FINAL PROJECT
MARKETING’S TOOLS: The Marketing Mix Applied on Distribution (Selling) and Manufacturing of Low
Carbohydrate Diet Products (Desserts) Under Category of Franchise
By
Liliana Melo
Roncliton Santos
Principles of Marketing, Course AMM 104.8026
LaGuardia Community College, Long Island City
February 5, 2007
MARKETING’S TOOLS: The Marketing Mix Applied on Distribution (Selling) and Manufacturing of
Low Carbohydrate Diet Products (Desserts) Under Category of Franchise
INTRODUCTION
According to the World Health Organization (WHO), there are about 1 billion overweight people in the world
of whom 300 million are obese; if this accurate figure it equates to a world epidemic. There are 800 million
underweight people worldwide. As a result, obesity is now the greatest contributor to chronic disease.
Therefore, Diet Bite will be created to provide the population of New York City with the possibility of
enjoying their favorite desserts with lower sugar, fat, and carbohydrates levels without feeling guilty. This
enterprise might be expanded to other locations in NYC, NY other states and might become a franchise
nationwide, or worldwide in a near future.
Target:
Product Position:
Differentiate Product:
Projected Sales:
Product Positioning
People on diet
Diabetic People
Supply an existing product or service in a superior way.
Ensure that customers know the product’s key benefits
Profit Margin = Net Profit/Net Sales
Target profit should include a reasonable salary plus a reasonable return
on the amount invested in the business
Net profit margin of 8.5% (determined from interview) *
Desired net profit is $48,000 a year (4000 per month)
Net sales for one year equals = $48,000/8.5% = 564.705
(*) According to Colombian Bakery
PRODUCT
DESCRIPTION:
A place where people can find any kind of Low Carbohydrate, Diet Products such as beverages, desserts,
breakfast, and brunch. Likewise, this store can offer people information about how to keep their lives
healthy through the food such as magazines, videos, and special events.
The store will distribute and sell products under the brands The South Beach Diet, Jello, Weight Watchers
Recipes, Atkins and others reference, and its own product under the brand Diet Bite.
Drawing 1. Some Brands will be available in Diet Bite
Also, the store will have the capacity to offer Bakery service. Diet Bite will include the following services:
PRODUCT
Beverages
Desserts
Breakfast
Sweets
SPECIFICATIONS OF LINE PRODUCTS
ORIGIN
KIND OF PRODUCT
OWN LINE - DIET BITE
OTHER BRANDS
Iced Tea
X
X
Diet Sodas
X
Hot
beverages:
X
Chocolate, Coffee,
Herbal teas.
X
Yogurt
X
Smoothies
X
Juices
Milk shakes
Ice Cream
Cakes
Mousse
Cheese Cake
Pies (Apple, Strawberry,
Lemon, Lime, Pumpkin)
Cookies
Muffins
Donuts
Brownies
Low Carb Cheesecake
Snow Pudding
Blueberry Cobbler
Eggs and Cheese
Cereal
Candies
Protein Bars
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Candy Bars
X
Packaging
Food packaging is the enclosing of food that requires protection from tampering, whether by physical,
chemicals, or biological needs. It also shows the product that is labeled to show any nutrition information on
the food being consumed. Food packaging functions are as diverse as they are important. They are broken
down as follows.
 The design: it can be a decisive advantage but it changes with fads. For example, a fun board must
offer a good and fashionable design adapted to people.
 The packaging: It must provide a better appearance and a convenient use. In food business,
products often differ only by packaging.
 The safety: The packaging must protect the food from biological agents in rats, insects, and
microbes; from mechanical damage such as product abrasion, compressive forces, and vibration;
and from chemical degradation such as oxidation, moisture transfer, and ultraviolet light.
 The "green” / Environmental issues: A friendly product to environment gets an advantage among
some segments.
 Communication: Packaged food must be identified for consumer use mainly with label text and
graphics. The packages will detail nutritional information, if they are kosher or halal-approved,
manufacturer, product size (volume or weight-based), and the Universal Product Code (UPC).
TYPES OF PACKAGES USED BY DIET SWEET
TYPE
DESCRIPTION
REMARKS
Carton Box
Base 95mm x 95mm +/For desserts
Top 110mm x 115mm +/Sizes available(oz):6.5/8/12/16/22/32
Paper: Quality pe1s and pe2s paper
imported from the USA/Finland/Canada
Qty per sleeve: 50-100
Logo and designs provided
Qty per carton: 1000-2000
using offset, rotary and
Premium PE coated cold paper
gravure printing.
cups
Quality pp plastic clear cups
Corporate logo prints.
*suitable for soda, cold drinks
General designs available
Material: High quality food grade pp
Available sizes: 12oz& 16oz
*matching ps flat lids available
Packing: 1000 pcs per carton
*Customizable to variable length and
width
PP Plastic Drinking Straws
*Solid Color / 3 color stripe / Swirl
available
*PP food safe material
Customizable color
250 pcs x 40 packet per carton
Packing: Jumbo Pack
Currently flexible straws
unavailable
Bakery Boxes
Pink bakery box
Paper Plate
Paper Bag
Biscuit Case
Outer packing
Aluminum Foil Container
PLA Containers
Ice Cream Cup Product
Bakery box - 14"X14"X6"
White bakery box with dimensions
14"x14"x6"
INDIVIDUAL ITEM SIZE: 14" x 14" x 6"
WEIGHT: 53 lbs.
CUBE: 1.23
Individual Item Size: 12"x12"x5"
Weight: 48 lbs.
Cube: 1.07
Features:
1) Good quality and food grade
paperboard, high resistance
2) Double or single PE is available
3) Measurement and design: according
to customers' requirements
4) Environmentally friendly and
biodegradable
1) Materials: LDPE and HDPE
2) Colors: tinted and clear
3) Printing: 1 - 6 colors from clear to
rainbow
4) Headers: wicket with plastic or rubber
wafer to close
5) Size and other specifications are
according to customers' requirements
1) Size: Φ145 x 50mm
2) Material: tinplate
120 pcs/cardboard carton
Carton dimensions: 75 x 60 x 33cm
Size: 4 3/8"(d) x 2"(h)
Good for baking food
Good quality
1000 pcs. Carton
1) Material: OPS
2) Thickness: 0.2mm ~ 1.5mm
3) Best container for food, cake and
cookie
4) Elegant style and various sizes
5) Can be covered or sealed directly for
the convenience of storage,
display, or carrying
6) Dimensions: 190 x 164 x 6mm, 190 x
164 x 67mm, 32oz
Outer packing:
300 sets/ctn
Type 24
This box can help you
easily bring your birthday
cake, also can keep your
cake fresh in refrigerator
and heated in microwave
oven.
PLA containers and
containers are made of
recyclable materials that
make them sanitary and
convenient
1) Material: PP
Clear Beverage Cup Products
Jelly Cups
Transparent Plastic
Height: 44 mm / Top diameter: 98 mm /
Caliber 89 mm and Capacity: 181 ml
Type 25
Height: 40 mm / Top diameter: 101.5
mm / Caliber 93.5 mm and Capacity:
227 ml
Type # 136
Height: 63mm / Top diameter: 101.5 mm
/ Caliber 93 mm and Capacity: 345 ml
2)
Heat
disinfection:
>120°C (no color fading)
3) Used for packing food or
beverage
1) Material: PP
2) Used for packing food
3) Thoroughly resoluble
Type # 95
1. Material: PP 2. Ideal for
Height: 40mm / Top diameter: 46.2mm /
packaging jelly 3. various
Caliber 38 mm and Capacity: 29ml
designs is available
1) Material: LDPE
2) Made from non-toxic polyethylene
3) Can be manufactured according to
customers' specifications
4) Suitable for supermarket and food
packing
References according to MALEX PAPER PRODUCTS SDN BHD http://www.malex.com.my
PRICE
Strategies:
Competitive pricing: If our product is sold at the lowest price regarding all our competitors, we are
practicing competitive pricing. Sometimes, competitive pricing is essential. For instance, when the products
are basically the same, this strategy will usually succeed.
Remember that the success of competitive pricing strategy depends on achieving high volume and low
costs. If our prices are lower than our costs, we are going straight to bankruptcy! To avoid such a mistake,
we have to take notice of the break even ratio that you will find below.
Cost-plus-profit: It means that we add the profit we need to our cost. The authority may have
access to the costing data and should like to check if the profit added to the cost is not too high.
Value pricing: It means that we base our prices on the value you deliver to customers. For
example, when a new recipe has developed, we can charge high prices to the customer. This practice is
also called skimming. It is easy when we are in the introductory phase of the product life cycle.
Weekly and Daily Sales Projections
 The store will be open 7 days a week all year round (52 weeks)
 Weekly sales: 564.705/52 weeks equal sales of $10.860 per week
 Daily sales: 564.705/365 days equals sales of $1547 per day
Determining Cost of Products:
Know variable costs
 Costs that vary with the level of production
 Materials, labor, packaging
Know fixed costs
 Cost that do not vary with production
 Rent, utilities, interest, and advertising
Cost Method - Activity Based Costing (ABC): Activity Based Costing (ABC) is a method of
allocating costs to products and services. It is generally used as a tool for planning and control. This is a
necessary tool for doing value chain analysis.
Steps for Performing ABC
1.
2.
3.
4.
5.
Analyze Activities
Gather Costs
Trace Costs to Activities
Establish Output Measures
Analyze Costs
We select Activity-based costing (ABC) because it offers the following benefits of activity – Based
Costing:










Identify the most profitable customers, products and channels.
Identify the least profitable customers, products and channels.
Determine the true contributors to - and detractors from - financial performance.
Accurately predict costs, profits and resources requirements associated with changes in production
volumes, organizational structure and costs of resources.
Easily identify the root causes of poor financial performance.
Track costs of activities and work processes.
Equip managers with cost intelligence to stimulate improvements.
Facilitate a better Marketing Mix.
Enhance the bargaining power with the customer.
Achieve better Positioning of products.
Variable Costs
PRODUCT
MATERIAL DIRECT LABOR
Brownies
0.60
0.75
Low Carb Cheesecake
3.10
0.75
Snow Pudding
2.60
3.00
Blueberry Cobbler
4.35
2.25
AVERAGE VARIABLE COST
TOTAL VARIABLE COST
1.35
3.85
5.60
6.60
4.35
Note: See Appendix 2
Fixed Costs
Fixed Overhead $10,000
Advertising $ 20,000
General & Administrative $ 96,000
Total Fixed Costs $136,000
Break-Even Selling Price
We can make 100 desserts per day or 36,500 per year
Selling Price = Variable Cost + Fixed Cost Quantity
(4.35 x 36,500) + 136,000 = 294,775
Selling Price = 294,775 / 36,500
= $8.07
Pricing Factors
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Product or service costs
Supply and demand
Sales volume
Competitors’ prices
Firm’s competitive advantage
Economic conditions
Business location
Seasonal factors
Credit terms and purchase discounts
Desired image
Pricing Strategies
Final price depends on desired image for the product or service:
1.
2.
3.
Discount equals Bargain
Middle-of-the-road equals Value
Prestige equals Upscale
Penetration
1.
2.
3.
4.
Objective is to gain high volume sales quickly
Set price just above unit cost
Profits are likely to be small
Attract customers with no brand loyalty
PROMOTION
Goal:
Branding
Create brand image
Persuade customers to buy
Develop brand loyalty
A brand gives a product identity and implies a level of quality or service
It can be a name, term, or symbol that will help identify the maker of
the product
 Will help differentiate product from the competition
 Helps build customer loyalty





Company: Diet Bite Foods
Brand: Diet Bite
Slogan: “your sweet sin without guilt”
Brand Associations  Attributes: quality, tasty, organic, homemade
 Benefits: Healthy
 Values: Caring, honest
 Culture: Big city values
 Personality: Caring person
 User: People on diet, Women upper 18 years old, Diabetic People, and
sophisticated people who want more than eat a dessert.
Product Adoption  Awareness
Process:
 Interest
 Evaluation
 Trial
 Decision
 Reinforcement
Publicity: Ways to gain positive publicity
1.
2.
3.
4.
5.
6.
7.
8.
Write an article about healthy desserts.
Contact local TV and radio stations and offer to be interviewed
Publish a newsletter (healthy magazines)
Speak at local functions (hospitals)
Offer or sponsor a seminar (about how to eat healthily)
Write news releases and fax them to the media
Sponsor a community project or support a nonprofit organization or charity
Promote a cause (how to care our health)
Advertisement:
It takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You have to take notice
about three important notions:
Reach is the percentage of the target market which is affected by your advertisement. For example, if you
advertise on radio you must know how many people belonging to your segment can be affected.
Frequency is the number of time a person is exposed to your message. It is said that a person must be
exposed seven times to the message before to be aware of it. Reach*frequency gives the gross rating
point. You have to evaluate it before any advertisement campaign.
Message: Sometimes, it is called a creative. Anyway, the message must: get attraction, capture interest,
create desire and finally require action that is to say close the sale.
Public relations:
Public relations are more subtle and rely mainly on your own personality. For example, you can deliver
public speeches on subjects such as economics, geo-economics, futurology to several organizations (civic
groups, political groups, fraternal organizations, professional associations)
These speeches will enable you to develop new relationships and their cost is nil !
-Sales promotion:
It includes fair trades, coupons, and discounts are linked to the sales strategy.
PLACE
Distribution Methods
WE
“SWEET BITE”
CUSTOMER
RETAILER
WHOLESALER
CUSTOMER
RETAILER
CUSTOMER
We have considered three main distribution channels to our products:
1.
Selling to the customers: Whether we sell by ourselves (as retailer) whether we employ a sales
force, we are in these cases in front of the final customer. There are not intermediaries between us
and him. Unfortunately, except for the retailer business, this situation is far to be the general case.
In this case, the sales will be at the store located in Manhattan.
2.
Selling to the retailers: For example, we manufacture bakery products and we sell them to the
New York retailers.
3.
Selling to the wholesalers: There are two wholesalers in NYC such as BJ’s and Costco. We sell
our bakery products to these big stores. On turn the wholesalers sell or products to the retailers
which finally sell to their customers.
Location:
In Manhattan:
Design:
Place with the capacity of 100 people and 10 employees. The bakery will have special designs that show
its elegance and sophistication. Also, the place will count on kitchen, bathrooms and 25 tables.
CONCLUSION
The ultimate objective of marketing is to link
1.
2.
3.
4.
Product to customer benefit
Price to customer cost
Place to customer convenience
Promotion to customer communication
APPENDIX 3
PROMOTION THROUGH THE INTRODUCTION STAGE
WE UNDERSTAND YOU WHEN …
CAN NOT BE EATEN BY YOU ….
SOON … THE SWEET WAY TO GET IT HEALTHILY
YOU CAN IMAGINE TO EAT THEM
WITHOUT FEELING GUILTY?
SOON … THE PLACE WHERE WILL UNDERSTAND YOUR FEELINGS