Executive Summary
GoGo Juice will be a fruit beverage company that sells freshly prepared drinks at gas stations. Its products will be distinguished by their combination of healthy fruit ingredients and an energy component that incorporates caffeine. The name refers to the “on the go” nature of the distribution model, which is aimed at highly active people who do not have much spare time. The company will make contracts with gas stations, starting with a specific chain in Maryland, and install their booths there.
People who drive in to refuel will be able to buy a freshly prepared, tasty, and energizing drink while their cars are being refueled. As such, the time they waste will be minimized without harming the quality of the experience. Initially, the company will be managed by a single director due to its small starting size. However, as it grows, it will deploy a traditional corporate structure that consists of the CEO, who oversees the VPs of marketing, sales, human resources, and operations as well as a comptroller, who will be responsible for the accounting. The market should be receptive to GoGo Juice because of the growing interest in healthy products as well as energy drinks.
The proportion of people who rely on the latter for their caffeine intake is growing steadily, and people are moving away from calorie-rich soft drinks. The new product satisfies the needs of both population categories at an affordable price, which is also critical. As such, it should have little competition, particularly early on in its existence, before its model is proven to be viable. Financial projections indicate that it should begin making a substantial profit, which will keep multiplying, by the end of its 3rd year with an initial capital of $200,000. As such, investors who put their money into the business early on stand to benefit significantly in a reasonably short time frame.
Company Description
GoGo Juice will be a seller of fresh fruit beverages that incorporate an energy element. Its focus is on those people who are always busy throughout the day and could benefit from a stamina boost but are also interested in maintaining excellent health. The energy aspect of the drink will answer the first need and let people do what they need to for longer. However, it will also be made from fruits on the spot, unlike most canned energy drinks that are stored in refrigerators, thus appealing to people who prefer fresh and organic beverages. Through this dual focus, the company should be able to capitalize on a customer audience without facing significant competition from other businesses. It will offer a unique product that caters to people’s needs in a new manner.
People who are busy throughout the day would presumably spend most of their time at work or moving around the city. In the case of the latter, they will likely use a car, which will need refueling from time to time. As such, gas stations are one of the few places where members of the target population are likely to stop repeatedly and frequently. The business will use this tendency to its advantage by setting up stalls at several gas stations in the beginning and expanding the coverage later. The need for the beverage to be fresh limits its distribution patterns, and thus, it is essential to take advantage of such locations. The gas stations will become more popular once the drink gains traction with buyers, as well. As such, the company should be able to secure its agreement and establish a mutually beneficial relationship.
Industry Analysis and Trends
The beverage industry tends to be highly competitive, though most of its segments are dominated by a small number of large brands, such as Coca-Cola. As a result, price sensitivity is high among consumers, who can change their consumption patterns significantly based on changes in this value (Heng, House, and Kim, 2018). There is a wide variety of different offerings in each category, and different drink types also compete with each other. Heng et al. (2018) mention that while the consumption of beverages, in general, has grown somewhat in the recent past, juice has become less popular despite being recommended as a part of a healthy diet. However, the study also notes that fruit drinks are seen as distinct from fruit juice, and consumers are more likely to switch to them from soft drinks.
This finding is somewhat promising for GoGo Juice, as its products are classified as fruit drink rather than juice. Additionally, according to Vercammen, Koma, and Bleich (2019), energy drinks have become significantly more prevalent across all of the target population categories due to their caffeine contents, becoming an essential source of the substance for these people. The growth is likely to continue in the future, as the market is not saturated yet.
Moreover, as Heng et al. (2018) mention, customers are becoming increasingly concerned over the calorie contents of their drinks, moving away from traditional soft drinks. Diet varieties have emerged in response, however, and GoGo Juice will likely have to compete against them. However, they do not have the advantage of freshness, which is only replicated by some juices and should not be a significant source of competition for the new beverage.
Target Market
The target audience for the drink will be people aged 18 to 55 with at least high-school education. The cause is that these people are the most likely to drive cars frequently and, thus, have a reason to visit gas stations. The income range that it will target will be $20,000 to $80,000 because, according to “Maryland household income” (n.d.), the upper end of this range is close to the average household income for the state. There will be no particular gender or ethnic group differentiation, as the drink’s properties appeal to all audiences. According to “ZIP code 21201” (n.d.), 16,972 people live in the zip code area with a median age of 30, guaranteeing a substantial audience for the brand. Overall, the drink should have a sizable potential customer base in its starting location.
Competition
The competition in the field is intense and likely to increase further in the future. According to Heng et al. (2018), fruit beverage and diet soft drink consumption depend heavily on prices, and fruit drinks have to compete with soft drinks for customers, though diet variations target different markets than standard options. As such, GoGo Fuel will have to compete with giants such as Coca-Cola or Pepsi and their diet-oriented offerings as well as a variety of other companies. Moreover, with the recent increase in energy drink consumption, especially among adolescents and young adults (Vercammen et al., 2019), competition in the field is likely to grow.
As a combination of a fruit and energy drink, GoGo Fuel will likely have to compete with both categories, which have dominant large companies as well as many smaller ones.
However, it may be able to capture a market niche where there is currently little to no competition. As a combination of a healthy drink and an energy beverage, it occupies a position that has few to no direct substitutes. It can appeal to the cross-section of the two demographics of nutrition-conscious people and energy drink fans. The specifics of its design and distribution also enable a unique market appeal due to its organic nature and freshness. GoGo Juice will be prepared and served at specialized stands at gas stations, which separates it from many other brands, which are stocked on shelves and in refrigerators. With these two critical differentiating factors, the beverage should be able to position itself sufficiently far away from the competition. Due to its substantial benefits, it can also attract a sizable customer base.
Strategic Position and Risk Assessment
GoGo Juice’s products are intended to offer buyers unique value at an affordable price. They also have the advantage of novelty, a few other beverages offer the same combination of cost, freshness, and benefits to both health and energy. The company’s core competencies are in the excellent sourcing enabled by its local contracts and predictive algorithms and the human interaction with its workers. Its resources are primarily allocated to supply and direct sales to capitalize on these advantages and make them sustainable. Lastly, so far, competition is weak, though it is likely to increase substantially once GoGo Juice proves that its business model is viable and profitable. As such, the current distribution model should result in short-term and possibly long-term success due to the potent combination of various strategic advantages.
However, numerous risks can have a severe adverse impact on the business’s development. Fresh ingredients may only be locally available seasonally, in which case GoGo Juice will have to source from elsewhere at higher prices.
The company may overestimate the number of its potential customers, stocking too many ingredients and failing to make the expected profits. Another possibility is that the buyers dislike the drink, in which case additional information gathering and development will be necessary before it can be relaunched. The ingredients may be contaminated in an accident, which can lead to poisoning and legal charges against the company, though this risk can be mitigated through careful supplier certification and checking. All of these risks are theoretically manageable, but they can be devastating if they occur in the early stages of the company’s existence, before it becomes profitable.
Marketing Plan and Sales Strategy
The message of the company should be one of an affordable and healthy energy drink for people who are active and busy. Its function will be to provide a burst of energy while improving one’s overall health. At the same time, it will be inexpensive without compromising the quality of the ingredients. In terms of freedom, the drink will be quickly and easily accessible at gas stations, which people regularly visit, without interrupting the flow of one’s day. The feelings it should inspire are confidence and inspiration from the energy support provided by the drink. Lastly, its future will be further expansion, the addition of more flavors, and possibly the introduction of other varieties of the beverage. As the drink’s functionality is the most important and differentiates it from the competition, the tagline will be “Healthy AND Energizing!”
Due to the target demographics of the brand, Internet-based promotion, and social media promotion, specifically, will be essential for success. The company will try to build a following for its brand accounts on various networks such as Twitter and Instagram. It will make a variety of promotions and interact with the visitors to its account actively. The suggestions and feedback can be used to adjust the company’s offerings and improve customer loyalty. It can then use these resources to draw awareness to its other marketing activities. In particular, sampling at its stands should prove useful at attracting an audience that may otherwise be distrustful of the enterprise. They will also try to partner up with the retailers where the installations will be located to increase awareness of the new product.
To contact the gas stations and arrange the installation of the GoGo Fuel stand as well as possible promotions, the company will have a sales team. Trade shows are not feasible because they do not happen often enough, particularly for the gas station and beverage industries. The presence of a separate stand rather than a generic fridge with a variety of options in it will help attract customer attention. Moreover, the brand representatives that work there will be able to answer questions and generate customer interest, as opposed to competitors, which are marketed passively. As such, customers will be attracted by the unusual features of the product and its distribution strategy.
They will then become engaged because of the active interaction, both online and offline, and its unique benefits, and return later on. Overall, the plan should be effective at creating a niche for itself and securing growth that can fuel further expansion.
Operations Plan
- Key Aspects of Operations: equipment, labor force utilization, facilities, sourcing. The production of the drink on-site will require a purchase of specialized equipment such as fruit juicers in substantial quantities so that every stand can have a set, incurring a portion of the cost at $25,000. Employees will have to be trained in customer service and the production of the drink and receive hourly wages of $12 so that the company can compete against other retailers. The company will have to contract gas stations and set up stands, creating an initial cost of $10,000. Supplies such as cups will have to be stored in a dedicated space, with a rent of $30000. Lastly, it will have to procure and deliver fresh ingredients regularly for a cost of $75,000.
- Cost and Time Efficiencies: GoGo Juice will use a prediction-based model to respond to customer demand in advance, thus saving money. It will use local sourcing for the ingredients, reducing both delivery time and costs. The company will set and maintain a set of standards that will enable consistent performance and employee performance measurement. Lastly, it will save money on storage by recycling leftover ingredients.
- Competitive Advantages: GoGo Juice will have an advantage over its competitors at the locations where it is sold because it will be served fresh, while the others will be pre-packaged. It also features a unique combination of health benefits and energy boosts, which competing products generally do not offer. By doing so, it appeals to two different demographics at once, providing a substantial potential for popularity. Lastly, GoGo Juice will utilize active customer interaction and feedback, potentially adjusting the serving immediately as the buyer asks.
- Problems Addressed and Overcome: sourcing, contract securing, efficient production. It was initially challenging to find suppliers for every fruit featured in the drink’s creation, but the company was eventually able to secure a favorable arrangement. Finding gas stations that would be willing to rent out an area for the stand was also an issue. However, GoGo juice overcame it by securing an exclusivity agreement with a chain that would also secure further expansion. Lastly, the company addressed the difficulties of producing the beverage with limited tools by refining its processes.
Technology Plan
- Software Needs: inventory management tools on-site and in the cloud as well as data analysis software. A significant part of cost reduction is to predict customer demand and adjust on-hand supplies to accommodate it without much waste. To that end, in addition to payment processing software, GoGo Juice will need inventory management tools that will contribute to a central database. The data in it can then be processed and analyzed once enough of it has accumulated to adjust ingredient orders.
- Hardware Needs: juicers, mixers, refrigerators, payment processing hardware, personal computers. The first three items are required for the creation of the beverage and have to be present at every stand. While the primary components will be fresh and recently sourced, refrigerators will help them keep longer, and the energy components require refrigeration, as well. Specialized payment processing hardware is necessary, in addition to a register to accept cards, which many customers will likely use (Steele, 2019). Lastly, personal computers will be required in the central office to conduct social media marketing.
- Telecommunications Needs: advert design, website design, and management, social media marketing. While the company will primarily rely on online marketing, it will still use traditional media and need to design television and radio adverts correspondingly while also arranging their displays. It will have to create and maintain its website with activities such as SEO and metric monitoring, for which it will need to hire specialists and use corresponding software. Lastly, social media marketing will require the company to create an always active account and contact the networks for verification.
- Personnel Needs: workers, website managers, product designers, social media managers. Website managers will be the only outsourced source of labor, as hiring them full-time would be expensive and inefficient due to the high number of different specialties required. The workers will have to be in-house, as will product designers, due to the need to refine and improve the product continuously. The social media managers will likely also fulfill another role in the company, at least initially, so they should be hired in-house.
Management and Organization Plan
Key Management and Employees: initially, the company will follow a basic structure, with the president overseeing several small divisions. Researchers who study the development of the drink will be required from the beginning. Sales staff will also be necessary to begin the distribution of the beverage, and some marketing workers will start spreading awareness of the company. Lastly, the company will need a substantial number of sourcing contractors who will keep the stand supplied. All of these divisions will report to the president until the company grows enough that appointing vice-presidents is feasible.
Board Members and Advisors: Eventually, the company aims to follow a basic structure that is similar to most other corporations. The VP of Marketing will oversee the various advertisements and promotions conducted by the company. The VP of Sales will manage the company’s outlets and assess their performance, making changes if necessary. The comptroller will be responsible for the company’s accounting, and the VP of operations will manage development and shipping. Lastly, the VP of human resources will conduct the hiring and training of employees. The positions of CEO and Chairman will be combined initially due to the small size of the company.
Management Structure and Style: initially, GoGo Juice will adhere to a flat management structure because of its small size, which makes other approaches ineffective. The CEO should be able to personally process all of the information about the company’s operations. However, as time passes and the company grows, it will have to switch to a hierarchical structure, as depicted in Figure 1. Product-based segmentation will be unnecessary because of GoGo Juice’s limited portfolio. The management style employed within the company will be democratic, aiming at high employee engagement. As an innovative company, GoGo Juice should collect and use feedback from both customers and employees to succeed.
Ethics and Social Responsibility Plan
The company has a responsibility to all of its stakeholders, which include employees and the community along with financial partners such as suppliers and investors. According to Kocollari (2018), a business’s duties include job creation, diversity promotion, civic engagement, and verification of suppliers, distributors, and products. It will fulfill the former two by expanding into more areas and hiring and promoting people without permitting any form of discrimination. The company will begin donating to charities and conducting community initiatives once it grows to a size where it can afford to do so. It will also only use well-checked sources for the drink ingredients and implement strict quality control measures.
The company aims to make money by selling beverages, and thus there is no reason to make it a social venture. However, it will pay close attention to its environmental impact and ensure that the pollution it creates is minimal. Panda and Shetty (2018) suggest that biodegradable packaging can be helpful, and the company will use paper cups for its drinks to make disposal easier. GoGo Juice should not have a significant impact on areas with scarce water because it does not produce large quantities of beverages. Moreover, due to the minimal involvement of potentially harmful chemicals in production, special purification tools should be unnecessary.
GoGo Juice will market itself on its numerous health benefits, which it will have to prove. To that end, it will regularly conduct studies that analyze the contents of its drinks for beneficial substances. It will also have to prove that the addition of the energy component is healthy and does not compromise GoGo Juice. To that end, the beverage should undergo extensive testing, and the company will quickly respond to any complaints and address them.
The Financials
GoGo Juice should need approximately $250,000 to begin operating and avoid early bankruptcy. The owner will invest $50,000 of their money and take out a 4-year bank loan for the sum of $150,000 at an interest rate of 10%. $150,000 of this money will go to the initial setup, leaving the business with a starting cash balance of $50,000. Throughout the first year, the company will be losing money while it begins gathering customers and increasing its sales.
It should reach the break-even point early on in the second year, after which its profits will start steadily growing. The starting cash amount should ensure that the company’s finances do not reach a negative number before this change can take place. As such, the business will not struggle to deliver on its obligations and keep operating smoothly throughout the initial period.
In the second year, GoGo Juice’s revenues will grow significantly compared to the first, but its profits will remain relatively small. However, the following years should see a change in the trend, with revenues growing noticeably and profits increasing by over six times in 2022 and then more than doubling in 2023. This increase is likely the result of the sales outpacing the fixed costs associated with the distribution and sales of the drink.
In 2024, the tendency will slow somewhat, and the company will begin growing more linearly. With that said, it will generate a substantial profit and should be able to pay off its loans and the other costs involved in the business’s creation. As such, GoGo Juice’s financial prospects appear promising, with it becoming a highly profitable company three years after its inception.
References
Davis, B., Lockwood, A., Alcott, P., & Pantelidis, I. (2018). Food and beverage management (6th ed.). New York, NY: Routledge.
Heng, Y., House, L. A., & Kim, H. (2018). The competition of beverage products in current market: A composite demand analysis. Agricultural and Resource Economics Review, 47(1), 118-131.
Kocollari, U. (2018). Strategic corporate responsibility: The social dimension of firms. New York, NY: Routledge.
Maryland household income. (n.d.). Web.
Panda, S. K., & Shetty, P. H. (eds.). (2018). Innovations in technologies for fermented food and beverage industries. Cham, Switzerland: Springer.
Steele, J. (2019). Payment method statistics. Web.
Vercammen, K. A., Koma, J. W., & Bleich, S. N. (2019). Trends in energy drink consumption among US adolescents and adults, 2003–2016. American Journal of Preventive Medicine, 56(6), 827-833.
ZIP code 21201. (n.d.). Web.