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Chef Vending is in their first year of operation. Their products have received strong demand from initial contacts with end users and distributors. Marketing will be critical to generate significant demand for the products. The basic market need is for high quality, innovative vending machines as well as restaurant equipment.
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Chef has captured good information about the market and knows a great deal about the common attributes of the target customers. This information will be leveraged to better understand who is served, their specific needs, and how Chef can best communicate with the customers.
Chef Vending is providing its customers with a wide selection of innovative vending machines and restaurant equipment. Many of the products have first to market features not found on competitors equipment. Chef seeks to fulfill the following benefits that are important to their customers.
Growth rates in both the vending industry and the restaurant industry remain strong. This growth is fueled by the changes in the workplace and workforce that are causing workers to consume more of their meals away from home. Away from home food sales are expected to increase by 53%, according to NAMA.
As more and more consumers eat away from home, the demand for higher quality is also growing. Vendors are now offering a full line of packaged frozen meals in their machines. Margins will increase as premium prices are being placed on branded, high-quality products.
Demographic trends are affecting the industry. A large group of young adults, who mainly grew up on fast food, have emerged as an economic force. This group's perceptions on fast food, technology, and vending, will have a positive impact in the vending business. Furthermore, overall population growth rates, and immigration trends particularly, will also have a tremendous economic impact on the vending industry. Much of the growth in both of these areas will be in the Southeast, where Chef Vending is poised to capitalize on these trends.
Studies by Automatic Merchandiser reflect an industry growth rate of approximately 4.8% over the last five years, matching the overall growth of the U.S. economy.
The U.S vending industry is divided into three main segments:
The food and beverage industry is divided into similar segments:
Distribution in the vending industry typically runs through a distributor. These distributors will carry a brand of machine for sale in a defined geographic region. In some instances, manufacturers sell direct to operators or end users. Another form of distribution is to be a supplier to a nationally branded company. Similar distribution patterns are established in the food and beverage industry.
Revenue from U.S. vending consumable merchandise was $24.5 billion in 2001, an increase of 4.9% over 2000, according to the Automatic Merchandiser magazine's State of the Vending Industry Report in August 2000. This figure includes both machines and products. Small companies, with sales of less than $1 million, accounted for 5.8% of the market and had projected sales for 2001 of $1.35 billion. Three quarters of all vending operators are classified in the small category.
Within the industry, snacks and cold beverages are the largest product segments, representing 29% and 25% of the industry, respectively. These two segments are the driving force of the industry. The food category grew at a rate of 7% last year, according to the Automatic Merchandiser. Cold storage machines grew at an even more impressive 42% in 2002, with this growth coming at the expense of shelf-stable products.
Broader economic and cultural trends are also positively impacting the industry. Food sales away from home have become a larger part of total food sales in the U.S. since the 50's, according to the Department of Agriculture. Technomic, a Chicago-based research firm, reports an increase in demand for takeout meals as the percentage of two-parent households declines, along with the decline of the three regular sit down meals per day.
Consumer preferences about taste, price, nutrition, convenience, and technology are changing. These changes favor the vending industry, which now has the opportunity to spot these trends and develop their markets.
According to the National Restaurant Association, revenues from restaurants are expected to reach $321 billion in 2001. This is a large and healthy industry in the economy, and suppliers to this industry are expected to benefit from this growth.
The following SWOT analysis captures the key strengths and weaknesses within the company and details the opportunities and threats that the industry faces.
Both the food and beverage and vending industries are highly competitive. Price, Return On Investment (ROI), reliability, and customer service are the factors most effecting a buying decision.
There are many large name brand companies with vending machines in the market. Chef is focused on creating a niche market for the innovative machines, to compete with larger more recognizable names. By being first to market, Chef has a unique opportunity to brand themselves and their machines.
Buying patterns are fairly consistent across the year.
Chef Vending has three vending machines and three lines of restaurant equipment.
The vending products are:
The restaurant equipment products are:
To enhance the existing line, Chef is looking at a larger model of Sandwich Express that will offer a greater variety of sandwiches, and a more diverse product line, such as pizza.
Chef is also pursuing supplier relationships with large nationally-branded juice and sandwich manufacturers, to customize our machines to their products. This would enable Chef Vending to supply machines to national companies and allow them to brand the machines with their product lines.
As Chef increases their presence in the equipment business, they will continuously search out products to expand the existing line. A key component of this will be the feedback from the customer base.
As a start-up company, new to the industry, and introducing new products, Chef must be focused and work hard to create acceptance for their brand and the products within the marketplace. The keys to success are:
Chef Vending is still in the speculative as a start up organization. The critical issues that they face are:
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