Salpis Limited Company
Shop Address: Shop Number 1, 1/F Olympian Centre Phrase I, Tai Kok Tsui Road, Mong Kok.
Tel: 2771-2345, 2772-2345
8 Part 8: Appendix
Calculations of market size, commissions, profit margins, break-even analyses, etc. 12
Part 1: Executive Summary:
Salpis is new set up company in 2009, which provide excellent healthy Mochi on food industry. Our first Mochi speciality shop is located in Tai Kok Tsui, which was recorded $400,000 within 2 months recently before the financial year 2009.
In the following year, our market plan is looking for a method of sale and profit growth. Our company's objective is that increase the shops in different districts in Hong Kong for sale and profit growth, so that our company can enjoy the economic of scale of Mochi production. We are optimistic in the following year; due to the economic environment recession is expected in 2010.
Our objective is doable, after our marketing team conduct surveys and analysis; we found that the trend of health food is prevalent in recent years, so we need more promotions in the following year, thus our budget in promotions will be increased.
For more detail information, you can contact:
Wan Roxanne, the Marketing Director focuses on the overall marketing planning.
Xie Si Yun, the Marketing Manager focuses on financial analysis in our company.
Li Heng Yu, the Marketing PR focuses on the market survey, product image and shop image.
In order to attain our marketing objectives, we have to plan our marketing strategies, which are about the methods of ‘how-to-do' in the following year. We will plan to open more shops in Mong Kok, Tsim Sha Tsui, and Wan Chai, because the groups of people there can afford higher price for the food and accept the new product better.
In order to let more target groups to know our product, more promotions will be launched, such as TV advertisements, magazine advertisements, promotion events in Shopping malls, etc.
However, our market plan should be very careful, especially in financial planning, we should control the budget for the overall expenses, since our company is new set up, and the cash liquidity is in the first issue in the whole planning.
Part 2: Industry Analyses:
Our competitors: (a matrix shows in appendix)
Our company's main competitors are The Kowloon Dairy Ltd (large company) and some Japan-style snack-bars (small shops). Their businesses positioned and successful strategies are various, for The Kowloon Dairy Ltd, their products are mass-production, so they enjoy ‘economic of production', their price of Mochi is very low that much family groups can afford. Whereas, the price of Japan-style snack-bars is expensive, but their can best fit for the customers' need, as they tailor-made the Mochi for customers once they order.
The marketing competitive advantage of Kowloon Dairy Ltd's is cheap price. Whereas, Japan-style snack-bars' target customers' need. Buying-Mochi customers can be classified by different market segmentation (psychographic variable—lifestyle) and disposable income groups. Since the market segmentation can be divided into 2 groups there, one is stay at home to have Mochi, another group is eat-out. And the disposable incomes of these 2 groups are different, since family group purchase for lower price, and the richer group can afford the higher price.
Yet, our Mochi overweigh our competitors in 2 areas: Low sugar, salt, fat, calorie, as well as therapeutic effects with Chinese material medica. As our Mochi with Chinese material medica, that totally difference to our competitors. Our competitors' marketing strategies do not copy ours, because they view the Mochi as a dessert, as the healthy concept is only popular in these years, so they may not alerted to this trend. And their pricing strategies is set different to us, for The Kowloon Dairy Ltd set lower price, and Japan-style snack-bars set higher price that their customers can afford. However, our Mochi set at a medium price, it is totally out of the competition to our competitors, because if our competitors, such as The Kowloon Dairy Ltd set their price of Mochi too high, from each box (with 2 pieces) $5 to 50, it is totally unacceptable to their customers, as their price is overcharge. When to some Japan-style snack-bars, their Mochi is handmade, and tailor-made for customers' order, thus their cost of made it is too high, if they shift to a medium pricing, they will find the profit margin immediately drop dramatically.
Our competitors find hard to copy ours, since the food production with materia medica need to get some certificates, such as U.S. FDA certificates of food, Nutrient value analysis can be conducted from ‘Institute of Chinese Medicine', Food and Health Bureau authorizes ISO 22000 Certificate, Good Manufacturing Product (GMP), as well as Hazard Analysis and Critical Control Points (HACCP). If The Kowloon Dairy Ltd plan to produce this kind of Mochi with materia medica, they take time to apply for these, that why our Mochi is still the market pioneer in the market. Whereas, some Japan-style snack-bars will not plan to do so, as our Mochi is made of ‘Chinese materia medica', it is not Japanese flavour, if they insist to do so; they will loss the existing customers.
Part 3: Products and Corresponding Target Markets:
As our product has a set of ‘attribute' that suitable to our potential customers among their ‘product choice set', so our company have to identify a target market (market segmentation), and concentrate our efforts on marketing to attract a specific consumer group.
First, we analyse the population in Hong Kong (from U.S. Census Bureau, International Data Base (Fig 3), we found that the working group from age 30-59 are large than the other 2 groups (young people: age 0 ¬ 29 and the retirements: age 60 - 80+). Thus, we should pinpoint to the working groups, as this market is larger than others.
Then, we analyse the characteristic of this working group, we conduct a future analysis of the health product ‘Mochi' (Phase 2). Our finding showed that higher education group are affordable to buy pricy healthy Mochi (Fig 1 & 2), as the main trends in these group's lifestyles are noticeable changes in recent years. As Maddux et al. have suggested that past habits or attitude can predict actual behavior (Maddux et al., 1995), so if the past education of this group which emphasis health concept, it is easy to predict that the attitudes of high education people will much more accept the health product in the future.
And when we analyse the other characteristic of this working group with higher education level, we found that this group of people are easier to suffer disease, such as diabetes, high level of cholesterol and over-weighted problem due to the high pressure of work. According to the Journal of Bio-behavioural Medicine (2005, Anne Kouvonen al. et.), it showed that stress increased in working life, and the work stress promoted unhealthy eating habits that lead to increase in BMI (Body mass index).
According to the information from Hong Kong Sanatorium and Hospital (1995), it is said that diabetics took 1/10 population (Fig. 4), that is 6667704 people. (Fig. 5)
According to the United Christian Hospital have conducted a survey in 1999, involving 17,716 Hong Kong people in this survey, half of the interviewees (53.99%, 9565) their total level of cholesterol higher than the standard (>5.2 mmol/L).
According to the Joint statement by WHO Western Pacific Region, IASO and IOTF (2000) suggested obese people more than BMI 25 kg/m2 in Asia-Pacific region. Then the prevalence of obesity in Hong Kong Chinese was approx 23% in women and approx 35% in men.
Form above information, we can put a lot of effort on the marketing in target customers, such as:
1) Working group: 2973,200 people (2009 (Q3), Quarterly Report on General Household Survey 2009)
2) Higher education and income group: 1161,151 people (2009 (Q3), Quarterly Report on General Household Survey 2009)
3) Diabetics: 1/10 population.
4) High level of cholesterol sufferers: 1/2 patients in hospital.
5) Over-weighted people (obese people): 1/4 population.
Our target income group is middle to high income groups, since our shop is located in Olympian Centre Phrase I of Tai Kok Tsui Road, where is surrounded by primary and secondary schools, hospitals, business centers, as well as High-class resident buildings. Thus, we can predict that their purchasing powers is well than other places, take Sam Shui Po as an example, there is many low class resident buildings and few business centre. Most important is the price of our Mochi is in middle price among of our competitors, so only this income groups are affordable to our Mochi.
Part 4: Marketing Strategy:
(a) Product's positioning: (the introduction of product shows in appendix)
Our product's position is the health dessert, as our Mochi made of Chinese materia medica, such as Soybean curd with Chinese red date (Snowy Berry), Sesame with Semen Coicis (Crystal Ring), Bulbus Fritillariae Cirrhosae with loquat (Yellow Jacket), as well as Mint with Aloe Vera (Green Salad). As Chinese materia medica is healthy food, they have a lot of advantage, such as high nutrition, anti-cancer and lower blood pressure.
Our new product is ‘Not me-too' product, as a competitive advantage to outstand to our competitors, as our ‘Mochi', we incorporated Chinese materia medica into our product, so that the function of Pharmacological action and therapeutic effect can be valued by our customers. Thus our Mochi is the ‘market pioneer' as our market position.
As to cater customers' needs, our marketing team need to update the website information about the health issue, such as the Pharmacological action in our Mochi, and the therapeutic effect of each Chinese materia medica, periodic seminars in community centre in different districts, periodic events about health consciousness of health food among people through some health clubs, etc.
(b) General strategy of Place:
We will cooperate with brand name ‘Taiwanese-style Mike Tea shops', like Gung Chai and Taiwan number One. As we observe that they have 3¬ 5 customers each minute in front of the shops. Besides, these Taiwanese-style Mike Tea shops have many branch stores in Hong Kong. Moreover, we notice that their average price of products range from $15 to $25 per cup, and our Mochi selling price is $ 17.5 each, thus the prices of Taiwanese-style Mike Tea and our Mochi are similar to avoid the impression of below standard.
We choose Taiwanese-style Mike Tea shops as our partners, because we know that our Mochi perfect matches with Chinese tea. And we observe that 3/4 customers of Taiwanese-style Mike Tea shops, they buy some foods after buying the milk tea! Knowing customer habit on tea with snake, we can contact to these shops for alliance, on one hand they can get the profit by earning from Mochi as we supply those for them. On the other hand, we can increase the outlets of sales, as our Mochi is not a brand name product, but these shops do, so we get a free ride to for Mochi promotion.
(c) Distribution channels/ Place:
Our distribution channels are Park ‘and' shop, taste supermarkets; Welcome supermarkets; Wah Yeon supermarkets; Taiwanese pearl milk tea shops; Health product chain of retail stores.
(d) Promotional activities:
Promotion activities like advertising, personal selling, sales promotions, public relations, Internet, TV, radio, newspapers and magazines.
Iv a) TV, magazine, newspaper:
TV channels in Hong Kong, such as TVB, ATV, Pearl, etc.
Newspapers are Ming Pao, Am730, Headline, etc.
Gossip magazines are Jessica, CosmoGIRL and Lisa, etc.
Iv b) supermarket screens:
‘Park and Shop' supermarkets allow our advertisements to be showed on small screens in the food shelves.
Iv c) bus screens ‘Roadshow':
Bus Company allows our ads to be showed on the screens in the walls of buses, and then our ads can be watched through the TV channel is called ‘Roadshow'.
Iv d) outdoor screens in Building:
Our ads will be watched at outdoor electronic screens in big Shopping Malls like Time Square, especially in the districts of Mong Kong Tsim Sha Tsui, and Wan Chai, etc.
Iv e) Mobile lorries equipped with big screens:
We will purchase 2 to 3 lorries that equipped with big LED screens for our ads, and distribute our sample Mochi for the pedestrians, the effect of ‘word of mouth' is obvious.
Iv f) Ads in front door & the walls outside of Olympian Centre Phrase I :
Advertisements in the front door of our shop as a shop sign, as well as the advertisements hang out in the walls outside of Olympain Centre Phrase I.
Iv g) direct mail and e-mail:
According to Evans et al. (1995), they argued that using direct mail in response to customers' requests, rather than ‘cold' prospecting. Thus, our company consider direct mail.
Iv h) Our web site and brochureware:
Our web site ‘www.salpis. com' advertises our Mochi and services, and offers on-line games to attract Internet- surfers to our website.
Ivi) linking ‘www.yahoo.com.hk','www.openrice.com.hk':
Allowing internet surfers access our website through these starting points.
Iv ii) post our past promotion events on Internet:
For example we invited Ella Kwan as our Product Representative.
We apply the AIDA model for promotion, in order to link the self body health and the product features together. Also we apply Daniel E. Berlyne's arousal theory, pinpoint our product that associate with experiences recognized as helpful for them to survival.
Our company's market is health food and dessert. Our potential customers are middle to high income group, which including the people with diabetics, high level of cholesterol sufferers, elders, over-weighted people, Office ladies (OL), youngsters, as well as kids.
We found the Tai Kok Tsui as our Salpis shop, as there are a lot of residential sites (high-class), primary and secondary schools, shopping district, commercial buildings, and some health clubs for elders, thus, this area really fit into our target customers.
We also plan another districts, such as Mong Kok and Wan Chai for our shops expansion, as there are many commercial buildings in Mong Kok and Wan Chai that people fall into our target customers groups.
We found that in Tai Kok Tsui shop, students of primary and secondary schools will shop at lunch time and after school; housewives and elders will shop at morning and afternoon in the shopping malls; whereas businessmen and OLs will shop at lunch times and after jobs.
While in Mong Kok and Wan Chai districts, businessmen and OLs will shop at lunch time and after job. But most of the case, people will shop at weekends.
We discover that our target groups will purchase our Mochi in cash or octopus cards, only businessmen and OLs will use credit cards to purchase. Thus we should develop an effective payment system to cater our customers.
And we also discover that only students OLs will have our Mochi immediately, so our package of Mochi should be independent that they can buy any number as they want, and our package should be easy to tear for our customers to eat immediately.
When we conduct a survey (phrase 2), we know that convenience, price, quality, service, as well as status that motivate our customer to buy our Mochi. Thus our plan to open more shops in Mong Kok and Wan Tai should be consider these factors to cater our customers' needs and wants.
Current trends in the market:
The current trends in the market are healthy and safe food, we should do a lot of effort to enhance our product is high quality to boost confidence in public. Since our food industry organizes the food product in a very strict way, for the food production with materia medica need to get some certificates, such as U.S. FDA certificates of food, Nutrient value analysis can be conducted from ‘Institute of Chinese Medicine', Food and Health Bureau authorize ISO 22000 Certificate, Good Manufacturing Product (GMP), or Hazard Analysis and Critical Control Points (HACCP).
According to the survey (Global Information Inc 2009), it is said that the Health Food Market is growing around the world. And according to another survey (Hong Kong Organic Resource Centre 2004), it showed that higher educated and higher income people trend to buy organic and natural foods. These findings showed that people value much on Environmental friendliness of production, nutritional value, safety and reliability, etc. Our Mochi all fulfill the requirement of our potential customers that can survive well in this healthy food market.
In order to capitalize this trend, our strategy is focus on health food stores and health clubs, since these groups of people who always shop in these stores and clubs are more pinpointed. Thus we will try to hold some seminars in these places and increase posters and stick on these places, so as to let more people to know our Mochi, as our Mochi are very suitable for them.
According to IIar (1998), he argued that the market size is more difficult to estimate for new companies. Thus, we have to derive the figures from Customer analysis, competitor analysis, risk analysis, product research, advertising the research, as well as marketing mix modeling. From the Customer analysis, we predict around 1/4 obese people will try to our products.
In order to enhance our market, we will deliver the offering to the buyers, as $20 coupon of ‘Taiwanese Pearl milk tea shops' for 2 boxes of Mochi, we think it is very attractive to buyers.
As we are the market pioneer to make Mochi with Chinese medica, so our Mochi stand out in the crowd easily, when Taiwanese Pearl milk tea lovers will try to buy our Mochi, so that we have an opportunity to utilize co-op advertisement by every dollar we spend.
Part 7 Conclusion:
To conclude, we would like to start our promotion plan before the year of 2010, because of the reasons, such as, first, catching up the fitness fever after East Asian Games. Second, The East Asian Game can show our health corporate image in the free ride. Third, there is no similar function product in the market. Fourth, HK economy is recovering, people are willing to purchase our Mochi, and so we must take the market share soon.
Appendix 1: Some of the advantages of each type of Mochi are listed below:
Food: Chinese materia medica: Advantages:
Tofu: contains soy isoflavones, which possess activity against cancer, including certain types of breast and prostate cancer.
Chinese red date: contains calcium, vitamins, solubility fructose, microelement and amino acid.
Sesame: Rich in iron, magnesium, manganese, copper, calcium, vitamin B1 , vitamine E.
Sesamin, which are phytoestrogens with antioxidant and anti-cancer properties.
Semen Coicis: Promotes diuresis and invigorate the spleen, can lower the level of blood pressure and blood sugar.
Loquat: Low in Saturated Fat and Sodium.
High in Vitamin A, Dietary Fiber, Vitamin B6, Potassium and Manganese.
Bulbus Fritillariae Cirrhosae: Attributive to heart and lung channels.
Nourish the lung, eliminate phlegm and relieve cough.
Mint: Attributive to liver and lung channels.
Expels wind and heat from head and eye, ease the throat.
Aloe Vera: Relieve digestive issues: e.g. heartburn and irritable bowel syndrome.
Improve blood glucose levels in diabetics, and with lower blood lipids in hyperlipidaemic patients, but also with acute hepatitis (liver disease).
Appendix 2: Comparison of our Mochi with Competitors by Matrix:
Our Mochi: Kowloon Dairy Ltd: Japan-style snack bars:
Flavours: 4 4 >5
Low sugar, salt, fat, calorie: yes No No
Therapeutic effects: yes No No
Reasonable price: Yes ($17.5/each) Yes ($2.5/each) No ($30/ each)
Distribution channel: Supermarket, 7-11, OK, our shop, Taiwanese-style milk tea shops. Supermarket, 7-11, OK. In the Japan-style snack bars.
Type of customer: Diabetics, High level of cholesterol sufferers, Elders, Over-weighted people, Office ladies (OL), Youngsters, Kids. Family groups High income group
Quality of product: High. low high
Product features: Healthy, traditional Chinese style. Easy to carry. Special Japanese style.
Other important characteristics: 40 calorie for each Mochi, high nutrition value, with Pharmacological Action, relieve digestive issues. Contain sweet falvours for kid, Cold mouth-feel. Beautiful, tailor-made flavours for customers' order.
Suppliers: Manufacturing factory in China. Kowloon Dairy Ltd manufacturing factory in N.T. Raw material from Japan.
regulatory environment: In HK and China. In Hong Kong only. In Japan and Hong Kong.
company's place within the food industry: In Tai Kok Tsui.
Plan to Mong Kok and Wan Chai. In N.T. In Wan Chai, Tsim Sha Tsui, Central, etc.
SWOT Analysis: S: no similar herbal Mochi therapeutic effects in market.
W: New Brand name, no stable customer base.
O: Product good to health.
T: Most target customers have their own eating pattern on certain food, so it is hard to change their behaviour. S: Brand name.
W: not too much choice.
O: enlarge market through price-cutting.
T: increasing competitors. S: Japanese-style food.
W: cannot mass production.
O: more choice Mochi to attract customers.
T: increasing competitors.
Porter's 5 Forces Analysis: ---current & future competitors: may increase from 2 to more.
---our company: market pioneer now, but not brand name.
--- substitutes for our products: Japanse Herb Mochi.
--- our industry suppliers: in China, the supply may not too stable.
--- customers: behaviours are unsure.
1) British Food Journal, Marvin J. Rudolph, 1995, volume 97, issue 3, P.3-11)
2) Journal of the Hong Kong college of Cardiology, Gary TC Ko, 2006, vol.14 (no.1suppl) .
3) Journal of Bio-behavioural Medicine, Relationship between stress and body Mass index, Anne Kouvonen, Mika Kivimäki, Sara J. Cox, Tom Cox, and Jussi Vahtera, 2005.