredients which are included. At the beginning, there are likely to be high levels of initial expenditure before returns and profits are seen due to the initial set up costs.

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According to Fahy & Jobber (2012) the ‘strategic marketing objective’ is to increase the market for the product in order to gain more sales. Creating awareness with the brand is also important so that customers can associate themselves with the positives that are being offered.

During this phase, there will be a range of promotional activities in Waitrose stores as well as going to events in the Cotswolds so that consumers can trial the product and recognise its benefits before there is a high expenditure on marketing. Fahy & Jobber (2012) also recognise that the price of the product will be high due to production and a lack of competition which allows higher costs to be charged.

GrowthThis is the stage where repeat purchases are made and market share should be increased. It is important to look at costs during this phase, as although profits will be higher, the cost of the product will need to be reduced to compete and promotional costs are also likely to be higher in order to reiterate the benefits that are being offered.

4.2.4.PackagingThe aim is to make sure that the appearance of the drink stands out, suits the target market and represents the brand/product well. A white label has been decided upon which should stand out well from competitors, as well as looking simple and smart. From the supermarket observations (see appendix 3), there are a number of round bottles or cartons, and from this it has been decided that selecting a clear, square bottle will allow for differentiation. The decision has been made to use recycled PET from the company Refresco-Gerber in order to achieve the desired packaging appearance and to be sustainable.

4.3. PriceHooley, et al. (2012) identified six considerations that organisations should evaluate when setting price. After evaluating these six considerations, Woodside Corporation have agreed upon a fixed price of £3 per 1 litre bottle as this pricing strategy will help to position the health drink at the higher end of the market. The justification of this pricing strategy is as follows:

Production Costs

The total costs to manufacture and sell the product

The production costs per unit for the product have been estimated at £1. The finance section of this report goes into more detail about these costs, and is considered to be the ‘floor’ in which our price should not fall below otherwise we would not have a sufficient profit margin (Hooley, et al., 2012).

Economic Value to Customers

The value of the

As a FMCG drink the product lifespan will be relatively short. This is because as a drink it will most likely be consumed upon or shortly after purchase (Masterson &

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product to the customer over the product’s lifespan

Pickton, 2014). From this, the price would have to reflect the short lifespan.

Competitive Price Levels

The pricing levels of others in the market

From the supermarket observation research that has been conducted, it has been identified that the average competitive price range for a 1 litre bottle fruit juice drink is from £1.99 to £3.

Desired Competitive Positioning

What end of the market organisations wish to be positioned

The Directors of Woodside Corporation have collectively agreed that the corporate objective is to grow market share as well as position the health drink has a premium product.

With this in mind along with the points that have been highlighted so far, it has been decided among the Directors that the price of a single 1litre bottle will be set at £3. This pricing strategy will set out to position the drink at the higher end of the market and provide consumers with the perception of a higher quality drink (Hooley, et al., 2012).

Corporate Objectives

How the price of the product affects the demand for it.

Price Elasticity of Demand

Organisations’ strategy for how they wish to grow within the market

As mentioned previously in the product section, when the product begins to enter its ‘growth’ stage in the product life cycle it is likely that imitations and competition will rise as well (Fahy & Jobber, 2012). With more competition, competitors may be able to gain market share, this may mean that a lower price strategy may need to be considered in order to compete with the elasticity of demand. Though for the first three years of the product’s launch, the price has been confirmed at £3 per 1litre bottle.

PromotionElixir will be on promotion 3 months of the year (quarter) and the promotion will be 2 bottles for £5.00 therefore the consumer will be saving £1.00 or 15% off each bottle.

4.4. PromotionPromotion refers to the communication process that Woodside Corporation will use in order to set out to create awareness, interest, desire and action from the target audience for the FMCG drink Elixir (Hooley, et al., 2012).

Fahy & Jobber (2012) have stated that it is important for organisations to understand what the message is that the organisation wants to send to their

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audience. This should be simple, clear and delivered through a communication tool that best portrays the message.

As previously stated the Directors of Woodside Corporation set out to position the health drink as a high end premium drink which will help to lower cholesterol and blood pressure, this is the message the company sets out to deliver to consumers.

The following communication tools have been decided upon by the Directors, and will be discussed further in the financial section:

Magazines

Cotswold life magazine has a reader base of 62% female, 38% male with age range between 35-65 (Cotswold Life, 2014). This magazine’s reader base clearly fits the consumer profile that has been previously stated in this report and therefore appears to be a suitable communication process. It is also a benefit that Cotswold Life is sold within Waitrose stores (Cotswold Life, 2014) and therefore will match the channels to market.Using magazines such as Cotswold Life, Bath Life and Crumbs Mag which all have a reader base that fit the consumer profile (Cotswold Life, 2014) (Bath Life, 2014) (Crumbs Mag, 2014), as a communication tool, will create a better awareness for the drink amongst the target audience and will help to establish the brand while conveying the message of a high end health drink (Fahy & Jobber, 2012) (Hooley, et al., 2012).Hooley, et al. (2012) identify magazines as particularly effective way of creating awareness as they can have a high visual impact and are usually easier to repeat than other methods of promotion. Fahy & Jobber (2012) however argue that though magazines are effective at creating awareness, they are not as effective at creating desire or generating actions leading to the final product purchase.This is why other communication tools have been decided upon to help utilise the awareness and interest created by magazines (Hooley, et al., 2012), and bring forward desire and actions from consumers (Masterson & Pickton, 2014).

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Figure 6 – Elixir Magazine Advertisement

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In Store Taste Stands In store taste stands are classed as direct marketing as they have high engagement with the target audience and have been argued to be more effective at creating desire and actions resulting to the final product purchase (Hooley, et al., 2012).It has been decided that the company would like Waitrose to run tastes stands within the 14 stores where Elixir is sold for 2 hours a week. This is so that Waitrose employees can promote the drink while engaging with consumers and answer any queries they may have about the drink. Fahy & Jobber (2012) state that this is an effective way to create desire and actions to purchase the drink due to consumers in the store already having awareness and interest created from the magazines (Hooley, et al., 2012).This engaging form of direct marketing will provided better flexibility in representing the brand, as well as clearly delivering the message that Elixir is a health drink that lowers blood pressure and cholesterol (Masterson & Pickton, 2014).

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Trade Stands As well as sampling in Waitrose, it has been decided that the directors will hold other trade stands at events that the target audience are likely to attend.By having trade stands at events that the target audience is likely to attend, this will help consumers associate the brand with other interests that they enjoy (Masterson & Pickton, 2014).Events that the company will set up trades stands include; Bath and West Show, Royal County of Berkshire Show, Frome Cheese Show, Badminton horse trials and Gatcombe horse trials. This is because a high number of attendants of these events fit the consumer profile (Bath Life, 2014) (Cotswold Life, 2014). Some of these shows are not within the Cotswold area, however, the selected trail stores are located near these shows and in the second year the product will be distributed to the whole of the South of England.

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Channels of DistributionThe channels of distribution refer to the decisions organisations make regarding how they will sell their products; this can be direct (selling to customers themselves) or through intermediate (selling through others, i.e. supermarkets) (Hooley, et al., 2012).

From the research gathered it was revealed that the target audience of 55-65 year olds within the South West predominately purchased groceries, including health drinks, from large supermarket chains (See Appendix 1). The most popular supermarket amongst the target audience was Waitrose (See Appendix This is likely to be due to Waitrose specifically targeting wealthier customers with higher disposable income.

This research has formed the justification of why the company has decided to distribute the drink Elixir through Waitrose stores. The Directors have been in discussion with a Waitrose buyer to enquire about the processes involved in arranging a deal to distribute Elixir within Waitrose stores (See Appendix 8).

The company is setting out to distribute Elixir within 14 Waitrose stores within the Cotswolds as a trial for its first year, expanding to 100 in the south of the UK in beginning of the second year and going nationwide in the third year. Waitrose also has predominated presence within the South (Waitrose, 2014) which further justifies this decision.

4.5. PlaceThe buyer (See Appendix 8) has stated that the normal process with introducing a new product is done on a trial bases in a select few locations. This is so Waitrose can see how well new products sell over a period of time before deciding to distribute the product to more stores.

Woodside Corporation has arranged with Waitrose that Elixir will be trialled in 14 stores in the Cotswolds region for its first year. Market analysis and primary research suggests that Elixir will sell well, once sales begin to grow the company will expand distribution of to a wider number of stores.

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Public Relations The other form of promotion that the company will use is public relations; Woodside Corporation will send a range of Cotswold magazines and newspapers samples of Elixir with the objective that they will publish articles about the product.Doing this will allow third parties to convey the message the company is setting out to promote. This could have more of an impact coming from an influential source depending on the magazine/newspapers status amongst the target audience (Hooley, et al., 2012).

The company has a strategic goal to create an established presence within the Cotswold area in the South West of England. From what has been highlighted previously in the report, it can be said that distributing through Waitrose in its Cotswolds stores will aid the achievement of this goal. A report published by the Office For National Statistics (2012) identified that 19.6% of the total population in the South West region of England and Wales were aged 55 or over. This report highlighted that the South West region has the highest percentage of residents’ aged 55 or over compared to any other region (Office For National Statistics, 2012).

4.6. PeopleThere are five equal owners of the company, all with full-time individual roles. Woodside Corporation will not recruit other members of staff in the first three years; however, when our product portfolio expands this will be reassessed. This is due to production, packaging and distribution being outsourced.

The individual roles and responsibilities are as follows:

Woodside Corporation Board of DirectorsDirector Role

Miriam KnightDirector of Accounting and Finance

Serving as the chief financial strategist in the organisation, playing an active

and analytical role in the development of strategic financing scenarios and

associated business decisions

James TysonDirector of New Product Development

Developing and delivering creative & innovative product strategies with

practical application and compliance to further develop product attributes and

offerings to consumers

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Ben WoodDirector of Operations

Developing up-to-date processes, procedures, strategies and

advancements to ensure adequate support of the organisation in both the

short and long-term

Claire JohnstonDirector of Marketing

Developing marketing strategies and executing marketing plans that include; development of sales

campaigns and communications, PR, advertising, evaluating the marketing mix and ensuring communications to consumers influence financial returns

Olly DentDirector of Strategy

Leading business planning and organisation-wide enterprise resources

management in support of the corporate strategy, including policies

and procedures for legal affairs, procurement, facilities, technical

support services, and risk management

4.7. Physical EvidencePhysical evidence refers to the tangible offerings and benefits that accompany a product or service and the way in which these influence consumer behaviour (Fahy & Jobber, 2012).Peter (2010) identified the means end chain as a tool which can help organisations understand the influences on consumer buying behaviour in relation to physical evidence.

These influences are: attributes (physical evidence), functional consequences, psychological consequences and values consumers perceive when choosing

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brands/products (Peter, 2010). With Regards to Elixir, the physical evidence (attributes) would be the ingredient within the drink that leads to functional consequences of lowering blood pressure and cholesterol.

From this, the psychological consequence is that consumers will believe that they are healthier from drinking Elixir, which leads to the value perceived as a longer life span.

4.8. ProcessesThe process is the way in which a product/service is delivered to consumers from its original raw ingredient stage to the finished product (Hooley, et al., 2012).

The Directors of Woodside Corporation have decided on the following process for Elixir:

1 Woodside Corporation will purchase raw ingredients in bulk proportions: 1kg (500ml) of apples, 400g (200ml) of beetroot and 5ml of Plant Sterols per bottle from UK wholesalers

2 The raw ingredients will then be transported to Refresco Gerber who are based in Bridgewater, Somerset (Refresco Gerber, 2014).

3 Refresco Gerber are the third party client who will produce and package the drink. It has been agreed that they will produce 1000 units a week from the raw ingredients for the first year

4 C&D South West will deliver the 1000 units weekly to the nearest Waitrose distribution warehouse in Bracknell (RG12 8YA) from Refresco Gerber (TA6 4RN). We chose C&D as they already have relationships with Refresco Gerber and Waitrose.

5 Waitrose distribution warehouse in Bracknell will then distribute the units among the 14 stores which are; Chipping Sodbury, Chippenham, Malmesbury, Melksham, Bath, Clifton, Swindon, Gloucester, Witney, Stroud, Cirencester, Cheltenham, Oxford, Keynsham (Google Maps, 2014)

6 Once in stores consumers will be able to purchase Elixir. The retailer will then take a 35% profit on each unit as their profit margin meaning the company will then be able to make 29% profit on each unit after VAT.

Throughout the process choices, we have considered being sustainable and eco-friendly. For example, the fact that we are delivering the product weekly to Waitrose instead of daily reduces the environmental impact of our distribution.

Active EthicsPart of Woodside Corporation’s values is to encourage an active lifestyle amongst its target audience of 55-65 year olds in the Cotswolds. As part of the ethical strategy the directors will invest, when established, into a charitable arm

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of the company that will encourage and organise active exercise (i.e. walking) for 55-65 year olds within the Cotswolds.

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5. Forecast and FinancialsWhen forecasting, the aim is to come up with a meaningful estimate on which to guide new-product development and product launch decision making (Kahn, 2010). New-product forecasting is difficult (Hooley, et al., 2012); Tull (1967) estimated that the average error within forecasting is 65% and therefore Woodside Corporation will use the financial forecast as a guide. To forecast as accurately as possible, strategic issues need to be considered (Armstrong & Brodie, 1999).

The factors that will influence the sales and successfulness of Elixir have been identified throughout the report. There are practical methods used in businesses for estimating total market demand (Barnett, 1988). The forecast is being based through experimentation and forecasting through the intentions of the company (Hooley, et al., 2012).

5.1. Financing the Product5.1.1.Start-up Funds

5 owners contribution total £50,000 £10,000 eachAngel investor £50,000 25% share plus £15,000 yearly to be

repaidTotal start-up funds £100,000

The owner’s contribution total will be paid back when the company is in a reasonable position to do so. It has been decided that this will be in the last nine months of the third year of trading, as can be seen on the cash flow forecast.

Angel investor’s demands vary largely on the return they want to make from investing in a start-up business (Angel Capital Association, 2014). Woodside Corporation would preferably like an angel investor who can give advice, as well as taking a back seat position as an owner. At first the angel investor will be offered £15,000.00 yearly and a 25% stake in the business for loaning the company £50,000.00. After three years of trading it will be decided whether the angel investor wants to continue owning a share of the business or whether the remaining owners buy them out.

There is a one off cost of £750.00 for bookkeeping software and £500.00 for a director to go on a bookkeeping course as well as £5000.00 for company laptops (PC World, 2014). Total: £5,750.00

5.1.2.Product Cost per UnitIt is estimated that raw ingredients, production and packaging will cost £1.00 per unit.

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Ingredients include Apples £0.04 per 100g, topped beetroot £0.02 per 100g (UK Government, 2014). The juice of 1kg (500ml) of apples and 400g (200ml) of beetroot costing £0.48 for both will be used. Plant sterols £0.07 (5ml) per juice (Health Span, 2014). Water will be added to this to make the total 1ltr. Total ingredients per 1ltr unit: £0.55.

Refresco Gerber Can produce and package the drink. Woodside Corporation have spoken to their sales team and quoted prices on making 1000 units a week and from this have estimated from this that production per unit will cost £0.15 and packaging £0.10.

Waitrose Distribution To distribute from Refresco Gerber to the Waitrose distribution warehouse weekly is at estimated at £48.67 and therefore unit cost of £0.20 (See Appendix 5).

Retailers will then make 35% profit on each unit which is what the Waitrose buyer suggested as their profit margin. The company will then be able to make 29% profit on each unit after VAT, which is a good profit margin for the FMCG market (Hartman, 2014). RRP is £3.00 as discussed in the pricing section.

Apple £0.40 Price Sold to Retailers

£1.95 100%

Beetroot £0.08 Production Cost per Unit

£1.00 51%

Plant Sterols

£0.07 VAT on £1.95 £0.39 20%

Production £0.15 Company Profit per Unit

£0.56 29%

Packaging £0.10 Total RRP £3.00Distribution £0.20Total £1.00

VAT needs to be paid on turnover more than £81,000.00 a year which Woodside Corporation will be over (UK Government, 2014). There is no VAT on fruit, but VAT on soft drinks and therefore 20% will be taken out of our sales price monthly(UK Government, 2014). Corporation tax does not need to be paid as Woodside Corporation is not a limited company, personal tax and NI will be paid by each individual owner at the end of the financial year (UK Government, 2014).

5.1.3.First Year SalesA Tesco Manager has informed the company that a medium size store sells on average 15 cartons of innocent a day, when it is not on offer. Therefore, as Elixir is a new product Woodside Corporation plan to sell 10 units per day, per store the product is placed in. This is ignoring seasonal trends although it is felt that this will be an average figure all year round. The Waitrose buyer the company

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have corresponded with has explained that the product will be initially put into a cluster of 14 stores.

Units per store per day 10 First Year Units Sales £1.95Number of stores 14 Daily 140 £273.00Total units per day 140 Weekly 980 £1911.00Selling price £1.95 £273 Monthly 4,258 £8303.10

Yearly 51,096 £99,637.20

5.1.4.Second and Third Year SalesIt is planned that Elixir will be in all of South UK Waitrose stores at the beginning of the second year, this will be 100 stores. By the third year it should be viable to be in all 300 Waitrose stores in the UK (Waitrose, 2014).

Second Year

Units Sale £1.95 Third Year

Units Sales £1.95

Daily 1,000 £1,950.00 Daily 3,000 £5,850.00Weekly 7,000 £13,650.00 Weekly 21,000 £40,950.00Monthly 30,416 £59,311.20 Monthly 91,250 £177,937.50Yearly 365,000 £711,750.00 Yearly 1,095,000 £2,135,250.00

5.1.5.Expenditure Fixed Costs per AnnumAccountant £2,000 Accountant quoted us this for completing

annual accounts and financial services, paid at the end of the financial year.

Premises £0 We are not going to have premises when we start up.

Marketing £20,000 See calculations below.Staff Wages £75,000 £15,000 each first 3 years trading.Business Insurance £240 Product/Public liability insurance (Markel

Direct, 2014)Promotion Costs Varies on how many stores the product is in,

see cash flow forecast.Total Fixed Costs £97,240.00

5.1.6.Marketing Costs

Magazines

Cotswold Life £320.00 for 6 insertions quarter page; total £1920.00 (Cotswold Life, 2014).

Bath Life Quarter page £265.00 in 5 issues; total £1325.00 (Bath Life, 2014).

Crumbs £363.00 per issue for half page in 6 issues in 2 magazines;

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total £4356.00 (Crumbs Mag, 2014)Waitrose Kitchen Advertisement with a 50p off voucher for first 6 months of

going into stores, it is predicted 1000 vouchers will be used costing £500.00. An advert will cost around £2,500.00 for a small spread; total £3,000.00.

Total Cost £10,601.00

In store taste stands Waitrose employee stands buy a taste stand advertising Elixir with tasters encouraging consumers to purchase. It is presumed that the company will have to pay for this. Woodside Corporation would like two hours once a week at different times each week in the 14 stores, using 4ltr’s of juice as tasters at each store weekly. Estimated total cost per week £392.00 for 8 weeks; £3,136.00.

Employee Costs £8 Cost per litre £3Number of Hours 2 Number of litres 4Number of Stores 14 Number of stores 14Total £224 Total £168

Trade standsWoodside would need to buy a gazebo £70.00 (Argos, 2014), banners to decorate £100.00 each and will get 3 (Discount Displays, 2014), plus tasters (500x unit cost- distribution £0.80) £400.00, t shirts (10x£10) £100.00. Total £870.00.

Bath and West Show £432.00 3m frontRoyal County of Berkshire show

£331.00 4m front

Frome Cheese Show £100.00 3m frontBadminton horse trials £1020.00 3m frontGatcombe horse trials £367.00 3m frontTotal trade stand cost £3,220.00

Public Relations

Samples will be sent to a range of Cotswold based magazines and newspapers with the objective of some of them writing an article about the juice. Estimated cost is £560.00.

Number of Samples 200Cost of Sample £0.08Postage £2.00

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Total £560.00

Total marketing cost yearly £17,517.00. This figure is going to be rounded to £20,000.00 for any extra’s that may have been missed. Marketing activities will differ year to year however £20,000.00 is going to be used as a rounded figure for all three years. As it is unknown when the marketing costs will need to be paid, the £20,000.00 has been divided equally throughout each year.

5.1.7.Promotion

Woodside Corporation will take this discount and not Waitrose. If all consumers took up this discount it would be £0.50 discount per unit, it has been acknowledged that with the product on promotion more units would be expected to be sold. However as 10 units per store, per day has been allocated as an average this figure will remain the same for the sales forecast. Promotion will be in the last three months of the year as sales are predicted to be lower during winter months. The promotion cost is a large amount of money yearly which means money is lost (as it doesn’t cover fixed costs) for three months each year. However it is felt that this will encourage initial sales of Elixir and consumers are then more likely to repeat purchase.

First Year Second YearUnits per Three Months

12,774 Units per Three Months

91,248

Discount per unit £0.50 Discount per unit

£0.50

Total Cost of Promotion

£6,387.00 Total Cost of Promotion

£45,624

Third YearUnits per Three Months

237,750

Discount per unit £0.50Total Cost of Promotion

£136,875

5.1.8.Market Share

Fruit Juice market worth £1.9m in 2013, expected steady growth (Keynote, 2014). Even though market value of the fruit juice industry is expected to raise Elixir’s market share has been calculated using the 2013 figure of £1.9m.

1st year sales figure £99,637.20, which is 0.05% market share.2nd year sales figure £711,750.00, 0.37% market share.3rd year sales figures £2,135,250.00, 1.12% market share.

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5.1.9.Breakeven Analysis

Fixed Costs £97,240.00Selling Price Per Unit £1.95Variable Costs Per Unit £1.00

To breakeven Woodside Corporation needs to sell 102,368 units per year, this is 8,530 units per month. This does not include promotional costs which would increase the figure. The company’s first year sales does not cover this and as you can see on the cash flow forecast Woodside Corporation will be losing money for the first 12 months. However, once Elixir has proved itself to Waitrose and is in 100 stores in the second year of trading, sales will be 3.57 times the breakeven quantity. By the third year (Elixir in 300 stores) sales are 10.7 times breakeven.

Projected Sales (units) Compared to Breakeven1st Year Projected Sales 51,096 0.5times2nd Year Projected Sales 365,000 3.57times3rd Year Projected Sales 1,095,000 10.7times

5.1.10. Cash Flow Forecasts

As can be seen from the cash flow forecasts, the company loses money in the first year of trading. However, Woodside Corporation quickly becomes profitable in year two and will start making money above the initial £100,000.00 invested in month 26. It is felt that this is a realistic assumption to be made due to the research into the forecast. By the end of year 3 the company has substantial funds to expand the product portfolio.

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6. Cash Flow Forecast

6.1. Year 1

41

Month Pre start 1 2 3 4 5 6 7 8 9 10 11 12 TotalMonth name January February March April May June July August September October November December

                                                                             Funding from other sources 50,000.00                                                                         50,000.00Own funds 50,000.00 50,000.00Income from sales       8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 99,637.20

                                                                              0.00                                                                                    0.00                                                                                    0.00Total money in (£) 100,000.00 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 8,303.10 199,637.20

Accountant 0.00 0.00 0.00 2,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,000.00Premises       0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Marketing       1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.74 20,000.00Staff Wages       6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 75,000.00Business insurance       20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 240.00VAT       1,660.62 1,660.62 1,660.62 1,660.62 1,660.62 1,660.62 1,660.62 1,660.62 1,660.62 1,660.62 1,660.62 1,660.62 19,927.44Promotion       0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,129.00 2,129.00 2,129.00 6,387.00Variable costs       4,258.00 4,258.00 4,258.00 4,258.00 4,258.00 4,258.00 4,258.00 4,258.00 4,258.00 4,258.00 4,258.00 4,258.00 51,096.00Repaying Owner Funds 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Repaying Angel Investor 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 15,000.00Computers 5,000.00 5,000.00Bookkeeping Course and Software 1,250.00                                                                         1,250.00

0.000.00

                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00Total money out (£) 6,250.00 15,105.28 15,105.28 15,105.28 17,105.28 15,105.28 15,105.28 15,105.28 15,105.28 15,105.28 17,234.28 17,234.28 17,234.36 195,900.44Balance (£) 93,750.00 -6,802.18 -6,802.18 -6,802.18 -8,802.18 -6,802.18 -6,802.18 -6,802.18 -6,802.18 -6,802.18 -8,931.18 -8,931.18 -8,931.26 3,736.76Opening balance 0.00 93,750.00 86,947.82 80,145.64 73,343.46 64,541.28 57,739.10 50,936.92 44,134.74 37,332.56 30,530.38 21,599.20 12,668.02Closing balance 93,750.00 86,947.82 80,145.64 73,343.46 64,541.28 57,739.10 50,936.92 44,134.74 37,332.56 30,530.38 21,599.20 12,668.02 3,736.76

Money in (£)

Money out (£)

6.2. Year 2

6.3. Year 342

Month Year start 1 2 3 4 5 6 7 8 9 10 11 12 TotalMonth name January February March April May June July August September October November December

                                                                             Funding from other sources                                                                         0.00Own funds 0.00Income from sales       59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 711,734.40

                                                                              0.00                                                                                    0.00                                                                                    0.00Total money in (£) 3,736.76 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 59,311.20 715,471.16

Accountant 0.00 0.00 0.00 2,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,000.00Premises       0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Marketing       1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.74 20,000.00Staff Wages       6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 75,000.00Business Insurance       20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 240.00VAT       11,862.24 11,862.24 11,862.24 11,862.24 11,862.24 11,862.24 11,862.24 11,862.24 11,862.24 11,862.24 11,862.24 11,862.24 142,346.88Promotion       0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 15,208.00 15,208.00 15,208.00 45,624.00Variable Costs       30,416.00 30,416.00 30,416.00 30,416.00 30,416.00 30,416.00 30,416.00 30,416.00 30,416.00 30,416.00 30,416.00 30,416.00 364,992.00Repaying Owner Funds       0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Repaying Angel Investor       1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 15,000.00

                                                                              0.00                                                                              0.00

0.000.00

                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00Total money out (£) 0.00 51,464.90 51,464.90 51,464.90 53,464.90 51,464.90 51,464.90 51,464.90 51,464.90 51,464.90 66,672.90 66,672.90 66,672.98 665,202.88Balance (£) 3,736.76 7,846.30 7,846.30 7,846.30 5,846.30 7,846.30 7,846.30 7,846.30 7,846.30 7,846.30 -7,361.70 -7,361.70 -7,361.78 50,268.28Opening balance 3,736.76 11,583.06 19,429.36 27,275.66 33,121.96 40,968.26 48,814.56 56,660.86 64,507.16 72,353.46 64,991.76 57,630.06Closing balance 3,736.76 11,583.06 19,429.36 27,275.66 33,121.96 40,968.26 48,814.56 56,660.86 64,507.16 72,353.46 64,991.76 57,630.06 50,268.28

Money in (£)

Money out (£)

Month Year start 1 2 3 4 5 6 7 8 9 10 11 12 TotalMonth name January February March April May June July August September October November December

                                                                             Funding from other sources                                                                         0.00Own funds 0.00Income from sales       177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 2,135,250.00

                                                                              0.00                                                                                    0.00                                                                                    0.00Total money in (£) 50,268.28 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 177,937.50 2,185,518.28

Accountant 0.00 0.00 0.00 2,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2,000.00Premises       0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Marketing       1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.66 1,666.74 20,000.00Staff Wages       6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 6,250.00 75,000.00Business Insurance       20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 240.00VAT       35,587.50 35,587.50 35,587.50 35,587.50 35,587.50 35,587.50 35,587.50 35,587.50 35,587.50 35,587.50 35,587.50 35,587.50 427,050.00Promotion       0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 45,625.00 45,625.00 45,625.00 136,875.00Variable Costs       91,250.00 91,250.00 91,250.00 91,250.00 91,250.00 91,250.00 91,250.00 91,250.00 91,250.00 91,250.00 91,250.00 91,250.00 1,095,000.00Repaying Owner Funds       0.00 0.00 0.00 5.555.56 5.555.56 5.555.56 5.555.56 5.555.56 5.555.56 5.555.56 5.555.56 5.555.56 50,000.00Repaying Angel Investor       1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 1,250.00 20,000.00

                                                                              0.00                                                                                    0.00

0.000.00

                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00                                                                                    0.00Total money out (£) 0.00 136,024.16 136,024.16 136,024.16 138,024.16 136,024.16 136,024.16 136,024.16 136,024.16 136,024.16 181,649.16 181,649.16 181,649.24 1,771,165.00Balance (£) 50,268.28 41,913.34 41,913.34 41,913.34 39,913.34 41,913.34 41,913.34 41,913.34 41,913.34 41,913.34 -3,711.66 -3,711.66 -3,711.74 414,353.28Opening balance 50,268.28 92,181.62 134,094.96 176,008.30 215,921.64 257,834.98 299,748.32 341,661.66 383,575.00 425,488.34 421,776.68 418,065.02Closing balance 50,268.28 92,181.62 134,094.96 176,008.30 215,921.64 257,834.98 299,748.32 341,661.66 383,575.00 425,488.34 421,776.68 418,065.02 414,353.28

Money in (£)

Money out (£)

7. Internal AnalysisThe internal analysis identifies what resources the company will need to start and grow the business. The 5 M model has been used to do this.

Materials The factors of production are the fruit; British grown Beetroot and Apples, plant sterols which will be bought in from a company who produces it and water. These materials are easily obtainable.

Money The company will have £100,00.00 start-up funds. This will cover all of the initial costs as Woodside Corporation loses money during the first year of trading. However the business will be in a stable financial position by month 26 as it will be making above and beyond the initial investment. An average figure has been decided for the sales of Elixir which is achievable. £20,000.00 yearly has been put aside for marketing activities.

Manpower As the company is outsourcing production and packaging there will be few staff needed. There will be 5 full time staff; the owners of the company. The owners will deal with the day-to-day running of the business as well as coming together for marketing activities such as the trade shows.

Machinery The company will not need to buy any machinery as the production and packaging of the product is going to be outsourced to Refresco Gerber. A juicer of some sort will be used to make small batches of juice for product development. Each manager will have a laptop to do their work on and a bookkeeping software package will be purchased for the financial manager in the company.

Management

Woodside Corporation will have 5 full time staff who are the main owners. The roles of the managers can be seen in the people section of the marketing mix. The angel investor may give advice but will take a back seat position when it comes to management.

8. SWOT AnalysisA SWOT analysis identifies an organisation’s strengths and weaknesses (internal influences) as well as the market’s opportunities and threats (external influences) (Hooley, et al., 2012).

From what has been stated in the report about the new product Elixir and its positing within its chosen FMCG drinks market, Woodside Corporation has been able to devise a SWOT analysis to identify both Elixir’s and Woodside Corporations’ strengths, weaknesses, opportunities and threats.

43

Strengths

- Elixir offers consumers a quality tasting drink that lowers blood pressure and cholesterol which differentiates itself from competition.

- Elixir has been designed from thorough research from the market identifying where the gaps & trends are and what appeals most to the target audience’s needs, making it more viable than a product that is devised first and then tries to find a gap in the market.

Weaknesses

- Since manufacture of the of Elixir has been outsourced to another company Woodside Corporation does not have much control over this process in which Elixir is made.

- The product is easy to imitate and therefore competition will enter the market quickly once Elixir is successful

Opportunities

- Woodside Corporation sets out to establish itself in the Cotswold area. Once this has been achieved the company has the opportunity to expand to cover more of the Douth and ultimately the entire UK.

- By positioning Elixir as a premium product Woodside Corporation has been able to set a premium price of £3 (per unit). With production costs at £1 (per unit) the potential profit margins are relatively high.

Threats

- The competitor analysis has identified that there are direct and indirect competitors for Elixir

- The chosen benefits of Elixir, (lowering blood pressure and cholesterol) were decided upon from the research identifying these as the major health concerns of the target audience. If these health issues no longer become of concern to the target audience in future years, then the product may become redundant and there may be a fall in sales.

9. ConclusionThis report has established that Woodside Corporation will be able to successfully produce and distribute a healthy juice drink named Elixir that includes ingredients that are scientifically proven to reduce blood pressure and combat high cholesterols levels. Elixir has been developed from the research finding a gap in the fruit juice segment of the FMCG market for the 55-65 aged demographic. Fruit juice has been chosen because it is a growing segment with a large market value.

Woodside Corporation has decided to pursue the 55-65 demographic because they are an unmined sector, which is growing and frequently drink fruit juice. Reduction of cholesterol and blood pressure has been targeted as a core benefit due to this being a health concern within the demographic, as shown by the

44

research. As a premium juice, it is going to be placed in Waitrose to target the wealthier consumers.

The Marketing mix and forecast has taken into account a variety of factors to ensure effective product development, and therefore it is felt that Elixir will be a successful and profitable product for Woodside Corporation.

10. Appendix 1 – Consumer Questionnaire Results

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48

49

50

51

52

53

54

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11. Appendix 2 – Health Professional Survey Results4 health professionals were interviewed for the research, these are the results assembled together.

General Questions

What would you say is currently the biggest health problem for the 55 – 65 age market?

Moving on from this, what can be done to help this in terms of changes to diet?

What sort of dietary advice do you currently give out at the moment?

Are there any specific types of food that you say to avoid?

Lowering Blood Pressure

Is high blood pressure a large problem for the 55 - 65 age gap?

What sort of food causes high blood pressure?

What sort of food is proven to reduce blood pressure?

56

Cardiovascular disease, Women: breast cancer, Men: prostate cancer, ongoing obesity, diabetes, alcoholism, high cholesterol, smoking related issues.

Reducing saturated fat intake and thus reducing cholesterol

Monitor alcohol intake, reduce amount of foods high in fat or salt, lots of fruit/veg, food high in fibre, portion control, encourage more exercise, can refer to dietician

Takeaways, fast food, fried food, butter, adding salt, reduce red meat intake, less carbohydrates, high saturated fats, and refined sugar

Yes

Foods high in salt (deli meats, bacon/cheese) adding salt directly to food, high sugar foods, caffeine, junk food, fatty food

Unaware of any food although eating food products and drinks in excess which are low in the above presents increasing hypertension, change in dietary habits, beetroot, lower salt, sugar fat intake

Is there any food types that you recommend patients?

Do you know of any specific ingredients that are proven to lower blood pressure

Lowering Cholesterol levels

Are high cholesterol levels a problem for the 55 – 65 age gap?

What sort of food causes high cholesterol levels?

What sort of food is proven to reduce cholesterol levels?

Is there any food types that you recommend patients?

Do you know of any specific ingredients that are proven to lower cholesterol levels

Other Potentially Useful information

Can you combine ingredients you have said that lower both cholesterol levels as well as blood pressure?

57

Fresh fruit, vegetables, lean protein, fish and high fibre foods

Not directly no, only food products that don’t encourage high blood pressure

Yes as high cholesterol leads to high blood pressure in atherosclerosis and thus cardiovascular disease

Foods high in saturated fat, salt and processed foods

High density lipoproteins e.g. found in fish (omega fatty acids), beans, corn, rye, benecol, flora, unsaturated fats,

Same as previous, rapeseed oil, cholesterol reducing spreads and drinks

Olive oil, nuts (almonds), avocado, oats, red wine in moderation, strawberries, unsaturated fats, low salt

Foods both low in saturated fat and salt

Brief product overview - We aim to create a juice drink, which is low in sugar and contains ingredients that have been proven either lower blood pressure or cholesterol levels or both. We will target the 55-65 age market; do you think this product is viable?

58

The trouble which juice drinks is that much of the health benefit from fruit/veg is only present when eaten in its fresh form. If you had any drink and ‘plant sterol extract’ in it which actively lowers cholesterol, then this would work but this is to do with the plant sterol extract and not because of the juice drink. However if you have a proven drink that lowers BP and cholesterol then a juice drink could definitely be viable if it is tasty and marketed correctly. Currently, I know patients are adverse to the short benecol/flora drink/yoghurt type drinks as they don’t like the taste and are reluctant to have them.

Yes I do. These products are attractive to people, they get the feeling of consuming something healthy and if it tastes good…even better!

Keeping the idea focused upon drinking the juice drink and having a exercise regime would be ideal.

I do yes, however there are some very well-known and widely used cholesterol drinks currently on the market. A combined drink however would be a fantastic option. Good luck!

12. Appendix 3 – Supermarket Observations

CostaAsda

Sainsbury’s

Superdrug

59

Holland and Barrett Waitrose

60

13. Appendix 5 – C&D Distribution from Refresco Gerber to Waitrose

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14. Appendix 6 – Memorandum of AssociationMemorandum of Association of: Woodside Corporation

Each subscriber to this memorandum of association wishes to form a company agrees to become a fully contributing member of the company for the duration of the project.

Name and student number of each subscriber

Authentication by each subscriber (signature)

Summary of role within the company

Oliver Dent Oliver Dent Strategy Director

Claire Johnston Claire Johnston Marketing Director

Miriam Knight Miriam Knight Director of Accounting and Finance

James Tyson James Tyson New Product Development Director

Ben Wood Ben Wood Director of Operations

Dated: 13th October 2014

Date received by Module Leader: 13th October 2014

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15. Appendix 7 – Minutes of MeetingsWoodside Corporation had meetings at least once a week to discuss progress. An internet correspondence page was set up to ensure if any team member had queries they were dealt with. Even though the tasks were split between the team it was ensured that thorough checking and standardising was carried out. Here are some of the meeting minutes:

Thursday 9 th October

All Attended First Meeting Discussed- how to go about project, we split the FMCG into segments and

all have a segment to go away and research, initial discussions and ideas, customer needs.

James- drinks, Olly- overview of FMCG market, Ben- food, Claire- cleaning, Miriam- toiletries & household care.

22nd October

All attended All had completed initial segment research and discussed what product to

choose from the undertaken research. Started to put together powerpoint on our FMCG market. The parts of the presentation were broken up and each individual had a

part to complete.

19 th November

All Attended Market research completed so talked about findings and narrowed down

the product, how to market it and what direction the business should go. Made a document for the report and split it up into sections with headings

and added presentation information that needed to be included. Each individual tasked with a specific part of the report.

Market Analysis – Olly- Nature and Structure of FMCG Industry, STEEPLE Analysis of FMCG Industry, FMCG Segment Analysis, Customer Analysis.

Market Segmentation, Targeting and Positioning – James. New Product Development and Launch – Claire and Ben break up

marketing mix between themselves. Forecast and Financials – Miriam-Demand for 3 years, Fixed/variable costs

– advertising, packaging, distribution etc.

9 th December

All attended Put together all of the parts of the report and read through each ensuring

coherence, discussed what other parts needed more information and each team member had another task to carry out.

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16. Appendix 8 – Waitrose Buyer Email

Q. It would be good to get your thoughts as to whether you believe our idea has potential and whether you feel it might sell in Waitrose stores? Hypothetically, would your team consider introducing the product to your stores?

Added Value (i.e. extra calcium, cholesterol lowering etc) is a very tricky market to crack because you need to choose your host product very carefully, and there will be variance based on the perceptions of the market. For example, in the UK cholesterol lowering works well in yoghurt and margarines, but doesn't work very well in milk (although there are Flora Pro Activ milks, they don't do very well). Interestingly, this is completely different in Ireland, where added value milks are huge. One key consideration is how 'natural' the customer perceives the product to be - the more 'natural' the perception, the harder it is to include added value, because you run the risk of having the customer think that your are including 'unnatural' chemicals.

My personal feeling is that you could make added vitamin work quite well in a juice, but you would have a harder time to make cholesterol lowering work. Lower blood pressure is an interesting one - beetroot juice naturally does this, and lots of people buy beetroot juice already for its functional effects - so I would question the need for a juice that has added value in this.

Having said that, if you were able to come up with a design that created a strong natural, 'no added nasties' perception (think the picture of the orchard on the front of a Copella bottle, or the innocent apple with a halo) but also communicated added value that didn't counteract that perception, then hypothetically yes, I would consider it!

Q. We would like to understand the process by which Waitrose goes about buying new products to introduce to their stores: How do new brands get the opportunity to pitch their concepts to you?

The supplier will usually send the buyer an email with a brief introduction to the brand. The trick is to make an impression without being annoying or over the top - its a hard balance to get right! Bear in mind most buyers for major mults can get a dozen of these emails a week - so you need to stick out but don't pester!

It's worth mentioning why you're different to anything else that the buyer already stocks - and make sure you really are unique! Also mention if you are already stocked elsewhere, buyers always like to hear if someone else has taken the risk first!

The buyer will usually invite you to send samples in for tasting - ask them if you can have a meeting with them to present the samples in person. They will often say no, they'd rather taste in private first - if this is the case don't push yourself on them!

Q. What criteria do new brands have to meet in order for you to consider them viable opportunities?

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They need to be something different. Ideally unique, or if not, they need to be clearly something that will drive the category forward. They also need to be an attractive margin. 

Q.Hypothetically, how many units of fruit juice (1 litre containers) do you tend to initially buy from new brands?

This is hard to put a number on, it would entirely depend on how many branches we listed you in (see below). Usually we would allocate 1 case per branch as an initial allocation of a new line, depending on how quickly we think they will sell. 

Q. Do you test new products in a small number of stores before expanding to all stores (assuming they perform well)?

Sometimes, depending on how popular we think the line will be - I have a 'London Cluster' of 21 branches that I often use to test premium products. Teh more confident we are about a line, the more branches we would put it in - but if you are a brand new supplier, expect to get a small listing in order to prove yourself! 

Q. How much of a profit margin does Waitrose tend to require on fruit juice drinks? i.e. if you were to buy 1 unit from us at £2.50 and then sell it in your stores for £3, the margin would be 50p per unit – is this realistic?

Not really! Firstly, we wouldn't be making any money on that, as once I take off VAT at 20%, I'm making 0% margin! I'm afraid I can't share my margins or targets with you, but they would need to be strong in order to get a buyer's attention. 

Your RRP of £3 is ok, but it would need to be REALLY clear to the customer why your product is at such a premium. If you can propose a lower one, around £2,80 to a supplier, that would be in line with other premium juices (such as Coldpress) and more credible.

Premium lines from small suppliers need to attract quite high margins as they won't achieve high sales and don't invest much in terms of supporting the brand. Larger suppliers can offer lower margins, as they will be investing money with the retailer in promotions, media, overriders etc.

I think that I would be looking for a margin % in the high 30s from a product like the one you've described.

17. Assessment of Individual Contribution

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The following form must be completed by the group. Where there is disagreement about the value of the individual contributions to the group work it is critical that the group discuss the issues collectively; this is not a mechanism for a majority of members to simply ostracize another member in an arbitrary manner. Meet together and consider the criteria below for each team member. Write clearly each team member’s name at the top of each column. Using the criteria defined overleaf, allocate a category mark against the criteria.The final individual mark will be decided by the tutor.

Student name:

Oliver Dent

Claire Johnston

Miriam Knight

James Tyson

BenWood

Category mark

Contribution 4 4 4 4 4

Time-management

4 4 4 4 4

Preparedness 4 4 4 4 4

Attitude 4 4 4 4 4

Working with Others

4 4 4 4 4

Quality of work

4 4 4 4 4

Date of group meeting:12th December 2014

As group members we have discussed and agree the marks above, and are in agreement that the assessment marks shall be weighted according to these marks.

Group member signaturesOliver Dent

Claire Johnston

Miriam Knight

James Tyson

Ben Wood

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