black horse energy drink buisness plan
TRANSCRIPT
Blackhorse
Energy drinks
I. Executive Summary
Black Horse energy Drinks is a firm in the partnership
of two persons. It’s a newly established business which will start its
operations w.e.f. 1st Jan 2012. the plan came to our mind because in
Pakistan only branded energy drinks are available which being too
expensive are not in reach of a common man. Some local companies are
manufacturing the energy drinks but they are not able to maintain the
quality. The main product of the firm will be energy drink whereas the
supporting drinks would be different flavors of soft drinks.
Currently in Pakistan there is low trend of using energy
drink; however the trend is continuously rising especially in the urban
areas. This gives us a hope and helps us to be optimistic. We can suppose
that if our product is properly advertised and awareness is created among
the people, our firm will have a bright future. We will have to adopt a
marketing strategy which will not only make our product known to the
customers but also make them realize the importance and benefits of using
energy drinks.
Our target customers would be the generation of 20 to 40
years of age without any discrimination of the gender; however research
shows that the main users of energy drinks are males. The customers of big
cities would be targeted belonging to the upper and middle class.
Our product is a consumer product so we will sell directly to
the retailers as initially business will operate on small scale. For distribution
purpose own vehicles would be purchased.
The overall supervision will be carried by the owners of the
firm, however to monitor the work of the employees effectively different
managers are hired. One manager is hired for each department who would
be held responsible for the performance of the department.
To avoid risk the product is launched in the twin cities. Our
plant is not running on full capacity however it has the capacity to fulfill the
production needs within different cities of Pakistan.
II. General Company Description
The name of our firm is Blackhorse Energy Drinks. The firm will be situated
in Rawat and is producing energy drinks.
To continue to thrive as a business over the next ten years and beyond, we
must look ahead, understand the trends and forces that will shape our
business in the future and move swiftly to prepare for what's to come. We
must get ready for tomorrow today.
Our vision is to “no compromise on quality and quantity as well” Our vision
serves as the framework for our Roadmap and guides every aspect of our
business by describing what we need to accomplish in order to continue
achieving sustainable, quality growth.
The mission of Black horse Energy Drinks is to be the Pakistan’s premier
consumer products company focused on convenient drinks. We seek to
produce healthy financial rewards to investors as we provide opportunities
for growth and enrichment to our employees, our business partners and the
communities in which we operate. And in everything we do, we strive for
honesty, fairness and integrity
Our target customers would be the generation of 20 to 40 years of age
without any discrimination of the gender. The customers of big cities would
be targeted belonging to the upper and middle class.
As because of faster global changes in world’s economy, if we need any
future change we will do. It might be change in our marketing strategy or
pricing and whatever the requirement of the time.
III. Products and Services
Product Specifications:
We offer premium quality Concentrates made entirely with Natural
Products Herbal Extracts rich in Vitamins and Minerals Easy for absorption
sugar Corn Syrup Unique Ecologically Clean Honey consisting of more than
75 percent Minerals, Amino Acids and Natural Sugars Wide ranges of
variations are available on Flavor and Aromas Classic, Lime, Wild
Strawberry, the authentic Rose and Mint Energy Content Vitamins, we add
Pro Vitamin A, Vitamins C, D, K and P derived from wild organic herbs. One
of our product is a natural concentrate for energy drink WITHOUT
CAFFEINE. The drink has the same energy value as the standard one does.
PRODUCTS:
Our main products include Black Horse Energy drink. The
supporting products are different flavor of juices like Mango Juice, Apple
Juice , orange Juice, Strawberry Juice, Pine Apple Juice.
Major competitive advantage is our reasonable pricing along with best
quality. Secondly highly advertisement strategy at the local and national
level will also help us to gain a competitive advantage.
IV. Marketing Plan
Market research - Why?There are 306 brands of energy drinks being used in the world and in
Pakistan there are only 10 to 15 brands available in the market among
which majority is branded which being much expensive is targeting only
elite class.3 to 4 energy drinks are launched locally which stands no where
near the branded items when it comes to quality. There is a lot of gap
between the local and the branded items. There is a lot of room for a
product of good quality and at the same time a reasonable price.
Market research - How?Sales and marketing is the most important department of any beverage
company. To boost the sales and profit, this department should be properly
planed and managed. Black Horse Energy has a very aggressive and
hardworking sales and marketing department..
For example;
Aquafina have an advantage over the nestle pure life water as its available
on the outlets, general stores, bakeries too earlier than the time span taken
by the nestle water, it’s all because of strong network of Pepsi and efficient
marketing and sales activities.
There are two kinds of market research: primary and secondary.
To understand the market we have to visit different markets of Rawalpindi,
Islamabad and many other places.
RESEARCH QUESTION:
What is the level of awareness among people about energy drink?
RESEARCH OBJECTIVES:
What kind of drinks student usually drink?
What are the different energy drink companies in the market?
Which brand they prefer in energy drinks.
What is the level of awareness about energy drinks?
Who drink more male or female?
Why do people take energy drink?
Any side effect due to use of energy drink?
What is the level of awareness regarding ingredients of energy drinks?
Who are more aware students or professionals?
What age group is more aware about side effects of energy drinks?
We gathered information by asking these questions from people. Most of
the users of energy drinks belonged to the elite class. Middle and lower
class people could not afford quality energy drinks but they wanted to. As a
whole most of the users were not satisfied with either the quality or the
price.
There is lack of awareness in Pakistan regarding the use of
energy drinks. The important part of our marketing plan would be to create
awareness among the people. In the big cities like Rawalpindi, Islamabad,
Lahore and Karachi only 10 to 15% people use this product which means
that we have a lot of customer to target.
.
Product:
As in Pakistan no doubt there are best quality energy drinks are available
but they are very costly and almost unaffordable for a common men.
So our main emphasis is to provide energy drinks at a reasonable price
everywhere for everyone, but still no compromise on quality.
A research was carried to understand the needs of the
customers, the discrepancies in the existing energy drinks etc. 70% of the
consumers were not satisfied with either the quality or price of energy
drinks. When we asked them about how they would react to a new product,
most of them responded positively whereas few people found it difficult to
have a quality energy drink in a reasonable price which shows that we will
have to adopt an active marketing strategy.
Features and Benefits:
Energy drinks may boost performance during exercise by activating the brain, new research suggests.
Apparently, brain areas can be activated by titillation of unknown and mysterious receptors in the mouth, according to a study in the issue of the Journal of Physiology.
We all know that when we work out, it's important to stay hydrated. Something we may not be so clear on is what exactly we should drink when we exercise.
Ordinary water, of course, is the classic choice. But with store shelves everywhere full of sports drinks, energy drinks, and various flavored and fortified waters, what's an exerciser to do?
Experts say it all depends on your taste -- as well as the length and intensity of your workouts. Here's a look at how the various drinks measure up.
Customers: Initially the business will be operational in Rawalpindi and
Islamabad, so we can sell directly to the retailers without involving any
third party. Afterwards when the business will expand its activities in other
cities independent distributers will be hired.
Our target customers would be the generation of 20 to
40 years of age without any discrimination of the gender. The customers of
big cities would be targeted belonging to the upper and middle class. The
young target customers are more brands conscious so we will have to
position our product at a high level. The target customers above the age of
30 years are more health conscious, so providing hygienic drink is also of
the primary importance. One thing which should be kept in mind is that all
the characteristics described above would be provided in a reasonable
price, otherwise our product would become out of reach of the middle class.
Competition: In Pakistan with the increasing trends of using energy
drinks number of brands available are increasing. Generally, there is no
manufacturer here. There are distributors who import these ready to drink
around the world. Main market to import energy drinks is UAE, from there
importers import in bulk and then distribute in their target areas. OZO
Switzerland is a beverage company with the most extensive distribution
system in the world. To distribute their product in Pakistan they have
granted the rights to Ghani Group of Industries. Who recently have soft
launched the product in Lahore market as OZO energy drink can be found
in cafeterias at colleges and universities. This is the only brand that
distributors import it directly from the manufacturer and they make its
packaging accordingly then.
The majority of the sales are coming from urban areas where people have
greater purchasing power and awareness of such drinks. Sales of energy
drinks are limited in rural areas although they are growing. Around 66% of
the Pakistani population resides in rural areas, but most do not buy energy
drinks as they are too expensive. The customers from the middle class are
unable to use it frequently. There is a lot of difference in the quality
between the local and branded products. There is a lot of room for a good
product available at a very reasonable price. This is a huge competitive
advantage to our product.
The indirect competition is with the soft drink manufacturers
including Pepsi, coca cola, Sheezan juice, Nestle etc.
Niche: As described above in Pakistan there is availability of a wide range
of energy drinks with a better quality but still there is a pricing issue. So
our unique marketing corner is to provide a good quality of energy drinks to
everyone at anywhere in Pakistan at a very reasonable price. Our purpose is
to capture the market by earning minimum profit just to increase our sale
volume.
Strategy: As distributers are chosen as a medium of distribution, so we
should place a proper check on the distributer who ensure that our product
is present in different outlets. The minimum quantity which should be
present in the outlets is 48 pieces in A class outlet and 24 pieces in B class
outlet. Proper visits of different markets would be organized in order to
evaluate the performance of the sales officer and making a check on the
presence of our product in the market. Once the product is reached in the
market then our marketing plan will be started on the trial basis in a
particular city i.e. Rawalpindi.
Promotion:Our main purpose is to provide energy drinks for everyone at everywhere so
first of all we have to launch our product in the market targeting all classes.
Our promotion policy includes the following advertising mediums.
Cable Adds: this is one of the very common, effective and as well as very
inexpensive way to market our product in the each city of Pakistan.
FM Radio: it’s almost the same marketing technique but more effective
comparatively, other marketing channels include billboards, weekly and
monthly magazines, daily newspapers, posters, pumphletsetc.
Providing the students of different universities at the introductory stage the
special prices including first time purchasing discount etc.
Promotional Budget:Initially we have to advertise very heavily because the general perception of
Pakistani people is that energy drinks are very costly so we will have to tell
people that the quality energy drink is really in reach of common men.
That’s why we have to make a huge marketing expenditure at the start i.e.
Rs.15, 00,000 on the different promotional activities described above. This
amount will be treated as “Deferred Cost” which will be covered when the
business starts to run smoothly.
After that we will have to spend Rs.500, 000 as ongoing marketing
expenditures. This cost will be charged to the income statement. This cost is
also to be included while calculating the cost of the product.
Pricing: Price may not be the only competitive factor but in our business
plan it will become the major competitive factor. Along price another major
factor affecting the mind of the customer is quality. We have chosen a price
that will give us the main competitive advantage if we are able to maintain
quality.
(Branded) is Rs. 130 to Rs. 150. The price of the local competitors is almost
same or less but that we do not bother because they are not able to
maintain the quality.
Proposed Location: The location of the firm is proposed to be in Rawat.
There are certain advantages of this location. The first and the most
important benefit is the cost of the land. The cost of land is much less as
compared to Rawalpindi and Islamabad. Secondly it is situated right next to
the G.T Road which will be very beneficial from the carriage point of view. It
will be very convenient for the suppliers to provide raw material and to
distribute final product and also the cost will be less.
Distribution Channels: Distribution (or place) is one of the four elements of
marketing mix. An organization or set of organizations (go-betweens)
involved in the process of making a product or service available for use or
consumption by a consumer or business user.
As in the introductory stage we will make sales only in
Rawalpindi and Islamabad so we can distribute directly to the retailers. For
this purpose we have purchased three new vehicles ( Shahzore). We can
take orders from different channels like web, mail order, phone calls,
through marketing staff. Most important source will the marketing staff.
Afterwards when we will operate in different cities like
Lahore, Faisalabad, Multan different independent distributers will be hired.
Sales Forecast:Product will be launched in January on a trial basis in Rawalpindi. In March
it will be launched in Islamabad.. To avoid any disaster huge investment will
not be made initially. After 1 year we will have to do market research again
and any modifications needed in the product would be made.
Month Sales
January 12000February 14000March 20000April 20000May 23000June 25000July 22000August 22500September 23100October 19000November 18000December 15000
Legal Environment: As such there are no special leagal requirements
to start up such a small business like a partnership between to persons. We
didn’t find any requirements before starting our operation anyways there
are certain requirements we will have to fulfill after starting our operational
activities like we will have to produce energy drinks and other juices
according to the standards established by the departments of health and
environments.
Credit Policies: For any business to run effectively credit selling or credit purchasing is very important. There are very few businesses which can effectively be run without dealing in credit. As our firm is in the introductory stage so we will have to sell on credit in order to enter into the market. Credit itself is not bad if proper credit policy is established and the danger of bad debts is minimized.
We will make sales on credit for approximately 30 days. After 40 days if the debt still remains unpaid we will remind the customer by giving him a phone call. After 55 days a letter is written to the debtor for the payment of the debt. After 75 days we will contact our attorney to deliver a notice.
V. Management and Organization
As the business is in partnership so the business would be
supervised primarily by the owners. The hierarchy of the organization is as
follows
For each department a manager is hired to supervise the
work of the relative department. These managers are qualified in their
fields. These managers are given sufficient authorities and are held
responsible for any malfunctioning.
The production staff is required to be well skilled
because our product is directly related to the health of the consumers. Any
minor mistake can cause major loss which will affect the reputation of the
company. So no compromise will be made on this.
The duty of the marketing staff is also very challenging
because there is less trend of the use of energy drinks. The marketing staff
should promote the product effectively otherwise there is quite a chance for
OWNERS
PRODUCTION
DEPARTMENT
SALES
MARKETING
DEPARTMENT
QUALITY
CONTROL
DEPARTMENT
the failure of the business. Secondly the marketing staff should make sure
that our product is available in the market and it should be properly
displayed on the shops i.e. visible to the customers.
The quality control department requires highly qualified
staff to ensure that our product is hygienic and do not contain any side
effects for the health of the consumer.
Professional and Advisory Support: The business is under the
ownership of two persons so the final decision making authority is with the
two partners. The legal matters are supervised by our attorney.
The firm is not operating on a very large scale yet we
have established a proper accounting system. The accounts department
records the daily transactions, manage account receivable and payables.
All the important decisions are being taken with the
advice of all the three managers whose knowledge provides guide lines for
the important decisions to be taken.
All the cash involved in the business is kept in Allied
Bank Limited.
Startup Expenses and Capitalization:
Start-up
Requirements
Start-up ExpensesPlant and Machinery cost 8,000,000Stationery 18,000Vehicles 1,800,000Rent 45,000Computer 30,000Consultants 10,000Furniture 200000Brochures 50,000Utility 20,000Cash required 5,000,000
Total Requirements 15173000
Opening day Balance
sheet
1st January 2012
Assets
Rs.
Equity and liabilities
Rs.
Current Assets
Cash
3,000,000
Other current assets
1,000,000
Fixed assets:
Plant and machinery
8,000,000
Furniture
200000
Vehicles
1800000
Total
14,000,000
Liabilities:
0
Equity:
14,000,000
14,000,000
VI. Financial Plan
No.of Years Year 1 Year 2 Year 3
Sales(Rs.)
12848000 14534000
15600000
Less: cost of
goods sold
8876800 9768400
10050000
Gross margin 3971200 4765600
5550000
Less marketing
and admin.
Expenses500000 500000 475000
Rent 540000 594000 653400
Salaries 1500000 250000 355000
Depreciation 480000 480000 480000
Utilities 200000 245000 280000
Electricity 400000 600000 700000
Telephone 120000 170000 195000
Carriage
535000 613500 702600
Total marketing
and admin
expenses
4275000 3452500 3138400
Earnings before -303800 1313100 2411600
tax
Income Statement
Balance sheet
As on Dec. 31 2012
Assets
Rs.
Equity and liabilities
Rs.
Current Assets:
Cash
3170200
Accounts receivable
260000
Inventory
375000
Other current assets
500000
Fixed assets:
Plant and machinery
8,000,000
Furniture
350000
Vehicles
Liabilities :
Accounts payable
400000
Rent outstanding
45000
Wages payable
80000
Accumulated depreciation
480000
Equity: 14,000,000
Current year profit/loss (303800)
13696200
2046000
Total
14701200
14701200
Balance sheet year
31st Dec, 2013
Assets
Rs.
Equity and liabilities
Rs.
Current Assets:
Cash
4776300
Accounts receivable
280000
Inventory
Liabilities :
Accounts payable
400000
Electricity bill
50000
Wages payable
410000
Other current assets
500000
Fixed assets:
Plant and machinery
8,000,000
Furniture
400000
Vehicles
2143000
90000
Accumulated depreciation
960000
Equity: 13696200
Current year profit/loss 1313100
15009300
Total
16509300
16509300
Balance sheet
Dec 31, 2014
Assets
Rs.
Equity and liabilities
Rs.
Current Assets:
Cash
5298900
Accounts receivable
415000
Inventory
632000
Other current assets
770000
Fixed assets:
Plant and machinery
8,500,000
Furniture
600000
Vehicles
2700000
Liabilities :
Accounts payable
550000
Telephone bill
15000
Wages payable
90000
Accumulated depreciation
1440000
Equity: 15009300
Current year profit/loss 2411600
17420900
Less: Drawings: 600000
16820900
Total
18915900
18915900