MKBP.pdf

3

MK Exhibit 1: Positioning Maps

Marketing Mission Statement

Easy Strainer Inc.’s marketing division mainly focuses on increasing awareness of our

product, having an effective market positioning in the cookware industry, and generating sales.

We plan on using various marketing strategies to reach consumers and selling channels. The

Easy Strainer aims to differentiate itself from competitors with its unique and convenient

straining function.

Marketing Objectives

1. Increase Awareness

We will maintain consistent messages and

color schemes throughout or advertisements so the

Easy Strainer is easily identifiable and recognized.

In that way, we will connect a very specific need to

our product. We also will advertise in multiple

outdoor channels so the Easy Strainer will be

relevant in common places like bus stops, airports,

or malls. We can measure our success by analyzing

the percent change in awareness in each year of

business.

2. Improve Position amongst Competitors

To improve our position amongst our

competitors we strive to maintain customer

excellence by having superior customer service in our online presence (through customer

interaction on the Easy Strainer Facebook page and company site) and by “developing a clear

and precise positioning strategy”1 (MK Exhibit 1: Positioning Map). As you can see from the

exhibit, Easy Strainer is not quite perceived as best amongst its competitors. We will focus our

1 Grewal, Dhruv, Ph. D, and Michael Levy, Ph. D. Marketing. 4th ed. Boston: McGraw Hill Education,

4

marketing efforts on making Easy Strainer perceived the best amongst competitors by educating

our consumers and stressing how it is durable, visually appealing, and easy to use. We can

measure whether we are considered to be excelling in this area through collecting survey data

each year of business and asking our target market to rank us in these attributes again.

Segmentation

MK Exhibit 2: Segmentation Tree

After conducting one-on-one interviews, online surveys, and a focus group, we

determined our target segments by looking at demographic and psychographic characteristics.

Specifically, we broke down our target market by gender, age, income, and how often someone

cooks (MK Exhibit 2: Segmentation Tree).

Through several interviews, it became apparent that women were more interested in our

product idea and are generally in control of cookware purchases within their household.

Additionally, we will not be targeting consumers older than the age of 64 because typically their

“enthusiasm for cooking has waned.”2 We also found that middle class individuals were not

willing to spend over $50 for our product; thus, we chose to focus on households with an income

of at least $60,000. MRI+ reports support our decision by stating that the majority of households

2 Elani, Gabriela. "Cookware - US - July 2014." Cookware. July 1, 2014. Accessed November 20, 2014.

http://store.mintel.com/cookware-us-july-2014).

5

that buy cookware have an annual income above $60K.3 Lastly, we separated the market by their

likelihood to cook because studies show that low income groups spend more time cooking than

high income groups. 4 We affirmed this research by collecting 180 of our own surveys. Our

results showed a clear trend that people with higher incomes, above $150,000, would buy our

product despite cooking very infrequently whereas surveyors with a lower income, $60,000-

$150,000, were more likely to purchase our product if they cook at home multiple times a week.

The number of households with females between the ages of 18 and 64 is estimated to be

55,205,853.5 We then eliminated the number of households with a household income below

$60,000. Finally, we divided the segments by cooking frequency and determined we would

target those who cook at least once a week for the higher income bracket, and those who cook at

least three times a week for the middle income bracket. We named the middle income segment

the Daily Cooking Dames and estimated the segment size to be 11,457,544 and named our

higher income segment the Luxurious Ladies and estimated the segment size to be 7,119,347

(MK Appendix 1: Segmentation Size Calculations). We chose the Daily Cooking Dames as our

primary segment because they represent a larger portion of cookware sales and through survey

results, we found that the purchase intent of the Luxurious Ladies is higher than the Daily

Cooking Dames purchase intent. Thus, we will focus our marketing strategies to this larger group

in order to adjust for their lower purchase intent.

Communication, Budget, and Creative

Pre-Year 1

Before launching our product into retailers, we will account for some marketing expenses

to aid production decisions. These expenses include conducting market research through

interviews and focus groups, as well as fees for trade shows and trade magazines. The overall

cost of these efforts totals $65,996.17, which is approximately 15% of our year 1 IMC marketing

expenses.

3 “Cookware that average household owns”, MRI+, accessed November 20, 2014.

http://www.mriplus.com/account/home.aspx 4 Lindsey P. Smith, Shu Wen Ng, and Barry M Popkin, “Trends in US home food preparation and

consumption: analysis of national nutrition surveys and time use studies from 1965-1966 to 2007-2008”

Nutrition Journal 12: 45 (2013): accessed November 22, 2014, doi: 10.1186/1475-2891-12-45. 5 “Cookware that average household owns”, MRI+, accessed November 20, 2014.

http://www.mriplus.com/account/home.aspx

http://dx.doi.org/10.1186%2F1475-2891-12-45

6

Year 1

In year 1, we will advertise in Food Network Magazine and Saveur, which generates a

combined 5.73% awareness for our segments. To increase awareness in later years, we will

implement a coordination plan to advertise through different mediums simultaneously in selected

cities. These strategies include fairs, billboard advertisements, and food truck advertisements to

generate a greater awareness for our product. Additionally, public relations blogs and magazines

in combination with our online advertisements in this year give us 4% total awareness. Trade

magazines and trade shows complete our push strategy to generate awareness amongst potential

retailers. At the end of year 1, the primary segment generates 7.03% awareness and the

secondary segment generates 7.57% awareness with total marketing spending of $439,974.47

(MK Appendix 2: IMC Year 1).

Year 2

Our marketing strategy will remain unchanged from the previous year; we expect our

consumers to generate awareness through word of mouth. However, we will include the addition

of point of purchase displays at select retailers that will grant us 1% awareness per segment. We

also expect awareness to increase 2% from year 1 from more online advertisements. At the end

of year 2, the primary segment generates 10.24% awareness and the secondary segment

generates 10.96% awareness, with a total marketing spending of $464,124.47 (MK Appendix 3:

IMC Year 2).

Year 3

Year 3 marks the visible results of our coordination strategy where we have

advertisements across different channels at the same time in highly populated cities. We will add

back-lit dioramas in mall locations and begin to increase the number of times we advertise

through our previous strategies for higher awareness. At this point, we also start to take

competition into account and adjust the awareness accordingly. The primary segment generates

14.43% awareness and the secondary segment generates 17.29% awareness, with a total

marketing expense of $609,792.44 (MK Appendix 4: IMC Year 3).

Year 4

In year 4, we will change up our marketing strategy. We will stop advertising through

POP displays, the Food Network Magazine, as well as decrease our participation in trade shows

and trade magazines. Instead, we will have ads in airports, bus stops, and the magazine, Taste of

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Home. Competition will also start to negatively impact our sales, but will generate 2.73%

awareness between both segments. The primary segment generates 19.81% awareness and the

secondary segment generates 21.22% awareness in total, with a total marketing spending of

$680.739.36. (MK Appendix 5: IMC Year 4).

Year 5

In year 5, we will not advertise through new mediums, and instead will increase the

number of advertisements we show throughout the year in our existing mediums. In this year, we

will maximize our advertising campaigns in each of the selected cities (MK Exhibit 3: Map of

Coordinated Advertisements). Our increased spending will generate an awareness of 26.26% and

26.85% awareness for both segments, respectively, with a total spending of $748,543.11 to

generate this accumulated awareness (MK Appendix 6: IMC Year 5).

Creative Strategies

Logo

In considering the creation of our logo, we researched

our competitors such as Caphalon and Le Creuset and noticed

a trend with sleek, clean, and simple logos (MK Exhibit 4:

Logos). As such, we wanted to create a logo that would be

MK Exhibit 4: Logos

MK Exhibit 3: Map of Coordinated Advertisements

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appropriate for the industry while appealing to both of our segments. Our first logo employed a

pot in the back of the product name, but then we adapted our logo and eliminated the pot, which

we thought was not sophisticated enough. Our second and final logo is appealing to both of our

target markets because it is sleek, simple, and not extremely detailed. We used cursive font for

the “Easy” to attach the feeling of ease with the word.

Slogan

In brainstorming slogan options for the Easy Strainer, we wanted something simple that

would also emphasize the convenience of our product. Some slogan options we considered

include: Cook Easily, Live Easily; Find your Inner Chef; Strain Your Pain Away; and Don’t

Strain Yourself. We thought that Find your Inner Chef could best capitalize on the trend of

cooking at home; however, when presented to a variety of consumers, many preferred Don’t

Strain Yourself because it spoke to the product functionality. Don’t Strain Yourself is featured

consistently across our ads and plays upon both the straining feature and the convenience of the

product.

Pull Marketing Strategy

Traditional Media

MK Exhibit 5: Traditional Media Across Five Years

In years 1 and 2, we will have a 1/3 page advertisement in Food Network Magazine and

Saveur, which are primarily read by our primary and secondary segments respectively. In year 1,

Traditional Media Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Food Network Magazine Cost 181,500.00$ 181,500.00$ 235,980.00$ -$ -$

Food Network Magazine for Daily

Cooking Dames CPM 145.04$ 145.04$ 145.04$ -$ -$

Food Network Magazine for Luxurious

Ladies CPM 572.25$ 572.25$ 572.25$ -$ -$

Saveur Cost 76,600.00$ 76,600.00$ 122,140.00$ 183,210.00$ 183,210.00$

Saveur CPM for Daily Cooking Dames 780.20$ 780.20$ 780.20$ 780.20$ 780.20$

Saveur CPM for Luxurious Ladies 160.80$ 160.80$ 160.80$ 160.80$ 160.80$

Taste of Home Cost -$ -$ -$ 248,000.00$ 316,000.00$

Taste of Home CPM for Daily Cooking

Dames -$ -$ -$ 74.25$ 74.25$

Taste of Home CPM for Luxurious

Ladies -$ -$ -$ 268.57$ 268.57$

Total Cost of Traditional Media 258,100.00$ 258,100.00$ 358,120.00$ 183,210.00$ 183,210.00$

Total Awareness Generated for

Daily Cooking Daisys 2.94% 2.93% 3.85% 7.68% 9.62%

Total Awareness Generated for

Luxurious Ladies 2.79% 2.77% 4.08% 7.18% 7.60%

9

the Food Network Magazine’s cost per thousand viewers for our primary segment is $145.04 and

generates an awareness of 2.73%. Saveur’s cost per thousand viewers for our secondary segment

is $160.80 and generates an awareness of 1.67% (MK Exhibit 5: Traditional Media Across Five

Years). By year 3, we plan to have a ½ page instead of 1/3 page advertisement, which will

generate 29.36% more awareness than in year 2. Our growth strategy for traditional media

includes replacing Food Network Magazine with Taste of Home in year 4, which generates over

100% awareness growth from year 3 to 4 for both segments. Because a greater number of Taste

of Home’s circulation fits into our primary segment as compared to Food Network Magazine,

advertising in Taste of Home will lower our cost per thousand viewers to $74.25.

In the first three years, we will advertise four times a year in both the Food Network

Magazine and Saveur. The Food Network Magazine uses a modern, bright layout to spotlight

cooking recipes and chefs as featured on the television network; we believe this will attract our

primary segment and return a decent awareness at a low cost.6 Saveur capitalizes on culture and

tradition in relation to cooking, a trait our secondary segment is likely to value.7 As the Easy

Strainer matures into the fourth year, we move into Taste of Home and move out of Food

Network Magazine. The mission statement for Taste of Home emphasizes uniting home cooking,

which aligns well with our promotion of home cooking in our family themed ads and will be

attractive to our segments.8

The main strategy of our magazine advertisements is to educate consumers on our pots’

unique straining functionality. We created two advertisements to achieve these goals (MK

Appendix 7: Magazine Advertisements). Our first advertisement depicts a happy family making

pasta using the Easy Strainer with the slogan “Don’t Strain Yourself”. We believe our middle

income segment includes mothers; thus, it is important to advertise a family dynamic. A study

reveals that several mothers are “organized, informative, and in control of purchasing the

product”, making them key influencers.9 Our second advertisement employs our signature

colors: black, red, white, and gray. It is sleek, concise, and very simply shows that the steps of

6 "Food Network Magazine Media Kit." Accessed November 21, 2014.

http://s3.amazonaws.com/jo.www.foodnetworkmediakit.com/uploads/option/files/8/original.pdf. 7 "Saveur Media Kit." Accessed November 21, 2014. http://www.bonniercorp.com/MediaKit/Saveur.pdf.

8 "Mission Statement." Taste of Home Media Kit. Accessed November 21, 2014. http://mediakit.tasteofhome.com/.

9 Sarah Boesveld, “Majority of moms in TV ads are ‘intensive,’ family focused, analysis finds,” National Post, May

13, 2012, accessed November 20, 2014, http://news.nationalpost.com/2012/05/13/majority-of-moms-in-tv-ads-

focused-are-intensive-family-focused-analysis-finds/

10

how to use the easy strainer are “as easy as 1, 2, 3”. We will alternate between both

advertisements to appeal to both of our target segments.

Fairs

We selected to attend fairs and expos in highly populated cities such as Miami, Boston,

Chicago, Los Angeles, and Las Vegas. In years 3 through 5, we decide not to attend the Western

Foodservice and Hospitality Expo in Los Angeles and instead will attend the Home Expo in Las

Vegas. We plan to increase advertisements through alternate mediums in Los Angeles and want

to attend fairs in other cities to increase variety. Total costs of attending fairs and expos remain

almost constant throughout the five years, which include airfares, hotel rates, booth workers

salary and training costs, costs to exhibits, and assumed shipping costs of $120 and food and

misc. expenses to be $35010

(MK Exhibit 6: Event Marketing Costs and Awareness).

In our event booth, we will maintain our color scheme and feature images of families

using the Easy Strainer. We will also showcase the Easy Strainer on the point of purchase

display, and hand out an informational pamphlet that details how the Easy Strainer works and

our company contact information(MK Appendix 8: Event Booth and Pamphlet). In addition, we

will include an informational insertion discussing our Corporate Social Responsibilities (MK

Appendix 9: Corporate Social Responsibility Insertion).

10

“MK 323 – Marketing Management Tutorial: IMC (Awareness)”, Boston University, accessed November 20,

2014.

Event Marketing Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Americas Food and Beverage Show

(Miami) 4,502.00$ 4,502.00$ 4,502.00$ 4,502.00$ 4,502.00$

Boston Home Show (Boston) $ 3,093.00 $ 3,093.00 $ 3,093.00 $ 3,093.00 $ 3,093.00

International Houseware Association

(Chicago) $ 3,237.00 $ 3,237.00 $ 3,237.00 $ 3,237.00 $ 3,237.00

Western Foodservice and Hospitality

Expo (Los Angeles) $ 7,410.00 $ 7,410.00 $ - $ - $ -

Home Expo (Las Vegas) -$ -$ 7,526.00$ 7,526.00$ 7,526.00$

Total Cost of Event Marketing 18,242.00$ 18,242.00$ 18,358.00$ 18,358.00$ 18,358.00$

Awareness for Daily Cooking Dames 1.09% 1.09% 1.10% 1.10% 1.10%

Awareness for Luxurious Ladies 1.46% 1.46% 1.47% 1.47% 1.47%

MK Exhibit 6: Event Marketing Costs and

Awareness

11

Point of Purchase

Our Point of Purchase display, which we use in the first two years of business, is a replica

of the Easy Strainer pot. (MK Appendix 10: Point of Purchase Display) Our Point of Purchase

display shelf will be in stores for January and February only, to increase awareness during slow

demand periods. After year 3, we will discontinue advertising through POP displays because we

generate greater awareness through other channels. POP displays are expected to cost $10,000

per year per target segment; therefore, POP displays for our company total $20,000 per year for

all five years, generating a 1% awareness per segment.11

Online

MK Exhibit 7: Online Advertising

For our online advertising, we researched our competitors’ social media pages and

company websites as references for our own page. A reoccurring trend we plan on following is

spreading product campaigns and company initiatives across all online platforms. On both our

Facebook and Twitter, we will post recipes, customer success stories, and photos of employees

volunteering to keep all online advertisements aligned. Similarly, we will employ multiple

similar content strategies across our social media platforms to stay relevant among our potential

consumers and generate awareness of our product.

Online costs will account for 15% of our total marketing expenditures every year and will

help us reach a wider audience. We will utilize Google Adwords to show our product to potential

consumers when searching certain keywords such as “cookware” and “strainer”. This feature

will allow us to advertise our website link in the corner of a YouTube video advertisement. We

will also have banner ads on Facebook, which has over 1.32 billion monthly active users12

. In

year 5, we plan to spend an extra $20,000 advertising our campaigns through Buzzfeed, which

11 “MK 323 – Marketing Management Tutorial: IMC (Awareness)”, Boston University, accessed November 20,

2014. 12

“The Benefits of Advertising on Facebook and Other Social Networking Sites,” Business Creator Plus, Accessed

November 23, 2014, http://www.businesscreatorplus.com/benefits-advertising-facebook-social-networking-sites/

Online Advertising Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Total Cost of Online Advertising 47,901.30$ 50,901.30$ 68,996.70$ 82,510.20$ 101,035.20$

Awareness Generated for Both

Segments 1% 3% 4% 5% 7%

http://www.businesscreatorplus.com/benefits-advertising-facebook-social-networking-sites/

12

will tie in with the trend of consistent online efforts to advertise to potential consumers13

(MK

Exhibit 7: Online Advertising).

Outdoor Advertising

MK Exhibit 8: Outdoor Advertisements

Billboards will be placed in six large cities: New York, Boston, Chicago, L.A., Miami,

and Dallas beginning in year 1. In all 5 years of our Integrated Marketing Schedule, we plan to

advertise on billboards in major cities all in the month of May. Because the message of our ad

calls upon a mother’s frustration, the Easy Strainer’s convenience will appear more valuable

when school ends and busy summer plans begin (MK Appendix 11: Billboard Advertisement).

The number of cities we advertise in will also increase as our company grows. Each billboard

costs $3,000, and placing them in six cities cost $18,000. 14

Beginning in year 3, we will expand our outdoor advertisement strategy by advertising at

select malls through backlit dioramas and elevator wraps. We chose to advertise in malls because

consumers will see the advertisements when they are in the “buying mode”15

. Similarly, we will

advertise at airports through backlit dioramas and banners, and bus stop ads beginning in year 4.

Having advertisements in prime transportation locations allows these ads to be unavoidable to

commuters and receive multiple repeat views to instill the advertisement message in the viewers’

mind. In year 5, online advertisements spending will be $101,000 and account for 3.03% and

4.04% awareness for our primary and secondary segments respectively (MK Exhibit 8: Outdoor

Advertisements).

13

“What Online Ads Really Cost,” Digi Day, Accessed November 23, 2014, http://digiday.com/publishers/what-

online-ads-really-cost/ 14

“Billboard Advertising in 300 Cities – Billboard Ads Company,” BlueLineMedia, accessed November 20, 2014,

http://www.chicagomanualofstyle.org/tools_citationguide.html 15

“Advantages and Disadvantages,” Ooh Media Source, accessed November 20, 2014,

http://www.oohmediasource.com/advantages-and-disadvantages

Outdoor Advertising Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Bus Stop Ads -$ -$ -$ 12,000.00$ 12,000.00$

Billboard Ads 18,000.00$ 18,000.00$ 24,000.00$ 27,000.00$ 30,000.00$

Airport Ads -$ -$ -$ 17,500.00$ 29,000.00$

Mall Ads -$ -$ 6,000.00$ 8,000.00$ 30,000.00$

Total Cost for Outdoor Advertising 18,000.00$ 18,000.00$ 30,000.00$ 64,500.00$ 101,000.00$



http://www.oohmediasource.com/advantages-and-disadvantages

13

PR Magazines Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Real Simple x x

Southern Living x x x x x

Best Cookware x x x

Cookware Consumer Guide x x x x x

Cooking Light x x x

Eating Well x x x

PR Blogs Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Love and Lemons x x x x x

The Pioneer Woman x x x x x

Mommys Kitchen x x x x x

Real Mom Kitchen x x x x x

What's Cooking Chicago x x x

The Blonde Can Cook x x x

The Lazy Mom Cooks x x x x

The Cooking Mom x x x x x

Carol's Cookery x x x x x

My Cooking Life by Patty x x x x x

Cast Iron & Wine x x x

The Eclectic Chef x x x

Dinner a Love Story x x

MK Exhibit 9: Public Relations

Public Relations

.

PR magazines and blogs generate a fixed 1% awareness for both segments and cost a

fixed $10,000 per year for all five years.16

We chose Cooking PR magazines and blogs that will

promote and talk about our product to their audience whom we consider to be potential

consumers. We selected the PR blogs that feature strong female personalities as the main

contributors (MK Exhibit 9: PR Magazines and Blogs). We plan to lend our pots to the bloggers

who act as influencers over their loyal followers.

Food Truck Advertising

MK Exhibit 10: Food Truck Advertising

The food truck emerged because restaurateurs sought cheaper alternatives to opening a

full restaurant.17

Due to the rise in food truck popularity, advertising on food trucks will generate

16

“MK 323 – Marketing Management Tutorial: IMC (Awareness)”, Boston University, accessed November 20,

2014. 17

"Where Did the Modern U.S. Food Truck Movement Really Start?" The Huffington Post. August 25, 2012.

Accessed November 21, 2014. http://www.huffingtonpost.com/quora/where-did-the-modern-us-f_b_1829587.html.

Food Truck Advertising Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Total Food Struck Cost 15,000.00$ 15,000.00$ 23,500.00$ 26,000.00$ 45,000.00$



14

greater impressions on our target segments, especially because food trucks are not limited to one

location and travel around multiple locations.

We will advertise on Roadstoves’ food trucks in Miami, Boston, Chicago, L.A, Denver,

and Austin for four months in year 1, which will increase until we are advertising all year round

in year 5. The truck will feature the Easy Strainer logo and an image of the pot (MK Appendix

12: Food Truck Advertisement). To develop a stable relationship with Roadstoves, we plan to

advertise year round in select cities by year 5. In year 5, we will advertise in San Francisco for

six months and in Indianapolis for four months. In year 1, truck advertisement generates

respectively 0.45% and 0.60% for our primary and secondary segments. In year 5, we expect to

reach 1.35% and 1.80% awareness for two segments due to the increased costs and longer time

exposure (MK Exhibit 10: Food Truck Advertising).

Push Marketing Strategy

Trade Shows

Our marketing strategy includes participation in trade shows and advertisements in trade

magazines in all five years to establish relationships with potential retailers that might carry our

product. We will attend the Total Housewares & Gourmet Market Trade Show in Dallas and the

International Home and Housewares show in Chicago. Our trade show booth design is the same

as our fair and expo booth design as we feel it will accurately show retailers what our product is

and the consumers who will buy our product. Brochures handed out at fairs and expos will also

be used at trade shows as they have a detailed description of our product and the corporate social

responsibilities we will incorporate. (MK Appendix 8: Event Booth and Pamphlet).

Trade Magazine

The marketing team designed the Retail and Trade Magazine advertisements for Fancy

Food and Kitchenware News with the idea of keeping it very straightforward. We include our

product, logo, slogan, and contact information, but mainly wanted to highlight the high quality

look of our product (MK Appendix 13: Trade Magazine Advertisement).

15

Measuring Effectiveness of Communications

Easy Strainer Inc. will monitor all marketing activities on our social media platforms:

Facebook and Twitter. We will utilize a social media tracker to track the percent increase or

decrease of “likes” and “follows” in each platform which will help us measure our social media

effectiveness. Conducting surveys is essential to measuring our effectiveness of communications

as a company. Upon request of a survey, our customer will be notified of a 5% discount they will

receive upon survey completion which is redeemable at their next purchase. In addition, our

CMO is responsible for maintaining constant contact with our retails and requesting positive or

negative feedback about our product.

Packaging

We gathered initial ideas for our packaging design by examining those of our

competitors. We found different types of packaging offerings at retail stores such as Bed Bath &

Beyond and Crate and Barrel and found that they focus mostly on the appearance and the

description of the product. For the packaging design, we decided to style our box with sharp and

clear colored pictures in order to grab consumer’s attention. Therefore, on the front and back, we

will use the same picture of a sink with our pot straining water to demonstrate how our product

works. On the left side of the box, we added a small description of the pot while on the right we

included an attribute chart (MK Appendix 14: Easy Strainer Packaging).

Channels and Pricing

Channel Distribution

The cookware market is highly

saturated and matured, but the innovative

and distinctive function of our product will

allow us to compete with established

companies. The major channels of

distribution for the cookware market are

comprised of independent retailers,

department stores, specialty stores, and

MK Exhibit 11: Profile of the Retail Environment

16

mass merchandisers.18

In order to create a profile of our all commodity volume, we decided to

combine department stores and specialty stores into chain retailers and adjusted for online sales

(MK Exhibit 11: Profile of the Retail

Environment).

The category size of the

cookware market is $4.655 billion and so

to determine the major retailers of the

cookware market, we found total home

and garden sales for the major players of

the cookware market and weighted them

according to retail sales and number of

locations of each retailer (MK Exhibit

12: Breakdown of Retailers).

The Easy Strainer will be sold

through independent retailers and online

channels such as Amazon.com,

accounting for an ACV of 15.84% and 18.74% in the first two years. In year 3, we will begin to

penetrate into chain retailers, specifically Sur La Table, which will increase our ACV to 21.52%.

In year 4, we will enter Macy’s, another chain retailer and Target, a mass manufacturer,

generating an ACV of 27.07%. By year 5, we will have developed a strong reputation for our

product among retailers and customers and will penetrate into another mass manufacturer and

chain retailer, Costco and Bed Bath & Beyond respectively, resulting in an ACV of 36.36%.

(MK Appendix 15: All Commodity Sales Volume)

18 “Cookware – US – July”, Mintel. Accessed November 20, 2014,

http://academic.mintel.com.ezproxy.bu.edu/display/710004/

MK Exhibit 12: Breakdown of Retailers

17

Pricing

From our survey results, we determined that the profit-maximizing price for our product

ranges from $60 to $69.99. We believe that in order to communicate our product as a quality

brand, we are deciding to charge the Easy Strainer at a retail price of $79.99, especially in the

case that we expand in our product line and do not want to rebrand our brand image. This will

keep our product competitive amongst similar products, while still being offered at an affordable

and reasonable price for our segments. The cumulative purchase intents at this price are 10.95%

and 20.18% for our primary and secondary segments respectively. (MK Exhibit 13: Cumulative

Purchase Intent).

MK Exhibit 13: Cumulative Purchase Intent

18

Retail Selling Price

We are selling to independent retailers at

$39.99 for the first five years with a retailer margin

of 50%.19

We want independent stores to continue

carrying our product throughout the first five years as

they comprise 16% of all cookware market sales;

thus, we will not lower the selling price for mass

merchandisers but rather increase it to avoid dramatic

channel conflict when we enter chain retailers and

mass merchandisers (See MK Appendix 16: Retail

Channels Units, Prices, and Margins). In order to

determine pricing for chain retailers and mass

merchandisers, our research suggested retail prices of

competing products and found prices that were

similar across all channels of distribution (MK

Exhibit 14: Competing Prices). Thus, we decided on

a $43.99 selling price for chain retailers due to a

retailer selling margin of 45% and a recommended

retail selling price of $79.99.20

For mass manufacturers, although we found retail prices similar

to those in independent stores and chain retailers, we decided on a $45.59 selling price due to a

40% retailer margin with a recommended $70.99 retailer selling price.21

Due to our total unit sale

growth of 72.97% from year 1 to year 2, we believe that chain retailers will buy our product at

$43.99 to latch onto our product sales. Similarly, we believe mass merchandisers will also want

to benefit from our unit sales as demand continues to grow.

19

“MK 323 – Marketing Management Tutorial: Sales Projection”, Boston University, accessed November 20, 2014. 20

Ibid. 21

Ibid.

MK Exhibit 14: Competing Prices

19

Year 1 Units Sold % of Total Units

Independent Stores 8,984 24.24%

Online 28,076 75.76%

Total 37,060 100.00%

Year 2


Online 41,007 63.97%

Total 64,101 100.00%

Year 3


Online 46,743 55.76%

Sur La Table (Chain) 9,109 10.87%

Total 83,824 100.00%

Year 4


Online 55,777 44.34%

Macy's (Department/Chain) 9,725 7.73%


Target 20,359 16.18%

Total 125,806 100.00%

Year 5


Online 67,064 33.10%

Macy's (Department/Chain) 16,370 8.08%


Target (Mass Merchandiser) 34,270 16.91%

Bed, Bath, and Beyond (Chain) 23,386 11.54%

Costco (Mass Merchandiser) 23,584 11.64%

Total 202,621 100.00%

Competition

Our product has a distinctive easy straining feature that stands out among competitors.

Our product design is not hard to mimic, thus competitors could offer products with

improvements to our straining functionality. Therefore, an Easy Strainer patent will help avoid

unwanted imitation by competitors.

Even though we will take actions to protect our company from some levels of

competition, it is impossible to perfectly avoid competition. We expect competitors to introduce

similar products to the cookware market in year 3 when our product is in the growth stage of its

product life cycle. This leads to an adjustment of 20% in year 3 sales unit. As our product starts

to penetrate in larger channels of distribution and exits growth phase, competition impact on our

sales increases to 30% and 35% in year 4 and 5 respectively.

Sales Volume

Four channels make up our sales

pool: independent stores, online, chain

retailer, and mass merchandisers. In year 1,

online channels will account for 75.76% of

total unit sales and independent retailers

will account for 24.24% of total unit sales.

In year 2, online channels will account for

63.97% of total unit sales and independent

retailers will account for 36.03% of total

unit sales. In year 3, Sur La Table will

begin to sell the Easy Strainer, which will

account for 10.87% of total unit sales.

Online channels will account for 55.67% of

total unit sales. Independent retailers will

account for 33.37% of total unit sales.

In year 4, Target will begin to sell

the Easy Strainer, will account for 16.18%

MK Exhibit 15: Sales Volume of Retailer Channels

20

of total unit sales. Chain retailers will account for 19.83% of total unit sales with Sur La Table

accounting for 12.10% and Macy’s accounting for 7.73%. Online channels will account for

44.34% of total unit sales. Independent retailers will account for 19.66% total unit sales. In year

5, mass manufacturers will account for 28.55% of total unit sales. Target will account for

16.91% and Costco will account for 11.64%. Chain retailers will result in 28.65% of total unit

sales. Sur La Table will account for 9.03% total unit sales, Macy’s will account for 8.08% total

unit sales, and Bed Bath & Beyond will account for 11.54% of total unit sales. Online channels

will account for 33.10% of total unit sales. Independent retailers will result in 9.70% of total unit

sales (MK Exhibit 15: Sales Volume of Retailer Channels).

Sales Force

In the first two years, we will not have our own sales force as we are a start-up company

and will not need a sales force. Instead, we will hire a manufacturer sales representative to help

us place our products in independent stores. Beginning in year 3, we will hire our own sales

force as the manufacturer representative’s salary exceeds that of sales force due to entrance in

chain retailers and soon thereafter, mass merchandisers in year 4 (MK Exhibit 16:

Manufacturer’s Sales Representative Expenses). Our salesperson’s salary is composed with two

factors: a fixed $60,000 base salary and a 5% bonus salary of each unit sold (MK Exhibit 17:

Sales Force Expense). We will continue to use a manufacturer sales representative to retain our

product placement in independent retailers.

MK Exhibit 16: Manufacturer Sales Representative Expenses

Manufacturer’s

Representative

Expenses

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Independent $44,098.58 $110,094.72 $139,088.71 $116,528.00 $91,993.80

Chain Retailer - - $45,292.96 $117,537.50 $271,785.55

Mass

Merchandisers - - - $95,937.29 $270,851.69

Total

Commissions

(10%)

$44,098.58 $110,094.72 $184,381.67 $330,002.79 $634,631.05

MK Exhibit 17: Sales Force Expense

21

Sales Force Expense Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Fixed 0 0 60000 60000 60000

Variable 5.0% 5.0% 5.0% 5.0% 5.0%

Total Sales 0 0 $400738.86 $2025561.86 $5191815.43

Sales Force Expense 0 0 $80036.94 $161278.09 $319590.77

According to our work time analysis, we will only need one manufacturer sales

representative throughout all five years (MK Exhibit 18: Salesperson Employment for Year 2-5).

MK Exhibit 18: Salesperson Employment for Year 2-5

Sales Hours Per Year For Each Company Salesperson 240

Sales Hours for Year 3 29



Sales Projection

Base Case Scenario

YEAR 1 2 3 4 5

Adjusted Purchase Intention 13.71% 13.71% 13.71% 13.71% 13.71%

Awareness 7.03% 10.24% 14.24% 19.80% 26.26%

ACV 15.84% 18.76% 21.52% 27.07% 36.26%

Trial Units 17,490.25 30,356.26 48,688.00 85,495.49 152,294.85

*Competition adjustment 0.20 0.3 0.35

TOTAL UNITS 17,490 30,356 38,950 59,847 98,992

Average WEIGHTED manufacturer's

selling price to channel 49.08$ 47.67$ 47.12$ 47.01$ 46.71$

Manufacturer sales ($) 858,505.01$ 1,447,101.26$ 1,835,356.93$ 2,813,616.68$ 4,623,985.74$

YEAR 1 2 3 4 5


Awareness 7.57% 10.96% 15.84% 21.12% 26.72%

ACV 15.84% 18.76% 21.52% 27.07% 36.26%

Trial Units 19,569.44 33,745.17 56,091.52 94,227.99 159,429.76


TOTAL UNITS 19,569 33,745 44,873 65,960 103,629




Secondary Segment: Females ages 18-64 with HHI of$150,000+ Base Case

Primary Segment: Females ages 18-64 with HHI of $60,000-$149,999 Base Case

MK Exhibit 19: Base Case Scenario Sales Projection

22

For the first two years, our product solely relies on sales from independent retailers and

online websites (ie Amazon.com), representing 16% and 12% of the cookware market’s total

sales. Every year, our manufacturer’s sales representative contacts 80% of independent stores;

assuming a 30% penetration rate, our product’s combined ACV for the first two years is 15.84%

and 18.76%. Because of our high secondary segment purchase intent and our company’s focused

efforts on generating awareness for our primary segment, unit sales are close across both the

segments in the first two years. Manufacturer sales for the first two years for our primary

segment are $858,505.01 and $960,561.37, and for our secondary segment are $960,561.37 and

$1,608,652.75 (MK Exhibit 19: Base Case Scenario Sales Projection). Every year, we expect

each segment to grow at .77% alongside the U.S. population22

. We also must account for

households that we have already sold too, and subtract them from our target segment over

subsequent years (MK Appendix 17: Complete Base Sales Forecast).

In our third year, our company will establish its own sales force to enter the third largest

chain store in the cookware market, Sur La Table. This will create some channel conflict

between our independent retailers and chain store; as a result, 20% of our current independent

stores will drop our product during this year, but our company’s overall ACV will increase to

21.52%. Unit sales will also be affected as our growth in revenue will attract competition and

take 20% of our unit sales per segment.

Year 4 will be the most crucial to our company. At this point, our product will have

reached the end of the growth phase of the product development life cycle. In year 4 we will

introduce our product to our first mass merchandiser, Target, and a department store, Macy’s.

Once again there will be channel conflict with independent retailers, thus another 20% of

independent stores will drop our product. Furthermore, Taste of Home will replace the Food

Network Magazine, resulting in greater awareness for both segments and an increase total unit

sales by 50.8%. Competition will come in much stronger in this year, taking 30% of our unit

sales per segment, which is why it was important for us to increase our awareness in year 4,

especially because we have ample resources to do so.

In year 5, our product will enter the maturity phase of the product life cycle, with

entrance into a new chain store, Bed Bath & Beyond, and a new mass merchandiser, Costco.

Another 10% of independent retailers will have dropped our product due to channel conflict

22 "Indicators." Data. Accessed November 22, 2014. http://data.worldbank.org/indicator/SP.POP.GROW.

23

resulting in an accumulated drop of 50% across the 5 years. We will also have increased

awareness in both segments as our advertisements across multiple channels become more

intensive. In this year, competition will have become stronger, thus taking 35% of our unit sales

per segment. Manufacturer sales will reach a total of $9,464,601.77 for both segments (MK

Appendix 17: Complete Base Case Sales Scenario).

Optimistic Case Scenario

MK Exhibit 20: Optimistic Case Scenario Sales Projection

The optimistic scenario assumed we would be able to incorporate and afford 3 corporate

social responsibilities (MK Exhibit 17: Optimistic Sales Projection). We would integrate

employees volunteering at a soup kitchen once a month to the existing CSRs regarding

sustainable packaging and donating pots to disaster relief. This increased our purchase intent to

14.85% in our first segment, and 24.08% in our second segment. In addition, we assumed that it

would take consumers three impressions instead of four to be aware of our product when

calculating magazine awareness. Word of mouth also changed as unit sales increased across the

five years. These changes in awareness resulted in a .98% and 1.10% increase in awareness in

the first year to a 3.98% and a 4.16% increase in our primary and secondary segments

respectively.

YEAR 1 2 3 4 5


Awareness 8.01% 11.29% 15.80% 22.76% 30.24%

ACV 17.12% 20.60% 24.96% 34.12% 42.63%

Trial Units 23,339.14 39,815.28 67,764.35 133,935.84 222,421.68


TOTAL UNITS 23,339 39,815 47,435 87,058 133,453

Average WEIGHTED manufacturer's selling price to

channel 52.15$ 50.65$ 50.07$ 49.98$ 49.67$

Manufacturer sales ($) 1,217,205.21$ 2,016,659.20$ 2,374,871.31$ 4,350,879.22$ 6,629,076.86$

YEAR 1 2 3 4 5


Awareness 8.67% 12.18% 17.81% 23.99% 30.88%

ACV 17.12% 20.60% 24.96% 34.12% 42.63%

Trial Units 25,433.50 43,206.77 76,646.10 141,174.08 225,875.87


TOTAL UNITS 25,433 43,207 53,652 91,763 135,526

Average WEIGHTED manufacturer's selling price to

channel 52.15$ 50.65$ 50.07$ 49.98$ 49.67$

Manufacturer sales ($) 1,326,431.93$ 2,188,439.42$ 2,686,141.02$ 4,586,012.04$ 6,732,026.02$

Secondary Segment: Females ages 18-64 with HHI of$150,000+ Optimistic Case

Primary Segment: Females ages 18-64 with HHI of $60,000-$149,999 Optimistic Case

24

We will also adjust for our product’s channel distribution as acceptance rates improve.

For the first two years, our product remains in independent retailers, but assumed a 40%

acceptance rate after an 80% call rate thus acquiring a greater ACV from independent stores

quicker. We also assumed our product would break into retailers with a great ACV, such as

Williams Sonoma for chain stores and Wal-Mart for mass merchandisers. These assumptions

result in a 6.37% greater ACV percentage compared to base scenario by year 5.

For pricing, we assumed that we could charge a higher price for our product and maintain

the same purchase intent across both segments from our Base Scenario. The new retailer selling

prices for our product are $84.99 for independent and chain retailers, and $80.99 for mass

merchandiser, resulting in greater manufacturing sales for our company. Finally, we assumed

that competition would come in stronger in year 3 as we generate greater sales, thus we assume

competition will take 30%, 35%, and 40% of our sales in years 3 through 5 respectively.

Assuming the rest of our marketing strategy remained unchanged, total unit sales in year 5 for

our segments are to 268,979 and manufacturer sales are $13,361,102.88 (MK Appendix 18:

Complete Optimistic Case Sales Scenario).

Pessimistic Case Scenario

MK Exhibit 21: Pessimistic Sales Case Scenario Projection

For our pessimistic scenario we assumed we would only be able to afford one corporate

social responsibility in sustainable packaging and would not be able to donate pots to disaster

YEAR 1 2 3 4 5


Awareness 6.44% 9.60% 12.07% 18.01% 23.97%

ACV 14.56% 16.71% 19.31% 24.01% 32.58%

Trial Units 13,128.34 22,596.65 33,037.50 61,598.42 111,619.46

*Competition adjustment 0.2 0.25

TOTAL UNITS 13,128 22,597 33,038 49,279 83,715




YEAR 1 2 3 4 5


Awareness 7.11% 10.43% 13.57% 19.42% 25.24%

ACV 14.56% 16.71% 19.31% 24.01% 32.58%

Trial Units 15,808.61 26,759.37 40,364.45 72,027.63 126,951.69

Repeat HHs 51.79% 51.79% 51.79% 51.79% 51.79%

Repeat Units - - - - -

BASES Units (before competition) 15,808.61 26,759.37 40,364.45 72,027.63 126,951.69

*Competition adjustment 0.2 0.25

TOTAL UNITS 15,809 26,759 40,364 57,622 95,214




Primary Segment: Females ages 18-64 with HHI of $60,000-$149,999 Pessimistic Case

Secondary Segment: Females ages 18-64 with HHI of $150,000+ Pessimistic Case

25

relief thus dropping our purchase intent for both segments to 12.22% and 21.45% for our

primary and secondary segments respectively (MK Exhibit 21: Pessimistic Sales Scenario Sales

Projection). We also assumed it would now take 5 impressions instead of 4 in order for

consumers to be aware of our product through magazine advertisements. Word of mouth will

also now be affected as the number of units we sell per year is lower than our base case units.

This resulted in a .59% and .46% decrease in awareness in year one and a 2.29% and a 1.48%

decrease in awareness in year 5 for our primary and secondary segments respectively We also

assumed it would now take 5 impressions instead of 4 in order for consumers to be aware of our

product through magazine advertisements. Word of mouth will also now be affected as the

number of units we sell per year is lower than our base case units. This resulted in a .59% and

.46% decrease in awareness in year one and a 2.29% and a 1.48% decrease in awareness in year

5 for our primary and secondary segments respectively.

We will adjust for channel distribution once again in our pessimistic scenario, but

acceptance rates will decrease. We assumed a 20% acceptance rate with independent retailers as

opposed to 30% in our base scenario, a 40% acceptance rate instead of 50% for mass

merchandisers. We also assumed it would take a longer time to penetrate retailers such as Sur La

Table and Bed Bath & Beyond and instead enter Macy’s in year 3 and enter Sam’s Club instead

of Target as our mass merchandiser in year 4 due to our slow product growth. These assumptions

result in a 3.68% lower ACV percentage compared to base scenario by year 5.

In terms of pricing, we assumed we would not be able price our product at $79.99

($74.99 for mass merchandisers) in retailers, and instead are now charging $74.99 ($70.99 for

mass merchandisers). This will result in a lower gross margin for our company as actual costs

per unit will remain at $19.99 in order to able to manufacture our product. Finally, we assumed

competition would not impact our sales in year 3, and would have a lower impact of 20% and

25% in years 4 and 5. Assuming the rest of our marketing strategy remained unchanged,

manufacturer sales in year 5 for both segments are $7,827,800.26 (MK Appendix 19: Complete

Pessimistic Case Sales Scenario).

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