Production Description

The product is a line of bake-at-home doughnuts. The name of the product is YoNuts, meaning "Your Doughnuts", because this might be the first time that a company has marketed doughnuts that you can make at home yourself.  The logic of the product is simple.  First, everybody loves doughnuts.  We can have fun with this, having a tagline like "Not just for cops anymore" or something like that, but the reality is that doughnuts are one of the most popular snack foods in America, the retail doughnut industry worth around $13 billion annually (IBIS World, 2014).  This includes both shops and doughnuts sold in grocery stores as well. IBIS estimates that the overall doughnut market has nearly 9000 competitors, ranging from small hipster doughnut shops like the trendy Voodoo Donut in Portland to giant chains like Krispy Kreme, Dunkin Donuts and Tim Horton's.  The packaged doughnut market is based mainly on large bakeries turning out fairly generic doughnuts, but the popularity of innovative doughnuts among today's consumers points to the opportunity for high-end doughnuts to be sold at the grocery level.

YoNuts will come in six flavors to start.  We will use focus groups to narrow down the flavors from a larger list of maybe 15-20 flavors, to ensure that the flavors we launch with are the most popular.  We will rotate through selections as well, maybe seasonal flavors, like a pumpkin pie donut in the fall.  They will be packaged in the frozen foods section, and heated from the frozen state in a normal oven.  Packages will contain with six or thirteen doughnuts (baker's dozen, a key gimmick).  

Competitive Advantages

YoNuts will have a few competitive advantages.  The first is that compared with other take-home doughnuts, YoNuts will have a much broader and more innovative selection of flavors.  These will range from hipster classics like maple bacon to entirely innovative selections like morel and bourbon or even savory flavors like roasted Hatch chile.  The possibilities are endless.  While other packaged doughnuts are focused on 1950s flavors like powdered sugar, YoNuts will bring the packaged doughnut business into the 21st century. The inspiration for this comes from Ben n' Jerry's and Haagen-Dazs.  Those companies in part earned their success with innovative flavors that more traditional ice cream companies were not doing at the time.  That...
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 Normally, doughnuts are deep fried, and since most Americans do not have a deep fryer, it is basically impossible to produce doughnuts at home, or if it can be done it will be very messy.  To solve this problem, we looked at the opportunity that was created by the French fry industry.  Fries are also deep fried, but when companies started finding ways to allow people to cook fries at home, fry sales in supermarkets went from not much to billions.  Our food scientists have developed a way to cook doughnuts in the oven that are just as good as doughnuts at the store, and better than any other supermarket doughnut.  Krispy Kreme taught us that people love hot, fresh doughnuts, and we all remember those mini-donuts from the fair, too.  By solving the problem of producing doughnuts in the average American kitchen, we have created what we believe is a new market, and the freshness gives us a competitive advantage over any other doughnut you can buy in a grocery store. For most people, YoNuts will be the only way they can get a truly fresh doughnut, since even many doughnut shops ship doughnuts in from faraway bakeries.  So with the best flavors and the best freshness, there is little doubt that YoNuts will be a very popular item.  

Goals & Strategy

With respect to market share, YoNuts will be positioned as a premium product.  The innovative flavors and freshness make YoNuts the most compelling proposition in the doughnut sphere in any grocery store.  The price point will reflect that, being above other doughnut products but still below the individual doughnut price one might find at a typical fancy hipster doughnut shop.  What this implies for market share is that this will always be a niche product.  YoNuts will need to look to similar products in other spheres - the aforementioned premium ice creams, craft beer – for market share trajectories.  While both of those products are becoming quite a bit more mainstream, and reaching double digit shares in some markets, the reality is that they started relatively small.  A first year target share should be 0.5% nationwide, and 5% for the first five years would be excellent.  Constraints to market share adoption will be the price point, the uniqueness of the product, and distribution considerations. It might take a year or two just to scale…