University of Economics, Prague
Bachelor’s Thesis
2020 Denis Karateev
University of Economics, Prague Faculty of Business Administration
Bachelors´ Field: Corporate Finance and Management
Title of the Bachelor´s Thesis:
Business plan: Cerera - Import and distribution of dried apricots
Author: Denis Karateev
Supervisor: Ing. Ladislav Tyll, Ph.D
D e c l a r a t i o n o f A u t h e n t i c i t y
I hereby declare that the Bachelor´s Thesis presented herein is my own work, or fully and specifically acknowledged wherever adapted from
other sources. This work has not been published or submitted elsewhere for the requirement of a degree programme.
Prague, May 12, 2021 Denis Karateev
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Title of the Bachelor´s Thesis:
Business plan: Cerera – import and distribution of dried apricots.
Abstract:
The goal of this Bachelor Thesis is to create a detailed Business plan for the distribution of dried apricots in the market of the Czech Republic. The thesis is divided into two parts: theoretical and practical.
The theoretical part describes the methods that were utilized to perform analysis of the market and create a business plan for the distribution of dried apricots in the market of the Czech Republic.
In the practical part, the conclusions of these analyses are documented.
Following analyses were used – Market and competitional analyses to define entry strategy and expected barriers as well as creating a forecast for the upcoming years. Target group analysis was used to establish the targeted audience for the dried apricots and their expectations from the product. Financial analysis was used to calculate the amount to initialize the business and its future requirements.
The analyses concluded that the market is stable and expected to grow in the next five years, nevertheless, the targeted audience for this market is relatively small. But with the chosen business model and partnership it is profitable to start operating on the Czech market. Furthermore, the risks are minimal due to the low running and start-up costs of the business.
Key words:
Business plan, Dried apricots, Czech Market
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Acknowledgements
I would like to thank my thesis supervisor Ing. Ladislav Tyll, MBA, Ph.D. for his guidance through the process of completing this thesis and my family for always providing me with support and inspiration.
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Reference table
Introduction ... 6
Theoretical part ... 7
Business plan ... 7
Organizational plan ... 7
Cover page ... 7
Table of contents ... 7
Executive summary ... 7
Opportunity ... 8
Problem ... 8
Solution ... 8
Vision, Mission, and Values ... 8
Product description ... 8
Business model ... 8
Marketing plan ... 8
Market analysis ... 8
Competitional analysis ... 9
SWOT ... 9
Target market ... 9
Marketing strategy in the target market ... 10
Differentiating and positioning ... 10
Marketing tactics – 4p of marketing ... 11
Financial plan ... 11
Sales/Revenue forecast ... 11
Start-up expenses ... 11
Projected profit and loss ... 11
Break even analysis ... 12
Practical part ... 13
Executive summary ... 13
Opportunity ... 15
Problem ... 15
Solution ... 16
Organizational plan ... 16
Mission and goals of the company ... 16
Geography ... 16
Product description ... 16
Business model ... 18
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Management of the company ... 22
Marketing plan – market analysis ... 23
Industry overview ... 23
Target market ... 25
Competitional analysis ... 26
SWOT ... 32
Marketing strategy in the target market ... 33
Differentiating and positioning ... 34
Marketing tactics – 4p of marketing ... 34
Financial plan ... 37
Sales/Revenue forecast ... 37
Market Strategy ... 37
Start-up expenses ... 37
Projected profit and loss ... 39
Profit and loss statement ... 42
Balance sheet ... 42
Pricing ... 43
Break even analysis ... 43
Scenario Planning... 44
Conclusion ... 45
References ... 47
List of tables and figures ... 49
Appendix ... 50
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Introduction
This thesis's main idea is to create a business plan for the company Cerera engaged in the import and distribution of dried apricots in the Czech market.
In this paper, the author will demonstrate the dried fruit market's current situation using well- known methods for analyzing the market and the company's development strategy.
The Cerera business plan will give the reader an idea of the current market situation, the demand for the product, and how this information will affect the foundation of a new company in the Czech market and the organization of the main processes.
This thesis will consist of two parts, theoretical and practical. The theoretical part will briefly touch on the methods and analysis that will be used in the business plan to assess the current market situation for dried apricots. Each analysis will be described to give a reader an understanding of how they will be utilized. The description is taken from books of well-known business authors.
The practical part will consist of the business plan itself. The most common aspects of running a business in the Czech Republic will be assessed along with the outcomes of the analysis, to conclude whether it is possible to enter the market of dried apricots in 2021. This business plan is a part of a bigger project and will only touch the first stage of the business, in other words, the entry phase.
The motivation behind this project is actual business idea that was offered to the author of the thesis. The offer was very profitable and required a more detailed plan for proper execution. This is the reason behind Cerera’s Business plan.
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Theoretical part
Business plan
A business plan is a written document that describes in detail how a business—usually a
startup—defines its objectives and how it is to go about achieving its goals. A business plan lays out a written roadmap for the firm from marketing, financial, and operational standpoints.
Ideally, the plan is reviewed and updated periodically to see if goals have been met or have changed and evolved. Sometimes, a new business plan is created for an established business that has decided to move in a new direction. (Hayes, 2021)
The following business plan will consist of:
Organizational plan – all the organization means will be considered here, the geography, logistics, management, and description of the product. This part will introduce the reader to the product and how it will be distributed.
Marketing plant – This part is responsible for attracting customers, the targeted audience, strategy, and product aspects such as packaging will be described in this section.
Financial plan – One of the most important factors of any business is financing. In this section financial plan, pricing, and penetration strategy will be discussed.
Organizational plan
Cover page
Cover page provides the first impression of the business plan to the reader. It should be neat and attractive and should contain information that will grab the readers attention. Company information, logo, information about owners, issue date and the name of the preparer must be included. (Pinson 2008)
Table of contents
The table of contents is an important element of a business plan. It enables the reader to quickly find information on the various aspects of the business. It needs to be well organized. Reader should find exact page of each topic of the business plan. (Pinson 2008)
Executive summary
Executive summary is the thesis statement of the business plan. It summarizes what a company does, in what direction it is going and the path it will take in order to get there. (Pinson 2008) The executive summary should have a pithy introduction to capture the reader's attention and be between 5% percent of the whole report's length to keep that attention. Only relevant information should be included in the executive summary. It doesn't have to be detailed, but it should justify the report's importance and make a reader continue reading.
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Opportunity
Problem
An issues that a company sets to deal with. Poor service/product quality, deficit of goods can be a longstanding problem that a company sets a goal to find a solution for.
Solution
Solution that a company will provide in order to minimalize or completely get rid of the problem.
In other words, the solution is the reason consumers should choose your product.
This should be the ultimate goal of any business, the solution to the problem. By solving a correctly posed problem, company reduces advertising costs by removing the need to convince the customer of the product choice.
Vision, Mission, and Values
Vision statement it is how the company is perceived from within. Vision is important for every level of the business as the employees should be guided by the same principles. (Evans, 2016) Mission is a description of your company and how you would like to be perceived by the customers. Mission also describes your future and the global universal goal that your company wants to achieve in the very end. (Pinson, 2008)
Values are what the company believes in and its philosophy. They guide the organization and determine its behavior. Values help in decision-making process by reminding you of your company’s foundation. (Evans, 2016)
Product description
Description of all of the products and services that will be provided by the company. This is a very important part of the business plan, since the success of the business depends on how the company presents its products or services. In this case, it is a food related product, which means that the product description should outperform competitors and persuade consumers to change suppliers.
Business model
A business model is the method of doing business by which a company can generate revenue and sustain itself (Pinson, 2008). The business model describes the structure and
the daily operations of the organization. The business model determines both the cost of starting a company and the cost of key operations. The business model will also determine the complexity of scaling the company in the future, as well as the complexity of switching to another model.
When starting a company, this factor is crucial and will become decisive in the business's first stages.
Marketing plan
Market analysis
Market analysis is a quantitative and qualitative analysis of a market to obtain information about its potential, capacity, market conditions, consumer behavior, and price dynamics. The purpose of marketing analysis is to study a specific product or service market to promote the company's products and make targeted management and marketing decisions. (Pinson, 2008)
9 Factor for analysis are: Demographics, Psychographics, and niches.
Competitional analysis
Competitor analysis is an effective way to understand the purpose of competing companies and identify their weaknesses and strengths. It allows you to identify opportunities and consider the dangers that are associated with a particular business activity. Careful analysis of actions helps to develop optimal solutions and actions for the successful development of your own company.
Effective business strategy building largely depends on the ability to predict the reaction of your competitors to certain events.
Research of competitors ' activities is carried out in several directions. Among them the following should be noted: profit, size of the business, features of products or services, the areas of the market, customers, methods for promoting products and services.
Before starting to monitor competitors, it is necessary to determine the competition of the business.
At this stage, it is important to choose your opponents and identify their advantages.
SWOT
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an in- depth examination of key factors that are internal (strengths and weaknesses) and external (opportunities and threats) to a business.
• Internal Factors. The examination of internal factors takes a close look at the organization, laying out core competencies and areas in which a business has a competitive advantage. It also looks at areas in which a business has a lack of certain strengths.
• External Factors. An examination of external factors takes a look at the marketplace in which a business operates and helps to identify new areas in which the business can grow and niche markets that can be pursued, all which will ultimately lead to greater profits for the business. It also looks at changes and trends in the marketplace that may affect a company’s business operations. (Pinson 2008)
SWOT analysis is used to identify internal and external factors of the organization. Every letter corresponds to a specific category.
S – Strength, is a category of the internal factors of the company, factors that affect the competitiveness and power of the company within the targeted market.
W – Weakness relates to the factors that bring negative effect to the company, decreasing its ability to compete and achieve designated goals.
O – Opportunities is external category that provides factors related to expansion and growth of the company.
T – Treats, external category. Factors that have negative effect on the expansion in the future.
Target market
A target market is a group of potential consumers of a product or service. The goal of marketing is to influence the group to encourage them to buy the product. In other words, this is the circle of
10 consumers, individuals, or companies that this product is created for and that may be interested in it. (Pinson,2008)
Common or similar characteristics of the target group:
Demographic characteristics of the targeted group are age, gender, marital status, and family size, nationality, profession, education.
Geographical features of the targeted group are the location of the region, its development dynamics, population size and density, availability of mass media, the structure of commercial activity, climate, legal restrictions, and development of the transport network.
Economic indicators of the targeted group are employment, income level, and as a result purchasing power.
Psychographic characteristics of the targeted group are social group, behavioral habits, personality, character traits, life position, dominant motives of behavior, lifestyle, and value system.
Marketing strategy in the target market
The key value of the target market is that representatives of the selected group are likely to buy a specific product that the company is offering. Therefore, a good marketing campaign that creates an ad based on the taste preferences or characteristics of this group and focuses solely on this group will significantly increase the effectiveness of the campaign, thus increasing the sales. There is an offline and online marketing strategy, the choice will depend on the product and most importantly in the targeted audience for that product. Offline marketing usually involves printed materials, online on the other hand utilizes web strategies though social media and public resources.
(Pinson,2008)
Differentiating and positioning
Positioning – develops the company's offer and its image aimed to take a favorable position in the minds of the targeted group of consumers.
Positioning plays a vital role in the strategy of your company, as it significantly affects the competitiveness, therefore the volume of sales of the product.
When positioning a product, following factors will be assessed.
1. What are the distinctive properties of the product, actual or perceived, to which buyers respond favorably?
2. How are the positions of competing brands perceived concerning these properties.
3. What is the best position to take in this market, taking into account the expectations of potential buyers and positions already occupied by competitors, as well as the goals and capabilities of the firm?
4. What marketing tools are best suited for developing a marketing program that ensures the appropriate position of the product in the minds of consumers?
11 Differentiation is the process of developing features of a product that will differentiate it from competitors ' products. Opportunities for differentiation depend on the characteristics of the industry and market. (Lumen Learning, 2013)
1) Product – the addition of chemicals, bio license 2) Services – the convenience of ordering, delivery 3) Distribution channel – distribution efficiency 4) Image – perceived image of the product
Marketing tactics – 4p of marketing
The standard marketing mix usually covers activities based on four components of tactical activity:
Product - variations with the product range and consumer properties: technical parameters, design, packaging, service and delivery.
Price - setting prices that are optimal in terms of comparing the benefits of the seller and the buyer, as well as discounts on the price of the product for different cases and different groups of buyers.
Place of sale - selection of distribution channels, distribution companies, and retail outlets.
Promotion - such areas of action as the development and implementation of advertising events, sales promotion, organization of public relations and personal sales.
Financial plan
Sales/Revenue forecast
An estimate of the number of products that my company will be able to sell in the future. The forecast period in my case will be 6 months. Since the company is just entering the market, the first few months will not bring financial benefits. (Pinson, 2008)
Start-up expenses
Initial expenses for starting a business. This section will take into account the costs of trading licenses, company creation, warehouse rentals, transportation costs, marketing costs, and initial purchase. Initial expenses are the resources that are used to launch initial operations of the organization. (Pinson, 2008)
Projected profit and loss
Projected profit and loss statement will be complied from future business transaction. It will show where the money has come from and where it was spent over a specific period of time. Profit and
12 loss statement is an excellent tool for assessing the business that will help pick out weaknesses in day to day operations and plan ways to run the business more effectively. (Pinson 2008)
Break even analysis
Break-even analysis is the point at which a company’s costs match exactly the sales volume and at which the business has neither made a profit nor incurred a loss. (Pinson 2008)
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Practical part
Executive summary
This business will have two stages. The first is to enter the market with seven different types of dried apricots, establish connections, and establish logistics. Identify the main product types and the volume of demand for them. This is a crucial stage, as the subsequent development of the business will depend on it. Stores and contacts with whom connection will be established will play a vital role in the future, as they will be the channels for distribution of new products. The purpose of this thesis is to describe the first stage of the business and Cerera's entry into the Czech market.
Seven types of dried apricots, different in their taste and appearance, will be introduced to the market. Each type also has a unique way of consumption. The entire product chain covers all possible ways of using dried apricots in everyday life. Dry apricots can be consumed as an addition to the main dish, as a dessert, and as a separate dish to maintain the required number of vitamins in the body during hikes or long working days. Extensive use of this product allows Cerera to expand its target audience. For the same reason of developing the targeted audience, two types of dried apricots imported to the Czech market will have bioproduct status. The product will also be fully certified and will undergo the best-known drying process at the moment, which is very important for preserving vitamins and nutrients in the product.
The essential quality of dried apricots is their long shelf life. Dried apricots can be stored for up to six months without complying with any regulations and up to several years at a low temperature and low humidity in a warehouse. This allows you to prevent the loss of goods under unpredictable circumstances or a drop in demand.
To avoid large investments, the dropshipping business model was chosen. This means that investments in warehousing and sorting of the products will be minimal. Poland's partner will play an essential role in the foundation of Cerera company on the Czech market. First, the goods will be imported to Poland, where they will be stored until further distribution. After receiving Prague's order, the goods will be sorted and delivered to a small warehouse in Prague. The warehouse will have a minimum size, and the goods will not be stored there for more than a day. Next, an outsourced company will deal with the delivery of goods within Prague.
Our primary channel of distribution will be chain stores. They have their own warehouses and logistics, which allows us to fully minimize these costs. Also, the price of our product is lower than the market price when purchased in large quantities. This and the taste of the products will make this product appear on the shelves of retail stores.
Considering the taste of products, it makes sense to clarify precisely how Cerera plans to increase the interest of retail stores in buying dried apricots from Azerbaijan. The main advantage of the product, as mentioned earlier, is the drying method, which preserves the maximum amount of nutrients and vitamins in the product, and of course, the taste of the product. Therefore, the first step is to order two types of dried apricots for the test of the market. A box with products will be sent to each of the chain stores' Managers. Certification and product prices will also be provided.
This allows them to compare our products with the mass of others. There is a high probability that
14 most companies currently have exclusive contracts with companies from Turkey. This is one of the risks that may affect the company's development in the Czech market. This test will provide an understanding of the demand for chain stores for these products and the further development of the Cerera company.
Cerera's target audience is mainly middle-aged and middle-income women. But this is only a statistically more profitable group. Due to new trends related to a healthy lifestyle, the target audience is significantly expanding. And the only factor affecting demand is the price of goods in retail stores since organic products are overpriced, and people with lower-than-average incomes will not be able to afford to buy these products on a daily basis. Since the primary distribution channel will be considered chain stores, Cerera will not be able to control the retail prices of products. Unlike the second stage, where the business model will change to B2C.
The Czech market currently offers a large number of products from Turkey and Tajikistan. After analyzing the data of companies and their products, it was revealed not only the average price of products but also the taste of products, as well as the method of drying. In all respects, Cerera surpasses its competitors in the segment of high-quality dried apricots. But there is also a segment of cheap Turkish apricots, where the market is flooded with unprocessed, quickly dried, and pumped with water apricots. And unfortunately, not all consumers of this product are aware of this or ready to pay more for a better-quality product.
The dry fruit market itself is developing and will continue to grow steadily in the future. This is facilitated by new popularized trends in healthy eating and lifestyle and greater interest of people in what they eat. Of course, COVID should also be mentioned as it has its effect on the shopping basket of the average consumer.
Strengths and weaknesses of Cerera when entering the Czech market should also be clarified.
High-quality products and a wide variety will significantly help in promoting the product in a new market. As noted earlier, the product has a long shelf-life. Also, the location will play a significant role; Prague is not only a place of dozens of different nationalities but a financially more stable city. This location is also ideal for further business scaling. Well, one of the greatest strengths in the case of Cerera is adaptability and flexibility in case of failure. The low price of the product will allow Cerera to bypass the competition. On the other hand, difficulties may arise due to a relatively limited target audience. As well as a high number of competitors with a low-quality product at a low price.
To enter the market, large investments will not be required. On the contrary, the initial costs for launching the main processes of the organization will be minimal. Since most of the processes are handled by a logistics center in Poland, Cerera will only require the purchase of initial equipment such as a printer, storage shelves, work phone rate, and legal costs. Renting a warehouse for storing no more than two pallets also comes at a small cost. All that remains is the cost of purchasing products to test interest in the product. As well as the purchase of the initial batch, since there is no possibility to obtain the product on credit.
15 Market penetration strategy will be used to make an entry and increase the market share in the first stage of the business. The cost of the product allows to decrease the price for the wholesale to receive a competitive advantage on the market. Furthermore, later it can be used to increase revenue and cover the cost of scaling.
In the financial analysis, a minimal markup was utilized, the price difference can be used as a competitive advantage, which would be vital for distribution through the local and chain stores, or to increase the profitability of the business in the first stage, which is not the main goal, as mentioned above. The minimal markup will also keep positive cash flow throughout the whole accounting period and allow withdrawal of the initial cash deposit of the owner in the fifth month.
Calculated volumes of the goods are an assumption, but it is based on the previous experience of the owner. Price flexibility allows to cover up the costs in the case of low turnover but has to be calculated accordingly as the business grows.
There are two purchase prices for five of the seven types of goods. The purchase price up to 100 kilograms of goods and from 100 kilograms of goods. From 100 kilograms, the price is correspondingly lower. This method will also be used when selling goods to chain stores. Selling up to 100 kilograms does not bring much benefit since prices were deliberately lowered to raise interest in this product. But the purchase from one hundred kilograms is more profitable for both Cerera and retail stores. Such items as seeds and grated apricots will not bring much profit and are provided only to increase the variety of the products.
It is planned to recoup the initial investment in the first two months. Accordingly, no later than the third month, Cerera will reach its first profit.
Since the second stage of the business is slightly touched in this paper, here is how Cerera plans to act after a year of operation with the current business model.
The second stage will be radically different. When the main types of products are identified, optimal sets or bouquets of dried apricots will be created. Cerera will not cancel t he established wholesale deliveries of products and will continue to develop in this direction. But such sales channels as the website and the Instagram account will be re-qualified for the sale of bouquets.
Stores will also receive a new offer to sell these sets. The niche of dried fruit sets has fewer competitors and allows Cerera to establish a stronger position on the market. It also expands the target audience by adding a new group of people seeking to make an original gift. Further development will depend on the success of the current stage. Ideally, Cerera will sell sets of several varieties of dried fruits and nuts.
Opportunity
Problem
The lack of a high-quality dried apricots on the Czech market. With the new healthy trends, dried fruits became a part of a daily consumption for the mid and high-class citizens. Moreover, established companies have dramatically increased the prices for the dried fruits in general.
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Solution
Cerera will take care of import and distribution of a high-quality dried apricots in the Czech market with the price for the imported goods below average. Consumer will have a larger variety or a better substitute of the product on the shelves of the local chain stores.
Organizational plan
Mission and goals of the company
Mission:
Cerera’s mission is to introduce to the market a high-quality product, located over almost 3000 km away, for a relatively low price. Also, increase the variety of the product in the stores to support the increasing demand for dried fruits.
Goals of the company:
- To enter the market of the Czech Republic with Azerbaijan dried apricots.
- To expand the variety of the dried apricots on the Czech market
- Later to expand the variety of the dried fruits and introduce new products - Expand within the European market
- To start cooperating with large food distributors - Create at least two channels of distribution
- Most importantly to offer a high-quality product at a relatively lower price.
Geography
The reason behind chosen locations is simple. The author of the thesis is currently located in the Czech Republic. While Azerbaijan is known for their dried fruits. Moreover, the main strength of the company is connected to Czech Republic due to the location of the partner that will be providing the goods at a lower price.
Product description
The idea of this business is to provide a high quality product at a price lower than average. The product is dried apricots. Dried fruits are full of useful vitamins. Their main advantage is that with the correct drying process, they retain all the useful substances that fresh fruit has. The only downside is that they contain more calories compared to fresh fruit. Still they are known to be dietary product due to a large amount of potassium salts, which prevail over sodium salts. In addition, the plant fibers in apricots help to regulate the work of the intestines and purify it, establish metabolic processes in the body, improve digestion and absorption of nutrients, stabilize blood pressure, and enriched with vitamin C, they improve the functioning of the cardiovascular system. Moreover, dried apricots contain potassium, phosphorus, calcium, and iron. In addition, a large amount of vitamin B5 helps to remove radionuclides.
These products will be imported from the Azerbaijan. One of the main advantages of the business is a variety of both product and distribution methods.
17 7 different varieties of dried apricots will be provided to the market. All of the following products were sampled to ensure the quality.
Dried Apricots 1 grade: fragrant, fleshy and full of flavor dried apricots. Perfect as a snack and dessert. See figure 1.
Dried apricots 2 grade: sweet, a good substitute for harmful sweets, also perfectly blends with meat dishes. See figure 2.
Dried apricots 3 grade: sweet and sour, most often used for baking, jam and as an additive to dishes. See figure 3.
Apricot kernel: Apricot kernels are an excellent source of plant protein. They give a boost of energy and allow you not to feel hungry for a long time. See figure 4.
Natural dried apricots, without preservatives: unprocessed by chemistry, large dark dried apricots. Soft honey taste. See figure 5.
Source: 1 Cerera SP. z o. o.
Figure: 2 Dried Apricots
Figure: 1 Dried Apricots
Figure: 3 Dried Apricots
Figure: 4 Dried Apricots
Figure: 5 Dried Apricots
Figure: 6 Dried Apricots Source: 2 Cerera SP. z o. o.
Source: 3 Cerera SP. z o. o.
Source: 4 Cerera SP. z o. o.
Source: 5 Cerera SP. z o. o.
18 Red Dried apricots, highest grade: Unusual, sweet, fleshy and large. The unusual shade is due to a special type of apricots. See figure 6.
Dried apricots: clean, cut 3-5 mm, ideal as an addition to oatmeal, yogurt, baking. See figure 7.
Dried apricots "Sugar" Mirsanjali: dried apricots are a special type, without moisture. Ideal as a snack with coffee, for making jam, easily crushed: ideal as a Supplement to oatmeal.
See figure 8.
The main line of business will be wholesale distribution.
Currently, the demand for dried products is high due to the trend for proper nutrition. But after analyzing the retail market, it was found that the prices for this product are high, giving Cerera an opportunity for easier market entry due to the low cost of the product. And the second factor that will affect the market entry is that most of the goods are imported from Turkey. Dried apricots from Turkey contain fewer vitamins due to the drying method and the poor taste of the product.
Both of these factors will make it possible to enter the market.
Cerera offers seven different types of products supplied from Azerbaijan.
Business model
Business model canvas was chosen to describe the main factors and actions of Cerera's company.
Canvas will perfectly deliver the main message to the reader and give an understanding of the model. For more detailed information after the canvas, each factor will be defined separately.
Figure: 7 Dried Apricots
Figure: 8 Dried Apricots Source: 6 Cerera SP. z o. o.
Source: 7 Cerera SP. z o. o.
Source: 8 Cerera SP. z o. o.
19 Factors such as the target audience will not be fully described in order to avoid repetition in further parts of this report.
Figure: 9 Business model canvas
Source: 9 Author
Key partners:
Supplier
Cerera’s supplier is located in Azerbaijan. Over 3000 km away from the point of distribution.
Azerbaijan is known for dried apricots, due to the climate and long standing traditions.
Logistic center in Poland
The partner in Poland will be engaged in importing goods to the European Union from third world countries at the first stage of the business. There will also be a logistics center from which the goods will be transported to smaller warehouses in Prague. When there is a stable demand, the logistics center will be relocated to Prague. Also, Cerera will begin to register the goods for transportation to the European Union. But at the initial stage, a partner in Poland is vital for the company's development.
Retail stores
As one of the main channels for product distribution, stores will be the key partner. Basically, Cerera will develop relationships with small and medium-sized stores that sell bio and organic products.
Key activities:
Key Partners Key Activities Value Propositions Customer Relationships Customer Segments
Supplier Logistics center in Poland Retail stores
Distribution of dried apricots in the Czech market.
Establishing of good relationship with distributors in Europe.
Cerera delivers a wide range of a high quality product.
Most of the offered product has relatively lower price on the B2B market.
Customer service both on B2B and B2C markets
Bio Product Licesed product
Distribution of the product by third party companies requires a good and trusted relathionship.
Stores Local buyers Companies
Key Resources Channels
Dried apricots – physical product
Good communication skills.
Web Page Instagram Stores
Cost Structure Revenue Streams
The main expense that occurs in the business activity of Cerera is the actual cost for the product.
Cerera’s main revenue stream is the distribution of the dried fruits through the chain stores located all over the Prague.
20 The key activity of the Cerera is the distribution of dried apricots. Seven different types of fruit will be introduced to the market. This action is vital for the company as it is the main inflow of cash. From which we come to the next activity: Establishing good relations with third-party companies and keeping them. In the future, Cerera’s plan is to shift to wholesale sales, in which case the relationship with distribution centers plays a key role.
Key Resources:
The main product at this stage of business is dried fruits brought from Azerbaijan. After the fruit has been harvested, processed, and dried, which also happens abroad. It is transported to Prague ready for sale.
Since sales will depend directly on established relationships with stores and distribution centers, negotiation skills are an indispensable resource in this business. After all, no matter what the product is, the success of sales depends on the seller.
Value Propositions:
One of the initial missions of the Cerera is to provide a wide range of dried apricots. At the first stage of the business, the variability will depend on the interest of the stores where these products will be distributed through. Each store will receive a short and simple presentation with a description of each type. The type of product on the B2C market will also depend on the demand of the stores. This is done to minimize expenses on the storage of the goods.
Excellent quality of service is the key to the success of any company. Every client of the company, whether it is a business or an individual, will receive the best service. Customer trust is influential and will play a crucial role in the long run.
Having a license for a bioproduct has two main advantages for the company: Firstly, the ability to position your product as a bio, respectively, be able to increase the price of the product by 30-50%, and the second is to reach to a new target audience. People who monitor the content of the products that they consume in their daily life.
The product license primarily allows Cerera to display its product in stores, as well as distinct Cerera’s brand from non-licensed products that do not inspire confidence in the buyer.
Customer Relationships:
As mentioned above, Cerera proposes a professional and thoughtful customer service for both companies and individuals. Customer relationship will be essential factor for the growth of the company.
Channels:
Web page – in the case of Cerera it is going to be a landing page. The website is mainly designed for an individual buyer, but also contains all the necessary information for distributors. Contact information will also be provided for communication and a form for receiving a presentation.
Instagram account – made for sale. Provides information about the usefulness of the product and the importance of proper nutrition and use of dried fruits in everyday life.
21 Stores – main channel for sale and distribution. At this stage, Cerera will sell the product to stores, setting the price and positioning will be the responsibility of the store management.
Customer Segments:
Local customers
Stores of any size that will be interested in selling international dried apricots. This will be one of the main channels for promoting this product. Large stores buy in large batches, which allows us to minimize the number of goods stored in warehouses. Since the product will be delivered from Poland in the first stage, it will be possible to deliver it directly from Poland to the store's warehouse. Also, Cerera is interested in small and medium stores that position themselves on proper nutrition and bioproducts, due to the fact that buyers of these stores are the core target audience for Cerera. In this case, orders will be smaller, so one of the tasks at the beginning will be to establish communication with several small to medium stores.
Small and medium-sized companies that distribute dried fruits in the Czech Republic. But in the first stage of the business, the main focus will be on the local customers and stores. The reason is the lack of a stable supply of the product during this period. Nevertheless, such companies will be considered from beginning in order to establish a good business relationship.
Cost Structure:
Product is the most expensive resource in the case of Cerera. And there are several reasons for this, the first is the chosen business model, the product does not need long-term storage and the work is carried out on the principle of drop shipping. This means lower storage and handling costs.
At this stage, there is also no need to promote the product on the B2C market, allowing Cerera to save on advertising of the product. The second reason is also a consequence of the chosen business model. Our partners in Poland have more responsibilities related to the product. Storage, sorting, processing, quality control, etc. And these costs are included in the price at which the product is purchased by Cerera.
Product quality is also a very important factor, which means that Cerera together with a partner from Poland spends more money on the correct transportation of products from the supplier to the Czech Republic.
At the first stage, the costs on Cerera's side will be rental of premises for storing goods, logistics within Prague, phone service, and accounting.
Revenue Streams:
The main flow of money in Cerera will come from selling products to chain stores. But there are a couple of nuances associated with the sale of products. The price per kilogram of the product depends on the amount of goods ordered. There are two main parameters. Up to one hundred kilograms and from one hundred kilograms. These parameters are also used when selling a product by Cerera. If the product is sold for less than one hundred kilograms, the income is minimal. The reason for this is an inflated purchase price of the product and an undervalued sale price of the product relative to the actual cost. This is done to raise the interest of store chains in the product presented by Cerera.
22 The money earned from the sale of goods makes 100% of the revenue at the first stage of the business.
Management of the company
Cerera will be separated between two parties in the following way. 70% will be owned by the Founder of Cerera who will be responsible for the suppliers, quality check, and packaging of the product prior to importing it to the Czech Republic. He has more than 20 years of experience behind his back which is a valuable asset for the company. 30% will be owned by Denis Karateev (Author), who will be responsible for managing, distribution, and sales.
23
Marketing plan – market analysis
Industry overview
Dried fruits is a food related product, but it has its own niche. This niche has both its pros and cons. This niche will be discussed in this section along with import, export, and demand for the product. Let's start with the advantages of this product and how they affect the industry.
- lengthy shelf life
First of all, it has to be clarified that dried fruits are fruits from which 75-85% of moisture was removed by natural or forced methods. Drying methods are very important for the duration of storage of the product, and most importantly – for its useful components.
Dried fruits, like many products, are best stored in a dark, dry place at a temperature of -10 to + 10 degrees Celsius. The shelf life in such conditions is from six months to a year. If the dried fruit is in the glaze, the shelf life will be much less, no more than four months.
Dried apricots have one of the shortest shelf-life among dried fruits.
Table 1: Shelf life
From 2 to 10 Celsius
From 10 to 17 From 18 to 24 From 0 – to -20
Apricots To a year To 6 months To 3 months Unlimited
Source: 10 Author
If the amount of moisture in the room is monitored and maintained at a constant temperature, the dried apricots give up to a year to sell the product. This means that it is possible to reduce the frequency of delivering goods to warehouses and in the case of poor analysis of the market, especially of the demand, or the customer's refusal of the order, there is time to find a new channel to sell the product.
Cons:
And dried fruit has a seasonality. Even if the fruit has been properly dried and retains almost the entire set of vitamins, during the summer customers will give priority to fresh and juicy fruits.
Based on this, a slight drop in sales is expected in the summer period for this niche.
The dried fruits industry has been growing for the past several years. The graph below will show the volume of the production of dried fruits worldwide. The supply is constantly growing from 2,246,700 metric tons in 2009 to 3,222,800 metric tons in 2020. This growth was mainly driven by new trends related to human health. Especially in the last year, due to the coronavirus, people
24 have become more responsible for their health and ought to maintain the required amount of vitamins to help the immune system. See table 1.
Table 2: Production of dried fruit worldwide from 2009/10 to 2019/20 (in 1000 metric tons)
Source: 11 INC Statistical Year book (statista)
The following charts show the forecast for the next 7 years in the value of dried fruits. See table 3. It is expected to grow by 25%. As mentioned earlier, there are several factors that have influenced the growth of the industry. Proper nutrition is one of them and will be discussed in more details in the next section.
25
Table 3 Forecast value of dried fruits worldwide
Source: 12 Statista
In conclusion, the dried fruit industry is growing and will continue to grow steadily for the near future. Extraordinary declines are not expected, except for a temporary one each year due to the seasonality of the product.
Target market
Target market will consist of three main groups:
Local buyers:
a) Women
b) 16-64 years old.
c) with average or above average income.
d) visiting fitness centers, cinemas, clubs, restaurants, beauty salons.
e) daily readers of women's fashion magazines.
f) closely monitoring the composition of what they consume.
g) those who value healthy lifestyle.
h) and do sports.
i) supermarket customers.
26 The concept of healthy diet attracts a large, but fairly specific audience. The targeted group are mostly people over the age of 25 who pay attention to health, even if they are not ill at all.
According to statistics, women are more likely to buy such product than men. However, in recent years, a healthy diet is becoming «younger» and often attracts even schoolchildren because parents want to see their children healthy and the ratio of men and women is balancing out. Targeted person should have average or above average income. This is due to the fact that a healthy lifestyle is a fashion trend. But it is not the most affordable. After all, organic food cannot be cheap, unlike surrogates and semi-finished products.
Stores:
Small and medium sized stores that supply with bio and organic products. The stores that will be considered by Cerera are Diana, Grizly, Svet Plodu, and a dozen local stores that mainly sell foreign goods and are interested in dried fruits.
Companies:
Small and medium-sized companies that distribute dried fruits in the Czech Republic.
Location:
Prague, Czech Republic
Population of Prague is 1,324,277 out of which 672 290 are women.
Trends:
One of the main trends followed by many people is a healthy lifestyle. What was introduced in the late seventies, became a leading trend in society in 21 centuries. A healthy lifestyle became a powerful trend for marketing and a strong tool for introducing new products and services to the market. Nevertheless, it is hard to argue with a fact that a well-balanced diet is vital for our bodies.
A healthy lifestyle is the behavior of a person that ensures physical, mental, and social well-being in everyday life. When followed properly it creates the best conditions for the person to proceed with daily tasks with the normal course of physiological and mental processes, which reduces the likelihood of various diseases and increases the life expectancy of that person.
A healthy lifestyle helps us fulfill our goals and objectives, successfully implement our plans, deal with difficulties, and overloads. Strong health, supported and strengthened by the person, will allow him to live a long and full of joy life. Health is the priceless wealth of each individual and society as a whole.
Competitional analysis
At the moment, many companies on the Czech market sell dried fruits, and they are direct competitors for Cerera on the B2C market, but they are a channel for distribution on the B2B market. As mentioned above, B2C will not be the main path for distribution. Competitors in the second stage of the business will differ since a new product will be offered.
27 In the following chart will be listed the most accessible dried apricots in the Czech market. These are retail products available for purchase via online or onsite shopping in the Capital of Czech Republic. Since Cerera’s product will also be listed online through some of the retail shops, it is important to compare the products of other retailers.
Pricing are listed in a Czech crown per kilogram of product. The markup for the dried fruit industry is around 25-35%, depending on the product and required processing. Since Cerera imports and distributes processed and packed product, the markup is reduced to around 20%. The percentage also depends on each store’s policy and might differ from store to store.
This is where the pricing flexibility of Cerera will play a huge role. At this stage the penetration strategy will be used. The prices can be lowered down to almost no profit margin. This is done to get the product out to the market and start operating on the Czech market.
Country of origin is where the product was harvested.
Packaging is how the customer receives the product. There are a few factors that should be considered in the comparison of the packaging. First is the material it is made from, whether it is recyclable or not and convenience of the package. Is the product sealed? Can it be packed for traveling?
Nutrition is the most important factor when it comes to comparison of dried apricots. Just like every other product dried apricots has calories, sugars, fibers, and fat, but this is not a decisive factor for the customer. What is really important is the way apricots were dried and how many vitamins are contained after the drying process. For simplicity of the graph nutrition will be graded as follows: 1 – lowest quality, 5 – highest quality of drying process. Where 1 is considered to be the worst drying process that does not save most of the vitamins. And 5 product contains most of the vitamins due to the drying process that was utilized. This aspect is the hardest to analyze as it requires experience, luckily Cerera’s management has experience in this industry.
Accessibility of the product are the stores where the product is available for purchase. For most of the products presented in the graph, the main distribution channel is online store.
Brand is important because of the brand recognition, the risk is high as the customers are loyal to existing brands and might not give a chance for a new product.
The last factor in this chart is a BIO status of the product. Every product with a status of Bio must have following codes on the package CZ-BIO-001 (002-003).
Cerera was also included into the chart for a better comparison of the products. The most popular product from the product portfolio was chosen to represent Cerera. It is also the product with the most similarities, such as size and type. The price is not irrelevant in this case since the product will be distributed through retails stores.
28
Table 4: Product Comparison
Pricing/kg Country of origin
Package Nutrition Accessibility Brand BIO
Farmland 260 CZK Turkey Plastic 3 Kosik King Food
Bohemia
No
Bonitas 475 CZK Turkey Plastic 3 Kosik King Food
Bohemia
Yes Dr.
ENSA
200 CZK Turkey Plastic 3 Rohlik Dr. ENSA No
Seeberger 500 CZK Turkey Plastic 4 Rohlik Seeberger No
Country life
350 CZK Turkey Plastic 3 Contrylife web-shop
Countrylife No Svet
Plodu
206 CZK Kazakhstan Plastic ZIP
5 SvetPlodu
web-shop
Svet Plodu No Organic
field
239 Turkey Plastic 5 OrganicField
Web-shop
Organic Field
Yes
Cerera - Azerbaijan Plastic 5 - Cerera Yes
Source 1: Author
In the following chart two brands will be compared – Grizly and Cerera. Grizly has the closes product portfolio to Cerera’s and requires a more detailed analysis. For each product that Grizly offers on their web-shop there is a similar product that will be imported by Cerera. This analysis is required because Grizly has agreed on cooperating with Cerera in the future. This graph will show the comparison of the product from both sides. The pricing listed for Cerera’s products is minimal with added markup of 30% (the markup for Grizly store), the difference can be the markup for Cerera or used as a competitive advantage to penetrate the market.
Table 5: Product comparison Grizly and Cerera
Brand Pricing/kg Country of origin Package Nutrition BIO
#1 Grizly 159 CZK Turkey/Tajikistan Vacuum - plastic
4 No
#1 Cerera 90 CZK Azerbaijan Plastic 5 No
#2 Grizly 269 CZK Turkey Vacuum -
Plastic
5 Yes
#2 Cerera 170 CZK Azerbaijan Plastic 5 Yes
#3 Grizly 178 CZK Turkey/Tajikistan Vacuum- Plastic
4 No
#3 Cerera 109 CZK Azerbaijan Plastic 5 No
#4 Grizly 118 CZK Turkey Vacuum - plastic
3 No
#4 Cerera 72 CZK Azerbaijan Plastic 4 No
Source 2: Author
Each pair of product was created by comparing aspects such as size, type, drying method.
29 Pricing – The pricing listed for Cerera as mentioned above is the minimal price possible with the markup of Grizly included. The difference is the markup for Cerera, the business model and entry strategy allows to be flexible when it comes to the pricing.
Most of the products presented by Grizly is harvested in Turkey, which is not considered to be the country of the highest quality when it comes to dried fruits. Nevertheless, a few types of dried apricots are brough partially from Tajikistan. Tajikistan is also know for a good quality dried fruits.
Unfortunately, it is hard to guess what is the proportion of fruits that are brought form Tajikistan.
In the case of Cerera every product is harvested solely on Azerbaijani soil.
Packaging differ due to the distribution methods, in case of Grizly every product is sealed in a vacuum container made of plastic which preserves the fruit for longer. It is hardly a competitive advantage due to the amount of dried apricots that can be acquired, for such small quantities, there is no need for it to be reserved for more than a few months. On the other hand it is more convenient to travel with sealed packaging. In the case of Cerera, packaging will depend on the retails stores and it cannot be established for this analysis.
The most important factor for Cerera is the drying method and nutrients that the fruit contains.
In the next graph, local and chain stores will be listed with their requirements for the pricing and product itself. Listed stores are the ones that agreed on cooperating with Cerera.
Table 6: Local stores comparison
Markup Packaging License Min. Order # of stores Online
Diana 30% Sealed Yes 50kg 6 Yes
Grizly 30% Crate Yes 20kg Online Yes
Local Store 40% Crate Yes 10kg 3 No
Local Store 25% Crate Yes 5kg 1 No
Local Store 25% - No 3kg 1 No
Local Store 20% - Yes 10kg 3 Soon
Local Store 15% - No 3kg 2 No
Local Store 15% - No 3kg 1 No
Source 3: Author
Cerera contacted each store directly to establish the connection and find the requirements for distribution through their selling points.
Markup is different for each store depending on their policy.
Packaging – How the product must arrive to their stores/warehouses.
License – Requirements for the product to be legally licensed.
Minimal order – Minimal possible order for the stores, it is in the interest of Cerera to keep the order as large as possible. For some of the stores it is only a temporary requirement, due to the trial period. Long shelf life of the product allows for it to be stored for longer time, hence this factor comes down to the storage possibilities of each store.
Number of stores is important because it reduces logistic expenses and increases the selling volumes.
30 A decisive factor for customers will be the brand. In the next section each brand will be described for overall knowledge of the market.
King Food Bohemia – was founded in 2012 as a trading company. The subject of trade was the distribution of sunflower oil and rice. After sufficiently successful sales, two brands were established: Bonitas and Farmland.
“Rádi bychom se stali jednou z nejuznávanějších a nejobdivovanějších značek v konvenčních, ale i BIO potravinách ve střední Evropě. Díky mnohým mezinárodním kontaktům a dlouhodobým zkušenostem z předcházejících činností v dané oblasti dokážeme vyhovět požadavkům i nejnáročnějších zákazníků.” (King Food Bohemia)
Both brands are competitors in the case of Cerera since both represent dried apricots on the Czech market. Four different positions, three of which are represented by Farmland and one by Bonitas are presented on Kosik.cz. The main difference is that the Bonitas product has the status of BIO.
While Farmland has two varieties of dried apricots. All products are brought from Turkey.
Dr. ENSA - The company has a more than 20-year history. With many years of experience, offers a wide range of products from dried fruits and has become the leading manufacturer of chocolate products. Also, has an IFS standard certification.
Seeberger - Seeberger is a German company with more than 175 years of tradition. The assortment is very wide, from nut kernels to dried fruits, cereal sticks for coffee and tea. They position themselves mainly on coffee and tea.
Country Life - “Country Life is the largest importer, trader of organic products and one of the largest traders of health food products in the Czech Republic. They offer 2,500 products in wholesale, of which almost 1,500 items are of organic quality. The range includes durable and refrigerated foods, fruits and vegetables, pastries, ecological cleaning products, and natural cosmetics. Since the beginning of 2016, the wholesale store has been located in Rudná near Prague.” (Country Life)
“The Country Organic "organic family" also includes eight organic and healthy food stores in Prague. The first of these was the store in Melantrichov 15, opened in the early 1990s and has been on the stand for more than 25 years. It was later joined by a snack shop. in Jungmann 1. The store on Čs. armády Street is one of the largest organic stores in the Czech Republic, with a specialized store for organic and natural cosmetics in Liliová Street in Prague 1.“ (Country Life)
Country Life also has its farms where they produce grain, vegetables, and fruits. They display their products only in their shops and one position in the "Globus" store. But what is important for Cerera are the apricots, which Country life also import from Turkey. They are a very well- established and strong corporation with a larger market share.
Svet Plodu - Sell dried apricots from Tajikistan, which is also one of the best suppliers around the world. One of the main competitive advantages will be price flexibility. But Svet Plodu displays its product only on its website. This product is not offered on any other website or onsite stores.
Organic Field is a small online store that imports products from Tajikistan. They offer two types of dried apricots one of them has BIO status. It is not considered to be their main focus, and the quality of the product is lower from the one offered by Cerera.
31 Grizly - online store that distributes dried fruits among a large product portfolio. Dried apricots offered by Grizly are mainly brought from Turkey. Nevertheless they have one of the best qualities on the market and should be considered to be a worthy distributor.
Branding is important, whether it is our competitive disadvantage on B2B market or a competitive advantage on B2C market. As of now, stores such as Grizly that have agreed on cooperating with Cerera, will greatly enhance the volumes and spread of new product due to established loyal base of customers.
These companies import all of the products from Turkey, most of the time not applying the most advanced drying methods. Because of this, it will be vital for Cerera to indicate the difference between dried fruits of this quality and dried apricots that were produced in Azerbaijan.
For further information on retail prices see Appendix 1
32
SWOT
SWOT analysis should be included in every project to create a business or evaluate the company's strategic decisions. SWOT analysis is very good at uncovering and linking factors collected from the entire work. Summarizing other analyses and allowing to quickly assess how the company positions itself and where it currently stands relative to a variety of external and internal factors.
Strengths depend entirely on the internal processes of Cerera. Also, these are often the factors that the company positions itself by. In the future, Cerera will improve the listed strengths as much as possible and strengthen the company from within.
Weaknesses are also internal factors of the company. It provides a clear image of what the company is missing out to be able to acquire a strong position in the market. The goal will be to minimize the impact of these factors on the firm's processes.
Opportunities are external factors. They point to the company's future possibilities. Development in this direction will benefit the company. In the case of Cerera, one of the listed factors is already a part of this business in the future.
Threats are also external factors that companies can't always influence. In the case of Cerera, the threats are fairly standard for a business of this type.
Table 7: SWOT Analysis
Strengths Weaknesses
Price flexibility Product flexibility
Country of origin Drying method
Brand Targeted audience
Opportunities Threats
New product introduction Supplier power
Alternative product
Source 4: Author
Strengths
Price flexibility – one of the main competitive advantages of Cerera is a price flexibility. Chosen markup of 40% is minimal to cover the expenses on the first stage of the business. The difference in pricing allows Cerera to utilize penetration strategy when entering the market. The prices can also adapt to changes on the market and within the company. When expenses will increase and the Cerera will have its place on the market, the markup can be increased. To acquire competitive strength in the first stage of the business, the price of the product will be lowered — this is possible due to the low expenses that will be faced in the first stage. The advantage of Cerera is the presence of partners in Poland who will take care of the registration of the product and storage in large volumes. Due to large quantity orders, the delivery of products from Azerbaijan will also cost less.
Product flexibility – Most of the apricot types in Cerera’s product portfolio are profitable. Which increases the flexibility when it comes to preferences of customers and/or sellers (local stores).
