Green Coconut Water1

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Feasibility Planning ofNew Product


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Executive Summary

We want to market Green Coconut Water. We have prepared thisfeasibility plan on that basis. We have assigned a name for the product asJaul . Since the raw materials are very much available in our country, wehave decided to give the product an indigenous image.

Jaul is a kind of soft drink that provides the consumers with processed green coconut water in bottles. For the marketing purpose of the product we have decided to launch three product lines. The Jaul would belaunched in the market at 250 ml. 500 ml. and 1 Litre bottle .

We have set a reasonable price for the product so that all kinds of people can afford to buy this soft drink. We have followed the TargetCosting pricing approach. We would gain a competitive advantage, as this isa first hit in the market.

Our target is to maximize profit by providing maximum satisfaction tothe consumers. We will use the Societal Marketing Concept, which holdsthat achieving organizational goals depends on how well the marketersidentify the needs, wants & interests and deliver the desired satisfaction

more effectively & efficiently than do competitors in a way that maintains orimproves the consumers & societys well being. We are using the naturalresources for manufacturing this product. This is very good for the health ofthe people & it is also quite refreshing for the summer season.


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We have targeted a huge market segment for the product. Bangladeshis a large populated country. Lots of people are looking for such a product.Green Coconuts are not available all the time. For example: a personwalking on the street. Suddenly he feels thirsty. Now if he wishes to drinkgreen coconut water he cannot find it easily. It is not always found in theright place at the right time. If we launch our product in the market, a personwilling to drink green coconut water can have it from a nearby shop. At

present this is not possible. Our target market includes health consciouspeople, sick people, sportspersons & many other consumers, which wehave segmented from the Demographical , Geographical , Psychographical & Behavioral point of view.

Since this is a soft drink, once the product is well promoted, this product will be sold well. The consumer can then use this drink to even indinner or lunch. A person going to see a sick relative in a hospital may buythis product instead of the real green coconut, as it is very convenient forcarrying. We will also use an attractive packaging process that willencourage some people to even taste the product for the first time. If they getto like it, then the product might become favorable as it is natural & doescontain nutritional value.

We are not experts on anything. But we have certainly gone throughan in-depth marketing research policy that provided us with all theinformation required for launching a new product.

The qualities of our team members are very dynamic. We are alwayson the look out for opportunities that can both be profitable at the short run& long run. As we are students of Marketing, we have lots of creativity. Wehave gone through some theoretical explanation. This will help useventually.


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We have prepared a financial documentation for this feasibility plan

of a new product. As we are introducing the product in three categories at

250 ml, 500 ml and 1 Litre bottles, we have prepared the Break-Even-Analysis for each of the product line. We have prepared the feasibility planfor five-year basis.

For 250mls the break-even point is at 4158004 Units. That means ifwe sale 4158004 Units a year, we will make neither profit nor loss. So tomake profit we have to create a market demand in such a way so that morethan 4158004 Units are sold every year. Obviously the unit cost will

eventually come down because of the law of Marginal Cost. Then the break-even point will also come down. But that is from the long run perspective.So initially we might suffer loss but ultimately we would earn enough profit.The consumers will first taste the product by consuming the 250ml bottles.So we might gain a short run profit from that.

For 500mls the break-even point is 4914004.914 units per year. So wehave to sell more than 4914004.914 units to earn profit. We know that afterthe product is well promoted, people will eventually consume more of500mls, as pet bottles are more in demand. The price is such that people willturn to the 500mls because we are providing them at lowest possible market

price.

For 1 Litre bottles we have a different plan. We know many peopleare not going to consume the 1 Litre package. So we have assigned more

profit on them per unit. Our target is to sell less quantity of products butachieving higher profit. For 1 Litre bottles we have estimated the break-even

point at 1724137.931 bottles per year. As we can see, we have prepared theselling price in such a way so that, to be in a profit earning zone we have tosell least amount of units comparing the other 2 product lines.


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We have given an elaborate discussion on financial summary at thelater stage of the feasibility plan. We have followed the Target CostingPricing Policy ; which means an ideal price is set first based on customerconsiderations, then target costs will ensure that the price is met. We decidedthe market price before. Then we calculated the estimated unit price & fixed

price. Then we decided how much profit margin is possible on each of the product line. We have assigned three different profit margins for three product lines. This price setting is based on the current market research.


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Table of Content

1.0 Product Description 01

1.1 Product Portrayal 011.2 Product Profile 02

2.0 Market Research and Analysis 03

2.1 Market Description..................................................................................... 032.2 Market Segmentation and Targeting.......................................................... 032.3 Competitive Analysis.................................................................................. 06

3.0 Market Plan............................................................................................. 10

3.1 Pricing Strategies........................................................................................ 103.2 Promotional Strategies............ 153.3 Distribution Channel.. 163.4 Services and Warranties............................................................................. 16

4.0 Manufacturing and operations.... 17

4.1 Locations..................................................................................................... 174.2 Human Resource......................................................................................... 174.3 Technological Aspects 17

5.0 Entrepreneurial Team 18

5.1 Entrepreneurs 185.2 Management Orientation 18

6.0 Financial analysis and Documentation. 19

6.1 Sales Forecasting 19

6.2 Profit and Loss Projection 20

Appendix .... 21


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1. Product Description

1.1 Product Portrayal

Jaul is a product that serve different segment of customer. The product is green coconut water, which is unique in the current market. Thegreen coconut water will be processed and sold in glass bottle ofconvenient sizes of 250 ml, 500 ml and 1 liter. The green coconut water will

be very much refreshing and provide great support to the sick and healthconscious people. Our target market is very large with different segments.Our expected sales are very high. The development cost is tk.2.5 millionapprox.


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Product Profile

Name of the Product : Jaul

Type of Product : Green Coconut Water

Ingredients : Pure natural green coconut water,

Sugar, mineral salts, vitamins C.

Container : Stylish glass bottle

Container size : 250 ml, 500 ml, 1 Litre

Product Price : 250 ml for Tk. 12

500 ml for Tk. 18

1 litre for Tk. 38

Estimated Durability : 12 Months from date of

manufactured

Machinery used : Advanced technology imported from

USA, UK and Netherlands.

Brand Slogan : Coola Coola Always Refreshing

Product Logo :


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2. Market Research and Analysis

Our company wants to develop and introduce a new Product. So, wehave gathered information through in-depth interviews. We made a survey ofthe market to have a clear idea about our market, our customer demand,

needs and wants. This information helps us to know about the current marketand prospects of our new product.

2.1 Market Description

Bangladesh is a country of about 150 million people.. The totalmarket size of the soft drink industry is about 20 million and day by day it isincreasing. We have a spread nationwide market of different convenient

product. People are nowadays very much concerned about the market and product conditions. So we have a growing prospect of customers of Jaul.Among the population we worked out few segments of customers who will

prefer our product most.

2.2 Market Segmentation and Targeting

Market Segments

We have observed and analyzed the market and based on the nature ofthe market we segmented the market in the following sectors:


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Geographic Segmentation:

Sylhet

Rajshahi Khulna & Barishal Chittagong Dhaka

Demographics:

Individuals

Family Sportsman Business buyer

Psychographics:

Higher class Higher mid class Middle class

Behavioral:

Sick people Health conscious Sophisticated who take the new product from the market

Target market and projections:

Analyzing all the segments, we decided our target market according toour product category. The target customers of Jaul are sick people , healthconscious people, sportsmen and tourists. The company decided to charge


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provide product, which is fit for them. About 5 million people of thistotal number are health conscious. They spend about Tk. 500 in amonth in average.

II. Sick people: Sick people are one of our major considerations. Morethan 1 million children suffer from diarrhoea that need liquid food.

Not only child but also the adult might suffer from those types of problems.

III. Tourists: Every year a huge number of tourists visit Bangladesh. Wewant to provide them with Jaul.

IV. General Customers: Besides the above segments, the generalcustomers will acquire a significant portion of our target market.

Market Needs:

Jaul wants to satisfy its customers need. Thats why it is importantto identify the market needs. Our first consideration is to provide the best

product to its custo mers. Thats why we offer three different sizes of bottlewith different prices for its different segment of customers.

250 ml : The lowest price for the rural mid social class and individuals.500 ml : Its target the sick people and tourist1 litre : For a small family.

2.3 Competitive Analysis

The Soft drink industry is very much competitive. Many soft drinkcompanies have acquired a significant portion of the market. But the unique


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features of Jaul will take it far beyond the reach of the competit or.Because, no one has yet thought about selling green coconut water in such aspecialized way. To evaluate our prospect of Jaul in the current market,we have analyzed the market situation in various ways. Following are somedemonstration of the analysis:

2.3.1 SWOT analysis:

The product existence in the future is depending on its strengths,weakness, opportunities and threats analysis:

Strengths:

1. Available input materials2. Low production cost3. Technological and marketing knowledge4. Strong distribution channel5. Easy manufacturing process6. Reasonable price

Weaknesses:

1. It is easy to copy the idea by others2. Taste differ from the natural green coconut water3. Green coconut water cannot be preserved for longer period

Opportunities:

1. Monopoly market2. Large market3. High demand4. Might have a chance to get subsidies by Govt. to export


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Threats:

1. High competition in future by copying the idea2. Entrance of new product3. Alternatives are avoidable in some segment4. Uncertainty of launching a new product.

2.3.2 Competitor Analysis

The major soft drinks and juice companies of current market are:

Pran Groups Starship Uro Cola RC Cola Coca cola Pepsi Acme Danish Foreign Products etc.

Distinct Competency:

These companies can try to entrance our market by launching new product lines to compete us. Yet, we have distinct competitive advantage.That is our product is still brand new. The other companies will takesometimes to enter into the market. Till then we can have a monopolymarket condition. The other advantage that we have is lower price. We willsell products in reasonably lower price then other competitors do.


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Strategies against competitors:

To compete with the major competitors we can adopt the followingmeasures:

Providing the best service to create high customersatisfaction

Reasonable and acceptable pricing Promising and providing top quality product Launching highly effective mass promotional activities Continuous innovation and modification of the products Creating and maintaining long term customer relationship Creating Brand Loyalty among the target consumers


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We have estimated the cost and want to charge a price that covers the

cost of production, distribution and selling the product, including a fairreturn for its effort and risk.

3.1.4. Types of cost and level of production:

There are two types of cost: a) fixed and b) variable. In our new product development project fixed cost is 2,00,00,000 taka. Fixed costincludes- machinery, monthly bills, and salaries of employees and so on,

regardless of output.

There are some variable costs like-cost of bottle, packaging and so on.These costs tend to be constant per unit production. We have estimated that

per unit variable cost is Tk. 6.3 for 250 ml, Tk. 12.6 for 500 ml and Tk. 24.4for 1 litre.

3.1.5. Analyzi ng competitors costs, prices and offer:

We have analyzed our competitors price and found that Pran chargestk.10 for 250 ml bottle, Starship charges tk. 12 for 250 ml Pac.

3.1.6. Selecting a pricing method:

We have chosen the target costing method to set price for our product; pricing that starts with an ideal selling price based on customerconsiderations, then target cost will ensure that the price is met.


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Promotional Strategies:

To acquire a strong position in the market, we need to give specialemphasis on effective promotional activities. In order to get the maximummarket share we will have to use all four tools of marketing promotion.Specially, advertising through mass media will support us a lot.

3.2.1 Advertising:

We initially will give more emphasis on paper ads and TVcommercials. Because, advertising through these media is the most effectiveway to reach the customers and position our product in their mind. We areanticipating that this will have a massive impact on the teenagers and otherenthusiasts. Few neon signs and bill boards of Jaul also can be set up in

some core points of the city. We hope to reach 75% of our customersthrough effective advertising.

3.2.2 Personal Selling:

Though personal selling skill is not that much effective for convenient products like Jaul, we will inspire and train the sales persons of the retailstores to convince people to buy our product when they will come to buyany drinks item. The sales persons will inform the consumers about the coolrefreshing taste of Jaul and about the nutritious aspects. We hope that will

play a significant role to increase our sales.

3.2.3 Promotional Tools:


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We have also planned to apply some promotional tools. Initially for

sometimes we will distribute our product at 50% discount just make our new product familiar with the customers. This will be the market-testing periodfor our product. Later, we may apply the strategy of giving gifts, luckycoupons, tour tickets depending on the market and competitive situations.

3.2.4 Public Relations:

We have future plans to hold seminars, commit social development,supporting social activities, to arrange cultural functions and mobile game

shows for publicity purpose.

3.3 Distribution Channel

In the initial stage, we will distribute the products with our soledistribution channel. When our market will spread out, we will distribute our

products through dealers. We will set our own outlets in few core market positions. When we will go for mass marketing, we will supply our productnationwide through dealers. Our dealers will take the products to everydistrict of the country. Jaul will be available in all retail stores of thecountry.

3.4 Services and warranties

As we are targeting to the top most customer satisfaction and buildinglong-term customer relationships, there is no alternative for us rather than

providing top quality service. Giving the customers timely and instantquality service is our primary concern. We even planned to open fewcustomer service centers where will response to customers interactions. We


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will collect information, suggestions, ideas and opinions of the customersthrough these centers and will innovate and modify our product accordingly.We also will change any defected product.

4. Manufacturing and Operations

4.1 Locations

We will set our manufacturing and other working areas in convenientlocations. We will prefer the locations to set up our manufacturing firms,

warehouses and inventories in different core business points of the countrywhere it will be easier to both collect the raw materials and transport thefinal goods to the market.

4.2 Human Resource

The board of directors will be responsible for the recruiting activities.Recruiting will be done through written tests followed by interviews.

4.3 Technological Aspects

To create and innovate new quality products we need to use advancedtechnology. We need high tech machineries imported from the foreigncountries. Not to mention, skilled people to operate them. We have alreadystudied all the technical aspects and prepared a list of instruments and theircosts. The machinery will be collected when required.


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Chairman &President

DirectorFinance

Manager

Executive Executive

DirectorManufacturing

Manager

Executive Executive

Director Sales

Manager

Executive Executive

DirectorMarketing

Manager

Executive Executive

ManagingDirector

5. Entrepreneurial Team

5.1 Entrepreneurs

The entrepreneurial members are:

Tanvir Ahmed Chowdhury Rezwana Hossain Faisal Ahmed Mehejabin Azam Md. Mafizul Islam Shibli Sadiq Ahmed

5.2 Management Orientation


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6. Financial Analysis and Documentation

6.1 Sales Forecasting

The following Table and graph show our expected sales for the coming fiveyears:

Expected Sales(Per year) 250 ml. Bottle

500 ml.bottle 1 Litre bottle

First Year 4000000 4500000 1500000

Second Year 4500000 5000000 1700000

Third Year 5500000 5800000 2000000

Fourth Year 6000000 6500000 2400000

Fifth Year 6300000 6700000 2500000

0

20000004000000

6000000

8000000

1st 2nd 3rd 4th 5th Year

Expected Sales for 5 Years

250 ml. Bottle

500 ml. bottle1 Litre bottle


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6.2 Profit and Loss Projection

For 250 ml.

Item Year 1 Year 2 Year 3 Year 4 Year 5

Total Sales 44440000 49995000 61105000 66660000 69993000Total Cost (45200000) (48350000) (54650000) (57800000) (59690000)

Total Profit (760000) 1645000 6455000 8860000 10303000Tax 40% --- 658000 2582000 3544000 4121200

Net Profit (760000) 987000 3873000 5316000 6181800

For 500 ml.

For 1 Litre


Total Sales 54000000 61200000 72000000 86400000 90000000

Total Cost (56600000) (61480000) (68800000) (78560000) (81000000)

Total (2600000) (280000) 3200000 7840000 9000000


Total Sales 75015000 83350000 96686000 108355000 111689000

Total Cost (76700000) (83000000) (93080000) (101900000) (104420000)

Total Profit (1685000) 350000 3606000 6455000 7269000

Tax 40% --- (140000) (1442400) (2582000) (2907600)

Net Profit (1685000) 210000 2163600 3873000 4361400


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Profit

Tax 40% --- --- (1280000) (3136000) (3600000)

Net Profit (2600000) (280000) 1920000 4704000 5400000

Appendix

Reference

1. Entrepreneurship: New Venture Creation

Author: David H. HoltEEddiittiioonn:: 22000022 PPr r iinntt

2. Entrepreneurship Development

Author: Hisrich and PeterEdition: 5 th Edition

3. Internet

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