Bauman's Frozen Custard
Strategy and Implementation Summary
Bauman’s Frozen Custard and Italian Ice will succeed in the Eugene market by selling a unique, fresh, high quality product that exceeds the customer expectations. We will focus on the local market, targeting two specific market segments, in an attempt to achieve the best reputation in our segment. We will strive to increase brand awareness among our target market during our first year of operation as a way to become part of their evoked set. When a member of our target market decides they want a frozen treat, we want to be the first name they think of.
Our most important competitive edge is our unique product offering, not found elsewhere in our market. Our goal is to maintain product consistency so that every time a customer comes into our store, they receive the same high quality, great tasting frozen treat.
However, consumers will only know how great our products are when they come in and sample them!
Once a customer has walked in the door of a scoop shop, he or she has probably already decided to purchase a dessert. However, the ambience, clarity of signage, quality of service, and product quality determine whether that choice will be repeated. Our marketing strategy is focused on the first task – getting our customers in the door, any way we can. Our sales strategy is focused on making their experience so enjoyable that they return again and again, bringing friends and relatives with them.
5.1 Competitive Edge
Bauman’s Frozen Custard’s has two competitive edges:
- Rich and creamy, high class, low fat, frozen desserts.
- Our friendly, neighborly approach to customers.
Both of these selling points will help us to achieve our overall goals of a steady customer base with repeat sales. Our focus on personalized attention to our customers, and involvement in local events and clubs, will set us apart from our competition.
The following table lists important project milestones to be undertaken before the business opens, during the start-up period, and immediately after opening the doors. The table lists the dates and managers in charge, and budgets for each milestone. The milestone schedule indicates our emphasis on planning for implementation.
We have several key steps that need to be resolved before we can move ahead with the planning of this business. We need to run several trial taste tests to finalize our product recipes and determine what flavors are most popular. We also need to raise awareness among potential investors by presenting our business plan and updating them on the progress we have made towards opening. During this time, we will be working with a local design firm to develop a company logo, our signage, and product packaging (cups, napkins, etc..).
We will then hire a close friend who has a degree in marketing/graphic arts to develop several newspaper advertisements designed to appeal to our target market. We will use the advertisements to generate brand awareness over our first three months of operations. Eighteen days after opening the scoop shop, we will begin our “Grand Opening” ad campaign. This is designed to inform our target market that our doors are open. This campaign will run for approximately 2 months.
|Milestone||Start Date||End Date||Budget||Manager||Department|
|Frozen Custard Taste Tests||8/1/2004||9/25/2004||$150||MB||ProDev|
|Italian Ice Taste Tests||8/1/2004||10/25/2004||$150||MB||ProDev|
|Business Logo/Sign Development||1/1/2005||1/30/2005||$400||MB||Marketing|
|Grand Opening Ad Campaign||4/18/2005||6/18/2005||$2,000||MB||Marketing|
|Brand Awareness Campaign||4/10/2005||7/20/2005||$1,100||MB||Marketing|
|Targeted Ad Campaigns||5/15/2005||10/31/2005||$4,000||MB||Marketing|
5.3 Marketing Strategy
Bauman’s Frozen Custard will use multiple methods to approach its target markets. Since our most difficult task will be attracting customers for that first tasting, we have a two-tiered approach. First, a mass mailing campaign will create customer awareness and generate trial. This will include coupons and our “Grand Opening” offer: with a coupon, your first dessert at Bauman’s in April or May is free. The initial cost of this offer will be more than offset by repeat sales later. After this initial campaign, our marketing strategy will focus on our two target markets separately.
For 18-24 year olds, Bauman’s will distribute flyers on campus and at the bus station. We will also seek permission to place fliers on the doors of apartment rentals and apartment complexes. To further reach the “Town and Gown” niche of this market, we will purchase radio ads on specific radio stations that feature R&B music.
To reach the “first families” more effectively, we plan to sponsor events and help out with local elementary schools and after school activities. Such plans include: sponsoring a little league team; offering a tour of the shop to elementary school students; and giving coupons and promotional information to the children to bring their families in.
All of these marketing campaigns will be supplemented by ongoing “brand awareness” campaigns, with advertisements in the local paper, interviews with the college newspaper (as the owner is a graduate), and fliers posted at popular local events. We will highlight our community service involvements as part of our “good neighbor” approach to doing business in this area.
5.4 Sales Strategy
Our sales strategy focuses first on providing the highest quality products and services to our target customers. Once a customer enters our store, it is our job to make sure their experience with us is enjoyable. Product offerings and prices will be clearly posted behind the counter, and scoopers will be educated about the ingredients and processes involved in each one, so they can answer any and all customer questions. Customers can taste any product before choosing. “Flavors of the day” will rotate throughout the entire set of flavor options, and we will keep a running tally of flavor choices, correlated with weather patterns for the day, to determine customer favorites. (While many customers may prefer mango to banana, we will certainly sell more on sunny days than rainy ones.)
In addition, our seating area will be comfortable, clean, and attractive, with booster seats available. Our restroom will include a changing table, which young families will appreciate. Customers can help themselves to free water from a container on the side of the counter.
We will initially offer three sizes: 5oz., 7oz., 9oz. sized cups. Prices will be based on size, with a 5oz serving priced at $2.00, the 7oz. $2.50, and the 9oz. at $3.00. There will be additional topping options at $0.35 each, thus increasing the sale price.
5.4.1 Sales Forecast
Our sales will largely be determined by foot traffic in the area, the season of the year, and current weather conditions. We estimate first year sales of approximately $66,840, $97,760 in the second year, and $113,402 in the third year following this plan.
These sales forecasts are based on several real world observations. On a rainy Friday afternoon in May, we observed 25 people an hour, make a purchase from one of our future competitors located in a mall. During a weekend evening in May, we observed 40 people an hour, make a purchase at an ice cream shop in Eugene, OR. We chose to use the first observation (25) and cut it in half for the approximate number of hourly customers we would have after being in business for several months. We also assumed that there would be a 60% increase in summer month sales over winter month sales. This information was given to us by the manager of a local ice cream store chain.
Bauman’s Frozen Custard and Italian Ice plans to have a soft start, inviting only family and friends over for the first few weeks. This will help the owners get experience in managing a scoop shop and help them be better prepared for the summer rush. Because we have little brand recognition, initial sales beyond that are predicted to be low, averaging less than half of the observed hourly rate over the year and less than a third of the observed rate during the start up months. We expect our sales to follow a seasonal trend, peaking out in July (the first year we assumed to still be building a customer base) and reaching a low in December and January.
For the second year, we expect to see a total 46% increase in sales due to a normal annual sales volume, and the dramatic difference between the monthly average of the startup months and their counterparts in the second year. In the third year, we expect a more conservative 16% increase in sales revenues.
Our sales forecast assumes a 10% increase in costs over the next year due to the increase in dairy product and sugar prices, which is a reasonable assumption given the current market data.
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||Year 1||Year 2||Year 3|
|Subtotal Direct Cost of Sales||$17,378||$25,418||$28,350|