Grenadier Chocolate company limited

4/15/12

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Group 3

INTRODUCTION
Mr. Ronald Begg is an ex-employee of : P&G brand manager Frito Lay National Sales Manager He now wanted to start his own company and after several trials and thought process and looking at available finance the eventual choice was a new, milk modifying, instant chocolate syrup for household use. The product was given the name MilkMate.
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SYNOPSIS

Chocolate is the dominant flavour, estimated to account for about 80% of total sales. The competition powdered Milk Modifiers had low solubility, were difficult to mix, and often left a residue in the glass after drinking The new liquid form of product dissolves instantly & completely

Market researches on Milk Mate gave positive results which gave Mr. Begg encouragement to go for the product
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CURRENT MARKET SHARE

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SYNOPSIS

Pricing and positioning strategies were worked out keeping in mind the competitors Investment and working capital figures were chalked out and banks gave a nod provided the viability of product as well as business was there. Mr. Begg wanted to find a space here where he could combine a small scale product with multi-national marketing techniques.

The biggest catch was that big multinationals could manage huge brands but not small ones , Canadian companies could manage small brands, but are reluctant to invest in 4/15/12 marketing and promotion support programs.

To master a particular market requires experience & additional learning Competition

Durable s
FMCG

Offering Markets/Public s Exchange MR Diffussion, Adoption & Innovation

B2B Govt Mktg Retail Internation al Mktg Social Mktg Rural Mktg

Broaden to Generic Mktg concept

Mktg Mgmt

Formulate Problem

Determine Research Design

Design Data Collection

Strategic marketin g Planning Corporat e Strategy &allocati on

Configuration (Product) Facilitation (Distribution/place) Valuation (Price) 4/15/12 Symbolisation(Promotion)

COMPETITION OF MILKMATE
Which brand? What from of milk modifier do I go for? How do I want my milk? What desire do I want to satisfy? Coconut Water Juice Milk
Desire Competi tors

Milk Mate

Powder Liquid

Honey Sugar Plain milk Tea Coffee

Generic Milk Competit Modifie ors 4/15/12

Enterpri se Competi

Form Competi tors

SEVEN DECIDING CRITERIA

Market Penetration Vs Market Skimming

Selling Price Trade Margins Advertising and Promotion Supply Chain : Retail Distribution Company salesmen Vs Sales Agents
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Regional distribution Vs National

MODIFYING A HABIT

Form of existing product: Powder of new product: Liquid

Form

Methods

to bring about the change in consum Produce a relevant benefit Liquid that dissolves instantly
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mindset:

MARKETING MIX
X

Product: Suits the market and comprehensive testing was carried out to come down to final formulation. Price : Market leaders were making losses ($1) per case because of rise of prices of sugar, essential ingredient in the product.
X

Advantage to company
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MARKETING MIX
Distribution Company salesman v/s Salesman on commission Salesman commission : 3 to 10 % Retailers Expectations : 20 % Margin ( margin given by existing players 18 %) X Communication Focus on ONTARIO and QUBEC Efficient advertising: Advertisements on 16 Channels Promotion: Cents-off coupons
X

Constraints Limited resources Entire dependence banks for funding

X

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PROJECTED MARKET SHARE

Per pound revenue: 0.99$

Total Market Size : 23 million pounds

Expected Total market Expected market Revenue (units million market (units million (Million $) pounds) share (%) pounds) 25.30 27.83 30.61 33.67 37.03 15 25 35 45 50 Total 3.79 6.95 10.71 15.15 18.51
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3.75 6.88 10.60 15 18.32 54.76

PROGRAM OF ADVERTISING & PROMOTION

Year 1: Extensive Promotion
TELEVISION: ON CBC NATIONAL NETWORK:
Class AA Time (Prime) 1 Ad @ $4775 for 180 days

ON CBC MID EASTERN REGION

Class B Time (Noon to 6:00pm Weekdays) 1 Ad @ $2303 for 180 days

MAGAZINES: CANADIAN MAGAZINE (NATIONAL EDITION) - HALF PAGE $7960 for 26 Weeks NEWS PAPER: Toronto star $2.7/line x 15 lines for 26 weeks (once 4/15/12 TOTAL - $ every 2 weeks)

PROGRAM OF ADVERTISING & PROMOTION

Year 2 to Year 5
TELEVISION: ON CBC MID EASTERN REGION
Class B Time (Noon to 6:00pm Weekdays) 1 Ad @ $2303 for 365 days (Everyday for 4yrs)

TOTAL FOR YEAR 2 TO YEAR 5 $336237

Total Advertising Cost for 5 years plus 10% interest on bank loan (assumed) for 5 years is $7,802,001
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ADVERTISING & PROMOTIONAL EXPENSES

Advertising Cost: $7820001 Promotional Expense: $15000 Special Promotional Material: $25000 Total: $7,842,001 Total No. Of cases Sold : 4.6 Million Cases (ie 55.31 million units) Advertising and Promotional 4/15/12 Expense Per Case : $1.70

SELLING PRICE & TRADE MARGINS

Particulars Ingredients Packaging Manufacturing Distribution Selling Expenses Advertising & Promotion Total Exp. Selling Price to Retailer Profit/Loss * Cost per MilkMate Nestle ($)* ($)* 7.25 6.16 0.75 0.64 0.5 0.425 0.5 0.425 0.5 0.5 1.5 11 11.5 1.70 9.85 11

0.5 1.15 4/15/12 case (12 packs of 1

PROFITABILITY OVER 5 YEAR PERIOD

Overhead Expenses : 50000x5 = $250,000 Initial Investment : $25,000 Total Expense For 5 Years Variable Cost : $45,310,000 Fixed Cost : $275,000 Total Cost : $45,585,000 Sales (Units) : 4,600,000 Sales ($) : 4600000x 11 = 50,600,000 Overall Profit : $5,015,000
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NK HA T OU Y
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