A Tasty Snack Voyage: Summary
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Pirate’s Booty is an aged white cheddar baked corn puffs, purchased by B&G Foods in the second quarter of 2013. The Pirates Booty product line is expanding into England, focusing on the most popular cities, such as London, Wales, and Birmingham.
The target group of Pirates Booty comprises mainly children, who make up 21.05% of the company consumers in England (“World Population Review,” 2014). However, the snack is also popular among English population in general. The market research shows that other interested groups include adults who like snacks ($68.80 per person/ year) (“British Council, Snack Culture Section,” 2014) and healthy eaters. Considering the FSA recent warning of the dangerously high levels of salt in children’s snacks and the focus of the top retail English supermarket on healthy eating, B&G Foods will offer the Pirates Booty product lines as a healthy snack choice for breakfast or an alternative snack (“British Council, Snack Culture Section,” 2014).
The key brand concept is pirates, adventures and fun. Children admire the pirate stories about the brave sailors who search for treasures on desert islands. The cultural analysis helped to establish that the brand’s name that is closely connected with English culture. Despite the fact that pirates existed in many countries, England is considered to be a major player in the history of pirates. Thus one of the United Kingdom’s popular family amusement parks is called “Pirate Cove Adventure Park” (“Pirate Cove Adventure Park,” 2011). Annually in UK and 39 other countries, there is an “International Talk Like a Pirate Day” held on September 19. It is a celebration, as well as charity and fundraising organization (“Timeanddate.com,” n.d.).
According to the results of the competitive analysis, the largest competitor companies in England are Walker, Tyrells Chips, and McCoy’s. Two out of three above mentioned companies produce healthy snack choices (“Walker,” n.d.; “Tyrrells English Crisps,” n.d.).Moreover, one of the Walker’s healthy lines is based on baked rice and corn puffs, which are the main ingredients of the Pirate’s Booty. Besides offering a wide range of flavor choices, the three competitor companies lack a sharp image for their brands. That is why, to be a strong contender, the Pirate’s Booty should stake on the popular pirate theme and healthy eating choices.
The marketing plan comprises of strong marketing tactics to accelerate the sales. To generate more sales, profit, and customer awareness of this product, Pirate’s Booty will be distributed to the top three retail supermarkets in England. These supermarkets are Tesco, Sainsburry’s, and Asda. Pirate’s Booty will be displayed in the supermarkets among other competing snacks, as well as at checkout to entice last minute impulse buys. Pirate’s Booty will be sold individually or in bulk, offering a better deal.
The marketing tactics embrace promotion days, giving away sample sizes of Pirate’s Booty at youth-oriented events by a fellow employee dressed as a pirate, and a unique promotional idea to increase customer interest. Each bag of Pirates Booty will contain a piece of the treasure map with a code giving access to the e-map located on the Pirate’s Booty website. When a player will collect all the missing pieces, the treasure will be waiting for him/ her. Treasures could vary from a free pack of Pirates Booty to coupons with offers for future savings.
The operational plan will help to lay out the process of Pirate’s Booty expansion to England. It will be financially beneficial to make room for the additional production in the existing manufacture. Pirate’s Booty will be kept fresh while shipping because it does not have short shelf life. Also, the product is light weight, which makes it easier and cheaper to ship. In the future, once there is a net income, B&G Foods should come back and discuss expanding to manufacturing in England. Due to the increase in production, there will be a need for additional equipment. New equipment will be purchased to outfit the factory expansion. There will be a need of approximately 300 new employees.
The importing taxes that England places on the products include a 9% duty tax on all products valued over $23.50 and a 20% VAT tax on all imports (“Duty Calculator,” 2014). Another extra expense is insurance costs on the shipping.
The total expenses of the startup budget for the 1st month are estimated at $3,925,000, and include additional equipment purchases ($1,100,000), expansion of factories ($750,000), additional raw materials needed ($350,000), shipping costs ($47,000), insurance costs ($37,000), additional wages ($720,000), administrative expense ($750,000) and duty and VAT taxes ($171,000).
The break even analysis allows us to see what the required units of sale will be in order to cover all the fixed and variable costs of the product. Pirate’s Booty’s break even in units would be:
1,507,000 / (1.60 – .57) = 1,463,107 (units/ month)
The estimated selling price of Pirate’s Booty in England is 1 pound that equals $1.60. It is estimated that over 4.4 billion bags of crisps are consumed in England every year (“The Guardian,” 2010). Based on this number, the projected sales will use an estimated 2,000,000 bags bought a month. The estimated sales for a year will be 38,400,000. However, during the first two years while the product is being built up in the market, Pirate’s Booty will probably not reach the set goal.
Overall, the expected loss during the first year will be 15,399,660. B&G Foods will not expense the total loss of 15,399,660 because the expected net income from US operations will mostly absorb the loss during the first four years. In the long run, once the product is fully established, B&G Foods will have a higher net income, compared to the current one.
To conclude, the successful integration of Pirate’s Booty into the English market may be fulfilled within five years if there will be an active implementation of the marketing tactics.
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