Ateneo de Manila University John Gokongwei School of Management

Project Information Cataloging System (PICS)

Class Project Information and Cover Sheet

Name of Student/s: (Surname, Firstname, MI). Apolinar, Francis A. Castro, Jose Angelo G. Gabitan, Justin S. Koa, Kathrina L. Malabanan, Patricia F. Miranda, Laurence P. Montiel, Byron J. Nanagas, Lorenzo E. Si, Scott G. Tornilla, Stephanie C. Zamora, Ryan P. Project Title: The Big O

School Year: 2009-2010 Sem: First Subject Code: LS 126 Course Name: Strategy Formulation Teacher(s): Carmelo V. Lopez (Information below this line and in this colunm for use by Faculty &/or PICS staff only.) Grade: Call Number:

Functional Area:

Client: teens and yuppies who are Comments: attuned to the health and wellness trend; doughnut lovers open to healthful alternatives; Industry Category: Donut Industry Abstract (150 words or less) Golden Halo Inc. presents The Big O Doughnuts, a line of healthy baked doughnuts with sugar-free dips and yogurt fillings. The products come in original and wheat variants made tastier with sugar-free chocolate dip and mango, strawberry, pineapple and vanilla flavored yogurt. The product will be marketed as a better, healthier alternative to the popular but ultimately fatty donuts abound in the industry today. The Big O Doughnuts is a playful brand promoting a fun, full and satisfyingly healthy lifestyle. This product is targeted towards the teens and young adults catering to the needs of a generation assigning great value to health and wellness. The product transforms the image of one of the most popular snack foods in the country today from a guilty pleasure into a guiltless delight.

Author(s) Recommended Key Words

The Big O, doughnuts, snack food, yogurt, wheat, low calorie, doughnut industry

THE BIG O LS126Q Members: Francis Apolinar Jose Angelo Castro Justin Gabitan Kathrina Koa Patricia Malabanan Laurence Miranda Byron Montiel Lorenzo Nanagas Scott Si Stephanie Tornilla Ryan Zamora
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TABLE OF CONTENTS Executive Summary Market and Industry Background-------------------------------------------------------------------------------- 7 A. Industry Structure and Industry Growth B. Dominant Industry Market Forces C. Drivers of Industry Change Business Concept and Envisioned Future------------------------------------------------------------------- 14 A. Business Concept B. Customers C. Risk in the Business D. Porters 5 Forces E. Key Factors for Success F. Market Feasibility G. Economic Feasibility H. Mission/Vision I. Objectives a. Short-Term b. Medium-Term c. Long-Term Market Strategies-------------------------------------------------------------------------------------------------- 27 A. Target Market B. Projected Market Share C. Positioning D. Pricing E. Distribution F. Promotion Plan G. Sales Potentia Competitive Analysis--------------------------------------------------------------------------------------------- 35 Design and Development Plan-------------------------------------------------------------------------------- 40 A. Research and Development 1. Rationale for the Design of this Development Phase 2. Product Development 3. Market Testing and Development Activities 4. Daizu Development Budget 5. Risk Assessment 4

1. 2. 3. 4.

B. Supply Chain Managemnt Plan 1. Supplier and Vendor Selection 2. Inventory Management 3. Direct and Indirect Materials of Production 4. Supply Chain Process Integration 5. Logistics 6. Distribution Network C. Operations Plan Facilities Layout Process Design Capacity Planning Scheduling Management & Financial Plans------------------------------------------------------------------------------- 56 Organizational Structure Man Power Requirement Overhead Budget Capital Budget Cost of Goods Sold &

A. B. C. D. E.

I. Financial

Plan Projections----------------------------------------------------------------------------------- 60 A. Income Statement B. Cash Flow Statement C. Balance Sheet Statement D. Financial Analysis Appendix

Executive Summary The Big O doughnuts The Big O doughnuts are healthy baked doughnuts with sugar-free dips and yogurt filling. The doughnut itself comes in two variants: Original and Wheat. These variants are additionally flavored with sugar-free chocolate dip, and mango, strawberry, pineapple, or vanilla flavored yogurt filling. The Big O doughnuts are low in calories and product variants have the added benefits of wheat germ and yogurt. The Big O also offers flavored chocolate drinks in strawberry and peanut butter variants as the ultimate complement to its healthy doughnuts. The Big O is a playful brand name that immediately captures the attention of consumers from the products target market, attracting them to The Big O kiosks and stalls serving high quality healthy treats in a fast and friendly manner. The brand name connotes a certain fullness and satisfaction that the company aims to provide its customers with a light, delightful feeling that promotes the fun dynamically energetic aura of a healthy lifestyle among the Filipino youth. The Big O doughnuts will be offered as a healthy alternative to current doughnut industry offerings primarily targeting a niche market composed of students and young adults with excess disposable income from the middle upper class of low A to broad B socio-economic classes. These include teenagers, young professionals and other people in their twenties and thirties residing in Metro Manila. They live active lifestyles and can often be noted to frequent malls, bazaars, cinemas and gyms during their free time. These targeted consumers are attuned to the growing health trend in the country and are greatly influenced by it. They are impulse buyers who have the age and background to appreciate the joys of doughnuts. Financial Features The Big O aims to generate Php 122,000 in sales revenues for the first trimester of operations. Furthermore, the business has an average profit margin of 35%, making it a profitable venture from the get-go. The business will be financed solely by the owners capital. Total initial investment required is estimated at Php 5,000 per member, or Php 55,000. The table below details the initial investments.

Initial working capital of PhP 5,000.00 per member SEC filings, business registration, and similar procedures Market testing and product sampling Advertisement Equipment maintenance Transportation Stall Purchases (Initial Supplies) Rent Deposit Total Initial Expenditures

PhP 55,000.00 1000.00 1000.00 1500.00 1000.00 1500.00 10000.00 32500.00 6500.00 55000.00

Major Achievements The Big O is confident in its product offerings as the company has received highly encouraging, positive feedback from random product sampling sessions conducted over the last three months. The Big O is enthusiastic about its future in the doughnut industry in the months to come. The following table details the objectives and sustainability of the product.
Time frame Year 1 Successful entry into the market Year 2 Expand to wider customer base Objectives The Big O Doughnuts will be launched in Ateneo and free samples will be given to potential consumers. Participation in school bazaars and outside events. Increase promotions to reach wider audience. Adding new flavors to suit the variety of preference in the expanded market Catering services for parties, university and corporate events. Open up our own permanent stall in a school or office cafeteria. More flavors for the existing product line. New healthy product line of other desserts and healthy sandwiches. Increase distribution networks through good client and supplier relationships. Pour in retained earnings to optimize production processes Open up a stall in a high-traffic mall. Open up more stalls in malls and food courts Expand to a caf type setting for one branch of The Big O Doughnuts Open up more stalls in malls and food courts Expand to a caf type setting for one branch of The Big O Doughnuts

Year 3 Extend product line and capacity

Year 4 Expand stalls to other venues, open up a caf Year 5 Franchising options and higher market share

I. Market and Industry Background

A. Industry Structure and Industry Growth

The fast-food market has grown rapidly over the past ten years with a proliferation of local and foreign establishments. This has been spurred in part by a relaxation of restrictions on foreign entrants and by the slow but steady rise in per-capita GDP of about 1.4% per year over the past decade, according to the World Bank. Food consumed outside the home has risen steadily from 3.8% of total family spending in 1991 to 4.9% in 2000, according to government figures, a jump from 24.6 billion pesos in 1991 to 89.2 billion pesos. The chart below shows the market value each classification. Figure 1percentage of fast food industry

The most popular fast food establishments in the industry are those under the restaurant sector serving food such as hamburgers, chicken meals, pizza and ethnic food. But when it comes to the side of the industry that leans towards the snack portion of consumerist diets, in other words the baked goods portion of the industry, the pack is being lead donuts. Donuts are undoubtedly one of the countrys favorite snack foods as the proliferation of donut shops in the country today shows. Brands like Dunkin Donuts, Go Nuts Donuts and more recently the Krispy
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Kreme Donuts, have gained a steady following. More recent entrants include those developing a mini-donuts sub-sector in the industry such as the competitor Lil Orbits. DPI reckons the doughnut market in the Philippines is worth about 3.8 billion to 4 billion pesos a year. Taking note of the figures in Table 1 we see a fairly stable level of expenditure by the average Filipino consumer on food and non-alcoholic beverages within the 1990-2015 period. The highest percent of spending (nearly 40% of total expenditure) is directed towards this category, under which The Big O falls. These expenditures are expected to amount to a total of 1.6 trillion php by 2015.1

Table 1

Consumer Expenditure by Purpose (% Analysis): 1990-2015

% of total consumer expenditure 1990 1995 2000 2005 2010 2015

Food and non-alcoholic beverages Alcoholic beverages and tobacco Clothing and footwear Housing Household goods and services Health goods and medical services
1

38.28

38.36

38.37

37.43

37.67

38.37

1.78

1.78

1.78

1.62

1.65

1.56

3.27 21.17 4.95

3.00 21.21 4.96

2.70 21.22 4.96

2.74 22.48 4.92

2.93 21.98 4.86

2.96 21.81 4.67

1.88

1.88

1.88

1.57

1.61

1.60

Ibid.
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Transport Communications Leisure and recreation Education Hotels and catering Misc goods and services TOTAL Source:

6.73 0.50 0.49 4.15 4.95 11.87 100.00

6.74 0.56 0.50 4.16 4.96 11.89 100.00

6.74 0.83 0.50 4.16 4.96 11.90 100.00

7.86 0.84 0.47 3.85 5.19 11.05 100.00

7.85 0.89 0.47 4.02 5.41 10.67 100.00

7.67 0.85 0.44 4.20 5.57 10.29 100.00

National statistical offices, OECD, Eurostat, Euromonitor International 2

Though minimal concrete data on the industry is available, the doughnut industry in the Philippines is of an arguably respectable size and as can be seen by the brisk business being done by current competitors in the industry, a rather attractive one. Despite the many competitors within the present day industry, it remains an appealing venture for companies able to pursue a differentiation strategy and offer consumers something that others cannot. The market is currently characterized by stiff competition among the various competitors in the industry for whom no significant differentiation exists other than in the matters of taste and price. The Big O intends to base its differentiation on an entirely different aspect hitherto unknown in the realm of doughnuts: health. The product endeavors to set itself apart from competitors unanimously offering fatty fried concoctions in the market today.

B. Opportunity within the Industry The Philippines is one of the countries with exceptionally high sugar consumption. This can mostly be attributed to the inherent Filipino sweet tooth and the success of the fast food
2

Ibid.
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culture within our heavily westernized society. Given the levels of intake as illustrated in figure 2, Filipinos are more prone to obesity and diabetes as well as certain other chronic-dietary diseases that have been gaining recognition as a danger to health in recent years.

Figure 2 Sugar consumption

According to WHO, by 2030, it is expected that most of the diabetic sufferers would be living in Asia with respect to the rising diabetic rates. India is the biggest home to the diabetics housing 33 million cases, China with 23 million cases, and Pakistan and Japan with 9 and 7 million cases respectively. Health indicator statistics from the DOH have pegged diabetes as the ninth leading cause of death in the Philippines. There are an estimated 3.36 million suffering

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from the disease today, meaning that 1 out of 25 Filipinos are affected by diabetes. 3 The incidence of diabetes among people living in Luzon is said to be 5.1%4 Resulting in high blood glucose rates, diabetes is often seen to affect the eyes, kidneys, nerves, and heart that would eventually lead to acute and chronic complications such as loss of vision, kidney failure, amputations, and heart disease. These health problems will adversely affect the quality of life as well as increase the health care progress and might thus decrease the productivity of the country. (see Figure 3: Tree of Life) Obesity, on the other hand, impedes on the work productivity of the employee. Overweight and Obesity are clinically defined as having a Body Mass Index (BMI) over 25 and 30 respectively. Obesity significantly increases the likelihood of health problems such as type 2 diabetes, high blood pressure, high cholesterol and triglycerides, coronary artery disease (CAD), stroke, and sleep apnea. These and the added stigma attached to body image problems also impacts and individuals productivity. One of the 25 global consumer trends in 2008 is a focus on health and wellbeing but with a parallel growth in obesity as predicted by Euromonitor International. Many Filipinos find themselves subscribing to this trend and respond well to products labelled as healthy despite having a higher price tag. 5 Many young people today enroll in gyms and follow a diet to live healthier and to have a better body image. data gathered from the NUTRISTAT Protocol at St. Luke's Medical Center (1999 - 2000), states that 34% of the total admitted patients are
3

Bio-Medicine.org. Diabetes on the rise among Filipinos.[http://www.biomedicine.org/medicine-news/Diabetes-on-the-Rise-among-Filipinos-15022-1/] Accessed: July 3, 2009. 4 Jane C. Baltazar et. Al. Prevalence and correlates of diabetes mellitus and impaired glucose tolerance among adults in Luzon, Philippines. [http://www.journals.elsevierhealth.com/periodicals/diab/article/PIIS0168822703002821/abstrac t] Accessed: July 4, 2009. 5 "Consumer Lifestyles - Philippines." (2005): Euromonitor International. [Database online.] 04 May 2005.
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malnourished and rouhly one-fourth of them are obese. There was more overweight (2/3) than undernourished (1/3) patients6. FNRI data from 1998 reveals an incidence of overweight and obesity in the Philippines of 16.9%. Coupling this information with the established steady growth of the fast food industry and the lifestyle it encourages, the current estimates of overweight and obesity in the country have increased to 25%7 Table 2. Five Leading Causes of Mortality among Filipinos, 2004 Cause 1. 2. 3. 4. 5. Heart diseases Vascular system diseases Malignant neoplasm Accidents Pneumonia Rate per 100,000 Population 84.8 61.8 48.5 41.3 38.4 Percent of total deaths 17.6 12.8 10.1 8.6 8.0

Cardiovascular conditions, diabetes and obesity have become a primary concern in the health industry today. All threeand as chronic-dietary diseases, the last two in particularare directly correlated with personal choices of nutrition and lifestyle. Alteration of these personal choices has an impact on these conditions. In addition to all this, young adults, aged 20-29 and with a tendency to eat outside are more susceptible to hypertensionwhich is only compounded by such external sources (such as those derived from work, home, traffic, etc.).8 These rising directly diet related health issues in the country today are prompting Filipinos to watch what they eat and makes the need for healthy versions of all time favourites such as The Big O quite prominent.
6

Asian Bariatrics. Morbid Obesity presents clear and big risks to our health, Filipino experts say. http://asianbariatrics.rxpinoy.com/new_challenge.html. Accessed August 3, 2009. 7 Rosa Allyn G. Sy. Prevalence of Obesity in Medical Practice in the Philippines. http://www.iotf.org/oonet/philippines.htm. Accessed: August 2, 2009. Beating Obesity. Philippine Daily Inquirer. June 14, 2008. 8 "Street Stalls/kiosks - Philippines." (2008): Euromonitor International. [Database online.] Feb 2008.
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II. Business Concept and Envisioned Future A. Business Concept The Big O doughnuts are healthy baked doughnuts with sugar-free dips and yogurt filling. The doughnut itself comes in two variants: Original and Wheat These variants are additionally flavored with sugar-free chocolate dip, and mango, strawberry, pineapple, or vanilla flavored yogurt filling. The Big O doughnuts are low in calories and product variants have the added benefits of wheat germ and yogurt. The Big O also offers flavored chocolate drinks in strawberry and peanut butter variants as the ultimate complement to its healthy doughnuts. The concept will make money through selling not only the doughnut itself but the experience of eating a sweet, guilt-free treat. The doughnuts will be sold per piece, or in boxes of three and six. The fruit-infused chocolate drinks will also provide additional revenue, as with the combo treats that come with offering doughnuts and drinks together. Franchising will become an option in the future once brand image has been established. This model can be sustained, through aggressive marketing strategies, which highlight the stall as the first to offer doughnuts in a healthy food experience. The Big O is a playful brand, promoting a fun, full and satisfyingly healthy lifestyle. This playful and fun image is a direct attempt to appeal to the target market. It is short and catchy, reinforcing the statement the company wishes to make with its products: That health, goodness and fun can mix. The company will be living proof that health and indulgence are not mutually exclusive. It is not necessary to give up the benefits of living and eating healthy and
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the joys of a sweet treat at any time of the day. The Big O does not want their consumers to have to make this choice.

B. Customers . Given that the unique thing about The Big O is its healthy nature the product will be marketed to a segment of the population that appreciates and seeks out this quality. The company has identified teens and yuppies (young professionals or adults in their 20s and 30s) in the upper middle class of low A to broad B as the most receptive to The Big O. The company targets both males and females though the latter is generally more conscious of diet nutrition and image. It is this demographic that is most attuned to the growing health trend and has the disposable income to pursue premium products directed towards this purpose. (Euromonitor International) The target market is geographically situated within Metro Manila and is concentrated in universities, business districts and call centers. They also frequent malls, after school hangouts and bazaars. The older members of this segment have also taken to frequenting gyms to live healthier and build a positive body image.9 The typical customer for this product will include active, health-conscious students and young professionals looking for an alternative guiltless snack and doughnut consumers looking to shift to a healthier snack that still fulfills their hunger cravings.

C. Risks in the Business As with every business venture certain risks are involved. One of the biggest risks that the company faces is entering an industry with such high levels of competition. There are certain difficulties encountered when penetrating a market with so many direct and indirect competitors
9

"Consumer Lifestyles - Philippines." (2005): Euromonitor International. [Database online.] 04 May 2005.

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present. Among the direct competitors are Dunkin Donuts, Mister Donut, Go Nuts Donuts, Krispy Kreme, as well as smaller competitors like Cellos, Happy Haus Donuts, Hot Loops. All other pastry products or sweet food items are taken as indirect competition for those consumers just looking to get their fix and fulfill the basic need of food and craving satisfaction. Penetration of other new firms in the industry, given low capital requirements and normally low switching costs to consumers, is another main concern that The Big O faces. With all these competitive offers the company maintaining customer loyalty becomes of high value. The Big Os response to these threats is in the strengthening of its position as a healthy alternative offering what no other doughnuts can. In line with this continuous product development is needed to ensure that offerings continuously surprise and delight the customer. .The next major risk that the company faces concerns its limited capital. Increasing rent rates in bazaars and for stalls pose a notable risk for the company. This calls for careful deliberation on stall location and which bazaars the company will participate in. Access to the taret market through these selections is vital to ensuring the maximization of the portion of capital infused into location funding. Additionally the company must ensure the stability of its supply source for raw materials. Despite the fact that doughnuts are basically made from commodity products, quality of certain key components is still crucial. External economic forces and fluctuations in supply may affect the price and availability of these ingredients and affect the profitability of the firm. The only remedies for this exist in strong supplier relations and contigency plans..

D. Key Factors for Success

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There are four major considerations that are crucial in establishing the success of The Big O. The First key success factor is the health and wellness trend which the company uses as the foundation for The Big O doughnuts. With the growing concerns of diet related illnesses and the stigma proliferated by the media attached to being overweight, consumers are becoming more conscious of their health and are beginning to look for products that will fulfill their wellness needs. The Big O believes that catering to this health trend will infuse something new and exciting into a matured industry. The companys next major consideration is in enabling extensive promotions and exposure. Because this kind of product is unheard of in the industry the firm must create visibility and awareness to attain higher sales. This is also necessary for the firm to establish a differentiation between its products and those currently available in the industry. It also enables the firm to penetrate the minds of their target consumers and entice new customers. Quality and Affordability are important, linked considerations. As consumers today are much more difficult to please, a product has to provide both quality and value for money to succeed. This can be achieved through thorough and efficient operations and is of great importance as these factors can increase customer loyalty and repeat purchases. It is also important for The Big O to offer rich variety through product innovation to satisfy the aggressive demands of the present day consumer. Product development must be geared towards producing flavors and variations that appeal to the target consumers as well as the cultivation of different product lines for the future. Such expansion is not restricted to doughnuts but also covers drinks sandwiches and possibly even full meals. E. Feasibility
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The doughnut industry is currently in the mature stage, and with the number of competitors rivalry is very high. There is a low bargaining power for suppliers because the ingredients are mostly commodities. There is a moderate bargaining power for consumers which was lowered by the pioneering vision of The Big O as the first healthy donuts in the country. However, there is a very high threat of substitutes for sweet products such as other doughnuts and pastries since consumers have a myriad of choices facing them when buying sweet snacks or desserts. A more detailed analysis can be found in the Porters Five Forces analysis in the appendix section. The newcomer can only succeed by offering something radically new that can shake up the market. Even if the donut industry is already very competitive, many consumers shy away from the current donut products because of the high sugar and fat content. It is this segment of the market that the company wants to tap. As for high threat of substitutes, this can be combated as long as the product delivers great taste and good value for the customers. Upon entry of the The Big O into the market, it offers something unprecedented in the donut industry a menu revolving around a line of healthy doughnuts. The business will thus rally on its first mover advantage in its positioning and develop a solid niche market. Going into this business is attractive and reasonable because there is an opportunity in filling the void of the healthy doughnut market. Although there are some baked/healthy variants for the doughnut sellers today, no doughnut company has yet positioned itself to offer primarily to the health conscious. The fruit-infused chocolate and coffee drinks are also new products that could appeal to the market. Furthermore, going into business is also attractive since the group has connections with skilled pastry bakers and the central office of Mister Donut.

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The trend towards and subsequent proliferation of food stalls and kiosks shows a particular characteristic of the Filipino consumer as an impulse buyer and is something that the company intends to exploit. In the Philippines, food and drink offerings are still based around impulse foods such as fried menu items, pastries or ice cream, which are mostly sought by consumers to indulge themselves when on the move.10 Establishing the business in a kiosk type of set up would help cater to this particular consumer buying habit and offer a convenient avenue for product purchase. Stalls and kiosks are also highly customizable, which presents further opportunity to pull in consumers with fun looking, attractively designed stalls. Due to the smaller scales stalls also require much lower financial capital input than a full sized caf or store. Market feasibility has been ascertained through the positive overall reception of the product in the surveys and focus group discussions conducted over the past three months. The strong demand for healthy products as dictated by the current trend also drives the salability of the product. Technically speaking these healthy doughnuts are feasibly produced as will be discussed in detail in later parts of the paper. Instead of frying the doughnuts, they will be ovenbaked and this has already been done by one of the group members. The use of sugar-free sweeteners and wheat as key ingredients is proven by extensive research. The only operational challenge for the product is the storage and maintenance, including the shelf life of the raw materials and work-in-progress. Financially, this business is also feasible since it does not require heavy capitalization, and can be started in a small, stall set-up scale. Details for feasibility will be discussed more thoroughly in the succeeding sections of the business plan.

Vision/Mission/Objectives

10

"Street Stalls/kiosks - Philippines." (2008): Euromonitor International. [Database online.] Feb 2008.

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Mission Golden Halo Inc. strives to give the best combination of health, great taste, and affordable convenience in our products. We will provide the highest customer satisfaction for healthconscious sweet lovers by providing them with excellent products and service that cater to their needs. Through constant innovation, we will transform guilty food into guiltless delights. As the pioneer of healthy donuts, we will come up with a wide variety of forms and flavors which will reinforce the mindset that healthy and tasty can go together.

Vision Guiltless eating pleasure will become synonymous with our company and our products. Our products will be recognized as the best value for their excellent quality and value. We will be the healthy sweets of choice for the people. Our customers will feel light and delighted whenever they consume our products. We will be among the top five donut shops in the country within eight years.

Objectives The company will be pursuing its strategy based on the objectives set by a five year plan. The following goals and objectives within the stipulated time frame will guide the company in its envisioned direction. Table 3: Objectives timeline Time frame Year 1 Successful entry into the market Year 2 Expand to Objectives The Big O Doughnuts will be launched in Ateneo and free samples will be given to potential consumers. Participation in school bazaars and outside events. Increase promotions to reach wider audience.
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wider customer base

Adding new flavors to suit the variety of preference in the expanded market Catering services for parties, university and corporate events. Open up our own permanent stall in a school or office cafeteria. More flavors for the existing product line. New healthy product line of other desserts and healthy sandwiches. Increase distribution networks through good client and supplier relationships. Pour in retained earnings to optimize production processes Open up a stall in a high-traffic mall. Open up more stalls in malls and food courts Expand to a caf type setting for one branch of The Big O Doughnuts Open up more stalls in malls and food courts Expand to a caf type setting for one branch of The Big O Doughnuts

Year 3 Extend product line and capacity

Year 4 Expand stalls to other venues, open up a caf Year 5 Franchising options and higher market share

III. Business Model A. Value Proposition The doughnuts being sold in the market today are traditionally fried and respond to the Filipinos natural craving for sweet snacks by layering on thick coats of sugar and artificial flavoring resulting in a high calorie product that though quite delicious, can be detrimental to your health. With the rising trend towards health-consciousness, consumers find themselves torn between caring for their bodies and satisfying their desire for tasty treats. The Big O offers them

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a solution by providing a healthy alternative to the high calorie doughnuts available in the market and thus a solution to their dilemma. Value Statement The Big O Doughnuts aim to encourage a healthy Filipino lifestyle by offering their consumers a healthy way to enjoy their doughnuts. These doughnuts encapsulate delightful healthiness in a delicious low calorie snack. Product

Golden Halo Inc. fills a void in the market with The Big O Doughnuts: a deliciously healthy alternative to the high-calorie doughnuts being sold by all the other doughnut establishments in the country. The product will be marketed as a better, healthier alternative to the popular but fatty donuts abound in the industry today. The Big O Doughnuts offers low calorie treats with even healthier variants. Through the use of yogurt, wheat flour (whole and enriched), and sugar substitutes, The Big O gives provides its patrons with more health benefits and fewer calories. The doughnut dip and fillings come in a variety of delightful flavors such as chocolate, mango, strawberry, pineapple, and vanilla. The special formulation of these doughnuts result in a tasty bite of health will keep The Big O customers coming back for more. To cater to the discriminating needs of the companys target market, The Big O Doughnuts will also be offering customizability options for the doughnuts that customers purchase. The stalls will have a dips selection consisting of the mentioned yogurt flavors and chocolate dip which would allow our customers to mix and match flavors for a more satisfying doughnut experience.
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Aside from the core product that is doughnuts, The Big O Doughnuts will also offer drinks that will enhance the dining experience of its customers. It will offer hot or cold chocolate drinks infused with strawberry or peanut butter. These drinks will be offered as standalone or combo purchases in order to give better value to customers. The pervading and unifying themes of all the products will be the low calorie aspect, the fun, dynamic flavors and the healthfulness infused in our offerings.

Values from the customers perspective

Low calorie content Calories are a unit of measurement for energy. The recommended calorie consumption for an average adult is estimated at 2700 for men and 2000 for women. Though calories are needed by the body to function an excess intake of calories that cannot be burned in ones dayto-day activity leads to weight gain and in extreme cases obesity. The health implications of being overweight are well known and include: heart diseases, stroke, diabetes, high blood pressure, sleep apnea, osteoarthritis and even certain types of cancer. By limiting sugar content through a mediated isomalt-sugar mixture and using only the best healthy ingredients, The Big O Doughnuts are lower in calories than other doughnuts in the market. Studies show that in addition to avoiding weight gain and its subsequent health problems, low calorie diets have the added benefit of improved cardiac performance levels.11

11

Jim Dryden. Heart benefits from a low-calorie balanced diet. http://www.medicalnewstoday.com/articles/36124.php. Jan 14, 2006

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Whole wheat flour Whole wheat flour is a type of flour retaining the bran germ that are usually discarded in the processing of regular white flour. Wheat germ is a veritable source of nutrients including B vitamins, Calcium, Fiber, Iron, Magnesium, Manganese, Omega-3 fatty acids and Vitamin E among other things. These nutrients (including phytosterol which lowers cholesterol and benefits the heart) produce such benefits as lowered blood pressure, aids in nervous system functions, and reduces risk for type 2 diabetes. The high fiber content of wheat flour also improves gastrointestinal health, reduces the risk of heart disease and prevents weight gain12. By using this type of flour for its wheat variant, The Big O Doughnuts pass these benefits on to their consumers. Yogurt Dips and Fillings Yogurt is a fermented dairy product made by adding bacterial cultures to milk, which causes the transformation of the milk's sugar, lactose, into lactic acid. Yogurt is a viable source of calcium for lactose intolerant individuals and in fact has even higher calcium content than milk due to the actions of the bacteria culture. In terms of nutritive content yogurt is considered a good source of protein, calcium, riboflavin zinc, potassium, protein, and B vitamins (B2, B5, B12). Additional health benefits of yogurt stem from its probiotics. Health benefits of yogurt include boosts to the immune response, improved digestive health, promotion of burning of fat and building of bones and reduce the risk of high blood pressure13. Glazes and fillings present the highest concentration of sugar in most doughnuts but in The Big O Doughnuts it becomes a source of healthful benefits.

12 13

Jennifer Murray. Nutritional Benefits of Wheat Germ. Feb 17, 2009 Elaine Magee. The Benefits of Yogurt

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Table 4: Calorie Content comparison Variant Plain Glaze Chocolate Glaze Filled Market Segment Demographics and Psychographics Dunkin Donuts 220 230 250 Krispy Kreme 200 250 300 The Big O Original 165 166 171

Wheat 148 149 154

. The chosen target market is composed of discerning, health conscious individuals who experience an underlying conflict between their health concerns and desire to indulge. These consumers are constantly looking for healthy versions or alternatives to their favorite products. The company has identified teens and young professionals from the upper middle class as most fitting the chosen profile. As having the background to appreciate doughnuts and the privilege to prioritize their health, these low A to broad B consumers are the most receptive to the benefits offered by The Big O and the most likely to pursue products of its nature. The firm targets both males and females though the latter is generally more conscious of diet nutrition and image. The target market is geographically situated within Metro Manila and is concentrated in universities, business districts and call centers. They also frequent malls, after school hangouts and bazaars in their spare time. The older members of this segment have also taken to frequenting gyms to live healthier and build a positive body image.14 As they are constantly on the look out for products that will satisfy their exacting standards these consumers are attentive to new offerings in the market and are adventurous enough to try new things particularly if they appeal to their sense of health and wellness. They
14

"Consumer Lifestyles - Philippines." (2005): Euromonitor International. [Database online.] 04 May 2005.

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will choose to pay special attention to products that cater to their busy on-the-go lifestyle and impulse buyer nature. More often than not they will choose items that are delicious, filling and easy to eat. The company makes use of the focus differentiation strategy by addressing the needs of this specific niche in the market.

Competitive Strategy The Big O will be employing a focus-differentiation competitive strategy as a company endeavoring to establish itself as a unique player in the industry with a new revolutionary product. The firm aims to provide their target customers with benefits that are currently not offered in the current product offerings of the industry. These healthy doughnuts cater to a void in the industry creating a special need driven by todays consumers demand for high quality products that cater to their dreams of health and wellness without sacrificing the pleasure of a tasty snack This has come to the industry in line with the recent health trend. The Big O believes that offering this kind of value in the industry will reap returns in the form of consumers willingness to pay premium prices for our product. The focus strategy comes into play in recognizing that we are catering to a very specific group of health conscious consumers. However the company aims to expand its base and capture even the not so health concerned individuals through the quality of their product and proper spread of information to aid in spreading the trend.

IV. Market Strategies A. Target Market

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The target market can be easily illustrated through four segments. Summary of Consumer Profiling can be viewed in the Appendix. Demographic The Big O will be targeting consumers ranging from 18 to 35 years old, both male and female, who are either college students or working professionals. These consumers have to belong to the upper middle classes of low A to broad B. Geographic The target customers live in Metro Manila, primarily in universities, business districts, malls, and call centers. However, the early stages of the business will focus on Ateneo, org events, and food bazaars. Psychographic Health-conscious consumers looking for healthier versions of unhealthy products will be targeted. They also have to love sweets, particularly donuts. These people are adventurous enough to try new things but responsible enough to care about their welfare. Behavioral Busy, stressed and constantly on-the-go, the target consumers will look for something that is delicious, filling, and easy to eat. They have no time or space to eat full, balanced meals; hence they resort to unhealthy snacks and sweets. The healthy fruit donuts will serve as a convenient, delectable treat for these people.

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Bulls Eye Target - Active and Health-conscious College Students and Young Professionals in Metro Manila belonging to AB Classes a) Lienne Chai represents the image-conscious, active and overworked college

student. She is currently a 20 year old senior studying AB Communication at the Ateneo de Manila University. Because of the heavy load of her academics and extra-curricular activities, she often gets stressed out. As a busy college student she often resorts to quick snacks and unhealthy sweets including doughnuts. Lienne is a closet doughnut lover, loving the sweetness of this guilty pleasure but hating the thought that every doughnut she eats goes straight to her hips. b) Jerry Go represents the modern and savvy young professional. He is currently a

35 year old entrepreneur trading toys and candies. He loves to search for the latest trends in food, business, and technology, and counts himself as a discriminating customer. Although he loves to eat, he always takes caution because he comes from a family of diabetics. His love for sweets takes a backseat in favor of his priority that is his health. He is on a constant lookout for food that will both satisfy his cravings and benefit his health. POSITIONING Identified Marketing Opportunity Upon entry of The Big O product into the market, it offers something unprecedented in the donut industry healthy donuts. The Donuts have the image of being fat and unhealthy, but this product aims to reinvent the image of donuts from a guilty pleasure to a guiltless delight. Although there are some baked/healthy variants for the donut sellers today, no donut company has yet positioned itself primarily on the health aspect. Furthermore, the core product of donuts will be reinforced with the fruit-infused chocolate drinks. The company will employ the focus
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differentiation strategy to address the specific needs of health-conscious or even diabetic sweet lovers. Positioning in the Market o It will position itself as the first healthy donuts in the country, while employing focus differentiation for the target customers. o Target trademark of the product: It offers high-quality donuts with a consideration for health, taste, and good value. o It will sell the experience of eating a sweet guilt-free treat without having to worry about unfavorable effects. o Unique Selling Proposition: From a guilty pleasure to a guiltless delight. o Slogan: The healthy doughnuts that make you go O! o The positioning of the company is made in a way that will first register the idea of a great-tasting donut in the minds of the consumers before we will introduce the idea of a healthy donut to them. o It concentrates on the upper end of the middle-priced market, being more expensive than regular doughnuts such as Mister Donuts and Dunkin Donuts but being careful to remain below the price ranges for other premium doughnut competitors such as Krispy Kreme. PRICING The pricing strategy of Healthy Fruit Donuts is based on market-oriented pricing with

the assumption that the customers are inelastic/insensitive to price changes.

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The prices of the products are based on the prices that the target market was willing to

pay for the products. The pricing scheme will be as follows: Product Original Glazed Doughnut Wheat Glazed Doughnut Yogurt-filled Original Doughnut Yogurt-filled Wheat Doughnut Yogurt dips Fruit Chocolate Drink Selling Price Php 18 Php 20 Php 22 Php 25 Add Php 5 for every dip Php 20 (regular) Php 25 (large)

Combo pricing will also be employed. Drink+donut combos will also be introduced,

as with half dozen and one dozen orders. This will provide more options for the customers. More detailed costings are found in the operations section of the paper.

SALES POTENTIAL Upon the start of operations and up until the short term time frame, the company might find it hard to make a noticeable mark in the whole doughnut industry and to pose a big threat against its major competitors due to its limited operational capacity and geographic reach as a small start-up company. However, the company firmly believes that its products will slowly but surely gain acceptance and recognition by offering something unprecedented that addresses a need of the market today: a healthy donut alternative. The company strongly believes that its products have a very big potential because it will capitalize on Filipinos love for sweets and the markets need for a healthy alternative which makes the companys oil-free and sugar-free doughnuts a strong viable option. Consumers will
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now have a choice as they could give in to their sweet cravings without jeopardizing their health. This potential coming primarily from the health aspect provided by the products will be intensified once consumers know that the company is the first doughnut company to offer a full range of products catering to health conscious individuals. Aside from the health aspect, the products main success drivers will be its taste and appeal to consumers. These two product characteristics, taste and appearance, will also play a vital role in determining the products sales potential all throughout the products life cycle. Its physical appearance will attract consumers to try the product while its taste will keep consumers on buying the product more and more. Therefore, it is important for the company to employ quality control processes to ensure that the products are produced within company quality standards at all times. PROMOTIONAL PLAN Upon its entry, the company will aggressively introduce and market its products and brand name as the first healthy doughnut company in the country. The company realizes that its successful entry and sustainability in the market heavily relies on its ability to effectively create product visibility, brand awareness and brand equity. Given the limited budget constraints, it will have to do with readily available resources to promote and make its product known to its consumers and other prospective buyers. Packaging The products packaging, displaying the product name and logo, is one simple way of establishing brand equity and recall in the mind of the consumers. Attractive packaging also serves as free advertisement striking curiosity and proliferating brand image (figure 2). For per
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piece sale transactions of less than three doughnuts, packaging will come in the form of environmentally-friendly paper bags while three and half-dozen purchases will be packaged in boxes for convenience. The flavored chocolate drinks will come in styrofoam cups of various sizes. Figure 1 sample packaging

Internet facebook, multiply, yahoo!groups The company will also utilize the Internet through various social networking websites such as Facebook, Multiply and Yahoo!groups to further introduce and market the company brand and its products. Since the company will initially start its operations inside the University targeting Ateneo students, online marketing will be an easy and economical way of information dissemination and product advertising especially when the chosen target market is very familiar with and has access to such technological advancements. From first degree relations, friends to friends and family to family associations, this can work all the way out to higher degrees of relations and can spread through word of mouth therefore reaching a greater number of the target market.
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Events The company will also take part in different events and bazaars inside and outside the school campus wherein the target market can be reached. It will create partnerships with different organizations inside the University to provide food and drinks during their general assemblies or just even conduct product sampling to establish product visibility and brand awareness. It can also join other food bazaars in different schools and geographic areas especially during Christmas season and the New Year to penetrate into the market even further. Flyers/Posters Flyers and Posters can also be an effective promotional tool for the company. Creatively designed and informative in content, they will be given away during events and bazaars to strike curiosity among potential customers and entice them into trying and buying our food products. This will help in creating awareness among and disseminating information to consumers on what the company and its products is all about. The design of the posters emphasize a fit, healthy lifestyle while emphasizing the Big O brand through the attractive models and sumptuous donuts. DISTRIBUTION Distribution channels will be simplified and targeted, especially for the initial phases of the operation. The company intends to sell in kiosks spread out through the University (similar to Figaro and the calculated placement of vendo machines). This allows not only the emphasis of our product being a healthier and equally delightful alternative to buying manufactured sweets in vending machines (like Pillows), but also the increase in visibility and brand awareness. Other than this, partnerships with Ateneos student organizations are the best choice for the company early on to improve brand equity, brand awareness, and product visibility. Product
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sampling can be done for these organizations small-scale projects (such as 1.5 hr seminars intended to immerse applicants into organizations culture and key functions) that restrict 30 or more students to one location for a given period of times allows us to exploit short term captive markets. With a heightened probability of taste-testing the product, brand equity can be built upon. Direct advertising can also be done here. Product selling in these organizations large-scale events and bazaars such as LFCs Under the Stars project, AMA Mall, Celadon Week, AMA Bazaar, can also be pursued as distribution channels. Furthermore, the company will participate in outside food bazaars. Partnerships with organizations and the installment of kiosks beyond the scope of Ateneo will also spread visibility and increase brand equity once the company has reached a sufficient level of awareness and market share in the University. In the long-term, the company hopes to establish its own stall in a high-traffic area near the target market like the university belt or call center areas in Ortigas and Eastwood.

Projected Market Share There are four major competitors in the doughnut industry, Mister Donut (19% share), Dunkin Donuts (14% share), Gonuts Donuts! (11% share), and Krispy Kreme (12%).
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Overall, 56% of the total market share is dominated by major competitors in the industry, with the remainder captured by multiple firms. Keeping this in mind, it is hoped that the company is capable of acquiring 0.11% of the market share by the end of year 1. On year 2, this is expected to jump to 0.19%, and then to 0.3% on year 3. The market share is derived from appropriation of the growing health trend, the target markets perception of quality taste of the product, the market shares of the established donut sellers, and the current growth rate of the industry. Market share acquisition has been conservative due to the high competition between major and minor competitors. Year 1 0.1% of market share captured Due to health benefits, taste quality, and initial market development Year 2 Improvement to 0.5% Due to increased advertising and improvements in operations and brand equity Year 3 Improvement to 1% Constant improvement in product development and operations allows competition with Gonuts Donuts and Krispy Kreme.

V. Competitive Analysis Bakery products fast food grew the most in sales value terms with a rate of 11% in 2007 and 11.6% in 2008. This growth pushed sales value to more than P4 billion from different outlets across the Philippines. Most of the sales come from normal bakery stores, with doughnut stores such as Mister Donut and Dunkin Donuts increasing in popularity as this has become a common dessert and an easy way to fill an empty stomach. Filipinos like doughnuts to the extent that an enormous number of independent doughnut producers have entered the market in the last few
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years. Among them are Go Nuts doughnuts and Krispy Kreme, which are priced higher than the two brands mentioned above. For a more detailed reading of the competitors SWOT, see appendix (Table 2: Competitors SWOT) Major Industry Competitors Out of the total 3% market share held by Chained Bakery products fast food and another 3% by individual bakery products fast food, the following are the major competitors playing within the industry. Competitor Mister Donut Quick Facts Mister Donut is owned by Duskin Co., a Japanese group that owns the franchise worldwide outside the U.S. Taking into consideration the market value of doughnut shops that facilitate more in kiosk/stall types, holding the top-notch position is Mister Donut with 19% of the market. Dunkin Donuts is a U.S. chain now owned by Britain-based Allied Domecq. It follows Mister Donut with a 14% of market share for the kiosk/stall type of doughnut business. Go Nuts Donuts products have been modeled on those produced by popular United States doughnut chain Krispy Kreme Doughnuts. Its doughnuts are well known to Manila residents, many of whom travel frequently to the U.S. Go Nuts Donuts opened its doors for business on December 11, 2003 with its first theatre store at Bonifacio Global City. Although at first priced the same as Dunkin Donuts, it was intended for a higher class market. Current market shares are averaged at 10-11%. The name is quite literally put. Hot signifies the freshness of donuts as it is delivered to store outlets fresh from the fryer, freshly frosted, and topped with mouth-watering, irresistibly aromatic flavors. Loops refers to the ring shape that is typically associated to donuts. The company was pioneered by John Gokongwei in 2004. Happy Haus Donuts is one of the fastest growing donut franchise companies in the country today. From its inception in 2005, it currently has some 400 franchise outlets mostly in Luzon and Greater Manila Area, and the number continues to grow. Their winning strategy of marketing low-priced high-quality donuts has proven to be a big hit among budget-conscious consumers. Happy Haus Donuts is also a hit with franchisers because of their attractive franchising schemes. The biggest name yet within the doughnut industry worldwide, this is the latest doughnut chain franchise to capture a significant part of the Philippine market. The franchise was acquired by Kim Fuentebella, whose family also owns the famous Maxs Restaurant. The products
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Dunkin Donuts Go Nuts Donuts

Hot Loops Corp.

Happy Haus

Krispy Kreme

are priced for the AB market, and the market share is currently at 12% of restaurant-type doughnut franchises. 1. Dunkin Donuts Dunkin Donuts is known and loved around the world for quality menu items and an

unrelenting commitment to customer service. Their customers are passionate about the Dunkin Donuts experience because they can expect a consistently superior product delivered fast and at a great value and their lives would feel empty without a cup of their daily Dunkin Donut coffee. In fact, Dunkin Donuts has been ranked No. 1 for customer loyalty in the Coffee and Doughnuts category in Brand Keys Customer Loyalty Engagement Index for 2007, 2008 and 2009. 2. Mister Donut Ramcar Inc. introduced an aggressive management policy and revitalized Mister Donut-Philippines in a bid to attain world class status. Today, Mister Donut-Philippines is one of the fastest growing fast food chains with over 700 outlets which include its innovative tie-ups with 7-Eleven, Shell Select, Petron and other convenience stores, petroleum outlets and shipping lines nationwitde with future potential franchisees that are ambitious and dedicated. 3. Go Nuts Donut Go Nuts Donuts firm belief that despite the saturation situation in the doughnut industry marked by multinational companies, the doughnut sector was asking for a new face, new products, and a new taste. Therefore, the companys first step was geared towards market research programs such as test panels, consumer tests, and even disguised selling to

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put the product through several trials ending with fun-designed, melt-in your-mouth donuts. 4. Krispy Kreme Its founder started working in the doughnut sector by selling the doughnuts in his bicycle, thereby yielding critique conclusions that the owner was able to understand the hardships and limitations of sending ones products to and fro. This brought the understanding of keeping the trade secrets close to heart and try working in the respective departments themselves to better understand the employees incapacity to work. Their motivation to keep on pushing their product is through the belief half of our business is done in the AM and the next half in the PM. So in the morning, we compete with anyone in the breakfast business. In the evening, we are seen more as a tasty dessert." 5. Hot Loops Hot Loops is part of the Robina Corp. which is also its source for raw materials. The name is quite literally put. Hot signifies the freshness of donuts as it is delivered to store outlets fresh from the fryer, freshly frosted, and topped with mouth-watering, irresistibly aromatic flavors. Loops refer to the ring shape that is typically associated to donuts. At the start of its operations in 2004, Hot Loops offered nine distinct flavors designed to tickle the taste buds of Filipinos everywhere. 6. Happy Haus Happy Haus Donuts is one of the fastest growing donut franchise companies in the country today. From its inception in 2005, it currently has some 400 franchise outlets mostly in Luzon and Greater Manila Area, and the number continues to grow. Their winning strategy of
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marketing low-priced high-quality donuts has proven to be a big hit among budget-conscious consumers. Happy Haus Donuts is also a hit with franchisers because of their attractive franchising schemes such as the Happy Haus Donuts and Coca-Cola agreement to give Filipinos the ultimate in snack combos. Prime Customer Motivators and Industry mobility barriers If the inflation experienced in early 2008 continues, costs will shoot up, and will therefore increase the prices of products from fast food chains. In addition, the world recession is believed to majorly hit the Philippines by the last quarter of 2009, which will be a general barricade to the mobility of almost all industries, including the baked products fast food industry. The rapid price increase in the prices of customary ingredients for baked products will affect both the supply and the demand sides of the market. It will increase the input price, hurting the manufacturer, and will most likely decrease the buying capacity of the Filipinos. Nevertheless, the operators are expected to push through only minimal price increases in order to keep consumers coming to their outlets. On a lighter note, the health-promoting menus like salads and sugar-free beverages are expected to be well patronized, helped by the growing fitness trend among Filipinos. More innovations are therefore expected in these lines. It is this kind of broad-based demand that makes snack items such an appealing opportunity for the largest global fast-food chains, particularly as they look to expand beyond the largest urban areas and into less affluent (though still fast-growing) regional cities. Furthermore, sector data shows a major increase in the number of chained bakery products fast food outlets in the country, jumping 15.06% from 2007 to current 2009 figures. Food
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service value increased 16% from 2007, and for the whole of the bakery products fast food industry, doughnut products classify under 92% of the sales of the whole industry. According to global company researches and international estimates, there is a minimum annual growth of 6.2% in the number of company outlets within the country and 7.68% in forecasted sales for the next 3 years, yielding to a total of 33.8% and 38.3% in the conjectured growth in percentage of units and sales from 2007-2012, respectively. VI. Design and Development Plan Rationale for the design of the development phase Capital infusions for the business will be provided solely by the incorporators. This translates into a relatively low starting capital of 55,000 php. This sets particular financial limitations that call for slower growth with a strategic approach. Relatively low starting capital. Product testing and analysis of business operations will be the focus for the first few months of operation. Growth is not a primary focus but is instead a long-term objective. Designed for analysis in order to implement improvements/adjustments to: o Production process o Product quality and taste o Distribution The aim of the design is to be able to improve and make adjustments to the business operations, from the purchase raw materials to the production up to sale, in order to attain the target objectives of the company.
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o Market acceptability o Logistics

B. PRODUCT DEVELOPMENT GOALS AND PROCEDURES Our Product: Healthy donuts will come in two basic options: original and whole wheat. Flavor variants (for the two options) include: o Sugar-free chocolate dip o Fruity-Yogurt filling in mango strawberry and pineapple variants The unique characteristics that differentiate healthy donuts from existing commercial doughnuts are: o Oven-baked instead of deep-fried o Low calorie Sugar-free chocolate dip Fruity Yogurt filling

o Comes in whole wheat variant Product Development Additional flavors of dips and fruity yogurt filling will be researched, tested and launched into the market Complimentary products within the product line o Low fat flavored chocolate drinks Strawberry variant Peanut butter variant

Further improvements to product quality and recipe based on first-hand evaluation

Production Process: Healthy donut (whole wheat and original)

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Processes 1. Mixing of ingredients Processes 2. Shaping 1. Mixing 2. Applying 3, Cooling 3. Baking

Sugar-free chocolate dip

4. Cooling 5. Flavoring 6. Serving/Packaging

Selling and Quality Control: Consumers can choose among variants of whole wheat

or original doughnuts and flavors either Sugar-free Glazing or Fruit-Jam filled The product can be bought individually or by the dozen through: 1.) By direct order a. Product will be packaged in boxes b. A minimum order of at least 1 dozen c. Delivery within 1 hour d. Available only to the immediate vicinity of Ateneo de Manila University 2.) Healthy donut Kiosks/Stall a. Packaged individually, in handy wrapping or b. In boxes of threes and half dozens Quality control will be done from the purchasing of raw materials up to production and distribution up to the sale of the product. In purchasing raw materials, quality would be achieved through: Purchase of fresh ingredients

Purchase the same product brand Stored appropriately whether in a cool dry place or refrigerated if needed
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Ingredients purchased must be used before best before date

During operations and production the following must be observed to ensure quality control: Sanitize work area and workers before and after every use Also oven, cooking utensils and equipments should be sanitized Must always follow exactly the recipe, cooking process and quantity needed of the product to be produced Store excess, unused supply appropriately as to avoid spoilage and unnecessary waste

And finally, during distribution, the finished product should be stored in a sterilized container. SUPPLIER AND DISTRIBUTION NETWORK Suppliers Since the company is a startup operating in a smaller scale, we would be purchasing supplies at quantities we estimate as ample for our current operation to avoid overstocking. Therefore, it is unlikely that we will be sourcing our supplies from wholesalers because those types of suppliers would require a larger minimum order amount. To save time cost of transportation, we would source our supplies from an establishment specializing in selling baking supplies while offering discounts on bulk orders. The location should also be near our area of operations. Thus, we have chosen to source most of our supplies from The Cocoa Pantry and the other supplies in Shoppersville and Furatos. Both establishments are located along Katipunan Avenue. Here are most of the prices of the supplies: Ingredients/Supplies Doughnut Whole Wheat Flour Baking Soda Eggs Size 1kg 250g 1 dozen Price P82.00 15 54 Supplier Furatos Furatos Furatos
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Salt 1000g Cinnamon 800g Canola Oil 1000 L Vanilla Extract 20ml Fruits Small Boxes 10pcs/set Large Boxes 20pcs/set Tsokolate specific ingredients Unsweetened Chocolate 500g Evaporated Milk 1 can Styrofoam cups Distribution

10 100 100 21 85 480 110 32.5

Furatos Furatos Furatos Furatos Shoppersville The Cocoa Pantry The Cocoa Pantry The Cocoa Pantry Shoppersville Shoppersville

Since the company is still a startup business, we will concentrate on a smaller area as our first market. The company will distribute our products by selling through kiosks inside the Ateneo de Manila University campus. We will also participate in different bazaar events inside the campus such as the SOM Week and other such events. Aside from selling inside the campus, the members of the company will also use our network of friends to look for potential customers. A networking website such us Multiply.com may also be used to connect all our contacts to promote our products to a larger audience. Distribution Scheme

The two diagrams simply show the flow of materials from our suppliers to our customers. The first diagram represents the flow of materials for the doughnuts while the second diagram is for the tsokolate.
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The first diagram shows that the baking ingredients and packaging for the doughnuts will be bought from our suppliers first. We will then transfer them to a bakeshop of Patti Malabanan, a member of the group, to bake the actual doughnuts. We will be paying their bakeshop as we make use of their equipment and their personnel. We will then transport the finished products to our kiosk or bazaars wherein our customers may purchase them. The second diagram shows that the supplies for the tsokolate drink will be bought from our suppliers and then be transported directly to our kiosk/bazaar. The reason for this is that the beverage will be made in the kiosk itself, as tsokolate is usually served hot right after being brewed. D. Market Testing

The company conducted an initial survey with the objective of testing out the Big O product. The main concern of the survey was the acceptability of the taste and the look of our donuts, especially the Whole Wheat Fruit Jam filled variant. The survey was conducted on 40 people, age ranges from 18-24 years. Free samples of our prototype, Whole wheat Healthy Donuts, were given out to these people and were asked to rank the overall appeal of the product (range of 1-10, 1-4 being the least appeal and therefore unsatisfactory, 4-8 as satisfactory and 9-10 rating as excellent therefore providing highest appeal) in comparison with other doughnut brands. They were asked to rate the product Unsatisfactory if the product is generally unappealing and is definitely inferior to other doughnuts available in the market. A grade of Satisfactory means that the doughnuts are at par with most of the existing brands of doughnuts and Excellent if the taste

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and overall appeal is superb and is greater than the products served by existing doughnut brands. The results show (refer to Appendix for a more detailed view of the results):

Number of votes

Rating Given

The data shows that the majority of the people surveyed rated our product at the Excellent level, at 23 votes, meaning that they think the taste is excellent as well as the presentation and also more importantly, they think that our doughnuts are better than existing brands. It is also to be noted that nobody thought that our products were inferior to existing doughnuts already in the market, as no one voted for a score of 4 and below. This means that, according to the survey, they thought that at the very least, our doughnuts are a tough competitor in terms of taste and appeal to existing doughnut shops. Further market testing will be conducted before final operations and production. E. Personnel Required The company has decided, for the purposes of production and operations, to not yet hire employees at least for the first few months of operations. Because of capital constraints, doing so will be able to reduce costs and also more importantly to have a first-hand experience on and to be able to gather data and analyze on the major operations of the start-up business so further
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improvements can be made and mistakes be spotted and corrected. For the first few months of operation division of labor will be conducted as follows Purchasing and Distribution departments: Byron Montiel, Francis Apolinar Budgeting and purchasing of raw materials Distribution to kiosk(s) Delivery to customers

Production department: Laurence Miranda, Ryan Zamora, Patricia Malabanan Main production of Healthy Donuts Maintenance of cooking area/kitchen Storage of supplies Quality Control

Marketing department: Lorenzo Nanagas, Scott Si, Justin Gabitan In charge of marketing and promotions Inviting potential customers Design of advertising materials/fliers and implementation

Sales department: Jose Angelo Castro, Stephanie Tornilla, Kathrina Koa Actual selling Kiosk and cashier duties

F.&G. Location and Layout The area where the business will primarily operate for now is inside the Ateneo campus. Possible location for the kiosk is the allotted area near the Colayco Pavillion. The baking operations, however, will be in conducted in various kitchens belonging to the incorporators.
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Kiosk/Bazaar Layout 1. Counter 2. Display area for the doughnuts 3. Area for making the tsokolate drink 4. Area for the inventory of doughnuts for the day 5. Area for the customers Can have some seats and tables where some customers may hang out H. Inventory Management The company will depend on the projected demand of our products in making decisions on the amount of stocks that we will keep and the amount of doughnuts we will be manufacturing. Since we will be employing the services of a bakeshop in making our doughnuts, the personnel of the bakeshop will be handling the management of the baking supplies while the group will

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handle the purchasing of the necessary amount of supplies that will be suggested by the bakeshop. We will need to have accurate demand projections because our products are perishable and best served when fresh. The entire inventory levels will also depend on these demand projections. I. Maintenance Supplies will be sealed with air-tight containers and stored in a cool dry place or refrigerated when needed. The baking/preparing area will be thoroughly sanitized before production begins Oven, baking pans and other cooking utensils used will be cleaned regularly and after every use. The kiosks used for selling will be maintained by sanitizing/cleaningup the area before opening and also upon closing everyday. Also materials used will likewise be cleaned and stored properly afterwards. J. Scheduling and Costs Healthy Donut (original) Preparation for a single production equivalent to 6 servings: Steps Time (in minutes) Measure out the following ingredients: 1 cup plus 5 10 tablespoons pastry flour, teaspoon baking soda, teaspoon cinnamon, 1/8 teaspoon salt, cup isomalt, cup low fat milk, 1 large egg. 1 teaspoons canola oil, 1 teaspoon vanilla extract Lightly whisk the flour, baking soda, cinnamon and salt in a 2 bowl Mix the isomalt, milk, egg, canola oil and vanilla in a bowl 5 until fluffy Form a well in the dry ingridients and slowly pour the froth in. 5
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Mix until just combined. Use a pastry bag to pipe the mixture into well coated doughnut pans Bake in oven preheated to 425 degrees Cool on baking racks Apply glaze Let glaze harden Inspection and packing Total Time Actual time (less baking and cooling) Total Calories per serving (1 doughnut)

3 10 10 2 8 10 65minutes 50 minutes 156

Healthy Donut (whole wheat) Preparation of a single production equivalent to 6 servings: Steps Time (in minutes) Measure out the following ingredients: 1 cup plus 2 10 tablespoons whole-wheat pastry flour, teaspoon baking soda, teaspoon cinnamon, 1/8 teaspoon salt, cup isomalt, 1/3 cup plus 1 table spoon low fat milk, 1 large egg. 1 teaspoons canola oil, 1 teaspoon vanilla extract Lightly whisk the flour, baking soda, cinnamon and salt in a 2 bowl Mix the isomalt, milk, egg, canola oil and vanilla in a bowl 5 until fluffy Form a well in the dry ingridients and slowly pour the froth in. 10 Mix until just combined. Use a pastry bag to pipe the mixture into well coated 3 doughnut pans Bake in oven preheated to 425 degrees 10 Cool on baking racks 5 Apply glaze 2 Let glaze harden 8 Inspection and packing 10 Total Time 65 minutes Actual processing time (less baking and cooling) 50 minutes Total Calories per serving (1 doughnut) 139 calories Sugar-free chocolate glaze preparation of a single production equivalent to servings Steps Time (in minutes) 1 tablespoon cocoa powder, 1 teaspoon isomalt, 1 2 tablespoon hot water
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Dissolve the isomalt in the hot water Slowly add sweetened hot water to the cocoa powder Total time Total Calories per serving (2 tablespoons) Fruit Yogurt filling Steps Measure out the following ingredients: 8 cups low fat milk, cup powdered milk, cup starter culture, 1 tablespoon diced fruit (strawberry, mango, pineapple) or 1 teaspoon vanilla extract Pour milk into a pot, add milk powder and stir well Heat milk mixture to 180 degrees stirring occasionally (preheat oven to 110 degrees) Let the mixture cool to 110 degrees then mix in the starter culture Pour milk mixture into sterilized glass containers Set containers on cookie sheets in the oven (only oven light on) Incubate yogurt at constant temperature of 110 degrees Refrigerate yogurt for storage Total time Actual processing time (minus incubation and refrigeration) Total Calories per serving (2 tablespoons)

1 2 5 10 calories Time (in minutes) 5 1 25 10 5 3 360 120 529 minutes 49 15

The 11 members of the group will be divided into functional production teams. As the recipes are fairly simple the group will break into four pairs and a group of three. Three of the functional groups will be dedicated to doughnut production while the other two will be assigned to dips (yogurt filling and chocolate dip) and tsokolate respectively. Fifty minutes of simultaneous production will result in enough batter for approximately 54 donuts. Due to the stipulations of the kitchen rent contract, production is limited to a maximum of 8 hours daily with 6 hours of oven time. A one day cycle of production will result in 216 doughnuts With a fixed biweekly schedule the group can produce up to 432 doughnuts a week. In the hectic

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bazaar filled month of December, production will extend to Sundays and reach a maximum capacity of 648 doughnuts per week. Other factors to consider: Activity Business registration and similar filings Product sampling Scouting of possible selling points Deliberation of a selling area and finalizing contracts Procurement of materials from suppliers Production and preparation Product selling Financial status and evaluations New Cost Structures Healthy Donut (original) Ingredients Pastry Flour (regular) Baking soda Cinnamon Salt Isomalt Low fat milk Egg Canola oil Vanilla extract Total Ingredients (Makes 6 Servings) Total Ingredients Per Piece Healthy Donut (whole wheat) Ingredients Pastry Flour (wheat) Baking soda Cinnamon Salt Isomalt Low fat milk Egg Canola oil Vanilla extract Total Ingredients (Makes 6 Servings) Total Ingredients Per Piece Quantity 1 Cup and 5 Tbsp. tsp. tsp. 1/8 tsp. Cup 2/3 Cup 1 Piece 1 tsp. 1 tsp. Price PhP 5.985 0.46 0.30 0.01 3.6 15.38 4.5 0.15 5.80 PhP 35.925 PhP 5.99 Price PhP 9.43 0.46 0.30 0.01 3.6 15.38 4.5 0.15 5.80 PhP 39.63 Php 6.60
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Duration 2 days 3 days 2 weeks 2 day 1 day 1 week 1 week 1 day

Quantity 1 Cup and 2 Tbsp. tsp. tsp. 1/8 tsp. Cup 1/2 Cup 1 Piece 1 tsp. 1 tsp.

Yogurt Filling Ingredients Low Fat Milk Powdered milk Starter culture Fruit bits (vanilla extract) Total Ingredients (Makes 85 Servings) Total Ingredients per piece Sugar-free chocolate glaze Ingredients Cocoa powder Isomalt Water Total Ingredients (Makes 1 Servings) Total Ingredients per piece Tsokolate (strawberry) Ingredients Water Tablea Isomalt-Sugar mix Salt Milk Strawberry Jam Total Ingredients (Makes 1.5 servings) Total Ingredients per serving Tsokolate (peanut butter) Ingredients Water Tablea Isomalt-Sugar mix Salt Milk Peanut butter Total Ingredients (Makes 1.5 servings) Total Ingredients per serving Packaging Item Paper Bag Label / Sticker Total Packaging

Quantity 8 cups Cup cup 1 tbsp. (1 tsp.)

Price PhP 246.00 8.06 10.00 6.00 PhP 270.06 PhP 3.16

Quantity 1 tbsp. 1 tsp. 1 tbsp.

Price PhP 2.50 0.45 0.01 PhP 2.96 PhP 2.96 Price Php 0.25 3.40 5.08 0.01 7.68 2.18 PhP 18.6 PhP 2.4 Price Php 0.25 3.40 5.08 0.01 7.68 1.84 18.26 Php 12.17 Price PhP 1.48 1.50 PhP 2.98
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Quantity 1 cup 1 tablet 3 tbsp. 1/8 tsp. cup 1 tbsp.

Quantity 1 cup 1 tablet 3 tbsp. 1/8 tsp. cup 1 tbsp.

Quantity 1 piece 1 piece

K. Development Budget
Initial working capital of PhP 5,000.00 per member SEC filings, business registration, and similar procedures Market testing and product sampling Advertisement Equipment maintenance Transportation Total COGS and expenditures Unused capital / Remaining cash-on-hand PhP 55,000.00 1,000.00 1,000.00 1,500.00 1,000.00 1,500.00 6,000.00 PhP 49,000.00

To minimize unnecessary employee outsourcing the product will be made by members of the group in batches two times a week to keep up with production requirements. Ovens used in the production of the doughnuts, and as incubators for the yogurt filling, will be provided by members of the group. A sufficient amount will be allocated to costs for the electrical/gas consumption of these. This cost will be noted as oven rent. This negates issues related to the disposal of said ovens in the event of the companys dissolution. No rent will be required for use of the production space.
1st Product Selling (November) Working capital Purchases(ingredients, initial supplies) Rent Deposit Oven Rental Stall Stall space/ Bazaar Rental Other Expenses Total COGS and expenditures Remaining cash-on-hand Expected revenue from sales New cash-on-hand 2nd Product Selling (December) Working capital Purchases(ingredients, production) Oven Rental Stall space/ Bazaar Rental Other Expenses Unused capital / Remaining cash-on-hand Expected revenue from sales New cash-on-hand P49,000.00 32,500 6,500 3,000 10,000 13,500 41,400 119,200 (70,200) 100,000.00 P28,300 P28,300 48,960 3,000 13,500 30,900 (67,060) 120,000 P51,940

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3rd Product Selling (January) Working capital Purchases(ingredients, production) Oven Rental Stall space/ Bazaar Rental Other Expenses Unused capital / Remaining cash-on-hand Expected revenue from sales New cash-on-hand

P51,940 53,856 3,000 13,500 30,900 (49,316) 132,000 P82,684

The number of servings given in the tables indicates the quota of sales. Profits may be increased through efforts towards alternative selling methods such as personal sales and concessions. The cost of booth rental or space for the product stand may vary depending on the bazaar in which the group will participate. Under certain circumstances it is possible for rent to be negotiated on a percent of sales basis. L. Risk Assessment
Scenario Major competitors produce healthy doughnut variants and market them aggressively. Effect Competitors with a larger market share an a stronger following encroach on the niche we have created Defensive The Big O will position its product as a homemade special treat with careful handling which results into a quality product unlike mass markets mass produced frozen custard. The Big O will endeavor to make its product more delicious and find ways to offer more mainstream flavors The Big O will invest more in product promotion to boost volume of sales. If the price increases for only one or two ingredients, The Big O will search for alternate Reactionary The Big O will highlight itself as the first entirely health oriented doughnuts

Healthy Doughnuts fail to capture a strong following in the local market.

Consumers do not buy the new product which results into low sales for the company.

Inflation in the economy occurs in the country.

Prices of healthy doughnut ingredients increase.

Prices of healthy doughnuts will rise hence less people may buy Frozen Innovations products which results into low profit. Costs to produce healthy doughnuts increases

Revisions and adjustments will be made to the marketing plan and strategy of Healthy Doughnuts if not a complete overhaul. The Big O will adjust to the economic forces and increase their prices accordingly. The Big O will increase the price of its product as well as the prices of their seasonal products

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suppliers who can offer the ingredients at lower costs while maintaining product quality. However, if all of the prices of raw materials increase, Healthy doughnuts will cut costs by raising operating efficiency and limiting flavor offerings to those in high demand.

depending on the season and respective ingredients price.

Management and Financial Plans

Organizational Structure Golden Halo Inc. will have three major departments under the Executive director: Operations, Finance and Marketing. These three departments will be further subdivided and each department and sub committee will have a respective manager to supervise, oversee and monitor the performance of their specific function. The departments and subcommittees are enumerated below. Executive Director o Chief Operations Officer Director of Product Development Directors of Supply Chain & Production Management Director of Administrative Systems Director of Partner Management

o Chief Financial Officer o Chief Marketing Officer Director of External Relations Director of Branding Director of Sales
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Job Descriptions and Requirements 1. Executive Director Scott Si a. The Executive Director is in charge of all business functions and the corporate direction which they follow. b. As the Director, he must take the initiative to set short-term corporate goals yearly in accordance to the companys mission and vision and its long-term objectives. c. He must also seek out other ways to improve the organization, through valueadding partnerships and oversight of the company from the bottom-up 2. Chief Operations Officer Kathrina Koa a. The COO is in charge of all business operations, from the supply chain to sales, to HR management and product research and development. b. She is expected to work together with the Executive Director and the other two Chief Officers in order to continuously improve operations while keeping it in line with branding standards and the companys mission and vision. 3. Chief Financial Officer Anjo Castro a. The CFO is in charge of all accounting functions, and basically must oversee the creation of pertinent documents to be submitted to the SEC and BIR (for tax purposes) as well as those to be used for internal accounting, including the balance sheet, income statement, and the like. He must ensure that the accounting principles used in the accounting of business activities fall under IFRS or GAAP. b. He must approve the accountants hired for his department as endorsed by the Director of Accounting

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c. He must work with all other departments to determine the revenue and costs incurred in each department, including his own. 4. Chief Marketing Officer Stephanie Tornilla The CMO is in charge of External Relations and Branding. She works with almost all other departments in overseeing the partnerships and promotion/advertising activities entered in by the company, assisted by both directors under her. 5. Director of Product Development - Byron Montiel The Director for PD leads his department in the innovation of the product and its development. He seeks new ways to improve operation and sales, with heavy emphasis on improving the products the company offers to its potential customers. He also works with the CFO to promulgate the expenses incurred in his department. 6. Director of Supply Chain Management Justin Gabitan Director of Supply Chain MGT is in charge of the production process of the companys products. He also is the companys face during discussions/negotiations with the companys [potential] suppliers, as well as distributors, if any. He works with the CFO for production costs, storage costs, etc. 7. Director of Partner Management Francis Apolinar The Director of Partner Management handles the companys employees and any complaints, as well as their suggestions. 8. Director of Administrative Systems Ryan Zamora

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The Director of Administrative Systems takes care of internal management. He ensures that the supply chain, inter-department communications, and other such details are streamlined and taken care of. He takes care of most of the countrys administrative work. 9. Director of External Relations Patti Malabanan The Director of ER handles proposals from organizations for events and the like. She also seeks opportunities for the company to increase brand exposure. Being in charge of ER, she also manages the promotions and marketing strategies of the company, working directly with the CMO and Executive Director. 10. Director of Branding Enzo Nanagas The Director of Branding has deep-seated knowledge on companys brand image, its mission, vision, and differentiator, and ensures that every single facet of the company obeys branding standards. 11. Director of Sales Lawrence Miranda The Director of Sales is in charge of managing the companys distribution channels and its stalls. His job is to maximize sales and make sure that the sales process fits the companys branding standards, and ultimately, to report his sales figures and forecasts to the CFO.

Financial Plan and Projections

Golden Halo, Inc. Monthly Income Statement November December 100000 40800 120000 48960

ATENEO Revenues Doughnut sales Variable expenses Production costs

January 132000 53856

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Contribution margin EXTRAORDINARY SALES Revenues School fairs Variable expenses Production costs Variable rent Contribution margin Other expenses Stall rent Marketing expenses Packaging expenses Doughnut flavoring Pre-tax income Pre-tax Income/Sales

59200

71040

78144

25000 10200 3000 11800 10500 8400 15000 7500 29600 0.296

30000 12240 3600 14160 10500 8400 15000 7500 43800 0.365

25000 10200 3000 11800 10500 8400 15000 7500 48544 0.367758

Golden Halo, Inc. Balance Sheet 1-Nov-09 Assets Cash Rent Deposit Initial Inventory Oven Rent Deposit Stall Total Assets Equity Golden Halo, Inc. Initial Investment req Unit costing for revenues

12750 10500 15000 3000 10000 51250 51250 5000 Per mem

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Direct materials Utilities allocation Direct labor Total

5.7 1.5 0 7.2 Plain 20 7.8 0.52 0.1 Flavored 22 10.8 0.6 0.9 100000 90000 5000 4500 250 120000 108000 6000 7200 400 132000 118800 6600 5940 330

Pricing Gross margin Profit margin Sales mix Target monthly sales Monthly sales Monthly sales units Daily sales Daily sales units

10000 667 500 33

12000 800 800 53

13200 880 660 44

Schedule of marketing expenses Sample production 900 Tarpaulin printing 2000 Photo shoots 3000 Poster printing 2500 Total 8400 Schedule of rent expense Ateneo de Manila School fairs Statement of Cash Flows Cash, Beginning Cash Flow from Operating Activities Cash inflow from sales Cash out flow from set-up/fixed costs Cash outflow November 2009 55,000.00 December 2009 28,300 January 2010 51,940 10500 0.12 per month of sales

100,000 (44,500) (40,800)

120,000 (3000) (48,960)

132,000 (3000) (53,856)

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from inventory Cash outflow from other expenses Net Cash from Operating Activities Cash Flow from Investing Activities Cash outflow from equipment Cash Flow from Financing Activities Cash outflow from dividends Cash, Ending

(41,400) (26,700)

(44.400) 23,640

(44,400) 30,744

28,300

51,940

82,684

Appendix
Porters Analyis on the Donut Industry Bargaining Power of Suppliers LOW o Main ingredients for donuts are only commodities like flour and sweeteners. o Hence, they are cheap and readily available. o Threat of forward integration for suppliers is also low since they are mostly commodity traders. o Cost of raw materials can be driven down with larger scales of production. Bargaining Power of Consumers MEDIUM

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o Consumers generally have a moderate bargaining power because they are constrained by their cravings and budget yet they remain primary drivers of the donuts business. o The bargaining power of consumers is driven down by the pioneering position of healthy fruit donuts as the first healthy donuts available in the market. Intensity of Competitive Rivalry (Competitors' Behavior) HIGH o The competition within the industry is fierce, especially the neck-to-neck competition of the top two players Dunkin Donuts and Mister Donut. o The relatively new companies thus avoid getting into this rivalry by focusing on other target markets. Threat of Entry MEDIUM o The intense rivalries and deep pockets of the donut businesses in the country make it difficult for new entrants to flourish in the industry. o Although the barriers to entry for donut selling on a per unit or per stall basis is low, it can be very difficult to compete with the established companies on a wider scale. o Still, there is an opening for products which offer innovation and good value. Threat of Substitutes HIGH o Donuts can be consumed as snacks or desserts, providing a myriad of alternatives to choose from. o Since Filipinos love sweets, sweet products of all kinds appeal to them. o Donuts are easily substituted with other kinds of pastries.

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o Donuts usually serve as the middle ground between the cheaper pastry breads and the high-end cakes. This position enables it to survive but makes it difficult to thrive.

Breakdown of market responses from FGD

Rating Number of responses None None None None None 2 3 12 14 9 Total

Unsatisfactory

Satisfactory

Excellent

1 2 3 4 5 6 7 8 9 10

17 23

Sample Posters

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Consumer Profile
Gender 40% men Age 18-22 (college) 60% Income per month P1000-2500 10% Occupation Student 60% Working 40% P2500-5000 40% P5000 and above 50% 23-35 (working) 40% 60% women

PEST Analysis
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o o

Political Decreased income taxes (to 30%) Compliance with industry standards as held by Bureau of Foods and Drugs. Adherence to other applicable laws (fat content ice cream must have 5-16% fat content while yogurt must contain at least 4%) Stricter regulation of produced wastes resulting from production (depending on the city)

o o

Economical According to Business Mirror, people are being more prudent in spending due to the crisis late last 2008, though demand usually picks up during holiday season. OFW remittance expected to fall from 2008 values this year, decreasing amount of money available for people to spend. Low inflation will benefit the company. Consumer income can be spent on substitutes due to their more favorable perception. Private consumption growth expected to drop from 4.6% to 2.2%

Social With a poverty incidence of more than 30% as reported in the Asian Development Banks report, the social class system in the country is concentrated in the extremes. The masses heavily favor cheap products (along with family bonding and celebration) while the middle to high class consumers prefer healthy and sophisticated types of donuts. Doughnuts are considered unhealthy by nature and many people find it hard to believe that healthy doughnuts can actually exist.

Technological Innovations such as nofry, oven-baked doughnuts and perfect sugar substitutes that can withstand oven heat allow the company to produce its doughnuts. Technology has made it easier to promote products

SWOT Analysis for Golden Halo, Inc.

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Strength

Weakness

Opportunity

Threat

First-mover advantage in healthy donuts Connections with bakeshop Innovative products Affordable prices Attractive proposition

Limited funds Lacking in contacts Insufficient time to try out new flavors Ingredients are not at their lowest pricing yet Suppliers does not prioritize company orders Limited market size

Trend: healthy lifestyle Consumer behavior: snacking Bazaars and exhibits, trade fairs, and food expo

Strong brand loyalty to companies such as Dunkin Donuts, Krispy Kreme, Go Nuts Donuts, etc. Long established tie-ups of competitors with formidable and wellknown companies/brands Lower purchasing power of consumers

Competitor SWOT
Company Strengths Weaknesses Strategies

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Dunkin donuts

Mister Donut

1. High loyalty from customers 2. Quality of premium, variety products 3. Integration of company to consumer lifestyle 1. Multiple franchise opportunity 2. Management and start-up assistance 1. Entertainment donuts 2. Good market research 3. Persistence to cross over obstacles 1. Understanding of the hardship of its employees 2. Optimistic for business opportunities 1. Cheaper costs for raw materials 2. Convenient branch opportunities

1. Long perfected process for products 2. Strict ingredient specifications 1. High franchise standards 2. High staff credential requirement 1. Timeconsuming market trials 2. Craft takes time 3. Market is saturated 1. Non-flexible management 2. Poor visionary of outcome

Go Nuts Donuts

The company banks on strengths with focus on improving coffee products. Continuous effort to adhere to the likes of the consumers. Wins the customers through ads that reminds the customers of their past as well as with a well-managed image Produced a niche marketing based solely on making the work more fun and by finding the missing piece from the market The strength of the company lies in the capacity to focus on what Krispy Kremes means instead of grasping on trends which goes against what it is Banking under the Robina Corp., it makes uses of the cheap raw materials to play around with the tastes of its customers Making use of its high market awareness along with its cheaper doughnuts, it entices the curiosity of its consumers to try to consume their doughnut

Krispy Kreme

Hot Loops

1. Low packaging of freshness 2. Low class image

Happy Haus

1. Attractive franchising schemes 2 High market awareness 3. Low pricing

1. Poor flavouring of doughnuts. 2. Poor consistency of management and franchise 3. Inefficient delivery system of supplies to their franchisees

SURVEY QUESTIONNAIRE

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Good day! Were Management students from the Ateneo de Manila University conducting a survey for a possible business venture. Please take your time in answering our survey.
I. Respondent Information Age: ___ Gender: [ ] Male Working Status: [ ] Student [ ] Female [ ] Professional

Monthly Allowance/Salary: [ ] less than P5,000 [ ] P5,000 P9,999 [ ] P10,000 P19,999 [ ] P20,000 P29,999 [ ] P30,000 and above II. Preferences

1. Do you eat doughnuts? (if yes, go to #3)

[ ] Yes [ ] No 2. Would you like to try some donuts? (if yes, go to #7; if no, have a nice day) [ ] Yes [ ] No 3. How often do you buy doughnuts? [ ] once a week [ ] twice a week [ ] thrice a week [ ] more than thrice a week 4. How many donuts do you buy on average every purchase? [ ]13 [ ] 10 12 [ ]46 [ ] Others: ___ [ ]79 5. Which donut establishments do you patronize? (mark all that apply) [ ] Dunkin Donuts [ ] Mister Donut [ ] Cellos [ ] Krispy Kreme [ ] Others: _________________ 6. What do you like most about the establishments mentioned? (mark all that apply) [ ] Ambiance [ ] Brand [ ] Variety [ ] Price [ ] Healthiness 7. Would you be interested in low-calorie donuts? (if no, have a nice day) [ ] Yes [ ] No

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8. Which glaze/flavor/variety would you try? (mark all that apply) [ ] Chocolate [ ] Candy Sprinkles [ ] Vanilla [ ] Pinipig Sprinkles [ ] Strawberry [ ] Nut Sprinkles [ ] Others: _________________ _________________ _________________ 9. Would you buy doughnuts from a brand called, The Big O!? [ ] Yes [ ] No, then please choose from which you prefer from these alternatives: [ ] Whoa! Donuts [ ] Halo Donuts [ ] Wicked Donuts 10. Which of these logos appeals to you the most? (encircle your preference)

11. Which of these taglines sounds best? [ ] The donut that makes you go oh! [ ] The donut that makes you go! [ ] You never forget your first time 12. Which doughnut package do you prefer? [ ] Box of 3 [ ] Box of 6 13. How much would you be willing to spend for a box of 3 low-calorie donuts? [ ] P30 P59 [ ] P90 P119 [ ] P60 P89 [ ] P120 and above 14. How much would you be willing to spend for a box of 6 low-calorie doughnuts? [ ] P30 P59 [ ] P90 P119 [ ] P60 P89 [ ] P120 and above 15. Would you want a hot chocolate beverage to go with your box of doughnuts? If yes, continue. If not, then alrighty.

16. How much would you be willing to spend for a combo that has a chocolate drink and
3 doughnuts? [ ] P50-69 [ ] P100-119 [ ] P70-99 [ ] P120-139

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17. How much would you be willing to spend for a combo with a chocolate drink and 6
doughnuts. [ ] P80-119 [ ] P140-159 [ ] P120-139 [ ] P160-179

Thank you for taking our survey. Have a nice day!

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