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

Products (Desserts) Under Category of Franchise

By

Liliana Melo Roncliton Santos

Principles of Marketing, Course AMM 104.8026 LaGuardia Community College, Long Island City February 5, 2007

MARKETINGS TOOLS: The Marketing Mix Applied on Distribution (Selling) and Manufacturing of Low Carbohydrate Diet Products (Desserts) Under Category of Franchise INTRODUCTION According to the World Health Organization (WHO), there are about 1 billion overweight people in the world of whom 300 million are obese; if this accurate figure it equates to a world epidemic. There are 800 million underweight people worldwide. As a result, obesity is now the greatest contributor to chronic disease. Therefore, Diet Bite will be created to provide the population of New York City with the possibility of enjoying their favorite desserts with lower sugar, fat, and carbohydrates levels without feeling guilty. This enterprise might be expanded to other locations in NYC, NY other states and might become a franchise nationwide, or worldwide in a near future. Product Positioning People on diet Diabetic People Supply an existing product or service in a superior way. Ensure that customers know the products key benefits Profit Margin = Net Profit/Net Sales Target profit should include a reasonable salary plus a reasonable return on the amount invested in the business

Target: Product Position: Differentiate Product: Projected Sales:

Net profit margin of 8.5% (determined from interview) * Desired net profit is $48,000 a year (4000 per month) Net sales for one year equals = $48,000/8.5% = 564.705 (*) According to Colombian Bakery PRODUCT DESCRIPTION: A place where people can find any kind of Low Carbohydrate, Diet Products such as beverages, desserts, breakfast, and brunch. Likewise, this store can

offer people information about how to keep their lives healthy through the food such as magazines, videos, and special events. The store will distribute and sell products under the brands The South Beach Diet, Jello, Weight Watchers Recipes, Atkins and others reference, and its own product under the brand Diet Bite.

Drawing 1. Some Brands will be available in Diet Bite Also, the store will have the capacity to offer Bakery service. Diet Bite will include the following services: SPECIFICATIONS OF LINE PRODUCTS ORIGIN KIND OF OWN LINE PRODUCT OTHER BRANDS DIET BITE Iced Tea X X Diet Sodas X Hot beverages: X Chocolate, Coffee, Herbal teas. X Yogurt X Smoothies X Juices Milk shakes Ice Cream Cakes Mousse Cheese Cake Pies (Apple, Strawberry, Lemon, Lime, Pumpkin) Cookies Muffins X X X X X X X X X X

PRODUCT

Beverages

Desserts

X X

X X

Breakfast Sweets Packaging

Donuts Brownies Low Carb Cheesecake Snow Pudding Blueberry Cobbler Eggs and Cheese Cereal Candies Protein Bars Candy Bars

X X X X X X

X X X X

Food packaging is the enclosing of food that requires protection from tampering, whether by physical, chemicals, or biological needs. It also shows the product that is labeled to show any nutrition information on the food being consumed. Food packaging functions are as diverse as they are important. They are broken down as follows. The design: it can be a decisive advantage but it changes with fads. For example, a fun board must offer a good and fashionable design adapted to people. The packaging: It must provide a better appearance and a convenient use. In food business, products often differ only by packaging. The safety: The packaging must protect the food from biological agents in rats, insects, and microbes; from mechanical damage such as product abrasion, compressive forces, and vibration; and from chemical degradation such as oxidation, moisture transfer, and ultraviolet light. The "green / Environmental issues: A friendly product to environment gets an advantage among some segments. Communication: Packaged food must be identified for consumer use mainly with label text and graphics. The packages will detail nutritional information, if they are kosher or halal-approved, manufacturer, product size (volume or weight-based), and the Universal Product Code (UPC). TYPES OF PACKAGES USED BY DIET SWEET TYPE DESCRIPTION REMARKS Carton Box Base 95mm x 95mm +/For desserts Top 110mm x 115mm +/Premium PE coated cold Sizes Logo and designs

paper cups

PP Plastic Drinking Straws

Packing: Jumbo Pack

Bakery Boxes

Pink bakery box Paper Plate

available(oz):6.5/8/12/16/22/ 32 Paper: Quality pe1s and pe2s paper imported from the USA/Finland/Canada Qty per sleeve: 50-100 provided using Qty per carton: 1000-2000 offset, rotary and gravure printing. Quality pp plastic clear cups Corporate logo *suitable for soda, cold prints. drinks General designs Material: High quality food available grade pp Available sizes: 12oz& 16oz *matching ps flat lids available Packing: 1000 pcs per carton *Customizable to variable length and width *Solid Color / 3 color stripe / Swirl available *PP food safe material 250 pcs x 40 packet per Customizable color carton Currently flexible straws unavailable This box can help Bakery box - 14"X14"X6" you easily bring White bakery box with your birthday cake, dimensions 14"x14"x6" also can keep your INDIVIDUAL ITEM SIZE: 14" x cake fresh in 14" x 6" refrigerator and WEIGHT: 53 lbs. heated in CUBE: 1.23 microwave oven. Individual Item Size: 12"x12"x5" Weight: 48 lbs. Cube: 1.07 Features: 1) Good quality and food grade paperboard, high resistance 2) Double or single PE is available 3) Measurement and design: according to customers' requirements

4) Environmentally friendly and biodegradable 1) Materials: LDPE and HDPE 2) Colors: tinted and clear 3) Printing: 1 - 6 colors from clear to rainbow 4) Headers: wicket with Paper Bag plastic or rubber wafer to close 5) Size and other specifications are according to customers' requirements 1) Size: 145 x 50mm Biscuit Case 2) Material: tinplate 120 pcs/cardboard carton Outer packing Carton dimensions: 75 x 60 x 33cm Size: 4 3/8"(d) x 2"(h) Good for baking food Aluminum Foil Container Good quality 1000 pcs. Carton 1) Material: OPS 2) Thickness: 0.2mm ~ 1.5mm 3) Best container for food, cake and cookie 4) Elegant style and various sizes 5) Can be covered or sealed PLA Containers directly for the convenience of storage, display, or carrying 6) Dimensions: 190 x 164 x 6mm, 190 x 164 x 67mm, 32oz Outer packing: 300 sets/ctn Type 24 Height: 44 mm / Top diameter: 98 mm / Caliber 89 mm and Capacity: 181 ml Ice Cream Cup Product Type 25 Height: 40 mm / Top diameter: 101.5 mm / Caliber 93.5 mm and Capacity: 227 ml

PLA containers and containers are made of recyclable materials that make them sanitary and convenient

1) Material: PP 2) Heat disinfection: >120C (no color fading) 3) Used for packing food or beverage

Clear Beverage Cup Products

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

1) Material: PP 2) Used for packing food 3) Thoroughly resoluble

Jelly Cups

Type # 95 1. Material: PP 2. Height: 40mm / Top Ideal for packaging diameter: 46.2mm / Caliber jelly 3. various 38 mm and Capacity: 29ml designs is available 1) Material: LDPE 2) Made from non-toxic polyethylene 3) Can be manufactured according to customers' specifications 4) Suitable for supermarket and food packing MALEX PRICE PAPER PRODUCTS SDN BHD

Transparent Plastic

References according to http://www.malex.com.my

Strategies: Competitive pricing: If our product is sold at the lowest price regarding all our competitors, we are practicing competitive pricing. Sometimes, competitive pricing is essential. For instance, when the products are basically the same, this strategy will usually succeed. Remember that the success of competitive pricing strategy depends on achieving high volume and low costs. If our prices are lower than our costs, we are going straight to bankruptcy! To avoid such a mistake, we have to take notice of the break even ratio that you will find below. Cost-plus-profit: It means that we add the profit we need to our cost. The authority may have access to the costing data and should like to check if the profit added to the cost is not too high. Value pricing: It means that we base our prices on the value you deliver to customers. For example, when a new recipe has developed, we can charge high prices to the customer. This practice is also called skimming. It is easy when we are in the introductory phase of the product life cycle.

Weekly and Daily Sales Projections The store will be open 7 days a week all year round (52 weeks) Weekly sales: 564.705/52 weeks equal sales of $10.860 per week Daily sales: 564.705/365 days equals sales of $1547 per day Determining Cost of Products: Know variable costs Know fixed costs Costs that vary with the level of Cost that do not vary production production Materials, labor, packaging Rent, utilities, interest, advertising

with and

Cost Method - Activity Based Costing (ABC): Activity Based Costing (ABC) is a method of allocating costs to products and services. It is generally used as a tool for planning and control. This is a necessary tool for doing value chain analysis. Steps for Performing ABC 1. 2. 3. 4. 5. Analyze Activities Gather Costs Trace Costs to Activities Establish Output Measures Analyze Costs

We select Activity-based costing (ABC) because it offers the following benefits of activity Based Costing: Identify the most profitable customers, products and channels. Identify the least profitable customers, products and channels. Determine the true contributors to - and detractors from financial performance. Accurately predict costs, profits and resources requirements associated with changes in production volumes, organizational structure and costs of resources. Easily identify the root causes of poor financial performance. Track costs of activities and work processes. Equip managers with cost intelligence to stimulate improvements. Facilitate a better Marketing Mix.

Enhance the bargaining power with the customer. Achieve better Positioning of products.

Variable Costs PRODUCT MATERI AL 0.60 3.10 DIRECT LABOR 0.75 0.75 TOTAL VARIABLE COST 1.35 3.85 5.60 6.60 4.35

Brownies Low Carb Cheesecake Snow Pudding 2.60 3.00 Blueberry 4.35 2.25 Cobbler AVERAGE VARIABLE COST Note: See Appendix 2 Fixed Costs Fixed Overhead $10,000 Advertising $ 20,000 General & Administrative $ 96,000 Total Fixed Costs $136,000 Break-Even Selling Price

We can make 100 desserts per day or 36,500 per year Selling Price = Variable Cost + Fixed Cost Quantity (4.35 x 36,500) + 136,000 = 294,775 Selling Price = 294,775 / 36,500 = $8.07 Pricing Factors 1. 2. 3. 4. 5. 6. 7. 8. 9. Product or service costs Supply and demand Sales volume Competitors prices Firms competitive advantage Economic conditions Business location Seasonal factors Credit terms and purchase discounts

10. Desired image Pricing Strategies Final price depends on desired image for the product or service: 1. Discount equals Bargain 2. Middle-of-the-road equals Value 3. Prestige equals Upscale Penetration 1. 2. 3. 4. Objective is to gain high volume sales quickly Set price just above unit cost Profits are likely to be small Attract customers with no brand loyalty PROMOTION Goal: Create brand image Persuade customers to buy Develop brand loyalty A brand gives a product identity and implies a level of quality or service It can be a name, term, or symbol that will help identify the maker of the product Will help differentiate product from the competition Helps build customer loyalty Company: Diet Bite Foods Brand: Diet Bite Slogan: your sweet sin without guilt Attributes: quality, tasty, organic, homemade Benefits: Healthy Values: Caring, honest Culture: Big city values Personality: Caring person User: People on diet, Women upper 18 years old, Diabetic People, and sophisticated people who want more than eat a dessert. Awareness Interest

Branding

Brand Associations

Product Adoption

Process:

Evaluation Trial Decision Reinforcement

Publicity: Ways to gain positive publicity 1. 2. 3. 4. 5. 6. 7. 8. Write an article about healthy desserts. Contact local TV and radio stations and offer to be interviewed Publish a newsletter (healthy magazines) Speak at local functions (hospitals) Offer or sponsor a seminar (about how to eat healthily) Write news releases and fax them to the media Sponsor a community project or support a nonprofit organization or charity Promote a cause (how to care our health)

Advertisement: It takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You have to take notice about three important notions: Reach is the percentage of the target market which is affected by your advertisement. For example, if you advertise on radio you must know how many people belonging to your segment can be affected. Frequency is the number of time a person is exposed to your message. It is said that a person must be exposed seven times to the message before to be aware of it. Reach*frequency gives the gross rating point. You have to evaluate it before any advertisement campaign. Message: Sometimes, it is called a creative. Anyway, the message must: get attraction, capture interest, create desire and finally require action that is to say close the sale. Public relations: Public relations are more subtle and rely mainly on your own personality. For example, you can deliver public speeches on subjects such as economics, geo-economics, futurology to several organizations (civic groups, political groups, fraternal organizations, professional associations) These speeches will enable you to develop new relationships and their cost is nil !

-Sales promotion: It includes fair trades, coupons, and discounts are linked to the sales strategy. PLACE Distribution Methods

WE SWEET BITE CUSTOMER RETAILER WHOLESALE R RETAILER

CUSTOMER

CUSTOMER

We have considered three main distribution channels to our products: 1. Selling to the customers: Whether we sell by ourselves (as retailer) whether we employ a sales force, we are in these cases in front of the final customer. There are not intermediaries between us and him. Unfortunately, except for the retailer business, this situation is far to be the general case. In this case, the sales will be at the store located in Manhattan. Selling to the retailers: For example, we manufacture bakery products and we sell them to the New York retailers. Selling to the wholesalers: There are two wholesalers in NYC such as BJs and Costco. We sell our bakery products to these big stores. On turn the wholesalers sell or products to the retailers which finally sell to their customers.

2. 3.

Location:

In Manhattan: Design: Place with the capacity of 100 people and 10 employees. The bakery will have special designs that show its elegance and sophistication. Also, the place will count on kitchen, bathrooms and 25 tables.

CONCLUSION The ultimate objective of marketing is to link 1. 2. 3. 4. Product to customer benefit Price to customer cost Place to customer convenience Promotion to customer communication

APPENDIX 3 PROMOTION THROUGH THE INTRODUCTION STAGE

WE UNDERSTAND YOU WHEN

CAN NOT BE EATEN BY YOU . SOON THE SWEET WAY TO GET IT HEALTHILY

YOU CAN IMAGINE TO EAT THEM

WITHOUT FEELING GUILTY? SOON THE PLACE WHERE WILL UNDERSTAND YOUR FEELINGS