Black Horse Energy Drink Buisness Plan

Blackhorse Energy drinks

I.

Executive Summary

Black Horse energy Drinks is a firm in the partnership of two persons. It’s a newly established business which will start its operations w.e.f. 1st Jan 2012. the plan came to our mind because in Pakistan only branded energy drinks are available which being too expensive are not in reach of a common man. Some local companies are manufacturing the energy drinks but they are not able to maintain the quality. The main product of the firm will be energy drink whereas the supporting drinks would be different flavors of soft drinks. Currently in Pakistan there is low trend of using energy drink; however the trend is continuously rising especially in the urban areas. This gives us a hope and helps us to be optimistic. We can suppose that if our product is properly advertised and awareness is created among the people, our firm will have a bright future. We will have to adopt a marketing strategy which will not only make our product known to the customers but also make them realize the importance and benefits of using energy drinks. Our target customers would be the generation of 20 to 40 years of age without any discrimination of the gender; however research shows that the main users of energy drinks are males. The customers of big cities would be targeted belonging to the upper and middle class. Our product is a consumer product so we will sell directly to the retailers as initially business will operate on small scale. For distribution purpose own vehicles would be purchased. The overall supervision will be carried by the owners of the firm, however to monitor the work of the employees effectively different managers are hired. One manager is hired for each department who would be held responsible for the performance of the department. To avoid risk the product is launched in the twin cities. Our plant is not running on full capacity however it has the capacity to fulfill the production needs within different cities of Pakistan.

II.

General Company Description

The name of our firm is Blackhorse Energy Drinks. The firm will be situated in Rawat and is producing energy drinks. To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and move swiftly to prepare for what's to come. We must get ready for tomorrow today. Our vision is to “no compromise on quality and quantity as well” Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth. The mission of Black horse Energy Drinks is to be the Pakistan’s premier consumer products company focused on convenient drinks. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity Our target customers would be the generation of 20 to 40 years of age without any discrimination of the gender. The customers of big cities would be targeted belonging to the upper and middle class. As because of faster global changes in world’s economy, if we need any future change we will do. It might be change in our marketing strategy or pricing and whatever the requirement of the time.

III. Products and Services Product Specifications: We offer premium quality Concentrates made entirely with Natural Products Herbal Extracts rich in Vitamins and Minerals Easy for absorption sugar Corn Syrup Unique Ecologically Clean Honey consisting of more than 75 percent Minerals, Amino Acids and Natural Sugars Wide ranges of variations are available on Flavor and Aromas Classic, Lime, Wild Strawberry, the authentic Rose and Mint Energy Content Vitamins, we add Pro Vitamin A, Vitamins C, D, K and P derived from wild organic herbs. One of our product is a natural concentrate for energy drink WITHOUT CAFFEINE. The drink has the same energy value as the standard one does. PRODUCTS: Our main products include Black Horse Energy drink. The supporting products are different flavor of juices like Mango Juice, Apple Juice , orange Juice, Strawberry Juice, Pine Apple Juice. Major competitive advantage is our reasonable pricing along with best quality. Secondly highly advertisement strategy at the local and national level will also help us to gain a competitive advantage.

IV. Marketing Plan

Market research - Why? There are 306 brands of energy drinks being used in the world and in Pakistan there are only 10 to 15 brands available in the market among which majority is branded which being much expensive is targeting only elite class.3 to 4 energy drinks are launched locally which stands no where near the branded items when it comes to quality. There is a lot of gap between the local and the branded items. There is a lot of room for a product of good quality and at the same time a reasonable price.

Market research - How? Sales and marketing is the most important department of any beverage company. To boost the sales and profit, this department should be properly planed and managed. Black Horse Energy has a very aggressive and hardworking sales and marketing department.. For example; Aquafina have an advantage over the nestle pure life water as its available on the outlets, general stores, bakeries too earlier than the time span taken by the nestle water, it’s all because of strong network of Pepsi and efficient marketing and sales activities. There are two kinds of market research: primary and secondary. To understand the market we have to visit different markets of Rawalpindi, Islamabad and many other places. RESEARCH QUESTION: What is the level of awareness among people about energy drink? RESEARCH OBJECTIVES:

•

What kind of drinks student usually drink?

•

What are the different energy drink companies in the market?

•

Which brand they prefer in energy drinks.

•

What is the level of awareness about energy drinks?

•

Who drink more male or female?

•

Why do people take energy drink?

•

Any side effect due to use of energy drink?

•

What is the level of awareness regarding ingredients of energy drinks?

•

Who are more aware students or professionals?

•

What age group is more aware about side effects of energy drinks?

We gathered information by asking these questions from people. Most of the users of energy drinks belonged to the elite class. Middle and lower class people could not afford quality energy drinks but they wanted to. As a whole most of the users were not satisfied with either the quality or the price. There is lack of awareness in Pakistan regarding the use of energy drinks. The important part of our marketing plan would be to create awareness among the people. In the big cities like Rawalpindi, Islamabad,

Lahore and Karachi only 10 to 15% people use this product which means that we have a lot of customer to target. .

Product: As in Pakistan no doubt there are best quality energy drinks are available but they are very costly and almost unaffordable for a common men. So our main emphasis is to provide energy drinks at a reasonable price everywhere for everyone, but still no compromise on quality. A research was carried to understand the needs of the customers, the discrepancies in the existing energy drinks etc. 70% of the consumers were not satisfied with either the quality or price of energy drinks. When we asked them about how they would react to a new product, most of them responded positively whereas few people found it difficult to have a quality energy drink in a reasonable price which shows that we will have to adopt an active marketing strategy.

Features and Benefits: Energy drinks may boost performance during exercise by activating the brain, new research suggests. Apparently, brain areas can be activated by titillation of unknown and mysterious receptors in the mouth, according to a study in the issue of the Journal of Physiology. We all know that when we work out, it's important to stay hydrated. Something we may not be so clear on is what exactly we should drink when we exercise. Ordinary water, of course, is the classic choice. But with store shelves everywhere full of sports drinks, energy drinks, and various flavored and fortified waters, what's an exerciser to do?

Experts say it all depends on your taste -- as well as the length and intensity of your workouts. Here's a look at how the various drinks measure up.

Customers: Initially the business will be operational in Rawalpindi and Islamabad, so we can sell directly to the retailers without involving any third party. Afterwards when the business will expand its activities in other cities independent distributers will be hired. Our target customers would be the generation of 20 to 40 years of age without any discrimination of the gender. The customers of big cities would be targeted belonging to the upper and middle class. The young target customers are more brands conscious so we will have to position our product at a high level. The target customers above the age of 30 years are more health conscious, so providing hygienic drink is also of the primary importance. One thing which should be kept in mind is that all the characteristics described above would be provided in a reasonable price, otherwise our product would become out of reach of the middle class.

Competition: In Pakistan with the increasing trends of using energy drinks number of brands available are increasing. Generally, there is no manufacturer here. There are distributors who import these ready to drink around the world. Main market to import energy drinks is UAE, from there importers import in bulk and then distribute in their target areas. OZO Switzerland is a beverage company with the most extensive distribution system in the world. To distribute their product in Pakistan they have granted the rights to Ghani Group of Industries. Who recently have soft launched the product in Lahore market as OZO energy drink can be found in cafeterias at colleges and universities. This is the only brand that distributors import it directly from the manufacturer and they make its packaging accordingly then.

The majority of the sales are coming from urban areas where people have greater purchasing power and awareness of such drinks. Sales of energy drinks are limited in rural areas although they are growing. Around 66% of the Pakistani population resides in rural areas, but most do not buy energy drinks as they are too expensive. The customers from the middle class are unable to use it frequently. There is a lot of difference in the quality between the local and branded products. There is a lot of room for a good product available at a very reasonable price. This is a huge competitive advantage to our product. The indirect competition is with the soft drink manufacturers including Pepsi, coca cola, Sheezan juice, Nestle etc.

Niche: As described above in Pakistan there is availability of a wide range of energy drinks with a better quality but still there is a pricing issue. So our unique marketing corner is to provide a good quality of energy drinks to everyone at anywhere in Pakistan at a very reasonable price. Our purpose is to capture the market by earning minimum profit just to increase our sale volume.

Strategy: As distributers are chosen as a medium of distribution, so we should place a proper check on the distributer who ensure that our product is present in different outlets. The minimum quantity which should be present in the outlets is 48 pieces in A class outlet and 24 pieces in B class outlet. Proper visits of different markets would be organized in order to evaluate the performance of the sales officer and making a check on the presence of our product in the market. Once the product is reached in the market then our marketing plan will be started on the trial basis in a particular city i.e. Rawalpindi.

Promotion: Our main purpose is to provide energy drinks for everyone at everywhere so first of all we have to launch our product in the market targeting all classes. Our promotion policy includes the following advertising mediums. Cable Adds: this is one of the very common, effective and as well as very inexpensive way to market our product in the each city of Pakistan. FM Radio: it’s almost the same marketing technique but more effective comparatively, other marketing channels include billboards, weekly and monthly magazines, daily newspapers, posters, pumphletsetc. Providing the students of different universities at the introductory stage the special prices including first time purchasing discount etc.

Promotional Budget: Initially we have to advertise very heavily because the general perception of Pakistani people is that energy drinks are very costly so we will have to tell people that the quality energy drink is really in reach of common men. That’s why we have to make a huge marketing expenditure at the start i.e. Rs.15, 00,000 on the different promotional activities described above. This amount will be treated as “Deferred Cost” which will be covered when the business starts to run smoothly. After that we will have to spend Rs.500, 000 as ongoing marketing expenditures. This cost will be charged to the income statement. This cost is also to be included while calculating the cost of the product. Pricing: Price may not be the only competitive factor but in our business plan it will become the major competitive factor. Along price another major factor affecting the mind of the customer is quality. We have chosen a price that will give us the main competitive advantage if we are able to maintain quality.

(Branded) is Rs. 130 to Rs. 150. The price of the local competitors is almost same or less but that we do not bother because they are not able to maintain the quality. Proposed Location: The location of the firm is proposed to be in Rawat. There are certain advantages of this location. The first and the most important benefit is the cost of the land. The cost of land is much less as compared to Rawalpindi and Islamabad. Secondly it is situated right next to the G.T Road which will be very beneficial from the carriage point of view. It will be very convenient for the suppliers to provide raw material and to distribute final product and also the cost will be less.

Distribution Channels: Distribution (or place) is one of the four elements of marketing mix. An organization or set of organizations (go-betweens) involved in the process of making a product or service available for use or consumption by a consumer or business user. As in the introductory stage we will make sales only in Rawalpindi and Islamabad so we can distribute directly to the retailers. For this purpose we have purchased three new vehicles ( Shahzore). We can take orders from different channels like web, mail order, phone calls, through marketing staff. Most important source will the marketing staff. Afterwards when we will operate in different cities like Lahore, Faisalabad, Multan different independent distributers will be hired.

Sales Forecast: Product will be launched in January on a trial basis in Rawalpindi. In March it will be launched in Islamabad.. To avoid any disaster huge investment will not be made initially. After 1 year we will have to do market research again and any modifications needed in the product would be made.

Month

Sales

January February March April May June July August September October November December

12000 14000 20000 20000 23000 25000 22000 22500 23100 19000 18000 15000

Legal Environment: As such there are no special leagal requirements to start up such a small business like a partnership between to persons. We didn’t find any requirements before starting our operation anyways there are certain requirements we will have to fulfill after starting our operational activities like we will have to produce energy drinks and other juices according to the standards established by the departments of health and environments. Credit Policies: For any business to run effectively credit selling or credit purchasing is very important. There are very few businesses which can effectively be run without dealing in credit. As our firm is in the introductory stage so we will have to sell on credit in order to enter into the market. Credit itself is not bad if proper credit policy is established and the danger of bad debts is minimized.

We will make sales on credit for approximately 30 days. After 40 days if the debt still remains unpaid we will remind the customer by giving him a phone call. After 55 days a letter is written to the debtor for the payment of the debt. After 75 days we will contact our attorney to deliver a notice.

V.

Management and Organization As the business is in partnership so the business would be

supervised primarily by the owners. The hierarchy of the organization is as follows

OWNERS

PRODUCTION DEPARTMENT

SALES

QUALITY

MARKETING

CONTROL

DEPARTMENT

DEPARTMENT

For each department a manager is hired to supervise the work of the relative department. These managers are qualified in their fields. These managers are given sufficient authorities and are held responsible for any malfunctioning. The production staff is required to be well skilled because our product is directly related to the health of the consumers. Any minor mistake can cause major loss which will affect the reputation of the company. So no compromise will be made on this. The duty of the marketing staff is also very challenging because there is less trend of the use of energy drinks. The marketing staff

should promote the product effectively otherwise there is quite a chance for the failure of the business. Secondly the marketing staff should make sure that our product is available in the market and it should be properly displayed on the shops i.e. visible to the customers. The quality control department requires highly qualified staff to ensure that our product is hygienic and do not contain any side effects for the health of the consumer.

Professional and Advisory Support: The business is under the ownership of two persons so the final decision making authority is with the two partners. The legal matters are supervised by our attorney. The firm is not operating on a very large scale yet we have established a proper accounting system. The accounts department records the daily transactions, manage account receivable and payables. All the important decisions are being taken with the advice of all the three managers whose knowledge provides guide lines for the important decisions to be taken. All the cash involved in the business is kept in Allied Bank Limited.

Startup Expenses and Capitalization:

Start-up Requirements Start-up Expenses Plant and Machinery cost Stationery Vehicles Rent Computer Consultants Furniture Brochures Utility Cash required

8,000,000 18,000 1,800,000 45,000 30,000 10,000 200000 50,000 20,000 5,000,000

Total Requirements

15173000

Opening day Balance sheet 1st January 2012 Assets

Equity and liabilities

Rs.

Rs.

Current Assets

Liabilities:

Cash

0

3,000,000 Other current assets 1,000,000 Fixed assets:

Equity: 14,000,000

Plant and machinery 8,000,000 Furniture 200000 Vehicles 1800000

Total 14,000,000 14,000,000

VI. Financial Plan Income Statement

No.of Years

Year 1

Year 2

12848000

14534000 15600000

Sales(Rs.) Less: cost of

8876800

9768400

goods sold Gross margin

Year 3

10050000 3971200

4765600 5550000

Less marketing and admin.

500000

500000

475000

Rent

540000

594000

653400

Salaries

1500000

250000

355000

Depreciation

480000

480000

480000

Utilities

200000

245000

280000

Electricity

400000

600000

700000

Telephone

120000

170000

195000

535000

613500

702600

4275000

3452500

3138400

-303800

1313100

2411600

Expenses

Carriage

Total marketing and admin expenses Earnings before tax

Balance sheet As on Dec. 31 2012 Assets

Equity and liabilities

Rs.

Rs.

Current Assets:

Liabilities :

Cash

Accounts payable

3170200

400000

Accounts receivable

Rent outstanding

260000

45000

Inventory

Wages payable

375000

80000

Other current assets

Accumulated depreciation

500000

480000

Fixed assets: Plant and machinery 8,000,000 Furniture 350000

Equity: Current year profit/loss 13696200

Vehicles 2046000

Total 14701200

14701200

14,000,000 (303800)

Balance sheet year 31st Dec, 2013 Assets

Equity and liabilities

Rs.

Rs.

Current Assets:

Liabilities :

Cash

Accounts payable

4776300

400000

Accounts receivable

Electricity bill

280000

50000

Inventory

Wages payable

410000

90000

Other current assets

Accumulated depreciation

500000

960000

Fixed assets: Plant and machinery 8,000,000 Furniture 400000

Equity: Current year profit/loss

13696200 1313100

Vehicles

15009300

2143000

Total 16509300

16509300

Balance sheet Dec 31, 2014 Assets

Equity and liabilities

Rs.

Rs.

Current Assets:

Liabilities :

Cash

Accounts payable

5298900

550000

Accounts receivable

Telephone bill

415000

15000

Inventory

Wages payable

632000

90000

Other current assets

Accumulated depreciation

770000

1440000

Fixed assets:

Plant and machinery 8,500,000 Furniture 600000 Vehicles 2700000

Equity: Current year profit/loss

2411600 1742090

0 Less: Drawings: 16820900

Total 18915900

15009300

18915900

600000