Introduction
Background
Water is an important and vital resource for human beings. It sustains life and makes it possible to carry out different social and economic activities. However, inequalities in the management of water and lack of adequate access to this commodity have created scarcities in the market where pockets of populations are often deprived of this valuable commodity, while others receive it in abundance. These challenges are more poignant in developing countries than developed ones (Judd, 2019; Adeniran, 2017; Onyango et al., 2015; Thai and Guevara, 2019; Taylor et al., 2020; Pittock, 2019; Narayanaswami, 2018). Indeed, improvements in government efficiency and service delivery standards have seen water become available to almost all households in developed nations. For most of these countries, the main water vending industry that still thrives is the bottling water industry. However, like all other business sectors, it has its challenges and opportunities, most of which need to be carefully evaluated to understand their impact on societies. Additionally, there is a need to undertake a critical review of the sub-segments of the market that are adequately serviced and those that are not. In this paper, it is proposed that the high-end section of the market is underserviced.
From the aforementioned market gap, two brothers of Indian descent founded Masaki Water Bottlers in August 2009. They started the business after noticing a gap in the niche water bottling market in the United Kingdom (UK), whereby the top-tier segment was significantly underserved while the middle and lower sections of the market were oversupplied. The purpose of this report is to seek additional funding to start a new bottling facility in Liverpool. This plant will serve the city market and expand the company’s production capacity to add value to existing product brand categories, as a strategy of standing out from the competition in the premium market segment. It is expected that the new plant will not only expand the company’s production capacity but also lower its operational costs. This outcome would suffice because the proposed business plan would make it cheaper to transport products from the new plant to the market, as opposed to the current model where the company subcontracts delivery services to a third party to distribute the goods on behalf of the company. Therefore, by locating the new services in-house, Masaki Bottlers can have better control of the value-chain process.
Additional funding is also needed to integrate the company’s business model with current online capabilities that allow customers to order products virtually and have them delivered at their doorsteps. This strategy aligns with the company’s plans of transitioning its business-to-customer (B2C) operational processes online as recommended by Wynn and Jones (2019). In this context of analysis, the additional funding obtained from investors would be used to update the company’s supply chain management activities to reflect a real-time ordering and delivery system. Current plans involve using unmanned automated vehicles and drones to improve deliveries to the target customers. Therefore, the additional funding sought through this plan will be instrumental in changing most aspects of logistics and supply chain activities to make them more efficient and responsive to customer needs, as suggested by Hatak and Snellman (2017).
Broadly, this document is a research proposal that explains how the above objectives are expected to be achieved. Key sections of this business plan highlight the main activities of Masaki Water Bottling Company and the services it provides to its customers. This document also contains information regarding the main services offered by the business to its customers as well as the management structure that currently guides the organization’s activities and future development plans. These insights will be presented in this report, relative to discussions that will explain how the proposed changes will fortify the target market and make it a key driver of growth in the next phase of the company’s business cycle. To have a proper understanding of the outcomes of the proposed plan, financial projections for the next three years will equally be provided in this report, with the key financial measures analyzed quarterly. However, before delving into the details of this analysis, it is first important to understand the scope of this report.
Scope of the Report
The scope of this report covers all aspects of Masaki’s business performance as they relate to water sales and distribution strategies. Key aspects of the plan include a sales strategy whereby the main markets are identified and ways of reaching them developed. While the theoretical contribution of the study to the business is highlighted in this study, additional financial information relating to the company’s performance will be provided in the appendix section. The goal will be to identify new opportunities for investments and estimate the timeline for the accomplishment of different operational objectives. Therefore, the full scope of this report not only explains the market conditions of the proposed business but also its future outcomes by evaluating the services it will offer to its customers.
The management structure that would guide decision-making in such an environment and the target market that should be identified to form the main customer group will also be described in this plan. These different aspects of the business plan are captured by Suša Vugec, Tomičić-Pupek, and Vukšić (2018) in their assessment of the main parts of a holistic business plan. The scope of this report will be domiciled in the water vending business with a special focus on the premium market segment. The aims and rationale of the business plan are outlined below.
Aims and Rationale
As highlighted in this paper, this study aims to develop a business plan for Masaki Bottling Company. The plan is aimed at launching new brands of luxury bottled water with different flavors in the UK. However, because of the challenges associated with implementing such a plan, the key success factor for this proposal is securing funding. This means that when financing is obtained, the business plan can be launched. The following two statements highlight the aims of the business plan.
- To seek funding for the business plan
- To profile the main target market for the company
Services Provided by the Business
Masaki water bottling company mainly sells water to customers in the UK. Its market around the region has been well established except for Liverpool, which is the last frontier of market growth (Howell et al., 2020). Besides, bottling its products, Masaki Water Company can package beverage bottles for other companies as well. Therefore, its services will not only be limited to business-to-customer (B2C) relationships but also business-to-business (B2B) relationships (Lyons and Brennan, 2019). Therefore, the water company will offer its services to both individual and corporate clients alike.
Target Market
Identifying a target market requires a careful understanding of the unique needs of a market and the desires or wishes of customer groups who form it. Typically, most businesses segment their markets into three broad categories: low-income, middle income, and high income (Angeli and Jaiswal, 2016). As its name suggests, the low-income segment of the market is characterized by the activities of the mass population whose interests largely define what the majority of the people want or need. Similarly, as highlighted in this report, this section of the market is already saturated as there are many water bottling companies that offer affordable products within this segment of the population. The middle-income section of the market is equally served because prices are still set affordably and consumers have access to a wide variety of products and services. However, the high-income segment of the market does not share the same characteristics because there is a poor product-price-value match. After all, consumers have been forced to pay high prices for products that would be found in other segments of the market.
Overall, the premium-pricing model, which is used in many high-end markets, thus fails to communicate value to customers because the additional benefits expected of a premium pricing structure are non-existent in the current market setting (Hammer, 2019). As such, there is an opportunity in the industry to match the value and price that high-end customers pay for. Masaki Water Bottling Company hopes to tap into this market opportunity using high-end consumers as the main target market category.
Product and Pricing Strategies
Similar to most markets involved in the sale of goods and services, the water bottling market in the UK is also categorized into different market segments. Masaki Water Company mainly specializes in the high-end business market segment, which is characterized by people who have high income and education levels. This target market is selected for the proposed business plan because it is relatively underserved compared to the mainstream market. Stated differently, this segment of the market is poorly targeted as the products sold resemble the ones available in the mass market, but only more expensive. This means that the niche customer segment pays a premium for the same product that would be obtained using a standard pricing model in a shopping outlet located in a different part of the country.
This discrepancy means that consumers are not getting value for money. Masaki Water Bottling Company strives to change this situation by delivering value to this market segment. The plan is predicated on a value-addition strategy whereby products will be sold to consumers with additional benefits added to the items sold (Lloréns and Stanchich, 2019). For example, under this marketing plan, flavored water will be sold as a unique product category for the niche market. Similarly, consumers will be supplied with enriched products that contain extra minerals for use. This value addition strategy will allow the target market to understand the additional value offered to them, hence justifying a premium marketing strategy.
Promotion Strategy
A business’s promotion strategy plays a critical role in influencing the number of people who would buy a product, or not. At the core of its implementation plan is the need to make customers aware of the existence of a product and communicate its value to them. Relative to this assertion, a digital promotion strategy will be adopted by Masaki Water Company to reach the target market. As highlighted in this proposal, the targeted market will be comprised of high-end customers. The basic assumption of adopting a digital promotion strategy is that members of this customer group are tech-savvy and can be effectively reached using this promotion strategy. Research studies suggest that the digital marketing strategy is a recent addition to traditional organizational promotion strategies because past communication channels were based on print advertisements and billboards.
The digital marketing plan provides a different way of thinking about marketing a company’s products because it can accommodate multiple creative ideas at the same time. For example, an Instagram video could contain video, audio, and computer graphic imitations in one frame. The digital marketing strategy is considered a by-product of the digital revolution shaping the global e-commerce space (Angeli and Jaiswal, 2016). This trend has forced companies to rethink their business strategies, thereby making them more appealing and integrated into the digital marketing platform. However, its use in this study is justified because it is an inexpensive and effective form of communication. Therefore, it will be adopted as the main promotion strategy.
Management Structure and Personnel
The management structure of a business defines the decision-making framework that will be followed when formulating strategic choices in a company. Depending on the type of business and firm involved, companies often adopt varied management structures and personal organizational plans that are suited to the achievement of their key objectives (Chatha, 2019). In light of the important role played by management in dictating an organization’s strategic flow, attention has been directed towards the development of an effective oversight and governance model that would not burden the firm, in terms of decision-making efficiency, but facilitate its responsiveness to existing micro-economic and macro-economic forces affecting an enterprise (Barrett and Moores, 2020).
Masaki Water Company will have a Chief Executive Officer (CEO) as the most impactful person because he or she will exercise instruments of power in the overall management structure and plan of the firm. However, the company’s three directors will occupy the highest positions in the overall management structures and their responsibility would be providing the strategic direction of the business. Therefore, the CEO will have the task of implementing the day-to-day operational plans of the business. Under his authority will be departmental managers and lower cadre employees. This differentiated understanding of leadership and management responsibilities characterizes the nature of the relationship between Masaki’s directors and managers and the structure of the overall management plan.
Financial Projects
The financial projections outlined below relate to Masaki’s profitability, return on investments, sales projections, and balance sheet performance. However, before explaining the details of these projections, it is assumed that from the break-even analysis below, Masaki Water Bottlers would enjoy a 69% gross margin as a percentage of total sales, which will allow investors to break even in two years. When coming up with these calculations it was assumed that no employees would be contracted in the first year of operation, as services will be outsourced to reduce operation costs. However, the company would need to make sales of $17,608,490 annually or $1,467,374 monthly to break even. A further breakdown of these calculations is provided in table 1 below.
Table 1. Break-even Analysis
Based on the above computations, Masaki Water Bottling Company is expected to be profitable within its first two years of operation. Table 2 below presents an estimation of the firm’s overall performance based on a review of key financial ratios.
Table 2. Indicative Financial Ratios
As highlighted in table 2 above, the projected financial ratios for Masaki Bottling Company are promising in the sense that investors are assured of good returns when injecting their capital into the business. Additionally, these indicators suggest that the company’s overall performance will be higher than the industry average of less than 12% (Ganamotse et al., 2017; Berends et al., 2016). This comparison of statistics means that investors would be benefiting from better market returns if they allocate their capital to the bottling company (Le Breton-Miller and Miller, 2018). This possibility is supported by a positive estimation of sales numbers within the next three years of operation. Appendices 1-3 contain an estimation of the projected sales for the company during the aforementioned period under review. According to the income statement highlighted in appendix 4, it is also seen that the company is expected to make profits within the first three years of operation. In the first year, the expected margins are estimated to be at 18.1%, after which is expected to rise to 19% in the second year and ultimately to 21% in the third year. These figures suggest that the company will be profitable in the short term and middle term. The company’s balance sheet for the start of the year is presented in appendix 5, while its overall performance throughout the three years under review is captured in Appendix 6.
Summary
This business plan has covered all aspects of Masaki’s business performance as it relates to water sales and distribution strategies. Key aspects of the plan that have been investigated include a sales and marketing strategy, which has helped to identify the main markets and ways of reaching clients in them. While the theoretical contribution of the proposed plan to the business field is fixated on understanding how to run successful enterprises, additional financial information relating to the company’s performance will be generated as the business operates. The goal will be to identify new opportunities for investments and estimate the timeline for the accomplishment of different operational objectives. Therefore, the full scope of this report not only explains the market conditions of the proposed business but also its future outcomes through an analysis of the services it will offer its customers. The management structure that would guide decision-making processes in such an environment and the target market that should be identified to form the main customer groups have also been explained in this document. These different aspects of the business plan should provide investors with sufficient information to make a sound judgment on capital allocation.
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