MARKETING IN PRACTICE

Submitted By CB Number Module Lecturer Module Code & Title Intake Code Date Assigned Date Due

: Fathima Sharmila Khan : 003332 : Miss. Nilusha Gallege : BLB10151-2 : HF091BA : 24th November 2009 : 16th February 2010

ABSTRACT
Gonuts with Donuts an infant company in the confectionary industry with the specialization in donuts. But it has achieved a huge improvement within few months. The main objective of this marketing plan is to increase the market share by introducing a new product line to the market. Basic analysis of the marketing environment and the company strengths, weaknesses, opportunities and threats (SWOT) has identified to figure out the actual position of the company to implement the marketing plan and achieve the company objectives. Cupcakes are the new product Gonuts with Donuts expect to introduce to their large customerbase. Identification of the best segments, how they will be the targeted to produce the product to the market efficiently and Position a positive image about the product in customers mind etc. have been proposed through this report. Marketing mix for cupcakes has been set for a successful product launce. Final part of the report is the execution of the marketing plan and to evaluate the final outcome key performance indicators have been established.

ACKNOWLEDGEMENT
I would like to acknowledge and extend my heartfelt gratitude to our Marketing lecturer Miss. Nilusha Gallage, for her continues vital encouragement and support to complete this report successfully and I acknowledge Dr. Mahesha Samarathunga for dedicating her precocious time on a special citation and referencing work shop, the chief executive officer Mr. Lalin Michael Jinasena of LMJ group of companies, Mr. Nawal Cassim Human resources manager of Casa Colombo, Shipping Manager of Adamjee Luckmanjee and sons Ltd Mr. Basheer Ahamed and the administrative and library staff of APIIT Sri Lanka. Most especially I acknowledge my family for the love and the endless guidance given for me and to God, who made everything possible.

Table of content
ABSTRACT.....................................................................................................................................2 ACKNOWLEDGEMENT...............................................................................................................3 Table of content...............................................................................................................................4 List of figures...................................................................................................................................6 List of tables.....................................................................................................................................7 List of abbreviations........................................................................................................................8 Proposal..........................................................................................................................................11 Table of content.............................................................................................................................12 Background-of-GWD....................................................................................................................13 Market-summary............................................................................................................................15 SWOT-Analysis.............................................................................................................................17 Marketing-objectives.....................................................................................................................20 Corporate-objective....................................................................................................................20 Qualitative-objectives................................................................................................................20 Quantitative-Objectives ............................................................................................................20 STP-process of GWD....................................................................................................................21 Marketing-mix...............................................................................................................................24 Product ......................................................................................................................................24 Price ..........................................................................................................................................27 Place .........................................................................................................................................30 Promotion ..................................................................................................................................32 Execution and evaluation...............................................................................................................34 APPENDICES...............................................................................................................................36 Appendix A Analysis and wrap up.........................................................................................38 Appendix B Justification of selected segments......................................................................42 Appendix C Effective segmentation ......................................................................................44 Appendix D Positioning..........................................................................................................48 Appendix E Internal and external factors affects the price ....................................................50 Appendix F -Fixing final price ................................................................................................52 4

Appendix G -Promotional materials..........................................................................................55 Appendix I Execution and evaluation.....................................................................................64 References .....................................................................................................................................66 Bibliography .................................................................................................................................67

List of figures
Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 Figure 8 Figure 9 Figure 10 Figure 11 Figure 12 - Product range of GWD - Segmentation Bases - Boston matrix - Demand curve - Channel levels - Brief analysis of population and housing characteristics - House hold income and expenditure - Census of population and housing - Proposed Gonuts cupcakes logo - Proposed promotional materials for children - Proposed promotional materials for teenagers and shoppers - Proposed promotional materials for parents

List of tables
Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 - Growth of GWD - Competitors of Gonuts with Donuts - Perceptual map - PLC theoretical versus actual - Competitors price - Outlet placement - Promotional mix - Gantt chart - Fixing final pricing - Costs of ingredients - Promotional budget

List of abbreviations
CSR GWD HRD LMJ NGO P&S PLC POD STP VAT - Corporate social responsibility - Gonuts with Donuts - Human Resources Department - Lalin Michel Jinasena - Non government organizations - Perera and sons bakers - Product life cycle - Point of difference - segmenting, Targeting, and positioning. - Value added tax

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Proposal
To From Date Subject : Miss: Nilusha Gallage : Fathima Sharmila Khan (CB003332) : 16th February 2010 : Marketing Plan for Gonuts with Donuts

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Table of content
1. Company background..............................................................................................................11 2. Market summary......................................................................................................................13 3. SWOT analysis........................................................................................................................14 4. Marketing objectives................................................................................................................16 5. Marketing strategy...................................................................................................................17 6. Marketing mix..........................................................................................................................20 7. Execution and evaluation.........................................................................................................29

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Background-of-GWD
GWD is an innovative company in the food-industry which brought a new concept to the SriLankan confectionary market. They have specialized in donuts and have many flavors and varieties of donuts. GWD is a member of L. M. Jinasena & Company (LMJ), which is owned by Sri-Lankan designer Mr. Lalin-Michael-Jinasena. (GWD-corporate-website, 2009).GWD started operations in March-2009 and achieved a considerable growth within few-months. The growth of GWD
Then 1-outlet 15-employees 6-flavours 36000-donut per-month 3-delivery-bikes Now 9-outlets 62-employees 16-flavours + specials 80000-donuts per-month 6-delivery-bikes

Table-1-(Jinesena, 2009) GWD does not have apparent vision/mission statements. According to the CEO it indicates to promote the brand as a must-have house-hold product with brand loyalty. (Jinesena, 2009)

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Figure-1- (source:-GWD-corporate-website, 2009) Unless hunting customers for the available product manufacturing products which match the customers need is effective. (Kotler & Keller, 2006) GWD uses Facebook fan-club as an equipment to obtain feedback. It indicates they follow the marketing philosophy which is based on customer needs. Company has to introduce new products to be stable in the unforeseen market. This marketing plan is to introduce cupcakes since its a new opportunity. GWD expects to establish new outlets in the local market as well as in the south Asian region.

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Market-summary
There are many competitors in the confectionary industry but competitors have specialized in different sectors or combination of different product ranges. GWD specialized in donuts are the pioneers in this market. Therefore GWD has to compete with all other food manufacturers since there is a monopolistic competition but as a donut seller it operates as monopoly. The competition is not based on the products but on special factors of the industry.
Category Delivery-service Sweets Savoury-products Bakeries Coffee-shops Physical-Evidence Participants Pizza-hut/Dominos/Harpo's-Pizza Ice-Cream/Indian-sweets KFC/McDonalds/Dine-more/Marry-Brown FAB/Green-cabin/P&S/Caravan, Coffee-bean/Barista/Cinnamon grand coffee-stop, KFC/McDonalds/Pizza-hut/Barista

Table-2-(source:-compiled-by-the-author) Target customers of GWD are, Shoppers Office-workers Students/children Teenagers Housewife/mothers (Jinesena,2009)

GWD established all the outlets where the target-customers exist. (Rife-table-7) The caf-trend, coffee-culture etc. is completely new to the market and adopted from the western-world. Donuts are now in the growth-stage of its PLC. GWD can introduce cupcakes and other similar confectionary products and has the opportunity to expand operations.

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GWD has to face many problems when introducing new products to the market. Local customers sometimes reject western trends. Growing health-consciousness, price-sensitiveness is big issues and Sri Lankans prefer savory-foods more.

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SWOT-Analysis
Strengths Monopolistic-competition - GWD market share is totally capitalised since GWD initiated donut specialization. Large-customers and strong-brand - Its hard to overtake the market and to position a new brand in customers mind. Customer-oriented-outlets - the location strategy has a very good impact on the company. All outlets are based on the target customers and its within Colombo area. Reputed-background - GWD affiliated with LMJ groups. It has leading businesses therefore it helps to improve the reputation. Weaknesses Price-sensitiveness - cannot increase the price due to any changes in production cost since the demand is elastic. Limited to donuts - Specializing only in donuts would not help to increase the profits. Charges on extra-services - GWD charges for the delivery-service. Narrow-promotions - Uncreative promotions lack the awareness of more customers.

Opportunities Expanding-operations - GWD can launch new outlets island-wide and in the south Asian region since there are not reputed donut cafes available. Increase the product-range - GWD has the opportunity to introduce more products such as cupcakes, coffee brands sugar-free products etc. and to introduce more seasonal products.

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Online-purchases - To reduce the waiting time GWD can introduce online-orders.

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Threats Food-preference Most of the Sri Lankans prefer savoury products more than sweets, GWD has to put an extra effort to direct the customer to their products. Fear of international-brands - Donut giants in the world can easily launch outlets in Sri Lanka. This is a huge threat because GWD is an infant in the donut market. Imported inputs Special-flavourings are imported and have to maintain the cost without harming the prices. Health consciousness - Society has an interest on healthy food consumption.

GWD has to convert these weaknesses and threats to strengths and opportunities respectively. (Rifer-appendix-A)

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Marketing-objectives
Corporate-objective
Maximise the market share by expanding the business operations. Create more brand awareness and loyal customers

Qualitative-objectives
Promote the brand name as a house-hold product Increase the customer satisfaction and brand awareness Introducing cupcakes to the existing customer base1. Introducing donuts to new markets. 2 Create a loyal customer-base. Produce high quality-goods for a favourable-price.

Quantitative-Objectives
Reduce complaints down by 5%. Increase the market-share by 10%. Maximise the revenue by 10% by 2012. Increasing the purchasing-frequency of cupcakes by 10% by 2011. Establish 4-outlets out of Colombo by 2012.

1 2

Applying Ansoff matrix Product-development Applying Ansoff matrix introducing existing-products to the new-markets

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STP-process of GWD
GWD concentrates on target-marketing-strategy which is catering different-products to differentconsumer-groups. GWD has selected the segments based on different variables. There are main four segmentation variables, Geographic, demographic, psychographics and behavioral (Kotler & Gray, 2006). The combination of main segments gives a unique segmentation-base for GWD.

Figure 2-(source:-compiled-by-the-author) These selected segmentation bases describes the similarity and the needs of the target market. (Rifer-appendix-B) Effective-segmentation contains five-bases. Measurable,-Accessible,-Substantial,-Differential and actionable (Kotler& Armstrong, 2008) The above selected customers are large and profitable since they are within an urban area. Easy access and the characteristics are similar. According to national censors the population and the income is measurable (Household-Income-and-Expenditure-Survey, 2006/07) since all the above 21

elements are effective GWD can easily implement the marketing-mix for cupcakes. (Riferappendix-C) The selected segments are shoppers, office workers and teenagers/children because GWD can cater them successfully. These identified segments preferences meet the objectives of the new product launch. Jobber states (2007: p301) When market segmentation reveals several potential-targets, specific marketing-mixes can be developed to all or some of the segments GWD has seasonal-donuts which bring a special-interest on seasons and savory-products for the people who are not interested in sweets. Overall GWD represents the differentiated-targeting-strategy. A successful positioning can be done by differentiating the offerings in the market. GWD has differentiated the product by specializing in donuts. They have increased the service capacity as well as pioneers in donuts home-delivery service. Customers have a good-image about GWD since they produce high quality donuts. GWDs positioning-strategy is unique selling proposition since they try to differentiate the products among competitors. (Rifer-appendix-D)

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Perceptual-map for GWD

Price coffee stop 120 100 80 GWD 60 40 Caravan Bake House Low Average -20 -40 -60 -80 -100 -120 20 Good Better Best Quality Fab P&S Barista

Table-3-(source:-compiled-by-the-author)

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Marketing-mix
Product
Cupcakes are the proposed new product-line. Product-levels-of-cupcakes Core Basic Expected Augmented Potential - Satisfying instant hunger/desert/snack. - Cupcakes/Wrappers - Delicious/hygienic/readily-available, - Home-delivery/High-Quality, - Star-cupcakes/Fruity-cupcakes.

The customers expect unique-features in every product which comes to the market. GWD especially concern about cupcakes and the customers have a point of difference about the product since the positioning is to make the product and the brand more attractive with uniquefeatures. The product-levels of cupcakes are different from the competitors and it grabs the attention of the customer. Cupcakes are available in the market though its new to GWD. Since the concept is already exists cupcakes are an imitative-product to GWD. The core-benefit of cupcakes is satisfying instant-hunger or the need of desert/snack. Therefore this product is a frequently-purchased item in other words impulse/convenience goods. The profitability and the market-situation change along with the PLC therefore analysis of the theoretical and actual situation is as given below.

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Theoretical Intro Sales Cost Competition Profit Demand Price Low High Negative High Growth High Average High High High Average Intro High

Actual Growth High Low Moderate High High Low

Average Moderate High High Low

Table-4-(source:-compiled-by-the-author) GWD stands at the star in Boston-matrix which has a considerable market share with profit generation.GWD expects to move to the cash cow which generates huge profits at the maturity stage. To be stabilized in the market new-product-development is required and it has been proposed to introduce cupcakes.

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Figure-3-(source:-quick-MBA-corporate-website, 2009)

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Price
To achieve company objectives the GWD has to fix a price which is favorable to the customers and the company. There are many internal and external factors affect the price of cupcakes. (Rifer-appendix-E) Pricing-objectives Attract more customers. Increase purchasing-frequency. Increase the market-share through attractive prices. Create awareness of high quality products for favourable prices. Compete with the competitors successfully. Maximize revenue of the organization.

Competitors supply the same product in the market and the prices are competitive since the elastic-demand. GWD has to face many restrictions when fixing the price. When GWD increases the price of the product the purchasing quantity of the product is being reduced by a largepercentage.
P

P1 P D

Q1

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Figure-4-(source:-compiled-by-the-author)

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Financial considerations of GWD, Overall rent should not exceed 10% from revenue. Food cost should not exceed 30% from retail price. Advertising cost should be 2%-5% of revenue. Wastages must be controlled (Jinesena L.M, 2009)

Competitors prices are as given below.

Competitor Coffee-Stop Barista FAB P&S Caravan Prices 160.00 75.00 55.00 40.00 35.00

Table-5-(source:-compiled-by-the-author) Market penetration-pricing1 is the most suitable strategy since the product is demand-oriented. The company can fix the price according to profit-oriented-strategy which targets profit. According to market penetration, final price has been fixed to Rs 60 including 12% VAT. (Riferappendix-F)

Setting a low price for a new product in order to attract large number of customers

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Place
Cupcakes will be purchased frequently therefore the location should be easy to access. The customers need to obtain information about the product, the available verities and GWD has to respond to continues orders. GWD delivers goods to the customers and the location should be in the center of gravity point which can easily manage all the orders effectively. Channel-objectives To reach the target customers conveniently. To reduce the waiting time. To attract new customers daily and increase profits. To position the location as the favourite place of the customers.

GWD has no intermediaries since they manufacture and directly delivers it to the customer.

Figure-5-(source:-compiled-by-the-author) The distribution strategy of GWD is selective2. Basically they have few outlets only around Colombo but the objective is to widely distribute the product locally and internationally which is representing the intensive3 strategy. Outlet-placement and the target-customers
2 3

Limited-number-of-outlets Many-outlets-to-sell-the-goods

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location ODEL Alfred-house-garden-Colombo-3 Crescat Nawam-Mawatha HSBC call-center M.D Gunasena Book-shop Colombo-4
Cartoon-Kids

Target-customers Shoppers/Foreigners/Teenagers, Office workers Shoppers/Foreigners Office-workers Office-workers Students

Kids/Shoppers

Table-6-(source:-compiled-by-the-author) To achieve ultimate company-objectives choosing the right channel alternative would be favorable. GWD currently has the delivery services. Rather than establishing new outlets GWD has the choice to supply products under the brand-name to selected locations such as hotels in the short-run. GWD can franchise and maximize the business-operations in the long-run.

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Promotion
To achieve required response from the identified potential customers GWD has to influence the mentality to purchase the product. Communication-objectives Make awareness of the product more in the selected-groups. Make the product friendly to the target-group. (Must-have-product). Create a loyal customer base. Increase the demand through effective-communication.

To achieve objectives an effective message is important to grab the attention. The main message should be delivered is, quality product from GWD for a fair price. This content is a rational appeal according to Kotler. (Kotler & Armstrong, 2005) The structure of this message is to provide a positive stimulus about the taste basically a positive argument about the product. The format is the usual GWD background and the theme colors. The brand ambassadors have been chosen according to the target ordinance. (Rifer-Appendix-G) Major communicating channels are billboards, TV and radio advertisements, newspapers, Facebook fan-club, free-gifts and email-marketing. Objective and task method is the most efficient method to establish the marketing budget. Objectives Tasks Fixing attention-grabbing billboards at identified locations. 32 Make awareness 25% of target-customers. Increase the sales by 10% within first 3-months. Continues improvement in sales.

Free-gifts will be offered to first 1000. Newspaper articles TV and radio commercials will be published.

Total budget for these communication channels are around Rs 714000. (Rifer-appendix-H) Promotional mix
Promotional-mix Advertising Sales-promotion Direct-marketing Channels TV-commercial/Newspaper/Billboards Free-gifts Email-marketing/Facebook fan-club

Table-7-(source:-compiled-by-the-author) Proposed evaluation is based on the first three months sales. Expected sales are around100000120000 cupcakes per-month. Therefore 25% sales should be achieved within first 3 months. Proper integration is required to achiever the objectives and to deliver the message.

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Execution and evaluation

GWD has to run few test sample rounds. The production will be started after obtaining 97% positive-feedbacks. Some ingredients would be purchased on an agreement for a fixed price to avoid cost changes. Human capital will be trained/hired according to the requirement. Lacking resources such as machinery will be hired. All the tasks will be assigned to the respective departments with total responsibility. (Rifer-appendix-I) Gantt-chart

Table-8-(source:-compiled-by-the-author) To evaluate the success, key performance-indicators have been adopted.

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Overall sales of first three-months should be 25% from the target-audience. Receive more than 85% positive-feedbacks from the customers within first 6-months. Evaluating points have been assigned once in a 3-month to observe the progress. Guidance/training will be provided further according to the efficiency of the process.

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APPENDICES

36

Appendix A Analysis and wrap up

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Appendix A Analysis and wrap up

As according to the SWOT analysis the major weaknesses are, Limited pricing range Specialization in one product Charges for extra services Narrow promotions

The company has to convert these weaknesses in to strengths and it would be favorable to the company. Limited price range is due to an elastic demand. Therefore GWD has restrictions in costing and setting the final price. To overcome this situation GWD has the opportunity to sign an agreement with local suppliers to fix the price for a considerable time period or to go for quality substitutes which can be found easily in the local market. By this company can gain advantages such as good reputation, high sales etc. in the long run. Donut is a confectionary product which cannot be used as a regular meal of the day. Therefore the purchasing frequency is low comparing to other foods. And the Sri Lankan food preferences are more likely to consume savory foods. To overcome this situation company can increase the product range and attract customers by promoting and direct the customer to go for donuts or introduce new products and varieties such as cupcakes etc. GWD has home delivery service but GWD charges Rs.100 per delivery. Poor analysis of the market has driven to this situation since the competitors provide the same service free of charge. Therefore reducing the charge or making it free for the customers would be favorable to the company. The main advertising tool is Facebook fan club. GWD does not have a proper ongoing promotional mix and attractive advertisements. Therefore the company has to concern more on marketing the product. GWD has the choice to work with an advertising agent to create an effective advertisement. 38

The fundamental threats are, Sri Lankan food preference Fear international brands Imported inputs (cost factor) Health consciousness

Though Sri Lankans adopt new trends faster the passion of tastes and behaviors cannot be changed. Most of the local market customers prefer spicy snacks. Therefore GWD has to position the quality and the taste of donuts in customers mind since anyone would like to consume delicious food. There are many donut giants in the world and they have the ability of establishing outlets in Sri Lanka and Sri Lankan has the mentality of which the international brands are better than local brands. Therefore it is hard to compete with the well established donut giants. To overcome this situation the main concept cafe trend should be communicated by influencing the passion of Sri Lankans by saying GWD is a local company and it would be strength and an opportunity to promote more products. Some flavorings and ingredients are imported and the threat is about the taxation policies. High import tariffs affect the pricing strategy and it is hard to allocate a high price for a convenient good. If the customer ignores the product because of the low purchasing power it is a threat to the company. The company has to find out strategies to satisfy the customer for the amount they pay. GWD has to produce products and make the customers feel comfortable with the product and the environment. Training the employees and produce a better service would be a mechanism of grabbing the concentration out of the price since people like to obtain special services and comfort-ability. Many companies, NGOs and health authorities have a good concentration about CSR projects. These organizations constantly conduct work-shops and make the people aware of healthy foods. The main message of these organizations is not to consume junk foods but a full course meal for

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a day to be healthy. Therefore GWD has to produce quality healthy foods and make the customer aware about the ingredients and the quality standards.

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Appendix B Segments justification

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Appendix B Justification of selected segments

Income level affects the buying behavior of people. For an example an ordinary income receiver would not prefer purchasing a donut for 65 rupees since there are competitors who sell the same product for low prices. The person should have a good income level to purchase a 65 rupee donut. Social class plays a huge role in Sri Lanka and Life style is imperative because GWD has to identify who likes to consume new products in the market. The target region is Colombo. The main objective of selecting this geographical region is the high existence of the target customers and the availability of other infrastructures. People look for products which satisfy instant hunger and some has an interest in consuming confectionary products as a snack or as the desert. Specially teenagers, office workers, shoppers look for celebrating special occasions outdoor and readily available products. Therefore under behavioral segmentation these factors affect the unique segment.

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Appendix C Effective segmentation

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Appendix C Effective segmentation

As according to the effective segmentation bases the targeted customers are measurable. National statistics states that the highest population is in Colombo.

Figure 6 (source: Brief Analysis of Population and Housing Characteristics, 2001) According to this data it indicates there are 3000-4000 persons per one square meter. The total population in Colombo region is 2,251,274. The median household income is around Rs 23,642.

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Table 12 (source : Household Income And Expenditure Survey - 2006/07) The below chart provides the employment critirieas of the population and the highest employed percentage is in Colombo.

Figure 7 (source : Census of Population and Housing, 2001) Most of the leading schools privet educational institutes and tution classes are established in Colombo region and a large amount of students and children are available in the market to cater the product. According to these datas the target segments are large and profitable and the income levels are high comparing to other sectors. All the outlets have been established within Colombo region and all the outlets are customer oriented. Therefore the company can easily access the customers and develop the business. Outlet location ODEL unlimited Alfred house garden Colombo 3 Crescat Boulevard Nawam Mawatha Target customers Shoppers, Foreigners, Teenagers, Office workers Shoppers, Foreigners, Office workers 45

HSBC call center Office workers M.D Gunasena Book shop Colombo 4 Students, Cartoon Kids Colombo 6 Kids, Shoppers Figure 6 (Source: compiled by the author) The actionability is measured as according to the resources available and GWD deserves all the required resourses to to impliment the effective marketing mix.

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Appendix D Positioning

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Appendix D Positioning
When introducing a new product to the market brand positioning is very important to create an image in customers mind. People constantly looking for new products with new features therefore GWD has to position their products differently. Customers of GWD strongly believe they would not be able to purchase quality donuts for a favorable price from any other place which is called as points of difference (POD). This differentiation can be take place in main four offerings which is product/service, personal, channel and image differentiation. GWD has specialized in donuts and they are the pioneers who specialized in donut production. GWD has competitive product range comparing to the competitors. As according to their marketing philosophy for the first time GWD introduced savory donuts to the market and also they differentiate the product through quality products for a low price. When it comes to goods versus services cafes stands at the middle since it has tangible and intangible elements. Therefore GWD has differentiated their service among other competitors. GWD are the pioneers in donut home delivery service which is totally new to the local market. Though the crew members are limited for an outlet GWD has trained for customer friendly employees to gain competitive advantages. Basically when it comes to channels they have established the outlets which is making easy to reach the target customers. Unlike other food outlets GWD has not ask the customer to the shop to consume their products but they have gone near to the customer which is an extra ordinary marketing effort. GWD differentiated their image through special physical evidence which makes the customer to identify the brand easily. There are competitors who follow this tactic but GWD uses this whole concept for only one product.

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Appendix E Internal and external factors affect the price

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Appendix E Internal and external factors affects the price

The companys objectives are based on maximize the market share and revenue by producing quality products to the customers. To achieve these objectives company has to fix a price which is favorable to the customer as well as to GWD. Taxes on imported goods would be an issue but the company has an objective to produce quality products for a low price therefore GWD prices under super value strategy. This strategy help out the company to create a loyal customer bases since the products can satisfy the customer more than the amount they pay. There is a limitation in price adjustments because of the elastic demand and monopolistic competition. People do not tend to buy convenient goods for high prices since there are suppliers who sell the same product for a low price. When the price level increases the total demand decreases from a high percentage. The price has to cover all the expenses of the company therefore the other three variable of marketing mix should be taken into account to fix the price of the product. For an example rent, promotional expenses, value added services etc. are the costs GWD has to hold. Donuts have been successfully launched to the market therefore customer expectations are high about the new product lines and the customers think the value they pay is fair but they do not willing to pay more than a certain amount. There are competitors who sell the product for a low price and it is a threat to the company.

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Appendix F Marketing mix Fixing Final Price

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Appendix F -Fixing final price

Main ingredients Flours 50g Sugar 50g Butter 50g 1 egg Toppings Butter 50g Icing sugar 225g Cocoa powder 15g Nuttela hazelnut 30g Nuts and flavourings 15g Other Labour Rent Power Promotions Transportation Other Total cost Wastage 5% from cost. Cost after wastage Profit margin Price for 10 cupcakes Price for 1 cupcake VAT Price after VAT 40 63 22.5 94 20 4 13 40 12

15 7 8 26 15 8 387.5 19.375 406.875 33% 134.26875 541.14375 54.114375 6.493725 60.6081

12%

Table 9 (source: compiled by the author)

Prices of ingredients

Flour

1kg 50g 52

78 4

Sugar

500g 50g 200g 50g

129 13 160 40 15

Butter

1 egg Icing sugar 500g 225g 50g 15g 371g 30g 500 g 15g

140 63 75 22.5 1162 94 1000 30

Cocoa powder

Nutella chocolate

Nuts and flavouring (imported)

Labour cost (6 per outlet) total crew 62/9 outlets Average salary 15000 Labour cost for 10 cupcakes (90000/115000)*10 Donuts (Rs 65) Cupcakes (Rs 60 - assumption) Expected total revenue Rent 10% of total revenue Average rent per outlet Rent expense for 10 cupcakes Power 80000 30000

90000 8 65 60 5200000 1800000 7000000 700000 77778 7 15 26

(77778/115000)*10

Promotion for cupcakes (30000) 714000/9 outlet (79334/30000)*10 Table 10 (source: compiled by the author)

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Appendix G Promotional materials

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Appendix G -Promotional materials New logo for cupcakes

Figure 9 (source: compiled by the author)

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Proposed billboard for kids

Figure 10 (source: compiled by the author)

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Proposed billboard for teenagers and shoppers

Figure 11 (source: compiled by the author)

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Proposed billboard for parents

Figure 12 (source: compiled by the author)

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Appendix H Promotional budget

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Appendix H Promotional Budget

According to the objective and task method the promotional budget has been set. The communication objectives are, To make awareness 25% of target-customers. The total target customers are around 100000 120 00. As an average it has been calculated to make aware of 30000 people out of target customers since the donut production at the beginning per month was around 30000. Therefore at a minimum level GWD has to reach this amount of customers. To Increase the sales by 10% within first 3 months. GWD has an objective to maximise the market share. Therefore company has to create a demand for the product and promotional materials will be used to achieve it. Continues improvement in sales. Overall company has to achieve the final objective of the organization. Therefore continues promotion is needed and it will help to increase the sales constantly. Tasks Find the places customers exists to make aware of the product the company has to figure out where the target customers exists more and visit more. Fixing attention-grabbing billboards at identified locations a size of 4064mm*3048mm will be placed at the identified locations to make aware of the product. The size of the billboard is quite large to achieve the objectives. Free gifts will be offered to first 1000. As according to the second objective to increase the sales it has been proposed to offer free gifts for the first 1000 customers since the brand will be promoted in-between friends by word of mouth. Newspaper articles will be published. Only on special magazines such as fashion, kids, business etc. will be published these advertisements since GWD has to reach the target customers.

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TV and radio commercials will be published to keep continues contact with the customers.

Additionally Facebook fan club will be updated and emails will be forwarded to the target customers.

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The promotional budget for cupcakes

Places Near to children-parks Near to major shopping-complexes. High ways. Major towns in Quantity 2 4 1 2 Total 92000 184000 46000 92000 100000 200000 714000

Colombo. Free-gifts 1000 Newspaper articles 3 per week Total Table 11-(source: compiled by the author)

There are main two children parks in Colombo. (Rajagiriya & Town-hall) Two billboards will be put up at these two areas. The cost for a 4064mm*3048mm billboard is around Rs 46000. The expectation from this is to grab the attention of children and parents who visit the childrens park. Another 4 billboards will be placed at major shopping complexes to communicate with shoppers, teenagers, office workers etc. Placing a billboard in a high way helps to communicate with frequent travelers basically office workers and two more major towns has been chosen to place billboards since all the target customers of GWD is in urban sector. TV and radio commercials will be used after obtaining a considerable growth in the new product launch since spending on these medias is not effective because GWD has only to communicate to a specific geographical region which is Colombo.

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Appendix I Execution and evaluation

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Appendix I Execution and evaluation

The departments and assigned tasks Marketing - Design unique advertisements to reach the customers and constant

observation on sales. Communicate with the communication channel members and deliver the message properly to the target customers. Accounts - Provide funds for the required departments to purchase goods and

services on time. Keep proper records of the total income expenses of the new product launch to evaluate the progress of the company. Production - Make the production-line clear to produce goods since GWD has to

produce two products without any complaints. Production department has to report lacking resources. Operations - Integrate all departments to achieve company objectives effectively and

schedule the process smoothly. HR - Motivate the employees and provide required training. According to the

lacking human capital HR department has to train or hire new employees. The Gantt chart represents the total marketing implementation for the first six months. The performance indicators are to evaluate the progress of the marketing plan. Overall sales of first three-months should be 25% from the target-audience. Since the communication objective is to achieve this amount of awareness a successful launch should be achieved this percentage. Receive more than 85% positive-feedbacks from the customers within first 6-months. Positive feedbacks are to motivate the employees as well as to improve the product more according to the feedbacks. Evaluating points have been assigned once in a 3-month to observe the progress. Evaluation is important to be up to date since the product is in the introduction level and 64

to make profits out of it. Overall GWD is an infant company constant evaluation would be helpful to develop the concept more. Guidance/training will be provided further according to the efficiency of the process. After identifying the success and the failure points GWD has to provide the relevant guidance and training. GWD also has to purchase required resources to improve the efficiency.

Final conclusion
The ultimate objective of this report is to introduce a new product line to GWD. The proposed product is cupcakes. To be stabilized and to increase the market share constant innovation is appropriate. Therefore according GWDs marketing philosophy they have identified a need of another product to cater to their customers. The main findings are the companys SWOT which helps to identify the background of the company to position the product. Though company objectives are assigned for the long run by this new product launch these objectives can be easily achieved. Marketing mix is to represent the new product more clearly which is about the product, price of the product place and how it will be promoted. To obtain the real output the relevant strategies have been adopted and to evaluate the outcome key performance indicators have been adopted. There are many opportunities in this confectionary industry. The company has to identify the need of the customers and to promote the brand successfully with the help of marketing strategies. The identifying the most suitable segment is important and the positioning should be attractive and it should grab the interest of the customer about the brand name to be success in the market.

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References
Books Jobber D, 2007, pg309, Principles and practice of marketing, 5th ed, McGraw-Hill Education, Berkshire, United Kingdom. Kotler P & Armstrong G, 2008, Principals of Marketing, 12th edition, Prentice Hall Publications, India Kotler P & Keller K. L, 2006, Marketing Management, 12th ed, Prentice Hall Publications, India Unpublished work Jinesena L.M, 2009, Gonuts with Donuts Colombo, APIIT Sri Lanka. Websites GWD corporate website, 2009, Company profile, [online], Available: http://gonutswithdonuts.com/01-06-2009_003.htm, [Accessed: 16/12/2009] GWD corporate website, 2009, donut menu, [online], Available: http://gonutswithdonuts.com/01-06-2009_002.htm, [Accessed: 20/12/2009] Word count: 2198 except abstract, acknowledgement, appendices, references and bibliography,

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