The Company
The company we will start is called Fresh. It is a start-up business that specializes in healthy alternative vending machine products. Fresh will penetrate the vending industry with innovative, first to market, high-quality vending machines. With the establishment of one strategic alliance with a national brand name, Fresh expects to easily exceed the financial forecasts, which will be discussed later.
Mission
Fresh’s mission is to penetrate into the vending market by adapting to the growing need of healthy living by supplying healthy vending machine products. Through the utilization of social networking sites, health conscious magazines and local advertisements, awareness on this product will be raised. This will add value to the community as well, promoting a healthier alternative to traditional vending machine products.
Target Markets
After conducting a survey to obtain market research on launching our new product we were able to narrow down our target market. The three most important demographic aspects that came to us were age, gender and life style:
§ Age – We aim to target the age group between 18-44 years old. This target market may be large however with the great amount of young being becoming more health conscious it represents the appropriate range. It targets this range, as these people are the more active group that would stop at a vending machine and buy a product.
§ Gender – According to the survey the question that asked if whether people looked for healthy products for their food choice showed 32% of women answering always compared to 13% of men. This shows us that women are more health conscious and advertisements may be more effective if targeted to women’s magazines.
§ Life-Style – With the growing trend of healthy living we were able to notice that many people are becoming more health conscious. Our survey shows that 81% would purchase a healthy product if presented well. Even though the data may be misleading it still underlines the fact that people are more interested in new, healthy and good tasting products. Fresh targets people maintaining a healthy diet who are constantly on the move. This will be the image of the brand; an innovative, fresh new way of vending.
Positioning
Fresh will position itself in Toronto, Ontario. With the great amount of students and young health conscious people it will serve as the leading healthy vending machine distributor in the area. It will place its vending machines in the Toronto subway as well as public universities and corporate offices. If this proves to be a success it will expand its market. Fresh will compete on price in addition to quality. Prices would range from small items such as fruit to larger items such as sandwiches and be priced at a slightly lower price at first to attract more customers. Quality of the product will be proven with properly refrigerated items such as meats, cheeses and fruits. Showing quality and performance, Fresh will solidify the brand in the market.
Marketing Objectives
1. Achieve gradual increases in market penetration each year - The Fresh business will gradually increase their penetration into the traditional vending business of both food products and beverages and on a lesser scale, other fast food options. Fresh will attempt to achieve this by increasing its brand awareness through its advertising plans.
2. Create A Buzz – Since the vending machine business is not a very large one, it relies on word-of-mouth. By showing Fresh advertisements in local newspapers and social networking sites the company will be able to create positive publicity for the brand. Also it is necessary to attend to vending trade shows to help get the name out.
3. Increase Promotion – Placing stickers on the back of products in the vending machine for the chance to win prizes is one option we plan to implement.
Financial Objectives
A budget of $100,000 will be needed to start up the business. With a break-even of 2-years the company will double the return-on-investment in 4 years. To gauge investor’s interest the following areas will be monitored to gauge financial performance:
1. Increase profit margin by 0.5% for first year – The Fresh business aims to achieve increases in gross profit margin through increases in production efficiency. This will show investors the company has a favorable pricing power.
2. Achieve break-even within 2 years – The expenses put on advertising, promotions and fixed costs plan to be offset in two years. With 30 machines at a price range of $2000-3000 in addition to labor and maintenance will also be paid off within this time frame. (Vending Machines Catalogue)
3. Decrease variable costs – Through increased mechanization and buying in greater volumes at a discount the company will be able to cut down on variable costs.
Customer satisfaction
§ Customer surveys- To help measure customer satisfaction we will send out yearly customer surveys to receive feedback and use that feedback to hopefully help make a better product.
SWOT Analysis:
Strengths:
There is a large selection of healthy snacks compared to what most vending machines offer. They offer quick and convenient way to obtain food or drink on the go. Vending machines do not require a great amount of expenses to run its business. Other than providing maintenance and someone to fill the machines on a regular basis there is no other expense put into the product.
Weaknesses:
The product may prove to be difficult to market since our products are mostly impulse purchases. There is also low brand awareness since it’s a brand new company. We would also need to establish estimated inventory levels due to uncertain demand for products.
Opportunities:
There is a high growth possibility for this company due to the low percentage of healthy vending machine companies in the current market. This provides for possible expansion towards other health products if our brand becomes established.
Threats:
The consumer taste may not suit health conscious foods disenabling us to turn a profit. New competitors may emulate our success in the future. There is also a low barrier to entry in the vending machine business so many competitors are able to compete
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