lOMoARcPSD|28755640

Bangabandhu Sheikh Mujibur Rahman Digital University, Bangladesh

Faculty of Cyber Physical System
Dept. of Internet of Things and Robotics Engineering (IRE)
Course Title: Entrepreneurship and Innovation
Course Code: BUS 4401
Assignment

Submitted to-
Rabeya Basri
Lecturer
Department of General Education
Bangabandhu Sheikh Mujibur Rahman Digital University, Bangladesh

Submitted by-
Sadat Hasnat Sabbir
Id-1901002
Session-2019-20

Date of
Contents
Abstract..........................................................................................................................................................5
Executive Summary.................................................................................................................... 6
New Product................................................................................................................................ 7
1. Product Description............................................................................................................7
1.1 Product Portrayal.................................................................................................................... 7
1.2 Product Profile......................................................................................................................... 7
2. Market Research and Analysis.........................................................................................8
2.1 Market Description...........................................................................................................8
2.2 Market Segmentation and Targeting.............................................................................9
2.3 Competitive Analysis..................................................................................................... 11
2.3.1 SWOT analysis.....................................................................................................11
3. Market Plan........................................................................................................................... 13
Pricing Strategies..................................................................................................................13
3.1.1. Setting the pricing objectives.................................................................................13
3.1.2. Determining Demand.............................................................................................13
3.1.3. Estimating costs..................................................................................................... 13
3.1.4. Types of cost and level of production................................................................14
3.1.5. Analyzing competitor’s costs, prices and offer................................................14
3.1.6. Selecting a pricing method...................................................................................14
Promotional Strategies.........................................................................................................14
3.2.1 Advertising............................................................................................................... 14
3.2.2 Personal Selling.......................................................................................................15
3.2.3 Promotional Tools...................................................................................................15
Public Relations.....................................................................................................................15
Distribution Channel.............................................................................................................15
Services and warranties.......................................................................................................15
4. Manufacturing and Operations...........................................................................................16
4.1 Locations......................................................................................................................... 16
4.2 Human Resource........................................................................................................16
4.3 Technological Aspects...................................................................................................16
5. Financial Analysis and Documentation.............................................................................17

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5.1 Sales Forecasting............................................................................................................17
5.2 Profit and Loss Projection............................................................................................17

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Abstract

Cake is a form of sweet dessert that is typically baked. In their oldest

forms, cakes were modifications of breads, but cakes now cover a wide range
of preparations that can be simple or elaborate, and that share features with
other dessert.

And our SARFS cake is one of the Best cake ever baked in the world.

As we are baking it in 3 sizes. Mini size, regular size and Family size it will be
very helpful for all kinds of people to carry. As they will get the cake at a
very good price which is 12, 18 and 38 respectively.

People of all class will enjoy eating this cake.

And we are baking the cake all over the country at a huge quantity.

We have gathered all types of information about the cake so I think we will
be able to run the business for a long time.

And we want everybody to be happy eating cake

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Executive Summary

We want to market cake. We have prepared this feasibility plan on that

basis. We have assigned a name for the product as “SARFS CAKE”.
Since the raw materials are very much available in our country, we
have decided to give the product an indigenous image.

SARFS Cake is a kind of sweet snack that provides the consumers

with processed chocolate, eggs, flour and sugar in sterilized packet. For
the marketing purpose of the product we have decided to launch
three product lines. The SARFS cake would be launched in the
market at Mini size. Regular size. and family size packet.

We have set a reasonable price for the product so that all kinds of
people can afford to buy this snack. We have followed the Target
Costing pricing approach. We would gain a competitive advantage,
as this is a unique hit in the market.

We have targeted a huge market segment for the product.

Bangladesh is a large populated country. Lots of people are looking
for such a product. Sterilised snacks are not available all the time. For
example: a person walking on the street. Suddenly he feels hungry.
Now if he wishes to eat sterilized snacks he cannot find it easily. It is
not always found in the right place at the right time. If we launch
our product in the market, a person willing to eat Sterilised snacks
can have it from a nearby shop. At present this is not possible. Our
target market includes health conscious people, sick people,
sportsperson & many other consumers, which we have
segmented from the Demographical, Geographical, Psycho
graphical & Behavioral point of view.

We have prepared a financial documentation for this feasibility plan of

a new product. As we are introducing the product in three categories at
mini, regular and family size packet, we have prepared the Break-Even-
Analysis for each of the product line. We have prepared the feasibility
plan for five-year basis.

For mini size packet the break-even point is at 4158004 Units. That
means if we sale 4158004 Units a year, we will make neither profit nor
loss. So to make profit we have to create a market demand in such a
way so that more than 4158004 Units are sold every year. Obviously
the unit cost will eventually come down because of the law of Marginal

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Cost. Then the break-even point will also come down. But that is from
the long run perspective. So initially we might suffer loss but ultimately
we would earn enough profit. The consumers will first taste the product
by consuming the mini size packet. So we might gain a short run profit
from that.

For regular size packet the break-even point is 4914004.914 units per
year. So we have to sell more than 4914004.914 units to earn profit.
We know that after the product is well promoted, people will
eventually consume more of regular size, as pet size are more in
demand. The price is such that people will turn to the regular size
because we are providing them at lowest possible market price.

For family size packet we have a different plan. We know many people
are not going to consume the family size package. So we have
assigned more profit on them per unit. Our target is to sell less
quantity of products but achieving higher profit. For family size packet
we have estimated the break-even point at 1724137.931 packets per
year. As we can see, we have prepared the selling price in such a way
so that, to be in a profit earning zone we have to sell least amount of
units comparing the other 2 product lines.

We have given an elaborate discussion on financial summary at the

later stage of the feasibility plan. We have followed the Target
Costing Pricing Policy; which means an ideal price is set first based
on customer considerations, then target costs will ensure that the price
is met. We decided the market price before. Then we calculated the
estimated unit price & fixed price. Then we decided how much profit
margin is possible on each of the product line. We have assigned three
different profit margins for three product lines. This price setting is
based on the current market research.

New Product

1. Product Description

1.1 Product Portrayal

‘SARFS Cake’ is a product that serve different segment of customer.
The product is sweet snack, which is unique in the current market.
The sweet snack will be processed and sold in polythene packet of
convenient sizes of mini size, regular size and family size. The

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sweet snack will be very much refreshing and provide great
support to the sick and

health conscious people. Our target market is very large with different
segments. Our expected sales are very high. The development cost is
tk.2.5 million approx.

1.2 Product Profile

Name of the Product: SARFS Cake

Type of Product: Sweet snack

Ingredients: Chocolate, sugar, flour, butter,vanilla, baking powder.

Container: Stylish polythene packet.

Container size: Mini, Regular,

Family. Product Price: Mini size for

Tk. 12 Regular size for Tk. 18

Family size for Tk. 38

Estimated Durability: 5 Months from date of manufactured

Machinery used: Advanced technology imported from

USA, UK and Netherlands.

Brand Slogan: Taste….Feel….Chill

2. Market Research and Analysis

Our company wants to develop and introduce a new Product. So, we

have gathered information through in-depth interviews. We made a
survey of the market to have a clear idea about our market, our
customer demand, needs and wants. This information helps us to know
about the current market and prospects of our new product.

2.1 Market Description

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Bangladesh is a country of about 180 million people.. The total market
size of the snack industry is about 20 million and day by day it is
increasing. We have a spread nationwide market of different
convenient product. People are nowadays very much concerned about
the market and product conditions. So we have a growing prospect of
customers of “SARFS cake”. Among the population we worked out few
segments of customers who will prefer our product most.

2.2 Market Segmentation and Targeting

Market Segments

We have observed and analyzed the market and based on the nature
of the market we segmented the market in the following sectors:

Geographic Segmentation:

• Sylhet
• Rajshahi
• Khulna
• Barishal
• Chittagong
• Dhaka
• Mymensingh

Demographics:

• Individuals
• Family
• Sportsman
• Business buyer

Psycho graphics:

• Higher class
• Higher mid class
• Middle class
• Lower class

Behavioral:

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 • Sick people
• Health conscious
• Sophisticated who take the new product from the market

Target market and projections:

Analyzing all the segments, we decided our target market according to

our product category. The target customers of “SARFS Cake” are sick
people, health conscious people, sportsmen and general public. The
company decided to charge Tk. 12 for mini size packets, Tk. 18 for
regular size packets and Tk. 38 for family size packets, if we consider
price versus taste received then we can see that taste received is more
in value. Therefore charging the mentioned prices are justified. The
following graph gives a clear idea of our target market.

Target Market:

Health Conscious –

18% Sick people – 12%

Sportsman – 5%

General people – 65%

We separate our target market into four different segment based on

their geographic, demographic, psychographic and behavioral
characteristics.

Health conscious: Health conscious people basically the sports

person are one of our largest target market. In this segment, we get a
lot of potential customer. One third of our total population is young.
This is a significant number that we have to concern about them and
provide product, which is fit for them. About 5 million people of this
total number are health conscious. They spend about Tk. 500 in a
month in average.

Sick people: Sick people are one of our major considerations. More
than 1 million children suffer from fever and related sickness which
make them unable to eat heavy food so they can eat this sweet snacks
that. Not only child but also the adult might suffer from those types of
problems.

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General Customers: Besides the above segments, the general
customers will acquire a significant portion of our target market.

Market Needs:

“SARFS Cake” wants to satisfy its customers need. That’s why it is

important to identify the market needs. Our first consideration is to
provide the best product to its customers. That’s why we offer three
different sizes of packet with different prices for its different segment
of customers.

Mini size: The lowest price for the rural mid social class and
individuals.

Regular size: Its target the sick people, sportsman and general
people.

Family size: For a small family.

2.3 Competitive Analysis

The snack industry is very much competitive. Many snack companies
have acquired a significant portion of the market. But the unique
features of “SARFS cake” will take it far beyond the reach of the
competitor. Because, no one has yet thought about selling sweet snack
in such a specialized way. To evaluate our prospect of “SARFS cake” in
the current market, we have analyzed the market situation in various
ways. Following are some demonstration of the analysis:

2.3.1 SWOT analysis:

The product existence in the future is depending on its strengths,

weakness, opportunities and threats analysis:

Strengths:

1.Available input materials

2.Low production cost

3.Technological and marketing knowledge

4.Strong distribution channel

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5.Easy manufacturing

process 6.Reasonable price

Weaknesses:

It is easy to copy the idea by others

Taste is same for all types of people

Opportunities:

1.Monopoly market

2.Large market

3.High demand

4.Might have a chance to get subsidies by Govt. to export

Threats:

1.High competition in future by copying the idea

2.Entrance of new product

3.Uncertainty of launching a new product.

2.3.2 Competitor Analysis

The major cake companies of current market are:

• Pran Groups
• Dan cake
• All-time
• Fu-wang
• Shyamoli
• Foreign Products etc.

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Distinct Competency:

These companies can try to entrance our market by launching new

product lines to compete us. Yet, we have distinct competitive
advantage. That is our product is still brand new. The other companies
will take sometimes to enter into the market. Till then we can have a
monopoly market condition. The other advantage that we have is lower
price. We will sell products in reasonably lower price then other
competitors do.

Strategies against competitors:

To compete with the major competitors we can adopt the following

measures:

Providing the best service to create high customer satisfaction

Reasonable and acceptable pricing

Promising and providing top quality product

Launching highly effective mass promotional activities

Continuous innovation and modification of the products

Creating and maintaining long term customer relationship

Creating “Brand Loyalty” among the target consumers

3. Market Plan

Pricing Strategies
We have decided to set a reasonable price for our product when we will
develop it. We considered many factors in setting the pricing policy. We
will describe a six-step procedure:

3.1.1. Setting the pricing objectives:

Our company has decided where it wants to position its market

offering. We have chosen our objective to maximize market share. We
believe that a higher sales volume will lead to lower unit costs and
higher long-run profit. We have set the lower price because we assume
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that the market is price sensitive. Our overall objective is to capture
the maximum market share by setting lower price.

3.1.2. Determining Demand:

Each price will lead to different level of demand and therefore have a
different impact on company’s marketing objectives.

3.1.3. Estimating costs:

We have estimated the cost and want to charge a price that covers the
cost of production, distribution and selling the product, including a fair
return for its effort and risk.

3.1.4. Types of cost and level of production:

There are two types of cost: a) fixed and b) variable. In our new
product development project fixed cost is 2,00,00,000 taka. Fixed cost
includes- machinery, monthly bills, and salaries of employees and so
on, regardless of output.

There are some variable costs like-cost of packets, packaging and so

on. These costs tend to be constant per unit production. We have
estimated that per unit variable cost is Tk. 3.3 for mini size, Tk. 7.6 for
regular size and Tk. 15.4 for family size.

3.1.5. Analyzing competitor’s costs, prices and offer:

We have analyzed our competitors’ price and found that Pran charges
tk.15 for mini size, Dan cake charges tk. 14 for mini size.

3.1.6. Selecting a pricing method:

We have chosen the target costing method to set price for our product;
pricing that starts with an ideal selling price based on customer
considerations, then target cost will ensure that the price is met.

Promotional Strategies:
To acquire a strong position in the market, we need to give special
emphasis on effective promotional activities. In order to get the

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maximum market share we will have to use all four tools of marketing
promotion. Specially, advertising through mass media will support us a
lot.

3.2.1 Advertising:

We initially will give more emphasis on onlinde ads and TV

commercials. Because, advertising through these media is the most
effective way to reach the customers and position our product in their
mind. We are anticipating that this will have a massive impact on the
teenagers and other enthusiasts. Few neon signs and bill boards of
“SARFS Cake” also can be set up in some core points of the city. We
hope to reach 75% of our customers through effective advertising.

3.2.2 Personal Selling:

Though personal selling skill is not that much effective for convenient
products like “SARFS cake”, we will inspire and train the sales persons
of the retail stores to convince people to buy our product when they
will come to buy any snacks item. The sales persons will inform the
consumers about the chilling taste of “SARFS cake”. We hope that will
play a significant role to increase our sales.

3.2.3 Promotional Tools:

We have also planned to apply some promotional tools. Initially for

sometimes we will distribute our product at 50% discount just make
our new product familiar with the customers. This will be the market-
testing period for our product. Later, we may apply the strategy of
giving gifts, lucky coupons, tour tickets depending on the market and
competitive situations.

Public Relations:
We have future plans to hold seminars, commit social development,
supporting social activities, to arrange cultural functions and mobile
game shows for publicity purpose.

Distribution Channel
In the initial stage, we will distribute the products with our sole
distribution channel. When our market will spread out, we will

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distribute our products through dealers. We will set our own outlets in
few core market positions. When we will go for mass marketing, we will
supply our product nationwide through dealers. Our dealers will take
the products to every district of the country. “SARFS cake” will be
available in all retail stores of the country.

Services and warranties

As we are targeting to the top most customer satisfaction and building
long-term customer relationships, there is no alternative for us rather
than providing top quality service. Giving the customers timely and
instant quality service is our primary concern. We even planned to
open few customer service centers where will response to customers’
interactions. We will collect information, suggestions, ideas and
opinions of the customers through these centers and will innovate and
modify our product accordingly. We also will change any defected
product.

4. Manufacturing and Operations

4.1 Locations
We will set our manufacturing and other working areas in convenient
locations. We will prefer the locations to set up our manufacturing
firms, warehouses and inventories in different core business points of
the country where it will be easier to both collect the raw materials and
transport the final goods to the market.

4.2 Human Resource

The board of directors will be responsible for the recruiting activities.
Recruiting will be done through written tests followed by interviews.

4.3 Technological Aspects

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To create and innovate new quality products we need to use advanced
technology. We need high tech machineries imported from the foreign
countries. Not to mention, skilled people to operate them. We have
already studied all the technical aspects and prepared a list of
instruments and their costs. The machinery will be collected when
required.

5. Financial Analysis and Documentation

5.1 Sales Forecasting

The following Table and graph show our expected sales for the coming
five years:

Expected Sales(Per year) Mini size Regular size Family size

First Year 4000000 4500000 1500000

Second Year 4500000 5000000 1700000

Third Year 5500000 5800000 2000000

Fourth Year 6000000 6500000 2400000

Fifth Year 6300000 6700000 2500000

5.2 Profit and Loss Projection

For mini size.

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 Item Year 1 Year 2 Year 3 Year 4 Year 5

Total Sales 44440000 49995000 61105000 66660000 69993000

Total Cost (45200000) (48350000) (54650000) (57800000) (59690000)

Total Profit (760000) 1645000 6455000 8860000 10303000

Tax 40% — 658000 2582000 3544000 4121200

Net Profit (760000) 987000 3873000 5316000 6181800

For regular size.

Item Year 1 Year 2 Year 3 Year 4 Year 5

Total Sales 75015000 83350000 96686000 108355000 111689000

Total Cost (76700000) (83000000) (93080000) (101900000) (104420000)

Total Profit (1685000) 350000 3606000 6455000 7269000

Tax 40% — (140000) (1442400) (2582000) (2907600)

Net Profit (1685000) 210000 2163600 3873000 4361400

For family size

Item Year 1 Year 2 Year 3 Year 4 Year 5

Total Sales 54000000 61200000 72000000 86400000 90000000

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Total Cost (56600000) (61480000) (68800000) (78560000) (81000000)

Total Profit (2600000) (280000) 3200000 7840000 9000000

Tax 40% — — (1280000) (3136000) (3600000)

Net Profit (2600000) (280000) 1920000 4704000 5400000

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