Hey everybody! We are well underway in developing our marketing plan. After looking at our resources and the cost for our ingredients, we have decided we will be selling our cupcakes starting at $3.25. A dozen would only be 36 dollars lowering the unit price to $3.00. This price will get you the cupcake with frosting and one choice of unique topping. Imagine a Thai tea flavored cupcake with vanilla frosting and topped with coconut shavings! It doesn't end there though, add any additional topping from our topping bar (imagine yogurtland) for only $.25 cents more.
We have also laid out our projected sales for the next three years. With this estimate we are predicting to sell and average of 200 cupcakes per day in the first year then gradually grow our customer base. This estimate also includes our catering services
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Year 1
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Year 2
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Year 3
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Unit Sales
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75,000
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80,000
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86,000
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Unit Prices
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3.25
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3.25
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3.25
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Sales
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243,750
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260,000
|
279,000
|
I think your projections sound too ambitious. First of all, you haven't really stated why people would buy your cupcakes. The best tasting ones have a high sugar and fat content. I don't know how you would be creating a healthy cupcake that doesn't sacrifice on taste. Second of all, more consumers are becoming more health conscious.
ReplyDeleteDo you want to perpetuate a culture of unhealthy eating? Cupcakes are the tip of the iceberg. They are usually grouped together with cakes, donuts, and ice cream. How can you change the perceptions of consumers who associate cupcakes with those unhealthy dessert choices?
Since it is not part of the five basic food groups, in terms of cupcakes, what are you really selling? Relief? Escape? Enjoyment? Happiness? Luxury?
These cupcakes are way too expensive. Unless they can sing and dance, and do some crazy party tricks, I'll have to pass.
Hi Jinni, thanks for the feedback! I’d like to respond to some of your questions:
DeleteFirst of all, although we did claim that our store will be offering gluten-free, vegan, and allergen-free options for individuals with special dietary requirements, nowhere in our marketing proposal did we indicate that the focus of our company would be on healthy cupcakes, nor did we segment our market in a way that specifically targets health conscious people. Yes, our product falls under the “dessert” category, but in no means do we plan on advertising in such a way that people who buy/consume our cupcakes would be falsely led to believe that they are eating a health food. We rely on our customers to be well-informed about their food groups and the health-adverse risks of consuming dessert. (And just as a side note: as a vegan myself, I can definitely vouch for the fact that taste is not always compromised on behalf of more nutritious ingredients :) )
As for the price of our cupcakes, yes it may be a bit steeper than the average dessert item. However, this is why we decided to locate in Newport Beach and specifically target females between the ages of 18-24. After analyzing several different areas based on geodemographic segmentation research, we’ve decided that this area provides a viable market for us to thrive in given that it inhabits a cluster of people who are much more likely to be receptive to novelty dessert products such as ours.
Hope this clarifies some of your questions. It was great to have honest and constructive feedback! Let us know if you have anymore concerns.
Ann glad to hear back from you! :D
DeleteI have additional questions:
1. Why cupcakes and why sell custom cupcakes?
2. How do you know that people between the ages of 18-24 will prefer cupcakes compared to other alternatives?
3. If you are not selling healthy cupcakes and would like a well-informed customer that knows what they are getting themselves into, how are you helping consumers? Shouldn't consumer health and wellness matter to you if you want to keep your consumers alive and coming back for more cupcakes?
4. What do you think of the rise of obesity in America? Do you think it is a problem?
I’d be happy to try my best to answer your questions!
Delete1. We decided to initially offer cupcakes because a) we observed trend data of existing cupcake chains (such as Sprinkles and Casey’s Cupcakes) and realized there was a sufficient amount of existing/projected demand for them in the dessert market, and b) we believed that today’s most popular social media platforms (Facebook, Instagram, Pinterest, etc.) proved to be the most suitable outlets for our marketing strategies. These sites would allow us to adequately display the creative approach of our business while simultaneously engaging with potential customers. We decided to introduce a level of customization to our cupcakes in order to not only help us gain a competitive advantage over the previously mentioned stores, but to also allow our customers to create a dessert that reflects their respective taste and lifestyle preferences.
2. Although there is no way for us to guarantee whether this age bracket will choose our cupcakes over other dessert substitutes such as donuts or ice cream, what we have found is that this age group is generally receptive and more likely to purchase dessert items overall. So from a business standpoint, what we have to focus on in our marketing tactics is how we can get our customers to associate a higher perceived value with our product relative to its alternatives.
3/4. Personally, I do believe that obesity is an ongoing problem in America and we continue to witness rising percentages of affected individuals. Among the numerous causes of obesity, I think that one of the driving factors of this condition is an imbalance of an individual’s lifestyle. Our company would by no means market/advertise to support or further promote excessive eating or overconsumption of unhealthy ingredients. What we offer is a sweet personalized treat that will satisfy our customers’ sweet tooth. From then on, it is up to the individual how often they choose to consume our cupcakes and in what quantity. I don’t believe we hold the responsibility to control their eating habits or dictate their personal choices.
Hope this helps!!
Thanks Ann that was very helpful, but I have more questions:
Delete1. As for the design of the cupcakes, because it would be impossible to provide every possible topping out there, how much toppings are you willing to offer overall?
2. Another question about design, would you guys be willing to print pictures on the cupcakes kind of like how it is done on a cake?
3. Are there certain limitations on the design and customization on the cupcakes? What if someone wanted to create something obscene or sexually suggestive?
4. Are you guys doing catering? How much will this cost?
5. Of course you guys can't tell people what to do, what to eat, and how much to eat, but what if someone has a heart attack at your shop or plans to sue you for causing their illness/disease. What can you do to prevent this from happening to Craft? It might seem outrageous, but people at California can sue you for practically anything these days and probably get away with it too.
6. What are you willing to offer returning customers who constantly buy your cupcakes?
7. I go into your cupcake shop with a partial body cast, and I am on a wheel chair, how will I be treated?
8. How fast is the service at the cupcake shop? What time limit are employees expected to complete a customer purchase transaction? How will you assess the happiness of employees and their service?
9. A gay/lesbian couple are kissing inside your cupcake shop, are you going to ask them to leave?
10. Would it be out of the question to ask for a pizza cupcake?
I really like the idea of having additional toppings (like yogurtland), because each person can personalize their own cupcake. By the way, I wish the thai tea cupcake really exist, it sounds delicious!
ReplyDeleteMelissa, I haven't been to Yogurtland in ages. What kind of toppings did they have? Since Craft is selling high-end custom cupcakes, what kind of high-end toppings should they have? I am very interested in hearing about your thoughts on this.
DeleteHaving unique topping is sound great
ReplyDeleteHi Linh, what toppings should Craft have that would be considered unique?
DeleteMaybe you can think about offering some discount to attract new customers in order to increase the sales of products.
ReplyDeleteI agree with you Tina. The cost should start low and when more people start realizing how good it is maybe they are willing to pay more later.
Deleteunique idea by building our own cupcakes, projections are kind of high especially the 200 cupcake/day. However, If you advertise well and create some kind of culture "build your own cupcake" , I think people will be coming to your place, and you will possibly reach these numbers! good luck.
ReplyDeleteI agree with you Yaser. There has to be an "it" factor that Craft cupcakes needs to make it more desirable for all consumers to buy at high numbers.
DeleteI like the idea and the price sounds fair. Looks like you guys have a solid sales plan as well!
ReplyDeleteNice layout and plan! $3.00 for a delicious cupcake seems fair to me!
ReplyDeleteThe plan is so great. Hopefully you guys will give out free samples, so we can try them all. Thanks
ReplyDeleteI think having unique and tasty flavors will really give you an advantage in the market.
ReplyDeleteI think the prices are ok, considering the location of your business.
ReplyDeleteWhat pricing strategy did you guys use to come up with the price? Did you guys calculate your variable costs and fixed costs?
ReplyDelete