business plan proposal

Business Plan Proposal

Business Description

The proposed business is going to manufacturer and market high energy frozen yogurt bars as impulse purchases throughout grocery stores, supermarkets and specialty retailers. This segment of the frozen dessert industry is one of the most recession-resilient and also one of the most fragmented, which translates into the opportunity to gain market share rapidly given current economic conditions. The high energy drink market continues to have an exceptionally strong growth and new product introductions with 400 new products introduced in 2008 alone (Shelke, 2009). The most popular is Living Essentials 5-hour Energy (Shelke, 2009) which delivers high levels of B-complex vitamins without the sugar crash others do. The intended product will have the ability to deliver a satisfying snack and the rush of energy that 5-Hour Energy provides without the side effects of Monster drinks and others that lead to sugar crash hours after consuming it.

Industry and Market Analysis

The frozen desserts industry in the U.S. had relatively flat growth in 2008, gaining just 1.8% in sales in 2008 and attaining a value of $9.7B. Despite this relatively slow growth during the global recession, ice cream and frozen yogurt sales are expected to climb to $10.7B by 2013, an increase of 9.4% since 2008. This is attributable to the hybrid product strategies of market leaders including Unilever, who owns the Ben & Jerry's and Breyer's brands, significantly increasing their investments in R&D and market research including psychoigraphi8cs to better predict the preferences and wants of consumers. The partnering with Starbucks for coffee flavored ice cream has gained significant market share throughout distribution channels in the U.S. without sacrificing the company's exceptionally strong brand of being environmentally friendly and focusing on Fair Trade practices (Carlin, 1995). In effect the partnership of Starbucks and Unilever has served to significantly increase the size of the total available market, serving as a catalyst of sales of all frozen desserts throughout the recession.

Figure 1 provides an analysis of the U.S. Market Shares by Frozen Dessert type. The frozen yogurt market is not dominated by a single global competitor; each relies on product line extensions to address this market (Reast, 2005).

Figure 1: 2009 U.S. Market Shares by Frozen Dessert (estimated)

Product/Services

Estimated 2009 Share

Regular Ice Cream

61.3%

Reduced Fat, Light, Lowfat, and Nonfat Ice Cream

25.7%

Water Ices

4.3%

Sherbet

4.1%

Frozen Yogurt

3.9%

Other

0.7%

Sources: (Gloria, 2008) (Securities and Exchange Filings by Unilever & Dreyers)

The frozen yogurt market is treated by the most dominant frozen dessert manufacturers as a product line extension, as their main ice cream businesses are generating 67.2% of the total market value in the U.S. (Gloria, 2008). Over decades the industry has become more reliant on ice cream as the dominant product as distribution relationships with supermarkets and hypermarkets are for the most part based on margins and profits from these products. Frozen yogurt has delivered exceptionally high margins and profits to distribution channel partners however due to its unique differentiation (Walker, 2007) and has not been a primary focus of the leading producers in this industry. This translates into a significant opportunity for the proposed product of this business plan; it is addressing a market that for the most part has been ignored by larger competitors.

Competitive Analysis

The competitive dynamics of the market are oligopolistic in that three frozen dessert companies dominate the majority of the market. Each of them has specific strengths in the frozen yogurt area of their product lines, yet none has this as a primary focus on their manufacturing operations (Gloria, 2008).

Figure 2: 2009 Frozen Dessert Market Shares (estimated)

Major Player

Est. 2009 Market Share Range

Unilever PLC

24.0%

Dreyer's Grand Ice Cream Holdings, Inc.

18.0%

Dean Foods

13.0%

Wells' Dairy, Inc.

12.0%

Other

33.0%

Sources: (Gloria, 2008) (Securities and Exchange Filings by Unilever & Dreyers)

Of the entire series of competitors, Unilever PLC has the broadest distribution channels and series of alliances with grocery chains. Through acquisitions of Ben & Jerry's Homemade Ice Cream and Good Humor-Breyers Ice Cream, the company has grown to dominate the entire frozen desserts market within the U.S. And has a significant share globally as well. All of these competitors however have taken the traditional approach to frozen yogurt, offering only a very limited set of flavors, most often the most popular in their other products to save on costs. There is no product development occurring in any of these companies with regard to developing high energy frozen yogurt for customers to impulse purchase and take with them. Impulse purchasing accounts for 14% of total yearly sales in 2008 and is expected to increase in 2009 as companies seek to create greater levels of buyer activity based on price and availability, looking to overcome the perception of ice cream as a luxury (Gloria, 2008). The competitive landscape of frozen yogurt is highly fragmented with regional brands dominating sales only in local markets. There is not a single frozen yogurt brand dominating the U.S. Or global market today which further opens up the opportunity for a well-defined product with a strong distribution program to dominate the market.

Market Concept

Capitalizing on the high level of adoption for 5-Hour Energy and other energy supplements, the Energy Blast yogurt bar will be available in vanilla, french vanilla, chocolate, butter-pecan, strawberry, chocolate chip mint and Neapolitan, which are the top-selling flavors in the industry today (Gloria, 2008). Encased in frozen yogurt, the core of the yogurt bar will be a mixture of Niacin, Vitamin B6, B12, Folic Acid and Sodium, which will provide a high energy level of customers for several hours with no aftereffects as sugar can produce. The packaging will also be brightly colored with images connoting high energy and rapid motion, and also will have positive sayings and phrases on them. The use of social networking will be pervasive in the product concept, with Facebook and Twitter accounts created and entire social networking sites created for people to share their home-made videos of how they would promote the product as well. Companies including Heinz, Microsoft, Proctor & Gamble, and others have successfully used video contests to promote their brands and also generate greater awareness. The Doritos home-made advertisement that ran on the Super Bowl last year is a case in point. The key to a successful market concept is getting the customer as integrated as possible into the product marketing, messaging and identity. Social networking provides this flexibility and potential.