Marketing Plan: Strategy for Marble Slab Grand Opening

Adrian Chan Professor Hunter Business 1220 Section 573 December 9, 2009

Executive Summary: The marketing challenge is to attract customers and convince them to purchase frozen desserts from Thomas outlet. In addition, this outlet should be close to Thomas home. With a budget of $10,000, mandated selling prices, and a possibility of event catering, Thomas must complete many analyses to complete her marketing report and submit it to head office. Recommendations: Thomas should target young adults because they have disposable incomes, are not pricesensitive and would pay more to be able to socialize with friends and have fun. They also convince their friends to buy some ice-cream, thus creating loyal customers. On the other hand, families want child-friendly options so Dairy Queen would be their choice of brand and they do not carelessly spend, unlike young adults, on ice-cream, even on their children. The women segment is too broad to create a product that is well-liked by all women and with Thomas limited resources, she cannot undertake such a risky market. Most young adults can be found in downtown Toronto, where they heavily populate the streets because of the extensive shopping experience and the proximity to the University of Toronto and Ryerson University. This guarantees traffic to Thomas outlet, especially since young adults out of the area can commute by subway. Event catering should be offered to young adults because many of them participate in clubs at the Universities that host social events and party often. This allows Thomas to cater many events and earn extra revenues. A $1 increase from the other franchisees catering prices is justifiable because clubs and young adults have disposable incomes. The portable slab option should not be offered because it is designed for very large events, of which clubs or individuals do not host. Thomas should advertise through Pattison Outdoor, Now Magazine and Canada Post because of their ability to target a large amount of young adults. Billboard and street level media units are viewed by young adults who crowd the streets. Now Magazine is read by a large audience and is easily obtainable and young adults are instinctively attracted to coupons. Conclusion: This marketing plan will work because the placement, product, and promotions specially exploit the weaknesses of the young adults and ensure exposure of the store. To reach Thomas goal, she must sell 104167 units (see exhibit 5). The projections suggest Thomas can sell 108480 units, 4313 more units than needed (see exhibit 6). This is likely because of the characteristics of the target market and the densely populated location. In the scenario that she does not meet the projections, the revenue from event catering, projected to be $25034.40, can offset the difference. Through the promotional and advertising activities, it should ensure interest and exposure to the store and easily convince the target market to consider this service and try the Marble Slab experience, allowing Thomas to be meet her goals.

Introduction: Penny Thomas requires a start-up marketing plan that ensures the success of her new Marble Slab outlet, especially since she is committed to the ice-cream industry for the long term. Thomass goal for the year is to produce $400,000 in revenue. Decisions about the target market, product, placement, price and promotions must be completed for the first time and within Thomas budget of $10,000. Some of her concerns include the proximity of her home to the store and the possibility of event catering. Detailed analyses will be conducted to allow her to submit a solid marketing plan to head office for evaluation in two weeks. Internal Analysis: There are no previous results for Thomas to review, which will affect the predictions made. Also, the selling prices set by head office may increase the difficulty of the store breaking even or realizing a profit. However, despite these limitations, the Marble Slab brand is prominent throughout Canada, the United States and the world. The advertising and promotions initiated by the national shared advertising fund and by each individual location benefits Thomass new outlet by creating interest within the market for Marble Slab ice-cream. Thomas promotional budget is only $10,000 so the chosen advertising and promotions must be convincing and effective. Her stores profits will be decreased by the royalty fees (8% of monthly gross sales) so the marketing plan must account for this. External Analysis: If the Canadian economy declines, people will unlikely purchase luxuries such as icecream. This low in-store traffic may be slightly offset by the decreased commodity prices and

event catering, if pursued, but a strong promotions campaign is needed encourage consumers to purchase frozen desserts. People enjoy the social aspect of enjoying frozen desserts with others and ignore the prices of the products that allow them to relax, which is the value of the product. This suggests Thomas should undertake event catering and charge higher and promote this aspect in her advertisements. In undesirable weather, consumer desire in Marble Slab products decreases. Event catering during the winter may compensate for this decline of interest. Thomas should avoid market segments that are health conscious, such as women, since ice-cream is the main product. Competitive Analysis: Marble Slab ice-cream has higher quality and is fresher than the competitors ice-cream so this strength must be advertised. The customizable option that Marble Slab offers also differentiates itself from the other competitors, thus attracting customers looking for a different experience. The selling prices of the Marble Slab products cannot be modified so Thomas cannot compete against other competitors with prices. Neither of the competitors cater to events, so if Thomas undertakes event catering, this will greatly distinguish the Marble Slab brand. In retaliation, competitors may commence event catering and discontinue soft-serve ice-cream. They may also use higher-quality ingredients. Customer Analysis and Target Market: Thomas should target young adults because they have disposable incomes, a craving for a social life, and do not pay bills because of the financial backing from their parents. They also enjoy sweet treats, especially with friends, and frequently make purchases because of their own impulse or peer pressure. Event catering can create large profits in this market segment because

many young adults have social events for clubs, birthday parties, study groups, holidays and much more. In addition, after stressful tests, exams and reports, many students go out together to have a fun time, which means they will be highly likely to socialize over ice-cream, no matter what the cost. The families segment should not be targeted because parents have limited income so they will opt for cheaper options to engage in social activities. Dairy queen would be their choice of brand because it is the most children-friendly and cheaper. Also, the frequency of the purchases is low compared because parents do not want their children to consume ice-cream regularly. The women segment is the most unattractive because it is too broad to target this group. Most women, who are housewives, purchase ice-cream at grocery stores for their families. They are very health-conscious as well. Placement: The Marble Slab outlet should be in downtown Toronto because it is densely populated with young adults from the University of Toronto and Ryerson University that have higher incomes. The location is also close to a major shopper street that guarantees traffic for the Marble Slab outlet. Since the area has several subway stops, young adults anywhere can commute to shop and buy ice-cream on the way. It is also implied that there are no competitors within the Annex, thus giving Thomas more sales opportunities. Although prime space would be difficult and leasing costly, the revenue from event catering and heavy store traffic should quickly pay off the leasing fees and more. It is also close to her home in Vaughan. Product Thomas should choose popular flavours that are proven to satisfy Marble Slab consumers. The following list in exhibit 1 is based on the most popular products on the Marble

Slab website1 and also what flavours and mixins appeared exciting and adventurous, a factor that young adults value in their lives. In addition, Marble Slabs customization option and mixins concept allows young adults to express themselves, which is what the target market values. This suggests Thomas Marble Slab will be a popular venue for ice-cream for this market segment. Event catering would be a very promising option to pursue in this area because of the proximity to the University of Toronto and Ryerson University. Since these institutions are home to hundreds of student clubs and teams who host many social events, Thomas can exploit this money-making opportunity. Every social event needs a popular food item and with Marble Slab being the only place offering event catering, clubs with disposable funds will likely pay for that service to ensure their social event is a success. Participants in these social events can experience the Marble Slab product and become loyal consumers, thereby spreading the word and creating interest in other young adults or family members. Most social events range from approximately 40 to 100 people, averaging around 70 people per event. Price Thomas needs to only consider the pricing for event catering. She should charge higher prices because the population has a higher income and the young adults are not price-sensitive. An increase of $1 of the catering prices will not divert customers to the other franchisee because the increase is very small and there is no other Marble Slab in the Annex so their only choice is event catering through Thomas outlet. Odd pricing should be set because it easily fools young adults, due to their inexperience. The portable slab option should not be pursued yet because no one has experienced event catering from a Marble Slab. It is the most expensive option for customers and they would choose the smaller options first to get an idea of the catering (2009). Ice Cream Flavors. Menu. Retrieved December 7, 2009, from http://www.marbleslab.com/menu/
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experience. Also, the sundae bar and ice cream social is more likely to be chosen by customers because most social events hosted by clubs and people range from only 40 to 100 people, while the portable slab caters to very large events like weddings and graduation. It is unlikely there will be two events per weekend that will need catering; it is more realistic to suggest there will be an average of 4 events per month. If two events opt for the sundae bar and the other two opt for the ice-cream social, the projected revenue for the year is $25034.40, which is equivalent to selling 6520 units (refer to exhibit 2 for calculations). Since more revenues are gained from the sundae bar than the ice-cream social, the sundae bar catering should be advertised more. Promotions: Thomas should not promote her outlet through Toronto Star or Chum FM because they do not target young adults. Since the Annex has high foot-traffic, Thomas should use street level media units and billboards from Pattison Outdoor. Many people re-use the same routes, so they will be frequently exposed to the same medium. Since the area is small and densely populated, one insertion of billboards and street level units should be enough and still within our budget. Now Magazine is another strong advertising option because it targets young adults, has high readership and available for free. Because of the limited budget, Thomas should only request 1/4 page for a Marble Slab advertisement with additional colour. The size may be small, but it will still visually look appetizing to young adults. If it is placed near or within an article, readers will instinctively glance at the advertisement while reading. In addition, the 12 times insertion annually option should be purchased because it is the cheapest and will ensure readers see it. Distributing coupons through Canada Post is also an effective method to attract young adults. When young adults have buy-one-get-one free ice-cream coupons, they usually convince

another friend to take the free ice-cream because they do not want to eat two. This can convert the friend into a loyal Marble Slab customer. If this occurs frequently, Thomas can attract many new loyal customers to quickly make up for the loss sales from the free ice-cream. Thomas should request Canada Post to target young adults who are within the Annex and who are socially active in social events and clubs because these are the type of people who make the most impulse purchases and have high influencing power by word-of-mouth. The flyers should advertise event catering to catch the interest of clubs. Thomas needs to create 3390 flyers with coupons to target each young adult in the Annex. The redemption rate will be approximately 10%. On the billboards, flyers and magazines, the slogan, Sweet Success, should be emphasized along with a picture of young adults enjoying sundaes at a party. This image portrays the idea that if a host wants his/her social event to be successful and enjoyable to everyone, he/she should have Marble Slab cater it. In smaller font, the brand slogan, The Freshest Ice-Cream On Earth, should be included to establish branding. On the street level units and coupons, the slogan, Take Time to Enjoy Yourself, should be highlighted and a picture of an ice-cream cone should accompany it. This message is very strong to convince the market because most students do not take the time to enjoy themselves because of educational commitments. If they are instructed by the advertisement to have fun, it will encourage them to get together with friends and enjoy some ice-cream (see exhibit 7 for sample coupon). To measure the success of these advertisements and promotions, the amount of in-store traffic, sales and events catered will be analyzed. If there are many people entering the store and purchasing ice-cream and there is high demand for event catering, then the advertising and promotions succeeded. If this does not occur, the quality of the advertising and promotions

must be increased or new mediums must be discovered. Refer to exhibit 3 to view the costs of the associated advertising and promotions. Financial Feasibility It is reasonable to assume that the young adult population the Annex, with disposable income and little price sensitivity, will purchase a common dessert like ice-cream. The average serving size of Marble Slabs main product, ice-cream, is 72 ounces or 0.21 litres (0.0296 litres in one ounce). Since the average Canadian consumes 8.4 litres of ice-cream annually, then the average Canadian purchases a 7 ounce ice-cream dessert 40 times per year. Since Marble Slab is the only ice-cream restaurant in the Annex and there is little direct competition, it is safe to assume the average person visits a Marble Slab outlet 32 times per year (80% of 40, a fair approximation), where the other 8 times he/she purchase ice-cream through other indirect competitors, such as grocery or convenience stores. To breakeven, Thomas must sell an average of 8237 units to breakeven (refer to exhibit 4 and 5 for an overview of the calculations). To realize her revenue goal of $400,000, she must sell 104167 units in a year. This is a reasonable figure because based on the market size in the Annex, her projected units that can be sold is 108480, which yields revenue of $416563 and higher than her goal (see exhibit 6 for projections). Since the Annex is home to the University of Toronto, Ryerson University, many subway stations and Bloor street, it is likely to reach this projected goal. In case she does not, event catering can help boost her revenue. As stated previously, event catering can reduce the amount of units needed to sell by 6520 if 48 events care catered in the year. Conclusion (2009). The Worlds Freshest Ice-Cream, at Your Service. Catering. Retrieved December 7, 2009, from http://www.marbleslab.com/catering/
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Thomas needs a strong marketing plan to ensure the success of her new outlet. To achieve her $400,000 revenue goal, Thomas should locate her outlet in downtown Toronto, targeting young adults, offering event catering without the portable slab option at a $1 increase, and providing popular and exciting flavours and mixins. She should also advertise through Pattison Outdoor, Now Magazine and Canada Post. Young adults are the primary consumers of ice-cream with a desire for socializing. They are most likely to purchase ice-cream with their disposable income and eat with friends. Vulnerable to peer pressure and impulses, this market is easily exploitable. Downtown Toronto is the best location to target the young adults because it is home to the University of Toronto, Ryerson University, and a major shopping street that is highly crowded with students. With several subway stops, anybody in neighbouring areas can access the Annex and purchase ice-cream. It is also close to Thomas home. Purchasing billboards and street level media units is highly effective because there is high student foottraffic, thus ensuring that young adults see the visually appealing physical mediums. Thomas should place Marble Slab advertisements in Now Magazine because it is read by almost 321,000 young adults and is easily obtainable by the target market. Lastly, flyers and coupons should be targeted to young adults because flyers can visually entice young adults to purchase ice-cream, especially if coupons are available. With all these promotions and unique product offering, there is a high likelihood that Thomas can sell 104167 units to the target market and cater approximately 48 events in a year, thus achieving success for her outlet.

Flavours

Exhibit 1: Flavours and Mixins List Mixins

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1. Sweet Cream 2. Vanilla 3. Double Dark Chocolate 4. Chocolate Swiss 5. Strawberry 6. Amaretto 7. Butter Pecan 8. Coffee 9. Caramel 10. Cheesecake

1. Butter Finger 2. Chocolate Chips 3. Blueberries 4. Raspberries 5. M&Ms 6. Snickers 7. Reeses 8. Graham Crackers 9. Walnuts 10. Peaches 11. Kit Kat

Exhibit 2: Financial Analysis of Catering Dollar Amounts when Sundae Bar Ice-Cream Social Catering to 70 People Variable Costs of Ice-Cream $200.20 $166.60 Supplies Cost $17.50 $17.50 Labour Costs $144.00 $144.00 Charge per person $7.95 $6.95 Revenues Per Event $556.60 $486.50 Profit Per Event $194.90 $158.40 Projected Number of Events 2/month = 24/year 2/month= 24/year Projected Revenue $13358.40 $11676 (Equivalent Units Sold) (3479) (3041) Projected Profit $4677.60 $3801.60 Total Revenues (Equivalent $25034.40 (6520) Units Sold) Exhibit 3: Financial Analysis of Advertising and Promotions Now Magazine Pattison Outdoor Canada Post Production Fees $1575 $4010 $393.24 ($0.116 per flyer/coupon produced) Number of People N/A N/A 339 who Redeem Coupon Money Lost through N/A N/A $652.80 Redemption of Coupon Cost Per Medium $1575 $4010 $1046.04 Total Cost $6631 Exhibit 4: Financial Constraints and Considerations

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Fixed Costs $31631 (Start-up Costs and Promotional Costs) Product

Variable Costs $32,000 (Royalty Fees)

Target Revenue $400,000

Profit $336369

Slab Cake Small Cake Milkshake Big Dipper Cone with 1 Mixin Small Sundae Quart Childs Size All Others Total

Exhibit 5: Financial Analysis of Products Selling Variable Cost Unit Weighted Price (Selling price Contribution Average Unit (Selling Unit Contribution Price * Contribution ) Margin) (% of sales * unit contribution) $54.95 $13.19 $41.76 $0.42 $22.95 $5.51 $17.44 $0.87 $5.70 $5.95 $4.95 $5.50 $8.95 $3.50 $6.16 $2.39 $2.68 $2.38 $2.86 $5.01 $2.06 $3.08 $3.31 $3.27 $2.57 $2.64 $3.94 $1.44 $3.08 $0.07 $0.33 $0.90 $0.13 $0.28 $0.22 $0.62 $3.84

Units Needed to Breakeven (Fixed Costs/ Unit Contribution ) 82 412 165 824 2883 412 577 1236 1647 8237

Units Needed to Reach Target Goal 1042 5208 2083 10417 36459 5208 7292 15625 20833 104167

Market Size

Annual Amount of Purchases

3390

32

Exhibit 6: Predictions for the Year Projected Projected Equivalent Units Sold Revenue Revenue from from Units Sundae Bar Sold and IceCream Social Events 108480 $25034.40 6520

Projected Revenue from Units Sold

Total Revenue

$416563

$441597.40

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Exhibit 7: Sample Coupon3

Source of Images: http://www.marbleslab.com/, accessed December 8, 2009 http://www.fcs.uga.edu/spanish/en/contact.html, accessed December 8, 2009 http://rinalie.files.wordpress.com/2008/12/ice-cream.jpg, accessed December 8, 2009
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