Workshop on Entrepreneurship

Neo Life Mini Portable Fridge

A Business Plan

Faculty Guide:Prof. B. S. Revankar

Submitted by:

Group AD1

Debdripta SenguptaHarsh MohanHirangi PandyaMohit Sethi

Executive Summary

People from all walks of life always feel the need of a product that helps them improve their lifestyle. Sometimes that very product may not be the ultimate need of the consumer but still if provided forms a very strong part in their day to day life.Neo Life - 12 litres Mini Fridge Warmer Cooler and Portable is a compact and portable thermo-electric refrigerator cum warmer designed to be used in vehicles, houses, offices, etc. It has a gross capacity of 12 litres and it can comfortably hold four 4litre bottles of water or 16 cans. It guarantees excellent chilling and keeps ice cubes intact. It not only keeps your drinks chilled but it also warms up your food effectively whenever you need it to do so.It comes with AC and DC connection and features triple insulation. This fridge cum warmer does not have any compressor, refrigerant gas or coils and is completely CFC free. Featuring a versatile design, it does not require any installation. Place it either vertically or horizontally and simply plug it in. This small wonder enables temperature setting via digital control. This refrigerator also features a removable partition panel.

Fridge cum Warmer is an effective solution to the needs of students and office goers who need cold drinks or warm food during their long working hours. Udupi and Manipal have a huge number students and working people who would be benefitted by this product. The idea is to design a marketing plan to effectively market the product in the diverse town of Manipal. It is known fact that Manipal is home to citizens from all across India and if a product do well in this small yet diverse market, there is always a high probability that the product will do well in the real market across India.We have made a humble attempt to try our knowledge and make a draft business plan for this unique and diverse product.

Table of Contents1.The Product42.The Management43.Company Goals54.Current Scenario55.Customer Expectations and Needs56.Environment Analysis:77.Marketing Goals88.Estimating market demand99.Challenges1010.Summary of different marketing strategies10a.Sales strategy11b.Competition strategy11c.Growth strategy1111.Budgeted sales and expenses11

1. The Product

Neo Life - 12 litres Mini Fridge Warmer Cooler and Portable is a compact and portable thermo-electric refrigerator cum warmer designed to be used in vehicles, houses, offices, etc. It has a gross capacity of 12 litres and it can comfortably hold four 4litre bottles of water or 16 cans. Based on NASA technology, it guarantees excellent chilling and keeps ice cubes intact. It not only keeps your drinks chilled but it also warms up your food effectively whenever you need it to do so.It comes with AC and DC connection and features triple insulation. This fridge cum warmer does not have any compressor, refrigerant gas or coils and is completely CFC free. Featuring a versatile design, it does not require any installation. Place it either vertically or horizontally and simply plug it in. This small wonder enables temperature setting via digital control. This refrigerator also features a removable partition panel.

Fridge cum Warmer is an effective solution to the needs of students and office goers who need cold drinks or warm food during their long working hours. Udupi and Manipal have students and working people who would be benefitted by this product.Our business plan will include the details of our business operations, from the process of manufacturing till the delivery.

2. The Management

a. Key Employees:Rahul Singh, President. Rahul Singh has worked in the electronics goods industry since the mid-1990s. In the year 2002, he opened an electronics goods company in Bangalore. He worked for the company full-time for five years. In 2007, Rahul joined a Mumbai-based electronics goods company as a sales associate for 5 years, earning recognition as the top sales associate every year. He will be the President of Neo Life.

b. Associates:In addition to the above employees, Neo Life has one full-time sales associate and a part-time sales associate. Yet with the rapid growth of Neo Life, we plan to hire more sales associates, an administrative assistant, and packing specialists next year.

c. Advisory Board:Neo Life is in the process of forming our advisory board. We have already secured sales associates and an Advertising Creative Director to serve on our Advisory Board.

d. Management Structure:President is involved in all aspects of the day-to-day operations of Neo Life. He works closely with the Vice-Presidents to support activities over which they have specific responsibility. Each Vice-President is given a wide degree of decision-making authority in their area of the company.

3. Company GoalsThe goals of Neo Life:1. To become the leading manufacturer in the 10-15 liter cooler-cum-warmer in Manipal, Udupi and Mangalore region.2. To expand our business in other urban cities like Bangalore in next 2 years3. To provide excellent customer service4. To differentiate our services by providing great packaging and with energy efficient products

4. Current ScenarioManipal, often known as the University City is home to some of the esteemed educational institutions like Kasturba Medical College, Manipal Institute of Technology, T. A. Pai Management Institute, etc.,Today, Manipal has more than 70,000 students graduate and has an ever increasing enrolment number of more than 15,000 students out of which most of students are hostel residents.The climate in Manipal is humid and warm between November and May and wet and cool during the monsoon months from June to October. It has a tropical climate characteristic of coastal plains in the West of India. Manipal, being located on an elevated place near the seashore, has fine breeze throughout the day and the temperature ranges from 24 C to 38 C for most part of the year.Though products like tropicool, which are the competitors, are easily available online, the high cost of such products make them unattractive for the students. Moreover, the location of, Manipal makes it a little inconvenient to order online. Thus a local dealer which is easily accessible will be more attractive for the students as well as local residents of Manipal.The product being as small as 12 litres is easy to fit in hostel rooms, bed-rooms as well as cars, making it a very useful product for students, working people and frequent travellers.Apart from this, the CFC free Fridge cum Warmer complements the pollution-free, clean and green environment of Manipal.

5. Customer Expectations and NeedsThe 12-ltr fridge cooler-cum-warmer is a good example of the way in which different groups of customers can have different expectations. According to the online survey, we conducted with respondents spanning age range of 18-50 years, we found that consumers believe this product to be useful in office or cars or hostel rooms or living rooms.

QuestionYes / LikeNo / Does Not Like

People who prefer drinking coffee/soft drinks while driving62%38%

People who like the portability concept of this product60%40%

Need of a fridge at Office / Hostel / Car59%41%

Based on the survey shown above, we have identified the customer needs which can be filled by our product. In the Udupi/Manipal/Mangalore region, there is an unmet need of a product which can act both as cooler and as warmer, yet will be portable, lightweight, economic and eco-friendly.

6. Environment Analysis:

OpportunityThreats

Less CompetitionUntapped marketLarge potential customersHigh expansion prospectsLess price then competitorsSale dependent on specific time of yearHard to maintain continuous saleAvailability of very cheap substitutes.

StrengthsAffordable PriceSOSOST

PortabilityST

Useful in all seasons SOSOST

Uses less electricitySO

Light weightSOST

Eco friendlySO

WeaknessCannot be used for freezingWT

Very less awarenessWOWT

Complicated for some usersWOWO

Students may find it costlyWOWT

Limited temperature rangeWT

7. Marketing Goalsa. Segmentation of the customersThe customers are segmented based on three factors:Demographics 20-40 years old Mostly students and office-goers

Geographic Initial launch in Manipal / Udupi / Mangalore Further plans of expansion in Bangalore

Psychographics People prefer having their drinks hot or cold

b. Identification of the target segmentWe will be targeting the following customers: Students residing in hostels Office-goers as well as people who drive to office or go on a long drive Family persons who prefer to use it in their rooms c. Positioning the productOur product will be an economic and widely accessible to all the customers. More specifically, the product will be positioned as follows: Eco-friendly energy efficient and economic Multi-usage of keeping beverages cold and foods (or beverages) warm Small size, portability and good design to accommodate multiple items will position the product as useful for students in hostels, office goers or people going on a long drive in a car d. Inventory in UdupiA small storage facility (around 800 sq feet) will be taken on rent. The finished products will be stored in this storage facility. There will be a small office room here for daily operations. The sales personnel will take the products to the nearby retailer shops from this storage facility.e. Plan method of distributionThe collection of finished products will be done once a week, however, if the demand is high in few months (as forecasted during the months of May and June), the frequency of collection can be increased to twice per month. The distribution to retailers will take place in Mini Goods carrier or tempo.f. Promotion planWhen the product will be launched in January, there will be promotional fair in Manipal to create awareness. During May and June, there will be another promotional fair to attract the new students coming to Manipal. Also, during the month of September, there will be another promotional fair in Bangalore to create an impact before entering the Bangalore market in October. There will be other promotions like online advertisements and social media ads along with ads in print media.g. Long term plan1. Expanding into BangaloreWe will enter the Bangalore market after 9 months of operation in Udupi/Manipal/Mangalore region. There are existing competitors in Bangalore, so retailer commission will be higher as compared to Manipal/Udupi region.

2. Opening a storage facility in BangaloreAnother storage facility will be opened in Bangalore once we enter Bangalore. This will incur more cost, however, it will help us to respond to the market demand quicker.

3. Online distribution channelThere are long term plans of expanding our distribution channel to online shopping destinations like Flipkart, Rediff Shopping and e-Bay. This will happen once we expand our business in larger cities like Bangalore.

8. Estimating market demandThe demand of 12 ltr fridge cooler-cum-warmer in the Manipal/Udupi region is tabulated below. It is found that in the full market potential the total demand is Rs. 68, 73,057.Market Demand

Percentage of people willing to use the product 57.2%

Total number of students and other potential buyers 2000

Number of potential buyers 1145

Average number of buyers per month (assuming no repeat purchase) 95

Quantity purchased 1

Cost of one unit of 12 ltr fridge cooler cum warmer 6000

TOTAL MARKET DEMAND Rs. 6873057

9. Challenges

i. Less awarenessThe product being new to market, not many people are aware about it. Less availability of similar products in local stores makes the awareness even less. Thus, the marketing strategy begins by creating awareness among potential customers about the product and thereby increasing the customer base.ii. Complicated for some usersThe dual feature of cooling and warming in the same box makes the understanding of product difficult. It takes time to understand the working of the Fridge cum Warmer taking into account all the safety measures.iii. Cost IssuesStudents, who are yet to earn on their own, find it costly to spend an amount of Rs.6000 for a Fridge cum Warmer of the capacity of 12 liter. Especially, when the usability of product is mainly during the two- four years duration of their course after which the product might not serve its original purpose.iv. Limited temperature rangeThe temperature range provided by this Fridge cum Warmer is -5C to 65C limiting its capability to freeze or boil.This limited range makes the product less attractive to customers thus making it a challenge for the marketing manager to sell.v. CompetitorsOnline available similar products are primary competitors, Tropicool being one of the major of them. Also, substitutes like ice-cool box, which are easily available in the market and low on maintenance, can be considered as competition.vi. Sales dependent on time of yearSales are at its peak in months of June-July when new students enroll in colleges after which the demand decreases drastically.

10. Summary of different marketing strategiesa. Sales strategy

Sales would be done through local retail stores which are available in large numbers in Manipal/Udupi/Mangalore region This would pay off as most of the students/office goers visit the retail stores to buy other products and also due to the absence of many supermarkets in this region. Retailers in Manipal/Udupi and in Bangalore will get a commission on 10% and 12% for each unit sold. 2-year warranty for the customers.b. Competition strategy

Use first mover advantage: There are no close substitutes for the product in the Udupi/Manipal market. Manufacturers like Tropicool have their presence in Bangalore. So it will be challenging to gain market share in Bangalore. Also, major players can enter the Udupi/Manipal market soon.c. Growth strategy

Promotional fair in Manipal to be conducted in January (when the product is launched) and in June (when new students arrive in Manipal for college admissions), also in Bangalore a promotional fair to be conducted in September to create an awareness before the product is launched in October in Bangalore. Customers and distributors will be given demonstration on the usage of the product by the sales and marketing personnel. Post-purchase behavior of the customers will be monitored and proper servicing and maintenance will be covered under the warranty scheme.

11. Budgeted sales and expensesAssumptions:Manufacturing cost = Rs. 4500Retailer Commission = 10% in Manipal & 12 % in BangaloreJanFebMarAprMayJun

Sales Units606070808090

Revenue360000360000420000480000480000540000

Product Manufacturing Costs270000270000315000360000360000405000

Rent800080008000800080008000

Distribution100001000010000100001000010000

Salaries of Sales & Marketing Personnel200002000020000200002000020000

TA/DA500050005000500050005000

Online Advertising/Print Media500050005000500050005000

Social Media200020002000200020002000

Promotional Fairs-Manipal/Udupi/Mangalore1500015000

Retailer commission (@600 Rs/Unit)-Udupi/Mangalore/Manipal region360003600042000480004800054000

Demonstration expenses600060007000800080009000

Miscellaneous600060007000800080009000

Total Costs383000368000421000474000474000542000

Profit/Loss-23000-8000-100060006000-2000

JulAugSepOctNovDec

Sales Units100100100200250300

Revenue600000600000600000120000015000001800000

Product Manufacturing Costs45000045000045000090000011250001350000

Rent800080008000230002300023000

Distribution100001000010000400004000040000

Salaries of Sales & Marketing Personnel200002000020000550005500055000

TA/DA500050005000150001500015000

Online Advertising/Print Media500050005000500050005000

Social Media200020002000200020002000

Promotional Fairs-Bangalore50000

Retailer commission (@600 Rs/Unit)-Udupi/Mangalore/Manipal region600006000060000540005400060000

Retailer commission (@720 Rs/Unit)-Bangalore79200115200144000

Demonstration expenses100001000010000200002500030000

Miscellaneous100001000010000200002500030000

Total Costs580000580000630000121320014842001754000

Profit/Loss2000020000-30000-132001580046000

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