In recent years, a new consumer segment, the Foodie, has emerged causing marketers to re-evaluate their approach when targeting these trendy customers. Foodies look for high quality, locally-grown, and flavorful ingredients to use in unique recipes. They are devoted to upscale, sensual ingredients and enjoy the consumption of food and beverages. The Pennsylvania Simply Sweet Onion Cooperative is dedicated to providing Pennsylvania with a high-quality, nutritious sweet onion product. The Cooperative involves producers who are growing this delicious sweet onion in two regions within the Commonwealth. Additionally, the Cooperative strives to meet the needs of our market, those who desire a nutritious, fresh product, but that is unique and different from onions currently available. The Cooperative was started in 2006 by a group of sweet onion farmers in Washington County, PA. The board consists of a representative from The Pennsylvania State University, Pennsylvania Vegetable Growers Association, four Simply Sweet growers and a sales associate. The Cooperative has registered the brand name Pennsylvania Simply Sweet. The Pennsylvania Simply Sweet Onion Cooperative currently has shipping and packaging facilities near the two production areas in Washington and Lancaster Counties. They can readily supply the market with a fresh, quality ingredient and in the future they can adapt the product to any changes Foodies desire. Between 1983 and 2005, overall onion consumption increased by over 70 percent, from 12.2 pounds per capita to an estimated 21 pounds. 1 Historically, fresh-onion consumption has grown by 2.65 percent for every 1 percent increase in the population. According to the USDA, men eat 40 percent more onions than women. 2 Pennsylvania Simply Sweet Onions will be positioned to appeal to Foodies between the ages of 45 to 54 years. Region Pennsylvania Counties Included Regional Profile Philadelphia Region: Philadelphia, Bucks, Montgomery, Chester, Northampton, Lehigh, and Lancaster. Pittsburgh Region: Washington, Allegheny, and Number of households within Target Market range Number of persons within Target Market range 186,771 207,344 Westmoreland. Market Size/Potential In the U.S. sweet onions are consumed more often by consumers aged 48 to 57 years of age and in households with no children. High income families account for 41 percent of all onions consumed. These consumers prefer onions displayed in bulk and buy bulb onions once every two to three weeks. With consumption of specialty foods being highest in the northeast U.S. 3, the potential to market a specialty sweet onion should be investigated. Market Needs Foodies want: - specialty foods that are of high quality. 4 - specialty food items to be available in supermarkets. - to experiment with food ingredients and create flavorful meals using innovative recipes. - to purchase fresh, local ingredients and use them to create a sensory experience. Market Trends 64 percent of all consumers purchase specialty foods. 5 Onions are ranked 5 th among all vegetables in value and consumption. 72 percent of fresh and processed onions were purchased at retail stores and considered as home foods. 88 percent of consumers purchase foods and ingredients for meals from supermarkets An average American eats 21 pounds of onions per year in 2005, up from 18 pounds in 2000. Source: 2000 Census 1 http://www.onions-usa.org/media_center/mr_consumption.asp 2 http://www.sweetonionsource.com/lore.html 3 Tanner, Ron. Today s Specialty Food Consumer. Specialty Food magazine. Oct. 2006. 4 Tanner, Ron. 5 Tanner, Ron.
Foodies are a lucrative market because they are willing to pay a premium price. 6 Target Market Profile Demographic Psychographic Behavioral Married, college-educated adults, 45 to 54 years of age 7 Average household income of $93,150 per year 4 1-2 person sized households Desire to create new recipes with food ingredients Wish for new flavor or taste Considering food as a hobby 8 Supports local production Willing to pay higher prices in exchange for food experiences Travel to find a unique foods to try in new recipes Interested and challenged by experimentation, techniques and ingredients that they are not familiar with 85 percent like to experience new recipes 9 Most sweet onions are marketed internationally as differentiated products. Vidalia, New York Empire Sweets, Texas Spring Sweets, Walla Walla, Mayan, and OSO are the main industry participants. Larger onion growers produce Vidalia sweet onions. Keystone Fruit Marketing, Inc. s Lima, Peru office manages a large production facility where Maya Sweets are grown, then imports them to the U.S. Regional retailers selling sweet onions are Giant, Giant Eagle, Weis, and Wegman s. Geographic Area produced Season PA Simply Sweet Onions Vidalia Sweet Onions Competitive Analysis New York Texas Empire Spring Sweets Sweets Pennsylvania Georgia New York Early July Mid - September April - August September - January Washington Walla Walla Rio Grande Washington and Valley, Texas Oregon March - July June - September Mayan Sweets South America November - February OSO Sweets South America November- February Geographic Market Pennsylvania Nationwide East Coast Mainly Texas Mainly West Coast Nationwide Nationwide Direct or Indirect Competitor? ------- Direct Direct Indirect Indirect Indirect Indirect Most sweet onion growers are members of the National Onion Association. The cooperatives work together to produce and market the product. In the retail market sweet onions are sold in bulk or 2 to 5 pound bags. Our largest competitor, The Vidalia Sweet Onion, is marketed as being nutritious and low in fat, calories, and carbohydrates. Vitamin C, Calcium, and Iron are some other nutritional aspects of sweet onions. Various sweet onions are sold in grocery stores as a specialty item during their harvest season. Roadside stands, public farmers markets, and privately-owned farm markets also sell sweet onions. These sources provide viable outlets for this nutritional, flavorful ingredient. Key Planning Assumptions The Cooperative has a large number of growers whom can provide an adequate supply of sweet onions. Foodies desire for fresh local products is on the rise. The Cooperative s existing packing infrastructure has the capability of meeting increasing consumer demand. Availability of Pennsylvania Simply Sweet Onions peaks at a time where there is little competition with other sweet onions. 6 Cassedy, Kathleen. FOODIES: San Francisco Nurtures A Niche. Travel Marketing Decisions. Fall 2000 <www.atme.org/pubs/archives/77_252_1090.cfm> 7 www.foodspring.com 8 Chute, Elle. Food & Drug Retailing: It s a Foodie Thing. Visual Merchandising & Store Design 137.2 (2006): 18. 9 Tanner, Ron.
SWOT Analysis Strengths Weaknesses Opportunities Threats Onion board controls production quantity and quality standards Existing board has established relationships with PA grocery stores and includes knowledgeable producers with good communication Larger marketing window because harvest time varies by geographic locations within PA Access to other producers who are willing and able to grow onions Low packing capacity Small marketing budget Small product volume relative to our major competitors Difficult to store raw product Large, wealthy population centers nearby Increased consumer demand for local, value-added products Sweet onion demand is increasing along with our ability to increase awareness of the Pennsylvania Simply Sweet Onion brand Weather and disease can impact the crop, making it difficult to guarantee a specific yield Potential competition entering the market Consumers lack knowledge about the product The Pennsylvania Simply Sweet Onion is a unique food ingredient that can offer an appealing flavor, texture, and taste and allow Foodies to recreate culinary experiences. Objectives and Goals The Cooperative plans to achieve 40 percent brand recognition within our target market by year three. Within the same year the Cooperative plans to obtain 30 percent of the market share within our geographic target market region. With the success of the Pennsylvania Simply Sweet Onions, the cooperative plans to return 40 percent of total profits to its growers. Strategy Statement Pennsylvania Simply Sweet Onions will provide consumers with a quality, nutritious, locally-grown sweet onion option at a competitive price while providing growers with reputable returns. Product Description Pennsylvania Simply Sweet Onions will be available for purchase in two different options: a 4 pound bag containing 3 to 5 onions, and bulk. Positioning Pennsylvania Simply Sweet Onions will be a high quality, locally-grown, fresh sweet onion product and will be marketed as a premium vegetable item. Distribution and Logistics The Cooperative will transport Pennsylvania Simply Sweet Onions in refrigerated trucks, kept at a constant temperature of 45 F. One truck will be assigned to each of the two regions in Pennsylvania: Philadelphia and Pittsburgh. Trucks will be rented from Ryder and our product s logo will be displayed on the sides of the trucks. As the cooperative grows to include more members, the fleet of trucks will be expanded as needed. Pennsylvania Simply Sweet Onions will be delivered using a just-in-time delivery method. This method of delivery to the grocery chain s distribution centers across the region will ensure maximum freshness and shelf life potential. Place Pennsylvania Simply Sweet Onions will be marketed in the produce section of the selected grocery stores within our geographical target markets, including Giant, Giant Eagle, Weis, and Wegman s. Price The retail price of the Pennsylvania Simply Sweet Onions will range from $.99 to $1.19 per pound for bulk, $2.99 per 4 pound bag. Pricing Strategy Bulkindividual onions Suggested Retail $0.99 to Price PSSO Wholesale Price $1.19 $0.69 to $0.91 4lb.bag (3 to 5 onions) $2.99 $2.30 PSSO Total Cost $0.24 $1.12
Product Flow Chart Growers Promotional Strategies Print Materials: Brochures: These will be designed to feature the benefits of this new premium sweet onion product. Brochures will be given to grocery store produce managers to illustrate the benefits, onion size, packaging options, and retail prices for the Pennsylvania Simply Sweet Onion. Local Newspaper: Pennsylvania Simply Sweet Onions will be marketed in newspapers within our geographical target market. Product benefits will be noted along with great recipes that include Pennsylvania Simply Sweet Onions as an ingredient. Magazines: Large/ medium size advertisements will be printed in the following local magazines: Pittsburgh Magazine and Philadelphia Magazine. Internet: The Cooperative will develop a website to educate Foodies and inform them more about the product. The website will feature benefits of consuming sweet onions, sizes of Pennsylvania Simply Sweet Onions available for purchase, recipes created by local and regional chefs using Pennsylvania Simply Sweet Onions as an ingredient, restaurants that feature entrees with the product, and more. Food Trade Shows: Pennsylvania Simply Sweet Onions will be marketed at trade shows and events that feature cooking demonstrations prepared by regionally-famous guest chefs. One of these events is at The Pennsylvania State Farm Show s Food Showcase held in Harrisburg, PA. This booth will display recipes, informational brochures, and samples of new recipes containing Pennsylvania Simply Sweet Onions. Members of the Cooperative will staff the booth, answer questions and provide information. Partnerships with Chefs and Restaurants: The Cooperative will partner with restaurants in the Philadelphia and Pittsburgh areas to promote the use of the Pennsylvania Simply Sweet Onion product in their entrees. A benefit for Foodies, who have often wanted to dine at these restaurants, is that they are now able to re-create their experience at home based on recipes developed by chefs at these establishments. Cooking Classes: These classes will be available for Foodies seeking something new and trendy while enjoying their hobby. Classes will allow consumers to learn how to cook with Pennsylvania Simply Sweet Onions will learn how versatile this onion is, and how it can be pared with a variety of food ingredients. These classes will also be taught by renowned Pennsylvania chefs. Point-of-Purchase Displays: These displays will be located in cross merchandise areas in select supermarkets. Such areas include refrigerated bagged salads, seasonal grilling areas, and in the meat department. Informational brochures will be placed alongside. They will help inform consumers about the differences in tastes between Pennsylvania Simply Sweet Onions and other brands, and uses for Pennsylvania Simply Sweet Onions. The displays will also include tear off tablets with interesting and creative recipes. Fairs and Festivals: Pennsylvania Simply Sweet Onions will be on display at various fairs across Pennsylvania. Some of the larger fairs we will attend are: The Pennsylvania State Farm Show, Washington County Fair, Crawford County Fair, and Bloomsburg Fair. The Cooperative will also have a booth at state wine festivals featuring recipe samples that include the Pennsylvania Simply Sweet Onion, and information about the product. Some of the wine festivals will be the Annual Great Tastes of PA Wine & Food Fest, Seven Springs Mountains Resort Wine & Food Festival at Seven Springs Resort, Wine Tasting on the Hill Wine Tasting & Craft Festival, and many more. Target Area Goal Deadline Measuring Contingency Plan Customer 97% customer Customer surveys, website, Re-evaluate production and distribution Seasonal Reports Satisfaction satisfaction sales reps. channels. Product Product recognition: Perform random surveys Perform critical reviews of promotional Seasonal reports Recognition 75% by end of year 3 in grocery stores tactics, adjust based upon success. Quality Assurance Sales Profits Cooperative Onion Grading Meets PA Preferred product standards Year 1 - $498,445 Year 2 - $574,695 Year 3 - $685,179 Consistent with forecasted levels Packaging Constant production and store-level monitoring Weekly sales reports throughout the season Seasonal reports Grocery Dist. Centers Continued product checks Review of reports show low sales Review of reports show high sales Monitor weekly sales reports and current Grocery Stores Foodies Address shipping and logistics operations to ensure fresh, quality product. Re-evaluate sales rep. performance, target market, price point. Increase production, expand market area. Determine gaps in expected expenditures and sales. Re-evaluate pricing strategy.
financial statements Year 1 Year 2 Year 3 3 Year Total Sales Units Sold Bulk -Individual Onion in pounds (Wholesale $0.91/lb) 528,000 600,000 710,000 1,838,000 4lb Bag, 6-8 Onions (Wholesale $2.30) 10,000 15,000 20,000 45,000 Gross Sales $503,480 $580,500 $692,100 $1,776,080 Less: Sales Returns $5,035 $5,805 $6,921 $17,761 Net Sales $498,445 $574,695 $685,179 $1,758,319 Less: Cost of Goods Sold $151,044 $174,150 $207,630 $532,824 Gross Margin $347,401 $400,545 $477,549 $1,225,495 Promotional Expenses Food Trade Show $14,953 $5,747 $3,426 $24,126 Print Materials $74,767 $74,710 $75,370 $224,847 Website $44,860 $40,229 $41,111 $126,199 Public Relations $49,845 $44,539 $41,111 $135,494 Partnership with Chefs and Restaurants $5,732 $5,460 $5,139 $16,331 Cooking Classes $5,234 $4,310 $3,768 $13,312 Fairs and Festivals $17,446 $15,804 $11,991 $45,240 Displays in Retail $12,461 $12,931 $11,991 $37,382 Total Promotional Expenses $225,297 $203,729 $193,906 $622,932 Operating Expenses Maintenance $15,104 $17,415 $20,763 $53,282 Freight & Transportation $55,383 $63,855 $76,131 $195,369 Administrative Expenses $50,348 $58,050 $69,210 $177,608 Total Operating Expenses $120,835 $139,320 $166,104 $426,259 Total Expenses $346,132 $343,049 $360,010 $1,049,191 Net Profit before Taxes $1,269 $57,496 $117,539 $176,304 Profit Margin 0% 14% 25% 14%