The Marketing Final Project

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FINAL PROJECT

MARKETINGS TOOLS: The Marketing Mix Applied on Distribution (Selling) andManufacturing of Low Carbohydrate Diet Products (Desserts) Under Category

of Franchise

By

Liliana MeloRoncliton Santos

Principles of Marketing, Course AMM 104.8026LaGuardia Community College, Long Island City

February 5, 2007


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MARKETINGS TOOLS: The Marketing Mix Applied on Distribution(Selling) and Manufacturing of Low Carbohydrate Diet Products

(Desserts) Under Category of Franchise

INTRODUCTION

According to the World Health Organization (WHO), there are about 1 billionoverweight people in the world of whom 300 million are obese; if thisaccurate figure it equates to a world epidemic. There are 800 millionunderweight people worldwide. As a result, obesity is now the greatestcontributor to chronic disease. Therefore, Diet Bite will be created to providethe population of New York City with the possibility of enjoying their favoritedesserts with lower sugar, fat, and carbohydrates levels without feelingguilty. This enterprise might be expanded to other locations in NYC, NY otherstates and might become a franchise nationwide, or worldwide in a near

future.

Product Positioning

Target: People on dietDiabetic People

Product Position: Supply an existing product or service in a superiorway.

DifferentiateProduct:

Ensure that customers know the products keybenefits

Projected Sales : Profit Margin = Net Profit/Net SalesTarget profit should include a reasonable salary plus

a reasonable return on the amount invested in thebusiness

Net profit margin of 8.5% (determined frominterview) *Desired net profit is $48,000 a year (4000 permonth)Net sales for one year equals = $48,000/8.5% =564.705

(*) According to Colombian Bakery

PRODUCT

DESCRIPTION:

A place where people can find any kind of Low Carbohydrate, Diet Productssuch as beverages, desserts, breakfast, and brunch. Likewise, this store can


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offer people information about how to keep their lives healthy through thefood such as magazines, videos, and special events.

The store will distribute and sell products under the brands The South BeachDiet, Jello, Weight Watchers Recipes, Atkins and others reference, and its

own product under the brand Diet Bite.

Drawing 1. Some Brands will be available in Diet Bite

Also, the store will have the capacity to offer Bakery service. Diet Bite willinclude the following services:

SPECIFICATIONS OF LINE PRODUCTS

PRODUCTKIND OFPRODUCT

ORIGINOWN LINE -DIET BITE

OTHER BRANDS

Beverages

Iced Tea X XDiet Sodas XHot beverages:Chocolate, Coffee,

X

Herbal teas. X Yogurt Smoothies X

Juices X XMilk shakes X

Desserts Ice Cream X XCakes X X

Mousse XCheese Cake XPies (Apple,Strawberry,Lemon, Lime,Pumpkin)

X

Cookies X XMuffins X X


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Donuts X XBrownies XLow CarbCheesecake

X

Snow Pudding X

BlueberryCobbler

X

BreakfastEggs and Cheese XCereal X

SweetsCandies XProtein Bars XCandy Bars X

Packaging

Food packaging is the enclosing of food that requires protection from

tampering, whether by physical, chemicals, or biological needs. It also showsthe product that is labeled to show any nutrition information on the foodbeing consumed. Food packaging functions are as diverse as they areimportant. They are broken down as follows.

The design: it can be a decisive advantage but it changes withfads. For example, a fun board must offer a good and fashionabledesign adapted to people.

The packaging: It must provide a better appearance and aconvenient use. In food business, products often differ only bypackaging.

The safety: The packaging must protect the food from biologicalagents in rats, insects, and microbes; from mechanical damage suchas product abrasion, compressive forces, and vibration; and fromchemical degradation such as oxidation, moisture transfer, andultraviolet light.

The "green / Environmental issues: A friendly product toenvironment gets an advantage among some segments.

Communication: Packaged food must be identified for consumeruse mainly with label text and graphics. The packages will detailnutritional information, if they are kosher or halal-approved,

manufacturer, product size (volume or weight-based), and theUniversal Product Code (UPC).

TYPES OF PACKAGES USED BY DIET SWEET

TYPE DESCRIPTION REMARKSCarton Box Base 95mm x 95mm +/-

Top 110mm x 115mm +/-For desserts

Premium PE coated cold Sizes Logo and designs


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paper cups

available(oz):6.5/8/12/16/22/32Paper: Quality pe1s andpe2s paper imported fromthe USA/Finland/Canada

Qty per sleeve: 50-100Qty per carton: 1000-2000

Quality pp plastic clear cups*suitable for soda, colddrinksMaterial: High quality foodgrade ppAvailable sizes: 12oz& 16oz*matching ps flat lidsavailable

Packing: 1000 pcs per carton

provided usingoffset, rotary andgravure printing.Corporate logoprints.General designsavailable

PP Plastic DrinkingStraws

*Customizable to variablelength and width*Solid Color / 3 color stripe /Swirl available*PP food safe material

Packing: Jumbo Pack250 pcs x 40 packet percarton

Customizable colorCurrently flexiblestraws unavailable

Bakery Boxes

Bakery box - 14"X14"X6"

White bakery box withdimensions 14"x14"x6"INDIVIDUAL ITEM SIZE: 14" x14" x 6"WEIGHT: 53 lbs.CUBE: 1.23

This box can helpyou easily bring

your birthday cake,also can keep yourcake fresh inrefrigerator andheated inmicrowave oven.

Pink bakery box

Individual Item Size:12"x12"x5"Weight: 48 lbs.Cube: 1.07

Paper Plate Features:

1) Good quality and foodgrade paperboard, highresistance2) Double or single PE isavailable3) Measurement and design:according to customers'requirements


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4) Environmentally friendlyand biodegradable

Paper Bag

1) Materials: LDPE and HDPE2) Colors: tinted and clear3) Printing: 1 - 6 colors from

clear to rainbow4) Headers: wicket withplastic or rubber wafer toclose5) Size and otherspecifications are accordingto customers' requirements

Biscuit Case1) Size: 145 x 50mm2) Material: tinplate

Outer packing120 pcs/cardboard cartonCarton dimensions: 75 x 60 x

33cm

Aluminum Foil Container

Size: 4 3/8"(d) x 2"(h)Good for baking foodGood quality1000 pcs. Carton

PLA Containers

1) Material: OPS2) Thickness: 0.2mm ~1.5mm3) Best container for food,cake and cookie4) Elegant style and various

sizes5) Can be covered or sealeddirectly for the convenienceof storage,

display, or carrying6) Dimensions: 190 x 164 x6mm, 190 x 164 x 67mm,32ozOuter packing:300 sets/ctn

PLA containers and

containers aremade of recyclablematerials thatmake them sanitaryand convenient

Ice Cream Cup Product

Type 24

Height: 44 mm / Topdiameter: 98 mm / Caliber89 mm and Capacity: 181 mlType 25Height: 40 mm / Topdiameter: 101.5 mm /Caliber 93.5 mm andCapacity: 227 ml

1) Material: PP2) Heatdisinfection:>120C (no colorfading)3) Used for packingfood or beverage


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Clear Beverage CupProducts

Type # 136Height: 63mm / Topdiameter: 101.5 mm /Caliber 93 mm and Capacity:345 ml

1) Material: PP2) Used for packingfood3) Thoroughlyresoluble

Jelly Cups

Type # 95Height: 40mm / Topdiameter: 46.2mm / Caliber38 mm and Capacity: 29ml

1. Material: PP 2.Ideal for packaging jelly 3. variousdesigns is available

Transparent Plastic

1) Material: LDPE2) Made from non-toxicpolyethylene3) Can be manufacturedaccording to customers'

specifications4) Suitable for supermarketand food packing

References according to MALEX PAPER PRODUCTS SDN BHDhttp://www.malex.com.my

PRICE

Strategies:

Competitive pricing: If our product is sold at the lowest priceregarding all our competitors, we are practicing competitive pricing.Sometimes, competitive pricing is essential. For instance, when the productsare basically the same, this strategy will usually succeed.

Remember that the success of competitive pricing strategy depends onachieving high volume and low costs. If our prices are lower than our costs,we are going straight to bankruptcy! To avoid such a mistake, we have totake notice of the break even ratio that you will find below.

Cost-plus-profit: It means that we add the profit we need to our cost.

The authority may have access to the costing data and should like to check ifthe profit added to the cost is not too high.

Value pricing: It means that we base our prices on the value youdeliver to customers. For example, when a new recipe has developed, wecan charge high prices to the customer. This practice is also calledskimming. It is easy when we are in the introductory phase of the product lifecycle.
http://www.malex.com.my/http://www.malex.com.my/


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Weekly and Daily Sales Projections

The store will be open 7 days a week all year round (52 weeks)

Weekly sales: 564.705/52 weeks equal sales of $10.860 per week

Daily sales: 564.705/365 days equals sales of $1547 per day

Determining Cost of Products:

Know variable costs Know fixed costs

Costs that vary with the level ofproduction

Materials, labor, packaging

Cost that do not vary withproduction

Rent, utilities, interest, andadvertising

Cost Method - Activity Based Costing (ABC): Activity BasedCosting (ABC) is a method of allocating costs to products and services. It isgenerally used as a tool for planning and control. This is a necessary tool fordoing value chain analysis.

Steps for Performing ABC

1. Analyze Activities2. Gather Costs3. Trace Costs to Activities4. Establish Output Measures5. Analyze Costs

We select Activity-based costing (ABC) because it offers the followingbenefits of activity Based Costing:

Identify the most profitable customers, products and channels.

Identify the least profitable customers, products and channels.

Determine the true contributors to - and detractors from -financial performance.

Accurately predict costs, profits and resources requirementsassociated with changes in production volumes, organizationalstructure and costs of resources.

Easily identify the root causes of poor financial performance.

Track costs of activities and work processes.

Equip managers with cost intelligence to stimulateimprovements.

Facilitate a better Marketing Mix.


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Enhance the bargaining power with the customer.

Achieve better Positioning of products.

Variable Costs

PRODUCT MATERIAL

DIRECTLABOR

TOTAL VARIABLECOST

Brownies 0.60 0.75 1.35Low CarbCheesecake

3.10 0.75 3.85

Snow Pudding 2.60 3.00 5.60BlueberryCobbler

4.35 2.25 6.60

AVERAGE VARIABLE COST 4.35

Note: See Appendix 2

Fixed Costs

Fixed Overhead $10,000Advertising $ 20,000General & Administrative $ 96,000Total Fixed Costs $136,000

Break-Even Selling Price

We can make 100 desserts per day or 36,500 per year

Selling Price = Variable Cost + Fixed Cost Quantity(4.35 x 36,500) + 136,000 = 294,775

Selling Price = 294,775 / 36,500= $8.07

Pricing Factors

1. Product or service costs2. Supply and demand3. Sales volume4. Competitors prices5. Firms competitive advantage6. Economic conditions7. Business location8. Seasonal factors9. Credit terms and purchase discounts


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10. Desired image

Pricing Strategies

Final price depends on desired image for the product or service:

1. Discount equals Bargain2. Middle-of-the-road equals Value3. Prestige equals Upscale

Penetration

1. Objective is to gain high volume sales quickly2. Set price just above unit cost3. Profits are likely to be small4. Attract customers with no brand loyalty

PROMOTION

Goal: Create brand image

Persuade customers to buy

Develop brand loyaltyBranding A brand gives a product identity and implies a

level of quality or service

It can be a name, term, or symbol that will helpidentify the maker of the product

Will help differentiate product from thecompetition

Helps build customer loyalty

Company: Diet Bite FoodsBrand: Diet BiteSlogan: your sweet sin without guilt

BrandAssociations

Attributes: quality, tasty, organic, homemade

Benefits: Healthy

Values: Caring, honest

Culture: Big city values Personality: Caring person

User: People on diet, Women upper 18 years old,Diabetic People, and sophisticated people whowant more than eat a dessert.

ProductAdoption

Awareness

Interest


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Process: Evaluation

Trial

Decision

Reinforcement

Publicity: Ways to gain positive publicity

1. Write an article about healthy desserts.2. Contact local TV and radio stations and offer to be interviewed3. Publish a newsletter (healthy magazines)4. Speak at local functions (hospitals)5. Offer or sponsor a seminar (about how to eat healthily)6. Write news releases and fax them to the media7. Sponsor a community project or support a nonprofit organization or

charity8. Promote a cause (how to care our health)

Advertisement:

It takes many forms: TV, radio, internet, newspapers, yellow pages, and soon. You have to take notice about three important notions:

Reach is the percentage of the target market which is affected by youradvertisement. For example, if you advertise on radio you must know howmany people belonging to your segment can be affected.

Frequency is the number of time a person is exposed to your message. It issaid that a person must be exposed seven times to the message before to beaware of it. Reach*frequency gives the gross rating point. You have toevaluate it before any advertisement campaign.

Message: Sometimes, it is called a creative. Anyway, the message must: getattraction, capture interest, create desire and finally require action that is tosay close the sale.

Public relations:

Public relations are more subtle and rely mainly on your own personality. Forexample, you can deliver public speeches on subjects such as economics,geo-economics, futurology to several organizations (civic groups, politicalgroups, fraternal organizations, professional associations)

These speeches will enable you to develop new relationships and their cost isnil !


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-Sales promotion:

It includes fair trades, coupons, and discounts are linked to the salesstrategy.

PLACE

Distribution Methods

We have considered three main distribution channels to our products:

1. Selling to the customers: Whether we sell by ourselves (as retailer)whether we employ a sales force, we are in these cases in front of thefinal customer. There are not intermediaries between us and him.Unfortunately, except for the retailer business, this situation is far tobe the general case. In this case, the sales will be at the store locatedin Manhattan.

2. Selling to the retailers: For example, we manufacture bakeryproducts and we sell them to the New York retailers.

3. Selling to the wholesalers: There are two wholesalers in NYC suchas BJs and Costco. We sell our bakery products to these big stores. Onturn the wholesalers sell or products to the retailers which finally sell totheir customers.

Location:

WESWEETBITE

CUSTOMER RETAILERWHOLESALE

R

RETAILER

CUSTOMER

CUSTOMER


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In Manhattan:

Design:

Place with the capacity of 100 people and 10 employees. The bakery willhave special designs that show its elegance and sophistication. Also, theplace will count on kitchen, bathrooms and 25 tables.

CONCLUSION

The ultimate objective of marketing is to link

1. Product to customer benefit2. Price to customer cost3. Place to customer convenience4. Promotion to customer communication


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YOU CAN IMAGINE TO EAT THEM

WITHOUT FEELING GUILTY?

SOON THE PLACE WHERE WILL UNDERSTAND YOUR FEELINGS

The Marketing Final Project

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