Blackhorse

Energy drinks

I. Executive Summary

Black Horse energy Drinks is a firm in the partnership

of two persons. It’s a newly established business which will start its

operations w.e.f. 1st Jan 2012. the plan came to our mind because in

Pakistan only branded energy drinks are available which being too

expensive are not in reach of a common man. Some local companies are

manufacturing the energy drinks but they are not able to maintain the

quality. The main product of the firm will be energy drink whereas the

supporting drinks would be different flavors of soft drinks.

Currently in Pakistan there is low trend of using energy

drink; however the trend is continuously rising especially in the urban

areas. This gives us a hope and helps us to be optimistic. We can suppose

that if our product is properly advertised and awareness is created among

the people, our firm will have a bright future. We will have to adopt a

marketing strategy which will not only make our product known to the

customers but also make them realize the importance and benefits of using

energy drinks.

Our target customers would be the generation of 20 to 40

years of age without any discrimination of the gender; however research

shows that the main users of energy drinks are males. The customers of big

cities would be targeted belonging to the upper and middle class.

Our product is a consumer product so we will sell directly to

the retailers as initially business will operate on small scale. For distribution

purpose own vehicles would be purchased.

The overall supervision will be carried by the owners of the

firm, however to monitor the work of the employees effectively different

managers are hired. One manager is hired for each department who would

be held responsible for the performance of the department.

To avoid risk the product is launched in the twin cities. Our

plant is not running on full capacity however it has the capacity to fulfill the

production needs within different cities of Pakistan.

II. General Company Description

The name of our firm is Blackhorse Energy Drinks. The firm will be situated

in Rawat and is producing energy drinks.

To continue to thrive as a business over the next ten years and beyond, we

must look ahead, understand the trends and forces that will shape our

business in the future and move swiftly to prepare for what's to come. We

must get ready for tomorrow today.

Our vision is to “no compromise on quality and quantity as well” Our vision

serves as the framework for our Roadmap and guides every aspect of our

business by describing what we need to accomplish in order to continue

achieving sustainable, quality growth.

The mission of Black horse Energy Drinks is to be the Pakistan’s premier

consumer products company focused on convenient drinks.  We seek to

produce healthy financial rewards to investors as we provide opportunities

for growth and enrichment to our employees, our business partners and the

communities in which we operate.  And in everything we do, we strive for

honesty, fairness and integrity

Our target customers would be the generation of 20 to 40 years of age

without any discrimination of the gender. The customers of big cities would

be targeted belonging to the upper and middle class.

As because of faster global changes in world’s economy, if we need any

future change we will do. It might be change in our marketing strategy or

pricing and whatever the requirement of the time.

III. Products and Services

Product Specifications:

We offer premium quality Concentrates made entirely with Natural

Products Herbal Extracts rich in Vitamins and Minerals Easy for absorption

sugar Corn Syrup Unique Ecologically Clean Honey consisting of more than

75 percent Minerals, Amino Acids and Natural Sugars Wide ranges of

variations are available on Flavor and Aromas Classic, Lime, Wild

Strawberry, the authentic Rose and Mint Energy Content Vitamins, we add

Pro Vitamin A, Vitamins C, D, K and P derived from wild organic herbs. One

of our product is a natural concentrate for energy drink WITHOUT

CAFFEINE. The drink has the same energy value as the standard one does.

PRODUCTS:

Our main products include Black Horse Energy drink. The

supporting products are different flavor of juices like Mango Juice, Apple

Juice , orange Juice, Strawberry Juice, Pine Apple Juice.

Major competitive advantage is our reasonable pricing along with best

quality. Secondly highly advertisement strategy at the local and national

level will also help us to gain a competitive advantage.

IV. Marketing Plan

Market research - Why?There are 306 brands of energy drinks being used in the world and in

Pakistan there are only 10 to 15 brands available in the market among

which majority is branded which being much expensive is targeting only

elite class.3 to 4 energy drinks are launched locally which stands no where

near the branded items when it comes to quality. There is a lot of gap

between the local and the branded items. There is a lot of room for a

product of good quality and at the same time a reasonable price.

Market research - How?Sales and marketing is the most important department of any beverage

company. To boost the sales and profit, this department should be properly

planed and managed. Black Horse Energy has a very aggressive and

hardworking sales and marketing department..

For example;

Aquafina have an advantage over the nestle pure life water as its available

on the outlets, general stores, bakeries too earlier than the time span taken

by the nestle water, it’s all because of strong network of Pepsi and efficient

marketing and sales activities.

There are two kinds of market research: primary and secondary.

To understand the market we have to visit different markets of Rawalpindi,

Islamabad and many other places.

RESEARCH QUESTION:

What is the level of awareness among people about energy drink?

RESEARCH OBJECTIVES:

What kind of drinks student usually drink?

What are the different energy drink companies in the market?

Which brand they prefer in energy drinks.

What is the level of awareness about energy drinks?

Who drink more male or female?

Why do people take energy drink?

Any side effect due to use of energy drink?

What is the level of awareness regarding ingredients of energy drinks?

Who are more aware students or professionals?

What age group is more aware about side effects of energy drinks?

We gathered information by asking these questions from people. Most of

the users of energy drinks belonged to the elite class. Middle and lower

class people could not afford quality energy drinks but they wanted to. As a

whole most of the users were not satisfied with either the quality or the

price.

There is lack of awareness in Pakistan regarding the use of

energy drinks. The important part of our marketing plan would be to create

awareness among the people. In the big cities like Rawalpindi, Islamabad,

Lahore and Karachi only 10 to 15% people use this product which means

that we have a lot of customer to target.

.

Product:

As in Pakistan no doubt there are best quality energy drinks are available

but they are very costly and almost unaffordable for a common men.

So our main emphasis is to provide energy drinks at a reasonable price

everywhere for everyone, but still no compromise on quality.

A research was carried to understand the needs of the

customers, the discrepancies in the existing energy drinks etc. 70% of the

consumers were not satisfied with either the quality or price of energy

drinks. When we asked them about how they would react to a new product,

most of them responded positively whereas few people found it difficult to

have a quality energy drink in a reasonable price which shows that we will

have to adopt an active marketing strategy.

Features and Benefits:

Energy drinks may boost performance during exercise by activating the brain, new research suggests.

Apparently, brain areas can be activated by titillation of unknown and mysterious receptors in the mouth, according to a study in the issue of the Journal of Physiology.

We all know that when we work out, it's important to stay hydrated. Something we may not be so clear on is what exactly we should drink when we exercise.

Ordinary water, of course, is the classic choice. But with store shelves everywhere full of sports drinks, energy drinks, and various flavored and fortified waters, what's an exerciser to do?

Experts say it all depends on your taste -- as well as the length and intensity of your workouts. Here's a look at how the various drinks measure up.

Customers: Initially the business will be operational in Rawalpindi and

Islamabad, so we can sell directly to the retailers without involving any

third party. Afterwards when the business will expand its activities in other

cities independent distributers will be hired.

Our target customers would be the generation of 20 to

40 years of age without any discrimination of the gender. The customers of

big cities would be targeted belonging to the upper and middle class. The

young target customers are more brands conscious so we will have to

position our product at a high level. The target customers above the age of

30 years are more health conscious, so providing hygienic drink is also of

the primary importance. One thing which should be kept in mind is that all

the characteristics described above would be provided in a reasonable

price, otherwise our product would become out of reach of the middle class.

Competition: In Pakistan with the increasing trends of using energy

drinks number of brands available are increasing. Generally, there is no

manufacturer here. There are distributors who import these ready to drink

around the world. Main market to import energy drinks is UAE, from there

importers import in bulk and then distribute in their target areas. OZO

Switzerland is a beverage company with the most extensive distribution

system in the world. To distribute their product in Pakistan they have

granted the rights to Ghani Group of Industries. Who recently have soft

launched the product in Lahore market as OZO energy drink can be found

in cafeterias at colleges and universities. This is the only brand that

distributors import it directly from the manufacturer and they make its

packaging accordingly then.

The majority of the sales are coming from urban areas where people have

greater purchasing power and awareness of such drinks. Sales of energy

drinks are limited in rural areas although they are growing. Around 66% of

the Pakistani population resides in rural areas, but most do not buy energy

drinks as they are too expensive. The customers from the middle class are

unable to use it frequently. There is a lot of difference in the quality

between the local and branded products. There is a lot of room for a good

product available at a very reasonable price. This is a huge competitive

advantage to our product.

The indirect competition is with the soft drink manufacturers

including Pepsi, coca cola, Sheezan juice, Nestle etc.

Niche: As described above in Pakistan there is availability of a wide range

of energy drinks with a better quality but still there is a pricing issue. So

our unique marketing corner is to provide a good quality of energy drinks to

everyone at anywhere in Pakistan at a very reasonable price. Our purpose is

to capture the market by earning minimum profit just to increase our sale

volume.

Strategy: As distributers are chosen as a medium of distribution, so we

should place a proper check on the distributer who ensure that our product

is present in different outlets. The minimum quantity which should be

present in the outlets is 48 pieces in A class outlet and 24 pieces in B class

outlet. Proper visits of different markets would be organized in order to

evaluate the performance of the sales officer and making a check on the

presence of our product in the market. Once the product is reached in the

market then our marketing plan will be started on the trial basis in a

particular city i.e. Rawalpindi.

Promotion:Our main purpose is to provide energy drinks for everyone at everywhere so

first of all we have to launch our product in the market targeting all classes.

Our promotion policy includes the following advertising mediums.

Cable Adds: this is one of the very common, effective and as well as very

inexpensive way to market our product in the each city of Pakistan.

FM Radio: it’s almost the same marketing technique but more effective

comparatively, other marketing channels include billboards, weekly and

monthly magazines, daily newspapers, posters, pumphletsetc.

Providing the students of different universities at the introductory stage the

special prices including first time purchasing discount etc.

Promotional Budget:Initially we have to advertise very heavily because the general perception of

Pakistani people is that energy drinks are very costly so we will have to tell

people that the quality energy drink is really in reach of common men.

That’s why we have to make a huge marketing expenditure at the start i.e.

Rs.15, 00,000 on the different promotional activities described above. This

amount will be treated as “Deferred Cost” which will be covered when the

business starts to run smoothly.

After that we will have to spend Rs.500, 000 as ongoing marketing

expenditures. This cost will be charged to the income statement. This cost is

also to be included while calculating the cost of the product.

Pricing: Price may not be the only competitive factor but in our business

plan it will become the major competitive factor. Along price another major

factor affecting the mind of the customer is quality. We have chosen a price

that will give us the main competitive advantage if we are able to maintain

quality.

(Branded) is Rs. 130 to Rs. 150. The price of the local competitors is almost

same or less but that we do not bother because they are not able to

maintain the quality.

Proposed Location: The location of the firm is proposed to be in Rawat.

There are certain advantages of this location. The first and the most

important benefit is the cost of the land. The cost of land is much less as

compared to Rawalpindi and Islamabad. Secondly it is situated right next to

the G.T Road which will be very beneficial from the carriage point of view. It

will be very convenient for the suppliers to provide raw material and to

distribute final product and also the cost will be less.

Distribution Channels: Distribution (or place) is one of the four elements of

marketing mix. An organization or set of organizations (go-betweens)

involved in the process of making a product or service available for use or

consumption by a consumer or business user.

As in the introductory stage we will make sales only in

Rawalpindi and Islamabad so we can distribute directly to the retailers. For

this purpose we have purchased three new vehicles ( Shahzore). We can

take orders from different channels like web, mail order, phone calls,

through marketing staff. Most important source will the marketing staff.

Afterwards when we will operate in different cities like

Lahore, Faisalabad, Multan different independent distributers will be hired.

Sales Forecast:Product will be launched in January on a trial basis in Rawalpindi. In March

it will be launched in Islamabad.. To avoid any disaster huge investment will

not be made initially. After 1 year we will have to do market research again

and any modifications needed in the product would be made.

Month Sales

January 12000February 14000March 20000April 20000May 23000June 25000July 22000August 22500September 23100October 19000November 18000December 15000

Legal Environment: As such there are no special leagal requirements

to start up such a small business like a partnership between to persons. We

didn’t find any requirements before starting our operation anyways there

are certain requirements we will have to fulfill after starting our operational

activities like we will have to produce energy drinks and other juices

according to the standards established by the departments of health and

environments.

Credit Policies: For any business to run effectively credit selling or credit purchasing is very important. There are very few businesses which can effectively be run without dealing in credit. As our firm is in the introductory stage so we will have to sell on credit in order to enter into the market. Credit itself is not bad if proper credit policy is established and the danger of bad debts is minimized.

We will make sales on credit for approximately 30 days. After 40 days if the debt still remains unpaid we will remind the customer by giving him a phone call. After 55 days a letter is written to the debtor for the payment of the debt. After 75 days we will contact our attorney to deliver a notice.

V. Management and Organization

As the business is in partnership so the business would be

supervised primarily by the owners. The hierarchy of the organization is as

follows

For each department a manager is hired to supervise the

work of the relative department. These managers are qualified in their

fields. These managers are given sufficient authorities and are held

responsible for any malfunctioning.

The production staff is required to be well skilled

because our product is directly related to the health of the consumers. Any

minor mistake can cause major loss which will affect the reputation of the

company. So no compromise will be made on this.

The duty of the marketing staff is also very challenging

because there is less trend of the use of energy drinks. The marketing staff

should promote the product effectively otherwise there is quite a chance for

OWNERS

PRODUCTION

DEPARTMENT

SALES

MARKETING

DEPARTMENT

QUALITY

CONTROL

DEPARTMENT

the failure of the business. Secondly the marketing staff should make sure

that our product is available in the market and it should be properly

displayed on the shops i.e. visible to the customers.

The quality control department requires highly qualified

staff to ensure that our product is hygienic and do not contain any side

effects for the health of the consumer.

Professional and Advisory Support: The business is under the

ownership of two persons so the final decision making authority is with the

two partners. The legal matters are supervised by our attorney.

The firm is not operating on a very large scale yet we

have established a proper accounting system. The accounts department

records the daily transactions, manage account receivable and payables.

All the important decisions are being taken with the

advice of all the three managers whose knowledge provides guide lines for

the important decisions to be taken.

All the cash involved in the business is kept in Allied

Bank Limited.

Startup Expenses and Capitalization:

Start-up

Requirements

Start-up ExpensesPlant and Machinery cost 8,000,000Stationery 18,000Vehicles 1,800,000Rent 45,000Computer 30,000Consultants 10,000Furniture 200000Brochures 50,000Utility 20,000Cash required 5,000,000

Total Requirements 15173000

Opening day Balance

sheet

1st January 2012

Assets

Rs.

Equity and liabilities

Rs.

Current Assets

Cash

3,000,000

Other current assets

1,000,000

Fixed assets:

Plant and machinery

8,000,000

Furniture

200000

Vehicles

1800000

Total

14,000,000

Liabilities:

0

Equity:

14,000,000

14,000,000

VI. Financial Plan

No.of Years Year 1 Year 2 Year 3

Sales(Rs.)

12848000 14534000

15600000

Less: cost of

goods sold

8876800 9768400

10050000

Gross margin 3971200 4765600

5550000

Less marketing

and admin.

Expenses500000 500000 475000

Rent 540000 594000 653400

Salaries 1500000 250000 355000

Depreciation 480000 480000 480000

Utilities 200000 245000 280000

Electricity 400000 600000 700000

Telephone 120000 170000 195000

Carriage

535000 613500 702600

Total marketing

and admin

expenses

4275000 3452500 3138400

Earnings before -303800 1313100 2411600

tax

Income Statement

Balance sheet

As on Dec. 31 2012

Assets

Rs.

Equity and liabilities

Rs.

Current Assets:

Cash

3170200

Accounts receivable

260000

Inventory

375000

Other current assets

500000

Fixed assets:

Plant and machinery

8,000,000

Furniture

350000

Vehicles

Liabilities :

Accounts payable

400000

Rent outstanding

45000

Wages payable

80000

Accumulated depreciation

480000

Equity: 14,000,000

Current year profit/loss (303800)

13696200

2046000

Total

14701200

14701200

Balance sheet year

31st Dec, 2013

Assets

Rs.

Equity and liabilities

Rs.

Current Assets:

Cash

4776300

Accounts receivable

280000

Inventory

Liabilities :

Accounts payable

400000

Electricity bill

50000

Wages payable

410000

Other current assets

500000

Fixed assets:

Plant and machinery

8,000,000

Furniture

400000

Vehicles

2143000

90000

Accumulated depreciation

960000

Equity: 13696200

Current year profit/loss 1313100

15009300

Total

16509300

16509300

Balance sheet

Dec 31, 2014

Assets

Rs.

Equity and liabilities

Rs.

Current Assets:

Cash

5298900

Accounts receivable

415000

Inventory

632000

Other current assets

770000

Fixed assets:

Plant and machinery

8,500,000

Furniture

600000

Vehicles

2700000

Liabilities :

Accounts payable

550000

Telephone bill

15000

Wages payable

90000

Accumulated depreciation

1440000

Equity: 15009300

Current year profit/loss 2411600

17420900

Less: Drawings: 600000

16820900

Total

18915900

18915900