Nature Brothers Essay Example

family and colleagues. Eventually, these individuals provided financial support for his company. To raise $65,000 for leasing manufacturing equipment and building space, Morris sold stocks to his mother and two other regional vice presidents who each received a 15 percent ownership stake in Nature Brow Ltd. The process of introducing the product into retail markets began in August 2002 with grocery store sales launching in March 2003. Morris personally approached supermarket managers from various chains and independent stores persuading them to allow tasting demonstration booths set up as part of their straightforward marketing plan: getting the product into consumers' hands.The demonstrations were well-received, much like the successful trial of the initial Thanksgiving dinner almost ten years earlier. As a result, Dale Morris's product gained popularity and he quickly secured contracts with food brokerage firms to distribute his product in a 10-state region.

Currently, additional capital is needed to support the existing markets and expand both the markets and product offerings, as shown in the balance sheet (see Exhibit 1). There are two new products being developed: a salt-free version of the original product and an MS-based flavor enhancer that will compete with Accent. To plan for future growth and capital requirements, Morris collaborated with a business consultant to create a comprehensive business plan.

The first section of the plan outlines the objectives and sales projections for 2004 and 2005 (refer to Exhibits 2 and 3). The resulting pro format income statements for this period can be found in Exhibits 4 and 5. In 2004, the company aims to stabilize its existing markets while achieving a 5 percent market share in seasoned salt, a 10 percent market share

in salt substitutes, and a 5 percent market share in MS products. Despite containing less than 10 percent salt, the company has created a salt-free product to compete with others. The dollar volume for the seasoned salt category in the seven markets where the company operates is projected to reach $7,931,889 in 2004.In 2003, the company achieved a significant sales percentage of 5.5% in the Oklahoma market without advertising. However, with a well-funded advertising campaign, the company believes it can achieve even greater success across all seven markets. Their marketing approach will involve print media advertisements, including "food day" ads that contain coupons. This program will be implemented in all seven markets, while floor displays will still be used for demonstrations in stores. The ultimate goal is to have almost complete warehouse penetration in these markets by 2004.

The company's objective for the salt substitute category in 2004 is to capture 10% of the market share. This is considered achievable as there are only a few competitors such as Mrs. Dash, IAMBI Inc.with Cordial Salt Alternative, and ARC with No Salt. The company's product has numerous advantages and surpasses competitors in every aspect. It also boasts a retail price advantage of 10 to 20 cents per can and offers more versatility compared to other products.

To promote their product's versatility, taste, and health benefits, the marketing and advertising strategy will emphasize these features. Consumer surveys conducted during demonstrations have clearly indicated a preference for Nature Brow over competing products.

Furthermore, the company has introduced a new product called "Enhance." This dry mixed food product requires no cooking process and offers high profits due to its low overhead costsUnder

the MS category, this product has a dollar volume of $1 in these markets. Its main competitor, Accent by Pet Inc., has had limited advertising and little initial recognition. The new product will have a retail price advantage of 10-20 cents per can to capture a 5 percent market share. The company plans to solidify its current market positions in 2004.

In 2005, the company aims to enter eight new markets: Los Angeles, Phoenix, Portland, Sacramento, Salt Lake City, San Francisco, Seattle, and Spokane. These markets account for 17 percent of grocery store sales according to the Progressive Grocer's Marketing Guidebook. In terms of seasoned salt sales, these markets generate an annual dollar volume of $15,218,886. Salt substitutes are sold at a volume of $10,064,028 while the MS category accounts for $3,285,528.

With proper advertising efforts in our current markets and considering the health consciousness on the West Coast as a conservative projection for the seasoned salt category penetration is set at 5 percent .The company plans to target a 10 percent penetration in the salt-free category through aggressive marketing strategies ,price advantage at retail,and improved packaging.The estimated share based on the current dollar volume of $10 ,064 ,028 in this category would be $1.Achieving a 5 percent share in the MS category is also expectedThe company's main competitor in this category lacks investment in advertising. However, the company aims to achieve a 5 percent market penetration by utilizing attractive packaging, aggressive marketing, high quality products, and a retail price advantage of 30 to 40 cents per unit. This will result in sales of $164,276 specifically in the West Coast markets. In total, the projected sales for

all three products in these eight new markets are approximately $1,931,639.

To solidify previously established markets,the company plans to use coupons, coop advertising, quality promotions,and word-of-mouth advertising. It is expected that market share in these original markets will increase by another 2.5 percent in 2005.The dollar volume for the seasoned salt category is anticipated to be around $9,522,472 in 2005 with our market share at 7 percent.Sales at a rate of 5 percent would amount to $714,185 while the dollar volume for the salt substitute category would be $6 ,220 ,748,giving sales at a rate of12 .5percent,$775 ,593.In addition,a7 .5percentmarketshareofthe$2 ,055 ,864volume would give sales of $154 ,189intheMScategory.

In existing markets,the company's total sales for 2005 are predicted to exceed$1 ,643 ,967.Nature Brow Old Fashioned Seasoning contributes $1 ,475 ,128andNatureBrowSaltFreevolumeamountsto$1.ThesalesofEnhance MSproductshouldbe$318465.Thiswillresultinatotalsalesvolumeof$3 .557 .606forallthreeproductsin2005Morris has indicated that an equity infusion of $100,000 is needed to expand sales, increase markets, and add new products. This money will be used for securing warehouse stocking space, cooperative print advertising, point-of-purchase display allowances, and operating expenses.

In terms of new product development, the company plans to continue its research and development program to introduce marketable products. Four products have already been developed and can be easily produced. The company is committed to building a large and profitable business while attracting quality brokers.

The next new product targets a different market segment but can be brought online for approximately $25,000 by utilizing existing machinery, container types, and display pieces. A highly respected broker predicts that this product will be hugely successful. This broker previously represented Pet Inc., the main producer of a similar product which made sales of $4.36 million in 1985.

The company aims to

achieve a 5 percent market share in its first year by offering a product of equal quality with a 17 percent lower price compared to competitors.

Another product that requires different equipment will initially be produced by a private-label manufacturer. The company's plant in Rose, Oklahoma is housed in a new metal building with lease payments limited to $300 per month for seven years.The new filling equipment will be fully paid off within a two-month period, whereas the seaming equipment is leased at a rate of $1 per year from the container manufacturer. Additionally, by investing $15,000 in an automatic conveyor system and larger product mixer, the company can produce approximately 300,000 units per month. This level of production would necessitate hiring two additional plant personnel for one shift without any overtime. If needed, the company could double its production by adding another shift. One advantage of this business is that it requires low overhead costs to reduce products. With an annual expenditure of only $37,000 on production payroll, the company can generate enough product to achieve sales totaling around $4 million per year. In order to meet their production goals, the company plans to acquire another filling machine in 2005. This machine has a capacity to fill two cans simultaneously at a speed of 75 cans per minute, increasing overall capacity to 720,000 units per month. Additionally, they will need to purchase a higher-speed seaming machine. The estimated cost for the filling machine is about $22,000 while a used seaming machine would cost $25,000 and a new one would cost $50,000. With these two machines added to their operations on one shift basis,the company's total

capacity will reach 1,0200 ,00 units per month.In 2006,the company must make a decision whether continue leasing or buying the property where it currently operates and expand its facilities.The property provides ample land for expansion over the next five yearsIn addition, the company possesses the capability to manufacture various products using the existing equipment and can swiftly adjust their production line according to customers' changing preferences.