Promera Inc - Business Expansion essay
- Length: 22 pages
- Sources: 10
- Subject: Business
- Type: essay
- Paper: #71933821
Excerpt from essay :
The original farm was a seasonal operation with periods of no production in the winter months. The ability to dry and produce value-added products will allow the business to smooth its income and realize revenue all year round. The new production facility will change the nature of the business from seasonal to year-round. The business will be able to stockpile product during the busy season and sell it on a continual year round basis.
The owners of the business will be directly responsible for the daily operation of the business. They will make joint decision as a body of shareholders, but each will have their own division to manage and operate. Each of the owners will have a stake and a role in the ability to make this new enterprise a success. They will have knowledge of what is happening on the production floor and will have a view of the larger picture as well. The owners are passionate about making this operation a success. All of the owners wish to play a role in the daily operation of the business. They have a passion for what they do and do not wish to simply sit back and let someone else do the work. They are hands-on type people, making them the most valuable assets that the company has in its possession.
Playing an active role in the daily operations of the business will allow them to be in direct contact with the product at every stage of production. This will allow them to make better forecasting models and to take advantage of opportunities. It is foreseeable that at some time in the future, my father will retire, at which point he will have the option to sell his shares or to remain a silent partner in the business.
The new fruit and nuts packaging line that is being proposed is only one of many expansions in the future. However, it is felt that the best approach to the expansion is to accomplish one task at a time and to do that well before moving on to the next one. The best approach is to do what is familiar and attainable, using assets that are already on-hand before expanding into new realms. This has been the sustaining philosophy of the business from its early beginnings.
Marketing will be the key to a successful business transition. It does little good to produce a product without the customer. Farm products marketing differs from packaged product marketing and represents a change in traditional lines of operation. In the past, marketing of fresh produce followed traditional commodity lines. The farm had a list of customers that carried farm produce and these clients placed weekly orders that were custom harvested and delivered to meet the client's needs. Any product that was left over would be taken to the local commodity auction and sold in this fashion.
This form of marketing and production will still be utilized by the fresh produce division of the company. However, rather than the mainstay of the operation, it will represent only 1/3 of the total revenue producing capabilities. It will help to defray operating costs in the other division through the first year. Production facilities will begin operations in late spring, as early berries come into production. It will shift product lines, as they become available. Established plantings of strawberries, blueberries, raspberries, apples, peaches, plums, and pears have been producing for many years and are managed to maintain peak production though proper pruning and fertilization techniques. This is a considerable advantage over a new operation that would have to wait for years until their plants began production.
The fresh produce market is used to seasonal shifts in production. However, the ability to dry, vacuum package and store produce will provide opportunities for sales beyond the production season. Packaged food represents a new market and a new way of marketing. Therefore, the bulk of the marketing research will concentrate on the sales of new product lines of packaged foods. The following outlines the plan for the marketing of new product lines.
Customer Survey and Consumer Demand
Consumers of packaged food products are becoming more knowledgeable than they were in the past. According to an IBM survey, consumers revealed a desire to know the contents, origins and environmental impact of the producers (IBM, p, 1). Producers need to establish trust among consumers and they need to establish a certain level of transparency in order to win over today's consumers (IBM, p, 1). In accordance with this trend, packaging will provide full disclosure of the product contents in a language that the average consumer can understand.
Several trends dominate the packaged foods industry, according to a 2008 survey. The first trend is a trend towards probiotics. Probiotics contain beneficial live bacteria that are said to aid the digestive tract (BizCommunity.com). Dannon's Activia achieved $150 million in sales alone in its first year (BizCommunity.com). This indicates an extreme amount of market acceptance. Dried and fresh fruits are a natural addition for these products that include live culture yogurt. This represents a potential market that could include other producers or end customers. This will be an advertising angle that could be explored, should the capital to start the project be approved.
Another major trend includes organic foods and beverages for children. This trend grew from controversy over the marketing of high sugar, low nutrient foods to children (BizCommunity.com). Organic product makers took advantage of this controversy and began marketing a line of healthy choices for kid's snacks (BizCommunity.com). Promera's brands will organically produced and will use little inputs, in terms of preservatives. They will offer a high nutrition, natural alternative that parents will feel good about giving to their children.
Fresh is best" is the latest marketing slogan of the newest Fresh and Easy Neighborhood Markets. This chain opened recently on the U.S. West Coast and have grown steadily (BizCommunity.com). This chain not only represents a potentially large, local market for Promera brands, but also happens to have the same marketing demographic as the proposed business expansion. Along with this trend is a growing demand for what are being termed "superfruits" (BizCommunity.com). This category of fruits includes high nutrient fruits such as acai, goji berries, and pomegranate and berries of all kinds. Promera sees a goldmine when one combines these trends with products already on the market and the proposed new business plan. Promera will make use of the five acres of berries already in production.
These trends are encouraging for the new business direction. The products that Promera currently produces and intends to produce in the near future are in accordance with major marketing trends and demand. However, prior to deciding to launch Promera Inc., a preliminary marketing survey was conducted to attempt to assess potential market demand and sales potential. Due to expense, the survey was conducted online by a professional marketing research firm. A more extensive marketing research campaign will be conducted should the project be approved. This research would include specifics about packaging and other issues that will affect final product design.
The preliminary market research indicated that the demographic group representing potential customers is diverse and from a varied background. They average age of the potential customer was from 18-70 years old. The 20- to 50-year-old crowd represents the largest market segment. Most of the potential customers were in the middle to upper income range. Intended price was key reason for the prevalence of this market segment. More females than males were more likely to purchase Promera products. This is largely because the females was more likely to be the primary grocery shopper in the family. In addition, complementary products, such as Activia yogurt are primarily targeted towards this demographic.
The typical customer is knowledgeable about health issues and is concerned about social and environmental issues. This represents a higher education target market. There was no difference between single and married couples in the survey. Both were equally likely to purchase Promera's products. Potential consumers were from varied ethnic background, with none more prevalent than they appear in the general population.
If launches of similar products with similar demographic groups is any indication, the market potential is close to $150 million on a national level. The future market is poised for rapid expansion and growth. It is in the early stages of development and sprang from health concerns and national campaigns to promote healthier living, including a healthy die (5aday.gov). National, government entities have launched a major campaign promoting the idea that eating more fruits and vegetables will lead to better health. Fruit is being promoted as an answer to inexpensive, sensible weight loss (thefruitpages.com).
National campaigns by government entities is a likely indicator of market growth. They continue to promote the health benefits of fresh fruits, dried fruits, nuts and fresh produce. This creates a need in the general public. The market potential is wide open and will continue…