Alma Products
...ter is an innovative product and this could be seen as a SCA. The lack of SCA’s should diminish as soon as possible by making use of the company’s opportunities and strong points. These will be discussed in the next chapter. 5. Situation Analysis 5.1. SWOT Analysis è Existing competitors with large scale promotion and strategiesè Established brands è Product can easily be copied by competitionè Charcoal barbeque market itself is decliningè Health concerns (charcoal) è Market for barbeque-related items is largeè Diversificationè Barbeque market in general is growing è Lack of SCA’sè Lack of experience and knowledgeè Lack of researchè No promotion mix è One of the firstè Charcoal Starter is a valuable tool, providing convenience and better tasting meatè Knowledge and experience from other sectorsè Products can be manufactured for low prices 5.2 Industry Analysis · Annual consumer spending is $4.35 billion. · Charcoal barbeque market declines, but the market itself is growing Source: http://hpba.org/BBQstats/BBQgrillShipments85-03_files/BBQ%20Grill%20Shipments%2085-04-1.htm This information suggests that the Market for gas barbeques (accessories) may provide opportunities for new products. This market is relatively new and growing strongly. 5.3. Competitors analysis In its home state of California, there are a few local retailers that sell a similar item, The Adamson QuickFire, for $9.95. However, this item is also new and the manufacturer, Adamson Inc., does not appear to have established distribution with any large retail chains. Brighton has looked in the stores of large chain retailers and found the QuickFire in none of them. The only stores that carry the QuickFire seemed to be small, individually owned hardware stores. A clerk in one of the small stores told Brighton that the store bought the QuickFire’s from “some guy from Berkeley.” Brighton has not been able to find a telephone listing for Adamson, Inc. in Berkeley or its surrounding areas. This means that if the product is positioned properly, Alma can have the advantage of being the first to hit the market on a large scale. This would set a strong base for expanding the product line from thereon. Broader competition includes manufacturers of electric charcoal starters, which sold for about $5.95 in most stores, and companies marketing charcoal lighter fluid. Lighter fluid still dominates the market for starting barbecue charcoal. A quart can of lighter fluid sold for about $2.00 in most stores and contains enough fluid to start 8 to 12 barbecue fires. As said earlier, Alma Products lacks SCA’s. Given the current market situation, this might not be the biggest problem they will face during the introduction phase of their first commercial product, but later on this will become a big threat for them. Sustainable competitive advantage allows the maintenance and improvement of the company's competitive position in the market. It is an advantage that enables it to survive against its competition over a long period of time. This will become even more important when competing directly against products that are already on the market having an established position in the market. 5.4. Company Analysis The company as it stands now is trying to conquer a considerable position in the market for barbeque-related items. The Charcoal Starter might prove to be a basis on which to develop a position further on. Today Alma Products has no experience in this market at all, but by using the insights of both founders, this gap could be reduced relatively fast. Alma Products should realize though, that in these days having information and assessing it in the right way means having power to stay ahead of competition. Ideally Alma Products would not start at all before having enough information about the market and all-important aspects that come with it. 5.5. Customer Analysis The same stands for Customer Analysis. Fortunately the market for this product has not really been touched yet, but there are substitutes available that fulfil the same need. In other words, Alma Products must first analyse consumer demands for this product. There are some indicators that the Charcoal Starter could indeed be a successful product, but this conclusion is based on very little information. 6. Product Market Focus 6.1. Target Markets Initially Alma Products will more or less target a niche with its charcoal starter. Later on the whole market for barbeque-related items will be entered, which is highly competitive. The market itself is growing and new developments like gas barbeques and electrical ones make it a market that needs to be tracked on a regular basis. Again, information will be a key element for success. 6.2. Positioning Marketing wise, not much positioning will take place, since Alma Products wants to keep costs as low as possible to be able to reach BEP within one year. Therefore, there needs to be a certain price margin, which we will calculate in the financial section of this plan. The production will be put on the market through 2 different distribution processes: · The ED-12 will be sold through hardware stores, home centres and discount department stores · The ER-12 is intended for sale through mail-order retailers Both types will feature different packaging, which will be further discussed in the marketing mix section of this plan. The product will be positioned as a convenient way of lighting charcoal, which is twice as fast as using lighter fluid offering better taste. 7. Financial Our Pricing Objective; “We have no expectations of making much money in the first year in business, but we do want to be certain to at least break even on a cash basis”. 7.1 Costs. Fixed Costs One time tooling cost 10 000 Office expense (500 * 12) 6 000 Total Fixed Costs 16 000 Variable Costs (Per Unit) Manufacturing 3 Freight 0.38 Total Variable Costs (P.U.) 3.38 Breakdown of Variable costing The average freight cost is $4.5 (6+3 / 2). This figure then needs to be applied on a per unit basis; therefore we divide 4.5 by 12 (the amount of units in a case). This gives us, a figure of .38 (rounded). 7.2 Break-Even Analysis Scenario One. Retail MODEL ED12 Assumed BEP = 20,000 units Assumed Sales Commission = 10% of selling price 20,000 = 16,000 / ($0.9) Price – 3.38 16,000 = 20,000 x (0.9P – 3.38) 0.9P – 3.38 = 16,000 / 20,000 16,000 / 20,000 = 0.8 0.8 + 3.38 = 4.18 4.18 / 0.9 = 4.64 Wholesale Price = $4.64 Retail Price = 1.4 x $4.64 = $6.50 Scenario Two. Retail MODEL ED12 Assumed BEP = 10,000 units Assumed Sales Commission = 10% of selling price 10,000 = 16,000 / ($0.9) Price – 3.38 16,000 = 10,000 x (0.9P – 3.38) 0.9P – 3.38 = 16,000 / 10,000 16,000 / 10,000 = 1.6 1.6 + 3.38 = 4.98 4.98 / 0.9 = 4.98 Wholesale Price = $5.53 Retail Price = 1.4 x $5.53 = $7.74 Scenario Three. Catalogue MODEL ER12 Assumed BEP = 20,000 units 20,000 = 6,000 / Price – 3.38 6,000 = 20,000 x (P – 3.38) P – 3.38 = 6,000 / 20,000 6,000 / 20,000 = 0.3 0.3 + 3.38 = 3.68 P = 3.68 Wholesale Price = $3.68 Catalogue Price = 1.6 x $3.68 = $5.89 Scenario Four. Catalogue MODEL ER12 Assumed BEP = 10,000 units 10,000 = 6...