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MARKETING PLAN
MARKETING MANAGEMENT
November 19, 2010
The Lisbon MBA Part Time 2010 - 2012
Florbela Pinto
153010151
Jorge Oliveira
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Summary
1 Executive Summary..............................................................................................2
2 The Challenge........................................................................................................2
3 Situation Analysis.................................................................................................3
3.1 Company Analysis........................................................................................4
3.2 Customer Analysis.......................................................................................4
3.3 Competitor Analysis....................................................................................6
3.4 Collaborators..................................................................................................73.5 Climate.............................................................................................................8
3.5.1 Political Factors......................................................................................8
3.5.2 Economic Factors..................................................................................8
3.5.3 Social Factors.......................................................................................10
3.6 SWOT Analysis.............................................................................................11
4 Market Segmentation.......................................................................................11
4.1 Segment 1.....................................................................................................12
4.2 Segment 2.....................................................................................................124.3 Segment 3.....................................................................................................12
5 Alternative Marketing Strategies................................................................13
6 Selected Marketing Strategy........................................................................13
6.1 Product...........................................................................................................14
6.2 Price....................................................................................................................16
6.3 Place location..................................................................................................17
6.4 Promotion.........................................................................................................18
7 SHORT & LONG TERM PROJECTIONS...........................................................19
7.1 Fixed Costs...................................................................................................20
7.2 Break-even Analysis..................................................................................21
7.3 Sales Forecast................................................................................................22
7.4 Advertising Budget.......................................................................................24
7.5 Contingency Planning..................................................................................24
8. Conclusion............................................................................................................25
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8. ConclusionAppendix. i, ii, iii
1 Executive Summary
With the increasing emphasis on healthy life styles, well being and quality of
life, people needs are changing. At the same time tastes for food are
becoming more sophisticated as well as more heterogeneous. There is a
growing concern with the quality and quantity of food people eat. This
tendency is yet to be explored explicitly in the coffee shops market.
Healthy food is still highly connoted with macrobiotic, vegetarian and nottasty; this is a great setback and will be Doce Dieta first barrier. Fortunately
there has been a significant increase in alternative ingredients offer in the
last few years. The whole project lies under the assumption that it is
possible to provide better quality foods and nutrition without changing the
basic core of the market.
We also believe that the tasting experience we offer will be actually
perceived. Some customers will try just for curiosity and will learn that our
healthy concept is not antagonic with the eating and drinking pleasure they
expect from a coffee shop. The core characteristics such as taste, flavor,
senses and aromas will be present as they are one of our main concerns.
The present plan discloses objective data for the implementation of the first
coffee shop in the center of Lisbon.
2 The Challenge
Doce Dieta will be a startup aimed to a niche in the high quality coffee
shops market, a place to socialize and spend time in a relaxed manner with
family, friends or colleagues with the distinctive combination between
healthy and tasty.
Medium term goal is the creation of two more coffee shops in the city and
the foundation of a recognized brand in the market. The next step is the
expansion of our chain of healthy coffee shops to the rest of the country in
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specific urban locals that fulfill the segment requirements identified. This
will enable the company to achieve different procurement results and place
it in a more competitive position regarding other existing chains.
In the long run, the pioneer effect will present a clear edge when the
competition decides to change their focus to healthy as we expect.
Internationalization may be considered in the future; in this case market
analysis must be object of thorough attention.
The scope of this marketing plan is to outline the strategies, tactics, and
programs that will make our sales goals a reality.
3 Situation Analysis
The first assumption we hope this plan will confirm is exactly that the
market not only is seeking for our healthy offer, as demand will increase in
the next few years. Actually we believe that the healthy behavior will be the
established reality in the long term.
Doce Dieta must build a brand around the whole concept. Products play a
big role and are a distinctive factor. The service will be crucial to bond with
the clients.
Fig. 1 Fig. 2
Although we havent considered the whole pastry market in our targeted
area, there is a big offer of pastries in the city. Some of these offer a fairly
good atmosphere and very good conventional pastry. There are some
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renowned vintage places in very good locations. These places werent
considered as competition since they serve different segments.
3.1 Company Analysis
This company is meant for a population that enjoy cultural events, reading,
listening to music and that seek coffee for their relaxing moments between
stressful activities.
A strong emphasis will be put on the atmosphere. A sophisticated, calming,
relaxed and stress free experience to our customers. People must associate
our place to a timeless experience that enables them to forget theirconcerns and strains. Another of our goals is to become a life style brand
around the concept of Tasty and Healthy.
Focusing on office executives, college students and seniors that feel the
need for a coffee and a relax moment during the day or after work. Each
client will experience much more than the best coffee and healthy sweets.
They will be received by a friendly team in a meeting place, comfortable
welcoming atmosphere with great ambiance music.
The shop will be designed to offer different environments to allow at the
same time people that will stay for different periods and for different
objectives. The kitchen will be in a visible position within glass walls faced to
the interior. This way, customers will be provided with the opportunity to
have close contact with the cooking process, enhancing both the learning
process and trust.
Our recipes will be developed by a professional nutritional team. Traditional
recipes will be transformed to provide the nutritional balance and taste we
propose.
3.2 Customer Analysis
In order to perceive customers needs and behaviors, we have conducted a
questionnaire to assess the following:
existing offer
consuming behaviors and preferences
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understand if there is space for our product in the market
Specifically, with each question, we wanted to know:
1) If the respondent usually attends our competitors coffee-shops
2) If the respondent appreciate, and at what level, the already existing
offer
3) If the respondent would appreciate, and at what level, the innovations
we intend to introduce in the market.
4) What kind of sweets are most appreciated, to understand in what
products we should engage more effort in production
5) What is the acceptability of the brand name we proposed.6) Socio demographic data we think might be useful in the result
stratification.
The questionnaire was conducted bearing in mind the segments we had
previously identified.
Office Executives, 220 questionnaires answered online in
Google Docs Forms;
College Students amounted for 88 answers in a face to face
survey at FCEE;
Seniors totaling 17 questionnaires answered in a face to face
survey conducted in our projected area.
Discussion of Results:
From the purposed features we were able to observe that most people value
ambience music, comfort and decoration. From the ones we want to
introduce, the higher score went to sweets baked at time and place and
tasty but low-calorie sweets. Thus, these shall be the ones where we will
enforce when implementing the concept.
From this survey we were able to observe the following:
The most appreciated features by all the segments were comfort and
decoration, the sweets baked at time and place and the tasty but
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low-calorie sweets which points out a important concern with taste,
health and comfort.
The ambience music is not as much important to seniors as it is to
university students and office executives.
Only executives perceive wi-fi internet connection as an important
issue which may be linked to the increasing internet mobile
connections.
Reading is not a main feature for university students.
None of the respondents perceive the workshops as an added value.
See Appendix i
3.3 Competitor Analysis
Competitors identification in Doce Dieta case must comprise the two most
significant characteristics we want to incorporate in our value proposition.
As previously stated we want to establish has a niche of the higher quality
coffee shops. To achieve that positioning, our products will be exclusively
healthy. This is a clear distinction to the existing offer.
Defining the boundary of our competition must account for these two key
aspects which Doce Dieta will combine, the high quality coffee shop
experience and the healthy emphasis.
Although we can notice an increasing concern with the health aspects of
their specialty coffee and other products, the existing coffee shop market
has a marginal amount of healthy products presented only as an alternative,
or not offered at all. The most significant coffee shops accounted for in this
study are Starbucks, Magnolia Caff, Cup & Cino, Il Caff di Roma and
Jeronymo. High quality coffee shops offer has increased mainly since the
beginning of the new millennium. They are well thought; typically offer a
wide spectrum of products, comfortable space, relaxed atmosphere and a
personalized relation with their clients. Overall they are very well structured
and their quality levels are very high.
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Our positioning of Doce Dieta regarding the existing competition is visible in
the following perceptual map.
Fig. 3 Perceptual Map
Vertical axis: Health Horizontal Axis: Confort Circle Size: Prices
3.4 Collaborators
Building brand loyalty through programs focused on providing staff the
corporate spirit. Staff must feel at home when working, happy people make
customers happier. Management believes in our brand potential and that
will get a great result in customer satisfaction.
The first partnerships we will try to do are with local gymnasium, in order to
spread our healthy concept.
In the future when the number of stores increases and the brand reaches
market recognition, interesting partnerships can be made with airline
companies, train and long distance busses and book stores.
There are online door to door distributors for our kind of products that we
consider very interesting potential partners. An example is
http://www.nomenuhomeservice.pt/.
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3.5 Climate
3.5.1Political FactorsThe market has been experiencing a growing emphasis on product and
service safety. The health authorities course of action has been central
creating both public awareness and a natural purge in the market.
People demand for higher standards in all the food supply chain, coffee
shops and bakeries included. High end coffee shops had their breakthrough
in the Portuguese market in the early 2000s. This tendency is aligned with
the EU policies towards public health and safety. This is a worldwide trend
mainly in the biggest economies.
3.5.2Economic Factors
Portuguese economy has shown a weak growth rate in this last decade. The
situation has worsened specially after the subprime event.
There has been concern in the country that it may need help from the
International Monetary Fund if it cannot restore the confidence of financial
markets worried about its budget deficit.
Portugal recently adopted an austerity budget aimed at cutting the deficit
from 9.3 per cent of gross domestic product in 2009 to 4.6 per cent in 2011.
There has been concern that the austerity measures may lead to economic
stagnation in the next year.
Tax burden to the population have been increased and the population
purchasing power has been diminishing. Consequently, projected confidence
levels are falling.
The social classes most affected are the middle, upper middle and upper
classes. This constitutes a major risk to the project because these are the
classes where we identified our core market segments. However, market
data show an increase in
private consumption in the first terms of the current year.
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Fig. 4
Fig. 5 Indicador de confiana dos consumidores
INE, 28 de Outubro de 2010
Fig. 6 Indicador de clima econmico , Fonte: INE
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3.5.3Social Factors
Western European consumers are quite sophisticated and also very
demanding. It's not just about cutting out fats and reducing calorie intake
but more about achieving a balance.
The best opportunities lie in niche sectors where successful market
penetration will require product specialization and uniqueness.
Similarly in Europe, consumers of all ages tend to choose bakery products
they view as healthy or nutritious, driven by government pressure to eat
well and concern about body image, confirmed a Euromonitor report last
March.
Market researchers maintain that a focus on health trends such as fortified
and gluten free foods combined with the development of value added items
such as savory bakery products will be critical for maintaining sales
momentum and profitability when the market picks up again.
Source: www.foodanddrinkeurope.com
3.6 SWOT Analysis
4 Market Segmentation
The segmentation is significantly made through the store localization and
through the price policy. Although Doce Dieta pricing policies place us
bellow Starbucks which is the lead player in the market.
Present a description of the market segmentation as follows:
Market Segment and targeting, Doce Dieta approach to the market of the
coffee houses is based on the concept of a comfortable meeting place,
somewhere that anyone who loves coffee, pastry or bakery can sit down,
listen to music, read a book or a newspaper and enjoy the atmosphere.
The key difference relies on the added benefit that the products are
carefully developed to be nutritionally balanced. Doce Dieta doesnt offer
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this as an option, rather is the philosophy itself. Being a fairly recent and
growing public concern, the concept will be further exploited and Doce Dieta
will organize workshops and events to create more awareness, both to the
healthy but still tasty theme has to the Doce Dieta brand itself. Doce Dieta
is strongly committed to the events and the whole message of a relaxed and
cozy atmosphere where people are offered the chance of learning how to
cook healthy bakery and the ingredients available.
After conducting a brief market research of the existing coffee-shops,
we realized that the following segments were our targets.
4.1 Segment 1
College Students
Although most of them are not working at the moment, a quiet place where
they can enjoy their free time with friends and/or studying is always
appreciated.
4.2 Segment 2
Office Executives
Living at a high rhythm of work, this population is looking at coffee-shop as
a place do distress from work and daily problems. Looking for a quite
involving atmosphere.
4.3 Segment 3
Seniors
Offering a space where they can spend some joyful time in company of their
most dears.
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5 Alternative Marketing Strategies
Before selecting our previously scoped positioning we have considered
several different issues concerning our possible marketing strategies.
i
et
6 Selected Marketing Strategy
While conducting surveys we asked a focused group to answer some
specific questions regarding key characteristics in the existent market
coffee shop offer. The results are in the following table and allowed us to
better perceive our positioning within the market. We can notice that the
health focus is yet to be presented in a clear differentiating manner. The
next step was defining our punctuation by each characteristic. This was
done by our team.
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6.1 ProductPositioning within the food and beverage market, we will provide a variety of
alimentary products that will include:
Drinks Foods
Coffee drinks (espresso, latte, cappuccino,etc)
Low calories bakery (bread, sweets,croissants)
Teas Sandwiches
Water, natural juices salads
What will distinguish our products from competitors?
The recipes will be carefully studied by a nutritional team, in order to
transform traditional recipes. We will gain in healthiness, reducing calories
but keeping flavor.
Some of the basic alimentary substitutions we propose are:
Soft drinks Natural Juices, water, or tea
White bread Brown Bread
Pasta Whole grain pasta
Saturated fats Olive oil and Sunflower oil
Sugar (sucrose) Fructose
Fat dairy products (e.g. Milk, butter, cheese) Low-fat dairy products
or soy products (e.g. skimmed milk, fresh cheese, soy milk).
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We include here some specific proposed alterations, to better explain the
concept and the associated benefits.
Muffins example: Most people enjoy warm muffins, especially for
breakfast on a wintry morning, although muffins are good any time of the
day or any season of the year. Then again, although there are exceptions,
many bakery or store-bought muffins are not especially nutritious, and
they are often loaded with trans-fat and high in calories. For instance, a
bakery muffin can contain 500 or even more calories.
The heart-healthy muffin recipes we propose, though, are actually quite
wholesome since they contain fruit antioxidants; plus, they are low in trans-
fats as well as calories and high in fiber, which means that people who are
health conscious and/or dieting can enjoy them without experiencing an
ounce of guilt.
As muffins were the most highly scores sweets in our questionnaire, we will
provide with an example of how we could do a recipe transformation.
See Appendix iii.
Marketing Objectives
Doce Dieta marketing objectives for the first three years of operation
include:
Grow total sales by 10% annually.
Build customer loyalty through educational programs (e.g.
workshops)
Maintain a staff of enthusiastic employees excited to share their training
acquired knowledge with Doce Dieta customers.
Build the Doce Dieta brand to the point where it becomes a household
word in the area.
Open more coffee shops so that brand and sales can grow quicker in order
to achieve a respectable market share.
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In order to compute the market share we have used the sales per store
values that we had access to, and the number of stores that the competition
had in Lisbon. That lead us to our definition of market as the high quality
coffee shops in Lisbon.
6.2 Price
In order to evaluate the competition pricing we have chosen 9 products and
compared the prices. As we can see by looking at the table it is very difficult
to say that one product is more expensive than the other. Since the
products sold by them are very alike we chose to extract a Unit Price that
corresponds to a mean of the 9 products. That way we can easily compare
prices.
We can see that Starbucks is clearly the competitor with higher prices with a
unit price of 2.19, while the rest of the competition has values between
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1.59 and 1.49. This makes sense since Starbucks is the most valued
brand.
It was also possible to get the annual sales of three of those competitors
(http://www.infoempresas.com.pt) and estimate the unit sales which will be
a great help to define our goal.
SBUX MAGNOLIA Il Caffe di Roma
Unit Price 2,19 1,57 1,59
Sales 2.625.154,68 1.513.365,43 1.216.797,80 Number of stores 5 7 7Sales per Store 525.030,94 216.195,06 173.828,26 Sales per Store per month 43.752,58 18.016,26 14.485,69
Unit Sales per Store 239255 137997 109402Unit Sales per Store per Month 19938 11500 9117
Main competitors Sales (2009)
Again Starbucks shows its strength with almost the double of sales per store
of Magnolia and Il Caf di Roma. Not only has the higher unit price but also
the higher number of sales.
6.3 Place location
Doce Dieta will locate the first coffee shop in the Chiado area this is high
costly Lisbon zone. After some research we reached a price of 20/m2 for a
300m2 space.
This is a shopping and business area with a great transportation network.
There are some college campuses nearby. It is also near a very busy
nightlife, we expect people to gather often before leaving to nearby night
clubs.
Another concern was the purchasing power of the local inhabitants which we
defined as above 100 index.
As we can see in the next map, this is a high valuated area
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6.4 Promotion
Website, A well optimized website can yield positive organic results and keep
the company in the mind of coffee drinkers who look for their next coffee
experience online;
Facebook and Tweeter are widely used, there are some interesting;
Search engines key words (coffee shop, pastry, healthy, etc);
The main objectives of our advertising are:
Initial brand advertising With this we present our product using
magazines/newspapers and brochures.
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Customer contacts With this we will create and maintain a regular
client basis. In order to achieve it, our clients can sign up in our
internet site. Regularly information regarding our products,
events and brand. This strategy will be highlighted in each of the
advertising strategies.
Continuous brand advertising.
The replacement of the initial brand advertising with a less
aggressive and costly version as the project evolves and the
brand becomes known.
7 SHORT & LONG TERM PROJECTIONS
Unit Variable Costs
Doce Dieta is operating in an industry capable of supporting high gross
margins. With the objective to define a realistic variable cost we decided to
compare the price of some products bought in a normal supermarket with
the price of our less expensive competitor.
#6 Blueberry Muffin
Ingredients:
cup skim milk = 0,085 L = 0,06 cup vegetable oil = 0,0425 L = 0,06
1 egg =0,09
1 and cup flour = 0,255 Kg = 0,15
cup sugar = 0,125 Kg =1,5
Total for 6 Blueberry Muffins = 1,93
Total cost for 1 Blueberry Muffin =0,32
Minimal Price of 1 Blueberry Muffin =1,2
Min Per-unit revenue = 0,88
Cost/Price = 27%
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In order to simplify we considered the monthly energy, gas and other costs
as fixed costs. So we can say that the variable costs in relationship to per-
unit revenues are low. Lets say that variable costs are equal to roughly 25%
of per-units price of our less expensive competitor. In terms of the unit price
that we are using as units, this represents an unit cost of 0,35. It is our
hope that as we move into the future and continue to build relationships
with our suppliers, this value will decrease further, approaching a value of
20% which represents an unit cost of 0,28.
7.1 Fixed Costs
Fixed costs for Doce Dieta include: rent costs, facility lease costs, wage
costs, monthly costs (energy, gas, ) and other costs which Doce Dieta
must maintain on a monthly basis. These costs are fixed and aren't
impacted by an increase or a decrease in sales.
In order to implement our coffee shop we need to be located in high costly
Lisbon zone. After some research we reached a price of 20/m2, which
means, for a 300m2 a monthly cost of 6.000,00.
To implement our brand view and quality we will need to get a business
lease for equipment and improvements. We defined that 300,000 would be
more than enough and we got the following leasing simulation which
represents a monthly cost of 3.590,40 with an initial payment of 45.000
and a residual value of 50.000:
The cost related with employees can be very difficult to predict, but based
on the 2009 Estudo Econmico Sector da Indstria de Panificao,
Pastelaria e Similares the mean monthly wage for this industry is 650.
Since we are in Lisbon and we are aware of the wage discrepancies to other
regions of Portugal we decided to use 1,000 as the monthly wage which
results in 1,166.67 when we account for the 14 annual wages. For 300m2,
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we decided to use 8 employees, which is more than our competitors. This
represents a monthly cost of 9,333.33.
Monthly costs we calculated:
Monthly Costs
Rent 6.000,00
Leasing 3.590,40
Wages 9.333,33 Energy, gas, 1.500,00
Total 20.423,73
7.2 Break-even Analysis
In order to do the break-even analysis we decided to use the maximum,
minimum and the mean value of our competitors and to try to position
ourselves as less than Starbucks but higher than the rest of the competition
as on the perception diagram.
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Max Min Mean Doce Dieta
Average Unit Price 2,22 1,39 1,69 2,00
Expected Unit Sales 19.938 9.117 13.518 ?
Average Per-Unit Variable Cost 0,35 0,35 0,35 0,35
Estimated Monthly Fixed Cost 20.424 20.424 20.424 20.424 Break-Even (#Sales) 10.925 19.607 15.261 12.357
As we can see by the break-even analysis compared with the expected unit
sales of our competitors, a 2,00 unit price is good and realistic price
position since the mean expected unit sales are 15261 while our 2 position
gives a break-even of 12357 sales.
7.3 Sales Forecast
Revenues for the first year of operation are based on an almost 10% growth
rate from month to month. This is an aggressive estimate, but we feel that
our strong emphasis on marketing will have positive results.
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Annually, beyond the first year of operations, we're predicting a growth rate
of roughly 10%. We'll have a better idea of potential growth rate beyond
year one as we make our way through our first year. The plan will be
updated as we receive more information.
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With this sales forecast we can also calculate the market share growth during 5years.
7.4 Advertising Budget
The advertising budget will consistently equal approximately 20% of the
total sales revenue with the exception of the first year where we will have a
budget of 30.000 with the objective to create an initial brand advertising.
One of our strongest strengths is our marketing and brand building
capabilities, and the aggressive marketing budget is a reflection of the
importance we attribute to our marketing activities. It is our hope to
increase this budget should sales and efficiencies of scale allow us to do so.
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2011 2012 2013 2014 2015
Sales 299.379,97 329.317,97 362.249,77 398.474,74 438.322,22 Direct Revenue 247.404,28 272.144,71 299.359,18 329.295,10 362.224,61
Sales Revenue -42.680,52 27.059,91 54.274,38 84.210,30 117.139,81
Brochures Cost (100,000) 5.000,00 5.000,00 5.000,00 5.000,00 5.000,00
Site Cost 285,00 285,00 285,00 285,00 285,00
Newspaper/Magazine Cost 44.928,00 0,00 5.616,00 11.232,00 16.848,00
#months 24 0 3 6 9
Advertising (20%) 50.213,00 5.285,00 10.901,00 16.842,06 23.427,96
Total Revenue -92.893,52 21.774,91 43.373,38 67.368,24 93.711,85
7.5 Contingency Planning
This marketing plan is just that, a plan. Plans don't always work out and we
have to be ready to deal with the likelihood that Doce Dieta won't make
good on the projections outlined in this plan. We also have to prepare
ourselves for overwhelming success.
The following are some possible scenarios:
Revenues exceed projections - A serious increase in revenues over
projections will give us an opportunity to increase our marketing budget andpossibly add an additional location increasing our market share.
Revenues miss projections - We have to be prepared for this possibility.
If we miss our projections, we need to attract more customers in order to
achieve the forecast sales by doing price promotions and partnerships. The
danger in this scenario is that the first reaction to missed projections is to
decrease spending, particularly marketing expenses. We can't do that! We
have to get our message out to the target market, and we can't do that ifwe stop spending on marketing. Additional capital infusions may become
necessary and that possibility is detailed in the business plan.
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8. Conclusion
Starbucks customers have been telling us that they want better tasting andhealthier food options when they visit our stores said Sandra Stark, vice
president, Food Category, Starbucks Coffee Company.
Many people do not realize how many hidden calories can be in the
average smoothie or restaurant salad. And no one wants to think theyre
making a healthy choice just to realize theyve accidentally consumed half
their days calories on a smoothie, said Katie Thomson, registered dietitian
and senior nutritionist, Starbucks Coffee Company.
People want food that tastes delicious, but the definition of healthy
snacking is changing. People are asking what goes into their food, not just
whether it is low-fat or low calorie, says Keith Ayoob, Ed. D., R.D. at Albert
Einstein College of Medicine.
We know that we can offer healthier food than any other competitor in our
market and yet keep an emphases on taste and pleasure. Our study shows
that our coffee shop concept is financially viable and profitable.
Our conclusion is that this plan clearly motivates us to move forward to the
next stage and that we can create this new brand and succeed!
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