Running Head: Foster’s Tea WCPJB 2

Foster’s Tea

Cody Warren, Jaila Cappelli

Jeremy Philips, Matthew Juve

Seth Barribeau

North Central University

BUS355.01 – Social Entrepreneurship

And Economic Development

Professor Brian Stewart

December 5, 2016

FOSTER’S TEA 3

TABLE OF CONTENTS

Executive Summary...................................................................................................4

Industry Analysis.......................................................................................................5

Company Description................................................................................................14

Company History.......................................................................................................15

Marketing Plan...........................................................................................................17

Sales Process & Sales Tactics....................................................................................20

Sales Funnel...............................................................................................................22

Market Share..............................................................................................................27

Competitive Analysis.................................................................................................29

Product Design and Development Plan.....................................................................41

Operations Plan..........................................................................................................43

Management Team and Company Structure..............................................................44

Overall Schedule........................................................................................................46

Foster’s Tea Financial Plan........................................................................................48

Appendix....................................................................................................................54

References..................................................................................................................56

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Executive Summary

Foster’s Tea is a custom, loose-leaf tea company focused on ameliorating the futures of

its employees.  Foster’s Tea’s desire is to equip our employees with the necessary skills to enter

next level careers.  Each order personally impacts our employees and drives the success of our

company.  Foster’s Tea desires to be the bridge for emancipated foster youth from low-skill

applicants to qualified achievers of higher careers.       

Foster’s Tea will successfully support the young adults through an online tea business.

The website enables customers to create their own loose-tea blend.  The customization aspect

allows customers to select flavors based on personal preference and to experiment with

combinations unavailable in prepackaged teas.  Each customer chooses between five base teas

and adds two flavors to their loose-leaf combinations.  These options create a variety of flavor

combinations and tea assortments for our customers.

The customization of the product, focus on a social injustice, and online platform drives

Foster’s Tea to focus on the millennial generation.  Although millennials are the smallest

consumers of loose-leaf tea, they are the largest supporters of socially responsible businesses

(MarketingCharts, 2015).  Approximately 72% of millennial consumers pay more for products

sold by socially responsible companies.  By enticing consumers through video advertisement,

Foster’s Tea powerfully convey passion to empower fostered youth for a successful future.

Foster’s Tea expects to gain 50 customers from this target group in the first year.

The first month of business, Foster’s tea will purchase 80lbs of bulk tea and flavoring,

400 8oz mason jars, Foster’s Tea stickers, 360 boxes, and office supplies as $2,836. The cost of

each good is $7.09 and will be sold for $17.99. This undercuts competitor prices per ounce.

Foster’s Tea expects to sell 400 units each month, providing overall profit margins at 60.5%.

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Industry Analysis

Industry analysis looks at the macro tea industry and analyzes the growth, nature of

participants, key success factors, industry structure, and industry trends.  The industry analysis

gives depth into how the businesses and consumer in the industry behave.  Industry analysis is

imperative for Foster’s Tea to enter the tea industry properly and accurately.

Growth Rate and Sales Projections

Per statistics from the International Tea Committee, The United States is the third largest

importer of tea in the world, just below Russia and Pakistan. The U.S is only short of second

place by approximately 9,000 tons (19,841,000 pounds), which is a small amount when

observing the 5.2 million tons of globally traded tea in 2015. The U.S remains the only western

country to grow in both tea imports and consumption (TeaUSA, 2015).  The more premium teas

expect to advance 5 – 7% while the more generic, low priced teas hold steady with little or no

growth.

Specialty tea industry has seen 8 – 10% growth rate each year since 2013.  Consumers,

particularly Millennials, are being drawn to an increasing number of tea products because they

enjoy discovering new and unique flavors, cultural offerings, and craft selections.  They also are

choosing healthier drink options compared to other sugary drinks (IBIS World, 2016).  The tea

market represents almost $11 billion of the consumer dollars spent in the $729.37 billion

(Technomic Inc., 2015) foodservice industry. The total wholesale value of tea sold in the U.S

grew from less than $2 billion in 1990 to almost $11 billion in 2015.  Per the Beverage

Marketing Corporation, the tea industry expects total retail sales to have a Continual Annual

Growth Rate of some 5 – 6% over the next 5 years.

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Nature of Participants

As tea grows in popularity, more beverage companies create their own specialty teas and

promote the latest, healthy drink trend.  Companies, such as Starbucks and Coca-Cola, are

shifting their focus to Ready-to-Drink teas along with specialty teas (TeaUSA, 2015).  They seek

to stand out in the industry by creating new flavors and seasonal promotions.  However, these

large businesses are missing the customization the market seeks now.  These larger businesses do

not create the same purchasing experience as the customizable, online businesses.  There are few

online companies which support the same customization process as Foster’s Tea, but each site

creates a different encounter.  All sites focus on educating consumers on the health benefits and

how to process loose leaf tea.  They understand the importance of connecting to the customer

through education and freedom of expression.  In addition, many of these business owners run

their online store similarly to Foster’s Tea: out of a small warehouse and with few to no

employees.  This creates a low startup cost and simple business model.  On the websites, each

company markets the unique opportunity to create a drink that represents the personality of the

consumer.  With Millennials being the target for many online businesses, this marketing strategy

is effective.  The small online tea companies are rising in popularity because they provide the

simple, specialized experience the Millennial generation desires.  

Key Success Factors

The growth in the tea industry drives the success of tea sales for Foster’s Tea.  The

incredible growth rates insure stability for the business’ long term, lucrative startup.  Industry

analysts forecast growth rates to stay at a consistent rate of 8-10% for specialty tea products.

These growth rates relate to the move towards a healthier lifestyle.  Customers are searching for

a sweet, hot drink experience with less sugar and health benefits (IBIS World, 2016). With tea

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and socially responsible businesses being a rising trend, Foster’s Tea expects to experience

continual growth.  Millennials are more conscious of business missions and tend to support those

that display social responsibility (Freund, 2016).  Since Foster’s Tea provides better futures for

foster graduates, Foster’s Tea expects that Millennials will show their support through their

purchases.  Keeping in touch with the community through relevant, injustice solving, and

delicious products will provide a successful future for Foster’s Tea.

The other primary success factor supporting Foster's tea’s startup is the competitive price.

Foster’s Tea will be selling each individual unit of tea for $29.99.  Foster’s Tea has chosen to sell

tea at this price for a 46% profit margin because it is well within (if not below) the price of many

primary tea competitors.  The cost provided is for a base black tea with no customization:

Design-a-tea: $4.95/ounce (Designatea, 2016), Tea Source: $2.19/ounce (Tea Source, 2016),

Teavana: $4.99/ounce (Teavana, 2016).  Foster’s Tea sells its tea at $3.75/ounce and provides a

very high level of customization for our customers.  Foster’s Tea will see great success in the

competitive tea market due to its superior price and high level of customization that is allowed

by our consumers.  This combined with our Millennial market sets a solid foundation for Foster’s

Tea to launch into the market.

Industry Structure

Since tea is available in all different varieties, there are many competitive businesses in

the market.  The rising trend for tea drinking drives the success of these companies through the

extensive consumer market.  Major tea companies include Lipton, Bigelow, and Teavana.  These

companies are easily recognizable to the public and hold a strong section of the market share

(IBIS World, 2016).  Tea is divided into different types of drink options.  It is either served hot

or cold with either sugar or leaf flavorings.  Ready-to-Drink Teas are the most popular and

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generate over half of the tea sales.  Specialty teas hold second place in market share and are a

rising trend with Millennials (TeaUSA, 2015).  Specialty tea is created by steeping loose leaves

through a tea strainer.  The water absorbs the herb, flower, or fruit flavors to create a delicious,

warm drink.  The last tea product is tea bags, which are herbs, leaves, and other natural

flavorings already prepackaged to sit in a mug to flavor the water.  These are becoming less

popular because their flavors are not as strong and tend to be repetitive.  Their growth rates

remain stable without flavor innovation.  These products create a vast diversity among tea

businesses because of the endless flavor combinations, drink types, and large consumer market.  

Industry Trends

The United States operated the third largest tea industry in 2015 (Stone, 2014).  While

80% of household in the United States purchase tea, the total wholesale value in the United

States was $11.6 billion dollars in 2015 alone with a market growth rate of 4% to 5% (TeaUSA,

2015). Between 2010 and 2016, the tea industry expanded 16% (TeaUSA, 2015).  Not only does

tea sustain a growth rate, but the popularity of tea in food services experienced a huge growth in

tea of 16% as well (TeaUSA).  Besides water, tea is the second most consumed beverage in both

the United States and the rest of world (Stone, 2014).  These growth rates show an increase of

consumer demand for customizable, loose leaf teas.  

Fragmented or Unfragmented

The Loose-Leaf tea industry is not nearly as saturated as packaged tea.  Loose Leaf tea

makes up 1% of tea purchased (TeaUSA, 2016).  However, the tea industry is saturated.  There

are many companies, both storefronts and ecommerce, selling loose leaf tea.  Blend Tea, Adagio

Tea, and Blend Bee are only a few of the many companies who retain an online presence, but

lack a substantial amount of traffic.  The traffic generated by these websites comparatively to the

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amount of tea stores and ecommerce sites available prohibits easy entry into the tea market

(Keywordspy, 2016).  The tea market is not fragmented and difficult to enter.  Larger tea

companies, such as Teavana, Lipton, and others, have already captured a market presence of

bagged tea, ready-to-drink tea, and loose leaf.  However, entry into the online market is

accessible because there is less fragmentation.

Long-Term Prospects - 5 Year Plan

During its first two years of business, Foster’s Tea will focus solely on scaling and

growing our presence in the tea industry to be able to employ as many emancipated foster youths

as possible. The entire heart of the organization rests on being able to employ these young adults,

which becomes ineffective if there is little company growth during our first two years of

operation.

Foster’s Tea intends to provide sufficient housing for its employees who graduate from

the Foster Care Program once there is sufficient work for eight employees. Foster’s Tea would

house them in a community house divided into two separate rooms (one for guys and one for

girls) with six sets of bunk beds in them. Each room will also contain a bathroom, group shower

area, and a small hangout space.  These living quarters will keep twelve members at maximum

capacity (24 in total counting both the girl’s and guy’s rooms), allowing room for significant

growth before further expansion is needed.  Outside the rooms will be a kitchen area and a large

group room for seminars and training sessions. This group room will be adjacent to our tea

storage room, allowing for effective utilization as a workspace and lounge area after work hours.

When our employees graduate, and move in with us, Foster’s Tea will provide additional work

steadily bringing their workload up to approximately 40 hours a week as Foster’s Tea continues

to grow.

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Once the Foster graduates move in with Foster’s tea, they will be able to exert the largest

dent on the social injustice that foster kids face.  They will then begin to host workshops training

sessions for Google Analytics, Google Adwords, and how to effectively use website

development applications such as SquareSpace.  Foster’s Tea also plans to organize community

building activities to cultivate a stable, friendly culture for our business.  This community home

will act as a temporary workplace/home for the foster program graduates as they receive skills

empowering them for a successful life. Our goal in five years is to have built relationships with

respected and effective companies looking to hire our employees once they are ready step out

from the Foster’s Tea program.

Entrance Points

Entrance points into markets are defined as specific areas, marketing strategies, or even

people groups.  For Foster’s Tea, millennials are one entrance point into the tea industry.

Foster’s Tea looks at social injustice as an opportunity to enter the Tea industry.  Since 87% of

millennials drink tea, Foster’s Tea enters the tea industry by focusing on providing a segue

opportunity for foster children into better lives (TeaUSA, 2016).  Foster’s Tea’s entrance point is

through millennials because they care most about solving injustices in our world.  E-commerce

allows successful entry to the market through lower prices and better profit margins due to low

overhead costs.  The combination of millennials and low overhead allow for a feasible entry

point into the loose-leaf tea industry.

Porter’s Five Forces

Porter’s Five Forces looks at the industry analysis and sums up the analysis into five

categories.  These categories are New Market Entrants, Supplier Power, Competitive Rivalry,

Product and Technology Development, and Buyer Power.  Each of these points are to be

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considered before starting a business and looked at through a lens of entrance opportunity

depending on how the external and internal forces affect the business.  If one of Porter’s Five

Forces are strongly suggesting issues within the potential viability of the business, the business

should reconsider strategies on high levels.

New Market Entrants

Entry barriers are low into e-commerce industries.  Low overhead and economies of scale

allows for most people to start a similar business with anywhere from $10,000-$20,000.

Geographical factors include all of America but will be constrained to the twin cities area first.

The twin cities have no large leading competitors within the same industry.  There are

competitors, but not large competitors meaning there are possibilities for competitors to enter.

Because of the e-commerce nature of Foster’s Tea, all of America must be considered therefore

bringing all large tea companies into consideration.  Gaining large market shares are less likely

because of the large company’s presence.  There are small threats from incumbents due to

control over import tax regulations.  If taxes are lowered, barriers to entry financially are lowered

significantly.  If new competitors arose, they will most likely use e-commerce as an entry

strategy also focusing on social media marketing as well as social justice.  There are many routes

to entry into the market but e-commerce routes may be the most simplistic entry route creating

an easy entry point into the already fragmented loose leaf tea industry.

Supplier Power

There are no significant brand reputations for loose leaf tea.  There are larger brand

names, but they have no focus on loose leaf tea.  Brands having more reputation as a loose-leaf

tea would be Teavana, The Mighty Leaf, and The Tea Spot.  These brand names are larger than

most brands reputations, but not large enough to control the market.  The geographical coverage

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of these brands is nationwide as well as most loose-leaf brands.  Most brands are nationwide

because of e-commerce.  The quality of the suppliers for Foster’s Tea and for other leading tea

companies are equivalent.  There are no major advantages to buying one over another due to

quality concerns tea.  Concerning packaging, other companies offer better packaging

experiences, but Foster’s Tea will be improving their standards over time when larger market

shares are attained.  Relationships with customers vary between companies.  Larger tea

companies such as Teavana will have more solidified relationships with their consumers due to

storefronts and customer service capabilities.  Relational selling is a large part of Teavana’s

strategy through sales associates working the storefronts (Glassdoor, 2016).  With any

ecommerce business, relationships with customers is generally built through social media

marketing.  There are no significant loose leaf tea brands who have created an extremely strong

relationship through social media marketing.

Competitive Rivalry

The loose-tea industry contains many competitors because of the low-cost startup and

ease of entry into the market.  The industry grows 8-10% each year as customers consume this

style of tea for its health benefits.  Online customization businesses are newer to the industry, but

are slowly increasing in popularity.  There are over a hundred loose-leaf tea brands available

online, many promoted through small businesses.  There are currently no large, chain brands

promoting customizable teas.  The small-scale of these businesses creates a unique culture for

this sector of the tea industry.  The startup costs typically involve the wholesale purchase of the

tea and the packaging (Cain, 2009).  These fixed costs are standard for all loose-leaf providers.

However, some bigger or specialized companies may also handle costs for employment and

infrastructure.  These costs vary among businesses based on the size and complication of their

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business.  To differentiate themselves from competitors, companies provide different varieties of

flavors, monthly subscriptions, and fundraising opportunities.  The process and product is similar

among the online, loose-tea companies, however selling products offline provides an advantage

for some companies.  Few businesses allow customers to sell their online product to fundraise for

the customer’s project.  This raises awareness for the company, builds strong customer

relationships, and is a unique fundraising tool.  Although the businesses contain similar content,

the unique marketing skills project specific small businesses above the rest.  

Product and Technology Development

Alternative prices for teas considering quality are limited.  Tea quality is hard to

determine because of the methods of steeping done by the consumer.  Higher tea quality can

mean better blends and better effects from the tea, but tea consistency between suppliers is

relatively equal.  Box and packaging qualities vary greatly.  Foster’s Tea may consider upgrading

boxes and packaging to higher quality materials to better suit Foster’s Tea’s market.  However,

box quality and price range vary greatly depending on many variables such as durability,

material, structure, and so forth.  Packaging systems may change slightly far into the future of

Foster’s Tea, but the current packaging method is part of Foster’s Tea key success factors and

social justice fulfillment goals.  Market distribution may change depending on if there is an

unintended market captured.

Buyer Power

The purchasers of Foster’s Tea hold a significant amount of power to the success of our

company.  Their purchases and support allow us to continue providing for our fostered

employees.  Although loose-tea is rising in popularity, only 1% of Americans consume loose-

leaf tea (TeaUSA, 2015).  This creates a smaller market for all loose-leaf companies to pursue

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and provides for more niche marketing techniques.  Buyers choose the company based on online

reviews, accessibility, and social responsibility.  Our specific market, millennials, desire to make

an impact with their purchases.  They are consistently willing to pay more to businesses who

help social justices.  However, if a business’ operations are complicated or clunky, millennials

quickly lose interest and seek out other ventures.  Foster’s Tea must create a streamline process

to draw these buyers to our socially responsible company.  Luckily, the flux in tea prices is rare.

Suppliers’ prices remain steady and have not seen any change in these prices in years.  This

stability is attractive to buyers and allows them to predict their spending each time they purchase

loose-leaf products.  The consistency and convenience of the online tea market provides buyers

the opportunity to markedly influence this industry.

Company Description

Foster’s Tea utilizes e-commerce to sell tea and support graduated foster teens unable to

find jobs.  Foster's Tea will operate online with the foster graduates creating the tea in a local

warehouse. Customers visiting the website will purchase and customize their tea based on

predetermined foundations and flavors.  After a customer orders, the young adults will create the

tea selection and fulfill the order. Foster’s Tea is a nonprofit owned by Jaila Cappelli.  Foster’s

Tea will operate within the Twin Cities area and target millennials because they are most

supportive of social justices.  

Foster’s Tea is not a destination for foster children, but rather a first stop to help foster

graduates excel faster in society.  Foster’s Tea intends to provide housing, eventually, to place

foster graduates into a safe environment.  Foster’s Tea hopes to prepare foster graduates with the

certifications and requirements that had better prepare them to enter society with a larger

competency of usable skills for future jobs.  Foster’s Tea will require foster graduates to become

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certified in Google Adwords and Google Analytics.  Forster’s Tea will also be teaching foster

graduates how to utilize SquareSpace to design and create websites.  As the foster graduate’s

work on certifications, Foster’s Tea will be using a hands-on approach to train employees in

basic managerial functions.  Lastly, Foster’s Tea will teach foster graduates how to utilize and

maintain Google Calendar and LinkedIn Profiles.

Mission Statement:  Providing quality tea by employing, equipping, and empowering

foster kids to lead successful future.

Vision Statement:  Connect foster kids and families looking to adopt, help foster kids

learn an independent living style, and create exceptional tea.

Company History

Foster’s Tea derives from our desire to provide better futures for foster youth who

emancipate from the program.  Since the foster care system tends to create an inconsistent

upbringing, many youth leave the program with PTSD and other emotional dependencies.  These

social struggles lead to less than 3% of foster youth earning a college degree.  More importantly,

1 in 5 of the aged-out foster adults are homeless after leaving the program.  These factors affect

their ability to find a sustaining career.  Only half of these youth find employment before the age

of 24 (Statistics on Foster Care, 2014).  Foster’s Tea stands in the gap to create an environment

where these young adults gain workplace and supervising experience to provide a resume

capable of leading them to a successful future.  Foster’s Tea provides this experience through an

online tea company.  Foster’s Tea is a customized experienced that provides quality drinks with

the convenience of online shopping.  Foster’s Tea’s simple and unique business will provide the

opportunities necessary to pave a better road to success for the emancipated young adults.  

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Product Description

Foster’s Tea will be selling an assortment of teas and flavorings for the consumer to mix

and match to customize their ideal cup of tea.  Our customers will first choose one of our five

base teas: Classic black, green, white, herbal or rooibos.  Once they select a base, the website

will present 10 of the following flavor options: chamomile, cranberry harvest, hibiscus raspberry

and currant, peppermint, pick me up, fruity sangria, honeybush, vanilla, lemon, and cinnamon

spice. After the customer selects and orders the base and the two flavorings, our team of

employees will mix the base with the flavor and package it into an 8oz mason jar.  Once the

product has been customized, mixed, and sealed, Foster’s Tea will securely package it with pre-

purchased cardboard boxes and ship it to our customer using USPS ground shipping.

Legal Entities

Currently, Foster’s Tea is connecting with foster organizations and learning how to best

partner with them and adjust our business to be effective for the young adults.  Foster’s Tea

hopes to partner with AdoptUSkids and Evolve to generate relationships which connect us to the

right youth for our company and new opportunities to support foster families.  

AdoptUSkids is not an adoption or foster agency, but is a bridge between families and

these organizations.  It supports families considering or actively fostering and educates the public

on foster care.  AdoptUSkids seeks to connect children to the right families by creating

relationships with the public and adoption agencies.  Partnering with AdoptUSkids connects

Foster’s Tea to the young adults who benefit most from our employment.  Since AdoptUSkids

actively bridges the gaps between organizations and families, their partnership is necessary for

employment victories.  

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Evolve reaches out to all different family demographics.  From unplanned pregnancies to

international adoption, Evolve’s goal is to support families every step of the way.  Since their

network is broad, it is beneficial to Foster’s Tea to connect with this organization.  Their

connections will provide more relationships between Foster’s Tea and the youth, as well as aid in

succeeding our future goals.

Foster’s Tea settled on a warehouse location and tea wholesaler.  Foster’s Tea is also in

the web design process for selling platform.  As the details of these major business factors come

to completion, Foster’s Tea becomes one step closer to changing lives.

Marketing Plan

Foster’s Tea utilizes many formats of marketing due to the nature of the expected

customer.  Foster’s Tea’s target market seems to be millennial due to their 87% consumption rate

of tea (McCarthy, 2015).  Due to millennials as the target market, Foster’s Tea will utilize

website optimization marketing and heavy social media marketing. Website optimization will

drive more traffic to Foster’s Tea’s website through keyword specification, page coherence, and

google search rankings.  Foster’s Tea’s main marketing approach will be through videos that tell

stories of foster youth. Foster’s Tea will employ marketing teams to work on specific stories of

each foster graduate.  This marketing approach also drives traffic to Foster’s Tea’s website

where Google Analytics will be utilized to slowly improve click through rates and sale rates.

Google Analytics also captures defined demographics and statistics about the users meeting

Foster’s Tea’s advertisements and website. This information is used to learn and tweak our

marketing plan in the future.  Website optimization along with story driven content and social

media marketing creates a strong foundation for Foster’s Tea to catch the eye of millennials.

Product

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The product of Foster’s Tea is a specialized tea customizable by the customer through

layers of flavors in a structured online ordering process.  Foster’s Tea’s product is a custom

designed tea with the opportunity to support foster youth leaving the foster care system, by

providing them jobs which educate them on good business practices.  Foster’s Tea believes

customizing the product relates to the customer because millennials prefer customization in

buying their products (The GBrief, 2016). Customization is one of the major buying behaviors

and drivers of decision making for millennials (The GBrief, 2016).  Foster’s Tea’s tea will also

involve the customer with the ability to understand foster teens’ struggle and worth through

marketing on our product.  In each box of Foster’s Tea will contain a story of the teens leaving

the foster care system with dreams towards education and an occupation.  Foster’s Tea’s

marketing will tell a story about the issue to the public about foster youth leaving the foster care

system and the hardships connected to this life.

Price

Foster’s tea will be buying 40lbs total of bulk tea and flavoring for its first month of

business. The complete cost of the 80lbs of tea will be $1,000. The 200 mason jars at $0.94 a jar

will bring our cost up to $1,188. Adding the $30 monthly cost for boxes brings us to $1,218

(Cheap A** Shipping Supplies, 2016). With the estimated shipping cost for each package being

$10, that brings our cost up $2,000 to $3,218. When Foster’s Tea packs the tea into the 200

mason jars, the variable cost per unit is $16.09. When we add the fixed cost per unit of $10.42,

the total cost per unit is $26.51. Foster’s Tea will be selling each 8oz mason jar that contains 56,

12oz servings for $29.99. This sets our overall profit margin at 11.6%.

Promotions

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Foster’s Tea will promote mainly through social media marketing as well as non-

traditional marketing tactics that engage the audiences in the story and align their passion with

Foster’s Tea’s products and passions.  Non-traditional marketing includes interaction with the

public through “planned encounters” and setting up areas to display the lives of fostered youth.

This promotes the issue about foster care systems while highlighting the passion for the product.

Marketing through story based material is Foster’s Tea’s focus.  Instagram, Facebook, and

Foster’s Tea’s website will be utilized to create multi-level campaigns.  Many promotions will be

in depth stories of the kids supported by Foster’s Tea as well as foster homes and foster kids.

Distribution

Fosters Tea will be purchasing its tea in bulk from tea guys.  Foster’s Tea will buy our

base teas for $25 a pound, and will start with ten pounds of each for the base teas.  Foster’s Tea

will also purchase 3lbs of each of the 10 flavors for $25 a pound.  Foster’s Tea’s teas will be

packaged in mason jars that hold 4oz of tea, and each jar will make about 56, 12oz cups of tea.

The mason jars will cost $0.94 a jar, and Foster’s Tea will purchase 400 jars for $376.  Foster’s

Tea will also procure the first six months for boxes for $360 (2400 boxes in total).  Foster’s Tea

will utilize UPS to deliver each package and purchasing boxes through Cheap A** Shipping

Supplies.  This company allows for shipment everywhere in the US.  After a customer places an

order online, Foster’s Tea prints the order out, measures each tea specifically to the guidelines

placed, packs the tea, and ships through USPS to the customer.  All stock of tea will be held at

Foster’s Tea’s warehouse/office before distribution.

Facebook Marketing

Foster's Tea will be setting aside two hundred and fifty dollars a month within the

marketing budget to advertise on Facebook daily. Setting aside two hundred and fifty dollars a

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month will help us reach forty-eight people a day that fit our target market (Marsan, 2016). This

will reach an outstanding number of 17,520 people a year. Through this type of advertising,

Foster's Tea will be expecting ten percent of the people reached will buy our product, which is

about 527 people a year who buy our product.

Sales Process & Sales Tactics

        Foster’s Tea will utilize the five-step sales cycle shown below to capture an audience and

continue relationships.  The sales cycle below allows for long-term customers to form enticing

new relationships, and maintain a healthy order to market cost and revenue ratio.  The five steps

of marketing are establishing the relationship, recognizing the need, forming a solution, deliver

& close the sale, and following up & retention.

Establish the Relationship

        Establishing the Relationship can be difficult especially when

considering online marketing.  Foster’s Tea will utilize story

based marketing material to show customers the value of

Foster’s Tea’s workers and the value of supporting foster

teens.  The injustice that kids in the Foster Care system face is

the compelling force behind why Foster’s Tea is launching, and

that same compelling force will solidify and further unify a

relationship with its target market.  Foster’s Tea will begin to forge this relationship by engaging

customers with stories about the background of the young adults they support.  This will directly

reflect the worth of the individual our customer supports with their purchases and further helps in

Diagram 1

FOSTER’S TEA 21

growing Foster’s Tea’s sales, which in turn will increase our ability to change the Foster Care

system.

Recognize the Need

        Recognizing the Need is dually supported through marketing story based content.

Explaining the story behind Foster’s Tea’s workers, mission, and vision allow customers to

understand the importance behind our mission.  Foster’s Tea believes power resides in truthful

stories and the effectiveness through social media of story based content (Writtent, 2016).

Foster’s Tea chose to address the pressing issue of Foster Care abuse through tea revenues

because tea is a very simple, yet common unifier.  The world in which we live is filled with

division, conflict, and differing opinions, yet tea is a simple, common good that the clear

majority of people like.  Foster’s Tea uses tea as a “rally point,” defined by Foster’s Tea as a

common unifier to bring people together around a common good to actively fight against the

injustice seen in the Foster Care system.  The problem Foster’s Tea sees in the Foster Care

system is to be unified around a common goal, to fight against the common evil. Tea is a simple

good that Foster’s Tea’s target market can unify around.  Put simply, tea is the “good” that

Foster’s Tea is using to meet the need of unity.

Form a Solution

        Google Analytics will be heavily utilized in monetizing every aspect of Foster’s Tea’s

website.  Google Analytics allows Foster’s Tea to create worth in every part of story-based

content by analyzing different aspects of human behavior within Foster’s Tea’s website.  The

stories listed on our website will be on the employed foster teens directly impacted by purchases.

Google Analytics opens the door by showing raw data about what customers are viewing on our

website, which stories they are reading, and what they want to see more of.  Google Analytics

FOSTER’S TEA 22

also allows for campaign style marketing while tracking demographics and metrics for

improvement.  Once issues arise in drop-out rates or other areas, Foster’s Tea will recognize,

analyze, and fix the problem accordingly.

Discover and Close the Sale

        Foster’s Tea will utilize Google Analytics to also close sales.  Since e-commerce is

Foster’s Tea fulfillment plan, Foster’s Tea can utilize Google Analytics to measure click through

rates and adjust the website and keywords accordingly.  Foster’s Tea will also utilize AdWords

to support healthy traffic flow to attain industry, benchmark click through rates.

Follow Up and Retention

        Automated and personalized emails from Foster’s Tea can create retention through

connections and appreciation.  However, hand written “Thank You” cards will be placed in each

tea package to earn loyalty and respect the customer’s decision to order from Foster’s Tea.

Through intentionality, Foster’s Tea expects to gain customer’s loyalty and admiration.

Sales Funnel

The sales funnel is close in definition to a sales process.  Often, sales funnels will be

associated with online businesses and show the exact process through which a customer will buy

a product.  Foster’s Tea will utilize a four-step sales funnel

to define how customers become aware of Foster’s Tea,

how to interest customers, what customers should decide

per drop off rates, and what actions customers are likely to

take.

Awareness

Diagram 2

FOSTER’S TEA 23

Customers gain awareness through Foster’s Tea’s presence on social media, search

engine ranking, and word of mouth.  Foster’s Tea will become aware through targeted story

based content focused on millennials by approaching the social justice issue of foster homes and

the amount of kids struggling to fit into society after graduating programs.  Awareness will be

gained both through bold statements of belief for change through story based content, calls to

action, and campaigns to Foster’s Tea website.  

Interest

Once Foster’s Tea has gained awareness by creating content, Foster’s Tea will gain

interest through the quality of content produced.  Foster’s Tea realizes story driven content

markets best towards millennials and creates an image for Foster’s Tea’s workers.  Millennials

often want deeper relationships with the brands they purchase, understanding the “why” behind

the company and correlating passions (Brenner, 2015).  Once the stories are marketed through

social media correctly, there will be call to actions and links to Foster’s Tea’s e-commerce site

where customers can order their customized tea.  Engagement rates vary on social media, but are

on average the same or lower compared to the click through rate (Lender, 2015).  However,

Foster’s Tea cannot make sales through social media and utilizes social media to both to build

brand image and drive traffic to the website.

Decision

Average click through rates on websites are about 2% (source below).  Foster’s Tea will

utilize this click through rates by combining the story page and ordering page into one.  Foster’s

Tea will not have many pages to navigate but will aim to make a website easy to navigate by

relaying the purpose, passion, and story in one page along with the ordering process directly

afterwards, below the story content.  Engagement rates vary on social media, but are on average

FOSTER’S TEA 24

the same or lower compared to the click through rate (Word Stream, 2016).  However, Foster’s

Tea cannot make sales through social media and utilizes social media to both to build brand

image and drive traffic to the website.

Action

The final part of the sales funnel is action.  Through the sales funnel, Foster’s Tea is

trying to show the value and worth of foster kids, tell their story, and show the need the have.

By the end of the process, Foster’s Tea hopes to show the customer what value they are buying

as well as the help they can provide to Foster’s Tea’s workers.

Market Analysis

Understanding the consumer market enables us to cater our business to the customers and

market our product effectively.  By looking at the market segments, target market, and

competition, Foster’s Tea discovers how to differentiate our product from the others already

represented in the tea industry.  Implementing these unique factors promotes a successful

entrance into the customized, online tea sector.   

Foster’s Tea segments the market by ages willing to pay higher prices to purchase

products from socially responsible companies because it allows us to better understand our target

market and successfully market the products to each group.  Foster’s Tea divides the market into

three age groups (capturing about 20 years each) and relays the percent of each age demographic

who are willing to pay more for purchases from socially impactful businesses. Ages shown in

Chart 1:

Target Market

Ages: 18-34: 72% are willing to pay more

35-54: 66% are willing to pay more>55:  51% are willing to pay more

(MarketingCharts, 2015)

Chart 1

FOSTER’S TEA 25

Foster’s Tea focuses on marketing to millennials in the US (ages 18-34) because this

generation appreciates customization, frequents online businesses, and invest in social

responsibility.  Tea is a rising trend in this generation.  They make up 24% of the coffee, tea, and

Ready-to-Drink tea consumption in the United States.  The company’s website will educate and

allow experimentation on loose teas to continue the growth in tea consumption for this

generation.  Operating Foster’s Tea on an internet site caters to the millennial market because

they buy online products frequently.  Millennials spend approximately $2000 each year via

online stores.  At this rate, half of the purchases made in a six-month period are by millennials.

“Nearly 1 in 3 (32%) millennials use computers to make purchases at least weekly” (fluentco,

2016).  Out of the total amount of online purchases, 49% are through their smartphones weekly

(fluentco, 2016).  Foster’s Tea’s online platform gives an advantage in the tea market for this

group of consumers.

Another drive for Foster’s Tea’s millennial customers are customization.  Foster’s Tea

creates a personal experience where our customers personally choose the ingredients they desire

in their drink.  It allows tea fanatics to exercise complete control and create an authentic product.

Since they prefer personalization, they hold high standards for the businesses they choose.

Millennials choose their business affiliations through customer reviews and “authentic” business

relationships (Siemasko, 2016).  They are not fans of the typical, commercial marketing and

focus on product promotion.  They prefer a story and taking part in the business’ mission.  They

want their actions to seem uninfluenced by advertising, but inspired by personal conviction and

desire.  Foster’s Tea shares the stories of its employees and allows customers to aid their future

successes.  The customers become part of the young adults’ story and journey into independence.

Foster’s Tea’s business method allows customers to create their own experience from the

FOSTER’S TEA 26

creating of the tea to personally packaging their product, while benefitting others.  This

customized, self-serving model is popular with the millennial purchasing trends and will aid

Foster’s Tea’s success.  It also enables customers outside our business to collaborate as Foster’s

Tea encourages the future generations.

Buying Decision Process for Millennials:

1. Need recognition: Millennials seek a healthier, flavorful, warm, and caffeinated drink to

carry around in a cool new thermos or mug (marketrealist, 2016).

2. Information search: Millennials mostly conduct searches through the internet on their

mobile devices.  In fact, they purchase 49% of their products on their smartphones each

week.  Since the internet is where Foster’s Tea’s customers browse most for desired

products, it is crucial for Foster’s Tea to hold a strong position online.  Our website also

needs to be easily navigable and visually appealing.

3. Evaluation of Alternatives:  Foster’s Tea’s target market relies on customer reviews and

personal recommendations over flashy advertisements (fluentco, 2016).  The compare

products through word of mouth reviews and online comments.  They search for products

that will display their personality and give them status.  They desire for every purchase to

flaunt their favorite aspects of themselves and be photogenic enough for social media.

Our customization and personal packaging satisfies these desires.

4. Purchase decision: Once the millennial finds the desired product with the right amount of

customization, repertoire, and an uplifting mission, they make their purchase.  Most

young adults, as previously stated, make online purchases frequently so Foster’s Tea will

be a perfect avenue for their tea purchases.

FOSTER’S TEA 27

5. Post-purchase Behavior:  Foster’s Tea wants our customers to enjoy their product and be

proud of the impact they made on the lives of our employees.  Foster’s Tea will allow

areas for them to learn about our employees and feel connected to our mission.  Their

love for our product and action on a social injustice will inspire them to present our

business in a great light to those around them.

Market Share

Since Foster’s Tea operates online, it can reach most of the United States (excluding

Alaska, Hawaii, and the territories).  To calculate the target market, Foster’s Tea takes the

population of the continental US (319,248,785) and multiplies it by the percent of population

purchasing loose leaf tea: 1% (TeaUSA, 2015).  Foster’s Tea takes the product of this calculation

and multiply it by the percent of millennials in the US: 26% (Fredrick, 2015).  Next, take 72% of

the loose leaf purchasing millennials because they are willing to pay more for socially

responsible products (Marketing Charts, 2015).  Finally, calculate the product of the 32% of

millennials who make online purchases weekly

through their computer.  The final product is

approximately 191,243 customers in the target market.

If each customer consumes a tea drink each day and

purchases an average of 2 units each month, Foster’s

Tea expects to reach 0.00003% of this market within

our first year.  This number means Foster’s Tea

accumulates just under 50 customers from this market

in the first year.  Foster’s Tea’s goal is to sell 400 units, with the average unit per customer

reaching two.  These units last almost 2 months, therefore Foster’s Tea will sell approximately

Chart 2

FOSTER’S TEA 28

200 each month to the regular customer base.  24% of millennials drink specialty drinks, which

allows Foster’s Tea to calculate approximately 50 customers from the target market.  

Search Engine Optimization

Keyword search holds significant importance in growing Foster’s Tea. Foster’s Tea will

start at a goal of 200 units per month and striving to 400 units per month. Capturing a high

click-through rate from marketing and SEO (Search Engine Optimization) will drive sales

upwards with both returning customers and new customers. The first result on Google’s search

pages receives 32.5% of average website traffic. Traffic drops significantly to 17.6% at second

and 11.4% as third (Lee, 2016).

Keywords

Keyword research begins by understanding what our main competitors are using. The

way this was found was through viewing

their page source data and looking at the

meta data specifically. Some website,

like Designatea.com, do not show the

keywords they use because they want to keep their competitive advantage of keywords. A list of

the keywords Foster’s Tea will be utilizing for startup is shown in List 1. These keywords are

picked comparatively to our main competitors and as well as positioning on Google Pages. Each

keyword has a specific page we can be on as well as possibility to raise in page ranking per

traffic. List 2 shows the traffic averages per month of our main competitors and how much

traffic we need to have to overcome their Google

Page Ranking. We expect this to take roughly 2

years (FirstRound, 2016) to accomplish a presence and realize full potential of these key words.

List 1

List 2

FOSTER’S TEA 29

Competitive Analysis

An analysis of Foster’s Tea competitors benefits our business by studying where Foster’s

Tea can improve the market and where Foster’s Tea needs to improve operations to compete.

Information on our competitors allows us a strategic entrance into the tea industry to ensure

customer relationships and sales.  Understanding how our competitors advertise and what

products they promote grants an opportunity for Foster’s Tea to step in where they missed.

Foster’s Tea evaluate the product each company sells, how they promote these products, what

avenue they sell through, and the price of their tea.  Foster’s Tea then compare these factors to

Foster’s Tea to improve competitive positions with competitors.  

Foster’s Tea focuses on two key factors of each aspect of their business.  To compare

products, Foster’s Tea focuses on the number of flavors the customer can add to their customized

drink and the amount of tea available to purchase.  These factors allow Foster’s Tea to observe

what is already available to customers and where Foster’s Tea can fill in the market gaps.  The

comparison for product promotion emphasizes the available information on tea flavors and

health benefits along with any social justice involvement in their communities.  Since social

justice is the heart of Foster’s Tea, Foster’s Tea’s desire to see what competitors is also driven by

this motive.  Most of our competitors operate online, therefore Foster’s Tea evaluates how

efficient the tea creating process is and if there are any products available offline.  Foster’s Tea

desires to make the tea generating process easy to access and follow. Therefore, evaluating the

effectiveness and faults of the competitor’s procedures provides Foster’s Tea with the knowledge

to provide the best method.  Finally, Foster’s Tea must evaluate the price points of the

competitors.  Foster’s Tea calculates the cost per ounce for each tea company and how many

different sizes are available at this price (excluding shipping).  Currently, Foster’s Tea is

FOSTER’S TEA 30

undercutting the competition in price, but is important to observe the package sizes to see if

customer’s desire certain portions.  These business factors allow Foster’s Tea to enter the market

efficiently and effectively to create a successful business that will benefit the emancipated foster

youth.  

In the graphs, a black circle will represent Foster’s Tea.  Each competitor is represented by a

colored circle coordinated with the color of the business title.  This allows for a clear, visual

comparison.  

FOSTER’S TEA 31

Primary Competitors

Company:  Design-A-Tea

Product: Design-A-Tea is most like our

business model.  Their site operates a four-layer tea

creating process.  Their base tea varieties are as

follows: Black, Green, Oolong, and Rooibos. Each

customer then adds up to two flavor options along

with an herb choice. For packaging, tea lovers choose

between loose leaves or an easy fill bag.  Each container holds between 30-60g (1-2oz) of tea

depending on the size ordered and is stored in wooden container.  Along with customized tea,

Design-A-Tea also creates their own signature blends to purchase as well as pots and strainers.

Promotion: Their promotions are not

outside of their website.  They use their product to

promote other organizations or community

projects through fund raising.  Design-A-Tea

offers their product to be sold to raise money.

Their admirers may sell their products at different

events and receive 40% of the revenues.  They

also provide some tea information on the base tea, but do not explain the different flavors, herbs,

or how to create the tea.  

Place: Design-A-Tea operates their

business mostly online; however, tea sales are

available at different fundraising events.

Chart 3

Chart 4

Chart 5

FOSTER’S TEA 32

Their admirers may sell their products at different events and receive 40% of the revenues.  The

major focus of their business, the tea creating process, is click away from the front page.  It is

easy to see, access, and follow.

Price: The cost of a small designed tea

is $4.95 and a large designed tea is $8.75.

This brings their cost per ounce to

approximately $4.95/oz.  Their shipping is a

$5 flat rate.  Their signature blends are the

same price as the customized containers.

These prices are higher than Foster’s Tea and

provide a much smaller amount of tea

(Designatea, 2016).

Company:  Blend Bee

Product: Blend Bee is a strong

competitor because of their similarities.  They

operate a three-step tea creating process, which

contains 16 base options, 8 allowed flavor

Chart 5

Chart 6

Chart 7

FOSTER’S TEA 33

additives, and an option to name and describe tea.  They allow the most flavor additives out of

our competitors.    Customers choose an amount of 1oz, 4.2oz, and 8oz.  However, their tea

packaged into sealed, standard, and grey bag.  Foster’s Tea holds the advantage of trademark

packaging.  However, Blend Bee also provides their own signature blends, which Foster’s Tea

do not offer as regularly.

Promotion: Another major benefit of

their company is their tea descriptions.  Blend

Bee offers information about the flavors and

the health benefits with each tea flavor and

additive. This feature competes with Foster

Tea’s flavor and health descriptions.  Although

Blend Bee also supports a monthly Tea club

where Customers receive two “free” bags of tea per month paying $15, they do not show active

involvement in community issues.

Place: Purchases operate through a website

with no storefront.  Their website is easy to

navigate and provides plenty of information about

customers concerns and needs.  The tea creating

process is in the top corner of their website and is

easy to follow.  

Chart 8

Chart 9

FOSTER’S TEA 34

Price: Their prices are like Foster’s Tea

and provide more variety in sizes.

Small (10 cups) = $9.95 + $3.09 shipping

Medium .25 lbs = $22.50 + $3.09 shipping

Large .5 lbs = $36.25 + $3.09 shipping

This estimates their price per ounce to be $5.40.

These prices will not hinder our entrance into the

market (Blendbee, 2016).

Company:  Adagio Tea

Product: Adagio Tea provides similar tea

bases and operations to the previously mentioned

companies.  In addition, they provide more bases

including black, green, chai, rooibos, white, etc.

They allow for two flavor additions and an accent.

The sizes for their tea packages are much smaller

than their competitors at 0.5oz, 3oz, and 5oz.  They

also provide signature teas based on fandoms.  Their tea flavors incorporate different aspects and

characters of millennial’s favorite movies and TV series.

Promotion: They provide information on

the health benefits and flavors of their base teas.

Chart 10

Chart 11

Chart 12

FOSTER’S TEA 35

However, accessing this information is difficult and cluttered.  Their business does not advertise

any interaction with social justice issues.  

Place: They operate solely online, yet

their website is not impressive.  It is cluttered

and difficult to navigate.  In addition to the

clumsiness, creating the tea is a complicated

process. There are not clear steps to the

process and they over complicate the naming

and packaging.  Foster’s Tea’s lean cut, basic

website guarantees a simple, successful

experience for our customers.

Price: They use a standard $3.75 shipping

rate and their prices are lower than Foster’s

Tea’s.

Sample size = $5

3oz pouch = $12

5oz tin = $24

This mean their cost per ounce is

approximately $5 (Adagio, 2016).

Secondary Competitors

Company:  Teami

Chart 13

Chart 14

FOSTER’S TEA 36

Product: Teami produces tea drinking

accessories, diet/tea drinking/cleanse plans, and

tea.  They sell accessories for a unique tea

drinking experience and break down the health

benefits of teas.  They do not provide tea

customization but provide many varieties of tea

package sizes. Their most popular items are their

weight loss cleansing teas and tumblers.

Promotion: Their website is full of

information on health benefits for tea and

provides dietary plans.  They focus on using tea

to promote a healthier, happier lifestyle.  Their

advertisements are full of beautiful, fit women of

all ethnicities and fashion styles.  Their social

justice issue is to focus on “inner beauty”,

meaning feeling beautiful through creating a healthy body.  

Place: Purchases occur online, but their

production is proudly based in Florida.  They do

not hold a storefront or customized tea process.

Chart 15

Chart 16

FOSTER’S TEA 37

Price: Since they offer many varieties of

products, they range from $9-140 depending on

product or detox plan. It is difficult to calculate

their price per ounce because their teas are sold

with other educational information and products.

Most of their tea comes from a diet plan so they

are more expensive than our tea packages (Teami,

2016).

Company:  TeaBox

Product: They purchase their tea from

India and are proud of their quality and ethnic

standards.  Not only do they provide quality tea,

but they also sell pots, steamers, and other

Chart 17

Chart 18

Chart 19

FOSTER’S TEA 38

accessories. Although they do not support a customizing process, their tea selection is

extravagant.  Their site contains any treasure a tea activist desires in packages and for wholesale.

Promotion: Teabox focuses more on

educating about FreeTrade and ethically

responsible tea than on the health benefits or

flavors.  They also focus on benefitting other

businesses through their product.  Teabox provides

corporates the option to package tea to deliver to

customers and partners.  This generates strong

business relationships between companies, boosting networking and positive images.  They also

provide tea to wholesalers as well.

Place: Purchases are made online and are

offered to corporations, individuals, and other

sellers.  They do not support a customization

process for tea, but have options for corporations

to send tea to customers.  The link is available on

the front page.  

Chart 20

Chart 21

FOSTER’S TEA 39

Price: Depending on the flavor desired,

their 40 cup (3.5oz) packages range from $10-27.

Their price per ounce, therefore, ranges from

$2.90-$7.70.  This variety in pricing competes

with Foster’s Tea on the lower end, but is more

expensive once customers choose specialty

flavors (Teabox.com, 2016).

Company:  Teavana

Product: Teavana is a popular spot for

teas and accessories.  They provide hot tea,

lemonade, iced tea, and plenty of tea options.

Although customers cannot create their own

blends, they offer a large variety of drinks.  Their

containers are sturdy and reusable with plenty of

vibrant colors.  They offer many different package

options with the largest being 8oz.

Promotion: Teavana focuses more on

customer loyalty than tea education or social

justice issues.  They provide monthly codes for

discounts on purchases (October’s discount was

20% off).  This encourages consumers to frequent

Chart 22

Chart 23

Chart 24

FOSTER’S TEA 40

their site for new deals.  Their unique tea containers are easily recognizable as a Teavana

product.  

Place: Teavana is available for purchase

online and at brick-and-mortar stores.  Many of

their stores are in different malls.  Recently,

however, Starbucks purchased this company and

now sells their products on their store shelves.

Once again, they do not provide tea creating.  

Price: Their blends are more

standardized; however, their prices range from

$10-30 depending on specialty, flavor, and

seasonality. This puts the price per ounce at a

range of $5-15 (Teavana, 2016).

Product Design and Development Plan

Copyrights and patents are unnecessary for the startup of Foster's Tea because Foster’s

Tea is not utilizing new technologies or methods.  The customization e-commerce model has

been used in other businesses like what Foster’s Tea is accomplishing.  The difference between

most companies and Foster’s Tea is the social justice aspect.  Foster’s Tea operates as a non-

profit with the final goal of preparing foster graduates for the future.  Foster’s Tea desire to

Chart 25

Chart 26

FOSTER’S TEA 41

prepare them for future careers by providing workplace experience such as inventory, web

design, marketing, and other skills.  To create a long lasting, successful workplace for our

employees, Foster’s Tea could develop new blends of tea possibly not seen in the market before.

However, the size of the tea industry makes new tea blends are unlikely.  Now, Foster’s Tea has

no reason to worry about copyright or any other form of intellectual protection other than logo,

brand image, and media produced through Foster’s Tea.  Our tea will be developed in packaging

and amounts of tea.  Tea quantity remains an issue only to be resolved through many product

samples and trials.

Development Status: Packaging

At the moment, packaging includes boxes purchased through Cheap A** shipping

supplies, mason jars purchased through Amazon, labels through Canada Rock Engraving and

paper/thank you cards purchased through local retail stores.  Packaging will depend on what the

size and shape of Foster’s Tea is after, or if, any changes need to be made after launching.

Foster’s Tea has no current plans to change packaging sizes or containers.  However, if

customer’s sales reveal inclinations towards smaller or larger product sizes due to amounts of tea

contained within, Foster’s Tea’s labels and packaging will be the only variables changing.

Development Status:  Product

Foster’s Tea has many variations of the same product size.  The business model is

specialized, so customers can pick one of 5 base teas, 5 first layer flavors, and 5 secondary layer

flavors. This means Foster’s Tea must develop the correct quantity of tea bases to tea flavors for

175 tea flavors.  Foster’s Tea will be developing each tea quantity through a trial period before

founding Foster’s Tea.  Because of the nature of development, Foster’s Tea will look to

FOSTER’S TEA 42

accomplish the correct tea quantities for all 175 tea flavors over one month.  Once the flavors

have been refined, quantities mapped out, and names given to the flavors, then Foster’s Tea will

continue with opening the business.  Once Foster’s Tea’s teas are produced and sold, Foster’s

Tea will be looking for feedback on the quantity size to check customer satisfaction.  

Developmental Efforts

Product and packaging development is nearly finished.  The longest developmental

problem is creating quantities and names for each tea.  The reason the process will take so long is

due to marketing each product as its own product and realizing marketing potential in making

teas seasonal and worth buying.  Continuous development will be put forth into the e-commerce

site to create the best sales process possible.  Continuous development will also be put into

teaching and training the foster graduates how to better work as a manager, website developer,

and creative assistant while teaching the importance of company culture.

Return Policy

Foster’s Tea will implement a return policy covering full cost of shipping and product if

the product is damaged, improperly packaged, or sent to a wrong address. Foster’s Tea will have

a phone number connected to Foster’s Tea’s CEO for the first six months to create a standard for

procedures in dealing with customers and delegated to Foster’s Tea’s foster graduates after six

months. Foster’s Tea’s goal is to make the customer as happy as possible to create a positive

experience and attain returning customers. Foster’s Tea will also look at issues arising within

returns to assess Foster’s Tea’s systems and the issues causing returns.

Operations Plan

Foster’s Tea will be providing quality tea by employing, equipping, and empowering

foster adults to lead successful futures.  Foster’s Tea allows the customer to customize their tea

FOSTER’S TEA 43

purchase through our website by mixing their own tea to fulfill their aphrodisiac desires for their

product.  All the products will be hand mixed by the foster employees.  Since it is a hand mixed

product, the company promises the customer that the product will be mixed within 2-3 business

days and delivered within 5-10 business days.  Foster’s Tea will use FedEx to ship all products

because FedEx apply lower shipping costs.  Along with their customized drink, they will receive

a thank you card and story about how their purchase is helping a fostered adult beat the system

and create a quality future.  These letters allow the customer to understand the value in our

product.

The tea creating process will occur in a warehouse acting under all proper health codes.

The products will be determined by the customer and customized by the fostered employees.

Our online system allows us to see the customer’s chosen leaf base and flavors.  Upon viewing

the order, the tea will be mixed by precise weight measurements of each additive into mason jars.

Weighing all the tea products prevents waste and standardizes the taste of products.  After all

ingredients are added, the employees seal the tea in a mason jar and ship the package to the

appropriate customer.

To personally connect to our customers, each package will contain a letter thanking them

for their purchase and educating them on our purpose.   Foster’s Tea will also send an email

inquiring on their satisfaction of the product and overall experience.  This grants customers a say

in our operations, describes their impact on our employees lives and personally connects them to

our company.

Management Team and Company Structure

The management team of Foster’s Tea will generate relationships with foster programs,

hire employees, train employees, purchase tea products, and market the product.  These duties

FOSTER’S TEA 44

will be divided among the founders of Foster’s Tea.  Each role will promote a successful future

for our employees.  

The management positions are divided as follows:

President & Chief Executive Officer: Jaila Cappelli

Chief Financial Officer: Cody Warren

Chief Marketing & Merchandising Officer: Seth Barribeau

Chief Human Relations Officer: Matthew Juve

Chief Operations Officer: Jeremy Phillips

President & Chief Executive Officer: The person in this position is responsible for the

overall direction and vision of the company, as well as the final authority on decisions. The

CEO, COO and HR Officer will work in close contact to oversee the continued development of

Foster’s Tea in the internal processes. The CEO will sign off on all budgets and statements

prepared by the CFO and administer changes where needed.  In addition, the CEO will connect

with the CMO to understand the market and promote Foster’s Tea mission and product.  The

CEO is responsible for connecting with the foster programs and generating close relationships to

raise awareness through Foster’s Tea’s mission.  

Chief Financial Officer: The person in this position will oversee the books and accounts of

Foster’s Tea.  The CFO will approve spending, forecast future revenue, and organize budgets.

He will also be responsible for raising any red flags associated with income and costs, to keep

Foster’s Tea out of debt and investing in its future.  This officer oversees payroll to our

employees.

Chief Marketing & Merchandising Officer: The CMMO will evaluate the market

trends, participants, and competition in the tea industry.  The CMMO will present the CEO with

FOSTER’S TEA 45

research supporting new markets, promotion strategies and opportunities to reach foster families.

He will predict any applicable trends affecting the sale of Foster’s Tea and capitalize on them.

Chief Human Resource Manager: This position evaluates and handles all relationship

within the company.  He will hire the employees and train them.  He will define employee

obligations, create daily task charts, and oversee any complications that arise.  He will also

organize and present employee benefits.  

Chief Operations Officer: This officer will oversee the purchasing, producing, and

processing of the product.  He will connect with the

wholesalers and keep the tea bases and flavors

stocked.  In addition, he will create the tasks for the

employees and supervise during shifts.  This officer

will understand all process and product details of

Foster’s Tea to ensure efficiency.  Foster’s Tea’s

structure is described through Chart 27.

Overall Schedule

There are a vast number of obstacles that Foster’s Tea must overcome to prepare for the

official launch of the business, and to secure a successful future for the company in the

upcoming years.  Foster’s Tea intends to open for business on Monday, January 2, 2017, to start

off the new year by addressing and seeking to change the social injustice seen in the foster care

system. To meet this goal the business will be setting check marks for itself over then next month

to ensure Foster’s Tea stays on track for a successful launch.

First, Foster’s Tea must connect with the foster care system in the Twin Cities area to

create profiles for a potential employee. Foster’s Tea will begin to contact several foster homes

Chart 27

FOSTER’S TEA 46

in search of a capable and willing individual who desires to work with them on Monday,

December 5.  Foster’s Tea will begin interviewing potential employees the week of December

19, and plan to have officially hired our choice employee by Monday, December 26.  This period

allows Foster’s Tea to hire the correct individual a week prior to launch providing sufficient time

to train the new employee on how to effectively complete their tasks within Foster’s Tea.

On the other front of the business, it is highly important that Foster’s Tea has possession

of its bulk product two weeks prior to opening.  This guarantees that the company holds the

correct quantity of tea, tea flavoring, and mason jars to provide a successful launch.  Foster’s Tea

will place the order for their bulk tea product on Monday, December 12 to obtain the desired

product one week later Monday, December 19 - exactly two weeks prior to opening day.

Foster’s Tea will make its down payment and first month's rent for its required office space on or

by Monday, December 26.  This allows for Foster’s Tea to move the product, and other office

supplies into the office space the week leading up to launch, which gives sufficient time to

prepare for the anticipated busyness of launch week.  Foster’s Tea will be moved in and prepared

for launch by Friday, December, 30.

The most vital step towards launch is an effective video to market its purpose and product

to its consumers.  This video connects with the millennial generation who seek to be part of a

greater good in their purchases.  They desire a story and are drawn to the purpose of product over

the uniqueness.  It will also demonstrate our convenient and easily navigable website for our

customers to purchase our tea.  Fosters Tea will begin video production on Wednesday,

December 7, and have the complete, polished video in hand by Friday, December 16th to be

posted to social media that afternoon.  Foster’s Tea will launch its introduction website with a

clear company description, product description, and mission outline on Wednesday, December

FOSTER’S TEA 47

16.  Foster’s Tea will have completed the production of our fully operational website by

Wednesday, December 28, and open it up to the public on opening day.

Schedule Breakdown

Monday, December 5: Begin creating website with multiple ordering stages for tea

Monday, December 5: Begin search for emancipated, foster care employees and potential stories

Monday, December 5: Begin moving supplies into new warehouse/office

Monday - Saturday, December 19-24: Begin production of company video

Monday, December 19: Order bulk tea product

Tuesday, December 20: Be fully moved in, and prepared for launch

Monday, December 26: Upload company video to social media/launch intro website

Monday, December 26: Complete construction of operational website

Friday, December 30: Receive bulk tea product, begin testing options

Friday, December 30: Begin going through every section of website and social media for issues

Friday, December 30: Begin building social media presence

Wednesday, January 4: Finish testing website and social media for issues

Monday - Friday, January 23-27: Begin interviews for foster care position

Monday, January 30: Finish testing tea options

Monday, January 30: Launch day

Wednesday, February 1: Hire ideal foster graduate as an employee

Foster’s Tea Financial Plan

Foster’s Tea’s financial plan give a breakdown of all pertinent information residing

within the operations of Foster’s Tea. The financial plan will cover Major Revenue Drivers,

Profit Margins, Fixed Costs, Variable Costs, Operating Leverage, Startup Cost, Economic

FOSTER’S TEA 48

Model, Breakeven Point, Profit Durability, Year 1 (2017), Year 2 (2018), Year 3 (2019), Year 4

(2020), and Year 5 (2021). Each section will break down the content titled in each section while

given adequate evaluation of the viability of Foster’s Tea through financial forecasting. Foster’s

Tea will give forecasts five years in advanced of Foster’s Tea’s predicted probable outcomes.

Major Revenue Drivers

Foster’s tea will be selling high quality tea to its customers. They will have the choice of

a black, green, white, herbal or rooibos as a base for the tea. Once they have selected a base, they

will then be presented with 10 flavor options to add to their base tea. The ten options will be

Chamomile, Cranberry Harvest, hibiscus raspberry and currant, peppermint, Strawberry, fruity

sangria, honeybush, vanilla, Lemon, and cinnamon spice.

Profit Margin:

Fosters tea will be buying 40lbs total of bulk tea and flavoring for its first month of

business. The complete cost of the 40lbs of tea will be $1,000 (Tea Guys, 2016). The 200 mason

jars at $0.94 a jar ($118) will bring our cost up to $1,188 (Ball Jar). Adding the $30 monthly cost

for boxes brings us to $1,218 (Cheap A** Shipping Supplies, 2016). With the estimated shipping

cost for each package being $10, that brings our cost up $2,000 to $3,218 (USPS, 2016). When

Foster’s Tea packs the tea into the 200 mason jars, the variable cost per unit is $16.09. When we

add the fixed cost per unit of $10.42, the total cost per unit is $26.51. Foster’s Tea will be selling

each 8oz mason jar that contains 56, 12oz servings for $29.99. This sets our overall profit margin

at 11.6%. With this price, Foster’s Tea can competitively undercut large tea companies such as

Teavana, who’s price per ounce ranges from $5-15 whereas Fosters Tea stays constant at $3.75

an ounce (Teavana, 2016).

Fixed Costs

FOSTER’S TEA 49

Foster’s Tea’s fixed cost is paying our employees $9 per hour of work. Foster’s Tea

anticipates the total time to pack and ship each unit of tea to be no more than 20 minutes,

resulting in 67 hours of work required to pack the specified tea. At a rate of $9 per hour, it will

cost us $603 in wages for our first month. Since Foster’s tea will begin operation by one

employees, the 67 hours of work in the first month will break down into about 16.75 hours of

work per week. Foster’s Tea will be renting a small office space from Assemble for $700 a

month (Assemble, 2016), spending $25 per month for our website, and $55 a month for

insurance. Foster’s tea will be setting aside $700 each month for marketing purposes such as

video production. The total fixed monthly expenses for Foster’s Tea will be $2,083.

Variable Costs

The clear majority of Foster’s tea costs are variable. Fosters Tea will be purchasing its

tea in bulk from tea guys. Foster’s Tea will be buying our base teas for $25 a pound, and will

start with 5 pounds of each our base teas. Foster’s Tea will also purchase 1.5lbs of each of the 10

flavors for $25 a pound (Tea Guys, 2016). The total cost for the base teas and the flavorings is

$1,000. Our teas will be packaged in mason jars that hold 113 grams of tea, and each jar will

make about 56, 12oz cups of tea. The mason jars will cost $0.94 a jar, and Foster’s Tea will be

purchasing 200 jars for $188 (Ball Jar). Foster’s Tea has already purchased all the required

packaging for the first year of business and that cost was included in our startup cost. (Bad A**

Shipping Supplies, 2016). Foster’s Tea will ship our tea using USPS ground service, which cost

about $10 per package depending upon the shipping location (USPS, 2016). Given this

information, it is estimated that Foster’s Tea will have a total monthly variable cost of $3,188.

Operating Leverage

FOSTER’S TEA 50

Given that Fosters Tea has a 11.6% profit margin and less fixed than variable costs,

Foster’s Tea has a high operating leverage. Foster’s Tea are taking the risk of our tea not selling

out, in which case Foster’s Tea would lose out on a large sum of money. However, once the

breakeven point is reached Foster’s Tea will greatly increase our return on investment.

Startup Cost

The total startup cost for Foster’s Tea will be the culmination of our first month’s fixed

and variable costs, combined with a few one-time expenses to get the company off the ground.

Their fixed costs cover their rent, wages, insurance, marketing and website expense for a

combined total of $2,083. Their variable costs include the cost of their tea product, their mason

jars, and the shipping expense per unit for a total of $3,188. The total of their fixed and variable

costs combined for the first month is $5,271. Fosters tea will be spending $2,000 to launch a

professional marketing video about for their company prior to their launch, procuring their first

years packaging for $360 (2,400 boxes), and spending $75 on other office supplies essential to

their company’s startup. This brings their total startup cost up to $7,706.

Economic Model

Fosters tea will make its money solely on tea sales. With the cost per unit being $26.51

(unit cost breakdown in profit margin section) and our sale price set at $29.99, that leaves us

with $3.49 profit per unit for a 11.6% profit margin. Upon the sale of all 200 units our total

revenue will be $5,998. Subtracting our monthly variable cost of $3,188 and our fixed cost of

$2,083 our monthly EBIT at $698. Although we will not be turning a very large profit within our

first year, this model allows us to turn a large profit once our company grows and we can grow

our market share.

FOSTER’S TEA 51

Rational for 200 Units

We expect to sell 200 units each month based on the number of people who drink tea

daily found in our target market. According to World Tea News, 158 million Americans drink

tea each day. We take this number and run it through the same percentages found for our target

market. This number tells us how many consumers in our target market drink tea daily. The

product of the percentages and the amount of daily, American tea drinkers is approximately

94,648 people. We then divide this number by the entire target market to find out the percentage

of the daily consumption of our market: 49%. We then apply this to our goal of 400 units a

month, which rounds to 200 expected unit purchases each month.

Profit Durability

The profit stream of the tea industry is incredibly durable. Since September of 2011 the

cost of tea per kilogram has not fluctuated more than 15% (Index Mundi, 2016). Based on this

information, Foster’s Tea is confident in maintaining a consistent tea price for customers since

actual product cost will see little to no fluctuation.

Breakeven Point

According to Chart 28 Foster’s tea based monthly expenses on the startup cost of $7,706

and added the combined fixed and variable costs of $5,271 to the original principle monthly.

They then recorded the total revenue of 200 units

sold ($5,998) each month to give us $71,976 for

2,400 units sold in the year. If they can sell the 200

units each month, Foster’s tea will cover its original

startup cost and monthly expenses by the end of

Month 4.Chart 28

Months of Year Gross Revenue ExpensesMonth 1 5,998$ 7,706$ Month 2 12,566$ 12,977$ Month 3 19,134$ 18,248$ Month 4 25,701$ 23,519$ Month 5 32,269$ 28,790$ Month 6 38,837$ 34,061$ Month 7 45,405$ 39,332$ Month 8 51,973$ 44,603$ Month 9 58,540$ 49,874$ Month 10 65,108$ 55,145$ Month 11 71,676$ 60,416$ Month 12 78,244$ 65,687$

FOSTER’S TEA 52

Year 1 (2017)

In year one Foster’s Tea anticipates to see 200 units sold in their first month of business

and will have released the first marketing videos. Foster’s tea will release one professional

quality video for company and product advertisement each quarter. After their second video

release in early April, they anticipate their sales will slowly begin to increase over the next few

months due to effective marketing through Facebook ads, Google page results, word of mouth,

and the fact they will be addressing a social justice issue targeted at millennials. We expect this

growth rate to be expressed as an increase of 19 customers per month throughout the first year.

The reason 19 customers per month is due to the Facebook advertising traffic. By the end of

their first year they expect to have sold a total of 3,654 units for a gross profit of $109,583 and a

net profit of $23,719.

Year 2 (2018)

In year two Foster’s tea anticipates seeing a 100% growth from year one due to growth

through Facebook mainly. Each year, Foster’s Tea will evaluate the market conditions, growth

rate, competitors, and any sales process enhancements needed. Foster’s Tea will be looking to

increase growth and marketing through increase units sold per month. Foster’s Tea expects to

sell a total of 5356 units in 2018, for a gross revenue of $160,626. At the end of the year, their

anticipated net profit will be $42,216.

Year 3 (2019)

Foster’s Tea projects a 8.8% growth rate in the third year of business as they will be

increasing their marketing budget to adhere to sales growth. Foster’s Tea expects to continue

utilizing marketing strategies while reflecting and checking all strategies annually as stated in

previous years. Foster’s Tea expects to take heavily research apartments and workspace to place

FOSTER’S TEA 53

foster graduates to have join Foster’s Tea. Foster’s Tea expect to sell 5,904 units in their third

year for a gross revenue of $177,061 and a net profit of $45,919.

Appendix

Revenue Year of 2017 Year of 2018 Year of 2019Tea Sales Revenue 109,583 160,626 177,061

Total Revenues 109,583 160,626 177,061 [42] [42]

ExpensesMarketing 10,400 8,400 12,000 Cost of goods sold 22,253 32,618 35,955 Insurance 660 660 660 Supplies Expense 75 - 315 Rent 8,400 8,400 8,400 Salaries and wages 7,236 14,472 14,472 Website 300 300 300 Shipping 36,540 53,560 59,040

Total Expenses 85,864 118,410 131,142

Net Income 23,719 42,216 45,919

Chart 29

FOSTER’S TEA 54

Current AssetsCash 33,719Cost of Goods Sold 22,253Supplies 75Total 56,047

LiabilitiesAccounts Payable 0Total 0

Owner EquityInvestment capital 10,000Owner Capital 22,328Accumulated retained earnings 23,719Total 56,047

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000

1 2 3 4 5 6 7 8 9 10 11 12

Uni

ts in

Dol

lars

Months in a Year

Break Even Point/Projected First Year Sales

200 Units per Month Monthly Expenses

Chart 30

Chart 31

FOSTER’S TEA 55

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